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) - March 31, 1997
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 previously reported, 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 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 March
31, 1997 as filed with the Bankruptcy Court.
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 May 2, 1997 By /s/ Norman R. Forson
Norman R. Forson
Senior Vice President
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UNITED MERCHANTS AND MANUFACTURERS, INC., D.I.P.
REUNITED HOLDINGS, INC., D.I.P.
Two Executive Drive, Suite 780
Fort Lee NJ 07024
201-585-2100
May 2, 1997
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 Reunited Holdings,
Inc. (formerly 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 March 1997.
Also enclosed is a schedule of and receipts for Federal, state, and local
taxes withheld and paid for the month.
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 MARCH 1997
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: MaY 2, 1997 /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
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UNITED MERCHANTS AND MANUFACTURERS, INC., D.I.P.
STATEMENT OF OPERATIONS (000 omitted)
MONTH OF
MARCH
1997
---------
Rental income....................................... $29
General and administrative expenses................. (135)
---------
Operating Earnings (Loss) ($106)
Interest income (expense)-net....................... 3
Other income........................................ 4
Reorganization expenses............................. (7)
Transactions with subsidiary:
Management services during reorganization.......... 65
Transfer of accrued reorganization
expenses to subsidiary............................ 300
---------
Net Earnings (Loss) $259
Dividends applicable to preferred stock............. 375
---------
Net Earnings (Loss) Applicable to Common Shares ($116)
=========
Average common shares outstanding................... 17,845
Net Earnings (Loss) per Common share................ ($0.007)
----------
See Notes to Financial Statements.
2
UNITED MERCHANTS AND MANUFACTURERS, INC., D.I.P.
BALANCE SHEET (000 omitted)
MARCH 31
1997
ASSETS ---------
Current Assets:
Cash............................................... $854
Receivables........................................ 50
Other current assets............................... 5
---------
Total Current Assets $909
Land and buildings.................................. $1,611
Less accumulated depreciation...................... (1,181)
---------
Net Land and Buildings $430
Investment in and advances to subsidiary............ 15,331
Other Assets and Deferred Charges................... 88
---------
Total Assets $16,758
=========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Trade payables..................................... $23
Accrued expenses and sundry liabilities............ 429
---------
Total Current Liabilities $452
Liabilities subject to compromise:
Accounts payable................................... $1,264
Accrued expenses................................... 679
Long-term debt..................................... 62,173
Other long-term liabilities........................ 8
---------
Total Liabilities Subject to Compromise $64,124
Other Long-Term Liabilities......................... 2,270
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)........................ (129,057)
Notes receivable from stock purchase agreement..... (4,000)
---------
Total Stockholders' Equity (Deficit) ($50,088)
---------
Total Liabilities and Equity $16,758
=========
See Notes to Financial Statements.
3
UNITED MERCHANTS AND MANUFACTURERS, INC., D.I.P.
STATEMENT OF CASH FLOWS (000 omitted)
MONTH OF
MARCH
1997
---------
Cash Flows from Operating Activities:
Net earnings (loss)................................ $259
Add (deduct) items not requiring or providing
cash in the current period:
Depreciation..................................... 8
Transfer of accrued reorganization expenses
to subsidiary................................... (300)
Increase (decrease) in liabilities:
Trade payables ................................... (2)
Accrued expenses and sundry liabilities........... (13)
---------
Net Cash Provided (Used) by Operating Activities ($48)
---------
Increase (Decrease) in Cash ($48)
Cash at beginning of period......................... 902
---------
Cash at end of period $854
=========
-------------------
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 March 31, 1997 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
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 Company's equity in the loss on the sale by the Company's subsidiary
of most of its operating assets on July 1, 1996 (see the Company's
financial statements as of and for the month ended July 31, 1996) reduced
the Company's investment in the subsidiary to zero. Therefore, so long as
the subsidiary's net equity is a deficit, the Company's equity in the
results of operations of the subsidiary will not be reflected in the
Company's statement of operations.
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 or is consummated on
a different basis, certain adjustments may be required to the stated
amounts and classification of assets and liabilities. See Note G below.
During the month of March 1997, the Company transferred to its subsidiary
additional liability for reorganization expenses of the jointly
administered bankruptcy cases. The expenses had been accrued previously
by the Company. The transfer is shown by the Company as income in March
1997.
NOTE B - PETITION FOR REORGANIZATION UNDER CHAPTER 11
Effective February 22, 1996, the Company and its 80%-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.
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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.
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 $412,000.
On February 26, 1997, the Company and its subsidiary each filed amended
and restated reorganization plans dated as of February 25, 1997 with the
United States Bankruptcy Court for the Southern District of New York
("Bankruptcy Court"). The plans set forth how claims against and interests
in the companies will be treated following the companies' emergence from
Chapter 11. The plans are based on the conclusion that recovery to
creditors will be maximized by the companies' continued operations as
going concerns under terms of the plans. Disclosure statements describing
certain aspects of the plans, the companies' businesses, significant
events occurring in the Chapter 11 cases and related matters were approved
by the Bankruptcy Court. The disclosure statements were mailed to persons
holding claims or interests in the companies, along with ballots, as
applicable, soliciting votes for accepting or rejecting the reorganization
plans. The votes were to be received by the voting agent by March 31,
1997.
Under the Company's plan, claims and interests in the Company are divided
into classes. If the plan is approved by the holders of the claims
authorized to vote and by the Bankruptcy Court, certain unclassified
claims, including administrative claims and priority tax claims, and
certain other priority claims, will receive payment in cash either on the
consummation date or in installments over time or such other treatment as
is agreed upon with the holders of such claims. All other claims and all
interests are classified into classes and will receive distributions and
recoveries, if any, as follows:
Class 1 - Other Priority Claim - the Pension Benefit Guaranty
Corporation ("PBGC"), which took over the Company's pension plan,
filed a claim for the underfunding of the plan. The PBGC will
receive
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a note in the principal amount of $17.2 million, payable from future
earnings of the Company.
