SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended August 2, 1997
Commission File Number 001-14346
SAKS HOLDINGS, INC.
(Exact name of the registrant as specified in its charter)
Delaware 52-1685667
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12 East 49th Street, New York, New York 10017
(Address of principal executive offices) (Zip Code)
(212) 940-4048
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
1) Yes |X| No | |
2) Yes |X| No | |
As of August 29, 1997 there were outstanding 63,425,421 shares of the issuer's
common stock, $.01 par value.
SAKS HOLDINGS, INC.
INDEX
Page
I. Financial Information Number
Item 1. Condensed Consolidated Balance Sheets as of August 2, 1997,
August 3, 1996, and February 1, 1997....................... 1
Condensed Consolidated Statements of Operations for the
three and six month periods ended August 2, 1997 and
August 3, 1996............................................. 2
Condensed Consolidated Statements of Cash Flows for the
six months ended August 2, 1997 and August 3, 1996......... 3
Notes to Condensed Consolidated Financial Statements....... 4-6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 7-11
Part II. Other Information
Item 1 Legal proceedings........................................ 12
Item 2 Changes in securities.................................... 12
Item 3 Defaults upon senior securities.......................... 12
Item 4 Submission of matters to a vote of security holders...... 12
Item 5 Other information........................................ 12
Item 6 Exhibits and Reports on Form 8-K......................... 12
Signatures............................................ 13
SAKS HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED) (UNAUDITED)
August 2, August 3, February 1,
(in thousands) 1997 1996 1997
--------------------------------------------------------------
Assets:
Current assets:
Cash and cash equivalents .......................... $ 9,678 $ 2,688 $ 52,955
Accounts receivable, net............................ 50,153 44,467 42,195
Merchandise inventories............................. 469,277 389,610 435,666
Other current assets................................ 80,426 52,149 69,791
----------------------------------------------------------
Total current assets...................... 609,534 488,914 600,607
Property and equipment................................. 872,946 798,386 824,080
Intangibles and other assets........................... 138,939 134,259 148,176
----------------------------------------------------------
Total Assets.............................. $ 1,621,419 $ 1,421,559 $ 1,572,863
----------------------------------------------------------
----------------------------------------------------------
Liabilities and Shareholders' Equity:
Current Liabilities:
Accounts payable, trade............................. $ 190,984 $ 142,312 $ 146,462
Accrued liabilities................................. 81,149 92,365 139,681
Taxes other than income taxes....................... 13,977 13,795 13,616
Current portion of long-term debt and capital lease
obligations....................................... 5,505 17,317 5,437
----------------------------------------------------------
Total current liabilities................. 291,615 265,789 305,196
Long - term debt....................................... 652,391 531,791 591,841
Other non-current liabilities.......................... 150,191 151,692 147,156
----------------------------------------------------------
Total liabilities......................... 1,094,197 949,272 1,044,193
Shareholders' equity................................... 527,222 472,287 528,670
----------------------------------------------------------
Total Liabilities & Shareholders' Equity............... $ 1,621,419 $ 1,421,559 $ 1,572,863
----------------------------------------------------------
----------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements
1
SAKS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS of OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
(In thousands except for August 2, August 3, August 2, August 3,
per share amounts) 1997 1996 1997 1996
-------------------------------- ------------------------------
Net Sales........................................... $ 454,703 $ 403,766 $ 975,120 $ 868,245
Cost of sales, including buying & occupancy costs... (338,919) (298,001) (705,615) (621,173)
-------------------------------- ------------------------------
Gross Margin......................... 115,784 105,765 269,505 247,072
Selling, general and administrative expenses........ (116,434) (110,478) (243,778) (230,516)
-------------------------------- ------------------------------
Operating income (loss).............. (650) (4,713) 25,727 16,556
Interest expense, net............................... (13,918) (17,942) (27,488) (42,163)
-------------------------------- ------------------------------
Loss from operations before
income taxes and extraordinary charge...... (14,568) (22,655) (1,761) (25,607)
-------------------------------- ------------------------------
Income taxes......................................... 396 0 196 0
Loss from operations before
extraordinary charge........................ (14,172) (22,655) (1,565) (25,607)
