SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended February 28, 1998, Commission File No. 0-1500
Evans, Inc.
(Exact name of registrant as specified in its charter)
Delaware 36-1050870
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization)
Identification No.)
36 South State Street, Chicago, Illinois 60603
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code (312) 855-2000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class
Common Stock, $.20 par value
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 and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10K or any
amendment to this Form 10-K. ____
The aggregate market value of voting stock of the Registrant held by
nonaffiliates of the Registrant was approximately $3,453,000. For
purposes of this calculation, all directors and officers of the
Registrant have been considered to be affiliates.
As of May 22, 1998, 5,050,245 shares of the Registrant's common stock were
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Registrant's Proxy Statement for its Annual Meeting of
Stockholders to be held on July 21, 1998 are incorporated into Parts I
and III of this Form 10-K.
<PAGE>
PART I
Item 1. Business
Evans, Inc. (together with its subsidiaries, hereinafter "Evans" or the
"Company"), founded in 1929, was conducted by a predecessor and affiliates until
1963 when the Company was incorporated under Delaware law. Evans' executive
offices are located at its flagship store at 36 South State Street, Chicago,
Illinois 60603 and its telephone number is (312) 855-2000.
Evans is a retailer of fur apparel, cloth coats and suits, dresses, sportswear,
and related items and services. Fur apparel is carried in all Company-owned
stores, excluding the two Evans Woman locations, while women's ready-to-wear
apparel is carried in the 10 Chicago area Evans and Evans Woman stores. Company
stores are located in Metropolitan Chicago, Austin, Dallas and Washington D.C.
areas. The Company operates leased departments in 54 locations in eight major
department store chains located in major metropolitan areas throughout the
eastern half of the United States and three locations in California.
The Company's Black Diamond mink trademark is registered in the United States
Patent and Trademark Office and in the trademark offices of 18 other countries.
Black Diamond mink is known as a luxurious fur made from among the finest and
darkest natural ranch mink. All Company-owned stores, as well as most of the
leased fur salons, market Black Diamond fashions.
Evans intends to continue its business activities as described above in the
future.
Buying is conducted by buyers and merchandising personnel in the open market
under competitive conditions.
Compliance with federal, state and local regulations related to the protection
of the environment had no material effect upon the capital expenditures,
earnings or competitive position of Evans. Fur apparel sold by Evans does not
include any so-called "endangered species" and is primarily ranch bred for
apparel purposes.
Evans employs regularly on a full or part-time basis approximately 825 employees
whose number increases during the Christmas season to a peak of approximately
900.
Evans' business is seasonal in nature and historically realizes a major portion
of its annual revenues in the second half and most of its earnings in the fourth
quarter of its fiscal year. This seasonality results in an increase in
short-term borrowings in the beginning of the third quarter which continues well
into the fourth quarter of the year due to increased inventories and accounts
receivable during such period.
<PAGE>
Item 1. Business, continued
During August, 1997, the Company acquired the world-wide fur trademark of
Maximillian (R) and entered into a multi-year license agreement with
Bloomingdale's Stores, a division of Federated Department Stores, Inc. to
operate 17 fur salons under the Maximillian (R) name. Nine of the locations are
in the eastern part of the United States, two in the Chicago metropolitan area
and three locations each in Florida and California. During fiscal 1998, the
Company discontinued four seasonal salons, two in Lazarus and one in
Goldsmith's, both being divisions of Federated Department Stores, Inc. and one
in Hudson's, a division of Dayton Hudson Corporation.
The Company offers retail customers a program of fur services, including
cleaning, storage, repair, restyling and insurance. The Company provides storage
for approximately 125,000 fur garments annually, primarily at facilities in its
retail locations. Repair and restyling services are usually performed by Company
personnel. Information regarding the percentage composition of the total
revenues of the Company during the period indicated is set forth below:
- ----------------------------------------------------------------------------
Feb. 28, Mar. 1, Mar. 2, Feb. 25, Feb. 26,
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------
Retail Fur
Operations
Company-owned
Stores 15.9% 19.0% 19.0% 22.8% 28.6%
Leased 46.6 41.1 40.1 30.5 27.7
Fur Service 13.9 15.6 14.4 13.4 10.6
Wholesale and Catalog
Sales 0.6
----- ----- ----- ----- ------
Subtotal 76.4 75.7 73.5 66.7 67.5
Women's Ready-To-
Wear and 23.6 24.3 26.5 33.3 32.5
Accessories
- ----------------------------------------------------------------------------
Total 100.0% 100.0% 100.0% 100.0% 100.0%
- ----------------------------------------------------------------------------
Evans believes that its continued operation of leased departments, and its
operation of additional leased departments, as these department stores may
expand, depends in large part on the continuance of present satisfactory
relations with these chains.
The business in which Evans is engaged is highly competitive. In all locations,
Evans competes with local furriers, department stores and specialty stores.
Evans believes its emphasis on design and quality, broad coverage of price and
size ranges and its advertising, promotional programs and competitive pricing
have resulted in a substantial degree of customer acceptance of merchandise and
services.
Based on statistics compiled by the Fur Information Council of America, Evans
further believes that it is the nation's largest retail fur apparel
merchandiser.
<PAGE>
Item 1. Business, continued
The following table sets forth information concerning the number of
Company-owned stores and Leased locations operated during the last five fiscal
years:
- --------------------------------------------------------------------------
Feb. 28, Mar. 1, Mar. 2, Feb. 25, Feb. 26,
1998 1997 1996 1995 1994
- --------------------------------------------------------------------------
Locations Opened
or Acquired
Company-owned 2
Leased (1) 17 1 1 27 4
Locations Closed:
Company-owned 4 1
Leased (1) 4 14 1 5
End of Period:
Company-owned 15 15 15 19 19
Leased (1) 54 41 54 54 27
(1) Includes seasonal leased locations (generally operated October through
January).
- ------------------------------------------------------------------------------
Financial Information about Industry Segments
The Company's operations are in a single industry, retailing furs and apparel
through the operation of stores and leased departments. All operations are
within the United States and no one customer accounts for more than 10% of
revenues.
<PAGE>
Item 2. Properties
All Company stores and distribution centers and corporate facilities are
operated in leased premises deemed suitable for their activities. The leased
premises, the sizes thereof and the lease expiration dates are as follows:
- --------------------------------------------------------------------------
Store Expiration Dates (a) Square Feet
- --------------------------------------------------------------------------
Chicago Area:
(Evans)
36 South State Street
Retail Lease 12/17/2012 61,775
Office Lease 12/17/2007 36,020 (b)
Shopping Centers:
(Evans)
River Oaks 02/28/2007 26,174
North Riverside Mall 02/28/2003 14,326
Yorktown 05/31/2006 15,718
Evergreen Plaza 04/30/2001 11,862
Ford City 02/28/2002 12,181
Orland Square 02/28/2002 12,000
Harlem Irving Plaza 01/31/1999 7,800
(Evans Woman)
Ford City 02/28/2002 3,034
Evergreen Plaza 04/30/2001 2,633
Washington D.C. Area:
(Evans/Rosendorf)
1750 K Street, N.W. 02/28/2005 9,718
Tyson's Corner Center 06/30/2006 2,664
Montgomery Mall 01/31/2002 3,342
Texas (Koslow's)
Caruth Plaza, Dallas 04/30/2000 14,363
The Arboretum, Austin 07/31/2005 6,000
Distribution Center
Hillside, Illinois 06/30/1999 36,625
New York, New York 08/31/2000 3,520
- --------------------------------------------------------------------------
(a) Includes options to renew.
(b)The Company has served notice of termination of the office lease effective
August 31, 1998.
<PAGE>
Item 3. Legal Proceedings
Evans is involved in various claims and lawsuits incidental to its business. In
the opinion of management, the ultimate liability will not have a material
effect on the consolidated financial statements of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to the shareholders of the Company for a vote
during the fourth quarter of the fiscal year ended February 28, 1998.
<PAGE>
Item 4A. Executive Officers of the Registrant
- --------------------------------------------------------------------------
Served
Name Age Title as
Title
Since
- --------------------------------------------------------------------------
David B. Meltzer 69 Chairman of the Board 1988
Samuel B. Garber 63 Vice President, General Counsel and
Secretary 1981
William E. 40 Vice President - Finance and Chief
Koziel Financial 1995
Officer
Robert K. 44 President and Chief Executive Officer 1997
Meltzer Executive Vice President - General
Merchandising Manager 1990
John Sarama 46 Vice President of Operations 1990
Dean Obrecht 53 Vice President of Human Resources 1996
- --------------------------------------------------------------------------
No executive officer of the Company has a family relationship to any other
executive officer, except that Robert K. Meltzer is the son of David B.
Meltzer.
Executive Officers
The executive officers are elected annually by the Board of Directors at the
first meeting following the annual meeting of shareholders. Vacancies may be
filled and additional officers elected at any meeting of the Board of Directors.
Any officer elected serves until the next annual meeting of the Board of
Directors and until a successor shall have been elected and qualified or until
his death, resignation or removal by the Board.
These officers have held the positions set forth in the above tabulation for the
last five years or have served the Company in various executive or
administrative capacities for at least that length of time.
<PAGE>
PART II
Item 5. Market for the Registrant's Common Stock and Related
Shareholder Matters
The Company's common stock is traded in the Over-the-Counter Market. High and
low bid quotations, as reported on NASDAQ for each quarterly period during the
past two fiscal years and cash dividends declared, were as follows:
1998
-------------------------------------------------
BID PRICE DIVIDENDS
-------------------------
HIGH LOW DECLARED
-------------------------------------------------
1st Quarter $1-1/4 $5/8 ----
2nd Quarter $3-3/4 $5/8 ----
3rd Quarter $3-7/8 $2-1/8 ----
4th Quarter $2-1/4 $1-1/2 ----
-------------------------------------------------
1997
-------------------------------------------------
BID PRICE DIVIDENDS
------------------------
HIGH LOW DECLARED
-------------------------------------------------
1st Quarter $2-3/4 $1-1/8 ----
2nd Quarter $2-5/8 $1-3/4 ----
3rd Quarter $2-1/2 $1-5/8 ----
4th Quarter $1-7/8 $1 ----
-------------------------------------------------
As of February 28, 1998, there were approximately 700 holders of the Company's
common stock.
The Company is restricted, under the terms of a debt agreement, from paying any
dividends at February 28, 1998 (see Note 3 to the consolidated financial
statements).
<PAGE>
Item 6. Selected Financial Data
--------------------------------------------------
1998 1997 1996 1995 1994
---------------------------------------------------
($ In Thousand's, Except Per Share Amounts)
Financial Position:
Total assets $48,400 $42,622 $46,011 $48,816 $53,943
Total liabilities 32,099 25,568 24,233 27,272 20,335
Shareholders' equity 16,301 17,054 21,778 21,544 33,608
Current assets 39,707 35,597 32,119 35,152 39,374
Current liabilities 30,291 24,301 22,334 26,078 20,266
(a) (a)
Current ratio 1.31 1.46 1.44 1.35 1.94
Long-term debt 1,808 1,224 1,888 1,178
Results from Operations:
Total revenues $92,255 $82,704 $96,566 $86,817 $96,785
Restructuring 3,176
Net (loss) earnings (835) (4,724) 234 (12,064) 1,960
(b) (c) (d)
Common Share Data:
Net (loss) earnings per (e) (e) (e) (e)
share $(0.17) $(0.96) $0.05 $(2.45) $0.40
Basic $(0.17) $(0.96) $0.05 $(2.45) $0.39
Diluted
(b) (c) (d)
Weighted average common
and common equivalents
Shares outstanding
Basic 4,973,819 4,918,301 4,918,301 4,918,301 4,918,301
Diluted 4,973,819 4,918,301 4,918,301 4,918,301 5,051,255
Book value per share $3.28 $3.47 $4.43 $4.38 $6.65
(a) Certain long-term debt obligations have been reclassified to
current liabilities in conformance with Emerging Issues Task Force
Abstract Issue No. 95-22, "Balance Sheet Classification of
Borrowings Outstanding under Revolving Credit Agreements".
