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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 report) November 2, 1994.
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HOUSE OF FABRICS, INC.
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(Exact name of Registrant as Specified in Charter)
A Delaware Corporation 1-7927 95-3426136
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File No.) Identification No.)
13400 Riverside Drive, Sherman Oaks, California 91423
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (818) 995-7000
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Item 3. Bankruptcy or Receivership
On November 2, 1994, the Registrant and its subsidiaries filed
for protection under Chapter 11 of the Bankruptcy Code. The case
is pending before the U.S. Bankruptcy Court for the Central
District of California. See attached Press Release (Exhibit
99.1).
Item 5. Other Events
On November 2, 1994, Daniel Greenberg resigned as a member of the
Board of Directors of the Registrant because of the added time
commitment required of the Board of Directors during the
Registrant's financial restructuring. On November 2, 1994,
William W. Pennell was appointed to the Board of Directors to
fill the vacancy created by Mr. Greenberg's resignation. See
attached Press Release (Exhibit 99.2).
Item 7 Financial Statements, Pro Forma Financial Information and
Exhibits
See Exhibit Index
SIGNATURES
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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.
HOUSE OF FABRICS, INC.
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(Registrant)
By /s/ MARVIN S. MALTZMAN
____________________________________
Marvin S. Maltzman, Esq.
Senior Vice President & General Counsel
Date: November 9, 1994
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EXHIBIT INDEX
Exhibit No.
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99.1 Press Release dated November 3, 1994
99.2 Press Release dated November 4, 1994
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(THE LETTERHEAD OF SITRICK KRANTZ & COMPANY INC. GOES HERE)
Exhibit 99.1
Contact: Sandra Sternberg
Rivian Bell
Sitrick Krantz & Company
310/788-2850
FOR IMMEDIATE RELEASE
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HOUSE OF FABRICS TO COMPLETE RESTRUCTURING THROUGH CHAPTER 11; SMALLER CHAIN
TO EMERGE WITH EXPANDED FOCUS ON CRAFTS AND HOME DECORATING
SHERMAN OAKS, CALIF. -- NOVEMBER 3, 1994 -- House of Fabrics, Inc.
(NYSE:HF) said today that, in order to complete the company's previously
announced restructuring in a more efficient environment, it has filed to
reorganize under Chapter 11 of the Bankruptcy Code. The filing took place late
Wednesday afternoon in the U.S. Bankruptcy Court for the Central District of
California in Los Angeles. Included in the filing were House of Fabrics, Inc.
and its wholly owned subsidiaries Fabricland, Inc., So-Fro Fabrics, Inc. and
House of Fabrics of South Carolina, Inc. Metrolina Express, Inc., a subsidiary
of House of Fabrics of South Carolina, Inc., was also included in the filing.
According to Gary L. Larkins, president and chief executive officer of the
427-store chain, "For more than a year, the company's operating options and
liquidity have been severely limited. By utilizing the Chapter 11 process, we
believe we can achieve an orderly restructuring that will enable us to
capitalize on opportunities resulting from improvements in operations and
merchandising.
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"While we would have preferred to complete our restructuring out of court,
we now believe that it is in the best interests of all the company's
constituents to complete the restructuring through a court-supervised process
that fairly recognizes the interests of, among others, our vendors, other
creditors and shareholders."
Mr. Larkins emphasized that the filing will have no effect on the customers
or employees of House of Fabrics stores.
"Daily operations will continue as usual, store hours will stay the same
and all aspects of the business will go on as before the filing," he stated.
"Our sales associates and employees will continue to be paid as if no
proceeding had been filed."
Mr. Larkins added that the company intends to honor customer commitments
relative to delivery schedules for merchandise on order, return and exchange
policies, gift certificates, service agreements and warranties and other
customer-related aspects of the business. He said that the company would
continue to accept MasterCard, Discover Card and Visa credit cards.
