EXHIBIT INDEX ON PAGE 3
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 3, 1997
CARSON PIRIE SCOTT & CO.
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(Exact name of registrant as specified in its charter)
Illinois
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(State or other jurisdiction of incorporation)
0-22682 37-0175980
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Commission File Number (IRS Employer Identification No.)
331 West Wisconsin Avenue, Milwaukee, Wisconsin 53203
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(Address of principal executive offices) (Zip Code)
(414) 347-4141
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Registrant's Telephone Number
Page 1 of 10
Item 5. Other Events.
On March 3, 1997, Carson Pirie Scott & Co. reported its earnings for the
fourth quarter and the fiscal year ending February 1, 1997. A copy of the press
release is attached as Exhibit 1.
Item 7. Exhibits.
See Exhibit Index on page 3 of this Current Report on Form 8-K.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated March 10, 1997.
CARSON PIRIE SCOTT & CO.
By: /s/ Charles J. Hansen
------------------------
Charles J. Hansen
Vice President,
General Counsel,
and Secretary
Page 2 of 10
EXHIBIT INDEX
1. News release, dated March 3, 1997.
Page 3 of 10
Investors Media
James L. Stoffel Edward P. Carroll, Jr.
V.P. - Treasurer Executive V.P. Marketing
(414) 278-5769 (414) 347-5340
FOR IMMEDIATE RELEASE MONDAY, MARCH 3, 1997
CARSON PIRIE SCOTT & CO. FULL YEAR OPERATING
EARNINGS INCREASE 14% TO $2.33 PER SHARE
Milwaukee, Wisconsin, March 3, 1997 - Carson Pirie Scott & Co. (NYSE:CRP) today
reported its fourth quarter and full year financial results. Stanton J.
Bluestone, Chairman and Chief Executive Officer of Carson Pirie Scott & Co.,
commented:
"I am pleased to report our third consecutive year and seventh consecutive
quarter of improvement in operating earnings per share. A combination of solid
sales growth, gross margin rate improvement and diligent expense control
generated the operating EPS gains in the fourth quarter and for the full year.
Ultimately, the consistent execution of our strategic plan by our associates was
responsible for the 1996 record results."
"Our top line grew 5.6% and our gross margin rate improved 30 basis points in
1996 versus comparable 1995 results. The sales increase came from a 2.2%
comparable store sales gain, and a 3.4 percentage point gain from the four new
stores that we opened in 1996. Our 2.2% comparable store sales growth was led by
15% improvements in Special Sizes and Outerwear. The feminine sportswear area as
a whole recorded another strong year with a 9% sales gain and a half-percentage
point gross margin rate improvement. In addition, the Men's area benefited from
merchandising improvements and the continued rollout of the American Designer
better sportswear lines resulting in an 8% sales gain."
"Our expense rate improvement from 27.9% in 1995 to 27.8% in 1996 was achieved
through reductions in bad debt expense on our credit card and productivity gains
throughout the Company that more than offset benefit cost increases and $2.9
million of store preopening costs. The reduction in bad debts associated with
our credit card is especially satisfying given the national trend of increased
credit losses."
"I am upbeat about our prospects for the upcoming year. I am particularly
encouraged by our strong start in the month of February during which we recorded
an 8.2% comparable store sales increase and a 13.2% total sales increase. The
strength of our merchandise strategies and new and renovated stores, together
with key contributions from our associates, gives us the opportunity to improve
on these record results in 1997."
Carson Pirie Scott & Co., a major department store retailer, operates 53
traditional department stores and 4 furniture stores: 32 Carson Pirie Scott
stores in greater Chicago, Indiana and Minnesota; 13 Bergner's in central
Illinois, and 12 Boston Stores in Wisconsin.
