-----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, LKaZ4gJ/Dhekokj0jETyPWY/tPDCxmUoI4vkPSCC/8RaC+BbSsqwF7jsMbmX18r0 oPHIwTUWDa2jnfpq75CsnA== 0000950154-97-000197.txt : 19970520 0000950154-97-000197.hdr.sgml : 19970520 ACCESSION NUMBER: 0000950154-97-000197 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970201 FILED AS OF DATE: 19970519 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: STRAWBRIDGE & CLOTHIER CENTRAL INDEX KEY: 0000094855 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DEPARTMENT STORES [5311] IRS NUMBER: 231131660 STATE OF INCORPORATION: PA FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-01308 FILM NUMBER: 97611493 BUSINESS ADDRESS: STREET 1: 801 MARKET ST CITY: PHILADELPHIA STATE: PA ZIP: 19107-3199 BUSINESS PHONE: 2156296779 MAIL ADDRESS: STREET 1: 801 MARKET STREET CITY: PHILADELPHIA STATE: PA ZIP: 19107-3199 10-K 1 STRAWBRIDGE & CLOTHIER -- FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED FEBRUARY 1, 1997 ---------------- or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ___________ Commission File Number 0-1308 ------------ STRAWBRIDGE & CLOTHIER ------------------------------------------------------ (Exact name of registrant as specified in its charter) Pennsylvania 23-1131660 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 801 Market Street Philadelphia, Pennsylvania 19107-3199 ---------------------------------------- ------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (215) 629-6460 -------------- Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered None None ----------------------------- ---------------------------- Securities registered pursuant to Section 12(g) of the Act: Series A Common Stock, par value $1 per share ------------------------------------------------- (Title of class) 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. YES / X / NO / / Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. YES / X / NO / / The aggregate market value of the Series A Common Stock and the Series B Common Stock, par value $1 per share, of the registrant held by nonaffiliates of the registrant as of April 30, 1997 was $154,158,584. The number of shares of Series A Common Stock, par value $1 per share, of the registrant outstanding at April 30, 1997 was 10,602,196. The number of shares of Series B Common Stock, par value $1 per share, of the registrant outstanding at April 30, 1997 was 33,988. DOCUMENTS INCORPORATED BY REFERENCE ----------------------------------- Portions of the 1996 Annual Report to shareholders are incorporated by reference in Part II. PART I ------ Item 1. Business. --------- Strawbridge & Clothier (the "Company") is a Pennsylvania corporation. Prior to July 18, 1996, the Company operated 13 department stores under the Strawbridge & Clothier name, 26 discount stores under the Clover name in Pennsylvania, New Jersey and Delaware, and one Home Furnishings store in northern Delaware. The Company is the successor to a business begun in 1868. On April 4, 1996, the Board of Directors of the Company adopted a resolution providing for the voluntary dissolution of the Company in accordance with a Plan of Reorganization and Liquidation (the "Plan of Liquidation") to be effected pursuant to the asset disposition transactions described below. The shareholders of the Company approved the voluntary dissolution of the Company in accordance with the Plan of Liquidation on July 15, 1996. On July 18, 1996, the Company completed the closing pursuant to an asset purchase agreement with The May Department Stores Company ("May") for the sale of substantially all of the assets of the Company's Department Store Division in exchange for May stock and the assumption by May of certain Department Store Division liabilities. The Company received a total of 4,454,229 shares of May common stock in accordance with the agreement. On August 28, 1996, the Company completed the sale of 23 of the Company's 26 Clover stores to Kimco Realty Corporation ("Kimco"), Kohl's Department Stores, Inc. ("Kohl's"), VC Retailers, Inc., and National Wholesale Liquidators of Philadelphia, Inc. for approximately $35.5 million. At closing, approximately $12.0 million of the Company's applicable mortgage notes, accrued interest, and closing costs were paid, and the Company received approximately $19.0 million in cash. An additional approximately $4.5 million was placed into a claims administration trust account. On July 10, 1996, the Company entered into agreements with Gordon Brothers Partners, Inc. ("Gordon Brothers") for the sale of the inventory of all, and the operation of certain, Clover stores. In connection with the inventory sale, the Company received approximately $63.4 million in proceeds. The agreements also authorized Gordon Brothers to liquidate the Clover fixtures. Proceeds from such fixture sales occurring thus far have been remitted to the Company, net of deduction of compensation payable to Gordon Brothers. From August 4, 1996 through February 1, 1997, the Company, through an operating agreement with Gordon Brothers, operated three Clover stores located in Penrose Plaza, Mercerville and Shore Mall, which were not sold as part of the Kimco and Kohl's transaction referred to above. On January 2, 1997, the Company repurchased the remaining inventory and resumed responsibility for ongoing operations. The Company completed sale of the Penrose Plaza store in February 1997, and closed the store on May 1, 1997 after a liquidation sale. The Company is continuing to operate the Clover stores at Mercerville and Shore Mall and is trying to line up substitute tenants or make other arrangements for these two remaining stores. Gordon Brothers is continuing the operating management of these stores under its agreement with the Company. The Company has commenced a going out of business sale at Mercerville. As of May 1, 1997, the Company had 118 full time employees. The Company is in the process of completing the voluntary dissolution of the Company pursuant to the Plan of Reorganization and Liquidation. The Company is disposing of certain of its remaining assets and satisfying remaining liabilities and is continuing to operate its Clover stores at Mercerville and Shore Mall. As a final step in the liquidation, the Company will transfer any remaining assets, including a portion of its May shares, to a liquidating 1 trust. Such transfer to the liquidating trust will occur by July 18, 1997. The liquidating trust will succeed to all of the then remaining assets of the Company including a portion of its May shares as a contingency reserve, and any liabilities of the Company. The sole purpose of the liquidating trust will be to liquidate on terms satisfactory to the liquidating trustees and to distribute any assets in the trust after paying any remaining liabilities. The shareholders of the Company at the time of the establishment of the liquidating trust will be the beneficiaries of any distributions from the liquidating trust. The liquidating trust will terminate upon the complete distribution of the liquidating trust's assets. The Company intends to make a substantial initial partial distribution of May shares to its shareholders on or before the time of the transfer of any remaining assets to a liquidating trust, which will occur by July 18, 1997. A final distribution of remaining May shares, if any, will be made at the termination of the liquidating trust, which is estimated to occur by July 1999. Item 2. Properties. ----------- As of May 1, 1997, the Company continues to lease two Clover store properties at Mercerville in Mercer County, New Jersey and at Shore Mall in Atlantic County, New Jersey, each of which is approximately 86,000 square feet. The Company also owns 85.5 acres of undeveloped land in Hopewell Township, New Jersey. Item 3. Legal Proceedings. ------------------ In connection with its voluntary dissolution, the Company, as required by Pennsylvania Business Corporation Law ("PBCL"), notified all known entities having claims against the Company and also served public notice of its planned dissolution. These notices requested entities to provide sufficient detail to enable the Company to evaluate the substance of any claims against the Company. To the extent the Company rejected any claims in accordance with PBCL, such claim is permanently barred unless the claimant whose claim was rejected had commenced an action within 90 days of the Company's mailing of the rejection notice. The Company has been named as a defendant in several actions related to its dissolution. In one of those actions, the Company's Directors were also named as defendants. In another action, the plaintiffs seek to enjoin the distribution of May shares to the Company s shareholders. While management believes that these actions are without merit and that adequate accruals have been established in the accompanying consolidated financial statements to provide for any costs that may be incurred with respect to these contingencies, there can be no assurance as to the time of payment or that the ultimate settlement of these claims will not be higher or lower than the amounts recorded. Item 4. Submission of Matters to a Vote of Security Holders. ---------------------------------------------------- This item is not applicable because there were no matters submitted to a vote of security holders during the fourth quarter of fiscal year 1996. Executive Officers of the Registrant. - ------------------------------------- Office Held Name Age Office(1) Since(2) - ---- --- --------- -------- Francis R. Strawbridge, III(3) 59 Chairman of the Board 1984 Peter S. Strawbridge(3) 58 President 1979 Warren W. White 65 Executive Vice President 1979 2 Office Held Name Age Office(1) Since(2) - ---- --- --------- -------- Steven L. Strawbridge(3) 53 Vice President, Treasurer and Secretary 1982 Ronald B. Avellino 58 Vice President 1987 Alexander B. Jervis 53 Vice President 1992 Thomas S. Rittenhouse 55 Vice President 1978 David W. Strawbridge(3) 57 Vice President 1978 __________ (1) Each executive officer has been employed by the Company as an executive officer for at least the past five years. (2) The executive officers of the Company are elected annually to hold office until the annual organization meeting of the Board of Directors and until their respective successors shall have been duly elected and qualified. (3) Peter S. Strawbridge and Steven L. Strawbridge are brothers and are first cousins of Francis R. Strawbridge, III and David W. Strawbridge, who also are brothers. 