10-Q 1 united10q.txt FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 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 May 5, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________________ to _____________________ Commission file number 00019774 -------- United Retail Group, Inc. (Exact name of registrant as specified in its charter) Delaware 51 0303670 -------------------------------- ------------------- State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) 365 West Passaic Street, Rochelle Park, NJ 07662 ------------------------------------------ --------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (201) 845-0880 --------------- -------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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 (the "1934 Act") 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 ____ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the 1934 Act subsequent to the distribution of securities under a plan confirmed by a court. YES _______ NO _______ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. As of May 5, 2001, 13,258,633 units, each consisting of one share of the registrant's common stock, $.001 par value per share, and one stock purchase right, were outstanding. The units are referred to herein as "shares." PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (dollars in thousands) May 5, February 3, April 29, 2001 2001 2000 ASSETS (Unaudited) (Unaudited) Current assets: Cash and cash equivalents $34,702 $36,781 $38,431 Accounts receivable 2,902 2,573 2,355 Inventory 67,029 59,002 63,166 Prepaid rents 4,594 4,425 4,063 Deferred income taxes - - 1,450 Other prepaid expenses 3,551 3,555 3,084 Total current assets 112,778 106,336 112,549 Property and equipment, net 80,700 77,651 67,469 Deferred charges and other intangible assets, net of accumulated amortization of $2,762, $2,656 and $2,603 6,955 6,786 6,973 Deferred income taxes 838 589 - Other assets 245 268 383 Total assets $201,516 $191,630 $187,374 LIABILITIES Current liabilities: Current portion of distribution center financing $1,345 $1,367 $1,252 Accounts payable and other 36,483 32,746 28,945 Accrued expenses 25,923 22,373 22,537 Deferred income taxes 419 283 - Total current liabilities 64,170 56,769 52,734 Distribution center financing 6,277 6,616 7,622 Other long-term liabilities 6,203 6,449 6,276 Total liabilities 76,650 69,834 66,632 STOCKHOLDERS EQUITY Preferred stock, $.001 par value; authorized 1,000,000 shares; none issued Series A junior participating preferred stock, $.001 par value; authorized 150,000; none issued Common stock, $.001 par value; authorized 30,000,000 shares; issued 14,231,000; 14,231,000; 14,214,400 shares; outstanding 13,258,633; 13,268,633; 13,313,033 shares 14 14 14 Additional paid-in capital 80,292 80,269 80,220 Retained earnings 48,836 45,703 44,391 Treasury stock (972,367; 962,367; 901,367 shares) at cost (4,276) (4,190) (3,883) Total stockholders' equity 124,866 121,796 120,742 Total liabilities and stockholders' equity $201,516 $191,630 $187,374 The accompanying notes are an integral part of the Consolidated Financial Statements
UNITED RETAIL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except per share amounts) (Unaudited) Thirteen Weeks Ended May 5, April 29, 2001 2000 Net sales $108,877 $99,479 Cost of goods sold, including buying and occupancy costs 80,515 73,667 Gross profit 28,362 25,812 General, administrative and store operating expenses 23,559 21,300 Operating income 4,803 4,512 Interest income, net 194 303 Income before income taxes 4,997 4,815 Provision for income taxes 1,864 1,907 Net income $3,133 $2,908 Net income per share Basic $0.24 $0.22 Diluted $0.23 $0.21 Weighted average number of shares outstanding Basic 13,264,677 13,301,755 Common stock equivalents 143,930 428,349 (stock options) Diluted 13,408,607 13,730,104 The accompanying notes are an integral part of the Consolidated Financial Statements.
UNITED RETAIL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (Unaudited) Thirteen Weeks Ended May 5, April 29, 2001 2000 Cash Flows From Operating Activities: Net income $3,133 $2,908 Adjustments to reconcile net income to net cash provided from (used in)operating activities: Depreciation and amortization of property and equipment 2,589 2,055 Amortization of deferred charges and other intangible assets 111 122 Loss on disposal of assets - 206 Deferred compensation 78 78 (Provision for) benefit from deferred income taxes (113) 308 Deferred lease assumption revenue amortization (81) (90) Changes in operating assets and liabilities: Accounts receivable (329) (1,209) Income taxes 1,938 1,485 Inventory (8,027) (7,843) Accounts payable and accrued expenses 4,342 2,263 Prepaid expenses (165) (882) Other assets and liabilities (503) 99 Net Cash Provided from (Used in) Operating Activities 2,973 (500) Investing Activities: Capital expenditures (5,638) (6,428) Deferred payment for property and equipment 1,088 435 Net Cash Used for Investing Activities (4,550) (5,993) Financing Activities: Repayments of long-term debt (361) (298) Issuance of loans to officers (55) (36) Treasury stock acquired (86) - Proceeds from exercise of stock options - 105 Tax benefits from exercise of stock options - 17 Other - (87) Net Cash Used in Financing Activities (502) (299) Net decrease in cash and cash equivalents (2,079) (6,792) Cash and cash equivalents, beginning of period 36,781 45,223 Cash and cash equivalents, end of period $34,702 $38,431 The accompanying notes are an integral part of the Consolidated Financial Statements.
