<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
(Mark One) FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended August 10, 1997
---------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 1-1066
-------------
GENERAL HOST CORPORATION
-----------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
NEW YORK STATE 13-0762080
- -------------------------- -----------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
One Station Place, P.O. Box 10045, Stamford, Connecticut 06904
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: (203) 357-9900
---------------------
________________________________________________________________________________
Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report.
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
------ -------
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
required to be filed by Section 12, 13 or 15(D) of the Securities and Exchange
Act of 1934 subsequent to the distribution of securities under a plan confirmed
by a court.
Yes _______ No_______
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date: Common Stock, $1.00 par value,
24,413,686 shares outstanding as of September 24, 1997.
<PAGE> 2
GENERAL HOST CORPORATION
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been reviewed
by Price Waterhouse LLP, independent accountants, whose report thereon
is included elsewhere in this Item 1. The review by Price Waterhouse
LLP was based on procedures adopted by the American Institute of
Certified Public Accountants and was not an audit.
In the opinion of the Company, the accompanying consolidated financial
statements reflect all adjustments necessary to a fair statement of the
results for the interim periods presented herein. In the opinion of
management such adjustments consisted of normal recurring items.
Financial results of the interim period are not necessarily
indicative of results that may be expected for any other interim
period or for the fiscal year.
The consolidated financial statements and notes are presented in
accordance with the rules and regulations of the Securities and
Exchange Commission and do not contain certain information included
in the Company's Annual Report. Therefore, the interim statements
should be read in conjunction with the Company's Annual Report on Form
10-K For the year ended January 26, 1997.
<PAGE> 3
Consolidated Statements of Income (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Twelve Weeks Ended Twenty-Eight Weeks Ended
----------------------- ------------------------
August 10, August 11, August 10, August 11,
1997 1996 1997 1996
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Sales $ 124,454 $ 125,509 $ 302,697 $ 298,217
Other income (expense) (195) 501 (160) 504
--------- --------- --------- ---------
124,259 126,010 302,537 298,721
--------- --------- --------- ---------
Costs and expenses:
Cost of sales, including
buying and occupancy 89,904 91,303 211,850 211,072
Selling, general and
administrative 31,809 29,288 75,915 72,763
Interest and debt expense 4,823 4,712 11,447 11,175
--------- --------- --------- ---------
126,536 125,303 299,212 295,010
--------- --------- --------- ---------
Income (loss) before
income taxes (2,277) 707 3,325 3,711
Income tax provision 50 260
--------- --------- --------- ---------
Net income (loss) $ (2,277) $ 657 $ 3,325 $ 3,451
========= ========= ========= =========
Net earnings (loss) per share $ (.09) $ .03 $ .14 $ .14
--------- --------- --------- ---------
Average shares outstanding 24,414 24,414 24,414 24,414
========= ========= ========= =========
</TABLE>
See accompanying notes.
<PAGE> 4
Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
August 10, August 11, January 26,
1997 1996 1997
---------- ---------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 50,359 $ 27,837 $ 43,320
Accounts and notes receivable 4,387 4,091 4,420
Merchandise inventory 94,448 101,561 81,575
Prepaid expenses and other
current assets 10,787 9,759 10,671
--------- --------- ---------
Total current assets 159,981 143,248 139,986
--------- --------- ---------
Property, plant and equipment,
less accumulated depreciation
of $177,330, $165,232 AND $173,228 207,605 227,976 220,626
Intangibles, less accumulated
amortization of $11,098,
$10,266 AND $10,653 14,821 15,653 15,266
Other assets and deferred charges 11,781 10,655 10,544
--------- --------- ---------
$ 394,188 $ 397,532 $ 386,422
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 52,537 $ 45,715 $ 43,868
Accrued expenses 36,288 32,044 40,595
Current portion of long-term debt 2,329 2,156 2,254
--------- --------- ---------
Total current liabilities 91,154 79,915 86,717
--------- --------- ---------
Long-term debt:
Senior debt 126,463 128,796 127,761
Subordinated debt 65,000 65,000 65,000
--------- --------- ---------
Total long-term debt 191,463 193,796 192,761
--------- --------- ---------
Other liabilities and deferred credits 8,131 10,142 7,449
Commitments and contingencies
Shareholders' equity:
Common stock $1.00 par value,
100,000,000 shares authorized,
31,752,450 shares issued 31,752 31,752 31,752
Capital in excess of par value 81,186 81,186 81,186
Retained earnings 61,452 83,357 58,127
--------- --------- ---------
174,390 196,295 171,065
Cost of 7,338,764, 8,503,105
and 7,338,605 shares of
common stock in treasury (69,561) (80,600) (69,561)
Notes receivable from exercise of
stock options (1,389) (2,016) (2,009)
--------- --------- ---------
Total shareholders' equity 103,440 113,679 99,495
--------- --------- ---------
$ 394,188 $ 397,532 $ 386,422
--------- --------- ---------
</TABLE>
See accompanying notes.