3 PART II ------- Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters. ----------------------------------------------------- The Company's Series A Common Stock is traded on the Nasdaq National Market. There is no trading market for Series B Common Stock but it is readily convertible at any time into Series A Common Stock on a share-for-share basis. The following table indicates the range of high and low price quotations for the Series A Common Stock by quarter during the last two fiscal years, as obtained through Nasdaq and the quarterly cash dividends per common share. Cash Dividends Per Share ----------------------------- Range of High and Low Price Quotations Series A Series B ------------------------------ -------------- ------------ Fiscal Quarter 1996 1995 1996 1995 1996 1995 - -------- First. . $17.75 $28.25 $19.00 $22.75 $0.275 $0.275 $0.25 $0.25 Second . 15.25 18.75 18.50 21.50 0.275 0.275 0.25 0.25 Third. . 16.75 20.88 14.13 19.75 0.275 0.275 0.25 0.25 Fourth . 14.50 17.75 18.00 25.25 - 0.275 - 0.25 Item 6. Selected Financial Data. ------------------------ The following table sets forth, for the periods and dates indicated, selected financial data derived from the financial statements of the Company. This data should be read in conjunction with the financial statements of the Company and related notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations. 4
FIVE-YEAR FINANCIAL SUMMARY (amounts in thousands, except per share data) 1996(1) 1995(2) 1994 1993 1992 -------- -------- ---------- -------- -------- OPERATING RESULTS Net Sales ..............$392,714 $980,598 $1,003,524 $984,615 $967,794 Cost of Sales .......... 316,813 746,473 745,251 733,901 718,582 Interest Expense ....... 7,917 18,964 19,551 20,909 21,446 Earnings (Loss) Before Income Taxes and Cumulative Effect of Accounting Changes................ (67,684) (13,285) 30,090 26,829 27,189 Income Taxes (Benefit).. (19,210) (4,498) 10,058 9,102 9,169 Earnings (Loss) Before Cumulative Effect of Accounting Changes..... (48,474) (8,787) 20,032 17,727 18,020 Net Earnings (Loss)..... (48,474) (8,787) 20,032 17,727 1,170(4) OTHER OPERATING DATA Depreciation............$ 14,798 $ 31,300 $ 29,587 $ 28,829 $ 28,322 DIVIDENDS Cash Dividends on Common Stock...........$ 8,655 $ 11,295 $ 11,147 $ 10,963 $ 10,502 Stock Dividends on Common Stock........... -- -- -- 3% 3% PER SHARE OF COMMON STOCK(3) Earnings (Loss) Before Cumulative Effect of of Accounting Changes..$ (4.56) $ (.83) $ 1.92 $ 1.71 $ 1.76 Net Earnings (Loss)..... (4.56) (.83) 1.92 1.71 .11(4) Cash Dividends on Series A Common Stock.. .83 1.10 1.10 1.09 1.07 Cash Dividends on Series B Common Stock.. .75 1.00 1.00 .99 .96 Book Value.............. 16.51 23.09 25.08 24.28 23.68
- ------------ (1) Operating results, other operating data and earnings per share reflect amounts for the 26 week period through August 3, 1996, the close of the Company's second fiscal quarter, the date on which the Company began reporting on the liquidation basis of accounting. Cash dividends, cash dividends per share, book value and financial data are as of or for the year ended February 1, 1997. (2) 53-week fiscal year. (3) Weighted average shares outstanding were: 1996--10,619; 1995--10,531; 1994--10,426; 1993--10,324; 1992--10,216. (4) Includes cumulative effect adjustments relating to accounting changes for income taxes ($9,750 benefit; $.95 per share) and retiree health care benefits ($26,600 charge; $2.60 per share) and reduced cost of sales of $3,948 as a result of a change in LIFO accounting method, resulting in an after-tax benefit of $2,606 or $.26 per share. 5 FINANCIAL DATA Working Capital.........$ N/A $119,532 $ 201,464 $209,581 $212,514 Property, Fixtures and Equipment--Net......... 5,075 329,392 308,161 300,368 307,158 Total Assets............ 239,091 575,814 639,792 663,052 653,939 Long-Term Debt.......... N/A 129,358 161,442 162,254 171,617 Capital Lease Obligations............ 1,931 35,739 40,848 43,554 52,030 Redeemable Preferred Stock.................. -- -- 116 296 474 Shareholders' Equity.... N/A 245,059 262,352 252,202 242,839 Net Assets in Liquidation............ 175,639 -- -- -- -- Number of Common Shares Outstanding..... 10,636 10,614 10,462 10,386 9,957 Square Feet of Store Space............ 255 6,007 5,744 5,744 5,744 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. --------------------------------------------------------------- The information appearing in the section captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations" from the portions of the Company's 1996 Annual Report to Shareholders filed as Exhibit 13 to this Form 10-K is incorporated herein by reference. Item 8. Financial Statements and Supplementary Data. -------------------------------------------- The information appearing in the sections captioned "Report of Ernst & Young LLP, Independent Auditors", "Consolidated Statement of Net Assets in Liquidation," "Consolidated Statement of Changes in Net Assets in Liquidation," "Consolidated Balance Sheet," "Consolidated Statements of Shareholders' Equity," "Consolidated Statements of Operations," "Consolidated Statements of Cash Flows" and "Notes to Consolidated Financial Statements," from the portions of the Company's 1996 Annual Report to shareholders filed as Exhibit 13 to this Form 10-K is incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. --------------------------------------------------------------- This item is not applicable. 6 PART III Item 10. Directors and Executive Officers of the Registrant. --------------------------------------------------- Directors of the Registrant - --------------------------- DIRECTOR NAME PRINCIPAL OCCUPATION AGE SINCE - ----------------------------- -------------------------------- --- -------- Jennifer S. Braxton ......... Retired ........................ 34 1994 Isaac H. Clothier, IV ....... Attorney ....................... 64 1975 Thomas B. Harvey, Jr. ....... Attorney ....................... 61 1988 Paul E. Shipley ............. Retired ........................ 67 1988 David W. Strawbridge ........ Vice President.................. 57 1971 Francis R. Strawbridge, III.. Chairman of the Board .......... 59 1968 Peter S. Strawbridge ........ President ...................... 58 1968 Steven L. Strawbridge ....... Vice President, Treasurer and Secretary ................... 53 1975 Natalie B. Weintraub ........ Retired ........................ 68 1994 Warren W. White ............. Executive Vice President ....... 65 1981 Each of the directors indicated above as being employed by the Company has been so employed during the past five years. Ms. Braxton was an Assistant Advertising Director for more than five years before July 1996. Mr. Harvey is an attorney and has been in practice since 1963. Until her retirement from the Company in 1994, Mrs. Weintraub was Vice President and General Merchandise Manager, Department Stores since 1976. Mr. Clothier has been a partner of Dechert, Price & Rhoads since 1966. Mr. Shipley retired in 1993 as a Vice President of Wilmington Trust Company, where he was employed since 1972, and he continues to be active in civic and community affairs. Peter S. Strawbridge and Steven L. Strawbridge are brothers and are first cousins of Francis R. Strawbridge, III and David W. Strawbridge who also are brothers. Each is a first cousin of Mr. Harvey and Mr. Shipley who also are first cousins. Jennifer S. Braxton is the daughter of Peter S. Strawbridge and the niece of Steven L. Strawbridge. Francis R. Strawbridge, III is a director of Mellon PSFS. Peter S. Strawbridge is a director of CoreStates Financial Corp. The required information as to executive officers is set forth in Part I hereof and incorporated herein by reference. 7 Item 11. Executive Compensation. ----------------------- The following table sets forth certain information concerning compensation paid for the Company's last three fiscal years. SUMMARY COMPENSATION TABLE
LONG- TERM COMPEN- ANNUAL COMPENSATION SATION ----------------------------- ------- SECUR- OTHER ITIES ALL ANNUAL UNDER- OTHER NAME AND COMPEN- LYING COMPEN- PRINCIPAL POSITION YEAR SALARY BONUS SATION OPTIONS SATION(1) - ---------------------------- ---- -------- ----- ------ ------- --------- Peter S. Strawbridge........ 1996 $340,000 $0 $0 0 $21,500 President and Co-Chief 1995 $340,000 $0 $0 0 $ 1,219 Executive Officer 1994 $310,000 $0 $0 0 $ 1,780 Francis R. Strawbridge, III. 1996 $340,000 $0 $0 0 $52,000 Chairman of the Board 1995 $340,000 $0 $0 0 $ 1,108 and Co-Chief Executive 1994 $300,000 $0 $0 0 $ 1,892 Officer Thomas S. Rittenhouse....... 1996 $190,000 $134,000(2) $0 0 $33,049 Vice President 1995 $180,000 $0 $0 0 $ N/A 1994 $170,000 $0 $0 0 $ N/A Warren W. White............. 1996 $300,000 $0 $0 0 $18,075 Executive Vice President 1995 $300,000 $0 $0 0 $ 921 1994 $275,000 $0 $0 0 $ 2,079 Robert G. Muskas(3)......... 1996 $205,000 $0 $0 0 $ 1,281 Executive Vice President 1995 $192,500 $0 $0 0 $ 1,000 1994 $180,000 $0 $0 0 $ 2,000