UNITED RETAIL GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The consolidated financial statements include the accounts of United Retail Group, Inc. and its subsidiaries (the "Company"). All significant intercompany balances and transactions have been eliminated. The consolidated financial statements as of and for the thirteen weeks ended May 5, 2001 and April 29, 2000 are unaudited and are presented pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, the consolidated financial statements should be read in conjunction with the financial statement disclosures contained in the Company's 2000 Annual Report and 2000 Form 10-K. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments necessary (which are of a normal recurring nature) to present fairly the financial position and results of operations and cash flows for the interim periods, but are not necessarily indicative of the results of operations for a full fiscal year. Certain prior year balances have been reclassified to conform with the current year presentation. 2. Net Income Per Share Basic per share data has been computed based on the weighted average number of shares of common stock outstanding. Diluted per share data has been computed on the basic plus the dilution of stock options. Options to purchase shares of common stock which were not included in the computation of diluted net income per share because the exercise prices were greater than the average market price of the common shares were as follows: Thirteen Weeks Ended -------------------------------- May 5, April 29, 2001 2000 Options 452,000 123,000 Range of option prices per share $7.56 - $15.13 $9.91 - $26.75 3. Financing Arrangements In 1993, the Company executed a ten-year $7.0 million note bearing interest at 7.3%. Interest and principal are payable in equal monthly installments beginning November 1993. The note is collateralized by the material handling equipment in the distribution center. In 1994, the Company executed a fifteen-year $8.0 million loan bearing interest at 8.64%. Interest and principal are payable in equal monthly installments beginning May 1, 1994. The loan is collateralized by a mortgage on the national distribution center owned by the Company in Troy, Ohio. The Company and certain of its subsidiaries, (collectively, the "Companies") are parties to a Financing Agreement, dated August 15, 1997 (the "Financing Agreement"), with The CIT Group/Business Credit, Inc.("CIT"). The Financing Agreement provides a revolving line of credit for a term ending August 15, 2004 in the aggregate amount of $40 million for the Companies, subject to availability of credit according to a borrowing base computation. The line of credit may be used on a revolving basis by either of the Companies to support trade letters of credit and standby letters of credit and to finance loans. The Companies are required to maintain unused at all times combined availability of at least $5 million. Except for the maintenance of a minimum availability of $5 million and a limit on capital expenditures, the Financing Agreement does not contain any significant financial covenants. In the event a loan is made to one of the Companies, interest is payable monthly based on a 360-day year at the prime rate or at two percent plus the LIBOR rate on a per annum basis, at the borrower's option. The line of credit is secured by a security interest in inventory and proceeds and by the balance on deposit from time to time in a bank account that has been pledged to the lenders. The Financing Agreement also includes certain restrictive covenants that impose limitations (subject to certain exceptions) on the Companies with respect to, among other things, making certain investments, declaring or paying dividends, making loans, engaging in certain transactions with affiliates, or consolidating, merging or making acquisitions outside the ordinary course of business. At May 5, 2001, the combined availability of the Companies was $16.0 million, no balance was in the pledged account, the aggregate outstanding amount of letters of credit arranged by CIT was $24.0 million and no loan had been drawn down. The Company's cash on hand was unrestricted. 4. Income Taxes The provision for income taxes consists of (dollars in thousands): Thirteen Weeks Ended ------------------------- May 5, April 29, 2001 2000 -------------- ------------- Currently payable: Federal $1,818 $1,454 State 159 145 ------ ------ 1,977 1,599 ------ ------ Deferred: Federal (93) 147 State (20) 161 ------ ------ (113) 308 ------ ------ $1,864 $1,907 ======= ======= Reconciliation of the provision for income taxes from the U.S. Federal statutory rate to the Company's effective rate is as follows (dollars in thousands): Thirteen Weeks Ended ----------------------------------------- May 5, 2001 April 29, ----------------- ------------- 2000 Tax at Federal rate $ 1,749 35.0% $ 1,685 35.0% State income taxes, net of Federal benefit 90 1.8% 199 4.1% Goodwill amortization 18 0.4% 18 0.4% Other 7 0.1% 5 0.1% -------- -------- -------- ------ $ 1,864 37.3% $ 1,907 39.6% ======== ======== ======== ====== The net deferred tax