SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) - December 16, 1996
as of July 31, 1996
UNITED MERCHANTS AND MANUFACTURERS, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-3185 13-1426280
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
Two Executive Drive, Fort Lee, N.J. 07024-3308
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (201) 585-2100
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Item 5. Other Events.
As reported in Registrant's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1995 filed February 26, 1996, the Registrant and its
79%-owned subsidiary, Reunited Holdings, Inc. (formerly Victoria
Creations, Inc.), each filed petitions for reorganization relief under
Chapter 11 of the United States Bankruptcy Code on February 22, 1996.
Registrant is continuing to operate its business as debtor-in-possession
while the reorganization case is pending. Registrant and its subsidiary
are in the process of evaluating their businesses and formulating a plan
or plans of reorganization.
Registrant and its subsidiary requested that the Securities and Exchange
Commission allow them to follow a modified reporting procedure in lieu of
the periodic reports required under the Securities Exchange Act of 1934,
as amended. The Commission granted the Registrants' request. Therefore,
the Registrants will file, under cover of Form 8-K, the financial reports
and schedules that are filed with the Bankruptcy Court.
Included herewith, Registrant is filing the cover letter, certificate and
verified financial statements/operating reports for the month ended July
31, 1996 as filed with the Bankruptcy Court. As soon as practical,
Registrant will file the monthly verified financial statements/operating
reports for each of the months of August, September, October and November
1996 and, as due, future monthly reports.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
United Merchants and Manufacturers, Inc.
Date December 16, 1996 By /s/ Norman R. Forson
Norman R. Forson
Senior Vice President
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UNITED MERCHANTS AND MANUFACTURERS, INC.
Two Executive Drive, Suite 780
Fort Lee NJ 07024
201-585-2100
November 14, 1996
United States Bankruptcy Court
Southern District of New York
Attn: Office of the Clerk
Alexander Hamilton Customs House
One Bowling Green
New York NY 10004-1408
In re: United Merchants and Manufacturers, Inc. and Victoria Creations,
Inc., Debtors, Jointly Administered Chapter 11 Case No. 96 B
40941 (AJG)
Enclosed herewith is a copy of the verified financial statements/operating
reports for the month of July 1996. My letter dated October 30, 1996
explained the reasons these financial statements were delayed.
I have previously sent you the schedule of and receipts for Federal,
state, and local taxes withheld and paid for the fiscal months of July,
August and September 1996.
The companies do not make sales subject to sales tax.
All property taxes due and payable have been paid.
All insurance policies, including for workers compensation and disability,
have been paid for the current period.
UNITED MERCHANTS AND MANUFACTURERS, INC., D.I.P.
VICTORIA CREATIONS, INC., D.I.P.
by Norman R. Forson, Senior Vice President
cc: U.S. Department of Justice
Office of the United States Trustee
Southern District of New York
Attn: Goodwin Benjamin, Esquire
80 Broad Street, 3rd Floor
New York NY 10004
Zalkin, Rodin & Goodman LLP
Attn: Andrew D. Gottfried, Esquire
750 Third Avenue
New York NY 10017
Skadden, Arps, Slate, Meagher & Flom
Attn: Michael L. Cook, Esquire
919 Third Avenue
New York NY 10022-3897
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UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
in re
CASE NO. 96 B 40941 (AJG)
CHAPTER 11
UNITED MERCHANTS AND MANUFACTURERS, INC. AND
REUNITED HOLDINGS, INC. (formerly VICTORIA CREATIONS, INC.), Debtors
MONTHLY OPERATING STATEMENT FOR
THE MONTH OF JULY 1996
DEBTORS' ADDRESS:
2 Executive Drive, Suite 780
Fort Lee NJ 07024
Monthly Disbursements - see Statement of
Cash Flows
DEBTORS' ATTORNEY:
Michael L. Cook (MC 7887)
Lawrence V. Gelber (L 9384)
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York NY 10022-3897
Monthly Operating Profit - see Statement of
Operations
REPORT PREPARER:
Norman R. Forson, Senior Vice President
This operating statement must be signed by a representative of the
Debtor.
The undersigned, having reviewed the attached report and being
familiar with the Debtors' financial affairs, verifies under penalty of
perjury, that the information contained therein is complete, accurate and
truthful to the best of my knowledge.
Date 11-14-96 \s\ Norman R. Forson, Sr. V.P.
Signature and Title
Indicate if this is an amended statement by checking here.
AMENDED STATEMENT [ ]
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UNITED MERCHANTS AND MANUFACTURERS, INC., D.I.P.
FINANCIAL STATEMENTS
INDEX
Page
Number
Statement of Operations............................................. 2
Balance Sheet....................................................... 3
Statement of Cash Flows............................................. 4
Notes to Financial Statements....................................... 5
1
UNITED MERCHANTS AND MANUFACTURERS, INC., D.I.P.
