-----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, M/uaIge0EBdZekJ9fvuBuulwHntpgcrkqv+ShA2skGR55pmLG+Rtf6Nd5qmv3AaB kAch0sjj+3760/vtnLWZWg== 0000950152-97-004556.txt : 19970618 0000950152-97-004556.hdr.sgml : 19970618 ACCESSION NUMBER: 0000950152-97-004556 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970503 FILED AS OF DATE: 19970617 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FABRI CENTERS OF AMERICA INC CENTRAL INDEX KEY: 0000034151 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISCELLANEOUS SHOPPING GOODS STORES [5940] IRS NUMBER: 340720629 STATE OF INCORPORATION: OH FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06695 FILM NUMBER: 97625459 BUSINESS ADDRESS: STREET 1: 5555 DARROW RD CITY: HUDSON STATE: OH ZIP: 44236 BUSINESS PHONE: 2166562600 MAIL ADDRESS: STREET 1: 5555 DARROW ROAD CITY: HUDSON STATE: OH ZIP: 44236 FORMER COMPANY: FORMER CONFORMED NAME: CLEVELAND FABRIC SHOPS INC DATE OF NAME CHANGE: 19681216 FORMER COMPANY: FORMER CONFORMED NAME: CLEVELAND FABRIC SHOPS INC NUMBER THREE DATE OF NAME CHANGE: 19681216 10-Q 1 FABRI-CENTERS OF AMERICA, INC. FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 - -------------------------------------------------------------------------------- FORM 10 - Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 - -------------------------------------------------------------------------------- For the Quarter Ended May 3, 1997 Commission File No. 1-6695 - --------------------------------------- ----------------------------------- FABRI-CENTERS OF AMERICA, INC. - -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) Ohio 34-0720629 - -------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 5555 Darrow Road Hudson, Ohio 44236 - --------------------------------------- ------------------------------------ (Address of principal executive offices) (Zip Code) (216) 656 - 2600 - ------------------------------- (Registrant's telephone number) 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest, practicable date. Shares of Class A Common Stock outstanding at May 30, 1997: 9,190,317 Shares of Class B Common Stock outstanding at May 30, 1997: 9,078,517 Sequential Page 1 of 31 2 FABRI-CENTERS OF AMERICA, INC. Form 10-Q Index For the quarter ended May 3, 1997 - --------------------------------------------------------------------------------
PART I. FINANCIAL INFORMATION: Item 1. Financial Statements (Unaudited) Page Numbers Consolidated Balance Sheets as of May 3, 1997 and February 1, 1997 3 Consolidated Statements of Income for the Thirteen Weeks Ended May 3, 1997 and April 27, 1996 4 Consolidated Statements of Cash Flows for the Thirteen Weeks Ended May 3, 1997 and April 27, 1996 5 Notes to Consolidated Financial Statements 6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationS 8-9 PART II. OTHER INFORMATION Item 5. Other Events 10 Item 6. Exhibits and Reports on Form 8-K 10 Signatures 11
Page 2 3 PART I FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) CONSOLIDATED BALANCE SHEETS (UNAUDITED) Fabri-Centers of America, Inc. (Thousands of dollars)
MAY 3, FEBRUARY 1, 1997 1997 - -------------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 12,632 $ 12,631 Merchandise inventories 295,231 296,104 Prepaid expenses and other current assets 10,433 9,532 --------- --------- Total current assets 318,296 318,267 Property and equipment, at cost: Land 1,709 1,709 Buildings 24,498 23,905 Furniture and fixtures 111,511 108,684 Leasehold improvements 42,406 42,118 --------- --------- 180,124 176,416 Less accumulated depreciation and amortization 86,291 81,798 --------- --------- 93,833 94,618 Mortgage receivable 7,064 7,136 Other assets 9,222 9,159 --------- --------- Total assets $ 428,415 $ 429,180 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 107,587 $ 99,458 Accrued expenses 18,641 28,898 Accrued income taxes 2,543 10,697 Deferred income taxes 2,582 2,167 --------- --------- Total current liabilities 131,353 141,220 Long-term debt 19,600 15,100 Convertible subordinated debentures 56,983 56,983 Deferred income taxes 13,567 13,357 Other long-term liabilities 3,469 3,110 Shareholders' equity: Common Stock: Class A 511 507 Class B 507 503 Additional paid-in capital 78,075 76,614 Other (1,368) (1,248) Retained earnings 144,005 141,397 --------- --------- 221,730 217,773 Treasury stock, at cost (18,287) (18,363) --------- --------- Total shareholders' equity 203,443 199,410 --------- --------- Total liabilities and shareholders' equity $ 428,415 $ 429,180 ========= =========
See notes to consolidated financial statements Page 3 4 CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Fabri-Centers of America, Inc. (Thousands of dollars, except per share data)
MAY 3, APRIL 27, THIRTEEN WEEKS ENDED 1997 1996 - -------------------------------------------------------------------------------- Net sales $218,826 $203,028 Costs and expenses: Cost of goods sold 122,688 114,641 Selling, general and administrative expenses 90,438 83,836 Interest expense, net 1,528 2,839 -------- -------- 214,654 201,316 -------- -------- Earnings before income taxes 4,172 1,712 Income tax provision 1,564 642 -------- -------- Net earnings $ 2,608 $ 1,070 ======== ======== Net earnings per common share: Primary $ 0.14 $ 0.06 ======== ======== Assuming full dilution $ 0.13 $ 0.06 ======== ========
See notes to consolidated financial statements Page 4 5 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Fabri-Centers of America, Inc. (Thousands of dollars)
MAY 3, APRIL 27, THIRTEEN WEEKS ENDED 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Operating activities: Net earnings $ 2,608 $ 1,070 Adjustments to reconcile net earnings to net cash (used for) provided by operating activities: Cancellation of restricted stock awards (32) -- Depreciation and amortization and other noncash expenses 5,321 5,272 Loss on disposal of fixed assets 144 292 Deferred income taxes 625 428 Working capital changes: Merchandise inventories 873 10,974 Prepaid expenses and other current assets (901) 748 Accounts payable 8,129 (6,553) Accrued expenses (10,257) (3,164) Accrued income taxes (8,154) (345) -------- -------- Net cash (used for) provided by operating activities (1,644) 8,722 Investing activities: Capital expenditures (4,168) (3,211) Mortgage receivable 72 68 Other, net (452) 318 -------- -------- Net cash used for investing activities (4,548) (2,825) Financing activities: Proceeds from long-term debt 8,600 13,100 Repayment of long-term debt (4,100) (11,400) Other long-term liabilities 359 10 Proceeds from exercise of stock options 1,122 634 Issuance of treasury shares 212 -- Purchase of common stock -- (9,009) -------- -------- Net cash provided by (used for) financing activities 6,193 (6,665) Net increase (decrease) in cash 1 (768) Cash and cash equivalents at beginning of period 12,631 11,552 -------- -------- Cash and cash equivalents at end of period $ 12,632 $ 10,784 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 2,195 $ 3,490 Income taxes 9,093 560
