-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GDJA38uhlBweQSBUSL6SUYRrceiiI3Njp7NkanGvuY4dQZzi5gIhqNXucO2Rs2Ea qVt+fl+lVPVwVdN3Va5K+g== 0000006885-00-000014.txt : 20000310 0000006885-00-000014.hdr.sgml : 20000310 ACCESSION NUMBER: 0000006885-00-000014 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000222 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000309 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STAGE STORES INC CENTRAL INDEX KEY: 0000006885 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DEPARTMENT STORES [5311] IRS NUMBER: 760407711 STATE OF INCORPORATION: DE FISCAL YEAR END: 0130 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-14035 FILM NUMBER: 564955 BUSINESS ADDRESS: STREET 1: 10201 MAIN ST CITY: HOUSTON STATE: TX ZIP: 77025 BUSINESS PHONE: 7136675601 MAIL ADDRESS: STREET 1: 10201 MAIN STREET CITY: HOUSTON STATE: TX ZIP: 77025 FORMER COMPANY: FORMER CONFORMED NAME: APPAREL RETAILERS INC DATE OF NAME CHANGE: 19930908 8-K 1 FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 February 22, 2000 (Date of Report, date of earliest event reported) Stage Stores, Inc. (Exact name of registrant as specified in its charter) Commission file number 001-14035 DELAWARE 76-0407711 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identifications No.) 10201 Main Street, Houston, 77025 Texas (Zip Code) (Address of principal executive offices) (713) 667-5601 (Registrant's telephone number, including area code) Not Applicable (Former name or address, if changed since last report) ITEM 5. Other Events. On February 22, 2000, Carl Tooker left employment with the Company, effective that date. Mr. Tooker was Chairman, Chief Executive Officer and President of the Company. Also effective that date, Steve Lovell, ceased serving as Chief of Field Operations Officer, and will leave the Company by March 31, 2000. With Mr. Tooker's departure, the Company's Board will oversee operations and coordinate the search for a new Chief Executive Officer. The Board appointed Director John J. (Jack) Wiesner interim Chairman, Chief Executive Officer and President. Prior to becoming a Director of the Company, Mr. Wiesner served as Chairman of the Board of Directors and Chief Executive Officer of C.R. Anthony Company, a national retail apparel chain which the Company acquired in 1997. The other members of the Board of Directors have agreed to assist Mr. Wiesner as necessary. The Company is actively conducting a search for a new Chief Executive Officer. Mr. Tooker's departure follows an inquiry conducted by a Special Committee consisting of all of the non-management members of the Board of Directors, which reviewed certain transactions between the Company and Mr. Tooker. The effects of the transactions reviewed have been reflected in the Company's results for prior periods, and the Committee believes they are not material to the financial condition or operations of the Company. However, these transactions had not been properly reported to the Company's Board of Directors. Specifically, the Special Committee determined that the Company purchased Mr. Tooker's personal residence in 1997 at a price specified by him, and assumed all liability for the property, including upkeep and existing debt payments, until it was sold in 1999. The Company sustained a loss of $806,556 as a result of this transaction. Although the payment of these funds has been reflected in the Company's books and records, this transaction has not been previously disclosed in prior filings with the SEC, nor was it discussed with or approved by the Board of Directors. In another transaction, it was determined that in May, 1997 the Company entered into a severance agreement and a separate consulting contract in connection with the separation of an employee who shortly thereafter became Mr. Tooker's spouse. The Company recorded in its books and records payments to or for the benefit of his spouse beginning in May, 1997, and ending in August 1998, totaling $608,317.48, without the knowledge or approval of the Board of Directors. The Special Committee also determined that while employed by the Company in 1996 and 1997, this employee entered into transactions with a company with whom her sister was believed to be affiliated, in which the Company paid a total of $313,260 for purchases of clothing inventory. The Special Committee did not find any overcharges with respect to the inventory purchases. Demand has been made upon Mr. Tooker to