<PAGE> 5
Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Twenty-Eight Weeks Ended
--------------------------
August 10, August 11,
1997 1996
------------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,325 $ 3,451
Noncash adjustments:
Depreciation and amortization 11,196 11,903
Other 727 170
--------- ---------
15,248 15,524
Changes in current assets and current liabilities:
(Increase) decrease in accounts and
notes receivable (390) 59
Increase in inventory (12,873) (13,399)
Increase in prepaid expenses (116) (342)
Increase (decrease) in accounts payable 8,669 (2,061)
Decrease in accrued expenses (4,529) (4,067)
--------- ---------
Net cash provided by (used for)
continuing operations 6,009 (4,286)
Net cash used for discontinued operations (48) (194)
--------- ---------
5,961 (4,480)
--------- ---------
Cash flows from investing activities:
Additions to property, plant and equipment (3,863) (1,799)
Other 6,164 576
--------- ---------
Net cash provided by (used for)
investing activities 2,301 (1,223)
--------- ---------
Cash flows from financing activities:
Issuance of long-term debt 5,137
Debt issue costs (441)
Payment of long-term debt and capital lease
obligations (1,223) (1,057)
--------- ---------
Net cash provided by (used for)
financing activities (1,223) 3,639
--------- ---------
Increase (decrease) in cash and cash equivalents 7,039 (2,064)
Cash and cash equivalents at beginning of year 43,320 29,901
--------- ---------
Cash and cash equivalents at end of quarter $ 50,359 $ 27,837
========= =========
</TABLE>
See accompanying notes.
<PAGE> 6
Notes to Consolidated Financial Statements
(Unaudited)
Note 1
On February 26, 1997 the Company declared a 5% stock dividend for shareholders
of record on March 14, 1997. The stock dividend representing 1,164,341 shares
was paid on April 4, 1997. Share and per share data for 1996 have been
restated to reflect the 5% stock dividend.
Note 2
No income tax provision for financial reporting purposes has been provided for
1997 due to previously unrecognized tax benefits. The effective income tax
rate used in 1996 reflects the utilization of previously unrecognized tax
benefits.
Note 3
Primary earnings per share is based upon the weighted average number of shares
of common stock outstanding.
Note 4
Certain reclassification have been made to the prior years' financial
statements to conform to the 1997 presentation.
Interest payments amounted to $1,197,000 and $10,061,000 for the twelve and
twenty-eight weeks ended August 10, 1997, and $1,259,000 and $10,064,000 for
the twelve and twenty-eight weeks ended August 11, 1996. Tax payments amounted
to $30,000 and $46,000 for the twelve and twenty-eight weeks ended August 10,
1997, and $35,000 and $40,000 for the twelve and twenty-eight weeks ended
August 11, 1996.
<PAGE> 7
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
General Host Corporation
We have reviewed the accompanying consolidated balance sheets of General Host
Corporation and its subsidiaries as of August 10, 1997 and August 11, 1996, and
the related consolidated statements of income and of cash flows for the twelve
and twenty-eight week periods ended August 10, 1997 and August 11, 1996. This
financial information is the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial information for it to be in conformity
with generally accepted accounting principles.
We previously audited in accordance with generally accepted auditing standards,
the consolidated balance sheet as of January 26, 1997, and the related
consolidated statements of income, of changes in shareholders' equity, and of
cash flows for the year then ended (not presented herein), and in our report
dated February 26, 1997 we expressed an unqualified opinion on those
consolidated financial statements. in our opinion, the information set forth
in the accompanying consolidated balance sheet information as of January 26,
1997, is fairly stated in all material respects in relation to the consolidated
balance sheet from which it has been derived.
Price Waterhouse LLP
Detroit, Michigan
September 4, 1997
<PAGE> 8
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Second quarter of 1997 compared with second quarter 1996
Results of operations
Sales
Sales for the Company's principal operating subsidiary, Frank's Nursery &
Crafts, Inc.("Frank's"), decreased .8% to $124,454,000 for the twelve weeks
ended August 10, 1997 compared with $125,509,000 in the 1996 second quarter
which ended on August 11, 1996. Same-store sales (stores open for a full year
in both years) decreased .2% for the 1997 second quarter.
Earnings
The net loss for the second quarter of 1997 was $2,277,000 compared to net
income of $657,000 in the 1996 second quarter.
Cost of sales, including buying and occupancy, decreased $1,399,000 to
$89,904,000 in 1997 compared to $91,303,000 in 1996. As a percentage of sales,
cost of sales was 72.2% in 1997 compared to 72.7% in 1996. The improvement of
.5 of a percentage point resulted from lower buying and occupancy costs, as
merchandise margins remained constant with the prior year.
Selling, general and administrative expenses increased $2,521,000 to
$31,809,000 in 1997 compared to $29,288,000 in 1996. Included in the 1997
second quarter is a charge of $1,248,868 for a reduction in the amount of loans
due to the Company by the Chairman of the Board of Directors. The loans,
issued pursuant to various Stock Option Plans, were reduced from $2,480,209 to
$1,231,341. In addition higher advertising costs and store labor costs, as
well as costs associated with the development of a new store concept
contributed to the increase in 1997. As a percentage of sales, selling,
general and administrative expenses increased 2.3 percentage points to 25.6% of
sales in 1997 compared to 23.3% in 1996.
Other income/expense in the 1997 second quarter included a charge of $926,000
associated with the sale of the Frank's headquarters. Interest on marketable
securities in the 1997 second quarter increased $258,000 due to higher levels
of cash during the quarter compared to 1996.
Interest and debt expense increased $111,000 to $4,823,000 in 1997 compared
to $4,712,000 in 1996 primarily due to the costs associated with the Company's
secured credit agreement.
Due to previously unrecognized tax benefits no income tax provision, for
financial reporting purposes, has been provided for in the 1997 second quarter.
In the 1996 second quarter the income tax provision was calculated using an
annual effective rate method. The difference between the statutory rate for
federal income tax purposes and the taxes provided is due to utilization of
previously unrecognized tax benefits.