STATEMENT OF OPERATIONS (000 omitted)
MONTH OF
JULY
1996
---------
Rental income....................................... $106
General and administrative expenses................. (247)
---------
Operating Loss ($141)
Interest expense - net.............................. (78)
Other income ....................................... 34
Reorganization expenses............................. (6)
Provision for income taxes.......................... (6)
Amounts billed to 79%-owned subsidiary:
Management services during reorganization.......... 80
Interest income on intercompany indebtedness....... 162
Equity in loss of 79%-owned subsidiary - Note G..... (5,374)
---------
Net Loss ($5,329)
Dividends applicable to preferred stock............. 375
---------
Net Loss Applicable to Common Shares ($5,704)
=========
Average common shares outstanding................... 17,845
Net Loss per Common share ($0.32)
=========
----------
See Notes to Financial Statements.
2
UNITED MERCHANTS AND MANUFACTURERS, INC., D.I.P.
BALANCE SHEET (000 omitted)
JULY 31
1996
ASSETS ---------
Current Assets:
Cash............................................... $158
Receivables........................................ 139
---------
Total Current Assets $297
Land and buildings.................................. $1,931
Less accumulated depreciation and amortization..... (1,280)
---------
Net Land and Buildings $651
Investment in and advances to 79%-owned subsidiary.. 16,041
Other Assets and Deferred Charges................... 1,794
---------
Total Assets $18,783
=========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Trade payables..................................... $35
Accrued expenses and sundry liabilities............ 845
---------
Total Current Liabilities $880
Liabilities subject to compromise:
Accounts payable................................... $1,264
Accrued expenses................................... 980
Long-term debt..................................... 55,693
Other long-term liabilities........................ 8
---------
Total Liabilities Subject to Compromise $57,945
Long-Term Debt...................................... 7,459
Other Long-Term Liabilities......................... 2,431
Stockholders' Equity (Deficit):
Preferred stock, par value $1 per share; 10,000,000
shares authorized; 450,000 shares outstanding..... $450
Common stock, par value $1 per share: 40,000,000
shares authorized; 17,845,000 shares outstanding
(excluding 22,800 shares held in treasury)........ 17,845
Capital in excess of par value..................... 64,674
Retained earnings (deficit)........................ (128,901)
Notes receivable from stock purchase agreement..... (4,000)
---------
Total Stockholders' Equity (Deficit) ($49,932)
---------
Total Liabilities and Equity $18,783
=========
See Notes to Financial Statements.
3
UNITED MERCHANTS AND MANUFACTURERS, INC., D.I.P.
STATEMENT OF CASH FLOWS (000 omitted)
MONTH OF
JULY
1996
---------
Cash Flows from Operating Activities:
Net earnings (loss)................................ ($5,329)
Adjustments to reconcile net earnings (loss) to
net cash used for operating activities:
Depreciation and amortization.................... 8
Equity in (earnings) loss of 79%-owned subsidiary 5,374
Interest income charged to 79%-owned subsidiary.. (162)
Decrease (increase) in assets:
Receivables....................................... (30)
Other assets and deferred charges................. 0
Increase (decrease) in liabilities:
Trade payables ................................... (13)
Accrued expenses and sundry liabilities........... 14
---------
Net Cash Provided (Used) by Operating Activities ($138)
Cash Flows from Financing Activities:
Increase in long-term debt......................... 78
Decrease in long-term debt......................... (203)
---------
Net Cash Provided (Used) by Financing Activities ($125)
---------
Increase (Decrease) in Cash ($263)
Cash at beginning of period......................... 421
---------
Cash at end of period $158
=========
-------------------
Supplemental disclosures of cash flow information:
Interest........................................... $0
Income Taxes....................................... 0
See Notes to Fianacial Statements.
4
UNITED MERCHANTS AND MANUFACTURERS, INC., D.I.P.
NOTES TO FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying financial statements of United Merchants and
Manufacturers, Inc. ("UM&M" or the "Company") are unaudited, are as of and
for the month ended July 31, 1996 and have been prepared in accordance
with generally accepted accounting principles (except on a separate
company basis - see the accompanying financial statements of the Company's
79%-owned subsidiary which is accounted for herein on the equity method)
for interim financial information. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. The
financial statements reflect the Company's equity in the loss on the sale
by the Company's 79%-owned subsidiary of most of its operating assets on
July 1, 1996, limited to the Company's investment in the subsidiary as of
that date (see Note G below). The results of operations of interim
periods are subject to year-end audit and adjustments and are not
necessarily indicative of the results of operations of the fiscal year.