Extraordinary charge................................. 0 (3,340) (3,352) (3,340)
-------------------------------- ------------------------------
Net loss.................... $ (14,172) $ (25,995) $ (4,917) $ (28,947)
-------------------------------- ------------------------------
-------------------------------- ------------------------------
Net loss per share before extraordinary charge....... $ (0.22) $ (0.38) $ (0.02) $ (0.49)
------------------------------- ------------------------------
-------------------------------- ------------------------------
Net loss per share................................... $ (0.22) $ (0.44) $ (0.08) $ (0.55)
------------------------------- ------------------------------
-------------------------------- ------------------------------
Weighted average shares outstanding.................. 63,413 59,656 63,379 52,311
------------------------------- ------------------------------
-------------------------------- ------------------------------
See Notes to Condensed Consolidated Financial Statements
2
SAKS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS of CASH FLOWS
(UNAUDITED)
(in thousands)
Six Months Ended
August 2, August 3,
1997 1996
---------------------------------------------------
Net income (loss) and depreciation and amortization..................... $ 29,914 $ 7,816
Adjustments to reconcile net earnings to net cash used in operations:
Extraordinary charge.............................................. 3,352 3,340
Change in operating assets and liabilities........................ (43,340) (54,973)
---------------------------------------------------
Net cash used in operating activities.................................. (10,074) (43,817)
Cash flows from investing activities:
Proceeds from sale and sale-leaseback of assets................... 3,368 0
Capital expenditures, net of construction allowances received.... (83,294) (48,325)
---------------------------------------------------
Net cash used in investing activities................................... (79,926) (48,325)
---------------------------------------------------
Cash flow from financing activities:
Additional paid-in-capital from initial public offering....... 0 417,769
Net borrowings (payments) under senior credit facility......... 75,550 (173,401)
Borrowing (repayment) of debt.................................. (30,000) (148,943)
Financing costs................................................ (3) (5,582)
Other.......................................................... 1,176 (1,640)
---------------------------------------------------
Net cash provided by financing activities............................ 46,723 88,203
---------------------------------------------------
Decrease during the period......................................... $ (43,277) $ (3,939)
---------------------------------------------------
---------------------------------------------------
See Notes to condensed Consolidated Financial Statements
3
SAKS HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
The accompanying condensed consolidated financial statements of Saks Holdings,
Inc. and its subsidiaries (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments, consisting of normal recurring
accruals, necessary for a fair presentation have been included. The retail
industry is seasonal in nature, and historically the results of operations for
interim periods may not be indicative of the results for the full year. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's consolidated financial statements
for the year ended February 1, 1997 which were previously filed.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates.
2. Income Taxes
The Company has net operating loss carryforwards at February 1, 1997 of
approximately $761 million, which are available to offset taxes otherwise
payable on its future taxable income. The carryforwards begin to expire unless
utilized in fiscal years 2005 through 2011.
The Company's results of operations, consistent with the retail industry, are
seasonal in nature with a majority of its earnings derived in its fourth
quarter. The Company currently expects that it will be required under
generally accepted accounting principles to recognize the benefit of its net
operating loss carryforwards in its 1997 fourth quarter results. If
recognition is required, the net operating loss carryforwards would increase
1997 fourth quarter earnings by an estimated $275 million, and would also
result in recording an asset for the deferred tax benefit and a corresponding
increase to shareholders' equity in the Company's balance sheet. The
recognition of the net operating loss carryforwards in the Company's 1997
financial statements would result in 1997 pretax earnings being subject to an
estimated forty-one percent effective tax rate (excluding the recognition of
operating loss carryforwards) and would also be reflected in reported results
on an ongoing basis beginning in 1998 when its pretax earnings would become
subject to an estimated forty-one percent effective income tax rate. The
Company anticipates that it would continue to pay cash taxes at the 2%
alternative minimum tax rate until approximately the year 2001.