<PAGE> 9
First half of 1997 compared with the first half of 1996
Results of Operations
Sales
Sales were $302,697,000 for the twenty-eight weeks ended August 10, 1997
compared with $298,217,000 in the 1996 first half which ended August 11, 1996.
Same-store sales increased 2.1% for the first half of 1997.
Earnings
Net income for the 1997 first half was $3,325,000 compared to $3,451,000 in
the 1996 first half.
Cost of sales, including buying and occupancy, increased $778,000 in 1997 to
$211,850,000 compared to $211,072,000 in 1996. As a percentage of sales, cost
of sales decreased .8 of a percentage point to 70.0% of sales compared to 70.8%
for 1996. Merchandise margins improved by .3 percentage points and buying and
occupancy costs declined by $1,058,000 or .5 percent of sales.
Selling, general and administrative expenses increased $3,152,000 to
$75,915,000 in 1997 compared to $72,763,000 in 1996. Included in the 1997
first half is a charge of $1,248,868 related to a reduction in the amount of
loans due to the Company by the Chairman of the Board of Directors. Increases
in advertising costs, particularly electronic media as the company looks to
broaden its customer reach, and costs associated with development of a new
store concept contributed to the increase in expenses in 1997 compared to 1996.
As a percentage of sales, selling, general and administrative expenses
increased .7 of a percentage point to 25.1% of sales in 1997 compared to 24.4%
in 1996.
Other income/expense for 1997 included a loss on the sale of the Frank's
headquarters of $926,000 and a charge of $250,000 associated with the closing
of a leased store. Interest income increased $278,000 in the 1997 first half
due to higher levels of cash during 1997 compared to 1996. The 1996 first half
included a charge of $263,000 for the write-off of leasehold improvements
incurred in the closing of a leased store and a loss on the sale of an
unprofitable store that was closed in the 1996 first quarter.
Interest and debt expense increased $272,000 to $11,447,000 in 1997 compared
to $11,175,000 in 1996, primarily due to the costs associated with the
Company's secured credit agreement.
Due to previously unrecognized tax benefits no income tax provision, for
financial reporting purposes, has been provided for in the 1997 first half. In
the 1996 first half the income tax provision was calculated using an annual
effective rate method. The difference between the statutory rate for federal
income tax purposes and the taxes provided is due to utilization of previously
unrecognized tax benefits.
<PAGE> 10
With regard to current accounting pronouncements, the Company has determined
that Statement of Accounting Standards No. 128, "Earnings per Share", relating
to the presentation of earnings per share (EPS), will not be material to the
financial statements. If the statement was applied for fiscal 1996 there would
be no effect on the financial statements as the Company's primary EPS equalled
basic EPS. Differences could exist in the future based on the dilutive effect
of the Company's outstanding options.
Liquidity and Capital Resources
Net cash provided by operations was $6,009,000 in the 1997 first half
compared to net cash used of $4,286,000 in the 1996 first half. Inventory
increased $12,873,000 for 1997 compared to an increase of $13,399,000 in 1996
while accounts payable increased $8,669,000 in 1997 compared to a decrease in
1996 of $2,061,000. The accounts payable change for 1997 and 1996, described
above, included amounts payable to brokers of $15,998,000 at August 10, 1997
compared to $15,998,000 at January 26, 1997, and $9,999,000 at August 11, 1996
compared to $19,997,000 at January 28, 1996. At August 10, 1997 the remaining
store closing reserve of $738,000 primarily represented lease termination costs
for the remaining four store locations and estimated losses associated with the
sale and or sublease of real estate. During 1997 the Company utilized net cash
of $1,394,000 in connection with the store closing reserve.
Net cash used for discontinued operations in 1997 and 1996 related to
payments for operations disposed of in prior years.
Net cash provided by investing activities was $2,301,000, which included
$3,863,000 for additions to property, plant and equipment and net proceeds from
the sale of property, plant and equipment of $6,164,000, which included
$2,717,000 received from a sale/leaseback of an owned store and $2,778,000 from
the sale of the Frank's headquarters. Net cash used for investing activities
was $1,223,000 in 1996 which included $548,000 for the write-off of leasehold
improvements incurred in the closing of one leased store and a loss on the sale
of an unprofitable store that was closed in the 1996 first quarter.
Net cash used for financing activities in 1997 represented payments of
long-term and capital leases. In 1996 net cash provided by financing
activities was $3,639,000 which included $5,137,000 of new mortgage financing
offset in part by debt issue costs of $441,000 and payments of long-term debt
and capital leases of $1,057,000.
On February 26, 1997 the Company declared a 5% stock dividend for
shareholders of record on March 14, 1997. The stock dividend representing
1,164,341 shares was paid on April 4, 1997. share and per share data for 1996
have been restated to reflect the 5% stock dividend.
Working capital at August 10, 1997 was $68,827,000 or $5,494,000 higher than
the $63,333,000 working capital level at August 11, 1996. The quarter-end
included $50,359,000 of cash and cash equivalents, of which $15,998,000
represented amounts payable to brokers.
<PAGE> 11
The Company has a $20 million revolving credit facility which, among
other things, requires the Company to maintain minimum levels of earnings,
tangible net worth and certain minimum financial ratios. At August 10, 1997
the Company was in compliance with the aforementioned loan covenants. During
the first quarter of 1997, the Company borrowed $21 million under the agreement
and fully repaid all amounts outstanding as of April 23, 1997. There were no
amounts outstanding as of August 10, 1997. An amendment to the revolving
credit agreement, effective July 25, 1997, (i) extended the maturity of the
facility to December 31, 1997 and, (ii) permanently reduced the amounts
available under the facility by $5 million on the effective date of the
amendment and by $5 million, $5 million, $6 million and $4 million on December
15, 22, 29, and 31, respectively. The revolving credit facility is secured by
52 properties with an appraised value in excess of $69 million, some part or
all of which the Company plans to use in long-term financing transactions,
including sale and leaseback financing and mortgages, to replace the maturing
revolving credit facility. The Company is also reviewing unsecured debt and
equity offerings.