- ------------ (1) Amounts contributed or accrued by the Company under the Company's 401(k) Retirement Savings Plan, which was terminated in June 1996, except for 1996 amounts paid for accrued vacation to P.S. Strawbridge ($19,800), F.R. Strawbridge ($50,300), T.S. Rittenhouse ($31,400) and W.W. White ($16,200). (2) Amount paid as wind down bonus for services during dissolution of the Company. (3) Ceased being an executive officer in July 1996. EMPLOYMENT AGREEMENTS AND CONSULTING ARRANGEMENT Each of the eight remaining executive officers of the Company has an employment contract with the Company terminable by either party triannually, which establishes the employee's basic annual rate of compensation, subject to periodic increases and bonuses. 8 STOCK OPTIONS There were no stock options granted in fiscal year 1996 to the executive officers named in the Summary Compensation Table. Set forth in the table below is information concerning stock options exercised during the fiscal year ended February 1, 1997 and the value of stock options held at the end of the fiscal year ended February 1, 1997 by executive officers named in the Summary Compensation Table. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT FY-END OPTIONS AT FY-END -------------------- -------------------- SHARES ACQUIRED ON VALUE EXERCIS- UNEXERCIS- EXERCIS- UNEXERCIS- NAME EXERCISE REALIZED ABLE ABLE ABLE ABLE - ---- ----------- -------- -------- ---------- -------- ---------- Peter S. Strawbridge 0 $0 21,218 0 $0 N/A Francis R. Strawbridge, III 0 0 21,218 0 0 N/A Thomas S. Rittenhouse 0 0 5,304 0 0 N/A Warren W. White 0 0 10,609 0 0 N/A Robert G. Muskas 0 0 8,401 0 0 N/A
Item 12. Security Ownership of Certain Beneficial Owners and Management. --------------------------------------------------------------- The following table sets forth the shareholdings as of April 30, 1997 of persons owning beneficially more than 5% of the outstanding shares of Series A Common Stock of the Company, the directors, certain executive officers and all executive officers and directors as a group. 9
AMOUNT OWNED BENEFICIALLY ---------------------------------------------- SERIES A COMMON STOCK ---------------------------------------------- SOLE SHARED PERCENT VOTING VOTING OF AND OR SERIES A INVESTMENT INVESTMENT COMMON NAME OF BENEFICIAL OWNER POWER POWER TOTAL STOCK(1) - ------------------------ ---------- ---------- ------- --------- MORE THAN 5% HOLDERS (3)(4) Estate of G. Stockton Strawbridge... 64,648 655,638 720,286 6.8% c/o Francis J. Mirabello Morgan, Lewis & Bockius LLP 2000 One Logan Square Philadelphia, PA 19103-6993 (3)(6) PNC Bank, National.................. 56,448 862,941 919,389 8.7 Association(5) Broad and Chestnut Streets Philadelphia, PA 19101 Farallon Partners, L.L.C.(7)........ 2,327,700 2,327,700 22.0 One Maritime Plaza, Suite 1325 San Francisco, CA 94111 (3) Peter S. Strawbridge................ 18,233 659,453 677,686 6.4 8060 Goshen Road Newtown Square, PA 19073 DIRECTORS Jennifer S. Braxton................. 102 102 (6) Isaac H. Clothier, IV...............116,180 109,076 225,256 7.1 (8) Thomas B. Harvey, Jr. .............. 30,292 136,000 166,292 1.6 (2) Paul E. Shipley..................... 79,307 211,557 290,864 2.11 David W. Strawbridge................ 29,908 29,908 (8) Francis R. Strawbridge, III......... 33,946 219,701 253,647 2.4 (3) Peter S. Strawbridge ............... 18,233 659,453 677,686 6.4 (2) Steven L. Strawbridge .............. 22,860 211,001 233,861 Natalie B. Weintraub................ 1,896 1,896 Warren W. White..................... 7,288 7,288
10
CERTAIN EXECUTIVE OFFICERS Robert G. Muskas.................... 1,497 1,497 Thomas S. Rittenhouse............... 2,521 2,521 All executive officers and directors as a group (13 persons).....................365,784 1,209,787 1,575,571 14.9
(1) Percentages of less than 1% are not shown. There were 10,602,196 shares of Series A Common Stock outstanding on April 30, 1997. (2) Includes 211,001 shares as to which P.E. Shipley and S.L. Strawbridge share voting and investment power. (3) Includes 655,441 shares as to which the estate of G.S. Strawbridge, P.S. Strawbridge and PNC Bank, National Association share voting and investment power. (5) The information relating to this person is presented in reliance upon information set forth in a Schedule 13G filed with the Securities and Exchange Commission reporting as of December 31, 1996. Does not include any shares held by the bank in purely custodial accounts. (6) Includes 94,302 shares as to which I.H. Clothier, IV and PNC Bank, National Association share voting and investment power. (7) The information relating to this person is presented in reliance upon information set forth in a Schedule 13D filed with the Securities and Exchange Commission reporting as of April 29, 1997. Includes shares owned beneficially by the following: Farallon Capital Partners, L.P., Farallon Capital Institutional Partners, L.P., Farallon Capital Institutional Partners II, L.P., Farallon Capital Institutional Partners III, L.P., Tinicum Partners, L.P., Farallon Capital Management, L.L.C., Farallon Capital Partners, L.L.C., Enrique H. Boilini, David I. Cohen, Joseph F. Downes, Fleur E. Fairman, Jason M. Fish, Andrew B. Fremder, William F. Mellin, Stephen L. Millham, Meridee A. Moore and Thomas F. Steyer. (8) Includes 136,000 shares as to which F.R. Strawbridge, III and T.B. Harvey, Jr. share voting and investment power with another co-trustee. The numbers shown exclude shares of Series A Common Stock which the individual or members of the group have the right to acquire within 60 days upon the exercise of stock options, as follows: F.R. Strawbridge, III, 21,218 shares; S.L. Strawbridge, 10,609 shares; D.W. Strawbridge, 10,609 shares; P.S. Strawbridge, 21,218 shares; W.W. White, 10,609 shares; R.G. Muskas, 8,401 shares; T.S. Rittenhouse, 5,304 shares; and all executive officers and directors as a group (13 persons) a total of 95,527 shares. In computing the percent of each series owned by an individual or the group, the number of shares subject to options held by the individual or the group are deemed outstanding. 11 Item 13. Certain Relationships and Related Transactions. ----------------------------------------------- None. PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. ---------------------------------------------------------------- (a) All financial statements and schedules. --------------------------------------- A list of the financial statements and supporting schedule included in this Report appears on page F-1 hereof. (b) Reports on Form 8-K. -------------------- No reports on Form 8-K were filed during the last fiscal quarter of the fiscal year covered by this Report. (c) Exhibits. --------- (2.1) Asset Purchase Agreement, dated April 4, 1996, between the Company and The May Department Stores Company, as filed as Exhibit 2.1 to Form 10-K for the fiscal year ended February 3, 1996, is incorporated herein by reference. (2.2) Plan of Reorganization and Liquidation of Strawbridge & Clothier, as filed as Exhibit 2.1 to Form S-4 No. 333-05527 of The May Department Stores Company, is incorporated herein by reference. (2.3) Asset Purchase Agreement, dated May 3, 1996, between the Company and Kimco Realty Corporation, as filed as Exhibit 2.3 to Form S-4 No. 333-05527 of The May Department Stores Company, is incorporated herein by reference. (3)(i) Restated Articles of the Company filed on July 28, 1995 with the Department of State of the Commonwealth of Pennsylvania, as filed as Exhibit 3(i) to Form 10-K for the fiscal year ended February 3, 1996, are incorporated herein by reference. (ii) By-Laws, effective October 1, 1989, as filed as Exhibit 3(b) to Form 10-K for the fiscal year ended February 3, 1990, are incorporated herein by reference. (10.1) 1991 Stock Option Plan of Strawbridge & Clothier, as filed as Exhibit 10(c) to Form 10-K for the fiscal year ended February 1, 1992, is incorporated herein by reference.(**) (10.2) Form of Employment Agreement for executive officers of the Company as filed as Exhibit 10.4.1 to Form 10-K for the fiscal year ended January 30, 1993, is incorporated herein by reference.(**) (10.3) Form of Supplemental Agreement for the executive officers of the Company, as filed as Exhibit 10.4.3 to Form 10-K for the fiscal year ended February 3, 1996, is incorporated herein by reference.(**) 12 (10.4) Form of Supplemental Employment Agreement to Employment Agreement for the executive officers of the Company, as filed as Exhibit 10.4.4 to Form 10-K for the fiscal year ended February 3, 1996, is incorporated herein by reference.(**) (10.5) Strawbridge & Clothier Separation Pay Plan dated as of February 26, 1996, as filed as Exhibit 10.4.5 to Form 10-K for the fiscal year ended February 3, 1996, is incorporated herein by reference.(**) (13) Portions of the 1996 Annual Report to Shareholders, included as part of this Report. (23) Consent of Ernst & Young LLP. (27) Financial Data Schedule. - ------------ (**) Management contract or compensatory plan or arrangement required to be filed or incorporated by reference as an exhibit. 