4
3. Synthetic Lease Financing
In June 1997, the Company entered into a $100.5 million operating lease
agreement for the purpose of financing the acquisition and construction of new
store sites. The facility can be used to finance qualified properties placed in
service by December 31, 1999. The lease requires a variable rent payment related
to LIBOR interest rates. The initial lease term ends in October 2001 and may be
extended at the mutual consent of the lessor and the Company. The Company has
also guaranteed a substantial residual value of the properties under lease. The
Company may purchase the assets under lease or elect for the property to be sold
to a third party. At August 2, 1997, there were no fundings under the lease
agreement.
4. Initial Public Offering
In May 1996, the Company completed an initial public offering (the "Offering").
The Company sold approximately 18 million shares of common stock at an initial
offering price of $25.00 per share. The net proceeds from the Offering were
approximately $417.8 million. The net proceeds from the Offering were primarily
used to prepay term loan borrowings under the Credit Facility and repay
outstanding balances on the revolving credit portion of the Credit Facility.
5. 5 1/2% Convertible Subordinated Notes
In September 1996, the Company issued $276 million aggregate principal amount of
5 1/2% Convertible Subordinated Notes (the "Notes") for net cash proceeds after
offering expenses and financing costs of $267.5 million. The Notes are due on
September 15, 2006 and are convertible at any time prior to maturity into shares
of the Company's common stock at a conversion rate of 24.0601 shares of common
stock for each $1,000 principal amount of Notes, which is equivalent to a
conversion price of approximately $41.563 per share. If all of the Notes are
converted, a total of 6,640,588 shares of common stock will be issued.
The net proceeds from the issuance of the Notes were primarily used to prepay
term loan borrowings under the Credit Facility and repay outstanding balances on
the revolving credit portion of the Credit Facility.
6. Extraordinary Charge
In February 1997, the Company acquired an additional $15.0 million of its
mortgage certificates with an annual fixed interest rate of 12.36%, effectively
prepaying the mortgage certificates. The Company recorded an extraordinary
charge of $3.4 million associated with the repurchase premium and accelerated
write-off of deferred financing costs related to the repurchase.
7. Commitments and Contingencies
The Company is from time to time involved in routine litigation incidental to
the course of its business. Management does not believe that the disposition of
such litigation will have a material adverse effect on the financial position or
results of operations of the Company.
5
The Company has entered into an agreement to sell its former distribution
facility located in Yonkers, New York. The sale is subject to the successful
rezoning of the property. If rezoned, proceeds associated with the sale would
fall within a range of $20 to $25 million. A sale of the distribution center in
this price range could result in a gain on sale of $8 to $13 million. Management
is unable to determine at this time if this transaction will be completed.
6
SAKS HOLDINGS, INC.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations for the Six Months Ended August 2, 1997
Compared with the Six Months Ended August 3, 1996
Net sales for the six months ended August 2, 1997 were $975.1 million, an
increase of $106.9 million or 12.3% over net sales of $868.2 million reported in
the six months ended August 3, 1996. Comparable sales increased 2.5% from the
1996 fiscal period. In fiscal 1996, comparable sales increased 12.4% from the
1995 comparable period.
Full-line, resort and main street stores net sales for the six months ended
August 2, 1997 were $818.4 million, an increase of $66.3 million, or 8.8%, from
$752.1 million for the six months ended August 3, 1996. Comparable sales for
full-line, resort and main street stores increased 3.6% in fiscal 1997. In the
fiscal 1996 period comparable sales increased 12.0% from the comparable 1995
period. The increase in comparable sales in fiscal 1997 was led by continued
strong demand for luxury goods. This performance was offset in part by the
softness in demand for select branded and private label categories of bridge
apparel. Off 5th stores net sales for the six month period ended August 2, 1997
were $121.9 million, an increase of $44.3 million, or 57.0%, from $77.6 million
for the six month period ended August 3, 1996. The increase is primarily a
result of opening fourteen net new stores during the last twelve months.