asset reflects the tax impact of temporary differences. The components of the net deferred tax asset as of May 5, 2001 are as follows (dollars in thousands): Net long-term asset: Accruals and reserves $2,696 State NOL's 1,080 Compensation 354 Depreciation (3,292) ------- $838 Net current liability: Prepaid rent $1,701 State NOL's (280) Accruals and reserves (434) Inventory (568) ------- $419 Net deferred tax asset $ 419 ======= Future realization of the tax benefits attributable to the existing deductible temporary differences and NOL carryforwards ultimately depends on the existence of sufficient taxable income within the carryforward period available under the tax law at the time of the tax deduction. Based on management's assessment, it is more likely than not that the net deferred tax assets will be realized through future taxable earnings or available carrybacks. The NOL's are scheduled to expire beginning in fiscal 2001 through fiscal 2015. 5. Advances To Officers Advances were made by the Company in February, 1998 and February, 1999 in the amounts of $1.6 million and $0.1 million to Raphael Benaroya, the Company's Chairman of the Board, President and Chief Executive Officer. The purpose of the advances was to finance payment of income taxes incurred in connection with the exercise of stock options. These advances and their related interest were refinanced as part of an issuance of a replacement note in November 1999 which aggregated $2.4 million, which includes an additional advance of $0.7 million. The additional advance financed the payment of income taxes incurred in connection with the excercise of additional stock options and paid interest accrued on the note that was refinanced. The replacement note has a term of four years subject to acceleration under certain circumstances and to call by the Company after two years with respect to half of the principal amount. Payment of the advances to Mr. Benaroya is secured by a pledge of 899,719 shares of the Company's Common Stock, equivalent to the shares issued upon the option exercises. The replacement note is a full recourse obligation of the borrower. The first payment of interest on the replacement note was made in November 2000 by the issuance of another note in the amount of $0.2 million with a term of one year. Future interest on both notes is payable annually in cash at the prime rate. 6. Stock Appreciation Rights Plan Commencing May 2000, each nonmanagement Director received an annual award under the Company's Stock Appreciation Rights Plan that provides for a cash payment by the Company when the Director exercises the stock option granted at the same time under the Company's 1999 Stock Option Plan. The payment will be an amount equivalent to the equity in the option that is being exercised, that is, the excess of the then current market price of the shares issued over the exercise price paid by the Director. 7. Segment Information The Company operates its business in two reportable segments: Avenue Retail and Shop @ Home (see Management's Discussion and Analysis of Financial Condition and Results of Operations for an overview of the Company's business). The Company's reportable segments represent channels of distribution that offer similar merchandise, service, marketing and distribution strategies. In deciding how to allocate resources and assess performance, the Company regularly evaluates the performance of its operating segments on the basis of net sales and earnings from operations. Certain information relating to the Company's reportable operating segments is set forth below (dollars in thousands): Thirteen Weeks Ended ------------------------- May 5, April 29, 2001 2000 -------------- ------------- Net sales: Avenue Retail $105,021 $98,175 Shop @ Home 3,856 1,304 ------- ------- $108,877 $99,479 ======== ======= Earnings from operations*: Avenue Retail $8,844 $8,106 Shop @ Home (2,065) (998) ------- ------ $6,779 $7,108 ======== ======= * Represents earnings from operations before unallocated corporate expenses and net interest income. The Company evaluates the performance of its assets on a consolidated basis. Therefore, separate financial information for the Company's assets on a segment basis is not available. The following table sets forth a reconciliation of the reportable segment's earnings from operations to the Company's consolidated income before income taxes (dollars in thousands): Thirteen Weeks Ended ------------------------- May 5, April 29, 2001 2000 -------------- ------------- Earnings from operations reportable segments $6,779 $7,108 Unallocated corporate expenses (1,976) (2,596) Interest income, net 194 303 ------ ------ Income before income taxes $4,997 $4,815 ====== ====== 8. Contingencies The Company is involved in legal actions and claims arising in the ordinary course of business. Management believes (based on advice of legal counsel) that such litigation and claims will not have a material adverse effect on the Company's financial position, annual results of operations or cash flows. