-----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, NZlni4DWt5dO6Pd/za1znrDVkEBWMUnwvuLz2h9XcTM4b7sV6TY6yfyJHKRaPgXy +sjEBGN/UoYFEZBUGYWCXA== 0000085149-95-000029.txt : 19951002 0000085149-95-000029.hdr.sgml : 19951002 ACCESSION NUMBER: 0000085149-95-000029 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950429 FILED AS OF DATE: 19950926 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROSES STORES INC CENTRAL INDEX KEY: 0000085149 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-VARIETY STORES [5331] IRS NUMBER: 560382475 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-00631 FILM NUMBER: 95576158 BUSINESS ADDRESS: STREET 1: PO DRAWER 947 STREET 2: 218 S GARNETT ST CITY: HENDERSON STATE: NC ZIP: 27536 BUSINESS PHONE: 9194302600 10-Q/A 1 FORM 10-Q/A SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended April 29, 1995 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-631 ROSE'S STORES, INC. Incorporated Under the Laws of Delaware I.R.S. Employer Identification No. 56-0382475 P. H. Rose Building 218 South Garnett Street Henderson, North Carolina 27536 Telephone No. 919/430-2600 Indicate by check mark whether the Company (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 Company 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 close of the period covered by this report. Class Shares Outstanding Common Stock, no par value - The 18,758,000 formerly outstanding shares of Common Stock of the Company were cancelled on April 28, 1995, and 10,000,000 shares of the reorganized Company were issued in escrow to First Union National Bank on April 28, 1995, but under the terms of the escrow agreement, the shares have no voting rights until distributed to the beneficial owners thereof, pursuant to the Company's Modified and Restated First Amended Joint Plan of Reorganization. ROSE'S STORES, INC. PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements (Amounts in thousands except per share amounts) The following summary of financial information of Rose's Stores, Inc. (the "Company"), which is unaudited, reflects all adjustments which are, in the opinion of management, necessary to reflect a fair statement of the information presented below for the thirteen weeks ended April 29, 1995 and April 30, 1994. ROSE'S STORES, INC. STATEMENTS OF OPERATIONS (Unaudited) (Amounts in Thousands Except Per Share Amounts)
For the Thirteen Weeks Ended April 29, 1995 April 30, 1994 Revenue: Gross sales $ 159,407 174,583 Leased department sales 5,117 5,514 Net sales 154,290 169,069 Leased department income 1,114 1,300 Total revenue 155,404 170,369 Costs and Expenses: Cost of sales 116,838 126,696 Selling, general and administrative 35,486 40,181 Depreciation and amortization 1,812 2,475 Interest 726 1,784 Total costs and expenses 154,862 171,136 Earnings (Loss) before reorganization benefit (expense) 542 (767) Reorganization benefit (expense) (Note 1) (3,847) (58,781) Fresh start revaluation (17,432) - Loss before extraordinary item (20,737) (59,548) Extraordinary item - gain on debt discharge 90,924 - Net Earnings (Loss) $ 70,187 (59,548) Earnings (Loss) per share before extraordinary item (Note 2) $ (1.11) - Net Earnings (Loss) per share (Note 2) $ 3.74 (3.17) Weighted Average Shares (Note 2) 18,758 18,758 Note 1 Certain information concerning benefits (expenses) resulting from the Company's reorganization are as follows: Closed store provision (59 closings) $ - (55,000) DIP financing fees, amortization & expenses (1,342) (424) Estimated professional fees (2,318) (3,115) Other reorganization costs and expenses (187) (242) TOTAL REORGANIZATION COSTS $ (3,847) (58,781) Note 2 The 18,758 formerly outstanding shares of the Company used to calculate earnings (loss) per share were cancelled on April 28, 1995.