Comparable sales for Off 5th stores decreased 3.5% from the fiscal 1996 period.
The decline in comparable sales in Off 5th stores sales for the six month period
ended August 2, 1997 resulted from below plan inventory levels encountered early
in the first quarter in both sell off and direct merchandise. Although these
problems were corrected late in the first quarter, Off 5th's comparable sales
remained negative as a result of the impact of the industry-wide customer
malaise for bridge apparel (40% of Off 5th's business) as well as the very
promotional environment in department stores for bridge apparel. Folio catalog
net sales for the six month period ended August 2, 1997 were $34.8 million, a
decrease of $3.7 million, or 9.4% from $38.5 million for the six month period
ended August 3, 1996.
Cost of sales includes the cost of merchandise and buying and occupancy costs.
Cost of sales in the six months ended August 2, 1997 was $705.6 million, an
increase of $84.4 million compared to $621.2 million in the six months ended
August 3, 1996. As a percentage of net sales, cost of sales was 72.4% for the
six month period ended August 2, 1997 compared to 71.5% for the six month period
ended August 3, 1996. The increase in the cost of sales rate was due to an
increase in penetration of lower margin Off 5th sales, an increase in markdown
rates and fixed occupancy costs associated with new stores.
Selling, general and administrative expenses for the six month period ended
August 2, 1997 were $243.8 million, an increase of $13.3 million or 5.7% from
the comparable period in fiscal 1996 primarily due to higher sales volume
related costs. As a percentage of net sales, selling, general and administrative
expenses were 24.9% for the six month period ended August 2, 1997 compared to
26.5% for the six month period ended August 3,1996. The improvement in the
7
selling, general and administrative expense rate resulted from expense
reductions and cost control measures as well as relatively flat depreciation
dollars, leverage from the Company's sales growth and increased penetration of
Off 5th sales which have a lower expense rate than the Company's full line,
resort and main street stores.
An extraordinary charge of $3.4 million or $0.05 per share was recorded during
the six month period ended August 2, 1997, which related to the repurchase of
high cost debt.
Operating income was $25.7 million for the six month period ended August 2,
1997, an increase of $9.1 million from the six month period ended August 3,
1996.
Interest expense in the six months ended August 2, 1997 was $27.5 million, a
decrease of 34.8% compared to the same period in fiscal 1996. This decrease is
due to reduced average borrowings outstanding following the Company's initial
public offering, the exchange of higher-cost debt with lower-cost debt
associated with the September 1996 issuance by the Company of 5 1/2% Convertible
Subordinated Notes due 2006, and a reduction of the spread on its variable
interest borrowings.
Income tax benefit was $0.2 million for the six months ended August 2, 1997
compared to $0 for the six months ended August 3, 1996. The Company currently
anticipates that it will be required to recognize the benefit of its net
operating loss carryforwards in the fourth quarter. In 1996, the Company
anticipated that the income tax provision for the full year would be immaterial,
accordingly no tax provision was reflected in the six month period ended August
3, 1996. The Company anticipates that it will continue to pay cash taxes at the
2% alternative minimum tax rate. See Note 2 to the Condensed Consolidated
Financial Statements for additional discussion on income taxes.
Net loss, before extraordinary charge, for the six months ended August 2, 1997
was $1.6 million or $0.02 per share, an improvement of $24.0 million or $0.47
per share from the six months ended August 3, 1996.
Supplemental Information:
The Company completed its initial public offering of common stock during May
1996. In order to provide meaningful comparisons, pro forma results are
provided. For the six months ended August 2, 1997, the Company's pro forma
net loss was $1.0 million or $0.02 per share, an improvement of $7.5 million
compared to a pro forma net loss of $8.5 million or $0.13 per share for the
six months ended August 3, 1996. The pro forma results adjust reported
results to give effect to the elimination of management fees, interest
savings on debt repayments assuming the initial public offering had been
completed at the beginning of fiscal 1996, elimination of extraordinary
charges and assumes a forty-one percent effective tax rate as well as
reflecting an increase in the number of shares outstanding.