13 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. STRAWBRIDGE & CLOTHIER (Registrant) By /s/Francis R. Strawbridge, III ------------------------------ Francis R. Strawbridge, III Chairman of the Board Dated: May 19, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/Francis R. Strawbridge, III May 19, 1997 - --------------------------------------------- Francis R. Strawbridge, III Director and Chairman of the Board (co- principal executive officer) /s/Peter S. Strawbridge May 19, 1997 - --------------------------------------------- Peter S. Strawbridge Director and President (co-principal executive officer) /s/Warren W. White May 19, 1997 - --------------------------------------------- Warren W. White Director /s/Steven L. Strawbridge May 19, 1997 - --------------------------------------------- Steven L. Strawbridge Director /s/David W. Strawbridge May 19, 1997 - --------------------------------------------- David W. Strawbridge Director /s/Thomas S. Rittenhouse May 19, 1997 - --------------------------------------------- Thomas S. Rittenhouse Vice President (principal financial and accounting officer) S-1 /s/Jennifer S. Braxton May 19, 1997 - --------------------------------------------- Jennifer S. Braxton Director /s/Isaac H. Clothier, IV May 19, 1997 - --------------------------------------------- Isaac H. Clothier, IV Director /s/Thomas B. Harvey, Jr. May 19, 1997 - --------------------------------------------- Thomas B. Harvey, Jr. Director /s/Paul E. Shipley May 19, 1997 - --------------------------------------------- Paul E. Shipley Director /s/Natalie B. Weintraub May 19, 1997 - --------------------------------------------- Natalie B. Weintraub Director S-2 FORM 10-K -- ITEM 14(a)(1) and (2) LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE STRAWBRIDGE & CLOTHIER The following consolidated financial statements of Strawbridge & Clothier and subsidiaries and the report of independent auditors thereon, included in the 1996 Annual Report to Shareholders, are incorporated by reference in Item 8: Consolidated Statement of Net Assets in Liquidation - February 1, 1997. Consolidated Statement of Changes in Net Assets in Liquidation - August 4, 1996 through February 1, 1997. Consolidated Balance Sheet - February 3, 1996. Consolidated Statements of Shareholders' Equity - February 4, 1996 through August 3, 1996 and Fiscal years ended February 3, 1996, and January 28, 1995. Consolidated Statements of Operations - February 4, 1996 through August 3, 1996 and Fiscal years ended February 3, 1996, and January 28, 1995. Consolidated Statements of Cash Flows - February 4, 1996 through August 3, 1996 and Fiscal years ended February 3, 1996, and January 28, 1995. Notes to Consolidated Financial Statements The following consolidated financial statement schedule of Strawbridge & Clothier and subsidiaries is included herein: Schedule II--Valuation and Qualifying Accounts All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. F-1 Exhibit Index ------------- Exhibit No. Page No. - ----------- -------- (13) Portions of the 1996 Annual Report to Shareholders, included as part of this Report. (23) Consent of Ernst & Young LLP. (27) Financial Data Schedule. STRAWBRIDGE & CLOTHIER AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (in thousands) - ------------------------------------------------------------------------------ COL. A COL. B COL. C COL. D COL. E - ------------------------------------------------------------------------------ | | ADDITIONS | | | |------------------------| | | |(1) Charged |(2) Charged| | | Balance at |to Costs |to Other | |Balance | Beginning |and |Accounts - | Deductions |at End of DESCRIPTION | of Period |Expenses |Describe | - Describe |Period - ------------------------------------------------------------------------------ February 4, 1996 to August 3, 1996: - ------------------ Reserves and allowances deducted from asset accounts: Allowance for doubtful accounts $1,940 $ 4,865 $ -0- $ 6,805(1)(4) $ -0- ====== ======= ====== ======== ====== Fiscal year ended February 3, 1996: - ----------------- Reserves and allowances de- ducted from asset accounts: Allowance for doubtful accounts $5,544 $14,177 $ -0- $17,781(1)(2) $1,940 ====== ======= ====== ======== ====== Fiscal year ended January 28, 1995: - ----------------- Reserves and allowances de- ducted from asset accounts: Allowance for doubtful accounts $5,000 $10,281 $ -0- $ 9,737(1)(3) $5,544 ====== ======= ====== ======== ====== (1) Accounts written off during year, net of recoveries. (2) Includes $7,560 reclassified to accrued expenses to provide for estimated recourse obligations on accounts receivable sold. (3) Includes $1,756 reclassified to accrued expenses to provide for estimated recourse obligations on accounts receivable sold. (4) Elimination of reserve in connection with Plan of Reorganization and Liquidation and related sale of accounts receivable to the May Department Stores Company. EX-13 2 EXHIBIT 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - --------------------------------------------- On April 4, 1996, the Board of Directors of the Company adopted a resolution providing for the voluntary dissolution of the Company in accordance with a Plan of Reorganization and Liquidation (the "Plan of Liquidation") to be effected pursuant to the asset disposition involving certain transactions with The May Department Stores Company ("May") and Kimco Realty Corporation ("KIMCO") . The shareholders of the Company approved the voluntary dissolution of the Company in accordance with the Plan of Liquidation on July 15, 1996. RESULTS OF OPERATIONS - --------------------- As a result of the May and KIMCO agreements (See Notes 1 and 2 to the accompanying consolidated financial statements) and the related planned dissolution of the Company, the Company's going concern operations ceased on July 15, 1996, and the Company began reporting on the liquidation basis of accounting as of the close of its second fiscal quarter. Accordingly, the financial statements for the fiscal year ended February 1, 1997 reflect operating activity only through August 3, 1996. Sales for the 26 week operating period in fiscal 1996 were $392,714,000, a decrease of 60.0% from sales of $980,598,000 in fiscal 1995, a 53 week year. Fiscal 1995 sales had decreased 2.3% from sales of $1,003,524,000 in fiscal 1994, a 52 week year. The vast majority of the decrease between fiscal 1996 and 1995 is the result of the July 15, 1996 termination of the Company's going concern operations. Comparable period net sales for the department stores through July 15, 1996 and for the Clover stores through July 10, 1996 declined 5.9%, while comparable store sales declined 7.0% during the same period. The net loss for the 26 week operating period in fiscal 1996 was $48,474,000 compared to a net loss for fiscal 1995 of $8,787,000 and net earnings for fiscal 1994 of $20,032,000. The 1996 result can be attributed to a $34,686,000 net adjustment to the liquidation basis of accounting, as well as the decrease in sales and significantly greater markdowns as a result of the May and KIMCO transactions. Fiscal 1995 earnings decreased from fiscal 1994 as a result of the decreased sales and increased markdowns taken to clear seasonal inventory. Other income and deductions was $2,915,000 for the 26 week operating period in fiscal 1996 compared to $6,238,000 in fiscal 1995 and $3,265,000 in fiscal 1994. Fiscal 1995 included a $6,556,000 gain on the curtailment of the Company's pension plan and a $2,920,000 expense incurred in connection with the attempt to acquire six John Wanamaker stores. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) - --------------------------------------------------------- Costs and expenses as a percentage of sales and the effective tax rates were as follows: FISCAL PERIODS ENDED -------------------------------------- 8/3/96 2/3/96 1/28/95 (26 weeks) (53 weeks) (52 weeks) ---------- ---------- ---------- Cost of sales, including occupancy and buying costs .................. 80.7 76.1 74.3 Selling and administrative expenses, net of finance charges .............. 21.4 19.3 17.1 Depreciation ........................ 3.8 3.2 2.9 Interest ............................ 2.0 1.9 1.9 Provision for doubtful accounts...... 1.2 1.4 1.0 Effective tax rate (benefit) ........ (28.4) (33.9) 33.4 Cost of sales, including occupancy and buying costs, for the fiscal 1996 operating period reflect significantly greater markdowns as a result of the May and KIMCO transactions. Selling and administrative expenses, net of finance charge income reflect an increase due to new stores opened in fiscal 1995 and a reduction in finance charge income due to the sale of customer accounts receivable. Depreciation expense increased due to new stores opened in fiscal 1995. The effective tax rate for fiscal 1996 decreased since only benefits available through the utilization of net operating loss carrybacks were recognized. In connection with the Company's change to the liquidation basis of accounting as of August 3, 1996, assets have been valued at estimated net realizable values and liabilities have been reflected at their estimated settlement amounts, including estimated costs to be incurred during the period of liquidation. The Company has recorded an adjustment to liquidation basis of $34,686,000 which consists of (i) gain on the sale of certain of the Company's department store division net assets to May of $75,732,000, (ii) gain on the termination of the Company's retiree health care plan of $48,223,000, (iii) unrealized gain on the Company's investment in common stock of The May Department Stores Company of $12,075,000, (iv) loss on accrual of estimated costs associated with carrying out the plan of liquidation of $78,270,000, (v) loss of $60,416,000 on adjustment of remaining assets and liabilities to net realizable values, (vi) loss on the sale of certain of the Company's Clover division net assets to KIMCO of $30,730,000, and (vii) loss on the sale of the Company's Clover division inventory to Gordon Brothers Partners, Inc. of $1,300,000. The valuations of the assets and liabilities are based on management's estimates and assumptions as of the date of the financial statements; actual realization of the assets and settlement of liabilities could be higher or lower than the amounts indicated. Estimates used in the liquidation basis of accounting are forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, and there are a number of important factors that could cause actual results to differ from the estimates, including the period during which the remaining Clover stores will continue to operate, the ability to obtain substitute tenants, settlement amounts of claims and other liabilities to be paid in the liquidation, the amounts to be received for assets which have not yet been sold, and the time period necessary to complete the Plan of Reorganization and Liquidation. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) - --------------------------------------------------------- Estimated costs during the period of liquidation increased $8,400,000 from August 4, 1996 through February 1, 1997. Of this amount, $6,000,000 provides for the anticipated operating losses of the three remaining Clover locations operating after January 1, 1997, the date the Company resumed responsibility for the continuing operating requirements (See Note 2 to the accompanying consolidated financial statements). The remaining $2,400,000 increase represents the net change in other estimated assets and liabilities in liquidation. On February 26, 1997, the Company sold the Penrose Plaza Clover location and settled its related lease obligation. This store closed on May 1, 1997 after completion of a liquidation sale. The Company continues to negotiate the sale of property and assumption of the leases for the two remaining Clover locations. CASH PAYMENTS AND RECEIPTS DURING LIQUIDATION - --------------------------------------------- Payments made during the six months ended February 1, 1997 consisted primarily of the payoff of certain Clover mortgages in connection with the KIMCO settlement, negotiated settlements on the early termination of operating contracts, payment to May of the $9,200,000 condemnation award received in settlement of the Island Avenue distribution center, repurchase of the Clover stores' merchandise inventory on hand at December 31, 1996 from Gordon Brothers Partners, Inc., wages and benefits for the Company's severance plans, liquidation and winddown expenses, and the dividend paid to shareholders in November, 1996. Cash received during the six months ended February 1, 1997 consisted primarily of the proceeds of the KIMCO transaction, after deduction at closing of the Company's applicable mortgage notes outstanding, including interest and closing costs as well as certain escrow trust requirements, $5,000,000 of income tax recoverable, and $2,400,000 in cash dividends on the shares of May. FINANCIAL CONDITION AND LIQUIDITY - --------------------------------- Cash provided by operating activities for the 26 week operating period in fiscal 1996 was $22,800,000 compared to $121,800,000 in 1995 and $93,000,000 in 1994. Results for fiscal 1995 and 1994 include $95,000,000 and $50,000,000, respectively, from the Company's sale of its private label credit card accounts receivable (See Note 4 to the accompanying consolidated financial statements). The principal components of the fiscal 1996 amount are cash received from the sale of merchandise inventories to Gordon Brothers Partners, Inc. and customers, offset by payments of account payable and accrued expenses. The Company's capital expenditures were $5,700,000, $48,700,000 and $38,000,000 in fiscal years 1996, 1995 and 1994, respectively. Capital expenditures for 1996 represent amounts paid for projects started in fiscal 1995. Capital expenditures in 1995 included two new Clover stores, the new Concord home furnishings store, and renovations of the Concord department store and Center Square and Rising Sun Clover stores. In 1994, capital expenditures were for various renovations projects. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) - --------------------------------------------------------- Cash used for financing activities were $20,000,000, $56,700,000 and $50,400,000 for the 26 week operating period in 1996, and fiscal years 1995 and 1994, respectively. Amounts used in each period were for the payment of debt obligations and dividends on the Company's common stock. At the closing of the May transaction on July 18, 1996, outstanding amounts under the Company's credit facilities, including all mortgage notes payable on department store assets, were assumed by May. The aggregate amount, including accrued interest, was $147,300,000. At the KIMCO closing on August 26, 1996, the aggregate amount of all mortgage notes paid on the applicable Clover sites, including accrued interest and closing costs, was $12,000,000. In connection with the Liquidation, in August, 1996 the Company entered into a $25,000,000 revolving credit facility with First Union National Bank (See Note 5 to the accompanying consolidated financial statements). The outstanding balance of $12,200,000 under this facility was paid on March 6, 1997 from the proceeds of a $22,500,000 federal tax refund. Management believes that this credit facility, together with amounts received from the sale of remaining assets, including certain shares of May common stock, will be sufficient to provide the liquidity necessary to complete the Company's dissolution. Report of Ernst & Young LLP, Independent Auditors To the Shareholders of Strawbridge & Clothier We have audited the accompanying consolidated statement of net assets in liquidation of Strawbridge & Clothier (the "Company") as of February 1, 1997, the related consolidated statement of changes in net assets in liquidation for the period from August 4, 1996 through February 1, 1997, and the consolidated statements of operations, shareholders' equity, and cash flows for the period February 4, 1996 through August 3, 1996. In addition, we have audited the consolidated balance sheet as of February 3, 1996 and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the two years in the period ended February 3, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As described in Note 1 to the consolidated financial statements, the Company's shareholders approved a plan of Reorganization and Liquidation on July 15, 1996, and the Company commenced liquidation shortly thereafter. As a result, the Company changed its basis of accounting from the going concern basis to the liquidation basis and began reporting on the liquidation basis as of August 3, 1996. 1 In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated net assets in liquidation of Strawbridge & Clothier at February 1, 1997, the changes in its consolidated net assets in liquidation from August 4, 1996 through February 1, 1997, the results of its operations and its cash flows for the period February 4, 1996 through August 3, 1996, the financial position of Strawbridge & Clothier at February 3, 1996, and the results of its operations and its cash flows for each of the two fiscal years in the period ended February 3, 1996, in conformity with generally accepted accounting principles applied on the bases described in the preceding paragraph. /s/ Ernst & Young, LLP Philadelphia, Pennsylvania May 15, 1997 2 Strawbridge & Clothier Consolidated Statement of Net Assets in Liquidation February 1, 1997 (in thousands) ASSETS Restricted cash $ 5,078 Investment in The May Department Stores Company common stock 198,350 Merchandise inventories 5,505 Income taxes recoverable 22,996 Property, fixtures, and equipment 5,075 Other assets 2,087 -------- 239,091 LIABILITIES Outstanding checks in excess of bank balances 238 Accounts payable 874 Accrued expenses 16,462 Debt and capital lease obligations 14,131 Estimated costs during period of liquidation 8,047 Other liabilities 23,700 -------- 63,452 -------- Net assets in liquidation as of February 1, 1997 $175,639 ======== See accompanying notes. 3 Strawbridge & Clothier Consolidated Statement of Changes in Net Assets in Liquidation August 4, 1996 through February 1, 1997 (in thousands) Net assets in liquidation as of August 4, 1996 $191,173 Unrealized loss on investment in The May Department Stores Company common stock (4,454) Decrease in estimated number of The May Department Stores Company common shares to be received (2,191) Dividends received on The May Department Stores Company common stock 2,438 Dividends paid on common stock (per share: $.275 Series A; $.25 Series B) (2,922) Net change in estimated assets and liabilities (8,405) -------- (15,534) -------- Net assets in liquidation as of February 1, 1997 $175,639 ======== See accompanying notes. 4 Strawbridge & Clothier Consolidated Balance Sheet (Going Concern Basis) February 3, 1996 (in thousands) ASSETS Current assets: Cash and equivalents $14,253 Accounts receivable 45,058 Allowance for doubtful accounts (1,940) ------- 43,118 Merchandise inventories 154,009 Deferred income taxes 3,365 Income taxes recoverable 5,653 Prepaid expenses and other 9,534 Total current assets 229,932 Property, fixtures, and equipment--on the basis of cost: Land 20,311 Buildings and improvements 388,740 Store fixtures, furniture, and equipment 258,093 Allowance for depreciation (deduction) (342,052) -------- 325,092 Construction in progress 4,300 -------- 329,392 Other assets 16,490 -------- $575,814 ======== 5 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 63,494 Accrued expenses 30,153 Federal, state, and local taxes 3,116 Long-term debt and capital lease obligations due within one year 13,637 -------- Total current liabilities 110,400 Long-term debt--due after one year 129,358 Capital lease obligations--due after one year 35,739 Accrued retirement costs 48,518 Other liabilities 6,740 Series Preferred Stock--no par value: authorized--2,000,000 shares; none issued -- Shareholders' equity: Series A Common Stock--par value $1 a share: authorized 20,000,000 shares; issued and outstanding 7,473,841 shares 7,474 Series B Common Stock--par value $1 a share, convertible: authorized--20,000,000 shares; issued and outstanding--3,139,699 shares 3,140 Capital in addition to par value of shares 170,859 Retained earnings 63,586 -------- Total shareholders' equity 245,059 -------- $575,814 ======== See accompanying notes. 6 Strawbridge & Clothier Consolidated Statements of Shareholders' Equity (Going Concern Basis) (in thousands, except per share data)
