MARSHALLS OF ROSEVILLE, MINN., INC.
(a wholly-owned subsidiary of Melville Corporation)
Consolidated Financial Statements
September 30, 1995 and October 1, 1994
(With Independent Accountants' Review Report Thereon)
Independent Accountants' Review Report
To the Board of Directors and Shareholders
Melville Corporation:
We have reviewed the accompanying consolidated balance sheets of
Marshalls of Roseville, Minn., Inc. (a wholly-owned subsidiary of
Melville Corporation) as of September 30, 1995 and October 1, 1994,
and the related consolidated statements of operations,
shareholder's equity, and cash flows for three-month and nine-month
periods then ended. These consolidated financial statements are
the responsibility of Marshalls of Roseville, Minn., Inc.'s
management.
We conducted our reviews in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our reviews, with the exception of the matter described in
the following paragraph, we are not aware of any material
modifications that should be made to the consolidated financial
statements referred to above for them to be in conformity with
generally accepted accounting principles.
Management has elected to omit substantially all of the disclosures
required by generally accepted accounting principles. If the
omitted disclosures were included in the consolidated financial
statements, they might influence the user's conclusions about the
Company's consolidated financial position, results of operations
and cash flows. Accordingly, these consolidated financial
statements are not designed for those who are not informed about
such matters.
/s/KPMG Peat Marwick LLP
Boston, Massachusetts
December 1, 1995
MARSHALLS OF ROSEVILLE, MINN., INC.
(a wholly-owned subsidiary of Melville Corporation)
Consolidated Balance Sheets
September 30, 1995 and October 1, 1994
(Unaudited)
(In Thousands)
Assets 1995 1994
Current assets:
Cash $ 15,077 $ 17,216
Accounts receivable, net of allowance for
doubtful accounts of $880 and $817, in
1995 and 1994, respectively 45,058 39,159
Inventories 607,429 593,263
Prepaid expenses and other current assets 9,004 6,861
Income tax receivable 18,714 -
Total current assets 695,282 656,499
Property and equipment, net 439,009 418,992
Capitalized lease assets, net 5,350 6,760
Goodwill, net 28,652 29,818
Deferred charges and other noncurrent assets, net 21,354 23,091
Total assets $1,189,647 $1,135,160
Liabilities and Shareholder's Equity
Current liabilities:
Accounts payable $ 243,688 $ 204,661
Accrued expenses 135,520 159,493
Accrued Federal income taxes - 8,244
Due to Parent and other divisions 154,582 73,333
Capital lease obligations 2,461 2,492
Total current liabilities 536,251 448,223
Deferred income taxes 19,259 12,519
Capital lease obligations 9,421 11,882
Other liabilities 4,167 12,931
Shareholder's equity:
Common stock, no par value, 100 shares
authorized and outstanding 1995 and 1994 352 352
Contributed capital 152,839 152,839
Retained earnings 467,358 496,414
Total shareholder's equity 620,549 649,605
Total liabilities and shareholder's equity $1,189,647 $1,135,160
See accompanying accountants' review report and notes to consolidated
financial statements.
MARSHALLS OF ROSEVILLE, MINN., INC.
(a wholly-owned subsidiary of Melville)
Consolidated Statements of Operations
For the three months ended and nine months ended September 30, 1995
and October 1, 1994
(Unaudited)
(In Thousands)
Three months ended Nine months ended
September 30, October 1, September 30, October 1,
1995 1994 1995 1994
Net sales $ 659,634 $ 671,077 $1,852,245 $1,902,444
Cost of goods sold 475,423 448,372 1,310,401 1,265,189
Gross profit 184,211 222,705 541,844 637,255
Selling, general and administrative
expenses 195,666 189,415 561,158 545,970
Depreciation and amortization 16,050 14,253 45,690 40,221
Operating income (loss) (27,505) 19,037 (65,004) 51,064
Other income (expense):
Net interest income (expense),
Parent and other divisions (2,500) (591) (5,971) (162)
Interest expense, third party (8) (23) (59) (102)
Income (loss) before provision
for income taxes (30,013) 18,423 (71,034) 50,800
Provision (benefit) for income taxes (8,770) 7,351 (28,369) 18,891
Net income (loss) $ (21,243) $ 11,072 $ (42,665) $ 31,909
See accompanying accountants' review report and notes to consolidated financial
statements.
MARSHALLS OF ROSEVILLE, MINN., INC.