(b) Net loss includes a $729 or $0.15 per share charge for the
write-down to fair market value of the 36 South State Street
property.
(c) Net loss includes a $1,333 or $0.27 per share tax provision for an
increase of its valuation allowance with respect to future tax
benefits of the net operating loss reflected in deferred income
taxes.
(d) Net earnings include $1,500 or $0.30 per share for the cumulative
effect of an income tax accounting change from adopting Statement
of Financial Accounting Standards 109 "Accounting for Income
(e) Taxes".
Net (loss) earnings per share has been restated based upon
Statement of Financial Accounting Standards 128, "Earnings Per
Share").
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Total revenues during fiscal 1998 increased $9,551,000 (11.5%) in comparison to
fiscal 1997 as the result of increases of $7,938,000 (16.0%) in fur merchandise
sales and $1,643,000 (8.2%) in women's ready-to-wear sales offset by a slight
decrease in service sales of $29,000 (0.2%). The increase in fur merchandise
sales was due primarily to sales of $14,073,000 at locations acquired during the
second quarter of fiscal 1998 as well as $855,000 in sales associated with a
store-closing event at Macy's in Texas during the first quarter. The increase
was partially offset by decreases of $3,182,000 (6.9%) in sales at comparable
locations, $3,378,000 in sales associated with a store closing event at Marshall
Fields in Texas during the latter half of fiscal 1997 and $448,000 in sales
related to a store closed during the second quarter of fiscal 1997. The decrease
in fur merchandise sales at comparable locations was largely due to a $3,025,000
decrease during the months of January and February, which the Company believes
resulted from the impact of the warmest January and February since the U.S.
weather bureau began compiling statistics, coupled with a decrease of $1,021,000
during March, 1997 which resulted from a lack of availability of finished goods
at certain affordable retail price levels. The Company believes that the women's
ready-to-wear comparable store sales increase of $1,643,000 (8.2%) was primarily
due to the refocusing of its efforts on providing product in line with tastes of
its target consumers. Service revenues decreased slightly for the fiscal year
due to an increase of $809,000 associated with locations acquired during the
second quarter of fiscal 1998 offset by a decrease of $516,000 (4.1%) in sales
at comparable locations and prior year sales including $322,000 related to a
store closed during fiscal 1997.
Total revenues during fiscal 1997 decreased $13,862,000 (14.4%) in comparison to
fiscal 1996 as the result of decreases of $7,314,000 (12.8%) in fur merchandise
sales, $5,547,000 (21.6%) in women's ready-to-wear sales, and $1,001,000 (7.2% )
in service revenues. The decrease in fur merchandise sales was due primarily to
a decrease of $6,537,000 (12.8%) in sales at comparable locations and a decrease
of $4,843,000 in sales associated with four Company-owned locations, one full
time leased location, and thirteen seasonal leased locations in several
department store chains closed during and subsequent to fiscal 1996. These
decreases were partially offset by sales of $3,378,000 associated with store
closing events in the Marshall Fields stores in Texas and an increase in sales
of $688,000 from two new full time leased locations opened subsequent to the
second quarter of fiscal 1996. The Company believes that fur merchandise sales
at comparable locations were adversely impacted by the significant increase in
fur prices, primarily mink, and the lack of availability of finished goods at
certain affordable retail price levels, as well as the record high consumer debt
levels. The decrease in women's ready-to-wear sales was due primarily to a
decrease of $4,184,000 (17.2%) in sales at comparable locations and a decrease
of $1,363,000 in sales associated with the closing of
<PAGE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations, continued
two Company-owned locations during fiscal 1996. The Company believes that
women's ready-to-wear sales at comparable locations were adversely impacted by
competition from department and discount stores. The decrease in service
revenues was primarily the result of a decrease of $791,000 in sales associated
with four Company-owned locations closed during fiscal 1996 and one leased
location closed during fiscal 1997 and a decrease of $210,000 (1.6%) in sales at
comparable locations.
Cost of goods and services sold, buying and occupancy costs were 63.9% of total
revenues in fiscal 1998 as compared to 65.3% in fiscal 1997 and 64.0% in fiscal
1996. During fiscal 1998, cost of goods sold as a percentage of total revenues
decreased over the prior year (49.5% versus 50.5%) and returned to fiscal 1996
levels. The increase in the prior year was due to the Company's attempt to
stimulate demand at certain lower retail price points, primarily in the mink
classifications. Occupancy costs as a percentage of total revenues decreased in
fiscal 1998 as compared to the prior year (12.2% vs. 12.4%) due primarily to the
impact of fixed rental costs as measured against the overall increase in sales.
Buying costs as percentage of total revenues increased slightly over the prior
year. During fiscal 1997, occupancy costs as percentage of total revenues
increased as compared to the prior year (12.4% versus 12.1%) due primarily to
the impact of fixed rental costs as measured against the overall decrease in
sales. Buying costs in fiscal 1997 as a percentage of total revenues were up
slightly over the prior year.
During fiscal 1998, selling and general expenses increased by $1,621,000 (5.3%)
as compared to the prior year. Payroll and related fringe benefits increased
$948,000 or 5.6% due to the additional payroll and benefits associated with the
acquisition of 17 salons operating under the Maximilian name. Fees related to
using bankcards increased by $286,000 or 66.1%. This increase relates to the
increase in business at the acquired salons. Due to the acquisition, the sale of
the building and services related to systems and data processing, professional
services increased by $157,000. Due to a decrease in the balance of the Evans
credit card portfolio, finance income decreased by $111,000. During fiscal 1997,
selling and general expenses decreased by $1,892,000 (5.8%) as compared to the
prior year. Payroll and related fringe benefits decreased $723,000 or 4.1% due
to a sales commission related decrease of $231,000 at comparable locations and a
$662,0900 decreased at locations closed during and subsequent to fiscal 1996
partially offset by $170,000 of payroll and related fringe benefits with a
Marshall Field's store closing event in three stores in Texas. Data processing
costs decreased by $171,000 or 20% as compared to the prior year due to
continued savings associated with the migration to a lower based operating
platform for the Company's systems. Advertising expense decreased by $984,000 or
11.3% due largely to a decrease of $600,000 at locations closed during and
subsequent to fiscal 1996.
<PAGE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations, continued
Results of Operations, continued
Interest expense for fiscal 1998 and 1997 increased $66,000 (4.6%) and $63,000
(4.5%) respectively as compared to fiscal 1997 and fiscal 1996 due in large part
to higher average short-term borrowings partially offset by lower average
interest rates as compared to the prior year.
The Company recorded net other income of $63,000 for fiscal 1998 and $5,000 for
fiscal 1996 compared to net other expense of $673,000 for fiscal 1997. The net
other expense for fiscal 1997 was the result of a charge of $729,000 recorded
for the write-down to fair market value of the property located at 36 S. State
Street partially offset by a gain from the sale of the Fort Worth real estate
during the fourth quarter. The net other income for fiscal 1998 was due
primarily to a $58,000 reversal of the prior year write-down on the property at
36 S. State Street resulting from the consummation of the transaction. Fiscal
1996 net other income was primarily interest income from temporary cash
investments.
The effective tax rate in fiscal 1998 was 10.6% as compared to 19.6% in
fiscal 1997 and 1996, respectively.
During fiscal 1998 and 1997, the Company increased its valuation allowance with
respect to the future tax benefits and the uncertainty of their ultimate
realization. The Company will continue to evaluate the valuation allowance
recorded with respect to the future tax benefits reflected in deferred income
taxes. During fiscal 1996, the Company utilized a portion of its net operating
loss carry forward to fully offset the tax provision.
Fiscal 1998 resulted in a net loss of $835,000 as compared to a net loss of
$4,724,000 in fiscal 1996 and a net earnings of $234,000 in fiscal 1996. The net
loss for fiscal 1998 was due primarily to the decline in total fur sales and
related gross margins from continuing operations during the last two months of
the fiscal year. The Company believes these results reflect the adverse impact
of record breaking warm temperatures in the months of January and February
believed to be caused by the effects of the strongest El Nino in the last
fifteen years.
The net loss for fiscal 1997 was due primarily to the decline in total fur sales
and related gross margins which the Company believes was the result of the
significant increase in fur prices, primarily mink, coupled with the lack of
availability of finished goods at certain affordable retail price levels. The
Company believes that the significant increase in demand worldwide (primarily
markets in Korea, Russia and China) for mink during fiscal 1997 combined with a
static supply of fur precipitated both the highest price increase ever recorded
at the wholesale level and the lack of product availability. In addition, record
high consumer debt levels had an adverse impact on consumer
<PAGE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations, continued
Results of Operations, continued
purchasing power. The Company also recorded a $729,000 write-down to fair market
value for its 36 South State Street property.
The net earnings for fiscal 1996 were largely due to the increase in total
revenues and improved gross margins as well as the cost reductions achieved as
part of the Company's restructuring initiated at the end of fiscal 1995,
partially offset by the increase in occupancy costs and interest expense.
All indications are that the price of fur merchandise, primarily mink, will
increase moderately in fiscal 1999 due to an increase in the demand for fur,
primarily in markets outside of North America. Also, preliminary indications are
that finished goods will be available in sufficient quantities at all price
levels to meet the Company's needs for fiscal 1999. The Company is encouraged by
the broad coverage of fur fashions by the national fashion publications, as well
as the significant increase of prominent designers using fur in their
collections.
Liquidity and Capital Resources
Cash and cash equivalents at February 28, 1998 were $650,000, an increase of
$497,000 as compared to March 1, 1998. The increase was due primarily to cash
provided by financing activities of $5,016,000 partially offset by cash used in
operating and investing activities of $3,736,000 and $783,000, respectively.
The cash used in operating activities was primarily due to increases of
merchandise inventories of $5,361,000 partially offset by an increase in
accounts payable of $1,847,000. The increase in merchandise inventories was due
to the incremental inventory needed to provide merchandise for the acquired
locations coupled with inventory remaining at the end of the year due to the
decline in sales during the months of January and February. Accounts payable
increased as a result of the purchases of additional inventory in the current
year.
The cash used in investing activities was due to the payment of $5,387,000 for
the acquisition of the inventory and operating assets as well as the world-wide
fur trademark of Maximilian(R) to operate fur salons within Bloomingdale's
Stores. Offsetting the acquisition was the proceeds received from the sale of
the Company's State Street building of $4,871,000.
<PAGE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations, continued
Liquidity and Capital Resources, continued
The cash provided by financing activities was for net proceeds from short-term
borrowings of $3,713,000, amounts received related to the acquisition of
Maximilian(R) at Bloomingdale's of $3,815,000 and a net increase of the
long-term credit facility of $1,010,000. These increases were offset by payments
on long-term borrowings of $3,522,000.
On June 16, 1997, the Company finalized an agreement with a new lender to
refinance the existing senior secured debt and provide for the Company's working
capital needs. The new agreement provides for a three year $27,000,000 credit
facility which includes a term loan of $2,000,000. The agreement provides for
interest at 0.25% over the base rate (prime) for the revolving facility and term
loan. The agreement provides for monthly principal payments of $23,810 beginning
October 1, 1997 with the remaining unamortized balance due June 15, 2000.