reimburse the Company for the unauthorized payments regarding his personal residence and the severance paid to his spouse. In addition, the Company has demanded repayment by Mr. Tooker of outstanding loans he obtained from the Company, with interest thereon, totaling approximately $1.1 million. Some of these loans are secured by collateral which includes securities of the Company. Mr. Tooker has not responded to the Company's demands. The Special Committee further determined that during the years 1997 through 1999, the Company maintained a contractual relationship with Stage Planning and Design, Inc. ("SPAD"), believed to be a wholly owned subsidiary of U.S. Builders, Inc., to manage the construction of store remodeling. Under the terms of this agreement, the Company was required to and did reimburse or pay direct all of SPAD's costs, including all payroll expenses. In 1997, the Company paid SPAD in excess of $2.4 million, and in 1998 in excess of $9.9 million. Until late 1999, Mr. Tooker's son-in-law was an officer and project manager for SPAD, whose compensation was included as a reimbursable expense billed to the Company during this time. Although the expenditures were recorded on the Company's books and records for the years in which they were accrued, the relationship involving Mr. Tooker's son-in-law was not previously discussed with and approved by the Board of Directors. A Press Release regarding Mr. Tooker's departure and certain other matters was issued by the Company on February 22, 2000 and was filed as Exhibit 99.1 to Form 8-K dated February 23, 2000. A press release regarding the Company announcing fourth quarter and full year 1999 results of operations and completion of $35.0 million senior revolving credit facility and certain other matters was issued by the Company on March 9, 2000 and is attached hereto as Exhibit 99.1. ITEM 7. Financial Statements and Exhibits. (a) Financial statements of business acquired. Not applicable. (b) Pro forma financial information. Not applicable. (c) Exhibits. 99.1 Press release dated March 9, 2000 issued by the Company. SIGNATURES 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. STAGE STORES, INC. March 9, 2000 /s/ James A. Marcum (Date) James A. Marcum Vice Chairman and, Chief Financial Officer EX-99.1 2 Exhibit 99.1 NEWS RELEASE CONTACT: Bob Aronson Director of Investor Relations (800) 579-2302 FOR IMMEDIATE RELEASE STAGE STORES, INC. ANNOUNCES FOURTH QUARTER AND FULL YEAR 1999 RESULTS AND COMPLETION OF $35.0 MILLION SENIOR REVOLVING CREDIT FACILITY -- Net Loss of $3.90 Per Share Includes Special Charges -- _______________________________________________________________ HOUSTON, TX, March 9, 2000 -- Stage Stores, Inc. (NYSE: SGE) today announced results for the fourth quarter and full year ended January 29, 2000. Net sales for the fourth quarter ended January 29, 2000 were $324.8 million as compared to $357.3 million for the same period last year. The decrease in sales primarily reflects the net reduction of 31 stores for the year and a 7.8% decline in comparable store sales during the quarter resulting from a weakness in the Company's sales during the holiday selling period. Net sales for the year ended January 29, 2000 were $1,121.6 million as compared to $1,173.5 million last year. Comparable store sales for the year decreased 7.0% The Company reported a net loss for the fourth quarter before extraordinary items of $109.1 million, or $3.88 per share, as compared to a net loss of $2.9 million, or $0.10 per share, for the same period last year. The results include certain one-time pretax charges aggregating $131.1 million. During the fourth quarter, the Company recorded an extraordinary item of $0.5 million in connection with the early retirement in November 1999 of the $30.0 million aggregate principal amount of SRI Receivables Purchase Co., Inc. 12.5% Notes. The net loss for the quarter after extraordinary items was $109.6 million, or $3.90 per share. The net loss for the year ended January 29, 2000 before extraordinary items and the cumulative effect of a change in accounting principle was $126.3 million, or $4.50 per share, as compared to net income of $3.7 million, or $0.13 per share on a diluted basis, for the comparable period last year. This year's results include certain one-time pretax charges aggregating $154.8 million. The net loss for the year after extraordinary items of $0.5 million and the cumulative effect of a change in accounting