Under the most restrictive provisions of any of the Company's debt
agreements, total shareholders' equity available to pay cash dividends or
purchase treasury stock was below the required minimum level by $15,570,000 at
August 10, 1997.
The Company expects to have sufficient cash and cash equivalents when coupled
with the availability of its credit line and to generate sufficient cash flow
from operations based upon current projections to meet its seasonal working
capital needs, pay approximately $9,700,000 of fixed interest charges and to
fund capital expenditures of approximately $9,400,000 for the remainder of
fiscal 1997. At this time management does not anticipate relocating or opening
any new stores during the remainder of the year.
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(4a) First Amendment to Mortgage-Backed Credit Agreement dated
as of June 13, 1997, between the Company and Frank's
Nursery & Crafts, Inc. and Comerica Bank.
(4b) Second Amendment to Mortgage-Backed Credit Agreement dated
as of July 25, 1997, between the Company and Frank's
Nursery & Crafts, Inc. and Comerica Bank.
(10) First Amendment dated as of June 30, 1997, to Employment
Agreement dated as of January 1, 1992, between the Company
and Harris J. Ashton.
(11) Additional Earnings Per Share Information.
(15) Letter regarding unaudited interim financial information.
(b) Reports on Form 8-K
During the quarter and through the date of this Report,
Registrant filed no reports on Form 8-K.
<PAGE> 13
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 thereunto duly authorized.
GENERAL HOST CORPORATION
By: /s/ Theodore Everingham
-------------------------------
J. Theodore Everingham
Vice President, General
Counsel and Secretary
By: /s/ James R. Simpson
-------------------------------
James R. Simpson
Vice President and Controller
Dated: September 24, 1997
<PAGE> 14
EXHIBIT INDEX
Exhibit Number Description of Exhibit
- -------------- ----------------------
(4a) First Amendment to Mortgage-Backed Credit Agreement
dated as of June 13, 1997, between the Company and
Frank's Nursery & Crafts, Inc. and Comerica Bank.
(4b) Second Amendment to Mortgage-Backed Credit Agreement
dated as of July 25, 1997, between the Company and
Frank's Nursery & Crafts, Inc. and Comerica Bank.
(10) First Amendment dated as of June 30, 1997, to
Employment Agreement dated as of January 1, 1992,
between the Company and Harris J. Ashton.
(11) Additional Earnings Per Share Information.
(15) Letter regarding unaudited interim financial
information.
(27) Financial Data Schedule.
<PAGE> 1
EXHIBIT 4a
FIRST AMENDMENT TO MORTGAGE-BACKED CREDIT AGREEMENT
This First Amendment to Mortgage-Backed Credit Agreement dated as of
June 13, 1997 by and between GENERAL HOST CORPORATION, a New York corporation
and FRANKS NURSERY & CRAFTS, INC. (collectively, "Company"), and COMERICA BANK,
a Michigan banking corporation ("Bank").
WHEREAS, Company and Bank entered into a certain Mortgage-Backed Credit
Agreement dated as of November 29, 1996 (the "Agreement"), pursuant to which
Company incurred certain indebtedness and obligations and granted the Bank
certain security for such indebtedness and obligations; and
WHEREAS, Company and Bank desire to amend certain provisions of the
Agreement on the terms and conditions hereof;
NOW, THEREFORE, it is agreed:
A. DEFINITIONS
1. Capitalized terms used herein and not defined to the contrary
have the meanings given them in the Agreement.
B. AMENDMENTS TO AGREEMENT
1. Subsection 1.47 of the Agreement is hereby amended and restated
to read:
"'Revolving Credit Maturity Date' shall mean July 31, 1997.
C. REPRESENTATIONS.
Company hereby represents and warrants that:
1. Execution, delivery and performance of this Amendment and any
other documents and instruments required under this Amendment or the Agreement
are within Company's powers, have been duly authorized, are not in
contravention of law or the terms of Company's Articles of Incorporation or
Bylaws, and do not require the consent or approval of any governmental body,
agency, or authority.
2. This Amendment, and the Agreement as amended by this Amendment,
and any other documents and instruments required under this Amendment or the
Agreement, when issued and delivered under this Amendment or the Agreement,
will be valid and binding in accordance with their terms.
- 1 -
<PAGE> 2
3. The continuing representations and warranties of the Companies
set forth in Sections 7.1 through 7.6 and 7.8 through 7.13 of the Agreement are
true and correct on and as of the date hereof with the same force and effect as
made on and as of the date hereof.
4. The continuing representations and warranties of the Companies
set forth in Section 7.7 of the Agreement are true and correct as of the date
hereof with respect to the most recent financial statements furnished to Bank
in accordance with Section 8. 1 of the Agreement.
5. No Event of Default, or condition or event which, with the
giving of notice or the running of time, or both, would constitute an Event of
Default under the Agreement, has occurred and is continuing as of the date
hereof.