8
Results of Operations for the Three Months Ended August 2, 1997
Compared with the Three Months Ended August 3, 1996
Net sales for the three months ended August 2, 1997 were $454.7 million, an
increase of $50.9 million or 12.6% over net sales of $403.8 million reported in
the three months ended August 3, 1996. Comparable sales increased 2.5% from the
fiscal 1996 period. In fiscal 1996 comparable sales increased 11.3% from the
1995 comparable period.
Full-line, resort and main street stores net sales for the three months ended
August 2, 1997 were $380.7 million, an increase of $31.0 million, or 8.9%, from
$349.7 million for the three months ended August 3, 1996. Comparable sales for
full-line, resort and main street stores increased 3.4% in fiscal 1997. In the
fiscal 1996 period comparable sales increased 11.3% from the comparable 1995
period. The increase in comparable sales in fiscal 1997 was led by continued
strong demand for luxury goods. This performance was adversely affected by the
softness in demand for select branded and private label categories of bridge
apparel. Off 5th stores net sales for the three month period ended August 2,
1997 were $60.5 million, an increase of $21.3 million, or 54.2%, from $39.2
million for the three month period ended August 3, 1996. The increase is
primarily as a result of opening fourteen net new stores during the last twelve
months. Comparable sales for Off 5th stores decreased 4.2% from the fiscal 1996
period. The decline in comparable sales in Off 5th stores sales for the three
month period ended August 2, 1997 resulted from the impact of the industry-wide
customer malaise for bridge apparel (40% of Off 5th's business) as well as the
very promotional environment in department stores for bridge apparel. Folio
catalog net sales for the three month period ended August 2, 1997 were $13.5
million, a decrease of $1.4 million, or 9.3%, from $14.9 million for the three
month period ended August 3, 1996 .
Cost of sales includes the cost of merchandise and buying and occupancy costs.
Cost of sales in the three months ended August 2, 1997 was $338.9 million, an
increase of $40.9 million compared to $298.0 million in the three months ended
August 3, 1996. As a percentage of net sales, cost of sales, including buying
and occupancy costs, was 74.5% for the three months ended August 2, 1997
compared to 73.8% for the three months ended August 3, 1996. The increase in the
cost of sales rate was due to an increase in the penetration of lower margin Off
5th sales, an increase in markdown rates and fixed occupancy costs associated
with new stores.
Selling, general and administrative expenses for the three month period ended
August 2, 1997 were $116.4 million, an increase of $5.9 million or 5.4% from
the comparable period in fiscal 1996 primarily due to higher sales volume
related costs. As a percentage of net sales, selling, general and
administrative expenses were 25.6% for the three month period ended August 2,
1997 compared to 27.4% for the three month period ended August 3, 1996. The
improvement in the selling, general and administrative expense rate resulted
from expense reductions and cost control measures as well as relatively flat
depreciation dollars, leverage from the Company's sales growth and increased
penetration of Off 5th sales which have a lower expense rate than the
Company's full line, resort and main street stores.
Operating loss was $0.7 million for the three month period ended August 2, 1997,
an improvement of $4.1 million from the three month period ended August 3, 1996.
9
Interest expense in the three months ended August 2, 1997 was $13.9 million, a
decrease of 22.4% compared to the same period in fiscal 1996. This decrease is
due to reduced average borrowings outstanding following the Company's initial
public offering, the exchange of higher-cost debt with lower-cost debt
associated with the September issuance by the Company of 5 1/2% Convertible
Subordinated Notes due 2006, and a reduction of the spread on its variable
interest rate borrowings.
Income tax benefit was $0.4 million for the three months ended August 2, 1997
compared to $0 for the three months ended August 3, 1996. The Company currently
anticipates that it will be required to recognize the benefit of its net
operating loss carryforwards in the fourth quarter. In 1996, the Company
anticipated that the income tax provision for the full year would be immaterial,
accordingly no tax provision was reflected in the three month period ended
August 3, 1996. The Company anticipates that it will continue to pay cash taxes
at the 2% alternative minimum tax rate. See Note 2 to the Condensed Consolidated
Financial Statements for additional discussion on income taxes.