See notes to consolidated financial statements Page 5 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Fabri-Centers of America, Inc. May 3, 1997, February 1, 1997 and April 27, 1996 Note 1 - Basis of Presentation The accompanying consolidated financial statements include the accounts of Fabri-Centers of America, Inc., and its wholly owned subsidiaries (the "Company") and have been prepared without audit, pursuant to the rules of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although, the Company believes that the disclosures, herein, are adequate to make the information not misleading. The statements should be read in conjunction with the consolidated financial statements and notes, thereto, included in the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 1997 (fiscal 1997). The Company's business is seasonal, therefore, earnings or losses for a particular interim period are not necessarily indicitive of full year results. In the opinion of management, the accompanying consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary for a fair statement of results for the interim periods. Note 2 - Earnings Per Share Primary earnings per common share and earnings per common share assuming full dilution equal net earnings divided by the weighted average number of common shares outstanding, after giving effect for the assumed exercise of dilutive stock options under the treasury stock method. The Company's 6 1/4% Convertible Subordinated Debentures are considered a common share equivalent in calculating earnings per common share assuming full dilution; however, they are not included in the earnings per common share calculation assuming full dilution, because the effect of conversion is anti-dilutive. The following table presents information necessary to calculate primary earnings per common share and earnings per common share assuming full dilution for the periods presented:
MAY 3, APRIL 27, THIRTEEN WEEKS ENDED 1997 1996 - -------------------------------------------------------------------------------- Common shares outstanding-primary: Weighted average shares outstanding 18,024,303 18,268,965 Share equivalents - stock options 1,207,417 541,043 ---------- ---------- 19,231,720 18,810,008 ========== ========== Common shares outstanding-assuming full dilution: Weighted average shares outstanding 18,024,303 18,268,965 Share equivalents - stock options 1,456,162 561,575 ---------- ---------- 19,480,465 18,830,540 ========== ==========
Page 6 7 The Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share," in March 1997, which will revise the calculation methods and disclosures regarding earnings per share. As required by the Statement, the Company will adopt SFAS No. 128 in the fourth quarter of fiscal 1998. The Company's pro forma earnings per common share that would have been reported had the new standard been previously in effect are as follows:
MAY 3, APRIL 27, THIRTEEN WEEKS ENDED 1997 1996 - -------------------------------------------------------------------------------- Basic earnings per common share 0.14 0.06 Diluted earnings per common share 0.14 0.06
Note 3 - Amendment to Revolving Credit Facility The Company amended its unsecured $200,000,000 revolving credit facility (the "Credit Facility") with a group of eight banks on June 2, 1997. The amendment extends the expiration date of the Credit Facility to May 31, 2001. The Company pays a facility fee on the revolving commitment amount which as a result of the amendment now ranges from .10% to .375%, based on the achievement of certain financial covenants. Under the amendment, the Company no longer pays a commitment fee on the unused portion of the Credit Facility. Interest on borrowings under the Credit Facility is payable at an applicable margin over prime, federal funds or LIBOR rates. The applicable margin has been amended and now ranges between .25% and 1.00%, based on the achievement of certain financial covenants. The amended Credit Facility contains financial covenants which limit the Company's capital expenditures and defined leverage ratio, as well as require the Company to maintain a minimum tangible net worth, fixed charge coverage ratio and current funded indebtedness ratio. As a result of the amendment, certain financial covenants were eliminated. Note 4 - Convertible Subordinated Debentures On May 20, 1997, the Company announced that its Board of Directors authorized the redemption on June 30, 1997 of all outstanding 6 1/4% Convertible Subordinated Debentures due March 1, 2002 at a price of 101.785 percent of principal, and payment of accrued interest to the date of redemption. The redemption will be funded through the use of the Company's long-term credit facilities. The Company estimates that it will incur a second quarter extraordinary charge of approximately $1,200,000 or $0.06 per share, net of taxes, upon redemption of all debentures. Each $1,000 principal amount of debentures is convertible into an aggregate of approximately 20.513 Class A Common Shares and 20.513 Class B Common Shares (at a conversion price of $24.375 per share). Debentures not converted by June 30, 1997 will be redeemed at the stated premium. Note 5 - Capital Stock During the first quarter of fiscal year 1997, the Company purchased 407,525 Class A and 450,506 Class B Common Shares on the open market. The aggregate purchase price of these shares was approximately $9,000,000 which was funded through the Company's revolving credit facility. Page 7 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS THIRTEEN WEEKS ENDED MAY 3, 1997 VS. APRIL 27, 1996 Net sales for the first quarter of fiscal 1998 increased 8 percent, or $15,798,000, compared to the first quarter of fiscal 1997. The sales growth was well-distributed across all product lines, in both Jo-Ann Fabrics and Crafts stores as well as Cloth World stores. Comparable store sales increased 7 percent for the first quarter of fiscal 1998 over the same quarter a year earlier. Gross profit increased $7,751,000 in the first quarter of fiscal 1998 compared to the same quarter of fiscal 1997. As a percentage of net sales, fiscal 1998 first quarter gross profit was 43.9 percent, an increase of 0.4 percentage points from the same quarter a year earlier. The improvement in the gross profit margin percentage resulted from smaller markdowns on seasonal merchandise as there was less clearance and carryover inventory during the first quarter of fiscal 1998 when compared to the same quarter a year earlier. Selling, general and administrative expenses as a percentage of net sales were 41.3 percent for both the first quarter of fiscal 1998 and 1997. As a percent of sales, increases in advertising and information systems development expenses were offset by declines in distribution service center costs and store level operating expenses. The Company's effective income tax rate was 37.5 percent for the first quarter of fiscal 1998 and 1997. Net earnings for the first quarter of fiscal 