On August 7, 1997, the Company entered into an agreement with its lender for an
amendment to its loan and security agreement. The amendment, among other things,
increased the credit facility to $35,000,000 from $27,000,000. Additionally, the
revolving loan commitment, which provides for direct borrowing was increased to
$33,000,000 from $25,000,000. The financial covenants were adjusted to reflect
the acquisition of the assets of Triomphe Fourrures incorporated, as well as the
Company's current financial operating condition.
On December 17, 1997, the Company closed on the sale and lease back of its
flagship store and corporate office headquarter building located at 36 S. State
Street in Chicago, Illinois. The net proceeds of $4,100,000 generated from the
sale were used first to pay down the unamortized senior secured long-term
payable obligation and then the secured revolving loan obligation.
On May 28, 1998, the Company amended its agreements with its lenders to
establish and modify certain financial covenants to reflect the Company's
current operating results and financial needs.
On June 3, 1998, the Company amended its agreement and promissory note related
to the acquisition of the assets in connection with the operation of
Maximilian(R) Fur Salons. The amendments provide for a revised payment plan for
the quarterly installments due May 4, 1998 and August 4, 1998. The payments will
be made as follows: $100,000 due June 30, 1998, $84,850 due monthly from August
31, 1998 through November 30, 1998 with the final installment due December 15,
1998. These payments will be paid with interest at a rate of 10% per annum. The
remaining debt schedule will remain intact.
<PAGE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations, continued
Liquidity and Capital Resources, continued
The Company's anticipated capital expenditures for fiscal 1998 are approximately
$700,000 to be used primarily for improvements to existing locations.
The credit facility which expires June 15, 2000 is considered adequate to
finance seasonal inventory requirements as well as capital expenditures through
fiscal 1998.
Other
In response to the Year 2000 issue, the Company has begun to identify, evaluate
and implement changes to its existing computerized business systems. The Company
is addressing the issue through a combination of modifications to existing
programs and conversions to Year 2000 compliant software. In addition, the
Company is in the process of communicating with its vendors and other service
providers to determine whether they are actively involved in projects to ensure
that their products and business systems will be Year 2000 compliant. The
Company does not anticipate any material problems associated with using computer
programs or retrieving computerized information with respect to Year 2000. The
Company is still quantifying the impact of total costs associated with the
required modifications and conversions. These costs are being expensed as
incurred.
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS No. 130"), was issued in June 1997. SFAS No. 130, effective for
financial statements for periods beginning after December 15, 1997 requires
the reporting of comprehensive income in a financial statement that is
presented with the same prominence as other financial statements. The
Company's financial statements are prepared in accordance with SFAS No. 130
and the Company believes that net (loss) earnings in the statement of
operations reflects the comprehensive income of the Company.
Statement of Financial Accounting Standards No. 131, "Disclosures about Segments
of an Enterprise and Related Information" ("SFAS No. 131"), was issued in June
1997. This statement, effective for financial statements for periods beginning
after December 15, 1997, requires that a public business enterprise report
financial and descriptive information about its reportable operating segments.
The Company is currently evaluating the effect of adopting SFAS No. 131.
<PAGE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations, continued
Other, continued
Statement of Financial Accounting Standards No. 132, "Employers' Disclosures
about Pension and Other Postretirement Benefits" ("SFAS No. 132"), effective for
fiscal years beginning after December 15, 1997, standardizes the disclosure
requirements for pensions and other post retirement benefits, requires
additional information on changes in the benefit obligation and fair values of
plan assets and eliminates certain disclosures that are no longer useful. The
Company does not anticipate any significant changes in disclosure being required
by SFAS No. 132.
Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995
The statements contained in Item 1 (Description of Business) and Item 7
(Management's Discussion and Analysis of Financial Condition and Results of
Operations) that are not historical facts may include forward-looking
statements. The Company cautions readers that these forward-looking statements
are subject to a variety of risks and uncertainties that could cause Evans'
actual results to differ materially from those expressed in forward-looking
statements. These risks and uncertainties include, without limitation, general
economic and business conditions affecting the customers in existing and new
geographical markets, competition from national, regional and local retailers,
the availability of sufficient capital, and the ability to obtain and identify
the right product mix and to maintain sufficient inventory to meet customer
demand.
<PAGE>
Item 8. Financial Statement and Supplementary Data
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors
Evans, Inc.
We have audited the accompanying consolidated balance sheets of Evans, Inc. and
Subsidiaries as of February 28, 1998 and March 1, 1997, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
the years ended February 28, 1998, March 1, 1997 and March 2, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Evans, Inc. and
Subsidiaries at February 28, 1998, March 1, 1997 and the consolidated results of
their operations and their cash flows for the years ended February 28, 1998,
March 1, 1997 and March 2, 1996 in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
June 4, 1998
Chicago, Illinois
<PAGE>
<PAGE>
EVANS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
February 28, 1998 and March 1, 1997
($ In Thousands)
<TABLE>
<CAPTION>
1998 1997 1998 1997
------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY
Current assets: Current liabilities:
Cash and cash equivalents $650 $153 Notes payable $13,021 $9,308
Accounts receivable, less allowance for Current portion of long-term debt 1,411 692
doubtful accounts of $535 and $755 12,639 12,665 Accounts payable 11,165 9,318
Merchandise inventories 25,495 17,130 Accrued liabilities:
Prepaid expenses and other current assets 923 899 Payroll 324 455
Assets held for sale - 4,750 Taxes, other than on income 967 1,267
------- --------
Rent 1,563 1,395
Total current assets 39,707 35,597 Vacations 772 789
------- --------
Other 1,068 1,077
------- -------
Property and equipment:
Total current liabilities 30,291 24,301
------- -------
Furniture and equipment 5,590 5,524
Leasehold improvements 6,052 5,792 Long-term debt 1,808 1,224
------- -------- ------- -------
11,642 11,316 Other liabilities - 43
------- -------
Commitments and contingent liabilities - -
------- -------
Shareholders' equity:
Accumulated depreciation and amortization (8,203) (7,398) Preferred stock, $1.00 par value, 3,000,000 shares
------- --------
authorized, none issued
3,439 3,918 Common stock, $.20 par value, 8,000,000 shares
------- --------
authorized, 6,333,435 shares issued 1,267 1,267
Capital in excess of par value 15,495 15,660
Retained earnings 3,890 4,725
Treasury stock, 1,339,190 and 1,415,134 shares
Intangible and other assets at cost (4,351) (4,598)
------- -------
(net of accumulated amortization of $1,341 and
and $1,090) 5,254 3,107 Total shareholders' equity 16,301 17,054
------- -------- ------- -------
$48,400 $42,622 $48,400 $42,622
======= ======== ======= =======
<FN>
The accompanying notes are an integral part of the
consolidated financial statements.
</FN>
</TABLE>
<PAGE>
EVANS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended February 28, 1998, March 1, 1997 and March 2, 1996
($ In Thousands Except Per Share Amounts)
1998 1997 1996
----------- ----------- -----------
Net sales $79,369 $69,789 $82,650
Service revenues 12,886 12,915 13,916
----------- ----------- -----------
Total revenues 92,255 82,704 96,566
----------- ----------- -----------
Cost of goods and services sold,
occupancy and buying costs 58,906 53,988 61,787
Selling and general expenses 32,239 30,617 32,510
Provision for doubtful accounts 416 621 600
Interest expense 1,512 1,446 1,383
Other (income) expense, net (63) 673 (5)
----------- ----------- -----------
93,010 87,345 96,275
----------- ----------- -----------
(Loss) earnings before provision
for income taxes (755) (4,641) 291
Provision for income taxes 80 83 57
----------- ----------- -----------
Net (loss) earnings ($835) ($4,724) $234
=========== =========== ===========
Net (loss) earnings per share
Basic ($0.17) ($0.96) $0.05
=========== =========== ===========
Diluted ($0.17) ($0.96) $0.05
=========== =========== ===========
Weighted average common and common
equivalent shares
Basic 4,973,819 4,918,301 4,918,301
=========== =========== ===========
Diluted 4,973,819 4,918,301 4,918,301
=========== =========== ===========
The accompanying notes are an integral part of the consolidated
financial statements.
<PAGE>
<TABLE>
EVANS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
for the years ended February 28, 1998,
March 1, 1997 and March 2, 1996
($ In Thousands except share data)
<CAPTION>
Capital in
Common Stock Excess of Retained Treasury Stock
Shares Amount Par Value Earnings Shares Amount Total
------------------ ---------- --------- ------------------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, February 25,
1995 6,333,435 $ 1,267 $ 15,660 $ 9,215 1,415,134$ (4,598) $ 21,544
Net earnings 234 234
------------------ ---------- --------- ------------------ -------
Balance, March 2,
1996 6,333,435 1,267 15,660 9,449 1,415,134 (4,598) 21,778
Net loss (4,724) (4,724)
------------------ ---------- --------- ------------------ -------
Balance, March 1,
1997 6,333,435 1,267 15,660 4,725 1,415,134 (4,598) 17,054
Stock Options Exercised (7) (4,000) 13 6
Stock Compensation to
Directors (158) (71,944) 234 76
Net loss (835) (835)
------------------ ---------- --------- ------------------ -------
Balance, February 28,
1998 6,333,435 $ 1,267 $ 15,495 $ 3,890 1,339,190$ (4,351) $ 16,301
================== ========== ========= ================== =======
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
EVANS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended February 28, 1998, March 1,
1997 and March 2, 1996 ($ In Thousands)
<CAPTION>
1998 1997 1996
--------- --------- ----------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net (loss) earnings (835) (4,724) 234
Adjustments to reconcile net (loss)
earnings to net cash provided by (used in)
operating activities:
Depreciation and amortization 1,073 1,426 1,435
Net gain from the disposition of
property and equipment (52) (55) (3)
Net loss (gain) from write-down of property
and equipment 729 (154)
Provision for doubtful accounts 416 621 600
Non-cash compensation expense 70
Change in assets and liabilities net of effects
of acquisition:
Accounts receivable (390) 2,698 521
Merchandise inventories (5,361) (2,369) 1,640
Prepaid expenses and other current assets (24) 255 (642)
Long-lived assets (161) 141 (673)
Accounts payable 1,847 2,707 (2,300)
Accrued liabilities (289) (478) (1,469)
Other liabilities (30) 32 (5)
--------- --------- ----------
Net cash (used in) provided by operating activities (3,736) 983 (816)
Cash Flows from Investing Activities:
Acquisition of business (5,387)
Proceeds from the sale of property and equipment 4,871 360 3
Additions to property and equipment (267) (484) (836)
--------- --------- ----------
Net cash used in investing activities (783) (124) (833)
Cash Flows from Financing Activities:
Proceeds from short-term borrowing 3,713 89
Principal payments on short-term borrowing (746)
Notes payable related to acquisition 3,815
Payment of notes payable related to acquisition (1,048)
Additional long-term debt 1,010 2,000
Principal payments on long-term debt (2,474) (1,015) (519)
--------- --------- ----------
Net cash provided by (used in) financing activities 5,016 (926) 735
--------- --------- ----------
Net increase (decrease) in cash and cash equivalents 497 (67) (914)
Cash and cash equivalents at beginning of period 153 220 1,134
--------- --------- ----------
Cash and cash equivalents at end of period 650 153 220
========= ========= ==========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest 1,429 1,454 1,393
Income taxes 34 98 57
<FN>
The accompanying notes are an integral part of the consolidated
financial statements.
</FN>
</TABLE>
<PAGE>
EVANS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies
The following is a summary of the significant accounting policies followed
in the preparation of the financial statements:
A. Principles of Consolidation
The consolidated financial statements include the accounts of
Evans, Inc. and it subsidiaries, all of which are wholly owned.
B. Recognition of Revenues
All revenues, including installment and revolving credit sales, are
included in the financial statements on the accrual method.
