SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended August 1, 1998 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 No. 0-23671
WEINER'S STORES, INC.
(exact name of registrant as specified in its charter)
Delaware 76-0355003
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
6005 Westview Drive, Houston, TX 77055
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (713) 688-1331
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 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
-- --
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 Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
-- --
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
As of September 14, 1998 there were 19,000,000 shares of Weiner's
Stores, Inc. common stock, par value $.01 per share, outstanding.
<PAGE>
WEINER'S STORES, INC.
FORM 10-Q
QUARTER ENDED AUGUST 1, 1998
Table of Contents
Page No.
--------
PART 1. FINANCIAL INFORMATION
ITEM 1. Financial Statements 3
Consolidated Statements of Operations 3
Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Notes to Financial Statements 6-8
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-11
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 11
PART 2. OTHER INFORMATION
ITEM 1. Legal Proceedings 12
ITEM 2. Changes in Securities and Use of Proceeds 12
ITEM 3. Defaults Upon Senior Securities 12
ITEM 4. Submission of Matters to a Vote of Security Holders 12
ITEM 5. Other Information 12
ITEM 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
EXHIBIT INDEX 15
2
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. Financial Statements
WEINER'S STORES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
Successor Predecessor Successor Predecessor
Company Company Company Company
----------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
August 1, July 26, August 1, July 26,
1998 1997 1998 1997
----------------- ---------------- ---------------- -----------------
Net sales $ 68,548,000 $ 64,397,000 $ 130,127,000 $ 127,083,000
Cost of goods sold 46,063,000 42,720,000 84,851,000 83,617,000
----------------- ---------------- ---------------- -----------------
Gross margin 22,485,000 21,677,000 45,276,000 43,466,000
Selling, administrative and other operating costs 22,816,000 21,122,000 44,826,000 42,363,000
Reorganization expense - 650,000 - 1,400,000
----------------- ---------------- ---------------- -----------------
Operating (loss) income (331,000) (95,000) 450,000 (297,000)
Interest expense (265,000) (15,000) (442,000) (26,000)
Interest income - 41,000 - 167,000
----------------- ---------------- ---------------- -----------------
Net (loss) income $ (596,000) $ (69,000) $ 8,000 $ (156,000)
================= ================ ================ =================
Net (loss) income per share of common stock $ (0.03) $ (0.69) $ - $ (1.56)
================= ================ ================ =================
Weighted average number of shares of
common stock outstanding 19,000,000 100,000 19,000,000 100,000
================= ================ ================ =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
WEINER'S STORES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
August 1, January 31,
1998 1998
------------------- -----------------
<S> <C> <C>
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 7,308,000 $ 3,574,000
Receivables 8,269,000 1,592,000
Merchandise inventories, net 63,330,000 49,881,000
Prepaid expenses and other assets 3,679,000 3,138,000
------------------- -----------------
Total current assets 82,586,000 58,185,000
------------------- -----------------
Property and Equipment:
Land 258,000 258,000
Building - distribution center and office facility 1,996,000 1,967,000
Furniture, fixtures and leasehold improvements 18,903,000 16,262,000
------------------- -----------------
Total 21,157,000 18,487,000
Less accumulated depreciation and amortization (3,317,000) (1,674,000)
------------------- -----------------
Total property and equipment, net 17,840,000 16,813,000
------------------- -----------------
Excess Reorganization Value, less accumulated amortization of
$360,000 and $164,000, respectively 5,545,000 5,741,000
------------------- -----------------
$ 105,971,000 $ 80,739,000
=================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable $ 23,720,000 $ 9,303,000
Accrued expenses and other current liabilities 10,440,000 7,633,000
------------------- -----------------
Total current liabilities 34,160,000 16,936,000
------------------- -----------------
Other Liabilities 834,000 834,000
Long-Term Debt 13,000,000 5,000,000
------------------- -----------------
Commitments and Contingencies - -
Stockholders' Equity:
Common stock, $.01 par value, 50,000,000 shares authorized,
19,000,000 shares issued and outstanding 190,000 190,000
Additional paid-in capital 63,664,000 63,664,000
Accumulated deficit (5,877,000) (5,885,000)
------------------- -----------------
Total stockholders' equity 57,977,000 57,969,000
------------------- -----------------
$ 105,971,000 $ 80,739,000
=================== =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
WEINER'S STORES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Twenty-Six Weeks Ended
Successor Predecessor
Company Company
-------------------- ---------------------
August 1, July 26,
1998 1997
-------------------- ---------------------
<S> <C>
Net cash used in operating activities $ (1,282,000) $ (7,738,000)
-------------------- ---------------------
Cash Flows from Investing Activities:
Capital expenditures (3,049,000) (3,391,000)
Proceeds on disposition of assets 65,000 -
-------------------- ---------------------
Net cash used in investing activities (2,984,000) (3,391,000)
-------------------- ---------------------
Cash Flows from Financing Activities:
Net borrowings under bank line of credit 8,000,000 -
-------------------- ---------------------
Net cash provided by financing activities 8,000,000 -
-------------------- ---------------------
Net Increase (Decrease) in Cash 3,734,000 (11,129,000)
Cash and Cash Equivalents, beginning of period 3,574,000 18,719,000
-------------------- ---------------------
Cash and Cash Equivalents, end of period $ 7,308,000 $ 7,590,000
==================== =====================
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
WEINER'S STORES, INC.
