<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- --------------------------------------------------------------------------------
FORM 10 - Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
- --------------------------------------------------------------------------------
For the Quarter Ended May 3, 1997 Commission File No. 1-6695
- --------------------------------------- -----------------------------------
FABRI-CENTERS OF AMERICA, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Ohio 34-0720629
- -------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5555 Darrow Road
Hudson, Ohio 44236
- --------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
(216) 656 - 2600
- -------------------------------
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------- -------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest, practicable date.
Shares of Class A Common Stock outstanding at May 30, 1997: 9,190,317
Shares of Class B Common Stock outstanding at May 30, 1997: 9,078,517
Sequential Page 1 of 31
<PAGE> 2
FABRI-CENTERS OF AMERICA, INC.
Form 10-Q Index
For the quarter ended May 3, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION:
<S> <C>
Item 1. Financial Statements (Unaudited) Page Numbers
Consolidated Balance Sheets as of May 3, 1997 and February 1, 1997 3
Consolidated Statements of Income for the Thirteen Weeks
Ended May 3, 1997 and April 27, 1996 4
Consolidated Statements of Cash Flows for the Thirteen Weeks
Ended May 3, 1997 and April 27, 1996 5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of OperationS 8-9
PART II. OTHER INFORMATION
Item 5. Other Events 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
</TABLE>
Page 2
<PAGE> 3
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Fabri-Centers of America, Inc.
(Thousands of dollars)
<TABLE>
<CAPTION>
MAY 3, FEBRUARY 1,
1997 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 12,632 $ 12,631
Merchandise inventories 295,231 296,104
Prepaid expenses and other current assets 10,433 9,532
--------- ---------
Total current assets 318,296 318,267
Property and equipment, at cost:
Land 1,709 1,709
Buildings 24,498 23,905
Furniture and fixtures 111,511 108,684
Leasehold improvements 42,406 42,118
--------- ---------
180,124 176,416
Less accumulated depreciation and amortization 86,291 81,798
--------- ---------
93,833 94,618
Mortgage receivable 7,064 7,136
Other assets 9,222 9,159
--------- ---------
Total assets $ 428,415 $ 429,180
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 107,587 $ 99,458
Accrued expenses 18,641 28,898
Accrued income taxes 2,543 10,697
Deferred income taxes 2,582 2,167
--------- ---------
Total current liabilities 131,353 141,220
Long-term debt 19,600 15,100
Convertible subordinated debentures 56,983 56,983
Deferred income taxes 13,567 13,357
Other long-term liabilities 3,469 3,110
Shareholders' equity:
Common Stock:
Class A 511 507
Class B 507 503
Additional paid-in capital 78,075 76,614
Other (1,368) (1,248)
Retained earnings 144,005 141,397
--------- ---------
221,730 217,773
Treasury stock, at cost (18,287) (18,363)
--------- ---------
Total shareholders' equity 203,443 199,410
--------- ---------
Total liabilities and shareholders' equity $ 428,415 $ 429,180
========= =========
</TABLE>
See notes to consolidated financial statements
Page 3
<PAGE> 4
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Fabri-Centers of America, Inc.
(Thousands of dollars, except per share data)
<TABLE>
<CAPTION>
MAY 3, APRIL 27,
THIRTEEN WEEKS ENDED 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Net sales $218,826 $203,028
Costs and expenses:
Cost of goods sold 122,688 114,641
Selling, general and administrative expenses 90,438 83,836
Interest expense, net 1,528 2,839
-------- --------
214,654 201,316
-------- --------
Earnings before income taxes 4,172 1,712
Income tax provision 1,564 642
-------- --------
Net earnings $ 2,608 $ 1,070
======== ========
Net earnings per common share:
Primary $ 0.14 $ 0.06
======== ========
Assuming full dilution $ 0.13 $ 0.06
======== ========
</TABLE>
See notes to consolidated financial statements
Page 4
<PAGE> 5
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Fabri-Centers of America, Inc.
(Thousands of dollars)
<TABLE>
<CAPTION>
MAY 3, APRIL 27,
THIRTEEN WEEKS ENDED 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating activities:
Net earnings $ 2,608 $ 1,070
Adjustments to reconcile net earnings to net cash (used for) provided by operating
activities:
Cancellation of restricted stock awards (32) --
Depreciation and amortization and other noncash expenses 5,321 5,272
Loss on disposal of fixed assets 144 292
Deferred income taxes 625 428
Working capital changes:
Merchandise inventories 873 10,974
Prepaid expenses and other current assets (901) 748
Accounts payable 8,129 (6,553)
Accrued expenses (10,257) (3,164)
Accrued income taxes (8,154) (345)
-------- --------
Net cash (used for) provided by operating activities (1,644) 8,722
Investing activities:
Capital expenditures (4,168) (3,211)
Mortgage receivable 72 68
Other, net (452) 318
-------- --------
Net cash used for investing activities (4,548) (2,825)
Financing activities:
Proceeds from long-term debt 8,600 13,100
Repayment of long-term debt (4,100) (11,400)
Other long-term liabilities 359 10
Proceeds from exercise of stock options 1,122 634
Issuance of treasury shares 212 --
Purchase of common stock -- (9,009)
-------- --------
Net cash provided by (used for) financing activities 6,193 (6,665)
Net increase (decrease) in cash 1 (768)
Cash and cash equivalents at beginning of period 12,631 11,552
-------- --------
Cash and cash equivalents at end of period $ 12,632 $ 10,784
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 2,195 $ 3,490
Income taxes 9,093 560
</TABLE>
See notes to consolidated financial statements
Page 5
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Fabri-Centers of America, Inc.
May 3, 1997, February 1, 1997 and April 27, 1996
Note 1 - Basis of Presentation
The accompanying consolidated financial statements include the accounts of
Fabri-Centers of America, Inc., and its wholly owned subsidiaries (the
"Company") and have been prepared without audit, pursuant to the rules of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to those
rules and regulations, although, the Company believes that the disclosures,
herein, are adequate to make the information not misleading. The statements
should be read in conjunction with the consolidated financial statements and
notes, thereto, included in the Company's Annual Report on Form 10-K for the
fiscal year ended February 1, 1997 (fiscal 1997).
The Company's business is seasonal, therefore, earnings or losses for a
particular interim period are not necessarily indicitive of full year results.
In the opinion of management, the accompanying consolidated financial statements
contain all adjustments (consisting only of normal recurring accruals) necessary
for a fair statement of results for the interim periods.