C. Cash and Cash Equivalents
For purposes of the consolidated statement of cash flows, the
Company considers all highly liquid debt instruments purchased
with an original maturity of three months or less to be cash
equivalents.
D. Merchandise Inventories
Merchandise inventories are stated at the lower of cost or market
with cost determined on the basis of specific identification
for furs (approximately 92% and 88% of total inventory in fiscal
1998 and 1997, respectively) and on the retail method on a first-in,
first-out basis for other inventories. The Company includes in
inventory certain purchasing and handling costs. The Company
believes this method provides for matching the full cost of
obtaining merchandise and preparing it for sale with related
revenues.
E. Property and Equipment
Property and equipment are stated at cost. Depreciation is
provided on the straight-line method in the financial statements
over the estimated useful lives of the assets. The estimated useful
lives are 3-10 years for furniture, fixtures, other equipment and
software. Leasehold improvements are amortized generally over the
shorter of the life of the related asset or the remaining term of
the lease. Accelerated methods of depreciation are used for tax
purposes.
<PAGE>
EVANS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
1. Significant Accounting Policies, continued
E. Property and Equipment, continued
Upon disposal of property and equipment, the cost of the asset
retired and the related accumulated depreciation or
amortization are eliminated from the accounts and the resulting
gain or loss is reflected in the consolidated statement of
operations.
Expenditures for maintenance and repairs are charged against
earnings and expenditures for betterments and major renewals are
capitalized.
The Company evaluates the recoverability of asset carrying values
using estimates of future cash flows over remaining asset lives.
When impairment is dictated, any impairment loss is measured by
the excess of carrying values over full values.
F. Intangibles and Other Assets
Intangibles, contracts and other deferred charges are stated
at cost less amortization provided on a straight-line basis over
periods ranging from 4 to 40 years. Approximately 95% of the assets
have amortization periods of 20 years (for goodwill) and 40 years
(for other intangibles). The Company assesses the recoverability of
intangible assets by determining whether the amortization of the
asset balance over its remaining life can berecovered through
undiscounted future operating cash flows. The amount of impairment,
if any, would be measured based on projected discounted future
operating cash flows using a discount rate reflecting the Company's
average cost of funds.
G. Advertising and Preopening Costs
Advertising costs and costs incurred in connection with the opening
of new locations are expensed as incurred. Total advertising expense
for the fiscal years ended February 28, 1998, March 1, 1997 and
March 2, 1996 was $7,647,000, $7,737,000 and
$8,721,000 respectively.
<PAGE>
EVANS, INC. AND SUBSIDIARIES
NOTES OF CONSOLIDATED FINANCIAL STATEMENTS, Continued
1. Significant Accounting Policies, continued
H. Earnings per Share
The Company has adopted Financial Accounting Standards Board issued
Statement No. 128, "Earnings per Share," effective February 28, 1998
which specifies the computation, presentation, and disclosure
requirements for earnings per share. The computation of basic
earnings per common share is computed based on net income available
to common shareholders divided by the weighted average common shares
outstanding. The computation of diluted earnings per common share is
based on net income divided by weighted average common shares and
potentially dilutive securities such as stock options. All earnings
per share amounts for all periods have been presented, and where
appropriate, restated to conform to the Statement 128 standards.
I. Fiscal Year
The Company's fiscal year ends on the Saturday nearest the end of
February. Fiscal 1998 and 1997 ended February 28, 1998 and March 1,
1997, respectively, and were comprised of 52 weeks each. Fiscal 1996
ended March 2, 1996 and was comprised of 53 weeks.
J. Industry Segment Information
The Company's operations are in a single industry, retailing furs,
apparel and related items and services through the operation of
stores and leased departments. All operations are within the United
States and no one customer accounts for more than 10% of revenues.
Inherent in the accompanying financial statements are certain risks
and uncertainties. These risks and uncertainties include, but
are not limited to the impact of competition and available sources
of supply.
K. Income Taxes
Taxes on income are accounted for under the liability method.
Deferred income taxes are recognized for the tax consequences in
future years of differences between the tax basis of assets and
liabilities and their financial reporting amounts at each year-end
based on enacted tax laws and statutory tax rates applicable to the
period in which the differences are expected to affect taxable
earnings. Valuation allowances are established when necessary to
reduce deferred tax assets due to the uncertainty of their
<PAGE>
EVANS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
1. Significant Accounting Policies, continued
K. Income Taxes, continued
ultimate realization. Income tax expense is the tax payable for
the period and the change during the period in deferred tax
assets and liabilities.
L. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of
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. Cash and Cash Equivalents Concentration
A significant portion of the Company's cash and cash equivalents are
maintained with one financial institution. The cash accounts of this
financial institution are insured up to the limits of federal government
requirements.
3. Debt Obligations
At February 28, 1998 and March 1, 1997, long-term debt consisted of the
following:
1998 1997
---- ----
Note payable, $1,573,000 amount due
August, 1997, $524,000 due in November
1997 and February 1998, $100,000 due
June 1998, subsequent monthly
installments of $84,850 August, 1998
through December 1998 (10% per annum),
subsequent quarterly installments of
$262,000 due November, 1998 through
November 1999; $932,000 due December 1999
(Note 11) $2,766,000
Note payable, floating prime rate plus
1% (Maximum rate of 11%), $91,000
principal amount due July,1995;
subsequent principal due in semi-annual
amounts of $181,000 beginning January,
1996, through January, 1999; $91,000
due July, 1999. 453,000 $816,000
<PAGE>
EVANS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
3. Debt Obligations, continued
Note payable, floating prime rate
plus 2%. Principal due in
Monthly installments of $27,500
beginning July, 1995 through
April, 1998; 715,000 due May, 1998. 1,100,000
------------ ---------
3,219,000 1,916,000
Less amounts due in one year 1,411,000 692,000
----------- ----------
$1,808,000 $1,224,000
At February 28, 1998, the Company had an available line of credit of
$21,919,000 ($17,086,000 of which was used in support of letters of
credit, bankers acceptances, direct borrowings and other reserves).
On June 16, 1997, the Company finalized an agreement with a new lender to
refinance the existing senior secured debt and provide for the Company's
working capital needs. The agreement provides for a three year $27,000,000
credit facility which includes a term loan of $2,000,000. The agreement
further provides for interest at 0.25% over the base rate (prime) for
direct borrowings under the revolving facility and the tem loan. Prime
rate was 8.50% at February 28, 1998. The agreement contains provisions
which, among other things, require the maintenance of certain financial
covenants, the most restrictive of which is the maintenance of a certain
level of earnings before interest, taxes, depreciation and amortization
(EBITDA). The agreement prohibits the payment of cash dividends and
requires a commitment fee of three-tenths of one percent per annum on the
unused portion of the revolving loan. Also, all assets, rights interest
and properties of the Company are pledged as collateral for the revolving
and term loan obligations.
On August 7, 1997, the Company entered into an agreement with its lender
for an amendment to its loan and security agreement. The amendment, among
other things, increased the credit facility to $35,000,000 from
$27,000,000. Additionally, the revolving loan commitment, which provides
for direct borrowing was increased to $33,000,000 from $25,000,000. The
financial covenants were adjusted to reflect the acquisition of the assets
of Triomphe Fourrures incorporated, as well as the Company's current
financial operating condition.
<PAGE>
EVANS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
3. Debt Obligations, continued
On December 17, 1997, the Company consummated on the sale and lease back
of its flagship store and corporate office headquarter building located at
36 S. State Street in Chicago, Illinois. The net proceeds of $4,100,000
generated from the sale were used first to pay down on the unamortized
senior secured long-term payable obligation and then the secured revolving
loan obligation.
On May 28, 1998, the Company amended its agreements with its lenders to
establish and modify certain financial covenants to reflect the Company's
current operating results and financial needs.
Scheduled payments on long term debt for the fiscal years 1999 and 2000
are $1,411,000 and $1,808,000 respectively.
The weighted average interest rate on short-term borrowings was 9.26%,
10.41% and 11.24% for fiscal years 1998, 1997 and 1996, respectively.
4. Common Stock
During fiscal 1996, 225,000 options were issued to officers of the Company
at a price of $1.50 per share being 100% of the market price at the date
of issue. During fiscal 1996, the Company granted key employees and
members of the Board of Directors options for 166,000 and 10,000 shares at
prices of $1.50 and $1.375, respectively, the prices being 100% of market
value at the dates of grant.
During fiscal 1997, the Company granted additional key employees and a new
member of the Board of Directors options for 36,500 and 10,000 shares at
prices of $2.25 and $2.00, respectively, the prices being 100% of market
value at the dates of grant. Also, options granted on 7,000 shares expired
during fiscal 1997.
During fiscal 1998, the Company granted additional key employees options
for 2,500 at a price of $2.00, the prices being 100% of market value at
the date of grant. Also, 4,000 options were exercised and options granted
on 13,500 shares expired during fiscal 1998.
As of February 28, 1998, 425,500 options were exercisable and 74,500 were
available for grant under the Company's stock option plan.
<PAGE>
EVANS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
4. Common Stock, continued
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation", which establishes a fair value based method of
accounting for employee stock-based compensation. Under this method,
compensation cost is measured at the grant date, based on the market price
of the stock at that date, and is recognized as expense over the life of
the option. SFAS 123 encourages companies to adopt a fair value based
method of accounting for such plans but continues to allow the use of the
intrinsic value method prescribed by Accounting Principles Board Opinion
(APB) No. 25, "Accounting for Stock Issued to Employees". As permitted
under SFAS 123, the Company has elected to continue accounting for
stock-based compensation in accordance with APB No. 25. The differences
between the recognition and measurement provisions of FAS 123 and APB 25
are immaterial to the Company's financial condition and results of
operations.
5. Service Charges
Service charges on customer credit accounts are netted against selling and
general expenses. Service charges amounted to $1,670,000, $1,811,000 and
$2,142,000 in the years ended February 28, 1998, March 1, 1997 and March
2, 1996 respectively.
6. Income Taxes
The components of the net deferred tax asset as of February 28, 1998 and
March 1, 1997 were as follows:
1998 1997
---- ----
Deferred tax assets:
Net operating loss $10,092,000 $ 10,721,000
Sales taxes 318,000 319,000
Vacations 257,000 263,000
Property and equipment 490,000 -
Other 961,000 1,313,000
Valuation allowance (11,855,000) (11,546,000)
----------- -----------
Total deferred tax assets 263,000 1,070,000
<PAGE>
EVANS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
6. Income Taxes, continued
Deferred tax liabilities:
Property and equipment - (909,000)
Accounts receivable (263,000) (161,000)
-------- --------
Total deferred tax liabilities (263,000) (1,070,000)
-------- --------
Net deferred tax balance $ -0- $ -0-
======== ========
The Company has recorded a valuation allowance with respect to the future
tax benefits as a result of the uncertainty of their ultimate realization.
The Company has net operating loss carryforwards of approximately
$23,078,000 available to offset future taxable income. These
carryforwards expire in the years 2005 through 2012.
The provision for income taxes is comprised of:
1998 1997 1996
---- ---- ----
Current
Federal $36,000
State 44,000 $83,000 $57,000
------ ------ ------
Deferred
Federal
State _______ _______ _______
Total $80,000 $83,000 $57,000
======= ======= =======
The income tax provision differed from a provision computed at the U.S.
statutory rate as follows:
1998 1997 1996
---- ---- ----
Statutory federal tax rate (34.0)% (34.0)% 34.0%
Increase (decrease) in
valuation allowance 34.2 33.5 (25.1)
State taxes on income, net
of federal tax benefit 3.8 1.2 12.9
Other 6.6 1.1 (2.2)
----- ----- ------
10.6% 1.8% 19.6%
===== ====== =====
<PAGE>
EVANS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
7. Profit-Sharing Plan
The Company maintains a profit-sharing plan covering substantially all
eligible employees. Employees become eligible after completing one year of
employment in which they complete 1,000 hours of service. Contributions
from employees are based on a percentage of their compensation on a
before-tax basis. The Company's contribution to the Plan is determined
annually by the Board of Directors of the Company. The Company contributed
$0, $38,000 and $27,000 to the Plan for the years ended February 28, 1998,
March 1, 1997 and March 2, 1996, respectively.