Page 4 0f 10
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CARSON PIRIE SCOTT & CO. AND SUBSIDIARIES
Consolidated Statements of Operations
(dollars in thousands, except per share amounts)
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Three Months Ended Year Ended
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February 1, February 3, February 1, February 3,
1997 1996 1997 1996 <F1>
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Net sales $374,833 $364,853 $1,102,826 $1,058,823
Cost of sales (236,309) (230,665) (700,080) (675,446)
Selling, general and administrative expenses (83,761) (82,033) (307,133) (295,724)
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EBITDA 54,763 52,155 95,613 87,653
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Depreciation and amortization expense (3,401) (2,577) (15,521) (11,392)
Other 643 391 188 212
Non-recurring items 0 904 0 55,904
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Income from operations 52,005 50,873 80,280 132,377
Non-recurring items 0 (6,835) 1,540 (6,835)
Interest expense, net (4,703) (4,997) (15,910) (17,974)
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Income before income taxes 47,302 39,041 65,910 107,568
Income tax expense (18,769) (15,614) (26,100) (43,027)
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Net income $28,533 $23,427 $39,810 $64,541
=============================================================================================================
Shares outstanding (in 000's) 16,509 16,736 16,667 17,218
Net income per share:
Operating $1.73 $1.61 $2.33 $2.04
Primary $1.73 $1.40 $2.39 $3.75
Fully diluted $1.73 $1.40 $2.39 $3.75
Statistics:
Same-store sales increase 1.3% 3.3% 2.2% 2.7%
Gross margin rate 37.0% 36.8% 36.5% 36.2%
SG&A rate (22.3%) (22.5%) (27.8%) (27.9%)
EBITDA rate 14.6% 14.3% 8.7% 8.3%
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<FN>
<F1>
1995 results have been restated to exclude $24,989 of clearance sales at
eight stores sold to Mervyn's in 1995.
</FN>
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Page 5 of 10
The Company provided the following highlights for the fourth quarter results:
1996 Fourth Quarter Results Summary 1995 Fourth Quarter Results Summary <F2>
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Net Net Net Net
($ in millions, except EPS) Sales EBITDA Income EPS Sales EBITDA Income EPS
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------------------------------------------- ---------------------------------------------
Operating results <F1> $374.8 $54.8 $28.5 $1.73 $364.9 $52.2 $26.9 $1.61
Non-recurring Items:
Acquisition costs - - - - - - ($4.1) (0.25)
Year 2000 costs - - ($0.3) (0.02) - - - -
Store closing costs - - ($0.5) (0.03) - - - -
Settlement of reorg payable - - $0.8 0.05 - - $0.4 0.03
Other - - - - - - 0.2 0.01
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Total Company $374.8 $54.8 $28.5 $1.73 $364.9 $52.2 $23.4 $1.40
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<FN>
<F1>
Excludes non-recurring and one-time items.
<F2>
1995 Results include 14 weeks, 1996 results include 13 weeks.
</FN>
Sales: Sales increased 2.7% to $374.8 million in the fourth quarter of 1996 from
the prior year's sales of $364.9 million. Sales increased 6.8% excluding the
53rd week from the 1995 results. Sales rose 1.3% on a same-store basis. The five
day shorter holiday selling season negatively impacted comparable store sales
gains for the quarter.
EBITDA: Earnings before interest, taxes, depreciation, amortization and other
non-cash items ("EBITDA") increased 5% to $54.8 million in 1996 from $52.2
million in 1995. The EBITDA rate for the fourth quarter increased 30 basis
points from 14.3% in 1995 to 14.6% in 1996. The EBITDA improvement resulted from
gross margin rate enhancement and better leveraging of expenses.
Earnings per share ("EPS") results: Net income excluding non-recurring items
increased $1.6 million in the quarter versus the prior year fourth quarter. The
improved EBITDA performance was offset by higher depreciation charges. Operating
EPS improved 7% from $1.61 to $1.73 per share. On a Total Company basis, EPS
increased 24% to $1.73 in 1996 versus $1.40 in 1995. The 1995 results included a
non-recurring charge to writeoff acquisition costs.