Note 2 - Earnings Per Share
Primary earnings per common share and earnings per common share assuming full
dilution equal net earnings divided by the weighted average number of common
shares outstanding, after giving effect for the assumed exercise of dilutive
stock options under the treasury stock method. The Company's 6 1/4% Convertible
Subordinated Debentures are considered a common share equivalent in calculating
earnings per common share assuming full dilution; however, they are not included
in the earnings per common share calculation assuming full dilution, because the
effect of conversion is anti-dilutive.
The following table presents information necessary to calculate primary earnings
per common share and earnings per common share assuming full dilution for the
periods presented:
<TABLE>
<CAPTION>
MAY 3, APRIL 27,
THIRTEEN WEEKS ENDED 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Common shares outstanding-primary:
Weighted average shares outstanding 18,024,303 18,268,965
Share equivalents - stock options 1,207,417 541,043
---------- ----------
19,231,720 18,810,008
========== ==========
Common shares outstanding-assuming full dilution:
Weighted average shares outstanding 18,024,303 18,268,965
Share equivalents - stock options 1,456,162 561,575
---------- ----------
19,480,465 18,830,540
========== ==========
</TABLE>
Page 6
<PAGE> 7
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards (SFAS) No. 128, "Earnings Per Share," in March 1997, which
will revise the calculation methods and disclosures regarding earnings per
share. As required by the Statement, the Company will adopt SFAS No. 128 in the
fourth quarter of fiscal 1998.
The Company's pro forma earnings per common share that would have been reported
had the new standard been previously in effect are as follows:
<TABLE>
<CAPTION>
MAY 3, APRIL 27,
THIRTEEN WEEKS ENDED 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Basic earnings per common share 0.14 0.06
Diluted earnings per common share 0.14 0.06
</TABLE>
Note 3 - Amendment to Revolving Credit Facility
The Company amended its unsecured $200,000,000 revolving credit facility (the
"Credit Facility") with a group of eight banks on June 2, 1997. The amendment
extends the expiration date of the Credit Facility to May 31, 2001. The Company
pays a facility fee on the revolving commitment amount which as a result of the
amendment now ranges from .10% to .375%, based on the achievement of certain
financial covenants. Under the amendment, the Company no longer pays a
commitment fee on the unused portion of the Credit Facility. Interest on
borrowings under the Credit Facility is payable at an applicable margin over
prime, federal funds or LIBOR rates. The applicable margin has been amended and
now ranges between .25% and 1.00%, based on the achievement of certain financial
covenants.
The amended Credit Facility contains financial covenants which limit the
Company's capital expenditures and defined leverage ratio, as well as require
the Company to maintain a minimum tangible net worth, fixed charge coverage
ratio and current funded indebtedness ratio. As a result of the amendment,
certain financial covenants were eliminated.
Note 4 - Convertible Subordinated Debentures
On May 20, 1997, the Company announced that its Board of Directors authorized
the redemption on June 30, 1997 of all outstanding 6 1/4% Convertible
Subordinated Debentures due March 1, 2002 at a price of 101.785 percent of
principal, and payment of accrued interest to the date of redemption. The
redemption will be funded through the use of the Company's long-term credit
facilities. The Company estimates that it will incur a second quarter
extraordinary charge of approximately $1,200,000 or $0.06 per share, net of
taxes, upon redemption of all debentures.
Each $1,000 principal amount of debentures is convertible into an aggregate of
approximately 20.513 Class A Common Shares and 20.513 Class B Common Shares (at
a conversion price of $24.375 per share). Debentures not converted by June 30,
1997 will be redeemed at the stated premium.
Note 5 - Capital Stock
During the first quarter of fiscal year 1997, the Company purchased 407,525
Class A and 450,506 Class B Common Shares on the open market. The aggregate
purchase price of these shares was approximately $9,000,000 which was funded
through the Company's revolving credit facility.
Page 7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THIRTEEN WEEKS ENDED MAY 3, 1997 VS. APRIL 27, 1996
Net sales for the first quarter of fiscal 1998 increased 8 percent, or
$15,798,000, compared to the first quarter of fiscal 1997. The sales growth was
well-distributed across all product lines, in both Jo-Ann Fabrics and Crafts
stores as well as Cloth World stores. Comparable store sales increased 7 percent
for the first quarter of fiscal 1998 over the same quarter a year earlier.
Gross profit increased $7,751,000 in the first quarter of fiscal 1998
compared to the same quarter of fiscal 1997. As a percentage of net sales,
fiscal 1998 first quarter gross profit was 43.9 percent, an increase of 0.4
percentage points from the same quarter a year earlier. The improvement in the
gross profit margin percentage resulted from smaller markdowns on seasonal
merchandise as there was less clearance and carryover inventory during the first
quarter of fiscal 1998 when compared to the same quarter a year earlier.
Selling, general and administrative expenses as a percentage of net sales
were 41.3 percent for both the first quarter of fiscal 1998 and 1997. As a
percent of sales, increases in advertising and information systems development
expenses were offset by declines in distribution service center costs and store
level operating expenses.
The Company's effective income tax rate was 37.5 percent for the first
quarter of fiscal 1998 and 1997.
Net earnings for the first quarter of fiscal 1998 were $2,608,000 or $0.14
per share, compared to net earnings of $1,070,000, or $0.06 per share, for the
same quarter a year earlier.
The Company's business exhibits seasonality which is typical for most
retail companies, with much stronger sales in the second half of the year than
the first half of the year. In general, net earnings are highest during the
months of September through December, when sales volumes provide significant
operating leverage. Conversely, net earnings are substantially lower during the
relatively low-volume sales months of January through August. Capital
requirements needed to finance the Company's operations fluctuate during the
year and reach their highest levels during the second and third fiscal quarters
as the Company increases its inventory in preparation for its peak selling
season.
LIQUIDITY AND CAPITAL RESOURCES
Working capital was $186,943,000 at May 3, 1997, an increase of $9,896,000
from the end of the prior fiscal year. The ratio of current assets to current
liabilities was 2.4:1 at May 3, 1997 and 2.3:1 at February 1, 1997.
The Company used $1,644,000 of cash for operating activities in the first
quarter of fiscal 1998 compared to generating $8,722,000 of cash from operating
activities in the first quarter of the prior year. During the first quarter of
fiscal 1998, cash used for operating activities included $9,093,000 in income
tax payments and a $3,280,000 payment to settle a Securities and Exchange
Commission enforcement proceeding. The cost of the Securities and Exchange
Commission settlement was recognized in the fourth quarter of fiscal 1997.
Page 8
<PAGE> 9
Capital expenditures were $4,168,000 for the first quarter of fiscal 1998
as compared to $3,211,000 for the same period of fiscal 1997. For the full year
of fiscal 1998, capital expenditures are expected to be approximately
$30,000,000 as compared to $13,191,000 in the prior year. The higher level of
anticipated capital expenditures is related to an increase in planned store
openings when compared to the prior year. The Company plans to open 65 to 70 new
stores (including six Jo-Ann etc formats) and close 75 to 80 stores during
fiscal 1998.
