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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
May 26, 1998
------------
Date of Report (Date of earliest event reported)
FACTORY CARD OUTLET CORP.
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(Exact name of registrant as specified in its charter )
Delaware 21859 36-3652087
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation
2727 DIEHL ROAD, NAPERVILLE, ILLINOIS 60563
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(address of principal executive offices) (Zip Code)
(630) 579-2000
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(Registrant's telephone number)
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ITEM 5. OTHER EVENTS.
On May 26, 1998, Factory Card Outlet Corp. (the "Registrant") announced
that Stewart M. Kasen, Chairman, has been named President and Chief Executive
Officer of the Registrant. The Registrant also reported its first quarter
results.
A copy of the Registrant's press release, dated May 26, 1998, is attached
hereto as Exhibit 99.1 and is incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
EXHIBIT NO. DESCRIPTION
99.1 Press Release of Factory Card Outlet Corp. issued May 26, 1998.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FACTORY CARD OUTLET CORP.
/s/ Stewart M. Kasen
--------------------------
Stewart M. Kasen
President
Dated: May 26, 1998
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
99.1 Press Release of Factory Card Outlet Corp. issued May 26, 1998
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Contact: Tom Stoltz Jason Lynch
Factory Card Outlet Roanne Kulakoff
Vice President/Finance James Fingeroth
630-579-2230 Kekst and Company
212-521-4800
FOR IMMEDIATE RELEASE
FACTORY CARD OUTLET NAMES KASEN PRESIDENT AND
CHIEF EXECUTIVE OFFICER: REPORTS FIRST QUARTER RESULTS
NAPERVILLE, IL, May 26, 1998 -- Factory Card Outlet Corp. (NASDAQ:FCPY)
announced today that Stewart M. Kasen, Chairman, has been named President and
Chief Executive Officer of this chain of superstores selling party supplies and
special occasion merchandise at everyday value prices.
Mr. Kasen, 58, has been Chairman of Factory Card Outlet since April, 1997 and a
Director of the Company since September, 1996. He has had a long and
distinguished retailing career, most recently as Chairman, President and Chief
Executive Officer of Best Products, a position he held from 1991 to 1996. Prior
to joining Best, he spent 24 years at Carter Hawley Hale as President and Chief
Executive Officer of Emporium Capwell, an $800 million division, and before
that, as President and Chief Executive of its Thalhimer's division.
Mr. Kasen succeeds Charles R. Cumello, who has resigned as an officer and a
director of the Company to pursue other opportunities.
A spokesman for the Company's Board of Directors stated, "We are fortunate to
have a person of Stewart Kasen's caliber and experience leading the Company. He
has a terrific understanding of our business and industry. We, as a company,
are as excited about the future as we have ever been."
The Company also announced today results for its first quarter ended May 2,
1998. Net Income for the first quarter increased over 50% to $568,000 from
$375,000 last year. Fully diluted earnings per share increased 40% to $0.07
from $0.05. Sales for the first quarter rose 51.3% to $49.9 million from $32.9
million last year. On a comparable store basis, sales for the quarter rose
3.1%.
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Mr. Kasen, said, "Our comparable store sales were somewhat below expectations,
but our new store sales were ahead of plan due to earlier openings within the
quarter. Comparable store sales were impacted by system conversion issues
associated with the consolidation of our Bensenville distribution facilities
into our new Naperville center. The new distribution center will support our
future growth and improve efficiency, but, initially, there has been an uneven
flow of merchandise to our stores resulting in stock outs in certain basic
items. These system issues have been identified and are being corrected.
However, we anticipate that this problem will adversely affect second quarter
earnings by up to $0.20 per share. The Wall Street consensus estimate, prior to
this announcement, had been for second quarter earnings per share of $0.27."
The Company further announced that its Annual Meeting of Stockholders,
currently scheduled for June 26, 1998, has been postponed to a date to be
announced in the future, because of Board composition issues related to Mr.
Cumello's resignation.
Factory Card Outlet is a chain of company-owned superstores offering a vast
assortment of party supplies, greeting cards, gift wrap and other special
occasion merchandise at everyday value prices. The Company currently operates
194 stores in 22 states.
This press release regarding the quarterly results of Factory Card Outlet Corp.
includes forward-looking statements as defined in the Private Securities
litigation Reform Act of 1995. Forward-looking statements do not constitute
historical facts and involve risks and factors may cause actual results to be
materially different than current estimates and cause actual results to differ
materially from the information contained in this press release is readily
available in the Company's Transition Report on Form 10-K. Copies of this
Transition Report are available on request directed to the President of the
Company.
(Table follows)
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FACTORY CARD OUTLET CORP.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
May 2, January 31,
1998 1998
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(In thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 164 $ 30
Receivables 1,041 2,009
Inventories 79,097 72,911
Other current assets 1,912 2,105
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Total current assets 82,214 77,065
Fixed assets, net 40,134 38,507
Deferred Income Taxes 493 493
Other Assets 304 188
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Total assets $123,145 $116,243
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 21,892 20,250
Accrued expenses 3,902 4,754
Other current liabilities 1,978 1,821
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Total current liabilities 27,772 26,825
Revolving credit note payable 34,968 29,700
Deferred rent liabilities 5,909 5,316
Other long-term liabilities 2.069 2,668
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Total liabilities 70,718 64,509
Total stockholders' equity 52,427 51,734
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Total liabilities and stockholders'
equity $123,145 $116,243
======== ========
</TABLE>
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FACTORY CARD OUTLET CORP.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
FIRST QUARTER ENDED
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MAY 2, APRIL 26
1998 1997
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(Dollars thousands except for earnings
per share data)
<S> <C> <C>
Net Sales $ 49,862 $ 32,946
Cost of sales and occupancy 32,183 20,459
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Gross profit 17,679 12,487
Selling, general and administrative
expenses 15,951 11,713
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Income from operations 1,728 774
Interest expense 781 127
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Income before taxes 947 647
Income taxes 379 272
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Net Income $ 568 $ 375
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Earnings per share
Basic $ 0.08 $ 0.05
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Diluted $ 0.07 $ 0.05
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Weighted average shares outstanding
Basic 7,354,386 7,210,791
========= =========
Diluted 8,096,974 7,988,643
========= =========
</TABLE>