8. Leases
The Company operates primarily in leased facilities under long-term
leases. Noncancelable lease terms generally range from 2 to 12 years. The
principal leases are for the corporate offices and for sales facilities
with options to renew for additional periods and provide for minimum
annual rentals plus additional rentals based on a percentage of sales, and
payment of taxes, insurance and maintenance costs.
Future minimum lease payments required under operating leases that have
initial or remaining noncancelable lease terms in excess of one year are
as follows:
1999 $ 3,399,000
2000 2,905,000
2001 2,820,000
2002 2,619,000
2003 2,081,000
Total thereafter 10,322,000
-----------
Total minimum payments required $24,146,000
===========
<PAGE>
EVANS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
8. Leases, continued
The following schedule shows the composition of total rental expenses for
all operating leases:
1998 1997 1996
---- ---- ----
Minimum rentals $2,432,000 $2,374,000 $2,578,000
Contingent rentals 6,717,000 6,053,000 7,010,000
$9,149,000 $8,427,000 $9,588,000
9. Earnings (loss) per Share
The following table sets forth the computation of basic and diluted
earnings per share:
Net Weighted
Earnings(loss) Avg. Shares Per Share
(Numerator) (Denominator) Amounts
Year ended February 28,
1998
Basic EPS:
Loss available to
common shareholders $(835,000) 4,973,819 $(0.17)
========== ========= =======
Effect of dilutive options 0
---------
Dilutive EPS:
Income available to
common shareholders
plus assumed conversions $(835,000) 4,973,819 $(0.17)
========== ========= =======
Year ended March 1, 1997 Basic EPS:
Loss available to
common shareholders $(4,724,000) 4,918,301 $(0.96)
============ ========= =======
Effect of dilutive options 0
---------
Dilutive EPS:
Income available to
common shareholders
plus assumed conversions $(4,724,000) 4,918,301 $(0.96)
============ ========= =======
<PAGE>
EVANS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
9. Earnings (loss) per Share, continued
Year ended March 2, 1996 Basic EPS:
Earnings available to
common shareholders $234,000 4,918,301 $0.05
======== ========= =====
Effect of dilutive options 0
---------
Dilutive EPS:
Income available to
common shareholders
plus assumed conversions $234,000 4,918,301 $0.05
======== ========= =====
10. Sale of Building
On June 19, 1997, the Company entered into a contract for the sale and
leaseback of its flagship store and corporte office headquarters building
located at 36 S. State Street in Chicago, Illinois with a purchase price
of $5,000,000.
The transaction was consumated on December 17, 1997. As part of the
agreement the Company executed 15-year and 10-year lease agreements
covering 61,775 square feet for the existing retail premises and 36,020
square feet for the corporate operation space, respectively. The agreement
also required a $500,000 deposit to secure the lease obligations. The net
proceeds of $4,100,000 generated from the sale were used first to pay down
the unamortized senior secured long-term payable obligation and then the
secured revolving loan obligation.
11. Acquisition
On August 4, 1997, the Company entered into a purchase agreement with
Triomphe Fourrures Incorporated to acquire certain assets in connection
with the operation of the Maximilian(R) Fur Salons at Bloomingdale's
Stores, a division of Federated Department Stores, Inc.
The total purchase price was $5,387,000, which included inventory and
operating assets as well as the world-wide fur trademark of Maximilian(R).
A down payment of $1,573,000 was made on August 7, 1997 and the first and
second installments of $524,000 each were paid on November 4, 1997 and
February 4, 1998 respectively, quarterly installments of $262,000 are due
from May 4, 1998 through November 4, 1999, with a final installment of
$932,000 due on December 30, 1999.
<PAGE>
EVANS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
11. Acquisition, continued
The acquisition, which was effective August 2, 1997, was accounted for by
the purchase method of accounting and, accordingly, the net assets and
results of operations were included in the Company's condensed
consolidated financial statements commencing on August 3, 1997. The
Maximillian(R)trademark was allocated $1,738,000 of the purchase price
with the remaining price exceeding the fair market value of the net assets
acquired by $500,000 which was recorded as goodwill. The trademark and
goodwill are being amortized over a forty and twenty year period,
respectively, on a straight-line basis.
On June 3, 1998, the Company amended its agreement and promissory note
related to the acquisition of the assets in connection with the operation
of Maximilian(R) Fur Salons. The amendments provide for a revised payment
plan for the quarterly installments due May 4, 1998 and August 4, 1998.
The payments will be made as follows: $100,000 due June 30, 1998, $84,850
due monthly from August 31, 1998 through November 30, 1998 with the final
installment due December 15, 1998. These payments will be paid with
interest at a rate of 10% per annum. The remaining debt schedule will
remain intact.
<PAGE>
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The Company will file with the Securities and Exchange Commission a definitive
Proxy Statement no later than 120 days after the close of its fiscal year ended
February 28, 1998 (the "Proxy Statement"). The information required by this Item
and not given in Item 4A, Executive Officers of the Registrant is incorporated
by reference from the Proxy Statement.
Item 11. Executive Compensation
The information required by this Item is incorporated by reference from the
Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this Item is incorporated by reference from the
Proxy Statement.
Item 13. Certain Relationships and Related Transactions
The information required by this Item is incorporated by reference from the
Proxy Statement.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement
Schedules and Reports on Form 8-K
a. (1) Financial Statements Pages
Included in Part II of this report:
Report of Independent Accountants 16
Financial Statements:
Consolidated Balance Sheets, February 28,
1998 17
and March 1, 1997
Consolidated Statements of Operations for
the years ended February 28, 1998,
March 1, 1997 and March 2, 1996 18
Consolidated Statements of Changes in
Shareholders' Equity for the years ended
February 28, 1998, March 1, 1997 and
March 2, 1996 19
Consolidated Statements of Cash Flows for
the years ended February 28, 1998, March 1,
1997 and March 2, 1996 20
Notes of Consolidated Financial Statements 21-32
a. (2) Financial Statement Schedules
Included in Part IV of this report:
Report of Independent Accountants 43
Schedules:
II. Valuation and Qualifying Accounts and
Reserves for the years ended February 28,
1998, March 1, 1997 and March 2, 44
1996
Notes: Schedules other than those listed are omitted for the reason that
they are inapplicable, are not required, or equivalent information
has been included elsewhere herein.
<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K, continued
a. (3) Exhibits
3.1 The Certificate of Incorporation of the Company is incorporated herein
by reference to Exhibit 3 (a) to Form 2-1 under Registration No.
2-21433 and the Certificate of Amendment of Certificate of
Incorporation effective July 15, 1968 is incorporated herein by
reference to Exhibit 3(c) to Form S-1 under Registration No. 2-29193
and all amendments thereto.
3.2 Bylaws as presently in effect are herein incorporated by reference to
the Form 10-K filed for the fiscal year ending February 28, 1981 (File
No. 0-1500).
4.1 Loan agreement dated August 16, 1978, as amended, between Registrant
and The Prudential Insurance Company of American relating to 10.125%
promissory note due August 15, 1993 as modified by Credit Agreement
dated August 30, 1984 between Registrant and Prudential Interfunding
Corporation relating to a revolving loan agreement not exceeding
$21,000,000 terminating August 30, 1988 is herein incorporated by
reference to the Form 10-Q filed for the quarter ended September 1,
1984 (File No. 0-1500).
4.2 Loan agreement dated October 29, 1984 modifying credit agreement dated
August 30, 1984 with Prudential Interfunding Corporation, whereby
Registrant reduced its revolving loan commitment from $21,000,000 to
$16,000,000 and converted $4,200,000 into a fixed rate term loan at
13.725% due October 1994, is herein incorporated by reference to the
10-Q filed for the quarter ended December 1, 1984 (File No. 0-1500).
4.3 Loan agreement dated October 15, 1985 effective as of September 30,
1985 with Prudential Interfunding Corp. whereby Prudential
Interfunding Corp. will make available to Registrant up to and
including September 30, 1989 sums which shall not exceed $21,000,000
at interest rates equal to 1.875% per annum plus the rate charged to
Prudential Interfunding Corp. by an affiliate on 30-day dealer-placed
promissory notes is hereby incorporated by reference to the Form 10-Q
filed for the quarter ended November 30, 1985.
4.4 Loan agreement (Promissory Note) dated August 6, 1986 with Prudential
Insurance Company of America (Prudential) whereby Prudential will make
available to Registrant $17,500,000 with interest at a rate of 9.375%
on the unpaid balance. This agreement which replaces Registrant's
agreement with Prudential dated October 15, 1985 is herein
incorporated by reference to the Exhibit to the Form 10-Q filed for
the quarter ended August 30, 1986.
<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K, continued
a. (3) Exhibits, continued
4.5 Amendment dated July 6, 1990 which amends the Loan Agreements with
Prudential Insurance Company of America dated August 16, 1978 and with
Prudential Interfunding Corporation dated August 30, 1984 and August
6, 1986.
4.6 Amended and restated secured credit agreement dated August 9,
1990 between registrant and American National Bank and Trust
Company of Chicago, individually and as agent is herein
incorporated by reference to the Exhibit to the Form 10-Q
filed for the quarter ended September 1, 1990 and the
amendment thereto dated December 7, 1990 is incorporated by
reference to the Exhibit to Form 10-Q file for the quarter
ended December 1, 1990. In addition, letters of notification
pursuant to section 7.3(c) of the amended and restated secured
credit agreement are herein incorporated by reference to the
exhibit to the Form 10-Q filed for the quarter ended December
1, 1990.
4.7 Amendment dated August 9, 1990 which amends the loan agreements with
Prudential Insurance Company of American dated August 16, 1978 and
with Prudential Interfunding Corporation dated August 30, 1984 and
August 6, 1986 is herein incorporated by reference to the Exhibit to
the Form 10-Q filed for quarter ended September 1, 1990.
4.8 Amendment dated June 20, 1991 which amends the amended and restated
secured credit agreement dated August 9, 1990 between registrant and
American National Bank and Trust Company of Chicago, individually and
as agent and the amendment thereto dated December 7, 1990.
4.9 Amendment dated June 20, 1991 which amends the loan agreements with
Prudential Insurance Company of America dated August 16, 1978 and with
Prudential Interfunding Corporation dated August 30, 1984 and August
6, 1986 and the amendment thereto dated August 9, 1990.
4.10 Amended and Restated Revolving Note dated June 20, 1991 between
registrant and American National Bank, individually and as agent.
4.11 Amendment dated February 7, 1992 which amends the amended and restated
secured credit agreement dated August 9, 1990 between registrant and
American National Bank and Trust Company of Chicago, individually and
as agent and the amendments thereto dated December 7, 1990 and June
20, 1991.
<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K, continued
a. (3) Exhibits, continued
4.12 Amendment dated February 7, 1992 which amends the loan agreements with
Prudential Insurance Company of America dated August 16, 1978 and with
Prudential Interfunding Corporation dated August 30, 1984 and August
6, 1986 and the amendments thereto dated August 9, 1990 and June 20,
1991.
4.13 Second Amended and Restated Revolving Noted dated February 7, 1992
between registrant and American National Bank, individually and as
agent.