1998 were $2,608,000 or $0.14 per share, compared to net earnings of $1,070,000, or $0.06 per share, for the same quarter a year earlier. The Company's business exhibits seasonality which is typical for most retail companies, with much stronger sales in the second half of the year than the first half of the year. In general, net earnings are highest during the months of September through December, when sales volumes provide significant operating leverage. Conversely, net earnings are substantially lower during the relatively low-volume sales months of January through August. Capital requirements needed to finance the Company's operations fluctuate during the year and reach their highest levels during the second and third fiscal quarters as the Company increases its inventory in preparation for its peak selling season. LIQUIDITY AND CAPITAL RESOURCES Working capital was $186,943,000 at May 3, 1997, an increase of $9,896,000 from the end of the prior fiscal year. The ratio of current assets to current liabilities was 2.4:1 at May 3, 1997 and 2.3:1 at February 1, 1997. The Company used $1,644,000 of cash for operating activities in the first quarter of fiscal 1998 compared to generating $8,722,000 of cash from operating activities in the first quarter of the prior year. During the first quarter of fiscal 1998, cash used for operating activities included $9,093,000 in income tax payments and a $3,280,000 payment to settle a Securities and Exchange Commission enforcement proceeding. The cost of the Securities and Exchange Commission settlement was recognized in the fourth quarter of fiscal 1997. Page 8 9 Capital expenditures were $4,168,000 for the first quarter of fiscal 1998 as compared to $3,211,000 for the same period of fiscal 1997. For the full year of fiscal 1998, capital expenditures are expected to be approximately $30,000,000 as compared to $13,191,000 in the prior year. The higher level of anticipated capital expenditures is related to an increase in planned store openings when compared to the prior year. The Company plans to open 65 to 70 new stores (including six Jo-Ann etc formats) and close 75 to 80 stores during fiscal 1998. The Company purchased 407,525 Class A and 450,506 Class B Common Shares on the open market at an aggregate purchase price of approximately $9,000,000 during the first quarter of fiscal 1997. The remaining number of shares that can be acquired pursuant to prior authorization by the Board of Directors is 597,025 Class A and 557,025 Class B Common Shares. On May 20, 1997, the Company announced that its Board of Directors authorized the redemption on June 30, 1997 of all outstanding 6 1/4% Convertible Subordinated Debentures due March 1, 2002 at a price of 101.785 percent of principal, and payment of accrued interest to the date of redemption. The redemption will be funded through the use of the Company's long-term credit facilities. The Company estimates that it will incur a second quarter extraordinary charge of $1,200,000 or $0.06 per share, net of taxes, upon redemption of all debentures. Each $1,000 principal amount of debentures is convertible into an aggregate of approximately 20.513 Class A Common Shares and 20.513 Class B Common Shares (at a conversion price of $24.375 per share). Debentures not converted by June 30, 1997 will be redeemed at the stated premium. The Company amended its $200,000,000 revolving credit facility (the "Credit Facility") with a group of eight banks on June 2, 1997. The amendment extended the expiration of the Credit Facility to May 31, 2001 and made various changes to simplify the administration and to clarify certain terms of the Credit Facility. The Company may borrow up to a maximum of $220,000,000, subject to further limitations during specified time frames, by utilizing funds available under the Credit Facility and other lines of credit. As of May 3, 1997, the Company had borrowings of $19,600,000 under the Credit Facility and other lines of credit. The Company continues to maintain excellent vendor and banking relationships and has sufficient resources, including unused credit facilities, to meet its operating needs, to fund the redemption of the Debentures and to fund its capital expenditures for fiscal 1998. During the first quarter of fiscal 1998, the Company opened 11 larger stores and closed 12 smaller or under-performing stores. As of May 3, 1997, the Company operated 913 stores in 48 states primarily under the names Jo-Ann Fabrics and Crafts, Cloth Worlds, New York Fabrics and Crafts and Jo-Ann etc. FORWARD-LOOKING STATEMENTS Certain statements contained in this report that are not historical facts are forward-looking statements that are subject to certain risks and uncertainties. When used herein, the terms "anticipates," "plans," "expects," "believes," and similar expressions as they relate to the Company or its management are intended to identify such forward-looking statements. The Company's actual results, performance or achievements may materially differ from those expressed or implied in the forward-looking statements. Risks and uncertainties that could cause or contribute to such material differences include, but are not limited to, changes in customer demand, changes in trends in the fabric and craft industry, changes in the competitive pricing for products, the impact of competitor store openings and closings, the availability of acceptable store locations, the availability of merchandise and general economic conditions. Page 9 10 PART II OTHER INFORMATION Item 5. OTHER EVENTS ------------ REDEMPTION OF 6 1/4% CONVERTIBLE SUBORDINATED DEBENTURES On May 20, 1997, the Company announced that its Board of Directors authorized the redemption on June 30, 1997 of all outstanding 6 1/4% Convertible Subordinated Debentures due March 1, 2002 at a price of 101.785 percent of principal, and payment of accrued interest to the date of redemption. The redemption will be funded through the use of the Company's long-term credit facilities. The Company estimates that it will incur a second quarter extraordinary charge of $1,200,000 or $0.06 per share, net of taxes, upon redemption of all debentures. Each $1,000 principal amount of debentures is convertible into an aggregate of approximately 20.513 Class A Common Shares and 20.513 Class B Common Shares (at a conversion price of $24.375 per share). Debentures not converted by June 30, 1997 will be redeemed at the stated premium. AMENDMENT TO REVOLVING CREDIT FACILITY The Company amended its $200,000,000 revolving credit facility (the "Credit Facility") with a group of eight banks on June 2, 1997. See Note 3 of Notes to Consolidated Financial Statements for further discussion. Item 6. EXHIBITS AND REPORTS ON FORM 8-K -------------------------------- a) EXHIBITS -------- See the Exhibit Index at sequential page 12 of this report. b) REPORTS ON FORM 8-K ------------------- The Company filed a report on Form 8-K dated February 18, 1997. Under Item 5 ("Other Events"), the Company reported its settlement with the Securities and Exchange Commission ("SEC") of allegations in connection with a previously reported SEC investigation. Page 10 11 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto, duly authorized. FABRI-CENTERS OF AMERICA, INC. DATE: June 17, 1997 /s/ Alan Rosskamm ----------------------------- By: Alan Rosskamm Chairman, President and Chief Executive Officer /s/ Samuel R. Gaston ----------------------------- By: Samuel R. Gaston Executive Vice President and Chief Financial Officer /s/ Robert R. Gerber ----------------------------- By: Robert R. Gerber Senior Vice President, Controller and Chief Accounting Officer Page 11 12 FABRI-CENTERS OF AMERICA, INC. FORM 10-Q FOR THE THIRTEEN WEEK PERIOD ENDED MAY 3, 1997 EXHIBIT INDEX