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS First Quarter Fiscal 2001 Versus First Quarter Fiscal 2000 Net sales for the first quarter of fiscal 2001 increased 9.4% from the first quarter of fiscal 2000, to $108.9 million from $99.5 million, principally from an increase in average price. Comparable store sales for the first quarter of fiscal 2001 increased 1.8%. Average stores open increased from 500 to 527. Sales in channels of distribution other than retail stores ("shop@home sales") were $3.9 million in the first quarter of fiscal 2001 compared with $1.3 million in the first quarter of fiscal 2000. Gross profit was $28.4 million in the first quarter of fiscal 2001 compared with $25.8 million in the first quarter of fiscal 2000, increasing as a percentage of net sales to 26.0% from 25.9%. The increase in gross profit as a percentage of net sales was attributable primarily to higher margins partially offset by higher direct marketing expenses, including direct marketing for shop @ home activities. General, administrative and store operating expenses increased to $23.6 million in the first quarter of fiscal 2001 from $21.3 million in the first quarter of fiscal 2000, principally as a result of an increase in shop @ home expense, including shipping and handling expense. As a percentage of net sales, general, administrative and store operating expenses increased to 21.6% from 21.4%. During the first quarter of fiscal 2001, operating income was $4.8 million compared with $4.5 million in the first quarter of fiscal 2000. Operating income arose from retail store sales and shop@home sales. During the first quarter of fiscal 2001, income (loss) from operations before unallocated corporate expenses was $8.8 million from retail store sales and ($2.1 million) from shop@home sales compared with $8.1 million from retail store sales and ($1.0 million) from shop@home sales during the first quarter of fiscal 2000. Net interest income was $0.2 million in the first quarter of fiscal 2001 and $0.3 million in the first quarter of fiscal 2000, primarily as a result of lower balances and lower interest rates. The Company had a provision for income taxes of $1.9 million in the first quarter of both fiscal 2001 and fiscal 2000. The Company had net income of $3.1 million in the first quarter of fiscal 2001 and of $2.9 million in the first quarter of fiscal 2000. Liquidity and Capital Resources Net cash provided from operating activities in the first quarter of fiscal 2001 was $3.0 million. The Company's cash and cash equivalents decreased to $34.7 million at May 5, 2001 from $38.4 million at April 29, 2000 and $36.8 million at February 3, 2001. Property and equipment, net increased to $80.7 million at May 5, 2001 from $67.5 million at April 29, 2000 and $77.7 million at February 3, 2001, primarily from constructing new stores and remodeling existing stores. Inventory increased to $67.0 million at May 5, 2001 from $63.2 million at April 29, 2000 and $59.0 million at February 3, 2001 to build inventories for the AVENUE shop @ home business and as a result of a higher store count. During fiscal 2000, the highest inventory level was $69.9 million. Accounts payable increased to $36.5 million at May 5, 2001 from $28.9 million at April 29, 2000 and $32.7 million at February 3, 2001, principally as a result of a change in vendor payment terms. Short-term trade credit represents a significant source of financing for domestic merchandise purchases. Trade credit arises from the willingness of the Company's domestic vendors to grant extended payment terms for inventory purchases and is generally financed either by the vendor or a third-party factor. Import purchases are made in U.S. dollars, are generally financed by trade letters of credit and constituted approximately 59% of total purchases in fiscal 2000. United Retail Group, Inc. and certain of its subsidiaries (collectively, the "Companies") are parties to a Financing Agreement, dated August 15, 1997, as amended (the "Financing Agreement"), with The CIT Group/Business Credit, Inc. ("CIT"). The Financing Agreement provides a revolving line of credit for a term ending August 15, 2004 in the aggregate amount of $40 million for the Companies, subject to availability of credit as described in the following paragraphs. The line of credit may be used on a revolving basis by any of the Companies to support trade letters of credit and standby letters of credit and to finance loans. As of May 5, 2001, letters of credit for the account of the Companies and supported by CIT were outstanding in the amount of $24.0 million. Subject to the following paragraph, the availability of credit (within the aggregate $40 million line of credit) to any of the Companies at any time is the excess of its borrowing base over the sum of (x) the aggregate outstanding amount of its letters of credit and its revolving loans, if any, and (y) at CIT's option, the sum of (i) unpaid sales taxes, and (ii) up to $500,000 in total liabilities of the Companies under permitted encumbrances (as defined in the Financing Agreement). The borrowing base, as to any of the Companies, is the sum of (x) a percentage of the book value of its eligible inventory (both on hand and unfilled purchase orders financed with letters of credit), ranging from 60% to 65% depending on the season, and (y) the balance in an account in its name that has been pledged to the lenders (a "Pledged Account"). (At May 5, 2001, the combined availability of the Companies was $16 million; the Pledged Account had a zero balance; the Companies' cash on hand was unrestricted; and no loan had been drawn down.) The provisions of