The Company purchased 407,525 Class A and 450,506 Class B Common Shares on
the open market at an aggregate purchase price of approximately $9,000,000
during the first quarter of fiscal 1997. The remaining number of shares that can
be acquired pursuant to prior authorization by the Board of Directors is 597,025
Class A and 557,025 Class B Common Shares.
On May 20, 1997, the Company announced that its Board of Directors
authorized the redemption on June 30, 1997 of all outstanding 6 1/4% Convertible
Subordinated Debentures due March 1, 2002 at a price of 101.785 percent of
principal, and payment of accrued interest to the date of redemption. The
redemption will be funded through the use of the Company's long-term credit
facilities. The Company estimates that it will incur a second quarter
extraordinary charge of $1,200,000 or $0.06 per share, net of taxes, upon
redemption of all debentures.
Each $1,000 principal amount of debentures is convertible into an
aggregate of approximately 20.513 Class A Common Shares and 20.513 Class B
Common Shares (at a conversion price of $24.375 per share). Debentures not
converted by June 30, 1997 will be redeemed at the stated premium.
The Company amended its $200,000,000 revolving credit facility (the
"Credit Facility") with a group of eight banks on June 2, 1997. The amendment
extended the expiration of the Credit Facility to May 31, 2001 and made various
changes to simplify the administration and to clarify certain terms of the
Credit Facility. The Company may borrow up to a maximum of $220,000,000, subject
to further limitations during specified time frames, by utilizing funds
available under the Credit Facility and other lines of credit. As of May 3,
1997, the Company had borrowings of $19,600,000 under the Credit Facility and
other lines of credit. The Company continues to maintain excellent vendor and
banking relationships and has sufficient resources, including unused credit
facilities, to meet its operating needs, to fund the redemption of the
Debentures and to fund its capital expenditures for fiscal 1998.
During the first quarter of fiscal 1998, the Company opened 11 larger
stores and closed 12 smaller or under-performing stores. As of May 3, 1997, the
Company operated 913 stores in 48 states primarily under the names Jo-Ann
Fabrics and Crafts, Cloth Worlds, New York Fabrics and Crafts and Jo-Ann etc.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this report that are not historical facts
are forward-looking statements that are subject to certain risks and
uncertainties. When used herein, the terms "anticipates," "plans," "expects,"
"believes," and similar expressions as they relate to the Company or its
management are intended to identify such forward-looking statements. The
Company's actual results, performance or achievements may materially differ from
those expressed or implied in the forward-looking statements. Risks and
uncertainties that could cause or contribute to such material differences
include, but are not limited to, changes in customer demand, changes in trends
in the fabric and craft industry, changes in the competitive pricing for
products, the impact of competitor store openings and closings, the availability
of acceptable store locations, the availability of merchandise and general
economic conditions.
Page 9
<PAGE> 10
PART II OTHER INFORMATION
Item 5. OTHER EVENTS
------------
REDEMPTION OF 6 1/4% CONVERTIBLE SUBORDINATED DEBENTURES
On May 20, 1997, the Company announced that its Board of Directors
authorized the redemption on June 30, 1997 of all outstanding 6 1/4%
Convertible Subordinated Debentures due March 1, 2002 at a price of
101.785 percent of principal, and payment of accrued interest to the
date of redemption. The redemption will be funded through the use of
the Company's long-term credit facilities. The Company estimates that
it will incur a second quarter extraordinary charge of $1,200,000 or
$0.06 per share, net of taxes, upon redemption of all debentures.
Each $1,000 principal amount of debentures is convertible into an
aggregate of approximately 20.513 Class A Common Shares and 20.513
Class B Common Shares (at a conversion price of $24.375 per share).
Debentures not converted by June 30, 1997 will be redeemed at the
stated premium.
AMENDMENT TO REVOLVING CREDIT FACILITY
The Company amended its $200,000,000 revolving credit facility (the
"Credit Facility") with a group of eight banks on June 2, 1997. See
Note 3 of Notes to Consolidated Financial Statements for further
discussion.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
a) EXHIBITS
--------
See the Exhibit Index at sequential page 12 of this report.
b) REPORTS ON FORM 8-K
-------------------
The Company filed a report on Form 8-K dated February 18, 1997.
Under Item 5 ("Other Events"), the Company reported its
settlement with the Securities and Exchange Commission ("SEC") of
allegations in connection with a previously reported SEC
investigation.
Page 10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto, duly authorized.
FABRI-CENTERS OF AMERICA, INC.
DATE: June 17, 1997 /s/ Alan Rosskamm
-----------------------------
By: Alan Rosskamm
Chairman, President and
Chief Executive Officer
/s/ Samuel R. Gaston
-----------------------------
By: Samuel R. Gaston
Executive Vice President and
Chief Financial Officer
/s/ Robert R. Gerber
-----------------------------
By: Robert R. Gerber
Senior Vice President, Controller and
Chief Accounting Officer
Page 11
<PAGE> 12
FABRI-CENTERS OF AMERICA, INC.
FORM 10-Q FOR THE THIRTEEN WEEK
PERIOD ENDED MAY 3, 1997
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential
EXHIBIT NO. Description Page No.
- ---------------------- ---------------------------------------------------- ----------------------
<S> <C> <C>
10 Amendment No. 1 effective June 2, 1997 to the Credit 13
Agreement dated as of September 30, 1994 among
Fabri-Centers of America, Inc., as Borrower,
the Banks named therein and Key Bank National
Association (as successor by merger to Society
National Bank), as Agent for the banks under
the credit agreement.
11 Computation of Earnings per Common Share 31
27 Financial Data Schedule
</TABLE>
Page 12
<PAGE> 1
EXHIBIT NO. 10
AMENDMENT NO. 1
TO
CREDIT AGREEMENT
This Amendment No. 1 to Credit Agreement (this "Amendment"), made as of
the 2nd day of June, 1997, among FABRI-CENTERS OF AMERICA, INC., an Ohio
corporation (herein the "Borrower"), the Banks (as hereinafter defined) and
KEYBANK NATIONAL ASSOCIATION (as successor by merger to Society National Bank),
as agent for the Banks (in such capacity, the "Agent") and KeyBank National
Association, as Letter of Credit Bank (the "Letter of Credit Bank"),
WITNESSETH:
-----------
WHEREAS, the Borrower has been extended certain financial
accommodations pursuant to that certain Credit Agreement, dated as of September
30, 1994, among the Borrower, the financial institutions which are a party
thereto (the "Banks"), the Agent and the Letter of Credit Bank;
WHEREAS, the Borrower, the Banks, the Agent and the Letter of Credit
Bank desire to amend the Credit Agreement as set forth herein; and
WHEREAS, the Banks which are the signatories hereto constitute all of
the Banks for the purposes of amending the Credit Agreement pursuant to Section
14.1 thereof,
NOW THEREFORE, in consideration of the mutual promises and agreements
contained herein and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Borrower, the Banks, the Agent
and the Letter of Credit Bank do hereby agree as follows:
SECTION 1. DEFINED TERMS.