Page 6 of 10
The Company provided the following highlights of its 1996 financial results:
1996 Fiscal Year Results Summary 1995 Fiscal Year Results Summary <F2>
-------------------------------------------- ---------------------------------------------
Net Net Net Net
($ in millions, except EPS) Sales EBITDA Income EPS Sales EBITDA Income EPS
-------------------------------------------- ---------------------------------------------
Operating results <F1> $1,102.8 $95.6 $38.9 $2.33 $1,058.8 $87.7 $35.1 $2.04
Non-recurring Items:
Minnesota Ops. - - - - 25.0 - - -
Minnesota sale gain - - - - - - 33.1 1.92
Acquisition costs - - - - - - (4.1) (0.24)
Sale of Proffitt's stock - - 9.0 0.54 - - - -
County Seat Write-Down - - (6.4) (0.38) - - - -
Charitable contribution - - (1.5) (0.09) - - - -
Other - - (0.2) (0.01) - - 0.4 0.03
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Total Company $1,102.8 $95.6 $39.8 $2.39 $1,083.8 $87.7 $64.5 $3.75
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<FN>
<F1>
Excludes the results of the 8 stores sold to Mervyns in March 1995 and
other non-recurring items.
<F2>
1995 results include 53 weeks, 1996 results include 52 weeks.
</FN>
Sales: Total sales increased $19.0 million or 1.8%. However, the 1995 results
included $25.0 million of clearance sales at the Company's eight Minnesota
Division stores which were sold to Mervyn's in March 1995 and $14.0 million in
sales during the 53rd week. Excluding the impact of these items, sales increased
$58.0 million or 5.6%. This sales increase came about through the combination of
a 2.2% comparable store sales gain and a 3.4 percentage point gain from the
Company's new stores.
New stores: During 1996, the Company added four net new stores. In January 1996,
the Company added a 62,000 square foot furniture gallery in Schaumburg,
Illinois. In June 1996, the Company added a 126,000 square foot department store
in the Cherryvale mall in Rockford, Illinois. This store was one of two
department stores in Rockford, Illinois acquired from Younkers, Inc. The second
store, located in Machesney Park Mall, was opened in August 1996, and the
Company closed an existing location in conjunction with this store opening. The
Company opened a 55,000 square foot furniture gallery in Brookfield, Wisconsin
in October 1996. In November 1996 the Company opened a 120,000 square foot
department store acquired from the May Department Stores Company in the Fox
Valley Mall in Aurora, Illinois.
Page 7 of 10
Comparable store sales gain: The 1996 comparable store sales gain of 2.2% was a
product of the strong performance of the Company's renovated stores, the
continued rollout of key vendor shops and sales gains in the Company's targeted
merchandise categories. The five stores renovated in 1995 generated a 15%
increase during 1996. The Company also continued to expand the number of key
merchandise vendor shops in the feminine and men's sportswear areas. In 1996,
the Company added 37 of these vendor shops resulting in nearly $6 million of new
business.
Gross Margin: The Company's FIFO gross margin rate increased 0.3 percentage
points from 36.2% in 1995 to 36.5% in 1996. This margin rate improvement was
achieved through higher maintained markup and improved shortage results. The
areas of the business that had the strongest margin rate improvements were
Feminine Sportswear, Men's, Children's, Coats and Furniture.
Selling, General and Administrative Expenses: The Company's net S, G & A rate
improved from 27.9% of sales in 1995 to 27.8% of sales in 1996. The 1996 S, G &
A expenses included $2.9 million of preopening costs associated with the
Company's four new store openings and $4.8 million of increased benefit costs.
Reduced bad debt expense and better expense control throughout the Company more
than offset the impact of these preopening and benefits charges. The Company's
finance charge income, which is netted against selling, general and
administrative expenses, remained consistent with the prior year at $45.7
million.
Depreciation and amortization: The Company's depreciation and amortization
expense increased from $11.4 million in 1995 to $15.5 million in 1996. The $4.1
million increase resulted from the higher fixed asset balances resulting from
the Company's capital expenditure program and new stores. The Company is
anticipating a comparable increase to depreciation and amortization expense in
1997.
Interest Expense: Interest expense declined from $18.0 million in 1995 to $15.9
million in 1996. The decline was due to lower average interest rates paid on
outstanding debt during 1996.