4.14 Amendment dated May 29, 1992, which amends the amended and restated
secured credit agreement dated August 9, 1990 between registrant and
American National Bank and Trust Company of Chicago, individually and
as agent and the amendments thereto dated December 7, 1990, June 20,
1991 and February 7, 1992.
4.15 Amendment dated May 29, 1992 which amends the loan agreements with
Prudential Insurance Company of America dated August 16, 1978 and with
Prudential Interfunding Corporation dated August 30, 1984 and August
6, 1986 and the amendments thereto dated August 9, 1990, June 20, 1991
and February 7, 1992.
4.16 Second Amended and restated secured credit agreement dated May 28,
1993, which amends and restates the amended and restated secured
credit agreement dated August 9, 1990 between registrant and American
National Bank and Trust Company of Chicago, individually and as agent
and the amendments thereto dated December 7, 1990, June 20, 1991 and
February 7, 1992 and May 29, 1992.
4.17 Amendment dated May 28, 1993, which amends the loan agreements with
Prudential Insurance Company of America dated August 16, 1978 and with
Prudential Interfunding Corporation dated August 30, 1984 and August
6, 1986 and the amendments thereto dated August 9, 1990, June 20, 1991
and February 7, 1992 and May 29, 1992.
4.18 Amendment dated May 10, 1994, which amends the second amended and
restated secured credit agreement dated May 28, 1993 between
registrant and American National Bank and Trust Company of Chicago,
individually and as agent.
<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K, continued
a. (3) Exhibits, continued
4.19 Amendment dated May 10, 1994, which amends the loan agreement with
Prudential Interfunding Corporation dated August 6, 1986 and the
amendments thereto dated August 9, 1990, June 20, 1991, February 7,
1992, May 29, 1992 and May 28, 1993.
4.20 Amendment dated January 13, 1995, which amends the second amended and
restated secured credit agreement dated May 28, 1993 between
registrant and American National Bank and Trust Company of Chicago,
individually and as agent, and the amendment thereto dated May 10,
1994.
4.21 Amendment dated January 13, 1995, which amends the loan agreement with
Prudential Interfunding Corporation dated August 6, 1986 and the
amendments thereto dated August 9, 1990, June 20, 1991, February 7,
1992, May 28, 1993 and May
10, 1994.
4.22 Amendment dated February 17, 1995 which amends the second amended and
restated secured credit agreement dated May 28, 1993 between
registrant and American National Bank and Trust Company of Chicago,
individually and as agent and the amendments thereto dated May 10,
1994 and January 13, 1995.
4.23 Amendment dated February 17, 1995 which amends the loan agreements
with Prudential Interfunding Corporation dated August 9, 1990, June
20, 1991, February 7, 1992, May 28, 1993,
May 10, 1994 and January 13, 1995.
4.24 Amendment dated March 31, 1995 which amends the second amended and
restated secured credit agreement dated May 28, 1993 between
registrant and American National Bank and Trust Company of Chicago,
individually and as agent and the amendments thereto dated May 10,
1994, January 13, 1995, February 17, 1995 and March 3, 1995.
4.25 Amendment dated March 31, 1995 which amends the loan agreements with
Prudential Interfunding Corporation dated August 6, 1986 and the
amendments thereto dated August 9, 1990, June 20, 1991, February 7,
1992, May 28, 1993, May 10, 1994, January 13, 1995 and February 17,
1995.
4.26 Amendment dated March 3, 1995 which amends the second amended and
restated secured credit agreement dated May 28, 1993 between
registrant and American National Bank and Trust Company of Chicago,
individually and as agent and the amendments thereto dated May 10,
1994, January 13, 1995 and February 17, 1995.
<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K, continued
a. (3) Exhibits, continued
4.27 Letter of termination dated May 31, 1995, which terminates the second
amended and restated secured credit agreement dated May 28, 1993
between registrant and American National Bank and Trust Company of
Chicago, individually and as agent and the amendments thereto dated
May 10, 1994, January 13, 1995, February 17, 1995 and March 3, 1995
and March 31, 1995.
4.28 Letter of termination dated May 31, 1995 which terminates the loan
agreements with Prudential Interfunding Corporation dated August 6,
1986 and the amendments thereto dated August 9, 1990, June 20, 1991,
February 7, 1992, May 28, 1993, May 10, 1994, January 13, 1995,
February 17, 1995 and March 31, 1995.
4.29 Loan and Security Agreement dated May 31, 1995 between registrant and
Transamerica Business Credit Corporation.
4.30 Amendment dated October 3, 1995 which amends the Loan and Security
Agreement dated May 31, 1995 with Transamerica
Business Credit Corporation.
4.40 Amendment dated November 20, 1995 which amends the Loan and Security
Agreement dated May 31, 995 with Transamerica Business Credit
Corporation and the amendment thereto dated
October 3, 1995.
4.50 Amendment dated January 5, 1996 which amends the Loan and Security
Agreement dated May 31, 1995 with Transamerica Business Credit
Corporation and the amendments thereto dated
October 3, 1995 and November 20, 1995.
4.51 Amendment dated May 30, 1996 which amends the Loan and Security
Agreement dated May 31, 1995 with Transamerica Business Credit
Corporation and the amendments thereto dated October 3, 1995, November
20, 1995 and January 5, 1996.
4.52 Amendment dated July 5, 1996 which amends the Loan and Security
Agreement dated May 31, 1995 with Transamerica Business Credit
Corporation and the amendments thereto dated October 3, 1995, November
20, 1995, January 5, 1996 and May
30, 1996.
<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K, continued
a. (3) Exhibits, continued
4.53 Amendment dated October 11, 1996 which amends the Loan and Security
Agreement dated May 31, 1995 with Transamerica Business Credit
Corporation and the amendments thereto dated October 3, 1995, November
20, 1995, January 5, 1996, May 30,
1996 and July 5, 1996.
4.54 Amendment dated November 25, 1996 which amends the Loan and Security
Agreement dated May 31, 1995 with Transamerica Business Credit
Corporation and the amendments thereto dated October 3, 1995, November
20, 1995, January 5, 1996, May 30,
1996, July 5, 1996 and October 11, 1996.
4.55 Amendment dated January 9, 1997 which amends the Loan and Security
Agreement dated May 31, 1995 with Transamerica Business Credit
Corporation and the amendments thereto dated October 3, 1995, November
20, 1996, January 5, 1996, May 30, 1996, July 5, 1996, October 11,
1996 and November 25, 1996.
4.56 Amendment dated April 17, 1997 which amends the Loan and Security
Agreement dated May 31, 1995 with Transamerica Business Credit
Corporation and the amendments thereto dated October 3, 1995, November
20, 1995, January 5, 1996, May 30, 1996, July 5, 1996, October 11,
1996, November 25, 1996 and
January 9, 1997.
4.57 Letter of termination dated June 17, 1997, which terminates the Loan
and Security Agreement dated May 31, 1995, as amended, between
registrant and Transamerica Business Credit Corporation.
4.58 Loan and Security Agreement dated June 16, 1997 between registrant and
Jackson National Life Insurance Company, a Michigan Insurance Company
with PPM Finance, Inc. as Attorney-in fact.
4.59 Amendment dated August 7, 1997 which amends the Loan and Security
Agreement dated June 16, 1997 between Jackson National Life Insurance
Company, a Michigan Insurance Company with PPM Finance, Inc. as
Attorney-in-fact.
<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K, continued
a. (3) Exhibits, continued
4.60 Amendment dated May 28, 1998 which amends the Loan and Security
Agreement dated June 16, 1997 between Jackson National Life Insurance
Company, a Michigan Insurance Company with PPM Finance, Inc. as
Attorney-in-fact and the amendment
thereto dated August 7, 1997.
10.1 1971 Stock Option Plan of the Company is incorporated herein by
reference to Appendix A of the Company's definitive proxy statement
for its annual meeting held July 11, 1978 (File No.
0-1500).
10.2 Deferred Compensation Plan dated July 8, 1975 is incorporated herein
by reference to Exhibit 4 to the Form 10-K filed for the fiscal year
ended February 28, 1976 and the amendment thereto dated July 14, 1977
is incorporated herein by reference to the Exhibit to the Form 10-K
filed for the fiscal year ended February 25, 1978 (File No. 0-1500).
10.4 Key Employees' Supplemental Medical Expense Benefit Plan is herein
incorporated by reference to the Form 10-K for the fiscal year ended
February 28, 1981 (File No. 0-1500).
10.5 Employment Agreement dated as of November 17, 1982 with David B.
Meltzer is incorporated by reference to the Form 10-K for the fiscal
year ended February 28, 1981 (File No. 0-1500)
10.6 Stock purchase agreement dated December 17, 1984 is incorporated by
reference to the exhibit to the Form S-1 Registration statement dated
June 27, 1986.
10.7 Letter agreement dated January 4, 1982 and May 18, 1983 between the
Company and each of two officer is incorporated by reference to the
exhibit to the Form S-1 Registration statement dated June 27, 1986.
10.8 Credit and Security Agreement with American National Bank and Trust
Company of Chicago dated July 6, 1990.
10.9 Inter-Creditor Agreement dated July 6, 1990, between American
National Bank and Trust Company of Chicago and Prudential
Insurance Company of America.
10.10 Commitment Letter dated June 29, 1990 for the secured revolving credit
agreement with American National Bank and Trust Co. of Chicago.
<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K, continued
a. (3) Exhibits, continued
10.11 Employment agreement dated July 5, 1990 with Leonard Levey is
incorporated by reference to the Exhibit to the form 10-Q filed for
the quarter ended June 2, 1990 and the Amendment thereto dated August
21, 1990 is incorporated by reference to the Exhibit to the form 10-Q
filed for the quarter ended September 1, 1990.
10.12 Commitment letter dated January 20, 1992 for certain modifications to
the amended and restated secured credit agreement dated August 9, 1990
and as amended June 20, 1991, between registrant, American National
Bank and Trust Company of Chicago, individually and as agent, the
Prudential Insurance Company of America, and the Prudential
Interfunding Corporation.
10.13 Purchase agreement dated as of January 13, 1995 by and between
registrant and Gilson, Incorporated, a Delaware Corporation.
10.14 Covenant not to compete agreement dated as of January 13, 1995
by and between registrant, Karl B. Gittelman and C. Richard
Gittelman.
10.15 Warrant to purchase shares of registrant's common stock.
10.16 Real Estate Purchase Agreement dated as of June 19, 1997.
10.17 Purchase Agreement dated August 4, 1997 by and between Registrant and
Triomphe Fourrures, Incorporated, a subsidiary of Revillon,
Incorporated, a New York Corporation.
10.18 Amendment dated June 3, 1998 to Purchase Agreement dated August 4,
1997 by and between Registrant and Triomphe Fourrures, Incorporated, a
subsidiary of Revillon, Incorporated, a New York Corporation.
21.1 A list of the Registrant's subsidiaries is incorporated by reference
to the Form 10-K filed for the fiscal year ended March 1, 1980 (File
No. 0-1500).
b. Reports on Form 8-K
Items other than those listed are omitted because they are not
required.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors
Evans, Inc.
Our report on the consolidated financial statements of Evans, Inc. and
Subsidiaries is included on page 16 of this Form 10-K. In connection with our
audit of such financial statements, we have also audited the related financial
statement schedule listed in the index on page 34 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
June 4, 1998
Chicago, Illinois
<PAGE>
<TABLE>
EVANS, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
for the years ended February 28, 1998, March 1, 1997
and March 2, 1996 ($ IN THOUSANDS)
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
- --------------------------------------------------------------------------------------------------------------
Additions
---------------------------
(1) (2)
Balance at Charged to Charged to Balance at
Beginning of Costs and Other End of
Description Period Expenses Accounts Deduction (a) Period
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended February 28, 1998
Allowance for doubtful accounts $755 $416 $636 $535
Year ended March 1, 1997
Allowance for doubtful accounts $864 $621 $730 $755
Year ended March 2, 1996
Allowance for doubtful accounts $794 $600 $530 $864
- --------------------------------------------------------------------------------------------------------------
<FN>
Note: (a) Uncollectible accounts receivable and inventory charged off, net of
recoveries.