Net loss for the three months ended August 2, 1997 was $14.2 million or $0.22
per share, an improvement of $11.8 million or $0.22 per share from the three
months ended August 3, 1996.
Supplemental Information:
The Company completed its initial public offering of common stock during May
1996. In order to provide meaningful comparisons, pro forma results are
provided. For the three months ended August 2, 1997, the Company's pro forma net
loss was $8.6 million or $0.13 per share, an improvement of $3.3 million,
compared to a pro forma net loss of $11.9 million or $0.18 per share for the
three months ended August 3, 1996. The pro forma results adjust reported results
to give effect to the elimination of management fees, interest savings on debt
repayments assuming the initial public offering had been completed at the
beginning of fiscal 1996, elimination of extraordinary charges and assumes a
forty-one percent effective tax rate as well as reflecting an increase in the
number of shares outstanding.
Changes in Financial Condition and Liquidity since February 1, 1997
In June 1997, the Company entered into a $100.5 million operating lease
agreement for the purpose of financing the acquisition and construction of new
store sites. The facility can be used to finance qualified properties placed in
service by December 31, 1999. The lease requires a variable rent payment related
to LIBOR interest rates. The initial lease term ends in October 2001 and may be
extended at the mutual consent of the lessor and the Company. The Company has
also guaranteed a substantial residual value of the properties under lease. The
Company may purchase the assets under lease or elect for the property to be sold
to a third party. At August 2, 1997, there were no fundings under the lease
agreement.
In February 1997, the Company acquired an additional $15.0 million of its
mortgage certificates with an annual fixed interest rate of 12.36%. The Company
recorded an extraordinary charge of $3.4 million associated with the repurchase
premium and accelerated write-off of deferred financing costs.
10
During the fiscal 1997 period, the Company financed its working capital needs
and capital expenditures primarily with cash on hand at the beginning of the
period, cash provided by operations and borrowings under the Company's senior
credit facility. The following discussion analyzes liquidity and capital
resources by operating, investing and financing activities as presented in the
Condensed Consolidated Statements of Cash Flows.
Net cash used in operating activities was $10.1 million during the six months
ended August 2, 1997 compared to $43.8 million used in the six months ended
August 3, 1996. This decrease was primarily attributable to increased net income
in the 1997 period as well as a decrease in working capital accounts. The
primary items affecting working capital in the 1997 period were a net increase
in merchandise inventories and trade accounts receivable of $33.6 million and
$8.0 million, respectively, as well as an increase in trade accounts payable of
$44.5 million offset by a decrease in accrued liabilities of $58.6 million. The
increase in merchandise inventories and trade accounts receivable was due to the
addition of new stores, seasonal inventory increases, and an increase to support
existing store sales growth. The decrease in accrued liabilities of $58.6
million was primarily due to the settlement of the January 1997 repurchase of
$15.0 million of mortgage certificates, as well as the redemption of Saks First
gift checks.
Net cash used in investing activities was $79.9 million during the six months
ended August 2, 1997 compared to $48.3 million in the six months ended August 3,
1996. Capital expenditures were $83.3 million, net of construction allowances,
during the six months ended August 2, 1997 and consisted principally of
construction of new stores and remodeling existing stores. Capital expenditures,
net of construction allowance, in the six months ended August 3, 1996 were $48.3
million. Proceeds from the sale and sale-leaseback of assets were $3.4 million
during the six months ended August 2, 1997 compared to $0 during the six months
ended August 3, 1996. During 1997, the Company opened a new resort store in
Hilton Head, South Carolina and three Off 5th stores in Las Vegas, NV,
Riverhead, NY (Long Island) and Westbury, NY.