principle of $2.4 million was $129.1 million, or $4.61 per share. In commenting on the results, Jack Wiesner, the new interim Chief Executive Officer, stated, "Clearly, the fourth quarter concluded an extremely difficult and challenging year for the Company. Improving our execution and the profitability of the business is our top priority and the Board of Directors and the management team are committed to accomplishing this objective. We must make significant strides during the year in getting the key drivers of our business back on track, namely sales, merchandise margins and store level execution." James A. Marcum, Vice Chairman and Chief Financial Officer, commented, "In reviewing the components of our profit and loss statement for the fourth quarter, it is important to note the impact of the significant amount of pretax charges that were recorded during the quarter. Gross margin for the fourth quarter reflects a $54.0 million charge related to a lower cost or market reserve for inventory to be liquidated in connection with our store closure program and excess fall clearance inventory as well as an $8.0 million LIFO charge resulting from an overall decrease in the level of inventory. Selling, general and administrative ("SG&A") expenses for the fourth quarter reflect a $36.0 million write down of long-lived assets in accordance with Statement of Financial Accounting Standards No. 121; of this amount, $13.7 million relates to goodwill and other intangibles and the remaining amount relates to other long-lived assets. SG&A expenses for the fourth quarter also reflect a $2.8 million provision against certain miscellaneous receivables, $0.6 million associated with severance for the previously announced work force reduction program and $1.9 million associated with certain costs related to the refinancing of the Company's accounts receivable program completed in November 1999. "In addition to the special charges, gross margin for the quarter was negatively impacted by an increased level of promotional activity which increased our level of markdowns without generating enough incremental unit sales to offset the decline in the average price of units sold. SG&A expenses were also negatively impacted by an increase in costs associated with the Company's frozen pension plan of $0.9 million and increased advertising costs of $2.0 million." Mr. Marcum concluded, "The store opening and closure costs of $27.8 million for the fourth quarter reflect the costs associated with our previously announced store closure program for 2000." The Company also announced that it completed its new $35.0 million senior revolving credit facility. The new facility increases the current borrowing capacity of the Company to $235.0 million when combined with its existing $200.0 million revolving credit facilities. In addition, as previously announced, the Company's bank lending group amended certain financial covenants under its existing credit facilities for the fourth quarter of 1999 and the first three quarters of fiscal 2000. As a result of these amendments, the Company is in full compliance with the provisions of the credit agreement. In the process of obtaining these amendments and the increase in working capital availability, the Company experienced a disruption of its spring merchandise receipt flows during the early part of the first quarter which may have an impact on the Company's first quarter performance. With the increase in liquidity and the modifications to the Company's financial covenants, the Company is currently receiving significant trade support. Mr. Wiesner concluded, "I want to reiterate that the Board of Directors and the management of Stage are all firmly committed to the Company's concept. We strongly believe that our difficulties lie in execution issues. We will take those tough, but necessary, actions that are needed to improve the future performance of the Company." The Company is actively conducting a search for a new CEO and has retained an executive recruiting firm to assist in the search effort. Stage Stores, Inc. brings nationally recognized brand name apparel, accessories, cosmetics and footwear for the entire family to small towns and communities throughout the United States. The company operated 648 stores in 33 states at the end of the fourth quarter, primarily under the Stage, Bealls and Palais Royal trade names. Any statements in this press release that may be considered forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are