C. MISCELLANEOUS.
1. This Amendment may be executed in as many counterparts as Bank
and the Companies deem convenient and shall become effective upon: (a) delivery
to Bank of all executed counterparts hereof; (b) delivery to Bank, in form and
substance satisfactory to Bank of each of the documents and instruments listed
on the Checklist attached as Exhibit "A" hereto; and (c) payment to Bank of a
non-refundable amendment fee in the amount of Seven Thousand Dollars ($7,000).
2. Companies and Bank acknowledge and agree that, except as
specifically amended hereby or in connection herewith, all of the terms and
conditions of the Agreement and the Loan Documents, remain in full force and
effect in accordance with their original terms.
3. Companies shall pay all of Bank's legal costs and expenses
(including attorneys' fees and expenses) incurred in the negotiation,
preparation and closing hereof, including, without limitation, costs of all
lien searches and financing statement filings.
4. Except as specifically set forth herein, nothing set forth in
this Amendment shall constitute, or be interpreted or construed to constitute,
a waiver of any right or remedy of Bank, or of any default or Event of Default
whether now existing or hereafter arising.
- 2 -
<PAGE> 3
WITNESS the due execution hereof as of the day and year first above
written.
GENERAL HOST CORPORATION COMERICA BANK
<TABLE>
<S> <C>
By: Robert M. Lovejoy, Jr. By: Chris Georvassillis
---------------------------------- ------------------------
Robert M. Lovejoy, Jr. Chris Georvassilis
Its: Vice President Its: Vice President
1 Station Place 500 Woodward Avenue, M.C. 3280
Stamford, Connecticut 06902 Detroit, Michigan 48226
Telephone: (203) 357-9900 Telephone: (313) 222-6239
Telefax: (203) 357-0148 Telefax: (313) 222-3330
FRANK'S NURSERY & CRAFTS, INC.
By: Robert M. Lovejoy, Jr.
-----------------------------
Robert M. Lovejoy, Jr.
Its: Vice President
6501 East Nevada
Detroit, Michigan 48234
Telephone: (313) 366-8400
Telefax: (313) 564-2084
</TABLE>
- 3 -
<PAGE> 4
EXHIBIT "A"
FIRST AMENDMENT TO
MORTGAGE-BACKED CREDIT AGREEMENT
BETWEEN GENERAL HOST CORPORATION AND
FRANK'S NURSERY & CRAFTS, INC. AND
COMERICA BANK
June 13, 1997
1. Recertification of Authority Documents
a. General Host Corporation
b. Frank's Nursery & Crafts, Inc.
2. First Amendment to Mortgage-Backed Credit Agreement
a. Exhibit "A" - Checklist
3. Acknowledgement and Consents
a. General Host Holding Corp.
b. AMS Industries, Inc.
C. AMS Salt Industries, Inc.
d. Bay Resources, Inc.
e. Nursery Distributors, Inc.
- 4 -
<PAGE> 5
ACKNOWLEDGEMENT AND CONSENT
Each of the undersigned hereby acknowledges and consents to the
execution, delivery and performance of that certain First Amendment to
Mortgage-Backed Credit Agreement dated as of even date herewith by GENERAL HOST
CORPORATION and FRANK'S NURSERY & CRAFTS, INC. (collectively the "Companies")
and COMERICA BANK, ("Bank"), amending that certain Mortgage-Backed Credit
Agreement dated as of November 29, 1996 between Companies and Bank (the
"Agreement").
This acknowledgement and consent is executed and delivered by the
undersigned in connection with the Guaranty from the undersigned in favor of
Bank and delivered in connection with the Agreement, which Guaranty remains in
full force and effect with respect to indebtedness now or hereafter incurred
under the Agreement, including, but not limited to, the Note.
Capitalized terms used herein and not defined to the contrary have the
meanings given them in the Agreement.
Executed as of the 13th day of June, 1997.
GENERAL HOST HOLDING CORP.
By: Robert M. Lovejoy
-----------------------------
Its: Vice President
AMS INDUSTRIES, INC.
By: Robert M. Lovejoy
------------------------------
Its: Vice President & Treasurer
-----------------------------
AMS SALT INDUSTRIES, INC.
By: Robert M. Lovejoy
------------------------------
Its: Vice President & Treasurer
-----------------------------
BAY RESOURCES, INC.
By: Robert M. Lovejoy
------------------------------
Its: Vice President & Treasurer
-----------------------------
NURSERY DISTRIBUTORS, INC.
By: Robert M. Lovejoy
------------------------------
Its: Vice President & Treasurer
-----------------------------
<PAGE> 1
EXHIBIT 4b
SECOND AMENDMENT TO MORTGAGE-BACKED CREDIT AGREEMENT
This Second Amendment to Mortgage-Backed Credit Agreement dated as of
July 25, 1997 by and between GENERAL HOST CORPORATION, a New York corporation
and FRANK'S NURSERY & CRAFTS, INC. (collectively, "Borrowers"), and COMERICA
BANK, a Michigan banking corporation ("Bank").
WHEREAS, Borrowers and Bank entered into a certain Mortgage-Backed
Credit Agreement dated as of November 29, 1996 and an amendment thereto dated
as of June 13, 1997 (as so amended, the "Agreement"), pursuant to which
Borrowers incurred certain indebtedness and obligations and granted the Bank
certain security for such indebtedness and obligations; and
WHEREAS, Borrowers and Bank desire to amend certain provisions of the
Agreement on the terms and conditions hereof;
NOW, THEREFORE, it is agreed:
A, DEFINITIONS
1. Capitalized terms used herein and not defined to the contrary
have the meanings given them in the Agreement.