CAPITAL IN SERIES A SERIES B ADDITION TO NET ASSETS COMMON COMMON PAR VALUE RETAINED IN STOCK STOCK OF SHARES EARNINGS LIQUIDATION TOTAL -------------------------------------------------------------------- Balance, January 29, 1994 $ 7,151 $ 3,235 $ 167,024 $ 74,792 $ -- $252,202 Net earnings 20,032 20,032 Cash dividends--common (per share: $1.10 Series A; $1.00 Series B) (11,147) (11,147) Cash dividends-- preferred (8) (8) Employee stock purchases 75 1,198 1,273 Conversions 65 (65) -- -------------------------------------------------------------------- Balance, January 28, 1995 7,291 3,170 168,222 83,669 -- 262,352 Net loss (8,787) (8,787) Cash dividends--common (per share: $1.10 Series A; $1.00 Series B) (11,295) (11,295) Cash dividends-- preferred (1) (1) Exercise of stock options, employee stock purchases, and contribution to Retirement Savings Plan 153 2,637 2,790 Conversions 30 (30) -- -------------------------------------------------------------------- Balance, February 3, 1996 7,474 3,140 170,859 63,586 -- 245,059 Net loss (48,474) (48,474) Cash dividends--common (per share: $.55 Series A; $.50 Series B) (5,733) (5,733) Exercise of stock options and employee stock purchases 22 299 321 Change from going concern to liquidation basis of accounting (7,496) (3,140) (171,158) (9,379) 191,173 -- -------------------------------------------------------------------- Balance, August 3, 1996 $ -- $ -- $ -- $ -- $191,173 $191,173 ====================================================================
7 See accompanying notes. Strawbridge & Clothier Consolidated Statements of Operations (Going Concern Basis) (in thousands, except share and per share data) FEBRUARY 4, 1996 YEAR ENDED TO -------------------------- AUGUST 3, FEBRUARY 3, JANUARY 28, 1996 1996 1995 ----------------------------------------- (26 weeks) (53 weeks) (52 weeks) Net sales $ 392,714 $ 980,598 $ 1,003,524 Other income, net of other deductions 2,915 6,238 3,265 ----------------------------------------- 395,629 986,836 1,006,789 Deduct: Cost of sales, including occupancy and buying costs 316,813 746,473 745,251 Selling and administrative expenses, net of finance charges 84,234 189,207 172,029 Depreciation 14,798 31,300 29,587 Interest 7,917 18,964 19,551 Provision for doubtful accounts 4,865 14,177 10,281 Net adjustment to liquidation basis of accounting 34,686 -- -- ----------------------------------------- 463,313 1,000,121 976,699 ----------------------------------------- (Loss) earnings before income taxes (benefit) (67,684) (13,285) 30,090 Income taxes (benefit) (19,210) (4,498) 10,058 ----------------------------------------- Net (loss) earnings $ (48,474) $ (8,787) $ 20,032 ========================================= (Loss) earnings per share $ (4.56) $ (.83) $ 1.92 ========================================= Average shares outstanding 10,618,659 10,531,149 10,426,277 See accompanying notes. 8 Strawbridge & Clothier Consolidated Statements of Cash Flows (Going Concern Basis) (in thousands) FEBRUARY 4, 1996 YEAR ENDED TO -------------------------- AUGUST 3, FEBRUARY 3, JANUARY 28, 1996 1996 1995 ----------------------------------------- (26 weeks) (53 weeks) (52 weeks) CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) earnings $ (48,474) $ (8,787) $ 20,032 Adjustments to reconcile net (loss) earnings to cash flows from operating activities: Net adjustment to liquidation basis of accounting 34,686 -- -- Depreciation 14,798 31,300 29,587 Deferred income taxes (benefit) 4,827 (407) (5,377) Pension curtailment gain -- (6,556) -- Sale of accounts receivable -- 95,000 50,000 Changes in operating assets and liabilities, exclusive of adjustments to liquidation basis: Accounts receivable 5,407 23,825 (11,510) Merchandise inventories 117,072 (10,219) (658) Accounts payable and accrued expenses (82,323) 9,482 3,303 Federal, state, and local taxes (14,154) (17,895) 4,154 Other (9,045) 6,090 3,481 ----------------------------------------- Total 22,794 121,833 93,012 ----------------------------------------- NET CASH USED FOR INVESTING ACTIVITIES Acquisition of property, fixtures, and equipment (5,731) (48,692) (37,970) Changes in other assets (403) (3,764) (5,917) ----------------------------------------- Total (6,134) (52,456) (43,887) ----------------------------------------- NET CASH USED FOR FINANCING ACTIVITIES Long-term borrowings -- -- 5,000 Payment of long-term debt and capital lease obligations (14,624) (37,320) (11,147) Decrease in short-term notes payable -- (6,500) (37,000) Net proceeds from stock transactions 321 1,213 1,094 Cash dividends (5,733) (14,092) (8,357) ----------------------------------------- Total (20,036) (56,699) (50,410) ----------------------------------------- Change in cash and equivalents (3,376) 12,678 (1,285) Cash and equivalents at beginning of period 14,253 1,575 2,860 ----------------------------------------- Cash and equivalents at end of period $ 10,877 $ 14,253 $ 1,575 ========================================= See accompanying notes. 9 Strawbridge & Clothier Notes to Consolidated Financial Statements Years ended February 1, 1997, February 3, 1996, and January 28, 1995 Prior to the adoption of a Plan of Reorganization and Liquidation as discussed in Note 1, the Company operated 40 retail stores, including department and self-service stores, which sold general merchandise in Philadelphia and the surrounding Delaware Valley area of Southeastern Pennsylvania, Southern New Jersey, and Northern Delaware. The Company granted credit to customers, substantially all of whom are residents of its trading area. Subsequent to July 15, 1996, the Company's activities have involved the sale of its remaining assets and the settlement of its remaining obligations. At February 1, 1997, three Clover stores remained in operation pending resolution of lease obligations. The Company completed the sale of the Penrose Plaza store in February 1997, and closed the store on May 1, 1997 after a liquidation sale. 1. SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION On July 15, 1996, the Company's shareholders approved a Plan of Reorganization and Liquidation involving certain transactions with The May Department Stores Company ("May") and Kimco Realty Corporation ("KIMCO"), and the dissolution of the Company following the sale, liquidation or disposal of all assets not purchased by May or KIMCO and the payment of all liabilities not assumed by May or KIMCO. As a result, the Company changed its basis of accounting from a going concern basis to the liquidation basis of accounting. Under this basis of accounting, assets and liabilities are stated at their net realizable value and estimated costs through the liquidation date are provided to the extent reasonably determinable. The Company began reporting on the liquidation basis of accounting as of the close of its second fiscal quarter, August 3, 1996. In connection with the aforementioned approval, the Company will be liquidated and dissolved and May shares will be distributed to its shareholders, to the extent that such shares are not needed to fund payment of remaining obligations. Any remaining assets and liabilities will be placed into a liquidating trust established to provide for the Company's remaining obligations during liquidation. Based on the Consolidated Statement of Net Assets at February 1, 1997 and the May stock price of $44.50 per share at that date, management estimates that .37 shares of May stock would be received for each S&C share. The actual amount will be higher or lower as estimates reflected in the Consolidated Statement of Net Assets or the price per share of the May stock change. 10 Strawbridge & Clothier Notes to Consolidated Financial Statements (continued) 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) BASIS OF PRESENTATION (CONTINUED) As a result of the change in the Company's basis of accounting from the going concern basis to the liquidation basis in accordance with generally accepted accounting principles, for all financial statements dated after August 2, 1996, assets have been valued at estimated net realizable value and liabilities have been reflected at their estimated settlement amounts, including estimated costs to be incurred during the period of liquidation. The valuations of the assets and liabilities are based on management's estimates and assumptions as of the date of the financial statements; actual realization of the assets and settlement of liabilities could be higher or lower than the amounts indicated. Estimates used in the liquidation basis of accounting are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and there are a number of important factors that could cause actual results to differ from the estimates including the period during which the remaining Clover stores will continue to be operated, the ability to obtain substitute tenants, settlement amounts of claims and other liabilities to be paid in the liquidation, the amounts to be received for assets which have not yet been sold, and the time period necessary to complete the Plan of Reorganization and Liquidation. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions have been eliminated. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. 11 Strawbridge & Clothier Notes to Consolidated Financial Statements (continued) 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) INVESTMENT IN THE MAY DEPARTMENT STORES COMPANY COMMON STOCK The Company's 4,457,309 May shares (including 3,080 shares received in December 1996 in lieu of cash dividends) are being carried at market value ($44.50 per share at February 1, 1997). The market value at August 3, 1996 was $45.50 per share. Realized and unrealized gains and losses are included in the Consolidated Statement of Changes in Net Assets in Liquidation. Dividends on May common stock are recognized on the record date. The per share value of May shares as of May 14, 1997 was $46.75. MERCHANDISE INVENTORIES Merchandise inventories at February 1, 1997 represent goods at the three remaining Clover stores which the Company plans to close. The inventory is stated at its estimated liquidation value, which is in excess of cost. Merchandise inventories at February 3, 1996 were priced at cost on the last-in, first-out method using internally developed price indices for most inventories. If the first-in, first-out method of determining inventory cost had been used, inventories would have been $33,235,000 higher than reported at February 3, 1996. STORE PREOPENING COSTS Store preopening costs were charged to expense in the year incurred and totalled $0, $1,417,000, and $28,000 in 1996, 1995, and 1994, respectively. PROPERTY, FIXTURES, AND EQUIPMENT Property, fixtures, and equipment at February 1, 1997 are recorded at net realizable value. Property, fixtures, and equipment at February 3, 1996 are recorded at cost, which was depreciated by the straight-line method over the estimated useful lives of the assets. Amortization of capital lease assets was included in depreciation expense. ADVERTISING COSTS Advertising costs were expensed as incurred and totalled $12,369,000, $29,292,000, and $28,477,000 in 1996, 1995, and 1994, respectively. 