-------------------------
Each defined term used herein and not otherwise defined herein shall
have the meaning ascribed to such term in the Credit Agreement.
Page 13
<PAGE> 2
SECTION 2. AMENDMENTS TO THE CREDIT AGREEMENT.
----------------------------------------------
2.1 AMENDMENT TO SECTION 1.1. The following definitions found in
Section 1.1 shall each be amended in its entirety to read as follows:
"APPLICABLE FEE PERCENTAGE" shall mean, on each day of any Fiscal Quarter,
with respect to any Facility Fee (as set forth in Section 3.4(a)), the annual
percentage indicated in the following table corresponding to the Borrower's
Consolidated Leverage Ratio as measured for the Fiscal Quarter immediately
preceding and ending on the applicable Fee Determination Date and the Borrower's
Consolidated Fixed Charge Coverage Ratio as measured for a Four Fiscal Quarter
Period ending as of such Fee Determination Date:
<TABLE>
<CAPTION>
Consolidated Consolidated Fixed Charge Coverage Ratio
Leverage Ratio
===================================================================================================================================
greater than greater than greater than greater than
or equal to or equal to or equal to or equal to
1.25 to 1.0 1.50 to 1.0 1.75 to 1.0 2.00 to 1.0 greater than
but less than but less than but less than but less than or equal to
1.50 to 1.0 1.75 to 1.0 2.00 to 1.0 2.25 to 1.0 2.25 to 1.0
<S> <C> <C> <C> <C> <C>
less than
or equal to
.50 to 1.0
but greater than
.35 to 1.0 .375% .30% .20% .20% .20%
less than
or equal to
.35 to 1.0
but greater than
.25 to 1.0 .375% .30% .20% .20% .15%
less than
or equal to
.25 to 1.0
but greater than
.15 to 1.0 .30% .30% .20% .15% .15%
less than
or equal to
.15 to 1.0
.30% .20% .15% .15% .10%
===================================================================================================================================
</TABLE>
-2-
Page 14
<PAGE> 3
"APPLICABLE LOAN PERCENTAGE" shall mean, on each day of any Interest
Period, with respect to any LIBOR Loans comprising a Revolving Credit Borrowing
or any Fed Funds Rate Loans comprising a Revolving Credit Borrowing, as the case
may be, the percentage indicated in the following table corresponding to the
Borrower's Consolidated Leverage Ratio as measured for the Fiscal Quarter
immediately preceding and ending on the Determination Date applicable to such
Interest Period and the Borrower's Consolidated Fixed Charge Coverage Ratio as
measured for a Four Fiscal Quarter Period ending as of such Determination Date:
<TABLE>
<CAPTION>
Consolidated Consolidated Fixed Charge Coverage Ratio
Leverage Ratio
===================================================================================================================================
greater than greater than greater than greater than greater than
or equal to or equal to or equal to or equal to or equal to
1.25 to 1.0 1.50 to 1.0 1.75 to 1.0 2.0 to 1.0 2.25 to 1.0
but less than but less than but less than but less than
1.50 to 1.0 1.75 to 1.0 2.0 to 1.0 2.25 to 1.0
<S> <C> <C> <C> <C> <C>
less than
or equal to
.50 to 1.0
but greater than
.35 to 1.0 1.00% 1.00% 0.75% 0.65% 0.45%
less than
or equal to
.35 to 1.0
but greater than
.25 to 1.0 0.925% 0.70% 0.65% 0.45% 0.35%
less than
or equal to
.25 to 1.0
but greater than
.15 to 1.0 0.70% 0.60% 0.45% 0.35% 0.30%
less than
or equal to
.15 to 1.0 0.60% 0.50% 0.35% 0.30% 0.25%
===================================================================================================================================
</TABLE>
"BANKING DAY" means: (i) a day of the year on which banks are not required
or authorized to close in Cleveland, Ohio and (ii) if the applicable
Banking Day relates to LIBOR Loans, a day of the year which is a Banking
Day described in clause (i) above and which is also a day on which dealings
in Dollar deposits are carried on in the London interbank market and banks
are open for business in London.
"COMMITMENT PERIOD" shall mean the period from the date hereof to May 31,
2001, as the same may be extended pursuant to Section 3.2(c) or reduced
pursuant to Section 3.2(a).
"EUROCURRENCY RESERVE PERCENTAGE" means, for any Interest Period in respect
of any LIBOR Loan, as of any date of determination, the aggregate of the
then stated maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves), expressed as a decimal, applicable to
such Interest Period (if more than one such percentage is applicable, the
daily average of such percentages for those days in such Interest Period
during which any such percentage shall be so applicable) by the Board of
Governors of the Federal Reserve System, any successor thereto, or any
other banking authority, domestic or foreign, to which the Agent or any
Bank may be subject in respect to eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Federal Reserve
Board) or in respect of any other category of liabilities including
deposits by reference to which the interest rate on LIBOR Loans is
determined or any category of extension of credit or other assets that
- 3 -
Page 15
<PAGE> 4
include the LIBOR Loans. For purposes hereof, such reserve requirements
shall include, without limitation, those imposed under Regulation D of the
Federal Reserve Board and the LIBOR Loans shall be deemed to constitute
Eurocurrency Liabilities subject to such reserve requirements without
benefit of credits for proration, exceptions or offsets which may be
available from time to time to any Bank under said Regulation D.
"LETTER OF CREDIT BANK" shall mean KeyBank National Association, its
successors and assigns.