Sequential EXHIBIT NO. Description Page No. - ---------------------- ---------------------------------------------------- ---------------------- 10 Amendment No. 1 effective June 2, 1997 to the Credit 13 Agreement dated as of September 30, 1994 among Fabri-Centers of America, Inc., as Borrower, the Banks named therein and Key Bank National Association (as successor by merger to Society National Bank), as Agent for the banks under the credit agreement. 11 Computation of Earnings per Common Share 31 27 Financial Data Schedule
Page 12 EX-10 2 EXHIBIT 10 1 EXHIBIT NO. 10 AMENDMENT NO. 1 TO CREDIT AGREEMENT This Amendment No. 1 to Credit Agreement (this "Amendment"), made as of the 2nd day of June, 1997, among FABRI-CENTERS OF AMERICA, INC., an Ohio corporation (herein the "Borrower"), the Banks (as hereinafter defined) and KEYBANK NATIONAL ASSOCIATION (as successor by merger to Society National Bank), as agent for the Banks (in such capacity, the "Agent") and KeyBank National Association, as Letter of Credit Bank (the "Letter of Credit Bank"), WITNESSETH: ----------- WHEREAS, the Borrower has been extended certain financial accommodations pursuant to that certain Credit Agreement, dated as of September 30, 1994, among the Borrower, the financial institutions which are a party thereto (the "Banks"), the Agent and the Letter of Credit Bank; WHEREAS, the Borrower, the Banks, the Agent and the Letter of Credit Bank desire to amend the Credit Agreement as set forth herein; and WHEREAS, the Banks which are the signatories hereto constitute all of the Banks for the purposes of amending the Credit Agreement pursuant to Section 14.1 thereof, NOW THEREFORE, in consideration of the mutual promises and agreements contained herein and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Borrower, the Banks, the Agent and the Letter of Credit Bank do hereby agree as follows: SECTION 1. DEFINED TERMS. ------------------------- Each defined term used herein and not otherwise defined herein shall have the meaning ascribed to such term in the Credit Agreement. Page 13 2 SECTION 2. AMENDMENTS TO THE CREDIT AGREEMENT. ---------------------------------------------- 2.1 AMENDMENT TO SECTION 1.1. The following definitions found in Section 1.1 shall each be amended in its entirety to read as follows: "APPLICABLE FEE PERCENTAGE" shall mean, on each day of any Fiscal Quarter, with respect to any Facility Fee (as set forth in Section 3.4(a)), the annual percentage indicated in the following table corresponding to the Borrower's Consolidated Leverage Ratio as measured for the Fiscal Quarter immediately preceding and ending on the applicable Fee Determination Date and the Borrower's Consolidated Fixed Charge Coverage Ratio as measured for a Four Fiscal Quarter Period ending as of such Fee Determination Date:
Consolidated Consolidated Fixed Charge Coverage Ratio Leverage Ratio =================================================================================================================================== greater than greater than greater than greater than or equal to or equal to or equal to or equal to 1.25 to 1.0 1.50 to 1.0 1.75 to 1.0 2.00 to 1.0 greater than but less than but less than but less than but less than or equal to 1.50 to 1.0 1.75 to 1.0 2.00 to 1.0 2.25 to 1.0 2.25 to 1.0 less than or equal to .50 to 1.0 but greater than .35 to 1.0 .375% .30% .20% .20% .20% less than or equal to .35 to 1.0 but greater than .25 to 1.0 .375% .30% .20% .20% .15% less than or equal to .25 to 1.0 but greater than .15 to 1.0 .30% .30% .20% .15% .15% less than or equal to .15 to 1.0 .30% .20% .15% .15% .10% ===================================================================================================================================
-2- Page 14 3 "APPLICABLE LOAN PERCENTAGE" shall mean, on each day of any Interest Period, with respect to any LIBOR Loans comprising a Revolving Credit Borrowing or any Fed Funds Rate Loans comprising a Revolving Credit Borrowing, as the case may be, the percentage indicated in the following table corresponding to the Borrower's Consolidated Leverage Ratio as measured for the Fiscal Quarter immediately preceding and ending on the Determination Date applicable to such Interest Period and the Borrower's Consolidated Fixed Charge Coverage Ratio as measured for a Four Fiscal Quarter Period ending as of such Determination Date:
Consolidated Consolidated Fixed Charge Coverage Ratio Leverage Ratio =================================================================================================================================== greater than greater than greater than greater than greater than or equal to or equal to or equal to or equal to or equal to 1.25 to 1.0 1.50 to 1.0 1.75 to 1.0 2.0 to 1.0 2.25 to 1.0 but less than but less than but less than but less than 1.50 to 1.0 1.75 to 1.0 2.0 to 1.0 2.25 to 1.0 less than or equal to .50 to 1.0 but greater than .35 to 1.0 1.00% 1.00% 0.75% 0.65% 0.45% less than or equal to .35 to 1.0 but greater than .25 to 1.0 0.925% 0.70% 0.65% 0.45% 0.35% less than or equal to .25 to 1.0 but greater than .15 to 1.0 0.70% 0.60% 0.45% 0.35% 0.30% less than or equal to .15 to 1.0 0.60% 0.50% 0.35% 0.30% 0.25% ===================================================================================================================================