the preceding paragraph to the contrary notwithstanding, the Companies are required to maintain unused at all times combined availability of at least $5 million. Except for the maintenance of a minimum availability of $5 million and a limit on capital expenditures, the Financing Agreement does not contain any financial covenants. In the event a revolving loan is made to one of the Companies, interest is payable monthly based on a 360-day year at the prime rate or at two percent plus the LIBOR rate on a per annum basis, at the borrower's option. The line of credit is secured by a security interest in inventory and proceeds and by the balance from time to time in the Pledged Account. The Financing Agreement also includes certain restrictive covenants that impose limitations (subject to certain exceptions) on the Companies with respect to, among other things, making certain investments, declaring or paying dividends, making loans, engaging in certain transactions with affiliates, or consolidating, merging or making acquisitions outside the ordinary course of business. At May 5, 2001, the principal amount of the long term indebtedness secured by liens on the Company's national distribution center real estate and material handling equipment had been paid down from an original amount of $15.0 million to $7.6 million. The Company believes that its cash on hand, the availability of short-term trade credit and of credit under the Financing Agreement on a revolving basis, the possibility of refinancing the national distribution center and material handling equipment and cash flows from future operating activities will be adequate for the next 12 months to meet its cash requirements, including (i) anticipated working capital needs, including seasonal inventory financing, (ii) the cost of distributing catalogs and marketing its Internet selling sites and (iii) store construction costs. This paragraph constitutes forward-looking information under the Private Securities Litigation Reform Act of 1995 (the "Reform Act") and is subject to the uncertainties and other risk factors referred to under the captions "Corporate Acquisition Review" and "Future Results." Store Expansion The Company leased 534 stores at May 5, 2001, of which 373 stores were located in strip shopping centers, 140 stores were located in malls and 21 stores were located in downtown shopping districts. Total retail square footage was 2.2 million square feet at May 5, 2001 and 2.1 million square feet a year earlier. In the first quarter of fiscal 2001, the Company opened 13 new stores with an average of 4,700 square feet of retail selling space and closed two smaller stores. The Company plans to lease and open approximately 50 new stores during fiscal 2001. See, "Liquidity and Capital Resources." Start-up costs will be expensed but are not expected to have a material effect on general, administrative and store operating expenses. During fiscal 2001, the Company plans to close approximately 20 to 25 stores, the term of whose leases shall have expired. This paragraph constitutes forward-looking information under the Reform Act, which is subject to the uncertainties and other risk factors referred to under the captions "Corporate Acquisition Review" and "Future Results". Substantially all the construction cost of new stores has been capitalized. Depreciation and amortization related principally to assets in stores and were approximately $9.2 million in fiscal 2000 and $2.6 million in the first quarter of fiscal 2001. Shop @ Home The Company has entered an additional channel of distribution for its merchandise, Internet and catalog (collectively, "shop @ home") sales, to seek to expand its customer base and to attract more business, both online and in-store, from its existing customers. The Company has mailed catalogs and operated an Internet site (www.cloudwalkers.com) for the sale of its CLOUDWALKERS.COM brand women's shoes since the third quarter of fiscal 1999. The Company has mailed catalogs for AVENUE brand merchandise since September 2000. The Company has operated an Internet site (www.avenue.com) for the sale of its AVENUE brand merchandise since November 2000. Fulfillment of shop @ home sales has been outsourced. The Company's shop @ home activities will not require material long term financial commitments to be made in fiscal 2001. There is no assurance of gross profit on shop @ home sales. Corporate Acquisition Reviews As a matter of routine, the Company has conducted "due diligence" reviews of businesses that are either for sale as a going concern or are in liquidation. From time to time, the Company has purchased assets being liquidated. It has not acquired a going concern but it would consider making a bid on a suitable corporate acquisition at an opportune price if adequate financing at acceptable rates were available. Expenses incurred in connection with such "due diligence" reviews may be material. Tax Matters The Company's federal income tax returns for fiscal 1994, fiscal 1995 and fiscal 1996 were audited by the Internal Revenue Service and settled except for the disallowance of a refund claim by the auditor, which has been affirmed by an IRS appeals officer. The refund claim, which has not been recorded, would affect stockholders' equity positively rather than increase the Company's earnings, if the disallowance