12 Strawbridge & Clothier Notes to Consolidated Financial Statements (continued) 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) CASH EQUIVALENTS For purposes of the statement of cash flows, the Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. PER SHARE DATA Earnings per share amounts are based on the weighted average number of shares of common stock and dilutive common stock equivalents (employee stock options) outstanding during each fiscal year. Common share equivalents have not been considered in loss periods as their effect would be anti-dilutive. 2. SIGNIFICANT TRANSACTIONS MAY AGREEMENT On April 4, 1996, the Company entered into an asset purchase agreement with May for the sale of substantially all of the assets of the Company's Department Store Division in exchange for May stock and the assumption by May of certain Department Store Division liabilities. The Company received 4,454,229 shares in accordance with the agreement. KIMCO AGREEMENT On August 28, 1996, the Company closed the sale of 23 of the Company's 26 Clover stores to Kimco Realty Corporation ("KIMCO"), Kohl's Department Stores, Inc., VC Retailers, Inc., and National Wholesale Liquidators of Philadelphia, Inc. for $35,500,000. At closing, $11,989,000 of the Company's applicable mortgage notes, accrued interest, and closing costs were paid, and the Company received $18,991,000 in cash. An additional $4,520,000 was placed into a claims administration trust account. This amount is included in Restricted cash in the accompanying Consolidated Statement of Net Assets in Liquidation. 13 Strawbridge & Clothier Notes to Consolidated Financial Statements (continued) 2. SIGNIFICANT TRANSACTIONS (CONTINUED) GORDON BROTHERS AGREEMENTS On July 10, 1996, the Company entered into agreements with Gordon Brothers Partners, Inc. ("Gordon Brothers") for the sale of the inventory at all, and the operation of certain, Clover stores. In connection with the inventory sale, the Company received $63.4 million in proceeds. The agreements also authorized Gordon Brothers to liquidate the Clover fixtures. Proceeds from such fixture sales were remitted to the Company, net of deduction of compensation payable to Gordon Brothers. Pursuant to the Gordon Brothers Agreement, on January 2, 1997, the Company repurchased any remaining inventory and resumed responsibility for ongoing operations of the Clover stores located in Mercerville, Penrose Plaza and Shore Mall, which were not sold as part of the KIMCO Agreement referred to above. The Company completed the sale of the Penrose Plaza location in February 1997 and closed the store on May 1, 1997 after a liquidation sale. The Company is continuing to negotiate the assumption of the leases for the two remaining locations. Gordon Brothers is continuing the operating management of these stores under its agreement with the Company. TERMINATION OF RETIREE HEALTH CARE PLAN In conjunction with the plan of liquidation, the Company terminated its retiree health care plan effective July 18, 1996. As a result, the Company recorded a one-time, noncash gain of $48.2 million in the quarter ended August 3, 1996. See Note 3. 14 Strawbridge & Clothier Notes to Consolidated Financial Statements (continued) 3. NET ADJUSTMENT TO THE LIQUIDATION BASIS OF ACCOUNTING The net adjustment at August 3, 1996 to convert from the going concern basis to the liquidation basis of accounting consisted of the following (in thousands): (INCOME) EXPENSE -------- Gain on sale to May $(75,732) Loss on sale to KIMCO 30,730 Loss on sale to Gordon Brothers 1,300 Gain on termination of retiree health care plan (48,223) Adjustment of remaining assets and liabilities to net realizable value 60,416 Estimated costs associated with carrying out plan of liquidation 78,270 Unrealized gain on investment in May common stock--7/18/96 -- 8/3/96 (12,075) -------- $ 34,686 ======== 4. ACCOUNTS RECEIVABLE The Company entered into an agreement in January 1995 under which it could sell, on a revolving basis, up to $50,000,000 of the Company's private label credit card accounts receivable. In November 1995, the Company entered into an agreement that increased the amount of receivables the Company can sell to $150,000,000. The amount of receivables sold was $145,000,000 at February 3, 1996. The Company accounted for these sales under the provisions of FASB Statement No. 77, "Receivables Sold With Recourse." Under the recourse provisions of the agreement, the Company was obligated to cover uncollectible receivables within specified limits. The Company remained contingently liable for approximately $31,990,000 of the sold receivables at February 3, 1996 and established an accrual of $7,560,000 to reserve for any such uncollectible receivables. In July 1996, the Company's private label credit card receivables were sold to May as part of the May Agreement described in Note 2. 15 Strawbridge & Clothier Notes to Consolidated Financial Statements (continued) 5. DEBT AND REVOLVING CREDIT FACILITY In connection with the Liquidation, the Company entered into a $25 million revolving credit facility, which is available through the Company's dissolution. Advances under the facility are to be used solely as a liquidity facility to assist in the settlement of liquidation claims and for working capital purposes. The facility is secured by the Company's pledge of 630,000 shares of common stock of The May Department Stores Company as well as other property and assets of the Company. The aggregate liability may not exceed seventy-two percent (72%) of the market value of the shares comprising the collateral. At February 1, 1997, $12,200,000 was outstanding under this facility. The interest rate is 5.67% at February 1, 1997. All outstanding amounts were repaid in March, 1997 with a portion of the proceeds of the Company's income tax refunds. At February 1, 1997, debt and capital lease obligations also included $1,931,000 representing a capital lease obligation for the Company's Mercerville Clover store. Principal and interest payments of $26,503 are payable monthly. At February 3, 1996, long-term debt due after one year consisted of the following (in thousands): 6.625% notes due October 15, 2003 $ 49,645 Series A Senior Notes, maturing equally from 1996 to 2004 with interest at 9.2% 21,819 Series B Senior Notes, due September 30, 1999, with interest at 9.0% 20,000 Mortgage notes payable, at rates ranging from 8.5% to 10%, due in installments, maturing from 2 to 12 years 12,894 Senior Note, due October 15, 1997, with interest at 7.04% 25,000 -------- $129,358 ======== 16 Strawbridge & Clothier Notes to Consolidated Financial Statements (continued) 5. DEBT AND REVOLVING CREDIT FACILITY (CONTINUED) During 1996, all of the above debt was transferred or satisfied in connection with the transactions described in Note 2. There were no compensating balance arrangements in connection with debt or credit lines. Interest paid, net of amounts capitalized, was: 1996--$11,768,000; 1995--$19,428,000; and 1994--$19,833,000. 6. RETIREMENT BENEFITS DEFINED BENEFIT PLANS The Company provided pension benefits under the Strawbridge & Clothier Employee Retirement Plan (the "Plan"). Effective January 31, 1996, the benefits that were earned by all present participants in the Plan were frozen. Employees who did not meet plan eligibility requirements prior to January 31, 1996 are not eligible to participate in the Plan. For participants with at least fifteen years of eligibility service and whose age and service add up to seventy, earnings over the next three years will be used in determining their final benefit. The benefits for all other participants have been determined as of January 31, 1996, based on current years of service and salary levels. As a result of these changes, the Company recorded a one-time, noncash curtailment gain in fiscal 1995 of $6,556,000, which is included in other income. Net pension cost was $0, $3,269,000, and $3,233,000 in 1996, 1995, and 1994, respectively. During December 1996, May assumed from Strawbridge & Clothier and became the sole sponsor of the Plan. The Company sponsored an unfunded, nonqualified Deferred Compensation Plan, which provided retirement benefits for certain key executive officers. The accrued liability for this plan is included in accrued retirement costs in the accompanying consolidated balance sheet at February 3, 1996. At December 31, 1995, the accumulated benefit obligation for this plan was $10,355,000 and the projected benefit obligation was $10,769,000. Obligations under this plan were assumed by May. 17 Strawbridge & Clothier Notes to Consolidated Financial Statements (continued) 6. RETIREMENT BENEFITS (CONTINUED) 401(K) PLAN The Company had a 401(k) Retirement Savings Plan, under which employees were able to defer a portion of their compensation. In connection with the Company's ongoing liquidation, the 401(k) Retirement Savings Plan was terminated in June 1996. All amounts were distributed to Plan participants by the end of September 1996. Prior to its termination, the Company contributed an amount equal to 1.5% of each participant's compensation for each Plan year. Matching expense was $716,900, $630,000, and $882,000 for 1996, 1995, and 1994, respectively. 