"LIBOR" means, for any Interest Period with respect to a LIBOR Borrowing,
the quotient (rounded upwards, if necessary, to the nearest one sixteenth
of one percent (1/16th of 1%)) of: (x) the per annum rate of interest,
determined by the Agent in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) as of
approximately 11:00 a.m. (London time) two Banking Days prior to the
beginning of such Interest Period pertaining to such LIBOR Loan, appearing
on Page 3750 of the Telerate Service (or any successor or substitute page
of such Service, or any successor to or substitute for such Service
providing rate quotations comparable to those currently provided on such
page of such Service, as determined by the Agent from time to time for
purposes of providing quotations of interest rates applicable to Dollar
deposits in the London interbank market) as the rate in the London
interbank market for Dollar deposits in immediately available funds with a
maturity comparable to such Interest Period DIVIDED BY (y) a number equal
to 1.00 MINUS the Eurocurrency Reserve Percentage. In the event that such
rate quotation is not available for any reason, then the rate (for purposes
of clause (x) hereof) shall be the rate, determined by the Agent as of
approximately 11:00 a.m. (London time) two Banking Days prior to the
beginning of such Interest Period pertaining to such LIBOR Loan, to be the
average (rounded upwards, if necessary, to the nearest one sixteenth of one
percent (1/16th of 1%)) of the per annum rates at which Dollar deposits in
immediately available funds in an amount comparable to KeyBank's Pro Rata
Share of such LIBOR Borrowing and with a maturity comparable to such
Interest Period are offered to prime banks by leading banks in the London
interbank market. The LIBOR shall be adjusted automatically on and as of
the effective date of any change in the Eurocurrency Reserve Percentage.
"MAXIMUM AVAILABILITY AMOUNT" shall mean, during each Fiscal Year of the
Borrower: (i) One Hundred Seventy-Five Million Dollars ($175,000,000)
during the period from January 1 to and including April 30 and (ii) the
Total Commitment Amount during the period from May 1 to and including
December 31.
"QUALIFYING FINANCIAL STANDARDS" shall mean, as at any date of
determination, the condition that (a) the Borrower shall have delivered the
financial statements required by Section 8.1(a) or 8.1(b), as the case may
be, (b) the Borrower shall have delivered the certificate required to be
delivered pursuant to Section 8.1(c)(ii) evidencing that the Borrower's
Consolidated Fixed Charge Coverage Ratio for the Four Fiscal Quarter Period
ending immediately prior to such determination date is not less than 1.50
to 1.0 and that the Borrower's Consolidated Leverage Ratio for the Fiscal
Quarter ending immediately prior to such determination date is not greater
than .50 to 1.0 and (c) no Event of Default shall have occurred and be
continuing.
- 4 -
Page 16
<PAGE> 5
2.2 AMENDMENT TO DEFINITION OF "INTEREST PERIOD". The definition of
"Interest Period" shall be amended to add the following as clause (vi) thereof:
"(vi) if the Interest Period commences on a Banking Day for which there is
no numerical equivalent in the calendar month in which the Interest Period
is to end, such Interest Period shall end on the last Banking Day of that
calendar month."
2.3 AMENDMENT TO SECTION 1.1 - ADDITIONS. Section 1.1 shall be amended
to add the following definitions:
"EFFECTIVE DATE" means June 2, 1997.
2.4 AMENDMENT TO SECTION 1.1 - DELETIONS. Section 1.1 shall be amended
to delete the following definitions: "Unused Commitment Fee" and "Reference
Bank".
2.5 AMENDMENT TO CREDIT AGREEMENT. Each reference to "Society" or
"Society National Bank" in the Credit Agreement shall be amended to read
"KeyBank" or "KeyBank National Association".
2.6 AMENDMENT TO SECTION 1.3. Section 1.3 shall be amended to delete
the words ";PROVIDED, HOWEVER, that, all accounting terms shall be understood as
based and determined on the "FIFO" method of valuation of inventory".
2.7 AMENDMENT TO SECTION 3.2(C). Section 3.2(c) shall be amended by
deleting the phrase "1995 Fiscal Year" and substituting "1998 Fiscal Year" in
lieu thereof.
2.8 AMENDMENT TO SECTION 3.4(B). Section 3.4(b) shall be amended by
deleting it in its entirety and substituting "Intentionally Omitted" in lieu
thereof.
2.9 AMENDMENT TO SECTION 8.8. Section 8.8 shall be amended by deleting
the proviso to the last sentence of Section 8.8 and the following shall be
substituted in lieu thereof:
"PROVIDED, that the aggregate amount of such investments by all of the
Borrower and its Subsidiaries does not exceed ten percent (10%) of the
Borrower's Consolidated Tangible Net Worth at the end of the previous
fiscal year of the Borrower."
2.10 AMENDMENT TO SECTION 8.11. Section 8.11 shall be amended by
deleting clause (iv) thereof in its entirety and substituting the following in
lieu thereof:
"(iv) so long as the Borrower and its Subsidiaries are satisfying the
Qualifying Financial Standards, loans may be obtained from financial
institutions not pursuant to this Agreement ("Outside Loans") in the
aggregate principal amount of up to Thirty Million Dollars ($30,000,000) at
any one time outstanding; PROVIDED, HOWEVER, that any such Outside Loan
obtained from any financial institution other than a Bank may not remain
outstanding for more than thirty (30) consecutive days and; PROVIDED,
FURTHER, that any such Outside Loans must be
- 5 -
Page 17
<PAGE> 6
repaid within one (1) Banking Day following the date as of which the
Borrower and its Subsidiaries no longer satisfy such Qualifying Financial
Standards, except that, if such repayment would cause the Borrower to incur
compensation obligations resulting from the prepayment of any such Outside
Loan with a fixed rate, the Borrower shall not be required to repay such
loan until the earlier of (x) the expiration of the interest period or (y)
the date upon which repayment will not result in a compensation obligation,
2.11 AMENDMENT TO SECTION 8.17. Section 8.17 shall be deleted in its
entirety and the following substituted in lieu thereof:
"SECTION 8.17 CAPITAL EXPENDITURES. The Borrower shall not make or permit
Consolidated Capital Expenditures to exceed Fifty Million Dollars
($50,000,000) for any Fiscal Year."
2.12 AMENDMENT TO SECTIONS 8.18 AND 8.19. Sections 8.18 and 8.19 shall
be deleted in its entirety and "Intentionally Omitted" shall be substituted in
lieu thereof.
2.13 AMENDMENT TO SECTION 8.20. Section 8.20 shall be deleted and the
following inserted in lieu thereof:
"SECTION 8.20 CONSOLIDATED TANGIBLE NET WORTH. The Borrower will not suffer
or permit its Consolidated Tangible Net Worth as of the Effective Date and
as at the end of any Fiscal Quarter to be less than the "Required Minimum
Amount" in effect from time to time. The "Required Minimum Amount" shall be
(i) as of the Effective Date, One Hundred Sixty-Five Million Dollars
($165,000,000) and (ii) as at the end of any Cumulative Fiscal Period
ending after the Effective Date:
(a) One Hundred Sixty-Five Million Dollars ($165,000,000) PLUS
(b) an aggregate amount equal to fifty percent (50%) of Borrower's
consolidated net earnings (if any and only to the extent a positive
number) for such Cumulative Fiscal Period, in each case calculated
after taxes and cumulating income and losses for all Fiscal Quarters
within such Cumulative Fiscal Period (such amount being "Cumulative
Fiscal Earnings") PLUS
(c) an aggregate amount equal to all Cumulative Fiscal Earnings (if any
and only to the extent a positive number) attributable to Fiscal Years
ending after the Effective Date and not including the Fiscal Year
during which said Cumulative Fiscal Period is occurring (which
aggregate amount shall not be reduced by consolidated net losses (if
any) reported for any Fiscal Year ending after the Effective Date) PLUS
(d) an amount equal to the total net proceeds received by Borrower at
any time from any stock or other equity offering or any conversion of
Subordinated Indebtedness into equity after the Effective Date
(excluding stock offerings under any employee benefit plan of the
Borrower or its Subsidiaries)."