were overruled. Future Results The Company cautions that any forward-looking statements (as such term is defined in the Reform Act) contained in this Report on Form 10-Q (this "Report") or otherwise made by management of the Company involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond the Company's control. Accordingly, the Company's future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. The following factors, among others, could affect the Company's actual results and could cause actual results for the remainder of 2001 and beyond to differ materially from those expressed or implied in any forward-looking statements included in this Report or otherwise made by management: changes in consumer spending patterns, consumer preferences and overall economic conditions; the impact of competition and pricing; changes in weather patterns; political instability; risks associated with the seasonality of the retail industry; risks related to consumer acceptance of the Company's products and the ability to develop new merchandise; the ability to retain, hire and train key personnel; risks associated with the ability of the Company's manufacturers to deliver products in a timely manner; risks associated with foreign sources of production; postal rate increases; increases in paper and printing costs; and availability of suitable store locations on appropriate terms. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. The 2001 Stock Option Plan set forth as the appendix to the Corporation's proxy statement on Schedule 14A for its 2001 annual meeting of stockholders is incorporated herein by reference.* The following exhibits to the Corporation's Annual Report on Form 10-K for the year ended February 3, 2001 are incorporated herein by reference. Number Description 10.1* Promissory note, dated November 17, 2000, from Raphael Benaroya to the Corporation 10.2 Consent of Independent Accountants for the Corporation The following exhibits to the Corporation's Quarterly Report on Form 10-Q for the period ended October 28, 2000 are incorporated herein by reference: Number in Filing Description 10.1* Amendment, dated August 18, 2000, to Employment Agreement, dated November 20, 1998, between the Corporation and Raphael Benaroya 10.2* Amendment, dated August 18, 2000, to Employment Agreement, dated November 20, 1998, between the Corporation and Kenneth P. Carroll 10.3 Amendment, dated October 15, 2000, to Right of First Refusal Agreement, dated as of September 17, 1999, between the Corporation and Limited Direct Associates, L.P. ("LDA") 10.4 Amendment, dated October 15, 2000, to Right of First Refusal Agreement, dated as of September 17, 1999, between the Corporation and The Limited, Inc./Intimate Brands, Inc. Foundation ("Foundation") The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the period ended April 29, 2000 is incorporated herein by reference: Number in Filing Description 10* Stock Appreciation Rights Plan The following exhibits to the Corporation's Annual Report on Form 10-K for the year ended January 29, 2000 are incorporated herein by reference: Number in Filing Description 10.1* Incentive Compensation Program Summary 10.2 Amendment, dated December 28, 1999, to Financing Agreement among the Corporation, United Retail Incorporated and The CIT Group/Business Credit, Inc., as Agent and Lender ("CIT") 10.3 Amendment, dated January 31, 2000, to Financing Agreement among the Corporation, United Retail Incorporated, Cloudwalkers, Inc. and CIT The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the period ended October 30, 1999 is incorporated herein by reference: Number in Filing Description 10.1 Amendment, dated October 6, 1999, to Financing Agreement among the Corporation, United Retail Incorporated and CIT The promissory note, dated November 18, 1999, from Raphael Benaroya to the Corporation filed as the exhibit to Mr. Benaroya's Schedule 13D, dated November 18, 1999, is incorporated herein by reference.* The following exhibits to the Corporation's Current Report on Form 8-K, filed September 23, 1999, are incorporated herein by reference: Number in Filing Description 3 Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock 10.1.1 Right of First Refusal Agreement, dated as of September 17, 1999, between the Corporation and LDA 10.1.2 Right of First Refusal Agreement, dated as of September 17, 1999, between the Corporation and Foundation The following exhibit to the Corporation's Current Report on Form 8-K, filed September 17, 1999, is incorporated herein by reference: Number in Filing Description 3 Restated By-Laws of the Corporation The stockholders' rights plan filed as the exhibit to the Corporation's Registration Statement on Form 8-A, dated September 15, 1999, is incorporated herein by reference. The following exhibits to the Corporation's Annual Report on Form 10-K for the year ended January 30, 1999 are incorporated herein by reference: Number in Filing Description 10.1 Amendment, dated March 29, 1999, to Financing Agreement among the Corporation, United Retail Incorporated and CIT 21 Subsidiaries of the Corporation The 1999 Stock Option Plan set forth as the Appendix to the Corporation's proxy statement on Schedule 14A for its 1999 annual meeting of stockholders is incorporated herein by reference.