7. COMMON STOCK Series A and Series B shares are entitled to one and ten votes per share, respectively. Series B shares are convertible on a share-for-share basis into Series A shares. Series A shares are freely transferable while Series B shares were only transferable to certain permitted transferees. Series A Common Stock is entitled to cash dividends at least 10% higher than any cash dividend declared on Series B Common Stock. The Company offered Series A Common Stock to employees for purchase through payroll deductions under its 1991 Employee Stock Purchase Plan. The purchase price was 85% of the closing market price on the offering date or the purchase date, whichever is lower. During fiscal 1996, 21,336 shares were issued at an average price of $14.00. In 1995, 76,870 shares were issued at an average price of $17.00. The Company also has stock option plans which provide for granting to key employees qualified and nonqualified options to purchase common stock of the Company. Generally, options are granted for a term of ten years and become exercisable immediately. During fiscal 1996, 1,038 shares were issued upon exercise of options at an average price of $21.03. During fiscal 1995, 2,044 shares were issued upon exercise of options at an average price of $19.14. No options were exercised during fiscal 1994. Options to purchase 147,343 shares of Series A Common Stock at an average price of $26.39 were outstanding at February 1, 1997. 18 Strawbridge & Clothier Notes to Consolidated Financial Statements (continued) 7. COMMON STOCK (CONTINUED) At February 1, 1997, there were 20,000,000 shares of Series A common stock and 20,000,000 shares of Series B common stock authorized and 10,602,196 shares of Series A common stock and 33,988 shares of Series B common stock outstanding. 8. INCOME TAXES Income taxes recoverable at February 1, 1997 consists primarily of federal income taxes recoverable through carryback of net operating losses. In March 1997, the Company received $22.5 million of federal tax refunds. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. As a result of the Plan of Reorganization and Liquidation, there are no deferred income taxes at February 1, 1997. The components of deferred tax liabilities and assets as of February 3, 1996 were as follows (in thousands): Deferred tax liabilities: Depreciation $18,078 Other--net 3,812 ------- 21,890 ------- Deferred tax assets: Retiree health care obligation 14,854 Accruals and reserves 11,863 ------- 26,717 ------- Net deferred tax assets $ 4,827 ======= 19 Strawbridge & Clothier Notes to Consolidated Financial Statements (continued) 8. INCOME TAXES (CONTINUED) The components of income tax expense (benefit) are as follows (in thousands): 1996 1995 1994 ----------------------------------- Current: Federal $(24,037) $(4,111) $13,886 State -- 20 1,549 ----------------------------------- (24,037) (4,091) 15,435 Deferred: Federal 4,827 (116) (3,927) State -- (291) (1,450) ----------------------------------- 4,827 (407) (5,377) ----------------------------------- $(19,210) $(4,498) $10,058 =================================== The $19,210,000 net income tax benefit reflects the current benefit of recoverable income taxes created by the carryback of the tax net operating loss, offset by the reduction of the prior-year deferred tax asset to zero. Due to the Plan of Reorganization and Liquidation, there are no additional loss carryforwards, and no additional taxes available for refund. A reconciliation of the effective income tax rate with the statutory federal income tax rate is as follows: 1996 1995 1994 ----------------------------------- Federal tax rate (34.0)% (34.0)% 35.0% Losses not benefited 5.6 0.0 0.0 State taxes (benefit), net of federal taxes 0.0 (1.6) 0.2 Jobs tax credit 0.0 (0.8) (1.9) Effect of state statutory tax rate change 0.0 1.1 0.0 Other 0.0 1.4 0.1 ----------------------------------- (28.4)% (33.9)% 33.4% =================================== Income taxes (refunded) paid were as follows: 1996--$(5,000,000); 1995--$13,309,000; 1994--$11,735,000. 20 Strawbridge & Clothier Notes to Consolidated Financial Statements (continued) 9. COMMITMENTS AND CONTINGENCIES LEASES Future minimum rental commitments as of February 1, 1997, for the Shore Mall Clover store, which is the only remaining significant operating lease obligation are as follows: 1997--$684,000; 1998--$684,000; 1999--$701,000; 2000--$787,000; 2001--$787,000; 2002--$787,000; 2003--$787,000; 2004--$656,000. These amounts do not consider reductions which may occur as the Company continues to negotiate the assumption of this lease. Total net rental expense amounted to: Fiscal Year 1996 1995 1994 ---------------------------------- Minimum rentals $ 3,684 $ 7,318 $ 5,661 Contingent rentals, based on sales 535 1,222 1,310 Sublease rentals (256) (973) (1,022) ---------------------------------- $ 3,963 $ 7,567 $ 5,949 ================================== CONTINGENCIES In connection with its dissolution, the Company, as required by Pennsylvania Business Corporation Law ("PBCL"), notified all known entities having claims against the Company and also served public notice of its planned dissolution. These notices requested entities to provide sufficient detail to enable the Company to evaluate the substance of any claims against the Company. To the extent the Company rejected any claims in accordance with PBCL, such claim is permanently barred unless the claimant whose claim was rejected had commenced an action within 90 days of the Company's mailing of the rejection notice. The Company has been named as a defendant in several actions related to its dissolution. In one of those actions, the Company's Directors were also named as defendants. In another action, the plaintiffs seek to enjoin the distribution of May shares to the 21 Strawbridge & Clothier Notes to Consolidated Financial Statements (continued) 9. COMMITMENTS AND CONTINGENCIES (CONTINUED) CONTINGENCIES (CONTINUED) Company's shareholders. While management believes these actions are without merit and that adequate accruals have been established in the accompanying consolidated financial statements to provide for any costs that may be incurred with respect to these contingencies, there can be no assurance as to the time of payment or that the ultimate settlement of these claims will not be higher or lower than the amounts recorded. OTHER In fiscal 1995, the City of Philadelphia advised the Company that it planned to exercise its eminent domain power to acquire the Company's Department Store Distribution Center. The Distribution Center was acquired by the City of Philadelphia during 1996, with the Company receiving $9.2 million in proceeds. As part of the May Agreement, these funds were remitted to May. The Company will also receive an amount from the City of Philadelphia for the value of the in-place fixtures at the Distribution Center. Outstanding letters of credit at February 1, 1997 amounted to approximately $509,000. In February 1997, the Company placed an additional letter of credit in the amount of $3,000,000, which was required under the terms of its operating agreement with Gordon Brothers (see Note 2). This amount was subsequently reduced to $1,000,000 as a result of the closing of the Penrose location and the commencement of a going-out-of-business sale at the Mercerville location. 22 Strawbridge & Clothier Notes to Consolidated Financial Statements (continued) 10. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) Selected quarterly financial data are as follows (in thousands): Fiscal Quarter Ended -------------------------------------------------- May 4, August 3, November 2, February 1, 1996 1996 1996 1997 -------------------------------------------------- Net sales $208,127 $184,587 $ -- $ -- Gross profit 46,407 29,494 -- -- Adjustment to the liquidation basis of accounting -- (34,686)(1) -- -- Increase (decrease) in net assets in liquidation -- -- (1,014) (14,520)(3) Net loss (6,932) (41,542)(1) -- -- Net loss per common share (0.65) (3.91)(1) -- -- Fiscal Quarter Ended -------------------------------------------------- April 29, July 29, October 28, February 3, 1995 1995 1995 1996 -------------------------------------------------- Net sales $198,625 $218,551 $225,504 $ 337,918 Gross profit 45,465 47,081 52,271 89,308 Net earnings (loss) (6,064) (9,079) (7,232) 13,588(2) Net earnings (loss) per common share (0.58) (0.86) (0.68) 1.28(2) (1) Restated from previously reported amount. (2) Includes gain on curtailment of pension plan of $4,320, or $.41 per share. (3) Results primarily from the decrease in market value of The May Department Stores Company Common Stock from $47.75 at November 2, 1996 to $44.50 at February 1, 1997. 23 EX-23 3 CONSENT OF ERNST & YOUNG LLP EXHIBIT 23 ---------- Consent of Ernst & Young LLP, Independent Auditors We consent to the incorporation by reference in this Annual Report (Form 10-K) of Strawbridge & Clothier of our report dated May 15, 1997 included in the 1996 Annual Report to Shareholders of Strawbridge & Clothier. Our audits also included the financial statement schedule of Strawbridge & Clothier listed in Item 14(a). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this schedule based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. We also consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-40928) and the related Prospectus of Strawbridge & Clothier of our report dated May 15, 1997, with respect to the consolidated financial statements and schedule included in the Annual Report (Form 10-K) for the year ended February 1, 1997. ERNST & YOUNG LLP Philadelphia, Pennsylvania May 15, 1997 F-3 EX-27 4 ART. 5 FDS FOR ANNUAL REPORT
5 1,000,000 12-MOS FEB-01-1997 FEB-01-1997 5,078 198,350 22,996 0 5,505 0 5,075 0 239,091 0 0 0 0 0 175,639 239,091 392,714 395,629 316,813 316,813 99,032 39,551 7,917 (67,684) (19,210) (48,474) 0 0 0 (48,474) (4.56) (4.56)
-----END PRIVACY-ENHANCED MESSAGE-----