Mr. Larkins further stated that, "We've already made many of the tough
decisions that will result in a smaller but stronger chain that is well
positioned to meet the competitive challenges of the 90s and beyond." He said
that the company has recently implemented a number of programs aimed at
eliminating marginal stores, reducing inventories, improving cash flow and
liquidity and enhancing operations. During the past several months, House of
Fabrics:
. Announced plans to close approximately 200 stores in an effort to
eliminate unprofitable or marginal operations and concentrate on
stronger core locations.
. Remodeled eight superstores based on its successful, new "creative"
store format featuring expanded emphasis on home decorating and
crafts. The new format stores feature floral departments, home
decorating items and expanded craft selections.
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It is anticipated that the new format stores will continue to outpace
sales trends for the rest of the chain.
. Enhanced the efficiency of its distribution and general and
administrative operations.
. Achieved significant improvements in merchandising and promotion
through expanded emphasis on crafts and home decorating.
Mr. Larkins said that, as a result of the filing, the company expects to
have the use of its cash flow from its continuing operations. He further stated
that the priority status accorded payment for shipments made during the Chapter
11 case, and the availability of cash flow should assure the company's vendors
that they will be paid for the merchandise the company purchases from them going
forward. Additionally, he said, the company is negotiating a commitment for
debtor-in-possession (DIP) financing which, if approved, would provide
additional liquidity which the company can use for its seasonal needs.
"We have sufficient resources to fund ongoing operations through the busy
holiday season. We fully expect our suppliers to work with us during the
restructuring period as they have with the many other retail companies that have
faced similar situations. While federal law prohibits us from paying for goods
received before the filing, payment for goods and services received now is
given priority status by the Court.
"We have our work cut out for us, but I am optimistic that, with the
support of our vendors, the hard work of our employees and the loyalty of our
customers, we will come through this process a stronger, more competitive
company than ever before," Mr Larkins said.
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House of Fabrics employs approximately 11,000 in 427 company-owned and
operated retail fabric and craft stores in California and 40 other states, doing
business under the House of Fabrics, So-Fro Fabrics, Fabriclands and Fabric King
names. An additional 450 are employed at the company's headquarters in Sherman
Oaks and a distribution center and trucking operation in Mauldin, South
Carolina.
In the third quarter ending October 31, 1994, House of Fabrics stock traded
between 1-1/4 and 4-1/8.
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(THE LETTERHEAD OF SITRICK KRANTZ & COMPANY INC. GOES HERE)
Exhibit 99.2
Contact: Sandra Sternberg
Rivian Bell
Lance Ignon
Sitrick Krantz & Company
818/385-2287
310/788-2850
HOUSE OF FABRICS APPOINTS NEW BOARD MEMBER
TO HELP GUIDE RESTRUCTURING
SHERMAN OAKS, CALIF -- NOVEMBER 4, 1994 -- House of Fabrics (NYSE:HF) today
announced the appointment to its board of directors of William W. Pennell, a
former consultant specializing in corporate turnarounds and reorganizations and
a former trustee for the Chapter 11 reorganization of Paramount Petroleum. Mr.
Pennell, 65, replaces Daniel Greenberg, who resigned from the Company's board of
directors because of the added time commitment required of the board during the
Company's financial restructuring.
Barney Sofro, chairman of House of Fabrics, said, "Daniel Greenberg has
been a valuable member of the board, and we regret his departure. We are
fortunate, however, to have William Pennell, whose vast experience with
successful corporate restructurings will be a tremendous asset to House of
Fabrics as we move ahead with building a stronger company."
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House of Fabrics - 2-2-2-2
In addition to his experience as a consultant and Chapter 11 trustee, Mr.
Pennell was managing director of The Seidler Companies, a Los Angeles-based
investment bank. He currently serves on the boards of directors of Dolco
Packaging Corp., Davis Wire Corp., and Hawaiian Communications Corp.
House of Fabrics, which operates 427 company-owned and operated retail
fabric and craft stores in California and 40 other states, as well as corporate
offices in Sherman Oaks, Calif., and a distribution center and processing plant
in Mauldin, S.C., filed to restructure under Chapter 11 of the Bankruptcy Code
on November 2, 1994.
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