"BANKING DAY" means: (i) a day of the year on which banks are not required or authorized to close in Cleveland, Ohio and (ii) if the applicable Banking Day relates to LIBOR Loans, a day of the year which is a Banking Day described in clause (i) above and which is also a day on which dealings in Dollar deposits are carried on in the London interbank market and banks are open for business in London. "COMMITMENT PERIOD" shall mean the period from the date hereof to May 31, 2001, as the same may be extended pursuant to Section 3.2(c) or reduced pursuant to Section 3.2(a). "EUROCURRENCY RESERVE PERCENTAGE" means, for any Interest Period in respect of any LIBOR Loan, as of any date of determination, the aggregate of the then stated maximum reserve percentages (including any marginal, special, emergency or supplemental reserves), expressed as a decimal, applicable to such Interest Period (if more than one such percentage is applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) by the Board of Governors of the Federal Reserve System, any successor thereto, or any other banking authority, domestic or foreign, to which the Agent or any Bank may be subject in respect to eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the Federal Reserve Board) or in respect of any other category of liabilities including deposits by reference to which the interest rate on LIBOR Loans is determined or any category of extension of credit or other assets that - 3 - Page 15 4 include the LIBOR Loans. For purposes hereof, such reserve requirements shall include, without limitation, those imposed under Regulation D of the Federal Reserve Board and the LIBOR Loans shall be deemed to constitute Eurocurrency Liabilities subject to such reserve requirements without benefit of credits for proration, exceptions or offsets which may be available from time to time to any Bank under said Regulation D. "LETTER OF CREDIT BANK" shall mean KeyBank National Association, its successors and assigns. "LIBOR" means, for any Interest Period with respect to a LIBOR Borrowing, the quotient (rounded upwards, if necessary, to the nearest one sixteenth of one percent (1/16th of 1%)) of: (x) the per annum rate of interest, determined by the Agent in accordance with its usual procedures (which determination shall be conclusive absent manifest error) as of approximately 11:00 a.m. (London time) two Banking Days prior to the beginning of such Interest Period pertaining to such LIBOR Loan, appearing on Page 3750 of the Telerate Service (or any successor or substitute page of such Service, or any successor to or substitute for such Service providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Agent from time to time for purposes of providing quotations of interest rates applicable to Dollar deposits in the London interbank market) as the rate in the London interbank market for Dollar deposits in immediately available funds with a maturity comparable to such Interest Period DIVIDED BY (y) a number equal to 1.00 MINUS the Eurocurrency Reserve Percentage. In the event that such rate quotation is not available for any reason, then the rate (for purposes of clause (x) hereof) shall be the rate, determined by the Agent as of approximately 11:00 a.m. (London time) two Banking Days prior to the beginning of such Interest Period pertaining to such LIBOR Loan, to be the average (rounded upwards, if necessary, to the nearest one sixteenth of one percent (1/16th of 1%)) of the per annum rates at which Dollar deposits in immediately available funds in an amount comparable to KeyBank's Pro Rata Share of such LIBOR Borrowing and with a maturity comparable to such Interest Period are offered to prime banks by leading banks in the London interbank market. The LIBOR shall be adjusted automatically on and as of the effective date of any change in the Eurocurrency Reserve Percentage. "MAXIMUM AVAILABILITY AMOUNT" shall mean, during each Fiscal Year of the Borrower: (i) One Hundred Seventy-Five Million Dollars ($175,000,000) during the period from January 1 to and including April 30 and (ii) the Total Commitment Amount during the period from May 1 to and including December 31. "QUALIFYING FINANCIAL STANDARDS" shall mean, as at any date of determination, the condition that (a) the Borrower shall have delivered the financial statements required by Section 8.1(a) or 8.1(b), as the case may be, (b) the Borrower shall have delivered the certificate required to be delivered pursuant to Section 8.1(c)(ii) evidencing that the Borrower's Consolidated Fixed Charge Coverage Ratio for the Four Fiscal Quarter Period ending immediately prior to such determination date is not less than 1.50 to 1.0 and that the Borrower's Consolidated Leverage Ratio for the Fiscal Quarter ending immediately prior to such determination date is not greater than .50 to 1.0 and (c) no Event of Default shall have occurred and be continuing. - 4 - Page 16 5 2.2 AMENDMENT TO DEFINITION OF "INTEREST PERIOD". The definition of "Interest Period" shall be amended to add the following as clause (vi) thereof: "(vi) if the Interest Period commences on a Banking Day for which there is no numerical equivalent in the calendar month in which the Interest Period is to end, such Interest Period shall end on the last Banking Day of that calendar month." 2.3 AMENDMENT TO SECTION 1.1 - ADDITIONS. Section 1.1 shall be amended to add the following definitions: "EFFECTIVE DATE" means June 2, 1997. 2.4 AMENDMENT TO SECTION 1.1 - DELETIONS. Section 1.1 shall be amended to delete the following definitions: "Unused Commitment Fee" and "Reference Bank". 2.5 AMENDMENT TO CREDIT AGREEMENT. Each reference to "Society" or "Society National Bank" in the Credit Agreement shall be amended to read "KeyBank" or "KeyBank National Association". 2.6 AMENDMENT TO SECTION 1.3. Section 1.3 shall be amended to delete the words ";PROVIDED, HOWEVER, that, all accounting terms shall be understood as based and determined on the "FIFO" method of valuation of inventory". 2.7 AMENDMENT TO SECTION 3.2(C). Section 3.2(c) shall be amended by deleting the phrase "1995 Fiscal Year" and substituting "1998 Fiscal Year" in lieu thereof. 2.8 AMENDMENT TO SECTION 3.4(B). Section 3.4(b) shall be amended by deleting it in its entirety and substituting "Intentionally Omitted" in lieu thereof. 2.9 AMENDMENT TO SECTION 8.8. Section 8.8 shall be amended by deleting the proviso to the last sentence of Section 8.8 and the following shall be substituted in lieu thereof: "PROVIDED, that the aggregate amount of such investments by all of the Borrower and its Subsidiaries does not exceed ten percent (10%) of the Borrower's Consolidated Tangible Net Worth at the end of the previous fiscal year of the Borrower." 2.10 AMENDMENT TO SECTION 8.11. Section 8.11 shall be amended by deleting clause (iv) thereof in its entirety and substituting the following in lieu thereof: "(iv) so long as the Borrower and its Subsidiaries are satisfying the Qualifying Financial Standards, loans may be obtained from financial institutions not pursuant to this Agreement ("Outside Loans") in the aggregate principal amount of up to Thirty Million Dollars ($30,000,000) at any one time outstanding; PROVIDED, HOWEVER, that any such Outside Loan obtained from any financial institution other than a Bank may not remain outstanding for more than thirty (30) consecutive days and; PROVIDED, FURTHER, that any such Outside Loans must be - 5 - Page 17 6 repaid within one (1) Banking Day following the date as of which the Borrower and its Subsidiaries no longer satisfy such Qualifying Financial Standards, except that, if such repayment would cause the Borrower to incur compensation obligations resulting from the prepayment of any such Outside Loan with a fixed rate, the Borrower shall not be required to repay such loan until the earlier of (x) the expiration of the interest period or (y) the date upon which repayment will not result in a compensation obligation, 2.11 AMENDMENT TO SECTION 8.17. Section 8.17 shall be deleted in its entirety and the following substituted in lieu thereof: "SECTION 8.17 CAPITAL EXPENDITURES. The Borrower shall not make or permit Consolidated Capital Expenditures to exceed Fifty Million Dollars ($50,000,000) for any Fiscal Year." 2.12 AMENDMENT TO SECTIONS 8.18 AND 8.19. Sections 8.18 and 8.19 shall be deleted in its entirety and "Intentionally Omitted" shall be substituted in lieu thereof. 