B. AMENDMENTS TO AGREEMENT
1. Section 1.2 of the Agreement is hereby amended and restated as
follows:
"1.2 'Applicable Interest Rate' shall mean: (a) until July 25,
1997, the Eurodollar-based Rate or the Prime-based Rate, as selected by
a Borrower from time-to-time or otherwise determined pursuant to the
terms of this Agreement, and (b) thereafter, the Prime-based Rate."
2. Section 1.11 of the Agreement is hereby amended and restated
as follows:
"1.11 'Collateral Pool' shall mean the Real Property (i) for
which Bank has received Mortgages/Deeds of Trust, Title Insurance,
Insurance Policies, Surveys, Appraisals and Environmental Reports, and
(ii) which has not been released from the lien of the relevant
Mortgage/Deed of Trust pursuant to Section 11.4 hereof."
3. Section 1.34 of the Agreement is hereby amended and restated as
follows:
"1.34 'Letter of Credit Maximum' shall mean, as of any date: (a)
with respect to Letters of Credit generally, the Maximum Amount from
time to time in effect minus the aggregrate principal amount of
outstanding Advances; and (b)
- 1 -
<PAGE> 2
with respect to Letters of Credit which are standby letters of Credit,
Ten Million Dollars ($10,000,000)."
4. Section 1.37 of the Agreement is hereby amended and restated as
follows:
"1.37 'Maximum Amount' shall mean Thirty Five Million Dollars
($35,000,000) or such lesser amount to which the Maximum Amount has then
been reduced to pursuant to Section 4.5 hereof."
5. The following Section 1.44a is hereby added to the Agreement
immediately after Section 1.44:
" 1.44a 'Release Reduction Amount' shall, in connection
with the release of any Mortgage pursuant to Section 11.4 hereof, mean:
(a) in the case of a release or discharge of a Mortgage upon any Real
Estate identified on Exhibit "E" hereto in connection with a sale-lease
back transaction or mortgage refinancing of such Real Estate by
Borrowers, fifty percent (50 %) of the proceeds of such sale-lease back
or refinancing, net of fees, commissions and other direct expenses paid
by Borrowers in connection with such transaction, and (b) in the case of
any other release or discharge of a Mortgage, the greater of the
appraised value of the Real Estate for which such release is required or
one hundred percent (100%) of the proceeds of the transaction for which
such release is requested, net of fees, expenses, commissions and other
direct expenses of such transaction paid by Borrowers.'
6. Exhibit "E" is hereby added to the Agreement as Exhibit "E" to
the Agreement.
7. Section 1.46 of the Agreement is hereby amended and restated as
follows:
" 1.46 'Revolving Credit Facility Fee' shall mean the facility
fee payable to Bank pursuant to Section 2.4 hereof, in an amount equal to
three-quarters (3/4%) per annum multiplied by the Revolving Credit
Maximum from time to time in effect."
8. Section 1.47 of the Agreement is hereby amended and restated as
follows:
"1.47 'Revolving Credit Maturity Date' shall mean December 31,
1997."
9. Section 1.48 of the Agreement is hereby amended and related to
read:
"l.48 'Revolving Credit Maximum' shall mean, as of any date,
Twenty Million Dollars ($20,000,000) or such lesser amount to which the
Revolving Credit Maximum has then been reduced to pursuant to Section
4.5 hereof."
10. The second sentence of Section 2.5 of the Agreement is hereby
amended to read:
- 2 -
<PAGE> 3
"Thereafter, Advances shall be available to satisfy Borrower's
working capital needs as and when such working capital needs arise."
11. The second sentence of Section 3.1 of the Agreement is hereby
amended and restated as follows:
"Notwithstanding anything to the contrary herein: (a) Letters of
Credit which are standby letters of credit may not be requested
hereunder after July 25, 1997; and (b) each Letter of Credit shall
provide that it is available by drafts drawn at sight and/or
presentation of documents and shall have an initial expiration date (i)
not later than one (1) year from the date of its issuance, and (ii) in
the case of any Letter of Credit which is not a standby letter of
credit, not later than the Revolving Credit Maturity Date."
12. Section 3.3 of the Agreement is hereby amended and restated as
follows:
"3.3 Letter of Credit Fees. Borrowers jointly and severally
agree to pay Letter of Credit Fees to Bank (i) upon the date of
issuance, in the case of Letters of Credit that are trade letters of
credit, in an amount equal to two and one-half percent (2.5 %) on the
face amount of such Letters of Credit, and (ii) with respect to Letters
of Credit which are standby letters of credit, quarterly in arrears, an
amount equal to two and one-half percent (2.5 %) per annum multiplied by
the average outstanding face amounts of such Letters of Credit
outstanding during the quarterly period then ended."
13. Section 4.5 of the Agreement is hereby amended and restated as
follows:
"4.5 Reductions or Terminations of Commitments.
"(a) Scheduled Reductions. The Maximum Amount and the Revolving
Credit Maximum then in effect shall each be reduced (i)
by the amount of Five Million Dollars ($5,000,000) on
December 15, 1997, (ii) by the amount of Five Million,
Dollars ($5,000,000) on December 22, 1997, (iii) by the
amount of Six Million Dollars ($6,000,000) on December 29,
1997, and (iv) to Zero Dollars ($0) on the Revolving
Credit Maturity Date.
"(b) Mandatory Reductions upon Releases. Upon each release of a
Mortgage pursuant to Section 11.4 hereof the Maximum Amount
and the Revolving Credit Maximum shall each be reduced by
the Release Reduction Amount for the relevant Real
Property.