- 6 -
Page 18
<PAGE> 7
2.14 AMENDMENT TO SECTION 8.21. Section 8.21 shall be deleted in its
entirety and the following shall be substituted in lieu thereof:
"SECTION 8.21 CONSOLIDATED FIXED CHARGE COVERAGE. The Borrower shall not
suffer or permit, as at the end of any Four Fiscal Quarter Period ending
after the Effective Date, the ratio (the "Consolidated Fixed Charge
Coverage Ratio") of: (x) Consolidated Net Pre-Tax Earnings of the Borrower
and its Subsidiaries attributable to such period PLUS Consolidated Net
Fixed Lease Charges attributable to such period PLUS Consolidated Net
Interest Expense attributable to such period PLUS depreciation and
amortization charges of the Borrower and its Subsidiaries attributable to
such period TO (y) Consolidated Net Fixed Lease Charges attributable to
such period PLUS Consolidated Net Interest Expense attributable to such
period PLUS scheduled principal payments in respect of any Long-Term
Indebtedness of the Borrower and its Subsidiaries during such period, to be
less as at such date than 1.25 to 1.00."
2.15 AMENDMENT TO SECTION 8.23. Section 8.23 shall be deleted in its
entirety and the following shall be substituted in lieu thereof:
"SECTION 8.23 CONSOLIDATED LEVERAGE RATIO. The Borrower shall not suffer or
permit, as at the end of any Fiscal Quarter, the ratio (the "Consolidated
Leverage Ratio") of: (x) Funded Senior Debt outstanding as at such date TO
(y) the sum of Funded Senior Debt outstanding as at such date PLUS the
Convertible Subordinated Debentures outstanding as at such date PLUS
Consolidated Tangible Net Worth as at such date to be greater than (i) .45
to 1.0 for the first Fiscal Quarter of each Fiscal Year, (ii) .50 to 1.0
for the second and third Fiscal Quarters of each Fiscal Year and (iii) .40
to 1.0 for the fourth Fiscal Quarter of each Fiscal Year."
2.16 AMENDMENT TO SECTION 8.24. Section 8.24 shall be deleted in its
entirety and "Intentionally Omitted" shall be substituted in lieu thereof.
2.17 AMENDMENT TO EXHIBITS. Exhibit F shall be deleted in its entirety
and Exhibit F-1 shall be substituted in lieu thereof.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
------------------------------------------
The Borrower hereby represents and warrants to the Banks and the Agent
as follows:
3.1 THE AMENDMENT. This Amendment has been duly and validly executed by
an authorized executive officer of the Borrower and constitutes the legal, valid
and binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms. The Credit Agreement, as amended by this Amendment,
remains in full force and effect and remains the valid and binding obligation of
the Borrower enforceable against the Borrower in accordance with its terms. The
Borrower hereby ratifies and confirms the Credit Agreement as amended by this
Amendment.
- 7 -
Page 19
<PAGE> 8
3.2 NONWAIVER. The execution, delivery, performance and effectiveness
of this Amendment shall not operate nor be deemed to be nor construed as a
waiver (i) of any right, power or remedy of the Banks or the Agent under the
Credit Agreement, nor (ii) of any term, provision, representation, warranty or
covenant contained in the Credit Agreement or any other documentation executed
in connection therewith. Further, none of the provisions of this Amendment shall
constitute, be deemed to be or construed as, a waiver of any Default or Event of
Default under the Credit Agreement as amended by this Amendment.
3.3 REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT. Upon the
Effectiveness of this Amendment, each reference in the Credit Agreement to "this
Agreement", "hereunder", "hereof", "herein", or words of like import shall mean
and be a reference to the Credit Agreement, as amended by this Amendment and
each reference to the Credit Agreement in any other document, instrument or
agreement executed and/or delivered in connection with the Credit Agreement
shall mean and be a reference to the Credit Agreement, as amended by this
Amendment.
SECTION 4. CONDITIONS PRECEDENT TO EFFECTIVENESS
------------------------------------------------
OF THIS AMENDMENT NO. 1.
------------------------
In addition to all of the other conditions and agreements set forth
herein, the effectiveness of this Amendment is subject to the following
conditions precedent:
4.1 THE AMENDMENT. The Banks, the Agent and the Letter of Credit Bank
shall have received this Amendment No. 1 to Credit Agreement, executed and
delivered by a duly authorized officer of the Borrower.
4.2 ACKNOWLEDGEMENT OF GUARANTORS. The Banks, the Agent and the Letter
of Credit Bank shall have received the Acknowledgement of Guarantors attached to
this Amendment, executed and delivered by a duly authorized officer of each of
the Guarantors of the indebtedness of the Borrower to the Banks and the Agent.
4.3 BORROWER'S CERTIFICATE. The Banks and the Agent shall have received
a certificate, in form and substance satisfactory to the Agent, executed for and
on behalf of the Borrower by either the President or Vice President of the
Borrower and by either the Secretary or Assistant Secretary of the Borrower (one
of which certifying officers shall not be a signatory of this Amendment) and
dated as of the date of this Amendment, certifying that (i) this Amendment, and
each document or other instrument executed in connection with the Amendment has
been authorized, (ii) the names and signatures of the officers signing this
Amendment on behalf of the Borrower, and (iii) compliance by the Borrower with
all representations, warranties, covenants and conditions under the Credit
Agreement as amended by this Amendment.
4.4 OTHER DOCUMENTS. The Banks and the Agent shall have received each
additional document, instrument or piece of information reasonably requested by
the Agent.
- 8 -
Page 20
<PAGE> 9
SECTION 5. MISCELLANEOUS.
-------------------------
5.1 GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of Ohio.
5.2 SEVERABILITY. In the event any provision of this Amendment should
be invalid, the validity of the other provisions hereof and of the Credit
Agreement shall not be affected thereby.
5.3 COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which, when taken together, shall constitute but one and
the same agreement.
[ REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
- 9 -
Page 21
<PAGE> 10
IN WITNESS WHEREOF, the Borrower has caused this Amendment No. 1 to
Credit Agreement to be duly executed and delivered by its duly authorized
officer as of the date first above written.
FABRI-CENTERS OF AMERICA, INC.
/s/ Samuel R. Gaston
-----------------------------------
By: Samuel R. Gaston
--------------------------------
Title: Executive Vice President
-----------------------------
- 10 -
Page 22
<PAGE> 11
ACCEPTED AND AGREED as of the date and year first above written by:
KEYBANK NATIONAL ASSOCIATION, as a
Bank, the Letter of Credit Bank and as Agent
/s/ David J. Janus
- --------------------------------------
By: David J. Janus
-----------------------------------
Title: Senior Vice President
--------------------------------
NATIONAL CITY BANK,
as a Bank
/s/ Donald B. Hayes, Jr.
- --------------------------------------
By: Donald B. Hayes, Jr.
-----------------------------------
Title: Vice President
--------------------------------
NBD Bank, as a Bank
/s/ Christina D. Zautcke
- --------------------------------------
By: Christina D. Zautcke
-----------------------------------
Title: Vice President
--------------------------------
COMERICA BANK, as a Bank
/s/ Jeffrey J. Judge
- --------------------------------------
By: Jeffrey J. Judge
-----------------------------------
Title: Assistant Vice President
--------------------------------
THE HUNTINGTON NATIONAL BANK,
as a Bank
/s/ Timothy M. Ward
- --------------------------------------
By: Timothy M. Ward
-----------------------------------
Title: Assistant Vice President
--------------------------------
- 11 -
Page 23
<PAGE> 12
PNC BANK, NATIONAL ASSOCIATION, as a Bank
/s/ C. J. Richardson
- --------------------------------------
By: C. J. Richardson
-----------------------------------
Title: Vice President
--------------------------------
BANK ONE, NA (as successor by merger to Bank One, Akron, NA),
as a Bank
/s/ Susan D. Steiger
- --------------------------------------
By: Susan D. Steiger
-----------------------------------
Title: Vice President
--------------------------------
THE FIFTH THIRD BANK, as a Bank
/s/ R. C. Lanctot
- --------------------------------------
By: R. C. Lanctot
-----------------------------------
Title: Vice President
--------------------------------
- 12 -
Page 24
<PAGE> 13
ACKNOWLEDGEMENT OF GUARANTORS
-----------------------------
Each of the undersigned, each of which being a guarantor of
indebtedness of the Borrower to the Banks, the Agent and the Letter of Credit
Bank, hereby acknowledges and agrees to the terms of the foregoing Amendment No.
1 to Credit Agreement. Each of the undersigned represents and warrants to the
Banks, the Agent and the Letter of Credit Bank that the respective Guaranty of
Payment (as amended), executed and delivered by each of the undersigned, each
dated as of September 30, 1994, remain the valid and binding obligations of each
of the undersigned, respectively, enforceable against it in accordance with
their terms.
FCA FINANCIAL, INC.
/s/ Francis C. Piccirillo
-------------------------------------
By: Francis C. Piccirillo
----------------------------------
Title: Treasurer
-------------------------------
FABRI-CENTERS OF SOUTH DAKOTA, INC.
/s/ Francis C. Piccirillo
-------------------------------------
By: Francis C. Piccirillo
----------------------------------
Title: Treasurer
-------------------------------
FABRI-CENTERS OF CALIFORNIA, INC.
/s/Francis C. Piccirillo
-------------------------------------
By: Francis C. Piccirillo
----------------------------------
Title: Treasurer
-------------------------------
FCA OF OHIO, INC.
/s/ Francis C. Piccirillo
-------------------------------------
By: Francis C. Piccirillo
----------------------------------
Title: Treasurer
-------------------------------
Executed: June 5, 1997
- 13 -
Page 25
<PAGE> 14
EXHIBIT F-1
FORM OF
COMPLIANCE CERTIFICATE
----------------------
[BORROWER LETTERHEAD]
QUARTER-ANNUAL COMPLIANCE CERTIFICATE
Certified on this ___ day of __________________, 19__
("this date") as of ___________________, 19__
(the "Report Date")
pursuant to Section 8.1(c)(ii) of the Credit Agreement (as hereinafter defined).
Reference is hereby made to that certain Credit Agreement, dated as of
September 30, 1994 (as amended from time to time, the "Credit Agreement"), among
Fabri-Centers of America, Inc. (the "Borrower"), certain banks which are
signatories thereto (the "Banks"), and KeyBank National Association, as agent
for the Banks (the "Agent"). Unless otherwise defined herein, all capitalized
terms used herein shall have the meanings ascribed to such terms in the Credit
Agreement.
Pursuant to Section 8.1(c)(ii) of the Credit Agreement, I certify to
the Banks that I am the _____________________ [responsible financial officer] of
the Borrower and further certify to the Banks, on behalf of the Borrower, to the
best of my knowledge and belief, as follows:
1. The conclusions below, together with the attached calculations, indicate the
Borrower's compliance or non-compliance with certain sections of the Credit
Agreement:
SECTION 8.17 CAPITAL EXPENDITURES.
<TABLE>
<CAPTION>
Maximum Permitted Actual
Consolidated Capital Consolidated Capital
Period Expenditures Expenditures
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
[FY ____ $50,000,000 $_______________]
======================================================================================================================
</TABLE>
Page 26
<PAGE> 15
SECTION 8.20 CONSOLIDATED TANGIBLE NET WORTH.
<TABLE>
<CAPTION>
Req. Minimum Actual
Consolidated Consolidated
Tangible Net Tangible Net
Worth Worth
- ------------------------------------------------------ ---------------------- -----------------------
<S> <C> <C> <C>
1. AS OF THE EFFECTIVE DATE:
$165,000,000 $
2. AS AT THE END OF ANY CUMULATIVE FISCAL
PERIOD ENDING AFTER THE EFFECTIVE DATE:
$165,000,000
PLUS (0.5 X consolidated net earnings for
FY in which Report Date falls (1))
PLUS (aggregate Cumulative Fiscal +$
Earnings attributable to FY's ending after -----------
the Effective Date(but not FY in which
Report Date falls)(2)
PLUS total net proceeds rec'd by Borrower + $
at any time from any stock or other equity -----------
offering or any conversion of Subordinated
Indebtedness to equity after the Effective
Date(3)
CONSOLIDATED TANGIBLE NET WORTH:
+ $ $
----------- ==============
(actual)
$===============
(required min.)
<FN>
- --------
(1) ONLY IF GREATER THAN ZERO, CALCULATED AFTER
TAXES AND CUMULATING INCOME AND LOSSES FOR
ALL FISCAL QUARTERS WITHIN THE APPLICABLE
CUMULATIVE FISCAL PERIOD.