2.13 AMENDMENT TO SECTION 8.20. Section 8.20 shall be deleted and the following inserted in lieu thereof: "SECTION 8.20 CONSOLIDATED TANGIBLE NET WORTH. The Borrower will not suffer or permit its Consolidated Tangible Net Worth as of the Effective Date and as at the end of any Fiscal Quarter to be less than the "Required Minimum Amount" in effect from time to time. The "Required Minimum Amount" shall be (i) as of the Effective Date, One Hundred Sixty-Five Million Dollars ($165,000,000) and (ii) as at the end of any Cumulative Fiscal Period ending after the Effective Date: (a) One Hundred Sixty-Five Million Dollars ($165,000,000) PLUS (b) an aggregate amount equal to fifty percent (50%) of Borrower's consolidated net earnings (if any and only to the extent a positive number) for such Cumulative Fiscal Period, in each case calculated after taxes and cumulating income and losses for all Fiscal Quarters within such Cumulative Fiscal Period (such amount being "Cumulative Fiscal Earnings") PLUS (c) an aggregate amount equal to all Cumulative Fiscal Earnings (if any and only to the extent a positive number) attributable to Fiscal Years ending after the Effective Date and not including the Fiscal Year during which said Cumulative Fiscal Period is occurring (which aggregate amount shall not be reduced by consolidated net losses (if any) reported for any Fiscal Year ending after the Effective Date) PLUS (d) an amount equal to the total net proceeds received by Borrower at any time from any stock or other equity offering or any conversion of Subordinated Indebtedness into equity after the Effective Date (excluding stock offerings under any employee benefit plan of the Borrower or its Subsidiaries)." - 6 - Page 18 7 2.14 AMENDMENT TO SECTION 8.21. Section 8.21 shall be deleted in its entirety and the following shall be substituted in lieu thereof: "SECTION 8.21 CONSOLIDATED FIXED CHARGE COVERAGE. The Borrower shall not suffer or permit, as at the end of any Four Fiscal Quarter Period ending after the Effective Date, the ratio (the "Consolidated Fixed Charge Coverage Ratio") of: (x) Consolidated Net Pre-Tax Earnings of the Borrower and its Subsidiaries attributable to such period PLUS Consolidated Net Fixed Lease Charges attributable to such period PLUS Consolidated Net Interest Expense attributable to such period PLUS depreciation and amortization charges of the Borrower and its Subsidiaries attributable to such period TO (y) Consolidated Net Fixed Lease Charges attributable to such period PLUS Consolidated Net Interest Expense attributable to such period PLUS scheduled principal payments in respect of any Long-Term Indebtedness of the Borrower and its Subsidiaries during such period, to be less as at such date than 1.25 to 1.00." 2.15 AMENDMENT TO SECTION 8.23. Section 8.23 shall be deleted in its entirety and the following shall be substituted in lieu thereof: "SECTION 8.23 CONSOLIDATED LEVERAGE RATIO. The Borrower shall not suffer or permit, as at the end of any Fiscal Quarter, the ratio (the "Consolidated Leverage Ratio") of: (x) Funded Senior Debt outstanding as at such date TO (y) the sum of Funded Senior Debt outstanding as at such date PLUS the Convertible Subordinated Debentures outstanding as at such date PLUS Consolidated Tangible Net Worth as at such date to be greater than (i) .45 to 1.0 for the first Fiscal Quarter of each Fiscal Year, (ii) .50 to 1.0 for the second and third Fiscal Quarters of each Fiscal Year and (iii) .40 to 1.0 for the fourth Fiscal Quarter of each Fiscal Year." 2.16 AMENDMENT TO SECTION 8.24. Section 8.24 shall be deleted in its entirety and "Intentionally Omitted" shall be substituted in lieu thereof. 2.17 AMENDMENT TO EXHIBITS. Exhibit F shall be deleted in its entirety and Exhibit F-1 shall be substituted in lieu thereof. SECTION 3. REPRESENTATIONS AND WARRANTIES. ------------------------------------------ The Borrower hereby represents and warrants to the Banks and the Agent as follows: 3.1 THE AMENDMENT. This Amendment has been duly and validly executed by an authorized executive officer of the Borrower and constitutes the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms. The Credit Agreement, as amended by this Amendment, remains in full force and effect and remains the valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms. The Borrower hereby ratifies and confirms the Credit Agreement as amended by this Amendment. - 7 - Page 19 8 3.2 NONWAIVER. The execution, delivery, performance and effectiveness of this Amendment shall not operate nor be deemed to be nor construed as a waiver (i) of any right, power or remedy of the Banks or the Agent under the Credit Agreement, nor (ii) of any term, provision, representation, warranty or covenant contained in the Credit Agreement or any other documentation executed in connection therewith. Further, none of the provisions of this Amendment shall constitute, be deemed to be or construed as, a waiver of any Default or Event of Default under the Credit Agreement as amended by this Amendment. 3.3 REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT. Upon the Effectiveness of this Amendment, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein", or words of like import shall mean and be a reference to the Credit Agreement, as amended by this Amendment and each reference to the Credit Agreement in any other document, instrument or agreement executed and/or delivered in connection with the Credit Agreement shall mean and be a reference to the Credit Agreement, as amended by this Amendment. SECTION 4. CONDITIONS PRECEDENT TO EFFECTIVENESS ------------------------------------------------ OF THIS AMENDMENT NO. 1. ------------------------ In addition to all of the other conditions and agreements set forth herein, the effectiveness of this Amendment is subject to the following conditions precedent: 4.1 THE AMENDMENT. The Banks, the Agent and the Letter of Credit Bank shall have received this Amendment No. 1 to Credit Agreement, executed and delivered by a duly authorized officer of the Borrower. 4.2 ACKNOWLEDGEMENT OF GUARANTORS. The Banks, the Agent and the Letter of Credit Bank shall have received the Acknowledgement of Guarantors attached to this Amendment, executed and delivered by a duly authorized officer of each of the Guarantors of the indebtedness of the Borrower to the Banks and the Agent. 