See notes to financial statements ROSE'S STORES, INC. BALANCE SHEETS (Amounts in thousands)
April 29, January 28, April 30, 1995 1995 1994 (Unaudited) (Audited) (Unaudited) Assets Current Assets Cash and cash equivalents $ 622 1,350 1,863 Accounts receivable 9,235 12,140 13,314 Inventories 185,129 119,567 234,467 Prepaid merchandise 7,100 6,632 9,199 Other current assets 2,475 5,531 7,252 Total current assets 204,561 145,220 266,095 Property and Equipment, at cost Less accumulated depreciation and amortization - 34,707 40,704 Deferred Income Tax Benefits - 3,164 6,447 Other Assets - 95 653 $ 204,561 183,186 313,899 Liabilities and Stockholders' Equity (Deficit) Current Liabilities Reclamation claims $ - - 2,271 DIP financing - 600 13,100 Current maturities of capital lease obligations 400 628 2,043 Bank drafts outstanding 5,762 - - Accounts payable 37,642 23,392 38,623 Short-term debt 58,654 - - Reserve for store closings and remerchandising 4,952 8,530 41,027 Deferred tax liabilities - 3,164 6,447 Accrued salaries and wages 5,262 7,821 7,138 Reorganization payables 4,352 - - Other current liabilities 13,421 9,076 16,038 Total current liabilities 130,445 53,211 126,687 Liabilities Subject to Settlement Under Reorganization Proceedings - 156,474 221,464 Excess of Net Assets Over Reorganization Value 32,021 - - Capital Lease Obligations (excluding current maturities) 593 646 1,601 Deferred Income 1,481 1,993 1,922 Accumulated Postretirement Benefit Obligation 5,021 6,048 5,678 Stockholders' Equity (Deficit) Common Stock, Authorized 10,000 shares 35,000 - - Voting common stock (Cancelled 4/28/95) - 2,250 2,250 Non-voting Class B stock (Cancelled 4/28/95) - 18,795 18,795 Paid-in Capital-Stock Warrants (Cancelled 4/28/95) - 2,700 2,700 Retained earnings (Accumulated deficit) - (40,313) (48,580) 35,000 (16,568) (24,835) Treasury stock, at cost (Cancelled 4/28/95) - (18,618) (18,618) Total stockholders' equity (deficit) 35,000 (35,186) (43,453) $ 204,561 183,186 313,899
See notes to financial statements ROSE'S STORES, INC. STATEMENTS OF CASH FLOWS (Unaudited) (Amounts in thousands)
For the Thirteen Weeks Ended April 29, 1995 April 30, 1994 Cash flows from operating activities: Net earnings (loss) $ 70,187 (59,548) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 1,812 2,475 (Gain) loss on disposal of property and equipment (1) (310) LIFO expense (credit) (364) 172 Provision for closed stores - 55,000 Fresh start revaluation and debt discharge (73,492) - Cash provided by (used in) assets and liabilities: (Increase) decrease in accounts receivable (630) 1,743 (Increase) decrease in prepaid merchandise (468) 1,558 (Increase) decrease in inventories (40,291) (31,489) (Increase) decrease in other current and non-current assets (3,152) 51 Increase (decrease) in accounts payable 14,361 (97) Increase (decrease) in accrued expenses and other liabilities (2,142) (3,150) Increase (decrease) in reserves for closed stores $ (1,731) 58,986 Non cash activities in closed store reserve: Provision for closed stores - (55,000) Retirement of net book value of assets 623 6,901 Net cash increase (decrease) in provisions for closed stores (1,108) 10,887 Increase (decrease) in deferred income (201) (374) Increase (decrease) in accumulated postretirement benefit obligation 7 64 Net cash provided by (used in) operating activities (35,482) (23,018) Cash flows from investing activities: Purchases of property and equipment (510) (278) Proceeds from disposal of property and equipment 5 712 Net cash provided by (used in) investing activities (505) 434 Cash flows from financing activities: Net activity on lines of credit 58,654 - Proceeds (payments) of DIP Facility (600) 13,100 Payments on pre-petition secured debt (26,423) - Payments of unsecured claims (1,593) - Principal payments on capital lease obligations (281) (607) Increase (decrease) in bank drafts outstanding 5,502 - Other - (1) Net cash provided by (used in) financing activities 35,259 12,492 Net decrease in cash (728) (10,092) Cash and cash equivalents at beginning of period 1,350 11,955 Cash and cash equivalents at end of period $ 622 1,863
See notes to financial statements Notes to Financial Statements: (1) On September 5, 1993, the Company filed a voluntary Petition for Relief under Chapter 11, Title 11 of the United States Code (the "Bankruptcy Code") with the United States Bankruptcy Court for the Eastern District of North Carolina (the "Bankruptcy Court") (See Part II, Item 1, Legal Proceedings). The Company's Modified and Restated First Amended Joint Plan of Reorganization (the "Plan") was approved by order of the Bankruptcy Court on April 24, 1995. On April 28, 1995 (the "Effective Date"), the Company closed on its exit financing loan, thereby satisfying the last condition of the Plan and emerged from bankruptcy. The exit financing is a $125,000 three- year revolving credit facility (to be reduced by $5,000 on each anniversary) with a letter