NOTES TO FINANCIAL STATEMENTS
(1) Basis of Presentation
On April 12, 1995, the Company filed a petition for reorganization
under Chapter 11 of the Federal Bankruptcy Code. The Company's Plan of
Reorganization was confirmed on August 13, 1997 and became effective on August
26, 1997. On that date, the Company adopted "fresh start" reporting in
accordance with the American Institute of Certified Public Accountants Statement
of Position 90-7, "Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code," which resulted in adjustments to the Company's stockholders'
equity and the carrying value of assets and liabilities. Accordingly, the
Company's post-reorganization financial statements are not comparable to the
pre-reorganization financial statements. A vertical black line is shown in the
accompanying financial statements to separate the post-reorganization periods
from the pre-reorganization periods.
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (consisting of normal recurring adjustments)
which management considers necessary to present fairly the financial position of
Weiner's Stores, Inc. (the "Company") as of August 1, 1998, and the results of
its operations and its cash flows for each of the thirteen and twenty-six weeks
ended August 1, 1998 and July 26, 1997. The results of operations for the
thirteen and twenty-six week periods may not be indicative of the results for
the entire year.
These financial statements should be read in conjunction with the
audited financial statements for the year ended January 31, 1998 and related
notes which are included in the Company's Annual Report to stockholders and the
Company's Registration Statement on Form 10, as amended. Accordingly,
significant accounting policies and other disclosures necessary for complete
financial statements in conformity with generally accepted accounting principles
have been omitted since such items are reflected in the Company's audited
financial statements and related notes thereto.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities, at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(2) Accrued Expenses
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
August 1, 1998 January 31, 1998
------------------- -------------------
<S> <C> <C>
Payroll and related benefits $ 1,623,000 $ 1,661,000
Taxes other than income taxes 3,351,000 1,613,000
Rent and other related costs 2,105,000 2,123,000
Other 3,361,000 2,236,000
------------------- -------------------
Total $ 10,440,000 $ 7,633,000
=================== ===================
</TABLE>
(3) Long-Term Debt
At August 1, 1998, the Company had approximately $19,056,000 of
availability under its $40,000,000 working capital facility, after considering
outstanding letters of credit of approximately $4,734,000. The Company may
prepay amounts outstanding under the working capital facility without penalty.
6
<PAGE>
Effective August 29, 1998, the Company and the Agent entered into a
Second Amendment to the revolving credit agreement. The Second Amendment, among
other things, provided for a slight upward adjustment in applicable interest
rates, and adjusted the financial covenant relating to earnings before interest,
taxes, depreciation and amortization ("EBITDA") as defined in the revolving
credit agreement. As of August 29, 1998, the Company was in compliance with all
covenants of the revolving credit agreement.
(4) Leases
During the twenty-six weeks ended August 1, 1998, the Company entered into
new leases for three stores, including relocations, closed one store and
executed renewal options on several locations. Future minimum rental payments
have increased approximately $6,484,000 since January 31, 1998, bringing the
total future minimum rental payments under all noncancelable operating leases
with initial or remaining lease terms of one year or more to approximately
$43,562,000.
Total rent expense for all operating leases was as follows:
<TABLE>
<CAPTION>
Successor Predecessor
Company Company
----------------- -----------------
<S> <C> <C>
Twenty-Six Twenty-Six
Weeks Ended Weeks Ended
August 1, 1998 July 26, 1997
----------------- -----------------
Minimum rentals $ 4,979,000 $ 4,627,000
Contingent rentals 221,000 268,000
================= =================
Total $ 5,200,000 $ 4,895,000
================= =================
</TABLE>
(5) Stock Based Awards
On March 26, 1998, under the 1997 Stock Incentive Plan, options to
purchase 51,500 shares of common stock were granted to certain key employees at
an exercise price of $1.00 per share, the fair market value on that date. At
August 1, 1998, there were vested options outstanding to purchase 83,333 shares
of common stock at a per share exercise price of $1.15.