4.3 BORROWER'S CERTIFICATE. The Banks and the Agent shall have received a certificate, in form and substance satisfactory to the Agent, executed for and on behalf of the Borrower by either the President or Vice President of the Borrower and by either the Secretary or Assistant Secretary of the Borrower (one of which certifying officers shall not be a signatory of this Amendment) and dated as of the date of this Amendment, certifying that (i) this Amendment, and each document or other instrument executed in connection with the Amendment has been authorized, (ii) the names and signatures of the officers signing this Amendment on behalf of the Borrower, and (iii) compliance by the Borrower with all representations, warranties, covenants and conditions under the Credit Agreement as amended by this Amendment. 4.4 OTHER DOCUMENTS. The Banks and the Agent shall have received each additional document, instrument or piece of information reasonably requested by the Agent. - 8 - Page 20 9 SECTION 5. MISCELLANEOUS. ------------------------- 5.1 GOVERNING LAW. This Amendment shall be governed by and construed in accordance with the laws of the State of Ohio. 5.2 SEVERABILITY. In the event any provision of this Amendment should be invalid, the validity of the other provisions hereof and of the Credit Agreement shall not be affected thereby. 5.3 COUNTERPARTS. This Amendment may be executed in one or more counterparts, each of which, when taken together, shall constitute but one and the same agreement. [ REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] - 9 - Page 21 10 IN WITNESS WHEREOF, the Borrower has caused this Amendment No. 1 to Credit Agreement to be duly executed and delivered by its duly authorized officer as of the date first above written. FABRI-CENTERS OF AMERICA, INC. /s/ Samuel R. Gaston ----------------------------------- By: Samuel R. Gaston -------------------------------- Title: Executive Vice President ----------------------------- - 10 - Page 22 11 ACCEPTED AND AGREED as of the date and year first above written by: KEYBANK NATIONAL ASSOCIATION, as a Bank, the Letter of Credit Bank and as Agent /s/ David J. Janus - -------------------------------------- By: David J. Janus ----------------------------------- Title: Senior Vice President -------------------------------- NATIONAL CITY BANK, as a Bank /s/ Donald B. Hayes, Jr. - -------------------------------------- By: Donald B. Hayes, Jr. ----------------------------------- Title: Vice President -------------------------------- NBD Bank, as a Bank /s/ Christina D. Zautcke - -------------------------------------- By: Christina D. Zautcke ----------------------------------- Title: Vice President -------------------------------- COMERICA BANK, as a Bank /s/ Jeffrey J. Judge - -------------------------------------- By: Jeffrey J. Judge ----------------------------------- Title: Assistant Vice President -------------------------------- THE HUNTINGTON NATIONAL BANK, as a Bank /s/ Timothy M. Ward - -------------------------------------- By: Timothy M. Ward ----------------------------------- Title: Assistant Vice President -------------------------------- - 11 - Page 23 12 PNC BANK, NATIONAL ASSOCIATION, as a Bank /s/ C. J. Richardson - -------------------------------------- By: C. J. Richardson ----------------------------------- Title: Vice President -------------------------------- BANK ONE, NA (as successor by merger to Bank One, Akron, NA), as a Bank /s/ Susan D. Steiger - -------------------------------------- By: Susan D. Steiger ----------------------------------- Title: Vice President -------------------------------- THE FIFTH THIRD BANK, as a Bank /s/ R. C. Lanctot - -------------------------------------- By: R. C. Lanctot ----------------------------------- Title: Vice President -------------------------------- - 12 - Page 24 13 ACKNOWLEDGEMENT OF GUARANTORS ----------------------------- Each of the undersigned, each of which being a guarantor of indebtedness of the Borrower to the Banks, the Agent and the Letter of Credit Bank, hereby acknowledges and agrees to the terms of the foregoing Amendment No. 1 to Credit Agreement. Each of the undersigned represents and warrants to the Banks, the Agent and the Letter of Credit Bank that the respective Guaranty of Payment (as amended), executed and delivered by each of the undersigned, each dated as of September 30, 1994, remain the valid and binding obligations of each of the undersigned, respectively, enforceable against it in accordance with their terms. FCA FINANCIAL, INC. /s/ Francis C. Piccirillo ------------------------------------- By: Francis C. Piccirillo ---------------------------------- Title: Treasurer ------------------------------- FABRI-CENTERS OF SOUTH DAKOTA, INC. /s/ Francis C. Piccirillo ------------------------------------- By: Francis C. Piccirillo ---------------------------------- Title: Treasurer ------------------------------- FABRI-CENTERS OF CALIFORNIA, INC. /s/Francis C. Piccirillo ------------------------------------- By: Francis C. Piccirillo ---------------------------------- Title: Treasurer ------------------------------- FCA OF OHIO, INC. /s/ Francis C. Piccirillo ------------------------------------- By: Francis C. Piccirillo ---------------------------------- Title: Treasurer ------------------------------- Executed: June 5, 1997 - 13 - Page 25 14 EXHIBIT F-1 FORM OF COMPLIANCE CERTIFICATE ---------------------- [BORROWER LETTERHEAD] QUARTER-ANNUAL COMPLIANCE CERTIFICATE Certified on this ___ day of __________________, 19__ ("this date") as of ___________________, 19__ (the "Report Date") pursuant to Section 8.1(c)(ii) of the Credit Agreement (as hereinafter defined). Reference is hereby made to that certain Credit Agreement, dated as of September 30, 1994 (as amended from time to time, the "Credit Agreement"), among Fabri-Centers of America, Inc. (the "Borrower"), certain banks which are signatories thereto (the "Banks"), and KeyBank National Association, as agent for the Banks (the "Agent"). Unless otherwise defined herein, all capitalized terms used herein shall have the meanings ascribed to such terms in the Credit Agreement. Pursuant to Section 8.1(c)(ii) of the Credit Agreement, I certify to the Banks that I am the _____________________ [responsible financial officer] of the Borrower and further certify to the Banks, on behalf of the Borrower, to the best of my knowledge and belief, as follows: 1. The conclusions below, together with the attached calculations, indicate the Borrower's compliance or non-compliance with certain sections of the Credit Agreement: SECTION 8.17 CAPITAL EXPENDITURES.
Maximum Permitted Actual Consolidated Capital Consolidated Capital Period Expenditures Expenditures - ---------------------------------------------------------------------------------------------------------------------- [FY ____ $50,000,000 $_______________] ======================================================================================================================
Page 26 15 SECTION 8.20 CONSOLIDATED TANGIBLE NET WORTH.