of credit sublimit in the aggregate principal amount of $40,000 with the First National Bank of Boston and The CIT Group/Business Credit, Inc., as facility agents. The revolving credit facility is secured by a perfected first priority lien and security interest in all of the assets of the Company. On the Effective Date, pursuant to the Plan, the Company paid in full the claims of its Pre-Petition Secured Lenders in the amount of $26,423, all amounts owing to GE Capital Corporation (the "Debtor-in-Possession (DIP) Facility"), and various administrative and tax claims as defined in the Plan. Under the exit financing facility, trade suppliers which extend credit to the Company will be supported by a $5,000 letter of credit and a subordinated lien of $15,000 in the real estate properties of the Company. The revolving credit facility includes certain financial covenants and financial maintenance tests, including those relating to earnings before interest, taxes, depreciation and amortization (EBITDA), debt service coverage, capital expenditures limitations, minimum stockholders' equity, and minimum/maximum inventory levels, which are measured quarterly. The facility also includes restrictions on the incurrence of additional liens and indebtedness and a requirement that the facility be paid down to certain levels for 30 consecutive days between December 1st and February 15th each year. Also pursuant to the Plan, the Company issued and delivered to First Union National Bank of North Carolina, as Escrow Agent for the unsecured creditors of the Company, 9,850 shares of the Company's new common stock for distribution on allowed claims of unsecured creditors in accordance with a schedule for distributions set forth in the Plan; and 150 shares of the Company's new common stock were delivered to the Escrow Agent for distribution to officers of the Company pursuant to a consummation bonus plan approved by order of the Bankruptcy Court on February 14, 1995. An initial distribution of stock to unsecured creditors whose claims have been allowed will commence on or before June 12, 1995 pursuant to the Plan amounting to seventy percent (70%) of the stock relating to allowed claims. Subsequent distributions for allowed unsecured claims, payments for administrative claims and resolution of disputed claims will be made in accordance with the Notes to Financial Statements (Continued): (1) Continued provisions of the Plan and applicable orders of the Bankruptcy Court. The consummation of the Plan resulted in a gain on extinguishment of debt of $90,924. On the Effective Date, all shares of the Company's pre-emergence Voting Common Stock and Non-Voting Class B Stock were cancelled and the record owners of such stock as of such date became entitled to warrants to purchase the new common stock of the Company. One warrant will be issued for every 4.377 shares of pre-emergence Voting Common Stock or Non-Voting Class B Stock and will allow the holder to purchase one share of the new common stock. The warrants may be exercised at any time until they expire on April 28, 2002. The initial warrant exercise price of $14.45 was calculated pursuant to a formula set forth in the Plan. The formula requires that the total allowed and disputed claims of the Company's unsecured creditors be divided by 10,000, the number of shares of the reorganized Company's stock to be issued under the Plan. This formula will be adjusted on each of the first three anniversaries of April 28, 1995 to reflect adjustments to the total of allowed and disputed claims of the Company's unsecured creditors, and will be further adjusted on the fourth, fifth and sixth anniversaries to reflect 105%, 110% and 115%, respectively of the total of the allowed and disputed claims of the unsecured creditors. Although there can be no assurance, the Company anticipates that the warrant exercise price will decrease as certain disputed claims are resolved over time. (2) In 1990, the American Institute of Certified Public Accountants issued Statement of Position 90-7 ("SOP 90-7") "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code" (sometimes called "Fresh-Start Reporting"). The application of Fresh-Start Reporting changed the Company's basis of accounting for financial reporting purposes. Specifically, SOP 90-7 required the adjustment of the Company's assets and liabilities to reflect their estimated fair market value at the Effective Date. At the same time, the Company made certain reclassifications between gross margin and expenses and changed the method of accruing certain expenses between periods. Accordingly, the statements of operations and changes in cash flows commencing May 1995, and the balance sheets beginning with April 1995, will not be comparable to the financial information for prior periods. In accordance with SOP 90-7, the reorganization value of the Company was determined as of the Effective Date. The reorganization value of $35,000 