</FN>
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf of the undersigned, thereunto duly authorized.
EVANS, INC.
By: William E. Koziel
William E. Koziel
Vice President and Chief Financial Officer
Date:
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the Capacities and on the dates indicated.
Signature Title Date
- ----------- ------------------- --------------
David B. Meltzer Chairman of the Board June 8, 1998
- ----------------
David B. Meltzer
Robert K. Meltzer President and Chief Executive June 8, 1998
- ----------------- Officer
Robert K. Meltzer
Samuel B. Garber Vice President, General Counsel June 8, 1998
- ----------------- and Secretary
Samuel B. Garber
Ernest R. Wish Director June 8, 1998
- -----------------
Ernest R. Wish
Harold Sussman Director June 8, 1998
- ----------------
Harold Sussman
Dennis Bookshester Director June 8, 1998
- ------------------
Dennis Bookshester
Gwendolyn L. Stanback Director June 8, 1998
- ---------------------
Gwendolyn L. Stanback
Edmond D. Cicala Director June 8, 1998
- ----------------
Edmond D. Cicala
<PAGE>
EVANS, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit Page Nos.
4.60 47-52
10.18 53-63
<PAGE>
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this
"Amendment") is made and entered into as of this 28th day of May, 1998, by and
among EVANS, INC., a Delaware corporation ("Evans"), KOSLOW'S, INC., a Texas
corporation ("Koslow's"), EVANS-ROSENDORF OF MARYLAND, INC., a Delaware
corporation ("Rosendorf" collectively referred to with Evans and Koslows, the
"Borrowers") and JACKSON NATIONAL LIFE INSURANCE COMPANY, a Michigan insurance
corporation, ("Jackson" or "Lender").
PRELIMINARY STATEMENTS
A. Borrowers and Lender have entered into that certain Loan and Security
Agreement, dated June 16, 1997, as amended from time to time and most recently
by that certain First Amendment to Loan and Security Agreement dated August 7,
1997 (as amended, the "Loan Agreement").
B. The Borrowers have each requested that the Lender amend, modify or
waive the Borrowers' compliance with certain covenants contained in the Loan
Agreement and the Lender is willing to amend, modify or waive the Borrowers'
compliance with such covenants, subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
AGREEMENT
ARTICLE I
Definitions
1.01 Capitalized terms used in this Amendment are defined in the Loan
Agreement as amended hereby, unless otherwise stated.
<PAGE>
ARTICLE II
Amendments to Loan Agreement
2.01 Amendments to Section 10.3 Financial Covenants. Sections 10.3(a)(ii)
and (b) are deleted in their entirety and the following is substituted in lieu
thereof.
"(ii) Borrower and Borrowing Subsidiaries will not permit consolidated
EBITDA to be less than $1,700,000 for the period ending February 28, 1998.
(iii) For each period ending specified below, Borrower and Borrowing
Subsidiaries shall maintain the minimum ratio of EBITDA to interest
expense specified below for each Fiscal Quarter calculated on a rolling
twelve month basis:
PERIOD ENDING RATIO
(a) May 31, 1998 .70:00 to 1:00
(b) August 31, 1998 .10:00 to 1:00
(c) November 30, 1998 .70:00 to 1:00
(d) February 28, 1999 and at all times
thereafter 2:00 to 1:00
(b) Borrower and Borrowing Subsidiaries shall not permit Net Income
excluding any after-tax extraordinary gains or losses plus deprecation and
amortization deducted in determining Net Income minus Capital Expenditures not
financed to current principal maturities of long term debt and Capital Leases
paid during such period for the periods set forth below to be less than the
ratio set forth opposite each such period:
PERIOD RATIO
Fiscal six month period ending nearest to February 28, 1998 2.03 to 1.00
Fiscal nine month period ending nearest to May 31, 1998 1.00 to 1.00
Fiscal twelve month period ending nearest to August 31, 1998 (1.15) to 1.00
Fiscal twelve month period ending nearest to November 30, 1998 (.80) to 1.00
Fiscal twelve month period ending nearest to February 28, 1999 1.30 to 1.00
Thereafter, for each rolling twelve month Fiscal Quarter" 1.25 to 1.00
ARTICLE III
Waiver of Compliance with Certain Covenants
Each of the Borrowers hereby notifies the Lender that the period ending
February 28, 1998, the Borrowers were not in compliance with Sections: (x)
10.3(a)(ii), and (y) 10.3(b) of the Loan Agreement. The Lender hereby agrees to
waive the items set forth in subparagraphs (x) and (y) above and any Event of
Default which has resulted therefrom for the period up to and including the date
of this Amendment. It is understood and agreed that this is a one-time waiver
and that this waiver is limited specifically to the
<PAGE>
express terms hereof and shall not be deemed a waiver of or consent to any
other matter. Except as expressly waived in accordance with this section,
all of the provisions of the Loan Agreement, as amended hereby are unmodified
and remain in full force and effect.
ARTICLE IV
Amendment Fee
The Borrower hereby agrees to pay to the Lender on the date hereof an
amendment fee in accordance with the letter agreement executed by the parties
hereto dated as of the date hereof.
ARTICLE V
Conditions to Effectiveness
The continued effectiveness of this Amendment is subject to the receipt by
Lender of the final audited statements of the Borrower for the fiscal year
ending February 28, 1998, which shall be submitted to the Lender within ten days
of the date hereof and shall be substantially in the form provided to the Lender
in draft and shall show no material changes from such draft.
ARTICLE VI
Ratifications, Representations and Warranties
6.01 Ratifications. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Loan Agreement and the Other Agreements, and, except as expressly modified
and superseded by this Amendment, the terms and provisions of the Loan Agreement
and the Other Agreements are ratified and confirmed and shall continue in full
force and effect. Borrower and each Borrowing Subsidiary and Lender agree that
the Loan Agreement and other Agreements, as amended hereby, shall continue to be
legal, valid, binding and enforceable in accordance with their respective terms.
6.02 Representations and Warranties. Borrower and each borrowing
Subsidiary hereby represent and warrant to Lender that (a) the execution,
delivery and performance of this Amendment has been authorized by all requisite
corporate action on the part of Borrower and each Borrowing Subsidiary and will
not violate the Articles of Incorporation or Bylaws of Borrower or either
Borrowing Subsidiary; (b) the representations and warranties continued in the
Loan Agreement, as amended hereby, are true and correct on and as of the date
hereof and on and as of the date of execution hereby as though made on and as of
each such date; (c) no Event of Default or event or condition which, with notice
or passage of time or both, would constitute an Event of Default under the Loan
Agreement, as amended hereby, has occurred and is continuing; and (d) Borrower
and each Borrowing Subsidiary are in full compliance with all covenants and
agreements contained in the Loan Agreement and the Other Agreements, as amended
thereby.
<PAGE>
ARTICLE VII
Miscellaneous Provisions
7.01 Survival of Representations and Warranties. All representations and
warranties made in the Loan Agreement or any Other Agreements, including,
without limitation, any document furnished in connection with this Amendment,
shall survive the execution and delivery of this Amendment and the Other
Agreements, and no investigation by Lender shall affect the representations and
warranties or the right of Lender to reply upon them.
7.02 Reference to Loan Agreement. Each of the Loan Agreement and the Other
Agreements, and any and all other agreements, documents or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Loan Agreement, as amended hereby, are hereby amended so that any
reference in the Loan Agreement and such other Agreements to the Loan Agreement
or any such Other Agreements shall mean a reference to the Loan Agreement and
the Other Agreements as amended hereby.
7.03 Expenses of Agent. As provided in the Loan Agreement, Borrowers agree
to pay on demand all reasonable costs and expenses incurred by Lender in
connection with the preparation, negotiation and execution of this Amendment and
the Other Agreements executed pursuant hereto, and any all amendments,
modifications, and supplements thereto, including without limitation, the
reasonable costs and fees of Lender's legal counsel.
7.04 Severability. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
7.05 Successors and Assigns. This Amendment is binding upon and shall
insure to the benefit of Lender and Borrower and each Borrowing Subsidiary and
their respective successors and assigns, except that Borrower and Borrowing
Subsidiaries may not assign or transfer any of their rights or obligations
hereunder without the prior written consent of Lender.
7.06 Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
7.07 Effect of Waiver. No consent or waiver, express or implied, by Lender
to or for any breach of or deviation from any covenant or condition by Borrower
or Borrowing Subsidiaries shall be deemed a consent to or waiver of any other
breach of the same or any other covenant, condition or duty.
7.08 Headings. The headings, captions, and arrangements used in this
Amendment are for convenience only and shall no affect the interpretation of
this Amendment.
<PAGE>
6.09 Applicable Law. THIS AMENDMENT AND ALL OTHER AGREEMENTS EXECUTED
PURSUANT HERETO SHALL BE DEEMED TO HAVE MADE AND TO PERFORMABLE IN AND SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
ILLINOIS (WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW).
6.05 Final Agreement. THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS, EACH AS
AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH RESPECT TO
THE SUBJECT MATTER HEREOF ON THE DATE THIS AMENDMENT IS EXECUTED. THE LOAN
AGREEMENT AND THE OTHER AGREEMENTS, AS AMENDED HEREBY, MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. NO
MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY PROVISION OF THIS
AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED BY BORROWER, EACH
BORROWING SUBSIDIARY AND LENDER.
<PAGE>
Witness the due execution hereof by the respective duly authorized officer
so the undersigned as of the date first written above.
EVANS, INC.
By: William E. Koziel
-----------------
William E. Koziel
Vice President - Finance
& Chief Financial Officer
KOSLOW'S, INC.
By: William E. Koziel
-----------------
William E. Koziel
Vice President - Finance
& Chief Financial Officer
EVANS-ROSENDORF, OF MARYLAND, INC.
By: William E. Koziel
-----------------
William E. Koziel
Vice President - Finance
& Chief Financial Officer
JACKSON NATIONAL LIFE INSURANCE COMPANY, as Lender
By: PPM America, Inc.,
Attorney-in-Fact
By: Barbara Buck
----------------
Barbara Buck
Vice President
<PAGE>
AGREEMENT
This Agreement made this __3__day of June, 1998, by and between TRIOMPHE
FOURRURES INCORPORATED, a subsidiary of REVILLON, INCORPORATED ("Revillon"), a
New York Corporation (hereinafter called "Seller") and EVANS, INC., a Delaware
Corporation (hereinafter called "Evans").
WITTNESSETH:
WHEREAS, BY PURCHASE AGREEMENT dated August 4, 1997, Seller sold to Evans
its retail fur business which operated certain Fur Departments in Bloomingdale's
Department Stores, and
WHEREAS, Seller and Evans desire to modify said Purchase Agreement,
NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements of the parties hereof, it is hereby covenanted and
agreed as follows:
1. Section 4 of said Purchase Agreement covering the balance of the installment
payments due on the purchase price of the Purchase Agreement shall be
modified as set forth by the Amended and Restated Promissory Notes in the
form attached hereto as Exhibit 1.
2. All of the other provision of said Purchase Agreement shall remain in full
force and effect, without modification.