For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's consolidated verified
financial statements/operating reports for the year ended June 30, 1996
filed with the United States Bankruptcy Court, Southern District of New
York, New York NY.
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles applicable to a going
concern which contemplate the realization of assets and the liquidation of
liabilities in the normal course of business. In the event that a plan of
reorganization (see Note B below) is not consummated, certain adjustments
may be required to the stated amounts and classification of assets and
liabilities.
NOTE B - PETITION FOR REORGANIZATION UNDER CHAPTER 11
Effective February 22, 1996, the Company and its 79%-owned subsidiary,
Reunited Holdings, Inc. (formerly Victoria Creations, Inc.), filed
petitions for reorganization relief under Chapter 11 of the Bankruptcy
Code in the United States Court for the Southern District of New York.
Pursuant to the Bankruptcy Code, the Company is continuing to operate its
businesses as debtor-in-possession while the reorganization case is
pending. The Company is allowed to use, and is using, its cash and other
resources at the operating level in the ordinary course of business.
Under Chapter 11, the presentation and collection of certain prepetition
claims against the Company are stayed. These claims are reflected in the
accompanying balance sheet as "Liabilities Subject to Compromise".
Additional claims (liabilities subject to compromise) may arise resulting
from rejection of executory contracts, including leases, and may be
determined by the court (or agreed to by the parties in interest) for
contingencies and other disputed amounts.
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Creditors holding claims secured by the Company's assets are also stayed,
although such claimants may move the court for relief from the stay.
Secured claims are secured by liens on substantially all of the Company's
assets.
Liabilities subject to compromise are stated at the Company's carrying
value and not at the amounts for which the claims may be settled.
The statement of cash flows reflects changes in applicable liabilities
before the reclassification of such amounts to Liabilities Subject to
Compromise.
The Company anticipates that it will not be required to pay postpetition
interest on certain of its prepetition debt obligations and, accordingly,
effective with the filing, discontinued accruing interest on those debt
obligations included in Liabilities Subject to Compromise. Contractual
interest not accrued and not reflected in the statement of operations with
respect to those obligations during the month amounted to $333,500.
NOTE C - INCOME TAXES
The Company has net operating loss carryforwards to offset earnings. The
amount shown as provisions for income taxes are for state and local taxes.
NOTE D - DIVIDENDS APPLICABLE TO PREFERRED STOCK
The Company has not declared nor paid any cash dividends on its 10%
Cumulative Preferred Stock in order to retain its available cash for use
in its operations. For financial statement purposes, cumulative preferred
dividends are deducted from the results of operations in determining
earnings applicable to common shares whether or not such dividends are
declared or paid.
NOTE E - LONG-TERM DEBT
Long-term debt classified as subject to compromise consists of the
following:
JULY 31
1996
(000)
--------
3 1/2% Senior Subordinated Secured Debentures
due 2009, net of unamortized discount of
$46,211,000...................................... $ 22,931
5% Subordinated Notes due 2019:
Issued to former senior lender................... 30,000
Issued in settlement of lawsuit, net of
unamortized discount of $20,852,000............. 1,148
Other............................................. 1,614
--------
Total Long-Term Debt Subject to Compromise $ 55,693
========
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Long-term debt not classified as subject to compromise is a term loan
secured by substantially all of the Company's assets, matures July 31,
2000 and bears interest at the rate of 12% a year. Subsequent to the
filing of the petition for reorganization, the Company has accrued
interest on this debt but has not paid such interest in cash.
NOTE F - SUPPLEMENTAL BALANCE SHEET INFORMATION
Supplemental information regarding certain balance sheet captions is as
follows:
JULY 31
1996
(000)
--------
Other assets and deferred charges:
Assets held for sale................................ $ 1,659
Deposits............................................ 69
Other............................................... 66
--------
$ 1,794
========
Other long-term liabilities:
Deferred shutdown costs............................. $ 1,337
Accrued workers compensation........................ 1,094
--------
$ 2,431
========
Note G - Sale of Assets
Under order of the bankruptcy Court, effective July 1, 1996, the Company's
79%-owned subsidiary sold most of its operating assets as a "going
concern" for proceeds of approximately $5.5 million in cash and the
assumption by the buyer of $19.55 million of the subsidiary's liability to
its senior secured lender. The subsidiary simultaneously used a portion
of the cash proceeds to payoff the balance owed to its senior secured
lender. The sale resulted in a non-cash loss to the subsidiary of
approximately $24.2 million. As set forth in Note A above, the Company's
equity in the loss on sale is limited to the Company's investment in the
subsidiary, approximately $5.4 million, at the date of sale. Subsequent
to the sale, the subsidiary continues to own and operate a design studio
providing design services for the high-quality-costume-jewelry and
fashion-jewelry industries.
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