was derived by an outside company using various valuation methods, including discounted cash flow analyses (utilizing the Company's projections), analyses of the market values of other publicly traded companies whose businesses are reasonably comparable, and analyses of the present value of the Company's equity. Notes to Financial Statements (Continued): (2) Continued The adjustments to reflect the consummation of the Plan and the adoption of Fresh-Start Reporting, including the gain on debt discharge for liabilities subject to settlement under reorganization proceedings, the adjustment to restate assets and liabilities at their fair value, and the adjustment to non-current assets for the excess of the fair value of net assets which exceeded reorganization value, have been reflected in the accompanying financial statements as follows: BALANCE SHEETS (Amounts in thousands)
Actual Fresh Restated April 29, Debt Start April 29, 1995 Discharge Accounting 1995 Assets Current Assets Cash and cash equivalents $ 622 622 Accounts receivable 12,076 (2,841)(a) 9,235 Inventories 160,111 25,018 (b) 185,129 Prepaid merchandise 7,100 7,100 Other current assets 2,475 2,475 Total current assets 182,384 - 22,177 204,561 Property and Equipment, at cost, Less accumulated depreciation and amortization 33,703 (33,703)(c) - Other Assets 6,302 - (6,302)(c) - $ 222,389 - (17,828) 204,561 Liabilities and Stockholders' Equity (Deficit) Current Liabilities Current maturities of capital lease obligations $ 400 400 Bank drafts outstanding 5,762 5,762 Accounts payable 37,642 37,642 Short-term debt 58,654 58,654 Reserve for store closings and remerchandising 4,952 4,952 Accrued salaries and wages 5,212 50 (d) 5,262 Reorganization payables - 4,352 (e) 4,352 Other current liabilities 9,543 3,878 (f) 13,421 Total current liabilities 122,165 4,352 3,928 130,445 Liabilities Subject to Settlement Under Reorganization Proceedings 130,276 (130,276)(g) - Excess of Net Assets Over Reorganization Value - 32,021 (h) 32,021 Capital Lease Obligations 593 593 Deferred Income 1,792 (311)(i) 1,481 Accumulated Postretirement Benefit Obligation 6,055 (1,034)(j) 5,021 Stockholders' Equity (Deficit) (38,492) 90,924 (k) (17,432)(l) 35,000 $ 222,389 (35,000) 17,172 204,561
Notes to Financial Statements (Continued): (2) Continued Explanations of adjustment columns of the balance sheet are as follows: (a) To reflect appropriate current value of accounts receivable (b) Adjust inventories to current market value (c) Write off of long-term assets (d) Increased bonuses payable as a result of emergence from bankruptcy (e) Reclassified pre-petition priority claims and cure amounts (f) Accrued an additional year of property taxes to reflect such taxes on assessment date basis, increased insurance and loss reserves, and accrued any remaining reorganization costs to be incurred after emergence from Chapter 11 (g) Unsecured pre-petition claims settled as follows: (a) $4,352 of priority claims and cure amounts reclassified to current liabilities (b) The remaining unsecured claims settled with stock (h) The excess reorganization value was allocated to non- current assets, with any excess recorded as a deferred credit to be amortized over the period of expected benefit but not more than 10 years. (i) Reduction of deferred income to current value (j) Adjustment to reverse unrecognized gain on transition obligation (k) To record the settlement of liabilities subject to settlement reorganization proceedings in accordance with the Plan. (l) Value of new company established (3) The Company's consolidated financial statements for years prior to January 1995 include the accounts of a wholly-owned subsidiary after elimination of intercompany accounts and transactions. In January 1995, the wholly- owned subsidiary was merged with the Company. (4) The operating results presented herein are not necessarily indicative of the operating results for a full year due to seasonal factors, among other reasons. (5) Included in the reorganization costs for the first quarter of 1994 was a provision of $55,000 for the estimated costs of closing 59 stores in 1994 and to realign corporate and administrative costs accordingly. (6) The fresh start revaluation of $17,432 reflects the net expense to record assets at their fair values and liabilities at their present values in accordance with the provisions of SOP 90-7 and to reduce noncurrent assets below their fair values for the excess of the fair values of assets over the reorganization value. (7) LIFO expense (credit) is included as an adjustment to reconcile net loss to net cash used in operating activities in the statements of cash flows because LIFO expense (credit) is a noncash item included in cost of sales to adjust inventories stated on a FIFO basis to a LIFO basis. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Amounts in thousands) Chapter 11 Proceedings On September 5, 1993, the Company filed a voluntary Petition for Relief under Chapter 11, Title 11 of the United States Code (the "Bankruptcy Code") with the United States Bankruptcy Court for the Eastern District of North Carolina (the "Bankruptcy Court") Case No. 93-01365-5-ATS. Technical modifications to the Company's First Amended Joint Plan of Reorganization (which was confirmed by the Bankruptcy Court on December 14, 1995) were approved by orders of the Bankruptcy Court dated February 3, 1995 and February 13, 1995 and a Modified and Restated First Amended Joint Plan of Reorganization (the "Plan") was approved by order of the Bankruptcy Court on April 24, 1995. On May 1, 1995, the Company announced that it had satisfied all conditions required under its plan of reorganization and had emerged from Chapter 11 of the United States Bankruptcy Code on April 28, 1995 (the "Effective Date"). For a further discussion of the Chapter 11 proceedings, see Note 1 to the Financial Statements. Thirteen Weeks Ended April 29, 1995 compared to Thirteen Weeks Ended April 30, 1994 Revenue The Company reported sales for the first quarter of 1995 of $159,407, a decrease of $15,176, or 8.7%, from the first quarter of 1994. The decline in sales was primarily attributable to a decline in sales on a comparable store basis of 3.1%, together with the decrease in the number of stores (106 in 1995 as compared to 113 in 1994). (Month-to-date sales trends are available from the offices of the Company upon request.) Costs and Expenses Year-to-date cost of sales as a percent to net sales was 75.7% for 1995 and 74.9% for 1994. The increase in the cost of sales was due primarily to an increase in promotional markdowns as a percent of sales and a decrease in markon which were offset somewhat by a decrease in the shrink percent. Selling, general and administrative expenses as a percent of net sales were 23.0% in 1995 and 23.8% in 1994. The decrease was due in part to the realignment of corporate and administrative costs as well as planned reductions in store expenses that were made in the second quarter of 1994. Reorganization costs during the first quarter of 1995 were $3,847 and during the first quarter of 1994 were $58,781. Included in reorganization costs are professional fees, DIP fees and expense amortizations, and other expenditures related directly to the Chapter 11 filing. Also, included in the reorganization costs for the first quarter of 1994 is a provision of $55,000 for the estimated costs of closing 59 stores in 1994 and to realign corporate and administrative costs accordingly. The fresh start revaluation of $17,432 reflects the net expense to record assets at their fair values and liabilities at their present values in accordance with the provisions of SOP 90-7 and to reduce noncurrent assets below their fair values for the excess of the fair values of assets over the reorganization value. Liquidity and Capital Resources On the Effective Date, the Company satisfied the last condition under the Plan for its emergence from bankruptcy by closing on its exit financing loans. The exit financing is a $125,000 three-year revolving credit facility (to be reduced by $5,000 on each anniversary) with a letter of credit sublimit in the aggregate principal amount of $40,000 with the First National Bank of Boston and The CIT Group/Business Credit, Inc., as facility agents. The revolving credit facility is secured by a perfected first priority lien and security interest in all of the assets of the Company. On the Effective Date, the Company drew down $58,654 which was used to satisfy all outstanding indebtedness to GE Capital Corporation (the "DIP Facility") and to the Pre-Petition Secured Lenders as defined in the Plan. Under the exit financing facility, trade suppliers which extend credit to the Company will be supported by a $5,000 letter of credit and a subordinated lien of $15,000 in the real estate properties of the Company. The revolving credit facility includes certain financial covenants and financial maintenance tests, including those relating to EBITDA, debt service coverage, capital expenditures limitations, minimum earnings stockholders' equity, and minimum/maximum inventory levels, which are measured quarterly. The facility also includes restrictions on the incurrence of additional liens and indebtedness and a requirement that the facility be paid down to certain levels for 30 consecutive days between December 1st and February 15th each year. At the end of the first quarter of 1995, the Company had $58,654 outstanding under its working capital facility and $8,753 in outstanding letters of credit. The Company's unused availability was $25,081 as of April 29, 1995. The Company invested $510 in cash for property and equipment in the first quarter of 1995 compared to $278 in the first quarter of 1994. Cash used in operating activities was $35,482 in the first quarter of 1995 and $23,018 in the first quarter of 1994. The Company expects to realize positive