* The following exhibits to the Corporation's Quarterly Report on Form 10-Q for the period ended October 31, 1998 are incorporated herein by reference: Number in Filing Description 10.1* Employment Agreement, dated November 20, 1998, between the Corporation and Raphael Benaroya 10.2* Employment Agreement, dated November 20, 1998, between the Corporation and George R. Remeta 10.3* Employment Agreement, dated November 20, 1998, between the Corporation and Kenneth P. Carroll The following exhibits to the Corporation's Quarterly Report on Form 10-Q for the period ended May 2, 1998 are incorporated herein by reference: Number in Filing Description 10.1* 1998 Stock Option Agreement, dated May 21, 1998, between the Corporation and Raphael Benaroya 10.2* 1998 Stock Option Agreement, dated May 21, 1998, between the Corporation and George R. Remeta The following exhibits to the Corporation's Annual Report on Form 10-K for the year ended January 31, 1998 are incorporated herein by reference: Number in Filing Description 10.1 Restated Stockholders' Agreement, dated December 23, 1992, between the Corporation and certain of its stockholders and Amendment No. 1, Amendment No. 2 and Amendment No. 3 thereto 10.2 Private Label Credit Program Agreement, dated January 27, 1998, between the Corporation, United Retail Incorporated and World Financial Network National Bank (Confidential portions have been deleted and filed separately with the Secretary of the Commission) 10.4* Restated 1990 Stock Option Plan as of March 6, 1998 10.5* Restated 1990 Stock Option Plan as of May 28, 1996 10.6* Restated 1996 Stock Option Plan as of March 6, 1998 The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the period ended November 1, 1997 is incorporated herein by reference: Number in Filing Description 10.1 Amendment, dated September 15, 1997, to Financing Agreement among the Corporation, United Retail Incorporated and CIT The following exhibits to the Corporation's Quarterly Report on Form 10-Q for the period ended August 2, 1997 are incorporated herein by reference: Number in Filing Description 10.1 Financing Agreement, dated August 15, 1997, among the Corporation, United Retail Incorporated and CIT 10.2* Amendment No. 1 to Restated Supplemental Retirement Savings Plan The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the period ended November 2, 1996 is incorporated herein by reference: Number in Filing Description 10.1* Restated Supplemental Retirement Savings Plan The following exhibits to the Corporation's Registration Statement on Form S-1 (Registration No. 33-44499), as amended, are incorporated herein by reference: Number in Filing Description 3.1 Amended and Restated Certificate of Incorporation of the Corporation 4.1 Specimen Certificate for Common Stock of the Corporation 10.2.1 Software License Agreement, dated as of April 30, 1989, between The Limited Stores, Inc. and Sizes Unlimited, Inc. (now known as United Retail Incorporated) 10.2.2 Amendment to Software License Agreement, dated December 10, 1991 -------------------- *A compensatory plan for the benefit of the Corporation's management or a management contract. (b) No current reports on Form 8-K were filed by the Corporation during the fiscal quarter ended May 5, 2001. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. (Registrant) UNITED RETAIL GROUP, INC. ------------------------------------------------------------- By: /s/ GEORGE R. REMETA ---------------------------------------------------- George R. Remeta, Vice Chairman of the Board and Chief Administrative Officer - Authorized Signatory By: /s/ JON GROSSMAN ---------------------------------------------------- Jon Grossman, Vice President - Finance and Chief Accounting Officer Date: June 4, 2001 EXHIBIT INDEX ITEM 14. EXHIBITS. The 2001 Stock Option Plan set forth as the appendix to the Corporation's proxy statement on Schedule 14A for its 2001 annual meeting of stockholders is incorporated herein by reference.* The following exhibits to the Corporation's Annual Report on Form 10-K for the year ended February 3, 2001 are incorporated herein by reference. Number Description 10.1* Promissory note, dated November 17, 2000, from Raphael Benaroya to the Corporation 10.2 Consent of Independent Accountants for the Corporation The following exhibits to the Corporation's Quarterly Report on Form 10-Q for the period ended October 28, 2000 are incorporated herein by reference: Number in Filing Description 10.1* Amendment, dated August 18, 2000, to Employment Agreement, dated November 20, 1998, between the Corporation and Raphael Benaroya 10.2* Amendment, dated August 18, 2000, to Employment Agreement, dated November 20, 1998, between the Corporation and Kenneth P. Carroll 10.3 Amendment, dated October 15, 2000, to Right of First Refusal Agreement, dated as of September 17, 1999, between the Corporation and Limited Direct Associates, L.P. ("LDA") 10.4 Amendment, dated October 15, 2000, to Right of First Refusal Agreement, dated as of September 17, 1999, between the Corporation and The Limited, Inc./Intimate Brands, Inc. Foundation ("Foundation") The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the period ended April 29, 2000 is incorporated herein by reference: Number in Filing Description 10* Stock Appreciation Rights Plan The following exhibits to the Corporation's Annual Report on Form 10-K for the year ended January 29, 2000 are incorporated herein