(6) Income Taxes
The Company provides United States federal income taxes based on its
estimated annual effective tax rate for the fiscal year. No income tax provision
has been recorded in either the first twenty-six weeks of 1998 or 1997. The
recognition of income tax benefits is affected by limitations on the Company's
ability to utilize NOL carryforwards.
(7) New Accounting Pronouncements
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5 ("SOP 98-5"), "Reporting the Costs of Start-up
Activities." SOP 98-5 is effective beginning on January 1, 1999, and requires
that start-up costs capitalized prior to January 1, 1999 are written off and any
future start-up costs to be expensed as incurred. If the Company expensed these
items as incurred during the first twenty-six weeks of 1998, the Company would
have had a loss per share of common stock of $0.01.
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" effective for fiscal years beginning after
June 15, 1999. The Company does not participate in the use of derivatives and
does not believe this pronouncement will impact its financial presentation.
7
<PAGE>
(8) Earnings Per Share
Net income per share of common stock is computed based on the weighted
average number of shares of common stock and equivalent shares of common stock
outstanding during the period. The computation of weighted average shares of
common stock outstanding is as follows:
<TABLE>
<CAPTION>
Successor Predecessor
Company Company
------------------ ---------------
August 1, 1998 July 26, 1997
------------------ ---------------
<S> <C> <C>
Weighted average number of shares of
common stock outstanding 19,000,000 100,000
Common stock equivalent - shares issuable
under the 1997 Stock Incentive Plan - -
------------------ ---------------
Weighted average shares of common stock
outstanding assuming full dilution 19,000,000 100,000
================== ===============
</TABLE>
As of August 1, 1998, the Company's common stock was not actively
traded. The Company has determined that none of its common stock had appreciated
beyond the underlying exercise price of the option based on the most recent
trading activity (i.e., no dilution for the earnings per share computations).
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements.
The words "anticipate," "believe," "expect," "plan," "intend," "seek,"
"estimate," "project," "will," "could," "may," and similar expressions are
intended to identify forward-looking statements. These statements include, among
others, information regarding future operations, future capital expenditures and
future cash flow. Such statements reflect the Company's current views with
respect to future events and financial performance and involve risks and
uncertainties, including, without limitation, general economic and business
conditions, changes in foreign, political, social and economic conditions,
regulatory initiatives and compliance with governmental regulations, the ability
of the Company and its competitors to predict fashion trends and customer
preferences and achieve further market penetration and additional customers,
consumer apparel buying patterns, adverse weather conditions, inventory risks
due to shifts in market demand, and various other matters, many of which are
beyond the Company's control. Should one or more of these risks or uncertainties
occur, or should underlying assumptions prove to be incorrect, actual results
may vary materially and adversely from those anticipated, believed, estimated or
otherwise indicated. Consequently, all of the forward-looking statements made in
this document are qualified by these cautionary statements and there can be no
assurance that the actual results or developments anticipated by the Company
will be realized or, even if substantially realized, that they will have the
expected consequences to or effect on the Company or its business or operations.
The Company does not undertake and expressly disclaims any obligation to
publicly update or revise any such forward-looking statements even if experience
or future changes make it clear that the projected results expressed or implied
therein will not be realized.
Results of Operations
On April 12, 1995, the Company filed a petition for reorganization
under Chapter 11 of the Federal Bankruptcy Code. The Company's Plan of
Reorganization was confirmed on August 13, 1997 and became effective on August
26, 1997. On that date, the Company adopted "fresh start" reporting in
accordance with the American Institute of Certified Public Accountants Statement
of Position 90-7, "Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code," which resulted in adjustments to the Company's stockholders'
equity and the carrying value of assets and liabilities. Accordingly, the
Company's post-reorganization financial statements are not comparable to the
pre-reorganization financial statements. A vertical black line is shown in the
8
<PAGE>
accompanying financial statements to separate the post-reorganization periods
from the pre-reorganization periods.