3. This Agreement may be executed in counterparts, each of which shall be deemed
to be an original, but all of which shall constitute but one and the same
instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned have signed this Agreement as of the
___3___ day of June, 1998.
ATTEST: TRIOMPHE FOURRURES INCORPORATED
_____________________________ By:___________________________
________________, Secretary ______________________, President
ATTEST: REVILLON, INCORPORATED
_____________________________ By:___________________________
_________________, Secretary _______________________, President
ATTEST: EVANS, INC.
___________________________ By:___________________________
_________________, Secretary _____________________, President
<PAGE>
AMENDED AND RESTATED PROMISSORY NOTE
$846,742.00 June 3, 1998
This amended and restate promissory note amends and restates in its
entirety that certain promissory note dated August 4, 1997 from EVANS, INC. to
REVILLON, INCORPORATED in the amount of $1,185,438.80. The balance due under the
said promissory note is now $846,742.00.
FOR VALUE RECEIVED, the undersigned, EVANS, INC., a Delaware corporation
with offices at 36 South State Street, Chicago, Illinois 60603 ("Debtor"),
HEREBY PROMISES TO PAY to the order of Revillon, Incorporated, 555 Madison
Avenue, New York, New York 10022 the principal sum of eight hundred forty-six
thousand seven hundred forty- two and no dollars ($846,742.00) as follows:
$32,304.40 on or before June 30, 1998
$27,408.80 on or before August 31, 1998.
$27,408.80 on or before September 30, 1998
$27,408.80 on or before October 31, 1998
$84,674.20 on or before November 4, 1998
$27,408.80 on or before November 30, 1998
$27,408.80 on or before December 15, 1998
$84,674.20 on or before February 4, 1999
$84,674.20 on or before May 4, 1999
$84,674.20 on or before August 4, 1999
$84,674.20 on or before November 4, 1999
$254,022.60 on or before December 30, 1999
Except as hereinafter provided, this Note shall not bear interest unless
the holder of this Note ("Holder") declares this Note to be forthwith due and
payable pursuant to the terms of the Note, in which event interest shall be due
on the unpaid balance of principal of this Note from the due dates as the
maximum rate allowed by law.
Notwithstanding the foregoing, the installments of principal due June 30,
1998, August 31, 1998, September 30, 1998, October 31, 1998, November 30, 1998
and December 15, 1998 shall be paid with interest at the rate of ten percent per
annum from May 5, 1998 on the following amounts:
(a) with the installment due June 30, 1998, interest on $84,674.20;
(b) with the installment due August 31, 1998, interest on $52,369.80 and
interest on $84,674.20 beginning August 4, 1998;
(c) with the installment due September 30, 1998, interest on $109,635.20;
(d) with the installment due October 31, 1998, interest on $82,226.40;
<PAGE>
(e) with the installment due November 30, 1998, interest on $54,817.60;
and
(f) with the installment due December 15, 1998, interest on $27,408.80.
Principal and any interest are payable in lawful money of the United
States of America to the Holder at the offices of Holder in immediately
available funds.
If any of the following events shall occur and be continuing:
(a) Debtor shall fail to pay any installment of principal or interest of
this Note within ten (10) days of when due; or
(b) Debtor shall be in default of any of its obligations under the
Purchase Agreement dated August 4, 1997 among Holder, Debtor and Triomphe
Fourrures Incorporated and any such failure shall remain unremedied for
ten (10) days after written notice thereof shall have
been given to Debtor by Holder; or
(c) Debtor shall admit in writing its inability to pay its debts
generally; or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against Debtor
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief,
or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property; or
Debtor shall take any corporate action to authorize any of the actions set
forth above in this paragraph (c)
Then, and in any such event, Holder may, by notice to Debtor, declare all
remaining installments of principal and interest of this Note to be accelerated
and forthwith due and payable, whereupon this Note shall become and be forthwith
due and payable, without presentment, demand, protest or further notice of any
kink, all of which are hereby expressly waiver by Debtor.
This Note may be prepaid by Debtor at any time or from time to time
without penalty or premium.
This Note may not be changed, modified or terminated orally, but only by
an agreement in writing, signed by the Debtor and Holder.
This Note shall be governed by and construed in accordance with the laws
of the State of New York and shall be binding upon the successors and assigns of
the Debtor and inure to the benefit of the Holder, its successors and assigns.
<PAGE>
Debtor hereby irrevocably consents and submits to the subject matter and
personal jurisdiction of the Supreme Court of the State of New and the United
States District Court for the Southern District of New York in connection with
any action or proceeding arising out of or relating to this Note, and to the
extent permitted by law, irrevocably waives the defenses of improper venue and
inconvenient forum to the maintenance of such action or proceeding. Debtor
further irrevocably consents that process out of said courts may be served by
certified mail, return receipt of said courts may be served by certified mail,
return receipt requested, and that such service shall be deemed effected three
(3) days after mailing. Nothing herein shall affect the right of Holder to serve
process in any other manner permitted by law or to commence legal proceedings in
any other jurisdiction.
The execution and delivery of this Note has been authorized by the board
of directors of Debtor. If any term or provision of this Note shall be held
invalid, illegal or unenforceable, the validity of all other terms and
provisions hereof shall in no way be affected hereby.
If this Note is not paid when due and given to an attorney for collection,
or suit filed thereon, Debtor agrees to pay Holder's reasonable attorneys fees
and other costs of collection.
EVANS, INC.
By: _________________________
Name: Samuel B. Garber
Title: Vice President
State of Illinois
:ss.:
County of Cook
On this _____ day of June, 1998, before me personally came Samuel B.
Garber, to me known, who, being by me duly sworn, did depose and say that he is
the Vice President of Evans, Inc., the corporation described in and which
executed the foregoing instrument; and that he signed his name thereto by order
of the board of directors of said corporation.
------------------------
Notary Public
<PAGE>
AMENDED AND RESTATED PROMISSORY NOTE
$1,919,423.00 June 3, 1998
This amended and restated promissory note amends and restates in its
entirety that certain promissory note dated August 4, 1997 from EVANS, INC. to
TRIOMPHE FOURRURES INCORPORATED in the amount of $2,629,192.20. The balance due
under the said promissory note is $1,919,423.00.
FOR VALUE RECEIVED, the undersigned, EVANS, INC., a Delaware corporation
with offices at 36 South State Street, Chicago, Illinois 60603 ("Debtor"),
HEREBY PROMISES TO PAY to the order of Triomphe Fourrures Incorporated, c/o
Revillon, Incorporated 555 Madison Avenue, New York, New York 10022 the
principal sum of One Million Nine Hundred Nineteen Thousand Four Hundred Twenty
Three and No Dollars ($1,919,423.00) as follows:
$67,696.60 on or before June 30, 1998
$57,437.60 on or before August 31, 1998
$57,437.60 on or before September 30, 1998
$57,437.60 on or before October 31, 1998
$177,442.30 on or before November 4, 1998
$57,437.60 on or before November 30, 1998
$57,437.60 on or before December 15, 1998
$177,442.30 on or before February 4,1999
$177,442.30 on or before May 4, 1999
$177,442.30 on or before August 4, 1999
$177,442.30 on or before November 4, 1999
$677,326.90 on or before December 30, 1999
Except as hereinafter provided, this Note shall not bear interest unless
the holder of this Note ("Holder") declares this Note to be forthwith due and
payable pursuant to the terms of this Note, in which event interest shall be due
on the unpaid balance of principal of this Note from the due dates at the
maximum rate allowed by law.
Notwithstanding the foregoing, the installments of principal due June 30,
1998, August 31, 1998, September 30, 1998, October 31, 1998, November 30, 1998
and December 15, 1998 shall be paid with interest at the rate of ten percent per
annum from May 5, 1998 on the following amounts:
(a) with the installment due June 30, 1998, interest on $177,442.30;
(b) with the installment due August 31, 1998, interest on $109,745.70
and interest on $177,442.30 beginning August 4, 1998;
(c) with the installment due September 30, 1998, interest on
$229,750.40;
(d) with the installment due October 31, 1998, interest on $172,312.80;
<PAGE>
(e) with the installment due November 30, 1998, interest on $114,875.20;
(f) with the installment due December 15, 1998, interest on $57,437.60.
Principal and any interest are payable in lawful money of the United
States of America to the Holder at the offices of Holder in immediately
available funds.
If any of the following events shall occur and be continuing;
(a) Debtor shall fail to pay any installment of principal or
interest of this Note within ten (10) days of when due; or
(b) Debtor shall be in default of any of its obligations under the
Purchase Agreement dated August 4, 1997 among Holder, Debtor and Revillon,
Incorporated and any such failure shall remain unremedied for ten (10)
days after written notice thereof shall have been given to Debtor by
Holder; or
(c) Debtor shall admit in writing its inability to pay its debts
generally; or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against Debtor
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief,
or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property; or
Debtor shall take any corporate action to authorize any of the actions set
forth above in this paragraph (c),
then, any in any such event, Holder may, by notice to Debtor, declare all
remaining installments of principal and interest of this Note to be accelerated
and forthwith due and payable, whereupon this Note shall become and be forthwith
due and payable, without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waiver by Debtor.
This Note may be prepaid by Debtor at any time or from time to time
without penalty or premium.
This Note may not be changed, modified or terminated orally, but only by
an agreement in writing, signed by the Debtor and Holder.
This Note shall be governed by and construed in accordance with the laws
of the State of New York and shall be binding upon the successors and assigns of
the Debtor and inure to the benefit of the Holder, its successors and assigns.
<PAGE>
Debtor hereby irrevocably consents and submits to the subject matter and
personal jurisdiction of the supreme Court of the State of New and the United
States District Court for the Southern District of New York in connection with
any action or proceeding arising out of or relating to this Note, and to the
extent permitted by law, irrevocably waives the defenses of improper venue and
inconvenient forum to the maintenance of such action or proceeding. Debtor
further irrevocably consents that process out of said courts may be served by
certified mail, return receipt requested, and that such service shall be deemed
effected three (3) days after mailing. Nothing herein shall affect the right of
Holder to service process in any other manner permitted by law or to commence
legal proceedings in any other jurisdiction.
The execution and delivery of this Note has been authorized by the board
of directors of Debtor. If any term or provision of this Note shall be held
invalid, illegal or unenforceable, the validity of all other terms and
provisions hereof shall in no way be affected thereby.
If this Note is not paid when due and given to an attorney for collection,
or suit filed thereon, Debtor agrees to pay Holder's reasonable attorneys fees
and other costs of collection.
EVANS, INC.
By: ____________________
Name: Samuel B. Garber
Title: Vice President
State of Illinois
: s :
County of Cook
On this ______ day of June, 1998, before me personally came Samuel B.
Garber, to me known, who, being by me duly sworn, did depose and say that he is
the Vice President of Evans, Inc., the corporation described in and which
executed the foregoing instrument; and that he signed his name thereto by order
of the board of directors of said corporation.
--------------------------
Notary Public
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-END> FEB-28-1998
<CASH> 650,000
<SECURITIES> 0
<RECEIVABLES> 12,639,000
<ALLOWANCES> 535,000
<INVENTORY> 25,495,000
<CURRENT-ASSETS> 39,707,000
<PP&E> 11,642,000
<DEPRECIATION> 8,203,000
<TOTAL-ASSETS> 48,400,000
<CURRENT-LIABILITIES> 30,291,000
<BONDS> 0
0
0
<COMMON> 1,267,000
<OTHER-SE> 15,034,000
<TOTAL-LIABILITY-AND-EQUITY> 48,400,000
<SALES> 79,369,000
<TOTAL-REVENUES> 92,255,000
<CGS> 45,675,000
<TOTAL-COSTS> 58,906,000
<OTHER-EXPENSES> 35,592,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,512,000
<INCOME-PRETAX> (755,000)
<INCOME-TAX> 80,000
<INCOME-CONTINUING> (835,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (835,000)
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
