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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported) February 18, 1997
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FABRI-CENTERS OF AMERICA, INC.
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(Exact name of Registrant as specified in its charter)
Ohio 1-6695 34-0720629
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
5555 Darrow Road
Hudson, Ohio 44236
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 216-656-2600
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Not applicable.
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(Former name or former address, if changed since last report)
The Exhibit Index is located on sequential page 3.
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Item 5. Other Events
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This Registrant's news release dated February 18, 1997, a copy of which is
attached hereto as Exhibit 99, announcing the Company's settlement with the
Securities and Exchange Commission ("SEC") of allegations in connection with a
previously reported SEC investigation is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(c) Exhibits
99 Fabri-Centers of America, Inc. News Release dated February 18, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
FABRI-CENTERS OF AMERICA, INC.
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REGISTRANT
Date: March 25, 1997 /s/ Samuel R. Gaston
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By: Samuel R. Gaston,
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
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99 Fabri-Centers of America, Inc. News Release dated
February 18, 1997.
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EXHIBIT 99
FOR IMMEDIATE RELEASE
CONTACT: Ron Gaston, 216/463-3436
Executive Vice President & CFO
Fabri-Centers of America, Inc.
FABRI-CENTERS SETTLES DISPUTE WITH SEC
OVER 1992 RESERVE ISSUES
Hudson, Ohio -- February 18, 1997 -- Fabri-Centers of America, Inc. (NYSE:FCA.A
and FCA.B) said it has reached a settlement with the Securities and Exchange
Commission, ending a previously disclosed Commission review. The inquiry related
to the adequacy of certain inventory reserves impacting the Company's financial
statements issued almost five years ago. The Company has cooperated with the
SEC's investigation since its inception.
The accounting and disclosure issues in question related to the Company's
financial statements for its fiscal year ended February 1, 1992 (fiscal 1992)
and the first three quarters of fiscal 1993 (ended October 31, 1992). The SEC
alleged that the fiscal year 1992 financial statements misled investors who
purchased the Company's convertible subordinated debentures in 1992.
Without admitting or denying the SEC's allegations, the Company consented to an
injunction prohibiting it from violating federal securities laws and agreed to
pay $3.28 million in settlement. The Company was not required to restate any
financial statements. Arthur Andersen LLP issued an unqualified report on the
1992 financial statements and has continued to stand behind its report.
The accounting issues that were raised are not related to any current period,
and no current accounting policies or financial statements were in question.
Since 1992, the Company has made substantial investments in point-of-sale
information systems, and the accounting methods in question are no longer used.
The Board, on the recommendation of its outside directors, concluded it would be
in the best interests of the Company and its shareholders to avoid protracted
litigation and the diversion of management's attention from the active operation
of the business. Fabri-Centers has experienced 14 consecutive quarters of
improved earnings through the end of the third quarter of fiscal 1997. The
Company expects that after giving effect to the settlement, and assuming no
unanticipated year-end adjustments, its earnings for the fiscal year ended
February 1, 1997, will meet analysts' expectations.
Concurrently with the Company's settlement, Alan Rosskamm, Chairman and Chief
Executive Officer of the Company, consented to a separate SEC administrative
cease and desist order settling certain allegations by the Commission, without
admitting or denying the allegations. The SEC contended that Mr. Rosskamm
violated certain federal securities laws as a result of his not making adequate
inquiry of his financial staff before signing management representation letters
given to the Company's auditors in connection with Debenture offering, and as a
result of signing the Company's Form 10-Q for the quarter ended May 2, 1992.
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