"(c) Discretionary Reductions. Upon five (5) Business Days prior
written notice to Bank, the Borrowers may permanently
reduce the Maximum Amount and/or Revolving Credit Maximum,
in whole or part, provided that each partial reduction of
the Maximum
- 3 -
<PAGE> 4
Amount and/or Revolving Credit Maximum shall be in an amount
equal to One Million Dollars ($1,000,000).
"(d) Requirements for all Reductions. Upon each reduction in the
Maximum Amount and/or Revolving Credit Maximum under this
Section 4.5:
"(i) in the case of a reduction of the Revolving Credit
Maximum Borrowers shall, on the date of such reduction,
pay to Bank, (x) the Revolving Credit Facility Fee
accrued on the amount of the Revolving Credit Maximum so
reduced through the date of such reduction and (y) the
amount (if any) by which the sum of Advances then
outstanding plus the amount of outstanding face amounts
Letters of Credit which are standby letters of credit
would exceed the Revolving Credit Maximum (as so reduced)
together with accrued interest thereon, and
" (ii) in the case of a reduction of the Maximum Amount, the
Borrowers shall deliver to Bank, as collateral for the
Borrowers' indebtedness and obligations hereunder (and
hereby grants and assigns to Bank a security interest
therein) cash and/or cash equivalents in amounts equal to
the amount by which the aggregate undrawn face amount
of Letters of Credit outstanding as of the date of such
reduction exceeds the Maximum Amount as so reduced."
14. Section 9.4 of the Agreement is hereby amended and restated as
follows:
"9.4 Financial Covenants. Borrowers will not permit:
"(a) the Fixed Charge Coverage Ratio to be less than:
"(i) 1.45 to 1.0, as of the last day of the Borrowers'
fiscal quarter ending in August 1997, and
"(ii) 1.50 to 1.0, as of the last day of any subsequent
fiscal quarter.
"(b) the Debt to Capitalization Ratio, as of the last day of any
fiscal quarter, to be greater than seventy five percent (75 %).
"(c) Tangible Net Worth to be less than:
"(i) Eighty Six Million Dollars ($86,000,000) as of the
last day of the Borrowers' fiscal quarter ending in
August 1997;
- 4 -
<PAGE> 5
"(ii) Seventy Three Million Dollars ($73,000,000) as of the
last day of any subsequent fiscal quarter."
"(d) EBITDA, as of the last day of any fiscal quarter, to be less
than Thirty Million Dollars ($30,000,000)."
15. Section 11.4 of the Agreement is hereby amended and restated as
follows:
"11.4 Releases of Real Property. Provided that, upon such release and
after giving effect thereto, (i) no Default or Event of Default exists or
will exist, (ii) the Collateral Amount for Real Property remaining in the
Collateral Pool will not be less than the greater of the Maximum Amount (as
reduced in connection with such release pursuant to Section 4.5 hereof) or
the aggregate outstanding amount of all Advances and Letters of Credit, and
(iii) the aggregate outstanding amount of Advances and Letters of Credit
which are standby letters of credit will not exceed the Revolving Credit
Maximum (as reduced in connection with such release pursuant to Section 4.5
hereof), Bank shall release Real Estate from its Mortgage upon the
consummation by Borrowers of a sale leaseback transaction or mortgage
refinancing involving such Real Property provided that, simultaneously with
such release, the requirements of Section 4.5 of this Agreement are
complied with."
C. REPRESENTATIONS
Borrowers hereby represent and warrant that:
1. Execution, delivery and performance of this Amendment and any other
documents and instruments required under this Amendment or the Agreement are
within their respective corporate powers, have been duly authorized, are not in
contravention of law or the terms of their respective Articles of Incorporation
or Bylaws, and do not require the consent or approval of any governmental body,
agency, or authority.
2. This Amendment, and the Agreement as amended by this Amendment, and
any other documents and instruments required under this Amendment or the
Agreement, when issued and delivered under this Amendment or the Agreement,
will be valid and binding in accordance with their terms.
3. The continuing representations and warranties of the Borrowers set
forth in Sections 7.1 through 7.6 and 7.8 through 7.13 of the Agreement
are true and correct on and as of the date hereof with the same force and
effect as made on and as of the date hereof.
4. The continuing representations and warranties of the Borrowers set
forth in Section 7.7 of the Agreement are true and correct as of the date
hereof with respect to the most recent financial statements furnished to Bank
in accordance with Section 8.1 of the Agreement.
- 5 -
<PAGE> 6
5. No Event of Default, or condition or event which, with the
giving of notice or the running of time, or both, would constitute an Event of
Default under the Agreement, has occurred and is continuing as of the date
hereof.
D. MISCELLANEOUS
1. This Amendment may be executed in as many counterparts as Bank
and the Borrowers deem convenient and shall become effective upon: (a) delivery
to Bank of all executed counterparts hereof; and (b) delivery to Bank, in form
and substance satisfactory to Bank of each of the documents and instruments
listed on the Checklist attached as Exhibit "A" hereto.
2. Borrowers and Bank acknowledge and agree that: (a) except as
specifically amended hereby, all of the terms and conditions of the Agreement
and the Documents, remain in full force and effect in accordance with their
original terms; (b) the Agreement (as amended by this Amendment) and the other
Documents constitute a complete integration of the terms and conditions with
respect to the extensions of credit by Bank to Borrowers and the other
transactions described therein; and (c) no amendment to or deviation from the
terms and conditions set forth in the Agreement (as amended by this Amendment)
and Documents shall be effective or binding upon Bank unless set forth in a
duly executed writing signed on behalf of the Borrowers and Bank.