by reference: Number in Filing Description 10.1* Incentive Compensation Program Summary 10.2 Amendment, dated December 28, 1999, to Financing Agreement among the Corporation, United Retail Incorporated and The CIT Group/Business Credit, Inc., as Agent and Lender ("CIT") 10.3 Amendment, dated January 31, 2000, to Financing Agreement among the Corporation, United Retail Incorporated, Cloudwalkers, Inc. and CIT The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the period ended October 30, 1999 is incorporated herein by reference: Number in Filing Description 10.1 Amendment, dated October 6, 1999, to Financing Agreement among the Corporation, United Retail Incorporated and CIT The promissory note, dated November 18, 1999, from Raphael Benaroya to the Corporation filed as the exhibit to Mr. Benaroya's Schedule 13D, dated November 18, 1999, is incorporated herein by reference.* The following exhibits to the Corporation's Current Report on Form 8-K, filed September 23, 1999, are incorporated herein by reference: Number in Filing Description 3 Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock 10.1.1 Right of First Refusal Agreement, dated as of September 17, 1999, between the Corporation and LDA 10.1.2 Right of First Refusal Agreement, dated as of September 17, 1999, between the Corporation and Foundation The following exhibit to the Corporation's Current Report on Form 8-K, filed September 17, 1999, is incorporated herein by reference: Number in Filing Description 3 Restated By-Laws of the Corporation The stockholders' rights plan filed as the exhibit to the Corporation's Registration Statement on Form 8-A, dated September 15, 1999, is incorporated herein by reference. The following exhibits to the Corporation's Annual Report on Form 10-K for the year ended January 30, 1999 are incorporated herein by reference: Number in Filing Description 10.1 Amendment, dated March 29, 1999, to Financing Agreement among the Corporation, United Retail Incorporated and CIT 21 Subsidiaries of the Corporation The 1999 Stock Option Plan set forth as the Appendix to the Corporation's proxy statement on Schedule 14A for its 1999 annual meeting of stockholders is incorporated herein by reference.* The following exhibits to the Corporation's Quarterly Report on Form 10-Q for the period ended October 31, 1998 are incorporated herein by reference: Number in Filing Description 10.1* Employment Agreement, dated November 20, 1998, between the Corporation and Raphael Benaroya 10.2* Employment Agreement, dated November 20, 1998, between the Corporation and George R. Remeta 10.3* Employment Agreement, dated November 20, 1998, between the Corporation and Kenneth P. Carroll The following exhibits to the Corporation's Quarterly Report on Form 10-Q for the period ended May 2, 1998 are incorporated herein by reference: Number in Filing Description 10.1* 1998 Stock Option Agreement, dated May 21, 1998, between the Corporation and Raphael Benaroya 10.2* 1998 Stock Option Agreement, dated May 21, 1998, between the Corporation and George R. Remeta The following exhibits to the Corporation's Annual Report on Form 10-K for the year ended January 31, 1998 are incorporated herein by reference: Number in Filing Description 10.1 Restated Stockholders' Agreement, dated December 23, 1992, between the Corporation and certain of its stockholders and Amendment No. 1, Amendment No. 2 and Amendment No. 3 thereto 10.2 Private Label Credit Program Agreement, dated January 27, 1998, between the Corporation, United Retail Incorporated and World Financial Network National Bank (Confidential portions have been deleted and filed separately with the Secretary of the Commission) 10.4* Restated 1990 Stock Option Plan as of March 6, 1998 10.5* Restated 1990 Stock Option Plan as of May 28, 1996 10.6* Restated 1996 Stock Option Plan as of March 6, 1998 The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the period ended November 1, 1997 is incorporated herein by reference: Number in Filing Description 10.1 Amendment, dated September 15, 1997, to Financing Agreement among the Corporation, United Retail Incorporated and CIT The following exhibits to the Corporation's Quarterly Report on Form 10-Q for the period ended August 2, 1997 are incorporated herein by reference: Number in Filing Description 10.1 Financing Agreement, dated August 15, 1997, among the Corporation, United Retail Incorporated and CIT 10.2* Amendment No. 1 to Restated Supplemental Retirement Savings Plan The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the period ended November 2, 1996 is incorporated herein by reference: Number in Filing Description 10.1* Restated Supplemental Retirement Savings Plan The following exhibits to the Corporation's Registration Statement on Form S-1 (Registration No. 33-44499), as amended, are incorporated herein by reference: Number in Filing Description 3.1 Amended and Restated Certificate of Incorporation of the Corporation 4.1 Specimen Certificate for Common Stock of the Corporation 10.2.1 Software License Agreement, dated as of April 30, 1989, between The Limited Stores, Inc. and Sizes Unlimited, Inc. (now known as United Retail Incorporated) 10.2.2 Amendment to Software License Agreement, dated December 10, 1991 -------------------- *A compensatory plan for the benefit of the Corporation's management or a management contract.