(a wholly-owned subsidiary of Melville Corporation)
Consolidated Statements of Shareholder's Equity
For the nine months ended September 30, 1995 and
October 1, 1994
(Unaudited)
(In Thousands)
Total
Common Contributed Retained Shareholder's
Stock Capital Earnings Equity
Balance as of December 31, 1994 $352 $152,839 $542,275 $695,466
Net loss - - (42,665) (42,665)
Dividends paid to Parent - - (32,252) (32,252)
Balance as of September 30, 1995 352 152,839 467,358 620,549
Balance as of December 31, 1993 352 152,839 500,697 653,888
Net income - - 31,909 31,909
Dividends paid to Parent - - (36,192) (36,192)
Balance as of October 1, 1994 $352 $152,839 $496,414 $649,605
See accompanying accountants' review report and notes to consolidated
financial statements.
MARSHALLS OF ROSEVILLE, MINN., INC.
(a wholly-owned subsidiary of Melville Corporation)
Consolidated Statements of Cash Flows
For the three months and nine months ended September 30, 1995
and October 1, 1994
(Unaudited)
(In Thousands)
Three Months ended Nine months ended
September 30, October 1, September 30, October 1,
1995 1994 1995 1994
Cash flows from operating activities:
Net income (loss) $ (21,243) $ 11,072 $ (42,665) $ 31,909
Adjustments to reconcile net income (loss)
to net cash used for operating activities:
Depreciation and amortization 16,050 14,253 45,690 40,221
Increase in deferred income taxes 78 74 164 226
Loss on disposal of assets 2,055 722 3,119 1,469
Changes in assets and liabilities:
Accounts receivable (24,517) (17,392) (27,925) (25,526)
Inventories (107,496) (93,991) (135,946) (223,581)
Prepaid expenses and other current
assets (2,198) (1,771) (74) (661)
Income tax receivable (8,876) - (18,714) -
Deferred charges and other noncurrent
assets (801) (56) (1,655) (1,054)
Accounts payable 106,089 (8,643) 134,157 68,000
Accrued expenses 10,967 12,462 (26,277) (13,262)
Accrued Federal income taxes - (5,102) (28,745) (13,901)
Other liabilities (216) (380) (1,256) (708)
Net cash used for operating activities (30,108) (88,752) (100,127) (136,868)
Cash flows from investing activities:
Additions to property and equipment (15,615) (33,301) (36,818) (68,513)
Proceeds from disposal of assets - - - 17,996
Net cash paid in acquisition of Puerto
Rico stores - (24,846) - (24,846)
Net cash used for investing activities (15,615) (58,147) (36,818) (75,363)
Cash flows from financing activities:
Advances from Parent and other divisions 60,883 120,455 158,914 231,719
Increase (decrease) in book overdrafts (2,674) 48,248 4,752 27,108
Dividends paid to Parent (10,716) (12,076) (32,252) (36,192)
Principal payments on capital lease
obligations (566) (353) (1,698) (1,498)
Net cash provided by financing activities 46,927 156,274 129,716 221,137
Net increase (decrease) in cash 1,204 9,375 (7,229) 8,906
Cash at beginning of period 13,873 7,841 22,306 8,310
Cash at end of period $ 15,077 $ 17,216 $ 15,077 $ 17,216
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 2,501 $ 591 $ 5,971 $ 591
Income taxes $ 416 $ 11,413 $ 31,254 $ 34,926
See accompanying accountants' review report and notes to consolidated financial
statements.
MARSHALLS OF ROSEVILLE, MINN., INC.
(a wholly-owned subsidiary of Melville Corporation)
Notes to Consolidated Financial Statements
September 30, 1995 and October 1, 1994
(Unaudited)
(1) Basis of Presentation
The unaudited consolidated financial statements include those of
Marshalls of Roseville, Minn., Inc., a wholly-owned subsidiary
of Melville Corporation (the "Parent") and all of its retail
subsidiaries doing business as Marshalls. All intercompany
balances and transactions between the consolidated entities
have been eliminated.
In the opinion of the Company's management, these unaudited
consolidated financial statements reflect all adjustments
(which include only normal and recurring adjustments) necessary
to present fairly the financial position and results of
operations for such periods. Results of operations for interim
periods are not necessarily indicative of results that might be
achieved for the entire year.
(2) Acquisition of Puerto Rico Stores
During 1994, the Company acquired the assets of twelve retail
stores located in Puerto Rico for a cash price of $24.8
million. This acquisition was accounted for using the purchase
method of accounting and resulted in goodwill of $15.5 million.
Results of operations are included in the consolidated
financial statements of the Company from the date of
acquisition. Pro forma financial results have not been
presented for the effect of this transaction since the
operations are not material to the consolidated financial
results of the Company.