discussed in periodic reports filed by the Company with the Securities and Exchange Commission that the Company urges investors to consider. (Tables to Follow) Stage Stores, Inc. Consolidated Condensed Statement of Operations (in thousands, except per share amounts) (unaudited) Three Months Ended Twelve Months Ended 1/29/00 1/30/99 1/29/00 1/30/99 Net sales $324,801 $357,349 $1,121,567 $1,173,547 Cost of sales and related buying, occupancy and distribution expenses 321,934 267,756 897,117 839,238 Gross profit 2,867 89,593 224,450 334,309 Selling, general and administrative expenses 121,390 76,854 313,212 271,477 Store opening and closure program costs 27,844 5,281 44,986 10,192 Operating income (loss) (146,367) 7,458 (133,748) 52,640 Interest, net 11,685 12,187 48,634 46,471 Income (loss) before income tax, extraordinary item and cumulative effect of change in accounting principle (158,052) (4,729) (182,382) 6,169 Income tax expense (benefit) (48,935) (1,795) (56,129) 2,455 Income (loss) before extraordinary item and cumulative effect of a change in accounting principle (109,117) (2,934) (126,253) 3,714 Extraordinary item - early retirement of debt, net of tax (457) -- (457) -- Cumulative effect of change in accounting principle - reporting costs of start-up activities, net of tax -- -- (2,402) -- Net income (loss) $(109,574) $(2,934) $(129,112) $3,714 Basic earnings (loss) per common share data: Basic earnings (loss) per common share before extraordinary item and cumulative effect of change in accounting principle $(3.88) $(0.10) $(4.50) $0.13 Extraordinary item - early retirement of debt, net of tax (0.02) -- (0.02) -- Cumulative effect of change in accounting principle - reporting costs of start-up activities, net of tax -- -- (0.09) -- Basic earnings (loss) per common share $(3.90) $(0.10) $(4.61) $0.13 Basic weighted average common shares outstanding 28,084 27,954 28,028 27,885 Diluted earnings (loss) per common share data: Diluted earnings (loss) per common share before extraordinary item and cumulative effect of change in accounting principle $(3.88) $(0.10) $(4.50) $0.13 Extraordinary item - early retirement of debt, net of tax (0.02) -- (0.02) -- Cumulative effect of change in accounting principle - reporting costs of start-up activities, net of tax -- -- (0.09) -- Diluted earnings (loss) per common share $(3.90) $(0.10) $(4.61) $0.13 Diluted weighted average common shares outstanding 28,084 27,954 28,028 28,428 Comparable store sales data (7.8%) (5.7%) (7.0%) (3.0%) Stage Stores, Inc., Consolidated Condensed Balance Sheet (in thousands) (unaudited) 1/29/00 1/30/99 ASSETS Cash and cash equivalents $20,179 $12,832 Undivided interest in accounts receivable trust 41,600 69,816 Merchandise inventories, net 261,104 341,316 Other current assets 34,707 84,473 Total current assets 357,590 508,437 Fixed assets, net 182,782 233,263 Goodwill, net 69,856 92,551 Other assets 94,437 23,429 $704,665 $857,680 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $40,955 $82,779 Other current liabilities 63,950 52,706 Current portion of long-term debt including credit facilities 9,830 4,814 Total current liabilities 114,735 140,299 Long-term debt including credit facilities 492,393 487,968 Other long-term liabilities 19,726 25,021 Total liabilities 626,854 653,288 Stockholders' equity 77,811 204,392 $704,665 $857,680 Stage Stores, Inc. Consolidated Condensed Statement of Cash Flows (in thousands) (unaudited) Twelve Months Ended 1/29/00 1/30/99 Cash flows from operating activities: Net income (loss) $(129,112) $3,714 Adjustments to net income: Depreciation and amortization 99,027 33,474 Other (53,337) 2,371 Amortization of debt issue costs and accretion of discount 4,184 3,715 Changes in working capital 100,339 (58,784) Net cash provided by (used in) operating activities 21,101 (15,510) Cash flows from investing activities: Additions to fixed assets (19,237) (88,719) Net cash used in investing activities (19,237) (88,719) Cash flows from financing activities: Proceeds from working capital facility 43,000 96,300 Proceeds from issuance of common stock 128 955 Payments on long-term debt (34,813) (2,596) Additions to debt issue costs (2,832) (913) Net cash provided by financing activities 5,483 93,746 Net increase (decrease) in cash and cash equivalents 7,347 (10,483) Cash and cash equivalents: Beginning of period 12,832 23,315 End of period $ 20,179 $ 12,832 -----END PRIVACY-ENHANCED MESSAGE-----