(2) ONLY IF GREATER THAN ZERO; THIS FIGURE
SHALL NOT BE REDUCED BY CONSOLIDATED NET
LOSSES (IF ANY) REPORTED FOR ANY FISCAL
YEAR ENDING AFTER THE EFFECTIVE DATE.
(3) EXCLUDING STOCK OFFERINGS UNDER ANY EMPLOYEE
BENEFIT PLAN OF THE BORROWER OR ITS
SUBSIDIARIES.
</TABLE>
- 2 -
Page 27
<PAGE> 16
SECTION 8.21 CONSOLIDATED FIXED CHARGE COVERAGE.
As of the Report Date, and as determined for each period set forth below:
Consolidated Net Pre-Tax Earnings: $
-----------------
Consolidated Net Interest Expense: +$
-----------------
Consolidated Net Fixed Lease Charges: +$
-----------------
depreciation and amortization charges: +$
-----------------
(A) $
-----------------
Consolidated Net Fixed Lease Charges: $
-----------------
Consolidated Net Interest Expense: + $
-----------------
scheduled principal payments
on Long-Term Indebtedness: + $
-----------------
(B) $
Actual Consolidated Fixed Charge Ratio: to 1.0
-------------------
(Ratio of (A) to (B))
Minimum Required Consolidated Fixed Charge Ratio: 1.25 to 1.00
- 3 -
Page 28
<PAGE> 17
SECTION 8.22 CONSOLIDATED CURRENT FUNDED INDEBTEDNESS.
AS OF THE REPORT DATE:
- ----------------------
(A) Consolidated Current Assets: $
--------------------
Consolidated Current Liabilities: $ (4)
--------------------
Funded Senior Debt: + $
--------------------
(B) $
Actual Ratio (Ratio of (A) to (B)): to 1.0
--------------------
MINIMUM REQUIRED CONSOLIDATED CURRENT FUNDED INDEBTEDNESS RATIO:
- ----------------------------------------------------------------
As at the end of any of the first three FQ's of any FY: 1.15 to 1.0
As at the end of any FY: 1.25 to 1.0
- --------
(4) Exclusive of the sum of (a) the aggregate outstanding balance of
Revolving Credit Loans PLUS (b) the aggregate outstanding Negotiated Bid Loans
not in excess of the Total Commitment Amount.
- 4 -
Page 29
<PAGE> 18
SECTION 8.23 CONSOLIDATED LEVERAGE RATIO.
AS OF THE REPORT DATE, AND FOR EACH PERIOD SET FORTH BELOW:
- -----------------------------------------------------------
(A) Outstanding Senior Funded Debt: $
--------------------
Consolidated Tangible Net Worth: $ (4)
--------------------
Outstanding Subordinated Debt + $
--------------------
Outstanding Funded Senior Debt: + $
--------------------
(B) $
--------------------
Actual Consolidated Leverage Ratio ((A) to (B)): TO 1.0
--------------------
MAXIMUM PERMITTED CONSOLIDATED LEVERAGE RATIO:
- ----------------------------------------------
FISCAL QUARTER RATIO
-------------- -----
First Fiscal Quarter of each Fiscal Year .45 to 1.00
Second Fiscal Quarter of each Fiscal Year .50 to 1.00
Third Fiscal Quarter of each Fiscal Year .50 to 1.00
Fourth Fiscal Quarter of each Fiscal Year .40 to 1.00
I further certify that:
Enclosed herewith are Borrower's [unaudited quarterly/audited annual]
financial statements as required by Section 8.1 of the Credit Agreement.
No Possible Default or Event of Default existed as at the Report Date,
nor does any exist at this date.*
*- If this certification cannot be given, substitute a brief description
of the Possible Default(s) or Event of Default(s) and Borrower's
intentions in respect thereof.
FABRI-CENTERS OF AMERICA, INC.
on behalf of itself and its
Subsidiaries
- ------------------------------
By:
---------------------------
Its:
--------------------------
Dated:
------------------------
- 5 -
Page 30
<PAGE> 1
EXHIBIT NO. 11
COMPUTATION OF EARNINGS PER COMMON SHARE
FABRI-CENTERS OF AMERICA, INC.
(THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
------------------------------
MAY 3, APRIL 27,
1997 1996
- ----------------------------------------------------------------------------
<S> <C> <C>
PRIMARY EARNINGS PER SHARE:
Net earnings $ 2,608 $ 1,070
============ ============
Weighted average shares of common stock
outstanding during the period 18,024,303 18,268,965
Incremental shares from assumed exercise
of stock options - primary 1,207,417 541,043
------------ ------------
19,231,720 18,810,008
============ ============
Net earnings per common share - primary $ 0.14 $ 0.06
============ ============
EARNINGS PER SHARE ASSUMING FULL DILUTION:
Net earnings $ 2,608 $ 1,070
Interest expense applicable to 6 1/4%
convertible subordinated debentures,
net of tax 556 556
------------ ------------
Net earnings $ 3,164 $ 1,626
============ ============
Weighted average shares of common stock
outstanding during period 18,024,303 18,268,965
Incremental shares from assumed exercise
of stock options - fully diluted 1,456,162 561,575
Incremental shares from assumed conversion
of 6 1/4% convertible subordinated
debentures 2,337,764 2,337,764
------------ ------------
21,818,229 21,168,304
============ ============
Net earnings per common share assuming
full dilution $ 0.15(a) $ 0.08(a)
============ ============
<FN>
- -----------
(a) This calculation is submitted in accordance with Regulation S-K Item
601(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15,
because it produces an anti-dilutive result.
</TABLE>
Page 31
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF FABRI-CENTERS OF AMERICA, INC. AS OF MAY 3, 1997
AND THE CONSOLIDATED STATEMENT OF INCOME FOR THE THIRTEEN WEEKS THEN ENDED.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-02-1997
<PERIOD-END> MAY-03-1997
<CASH> 12,632
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 295,231
<CURRENT-ASSETS> 318,296
<PP&E> 180,124
<DEPRECIATION> 86,291
<TOTAL-ASSETS> 428,415
<CURRENT-LIABILITIES> 131,353
<BONDS> 76,583
<COMMON> 1,018
0
0
<OTHER-SE> 202,425
<TOTAL-LIABILITY-AND-EQUITY> 428,415
<SALES> 218,826
<TOTAL-REVENUES> 218,826
<CGS> 122,688
<TOTAL-COSTS> 213,126
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,528
<INCOME-PRETAX> 4,172
<INCOME-TAX> 1,564
<INCOME-CONTINUING> 2,608
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,608
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.13
</TABLE>