Thirteen Weeks Ended August 1, 1998 Compared to Thirteen Weeks Ended July 26,
1997
Net sales in the second quarter of 1998 increased 6.4% to $68,548,000
from $64,397,000 in the second quarter of 1997. The increase is primarily
attributable to a 4.7% increase in comparable store sales and new store sales,
offset by the closing of seven stores in the fourth quarter of 1997. The
increase in comparable store sales is primarily attributable to the Company's
back-to-school promotion during July, including an enhanced layaway promotion.
Sales were further impacted by the well-publicized national down-turn in the
Levi's jeans and branded athletic shoe business, especially Nike and Fila.
Gross margin in the second quarter of 1998 decreased as a percentage of
sales to 32.8% from 33.7% in the second quarter of 1997. This decrease is
primarily attributable to inventory shortage results being higher than last
year.
Selling, administrative and other operating costs increased to
$22,816,000 in the second quarter of 1998 compared to $21,122,000 in the second
quarter of 1997. The increase is primarily attributable to increased payroll
costs due to federally mandated minimum wage increases that became effective
September 1997, promotional advertising and rent expense offset by reductions in
supply expense. As a percentage of sales, selling, administrative and other
operating costs in the second quarter of 1998 increased to 33.3% from 32.8% in
the second quarter of 1997. This increase is primarily attributable to the lack
of an incremental sales increase to offset the federally mandated minimum wage
increases.
The second quarter of 1997 included $650,000 of reorganization expense.
There has been no reorganization expense since August 26, 1997 when the Company
emerged from Chapter 11 reorganization.
Operating loss increased to $331,000 in the second quarter of 1998 from
$95,000 in the second quarter of 1997. Had the Company not incurred the
reorganization expense referred to above, second quarter 1997 operating income
would have been $745,000. The Company is focusing on its inventory mix and
evaluating overall expense control initiatives to attempt to further enhance
operating results for fiscal 1998.
The Company provides United States federal income taxes based on its
estimated annual effective tax rate for the fiscal year. No income tax provision
was recorded in either the second quarter of 1998 or the second quarter of 1997.
The recognition of income tax benefits is affected by limitations on the
Company's ability to utilize NOL carryforwards.
The Company recorded interest expense of $265,000 in the second quarter
of 1998 compared to $15,000 in the second quarter of 1997. During its bankruptcy
proceedings, the Company discontinued accruing interest on substantially all of
its prepetition debt. Interest expense has increased due to the change in cash
and cash equivalents since the emergence from Chapter 11 reorganization on
August 26, 1997. In the second quarter of 1997, the Company was not utilizing
its working capital facility.
Interest income during the second quarter of 1998 was approximately
zero compared to $41,000 during the second quarter of 1997. This decline in
interest income is primarily due to the reduction in cash available for
investment in the second quarter of 1998 as compared to the second quarter of
1997.
The Company's net loss for the second quarter of 1998 was $596,000, or
$0.03 per share of common stock, compared to a net loss of $69,000 or $0.69 per
share of common stock for the second quarter of 1997. The Company adopted "fresh
start" accounting upon its emergence from Chapter 11 reorganization. Earnings
per share for prior periods is based on the Predecessor Company shares then
outstanding; such information is not comparable due to the Company's
reorganization.
Twenty-Six Weeks Ended August 1, 1998 Compared to Twenty-Six Weeks Ended
July 26, 1997
9
<PAGE>
Net sales in the first six months of 1998 increased 2.4% to
$130,127,000 from $127,083,000 in the first six months of 1997. The increase is
primarily attributable to new store sales offset by the closing of seven stores
in the fourth quarter of 1997. Comparable store sales for the first six months
of 1998 were flat compared to the first six months of 1997. Sales were further
impacted by the well-publicized national down-turn in the Levi's jeans and
branded athletic shoe business, especially Nike and Fila.
Gross margin in the first six months of 1998 increased as a percentage
of sales to 34.8% from 34.2% in the first six months of 1997. This increase is
primarily attributable to increased initial markup offset by higher inventory
shortage results. These results are not indicative of performance during more
competitive seasons.
Selling, administrative and other operating costs increased to
$44,826,000 in the first six months of 1998 compared to $42,363,000 in the first
six months of 1997. The increase is primarily attributable to increased payroll
costs due to the federally mandated minimum wage increases, promotional
advertising and rent expense offset by reductions in supply expense and
insurance expense. As a percentage of sales, selling, administrative and other
operating costs in the first six months of 1998 increased to 34.4% from 33.3% in
the first six months of 1997. This increase is primarily attributable to the
lack of an incremental sales increase to offset the federally mandated minimum
wage increases.