Income Taxes: The Company's effective income tax rates were 39.6% and 40.0% in
1996 and 1995, respectively. The Company only paid $0.2 million in 1996 for cash
taxes as a result of tax benefits including net operating loss carryforwards.
The Company credited $16.0 million directly to paid-in-capital to recognize
these tax benefits.
Earnings per share results: Net income before non-recurring items increased 11%
to $38.9 million in 1996 as a result of the improved EBITDA performance and
lower interest costs, offset by an increase in depreciation charges. Operating
EPS improved by 14% from $2.04 to $2.33 per share. Total Company net income
declined $24.7 million and EPS was lower by $1.36 in 1996 compared to 1995. The
decrease was due to lower net non-recurring gains in 1996 compared to the net
non-recurring gain recorded in the prior year. The 1995 period included a net
non-recurring after-tax gain of $33.1 million or $1.92 per share from the sale
of the Minnesota Division. The Company recorded $0.3 million of non-recurring
after-tax charges for costs associated with preparing its information sytems to
be functional in the year 2000. The Company anticipates it will incur $1.5
million of additional after-tax year 2000 costs in 1997.
Page 8 of 10
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CARSON PIRIE SCOTT & CO. AND SUBSIDIARIES
Consolidated Balance Sheets
(dollars in thousands)
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February 1, February 3,
Assets 1997 1996
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Cash and cash equivalents $ 20,618 $ 44,384
Receivables, net 267,433 232,257
Inventories 190,646 178,632
Other current assets 16,265 42,715
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Total current assets 494,962 497,988
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Property and equipment, net 174,260 140,851
Net deferred tax assets 42,909 37,789
Other assets 11,916 15,474
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$ 724,047 $ 692,102
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Liabilities and Shareholders' Equity
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Current maturities of long-term debt $ 2,854 $ 3,081
Accounts payable and accrued liabilities 155,156 133,597
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Total current liabilities 158,010 136,678
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Other liabilities 47,585 42,903
Accounts receivable securitization 113,511 144,000
Long-term debt, less current maturities 46,124 48,705
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Total liabilities 365,230 372,286
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Shareholders' equity:
Common stock and paid-in-capital 176,946 171,894
Unrealized gain on investments 96 5,957
Retained earnings 181,775 141,965
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Total shareholders' equity 358,817 319,816
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$ 724,047 $ 692,102
=======================================================================================================================
Net Debt / Capitalization 28.3% 32.1%
Net Debt / Capitalization (excluding A/R debt) 07.3% 2.3%
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Page 9 of 10
The Company provided the following additional balance sheet information:
The Company continues to improve its financial strength. During 1996, the
Company reduced its net debt to capital ratio to 28%. This reduction was despite
cash uses of $12.3 million for share repurchases and $52.9 million for capital
expenditures. Shareholders' equity increased by $39 million in 1996. The
significant components of this increase were $39.8 million of net income and
$16.0 million in deferred tax benefits credited directly to paid-in-capital.
Rollforward of Net Debt and Shareholders' Equity
-----------------------------------------------------
Net Shareholders' Total Net Debt /
Debt Equity Capital Capital
-----------------------------------------------------
Year End - 1995 $151.4 $319.8 $471.2 32%
Net income - 39.8 39.8
Deferred taxes - 16.0 16.0
Net debt reductions (9.5) - (9.5)
Options exercised - 1.3 1.3
Share repurchases - (12.3) (12.3)
Unrealized gain - (5.8) (5.8)
----------------------------------------
Year End - 1996 $141.9 $358.8 $500.7 28%
========================================
Share Repurchase Program: During the fourth quarter, the Company repurchased
50,900 shares of its common stock for $1.2 million. During the 1996 fiscal year,
the Company repurchased 517,000 shares, or 3% of outstanding shares, for $12.3
million under a 1996 $20 million share repurchase authorization. In January 1997
the Company's board of directors authorized it to repurchase $20 million of its
common stock over the next two years. The January 1997 authorization supersedes
the 1996 $20 million share repurchase authorization.
Page 10 of 10