Net cash provided from financing activities during the six months ended August
2, 1997 was $46.7 million compared to $88.2 million in the six months ended
August 3, 1996. The decrease in 1997 compared to 1996 was primarily a result of
the repurchase of mortgage certificates and current period borrowings under
the Company's senior credit facility and the prior periods additional paid in
capital from initial public offering.
During the second quarter the Company relocated its primary merchandise
processing from its Yonkers, New York distribution center to a new facility
in Aberdeen, Maryland. The Company also converted its core management
information systems to improve longer-term infrastructure capabilities. The
Company continues to integrate its new systems, people and processes at the
Aberdeen facility. Successful execution in these areas will be critical in
the third and fourth quarters, as the Company historically earns all of its
income in these quarters.
This filing contains forward-looking information, within the meaning of The
Private Securities Litigation Reform Act of 1995, regarding expectations and
estimates of future earnings, tax benefits and financial reporting requirements.
Such forward-looking statements involve risks, uncertainties and other factors
that may cause the actual results to be materially different from such
forward-looking statements. Such factors include, among others, levels of
operating earnings and changes in business strategy or development plans, tax
laws or financial reporting requirements. For more details, see the Company's
other filings with the Securities and Exchange Commission.
11
SAKS HOLDINGS, INC.
PART II OTHER INFORMATION
Item 1 Legal proceedings Not Applicable
Item 2 Changes in securities Not Applicable
Item 3 Defaults upon senior securities Not Applicable
Item 4 Submission of matters to a vote of security holders
a) On June 16, 1997, the Annual Meeting of Stockholders of the Company was
held in New York, New York. There were 63,387,474 shares of common stock
outstanding on the record date and entitled to vote at the Annual Meeting.
b) The following directors were elected:
Vote For Vote Withheld
Philip B. Miller 53,170,277 2,216,018
Brian E. Kendrick 53,169,869 2,216,426
Rose Marie Bravo 53,169,824 2,216,471
E. Garrett Bewkes III 53,241,547 2,144,748
Jon P. Hedley 53,170,377 2,215,918
Charles J. Philippin 53,170,477 2,215,818
Brian Ruder 53,241,345 2,144,950
Stephen I. Sadove 53,240,757 2,145,538
Savio W. Tung 53,170,302 2,215,993
c) The Saks Holdings, Inc. Directors Stock Plan was approved with
51,301,503 shares voting in favor, 4,022,475 shares voting against and 62,317
shares abstaining.
d) The selection of Coopers & Lybrand L.L.P. as independent auditors for
the fiscal year ending January 31, 1998 was ratified with 55,332,063 shares
voting in favor, 15,611 shares voting against and 38,421 abstaining.
Item 5 Other Information Not Applicable
Item 6(a) Exhibits
Exhibit
Number Exhibit
- ------ -------
3.01* Amended and Restated Certificate of Incorporation of Saks
Holdings, Inc. as filed with the Delaware Secretary of State on
May 28, 1996.
3.02* Bylaws of Saks Holdings, Inc., as adopted on August 6, 1990.
11.01 Statement Re: Computation of Per Share Earnings.
27.01 Financial Data Schedule.
______________
* Incorporated herein by reference to Saks Holdings' registration statement
on Form S-1 (File No. 333-2426).
Item 6(b) Reports on Form 8-K 8-K filed June 5, 1997
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SIGNATURES
Pursuant to the requirement 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.
SAKS HOLDINGS, INC.
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(Registrant)
/s/ Mark E. Hood
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Date: September 3, 1997 Mark E. Hood
Senior Vice President - Finance
Chief Accounting Officer
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EXHIBIT INDEX
Exhibit
Number Exhibit
- ------ -------
3.01* Amended and Restated Certificate of Incorporation of Saks
Holdings, Inc. as filed with the Delaware Secretary of State on
May 28, 1996.
3.02* Bylaws of Saks Holdings, Inc., as adopted on August 6, 1990.
11.01 Statement Re: Computation of Per Share Earnings.
27.01 Financial Data Schedule.
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* Incorporated herein by reference to Saks Holdings' registration statement
on Form S-1 (File No. 333-2426).