cash flow from its 1995 operations. On the Effective Date, the Company entered into a Warrant Agreement and Escrow Agreement with First Union National Bank of North Carolina ("First Union") pursuant to which the Company issued to First Union 10,000 shares of Common Stock as Escrow Agent and 4,286 Warrants as Warrant Agent. The Escrow Agreement and Warrant Agreement specify the terms, conditions and procedures pursuant to which First Union will hold and deliver shares of Common Stock and Warrants under the terms of the Plan. (See Note 1 to the financial statements for further discussion.) PART II. OTHER INFORMATION No securities (debt or equity) which were not registered under the Securities Act of 1933 were sold by the Company during the fiscal quarter ended April 29, 1995. ITEM 1: Legal Proceedings (Amounts in thousands, except per share amounts) The Company's business ordinarily results in a number of negligence and tort actions, most of which arise from injuries on store premises, injuries from a product, or false arrest and detainer arising from apprehending suspected shoplifters. The Company's liability for uninsured general damages and punitive damages is not considered material. No legal proceedings presently pending by or against the Company are described because the Company believes that the outcome of such litigation should not have a material adverse effect on the financial position of the Company. On September 5, 1993, the Company filed a voluntary Petition for Relief under Chapter 11, Title 11 of the United States Code (the "Bankruptcy Code") with the United States Bankruptcy Court for the Eastern District of North Carolina (the "Bankruptcy Court") Case No. 93-01365-5-ATS (the "Chapter 11 Case"). The Chapter 11 Case is described in the Form 10-K of the Company for the year ended January 28, 1995. The following discussion sets forth certain developments in the Chapter 11 Case during the first quarter of 1995 and through the date hereof, but is not intended to be an exhaustive summary. For additional information regarding the effect of the Chapter 11 Case on the Company, reference should be made to the Bankruptcy Code. Technical modifications to the Company's First Amended Joint Plan of Reorganization (which was confirmed by the Bankruptcy Court on December 14, 1994) were approved by orders of the Bankruptcy Court dated February 3, 1995 and February 13, 1995 and a Modified and Restated First Amended Joint Plan of Reorganization (the "Plan") was approved by order of the Bankruptcy Court on April 24, 1995. All conditions to effectuation of the Plan were met on April 28, 1995 (the "Effective Date"), and the Plan became effective as of such date. On the Effective Date, pursuant to the Plan, the Company paid in full the claims of its Pre-Petition Secured Lenders, all amounts owing under the DIP facility, and various administrative and tax claims due at the Effective Date. Also pursuant to the Plan, the Company issued and delivered to First Union National Bank of North Carolina, as Escrow Agent for the unsecured creditors of the Company, 9,850 shares of the Company's new common stock for distribution on allowed claims of unsecured creditors in accordance with a schedule for distributions set forth in the Plan; and 150 shares of the Company's new common stock were delivered to the Escrow Agent for distribution to officers of the Company pursuant to a consummation bonus plan approved by order of the Bankruptcy Court on February 14, 1995. An initial distribution of stock to unsecured creditors whose claims have been allowed will commence on or before June 12, 1995 pursuant to the Plan amounting to seventy percent (70%) of the stock relating to allowed claims. Subsequent distributions for allowed unsecured claims, payments for administrative claims and resolution of disputed claims will be made in accordance with the provisions of the Plan and applicable orders of the Bankruptcy Court. On the Effective Date, all shares of the Company's pre-emergence Voting Common Stock and Non-Voting Class B Stock were cancelled and the record owners of such stock as of such date became entitled to warrants to purchase the new common stock of the Company. One warrant will be issued for every 4.377 shares of pre-emergence Voting Common Stock or Non-Voting Class B Stock and will allow the holder to purchase one share of the new common stock. The warrants may be exercised at any time until they expire on April 28, 2002. The initial warrant exercise price of $14.45 was calculated pursuant to a formula set forth in the Plan. The formula requires that the total allowed and disputed claims of the Company's unsecured creditors be divided by 10,000, the number of shares of the reorganized Company's stock to be issued under the Plan. This formula will be adjusted on each of the first three anniversaries of April 28, 1995 to reflect adjustments to the total of allowed and disputed claims of the