Class 2.01 - Foothill Secured Claims - Foothill Capital Corporation,
holder of a senior secured note, will receive a new senior note. The
new note will be payable from the proceeds of the sale of the
Company's Rhode Island facilities, when sold, and from future
earnings of the Company.
Class 2.02 - Old Subordinated Debentures Secured Claims - Holders of
the Company's 3 1/2% Senior Subordinated Debentures due 2009 will
receive new subordinated debentures, shares of new Common Stock and
new warrants to purchase additional shares of new Common Stock. The
new subordinated debentures will be payable from future earnings of
the Company.
Class 3 - General Unsecured Claims - Holders of general unsecured
claims will neither receive nor retain any property.
Class 4 - Subordinated Claims - Holders of subordinated claims will
neither receive nor retain any property.
Class 5 - Old Preferred Stock Interests - The Company's old Preferred
Stock will be canceled and holders thereof will neither receive nor
retain any property.
Class 6 - Old Common Stock Interests - The Company's old Common Stock
will be canceled and holders thereof will neither receive nor retain
any property.
The above is a summary of the plan and is qualified in its entirety by
reference to the provisions of the plan.
NOTE C - INCOME TAXES
The Company has net operating loss carryforwards to offset earnings, if
any.
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.
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NOTE E - LONG-TERM DEBT
Long-term debt classified as subject to compromise consists of the
following:
MARCH 31
1997
(000)
--------
Secured term loan................................. $ 6,480
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 $ 62,173
========
The term loan is 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
accrued interest on this debt but did not pay the interest in cash.
During the month of December 1996, the Company determined that the term
loan became subject to compromise effective July 1, 1996. Therefore, the
Company reversed the accrued interest applicable to this loan for the
period subsequent June 30, 1996.
NOTE F - SUPPLEMENTAL BALANCE SHEET INFORMATION
MARCH 31
1997
(000)
--------
Other long-term liabilities:
Deferred shutdown costs............................. $ 1,176
Accrued workers compensation........................ 1,094
--------
$ 2,270
========
Note G - Subsequent Event
As mentioned in Note B above, the Company and its subsidiary each filed an
Amended and Restated Reorganization Plan with the Court dated February 25,
1997. After the solicitation procedures set forth by the Court were
completed, a confirmation hearing was held on April 9, 1997. At the
conclusion of the hearing, the Amended and Restated Reorganization Plan of
the Company (and of its subsidiary) was confirmed by the Court.
The Company filed a Current Report on Form 8-K with the Securities and
Exchange Commission on April 24, 1997 which included Exhibits,
incorporated herein by reference, as follows:
Amended and Restated Reorganization Plan of United Merchants and
Manufacturers, Inc., dated February 25, 1997
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Findings of Fact, Conclusion of Law, and Order under 11 U.S.C.
Sections 1129(a) and (b) and Fed. R. Bankr. P. 3020 Confirming
Amended and Restated Reorganization Plan of United Merchants and
Manufacturers, Inc. Dated February 25, 1997, dated April 10, 1997
The following pro forma balance sheet of the Company reflects certain
adjustments which will result from the implementation of the Plan of
Reorganization as if the Plan had been implemented on March 31, 1997. The
adjustment amounts are based on the best information available to the
Company as of this date and are subject to change.
Pro Forma Balance Sheet as of March 31, 1997
(000 omitted)
------------------------------------
BEFORE
ASSETS: ADJUSTMENT ADJUSTMENTS ADJUSTED
---------- ----------- --------
Cash............................... $ 854 $ (694) A $ 160
Receivables........................ 50 50
Other current assets............... 5 5
Land and buildings - net........... 430 2,470 G 2,900
Investment in and advances to
subsidiary........................ 15,331 (5,000) C
(3,845) D 6,486
Other assets....................... 88 88
Intangible......................... 54,959 H 54,959
--------- -------- --------
$ 16,758 $ 47,890 $ 64,648
========= ======== ========
LIABILITIES AND EQUITY:
Accounts payable................... $ 1,287 $ (1,264) E $ 23
Accrued expenses................... 1,108 (429) B
(679) E
Long-term debt:
Note payable to secured lender.... 6,480 6,480
3.5% subordinated debentures - net
of discount:
Prior 3.5% holders.............. 22,931 14,416 F 37,347
PBGC............................ 10,798 F 10,798
5% notes payable.................. 31,148 (31,148) E
Other............................. 1,614 (1,614) E
Other long-term liabilities........ 2,278 (2,278) A,B
Equity............................. (50,088) 2,005 A,B
(Note - Equity consists of 8 million (5,000) C
shares of new Common Stock and warrants (3,845) D
to acquire an additional 2 million 41,671 E
shares. The old Preferred and Common (32,172) F
Stock are canceled. See Note B above) 2,470 G
54,959 H 10,000
--------- -------- --------
$ 16,758 $ 47,890 $ 64,648
========= ======== ========
- ------------
A - Settlement of secured liability
B - Adjustment of certain liabilities
C - Contribution of capital to subsidiary
D - Record discount on receivable from subsidiary
E - Write-off debt discharged in bankruptcy
F - Record issuance of revised 3.5% debentures, net of discount
G - Adjust property to estimated value
H - To recognize intangible arising from "Fresh Start" accounting;
based on value given over value of net tangible assets
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