Req. Minimum Actual Consolidated Consolidated Tangible Net Tangible Net Worth Worth - ------------------------------------------------------ ---------------------- ----------------------- 1. AS OF THE EFFECTIVE DATE: $165,000,000 $ 2. AS AT THE END OF ANY CUMULATIVE FISCAL PERIOD ENDING AFTER THE EFFECTIVE DATE: $165,000,000 PLUS (0.5 X consolidated net earnings for FY in which Report Date falls (1)) PLUS (aggregate Cumulative Fiscal +$ Earnings attributable to FY's ending after ----------- the Effective Date(but not FY in which Report Date falls)(2) PLUS total net proceeds rec'd by Borrower + $ at any time from any stock or other equity ----------- offering or any conversion of Subordinated Indebtedness to equity after the Effective Date(3) CONSOLIDATED TANGIBLE NET WORTH: + $ $ ----------- ============== (actual) $=============== (required min.) - -------- (1) ONLY IF GREATER THAN ZERO, CALCULATED AFTER TAXES AND CUMULATING INCOME AND LOSSES FOR ALL FISCAL QUARTERS WITHIN THE APPLICABLE CUMULATIVE FISCAL PERIOD. (2) ONLY IF GREATER THAN ZERO; THIS FIGURE SHALL NOT BE REDUCED BY CONSOLIDATED NET LOSSES (IF ANY) REPORTED FOR ANY FISCAL YEAR ENDING AFTER THE EFFECTIVE DATE. (3) EXCLUDING STOCK OFFERINGS UNDER ANY EMPLOYEE BENEFIT PLAN OF THE BORROWER OR ITS SUBSIDIARIES.
- 2 - Page 27 16 SECTION 8.21 CONSOLIDATED FIXED CHARGE COVERAGE. As of the Report Date, and as determined for each period set forth below: Consolidated Net Pre-Tax Earnings: $ ----------------- Consolidated Net Interest Expense: +$ ----------------- Consolidated Net Fixed Lease Charges: +$ ----------------- depreciation and amortization charges: +$ ----------------- (A) $ ----------------- Consolidated Net Fixed Lease Charges: $ ----------------- Consolidated Net Interest Expense: + $ ----------------- scheduled principal payments on Long-Term Indebtedness: + $ ----------------- (B) $ Actual Consolidated Fixed Charge Ratio: to 1.0 ------------------- (Ratio of (A) to (B)) Minimum Required Consolidated Fixed Charge Ratio: 1.25 to 1.00 - 3 - Page 28 17 SECTION 8.22 CONSOLIDATED CURRENT FUNDED INDEBTEDNESS. AS OF THE REPORT DATE: - ---------------------- (A) Consolidated Current Assets: $ -------------------- Consolidated Current Liabilities: $ (4) -------------------- Funded Senior Debt: + $ -------------------- (B) $ Actual Ratio (Ratio of (A) to (B)): to 1.0 -------------------- MINIMUM REQUIRED CONSOLIDATED CURRENT FUNDED INDEBTEDNESS RATIO: - ---------------------------------------------------------------- As at the end of any of the first three FQ's of any FY: 1.15 to 1.0 As at the end of any FY: 1.25 to 1.0 - -------- (4) Exclusive of the sum of (a) the aggregate outstanding balance of Revolving Credit Loans PLUS (b) the aggregate outstanding Negotiated Bid Loans not in excess of the Total Commitment Amount. - 4 - Page 29 18 SECTION 8.23 CONSOLIDATED LEVERAGE RATIO. AS OF THE REPORT DATE, AND FOR EACH PERIOD SET FORTH BELOW: - ----------------------------------------------------------- (A) Outstanding Senior Funded Debt: $ -------------------- Consolidated Tangible Net Worth: $ (4) -------------------- Outstanding Subordinated Debt + $ -------------------- Outstanding Funded Senior Debt: + $ -------------------- (B) $ -------------------- Actual Consolidated Leverage Ratio ((A) to (B)): TO 1.0 -------------------- MAXIMUM PERMITTED CONSOLIDATED LEVERAGE RATIO: - ---------------------------------------------- FISCAL QUARTER RATIO -------------- ----- First Fiscal Quarter of each Fiscal Year .45 to 1.00 Second Fiscal Quarter of each Fiscal Year .50 to 1.00 Third Fiscal Quarter of each Fiscal Year .50 to 1.00 Fourth Fiscal Quarter of each Fiscal Year .40 to 1.00 I further certify that: Enclosed herewith are Borrower's [unaudited quarterly/audited annual] financial statements as required by Section 8.1 of the Credit Agreement. No Possible Default or Event of Default existed as at the Report Date, nor does any exist at this date.* *- If this certification cannot be given, substitute a brief description of the Possible Default(s) or Event of Default(s) and Borrower's intentions in respect thereof. FABRI-CENTERS OF AMERICA, INC. on behalf of itself and its Subsidiaries - ------------------------------ By: --------------------------- Its: -------------------------- Dated: ------------------------ - 5 - Page 30 EX-11 3 EXHIBIT 11 1 EXHIBIT NO. 11 COMPUTATION OF EARNINGS PER COMMON SHARE FABRI-CENTERS OF AMERICA, INC. (THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)
THIRTEEN WEEKS ENDED ------------------------------ MAY 3, APRIL 27, 1997 1996 - ---------------------------------------------------------------------------- PRIMARY EARNINGS PER SHARE: Net earnings $ 2,608 $ 1,070 ============ ============ Weighted average shares of common stock outstanding during the period 18,024,303 18,268,965 Incremental shares from assumed exercise of stock options - primary 1,207,417 541,043 ------------ ------------ 19,231,720 18,810,008 ============ ============ Net earnings per common share - primary $ 0.14 $ 0.06 ============ ============ EARNINGS PER SHARE ASSUMING FULL DILUTION: Net earnings $ 2,608 $ 1,070 Interest expense applicable to 6 1/4% convertible subordinated debentures, net of tax 556 556 ------------ ------------ Net earnings $ 3,164 $ 1,626 ============ ============ Weighted average shares of common stock outstanding during period 18,024,303 18,268,965 Incremental shares from assumed exercise of stock options - fully diluted 1,456,162 561,575 Incremental shares from assumed conversion of 6 1/4% convertible subordinated debentures 2,337,764 2,337,764 ------------ ------------ 21,818,229 21,168,304 ============ ============ Net earnings per common share assuming full dilution $ 0.15(a) $ 0.08(a) ============ ============ - ----------- (a) This calculation is submitted in accordance with Regulation S-K Item 601(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15, because it produces an anti-dilutive result.
Page 31 EX-27 4 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET OF FABRI-CENTERS OF AMERICA, INC. AS OF MAY 3, 1997 AND THE CONSOLIDATED STATEMENT OF INCOME FOR THE THIRTEEN WEEKS THEN ENDED. 3-MOS JAN-31-1998 FEB-02-1997 MAY-03-1997 12,632 0 0 0 295,231 318,296 180,124 86,291 428,415 131,353 76,583 1,018 0 0 202,425 428,415 218,826 218,826 122,688 213,126 0 0 1,528 4,172 1,564 2,608 0 0 0 2,608 0.14 0.13
-----END PRIVACY-ENHANCED MESSAGE-----