Company's unsecured creditors, and will be further adjusted on the fourth, fifth and sixth anniversaries to reflect 105%, 110% and 115%, respectively of the total of the allowed and disputed claims of the unsecured creditors. Although there can be no assurance, the Company anticipates that the warrant exercise price will decrease as certain disputed claims are resolved over time. On or about May 24, 1995, First Union National Bank of North Carolina as Warrant Agent for the Company, pursuant to a Warrant Agreement and in accordance with the Plan of Reorganization and applicable orders of the Bankruptcy Court, commenced the process of distributing the warrants to record owners of the pre-emergence Voting Common Stock and Non-Voting Class B Stock of the Company. To obtain the warrant certificates, each shareholder must deliver the stock certificates of pre-emergence stock to the Warrant Agent and furnish certain information and documents to the Warrant Agent. Inquiries regarding the warrant distribution procedures are to be directed to First Union National Bank of North Carolina, Shareholder Services Administration Group, 230 South Tryon Street, 11th Floor, Charlotte, North Carolina 28288-1154, telephone number (800)829-8432. ITEM 2: Changes in Securities For information with respect to this Item, see Item 1 - Legal Proceedings. ITEM 6: Exhibits and Reports on Form 8-K (a) All exhibits included in the Company's 1994 Form 10-K are included herein by reference. (b) The Company filed the following reports on Form 8-K during the quarter covered by this report: Form 8-K dated January 28, 1995, reporting in Item 5 the financial performance through December 31, 1994, and revised projections for 1995 to 1997. Form 8-K dated February 13, 1995, reporting in Item 5 the Bankruptcy Court approved amendment changing the record date for distributions of the New Rose's Warrants and New Rose's Common Stock Secondary Distribution to the Effective Date of the Plan. Form 8-K dated April 24, 1995, reporting in Item 5 the approval by the Bankruptcy Court of a Modified and Restated First Amended Joint Plan of Reorganization which was filed as an exhibit in Item 7. In addition, the Company filed in Item 7 various exhibits relating to its obligations with respect to the compensation of its officers and directors, the Short-Term Incentive Compensation Plan and New Equity Compensation Plan. Form 8-K dated May 1, 1995, reporting in Item 5 the effectuation of the Plan on April 28, 1995. In addition, the quantitative maintenance criteria for inclusion in the Nasdaq National Market System, set forth in Part III, Section 5 of Schedule D to the NASD Bylaws, and the status of the Company's compliance with each of such criteria were included. The Company also included in Item 7 the Proforma Financial Statement of Rose's Stores, Inc., as of April 29, 1995. Form 8-K dated April 28, 1995, reporting in Item 5 that the Company entered into a Warrant Agreement and Escrow Agreement with First Union National Bank of North Carolina on April 28, 1995. In addition, the Company reported that it had satisfied the last condition under the Modified Plan for its emergence from bankruptcy by closing on its exit financing loans. The Company also included various exhibits relating to these events in Item 7 including a copy of the Revolving Credit Agreement. Form 8-K dated April 28, 1995, reporting in Item 5 the revision of the Independent Auditor's Report and Note 18, Subsequent Events, to the financial statements due to the Company's emergence from Chapter 11. The financial statements were included as an exhibit in Item 7. Form 8-K dated April 29, 1995, reporting in Item 5 a summary of the Company's 1995 financial plan which includes the actual operating results for the quarter ended April 29, 1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ROSE'S STORES, INC. Date: September 25, 1995 By: /s/ R. Edward Anderson R. Edward Anderson President, Chief Executive Officer Date: September 25, 1995 By: /s/ Jeanette R. Peters Jeanette R. Peters Senior Vice President, Chief Financial Officer EX-27 2
5 This schedule contains summary financial information extracted from Rose's Stores, Inc., Form 10-Q/A for the quarter ended April 29, 1995, and is qualified in its entirety by reference to such financial statements. 0000085149 ROSE'S STORES, INC. 1,000 3-MOS JAN-27-1996 APR-29-1995 622 0 11,748 (2,513) 185,129 204,561 0 0 204,561 130,445 0 35,000 0 0 0 204,561 154,290 155,404 116,838 116,838 37,298 0 726 (20,737) 0 (20,737) 0 90,924 0 70,187 3.74 3.74 The Company emerged from Chapter 11 on April 28, 1995, and adopted Statement of Position 90-7. (See Notes to the Financial Statements.) Includes reorganization expense of $3,847 and fresh start revaluation of $17,432. The 18,758 formerly outstanding shares of the Company used to calculate earnings (loss) per share were cancelled on April 28, 1995.
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