The first six months of 1997 included $1,400,000 of reorganization
expense. There has been no reorganization expense since August 26, 1997 when the
Company emerged from Chapter 11 reorganization.
Operating income increased to $450,000 in the first six months of 1998
from an operating loss of $297,000 in the first six months of 1997. Had the
Company not incurred the reorganization expense referred to above, in the first
six months of 1997 operating income would have been $1,697,000. The Company is
focusing on its inventory mix and evaluating overall expense control initiatives
to attempt to further enhance operating results for fiscal 1998.
The Company provides United States federal income taxes based on its
estimated annual effective tax rate for the fiscal year. No income tax provision
was recorded in either the first six months of 1998 or the first six months of
1997. The recognition of income tax benefits is affected by limitations on the
Company's ability to utilize NOL carryforwards.
The Company recorded interest expense of $442,000 in the first six
months of 1998 compared to $26,000 in the first six months of 1997. During its
bankruptcy proceedings, the Company discontinued accruing interest on
substantially all of its prepetition debt. Interest expense has increased due to
the change in cash and cash equivalents since the emergence from Chapter 11
reorganization on August 26, 1997. In the second quarter of 1997, the Company
was not utilizing its working capital facility.
Interest income during the first six months of 1998 was approximately
zero compared to $167,000 during the first six months of 1997. This decline in
interest income is primarily due to the reduction in cash available for
investment in the first six months of 1998 as compared to the first six months
of 1997.
The Company's net income for the first six months of 1998 was $8,000,
or less than $0.01 per share of common stock, compared to a net loss of $156,000
or $1.56 per share of common stock for the first six months of 1997. The Company
adopted "fresh start" accounting upon its emergence from Chapter 11
reorganization. Earnings per share for prior periods is based on the Predecessor
Company shares then outstanding; such information is not comparable due to the
Company's reorganization.
Liquidity and Capital Resources
The Company's cash used in operations was $1,282,000 during the
twenty-six weeks ended August 1, 1998, compared to cash used in operations of
$7,738,000 during the twenty-six weeks ended July 26, 1997. The decrease in cash
10
<PAGE>
flow used in operations is primarily attributable to the elimination of the
incurrence of reorganization expense since the Company's emergence from Chapter
11 reorganization on August 26, 1997. The Company's working capital was
$48,426,000 at August 1, 1998 compared to $41,249,000 at January 31, 1998 and
$52,582,000 at July 26, 1997. The Company's primary source of liquidity has been
borrowings under the Revolving Credit Agreement, dated August 26, 1997, as
amended, between the Company and The CIT Group/Business Credit, Inc., as agent
(the "Agent") and lender (the "Revolving Credit Agreement").
At August 1, 1998, the Company had approximately $19,056,000 of
availability under the Revolving Credit Agreement, after considering borrowings
and outstanding letters of credit. At August 1, 1998, the aggregate amount of
outstanding letters of credit thereunder was approximately $4,734,000. The
Company may prepay amounts outstanding under the Revolving Credit Agreement
without penalty.
The Company's capital expenditures are expected to be between
$5,000,000 and $7,000,000 in fiscal 1998, primarily for the opening of new
stores, remodeling of existing stores and enhancements of the management
information systems. The Company will fund these capital expenditures from cash
flows from operations and borrowings under the Revolving Credit Agreement.
The Company's Revolving Credit Agreement provides a $40,000,000 working
capital facility, including a $15,000,000 subfacility for the issuance of
letters of credit. The Revolving Credit Agreement is secured by substantially
all of the Company's assets. Effective August 29, 1998, the Company and the
Agent entered into a Second Amendment to the Revolving Credit Agreement. The
Second Amendment, among other things, provided for a slight upward adjustment in
applicable interest rates, and adjusted the financial covenant relating to
earnings before interest, taxes, depreciation and amortization ("EBITDA") as
defined in the Revolving Credit Agreement. The Revolving Credit Agreement
provides that proceeds may be used solely to fund working capital in the
ordinary course of business and for other general corporate purposes. Borrowings
under the Revolving Credit Agreement, as so amended by such Second Amendment,
bear interest at the reference rate thereunder plus 0.50% or, at the option of
the Company, the Eurodollar Rate thereunder plus 2.50%. Under the terms of the
Revolving Credit Agreement, capital expenditures are limited to $7,000,000 in
fiscal 1998. The Revolving Credit Agreement further stipulates certain borrowing
limitations based on the Company's inventory levels and requires that the
Company comply with certain financial covenants. The expiration date of the
Revolving Credit Agreement is August 31, 2000. As of August 29, 1998, the
Company was in compliance with all covenants of the Revolving Credit Agreement.
The Company believes that its internally generated cash flow, together
with borrowings under the Revolving Credit Agreement, will be adequate to
finance the Company's operating requirements, debt repayments and capital needs
during the foreseeable future. Any material shortfalls in operating cash flow
could require the Company to seek alternative sources of financing or to reduce
capital expenditures.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
11
<PAGE>
PART 2. OTHER INFORMATION
ITEM 1. Legal Proceedings
The Company is party to ordinary routine litigation,
arbitration and proceedings incidental to its business, the disposition
of which is not expected to have a material adverse effect on the
Company's business or financial condition.
ITEM 2. Changes in Securities and Use of Proceeds
None.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of the Stockholders of the Company was held
on June 25, 1998. Matters voted upon at the meeting were the election
of directors and the ratification of independent public accountants for
the fiscal year ending January 30, 1999.
The number of shares voted for and withheld with respect to
the election of each director is as follows:
<TABLE>
<CAPTION>
Shares Voted For Shares Withheld Broker Non-Votes
---------------- --------------- ----------------
<S> <C> <C>
Herbert R. Douglas 14,576,243 51,643 0
Raymond J. Miller 14,590,606 37,280 0
Merwin F. Kaminstein 14,590,606 37,280 0
Randall L. Lambert 14,590,606 37,280 0
Gasper Mir 14,590,606 37,280 0
F. Hall Webb 14,590,606 37,280 0
Melvyn Wolff 14,590,606 37,280 0
</TABLE>
The number of shares voted with respect to the ratification of
the appointment of Ernst & Young LLP as independent public accountants
for the fiscal year ending January 30, 1999 was as follows:
<TABLE>
<CAPTION>
Voted For Voted Against Abstained Broker Non-Votes
--------- ------------- --------- ----------------
<S> <C> <C> <C>
14,576,243 19,930 31,713 0
</TABLE>
ITEM 5. Other Information
None.
12
<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibit
No. Description
--- -----------
3.1 Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the
Company's registration statement on Form 10 filed
April 14, 1998)
3.2 Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2 to the Company's
registration statement on Form 10 filed April 14,
1998)
27.1 Financial Data Schedule
(b) During the second quarter of 1998, the Company filed a Current
Report on Form 8-K on May 27, 1998, filed Amendment No. 1 thereto on
May 28, 1998 on Form 8-K/A and filed Amendment No. 2 to such Current
Report on Form 8-K on Form 8-K/A on June 2, 1998, to report, pursuant
to Item 4 of Form 8-K, the dismissal of the Company's independent
accountant and the appointment of a new independent accountant, namely,
Ernst & Young LLP.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
WEINER'S STORES, INC.
September 14, 1998 /s/ Raymond J. Miller
------------------ ----------------------------
(Date) By: Raymond J. Miller
Vice President and
Chief Financial Officer
14
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
3.1 Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the
Company's registration statement on Form 10 filed
April 14, 1998)
3.2 Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2 to the Company's
registration statement on Form 10 filed April 14,
1998)
27.1 Financial Data Schedule
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS CONTAINED IN THE ACCOMPANYING QUARTERLY REPORT ON
FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> JAN-30-1999 JAN-30-1999
<PERIOD-END> AUG-01-1998 AUG-01-1998
<CASH> 0 7,308
<SECURITIES> 0 0
<RECEIVABLES> 0 8,269
<ALLOWANCES> 0 0
<INVENTORY> 0 63,330
<CURRENT-ASSETS> 0 82,586
<PP&E> 0 21,157
<DEPRECIATION> 0 (3,317)
<TOTAL-ASSETS> 0 105,971
<CURRENT-LIABILITIES> 0 34,160
<BONDS> 0 0
0 0
0 0
<COMMON> 0 190
<OTHER-SE> 0 57,787
<TOTAL-LIABILITY-AND-EQUITY> 0 105,971
<SALES> 68,548 130,127
<TOTAL-REVENUES> 68,548 130,127
<CGS> 46,063 84,851
<TOTAL-COSTS> 46,063 84,851
<OTHER-EXPENSES> 22,816 44,826
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 265 442
<INCOME-PRETAX> (596) 8
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (596) 8
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (596) 8
<EPS-PRIMARY> 0.03 0.00
<EPS-DILUTED> 0.03 0.00
</TABLE>