3. Borrowers shall pay all of Bank's legal costs and expenses
(including attorneys' fees and expenses) incurred in the negotiation,
preparation and closing hereof, including, without limitation, costs of all
lien searches and financing statement filings.
4. Except as specifically set forth herein, nothing set forth in
this Amendment shall constitute, or be interpreted or construed to constitute,
a waiver of any right or remedy of Bank, or of any default or Event of Default
whether now existing or hereafter arising.
- 6 -
<PAGE> 7
WITNESS the due execution hereof as of the day and year first
above written.
GENERAL HOST CORPORATION COMERICA BANK
By: Robert M. Lovejoy, Jr. By: Chris Georvassilis
------------------------ ------------------------
Robert M. Lovejoy, Jr. Chris Georvassilis
Its: Vice President Its: Vice President
1 Station Place 500 Woodward Avenue, M.C. 3280
Stamford, Connecticut 06902 Detroit, Michigan 48226
Telephone: (203) 357-9900 Telephone: (313) 222-6239
Telefax: (203) 357-0148 Telefax: (313) 222-3330
FRANK'S NURSERY & CRAFTS, INC.
By: Robert M. Lovejoy, Jr.
-----------------------------
Robert M. Lovejoy, Jr.
Its: Vice President
6501 East Nevada
Detroit, Michigan 48234
Telephone: (313) 366-8400
Telefax: (313) 564-2084
- 7 -
<PAGE> 8
EXHIBIT "A"
SECOND AMENDMENT TO
MORTGAGE-BACKED CREDIT AGREEMENT
BETWEEN GENERAL HOST CORPORATION AND
FRANK'S NURSERY & CRAFTS, INC. AND
COMERICA BANK
July _, 1997
1. Recertification of Authority Documents
a. General Host Corporation
b. Frank's Nursery & Crafts, Inc.
2. Second Amendment to Mortgage-Backed Credit Agreement
a. Exhibit "A" - Checklist
b. Exhibit "E" - Specified Real Estate
3. Acknowledgement and Consents
a. General Host Holding Corp.
b. AMS Industries, Inc.
C. AMS Salt Industries, Inc.
d. Bay Resources, Inc.
e. Nursery Distributors, Inc.
- 8 -
<PAGE> 9
EXHIBIT "E'
Store # City
------- ----
5 Dearborn Heights, MI
29 Fort Wayne, IN
45 Bloomington, MN
102 Philadelphia, PA
112 Blaine, MN
117 Tampa, FL
181 Norton Shores, MI
189 Toledo, OH
266 Cincinnati, OH
272 Westfield, MA
622 Milford, CT
624 Kenvil, NJ
648 Brockton, MA
649 Hadley, MA
652 Springfield, MA
- 9 -
<PAGE> 10
ACKNOWLEDGEMENT AND CONSENT
Each of the undersigned hereby acknowledges and consents to the
execution, delivery and performance of that certain Second Amendment to
Mortgage-Backed Credit Agreement dated as of even date herewith by GENERAL HOST
CORPORATION and FRANK'S NURSERY & CRAFTS, INC. (collectively the "Companies")
and COMERICA BANK, ("Bank"), amending that certain Mortgage-Backed Credit
Agreement dated as of November 29, 1996 between Companies and Bank (the
"Agreement").
This acknowledgement and consent is executed and delivered by the under-
signed in connection with the Guaranty from the undersigned in favor of Bank
and delivered in connection with the Agreement, which Guaranty remains in full
force and effect with respect to indebtedness now or hereafter incurred under
the Agreement, including, but not limited to, the Note.
Capitalized terms used herein and not defined to the contrary have the
meanings given them in the Agreement.
Executed as of the 25th day of July, 1997.
GENERAL HOST HOLDING CORP.
By: Robert M. Lovejoy
-------------------------
Its: Vice President & Treasurer
---------------------------
AMS INDUSTRIES, INC.
By: Robert M. Lovejoy
-------------------------
Its: Vice President & Treasurer
---------------------------
AMS SALT INDUSTRIES, INC.
By: Robert M. Lovejoy
-------------------------
Its: Vice President & Treasurer
---------------------------
BAY RESOURCES, INC.
By: Robert M. Lovejoy
-------------------------
Its: Vice President & Treasurer
---------------------------
NURSERY DISTRIBUTORS, INC.
By: Robert M. Lovejoy
-------------------------
Its: Vice President & Treasurer
---------------------------
<PAGE> 1
EXHIBIT 10
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "First Amendment"), made as of the 30th day of June,
1997, is intended to amend a certain Employment Agreement, hereinafter the
"Employment Agreement," dated as of the 1st day of January, 1992 by and between
Harris J. Ashton (the "Executive") and the General Host Corporation (the
"Company");
WHEREAS, the Executive has been employed by the Company for more than
thirty-one years and for twenty-five years has been, and currently is, serving
as Chairman of the Board of Directors of the Company (the "Board") and Chief
Executive Officer of the Company;
WHEREAS, the Company desires that the Executive continue to serve as
Chairman of the Board and Chief Executive Officer of the Company and the
Executive is willing to continue to serve as Chairman of the Board and Chief
Executive Officer of the Company on the terms and conditions as hereinafter set
forth in this amendment (the "Amendment");
WHEREAS, the Executive and the Company additionally desire to clarify
several other provisions of the Employment Agreement;
NOW, THEREFORE, based upon the mutual promises and conditions contained
herein, the parties hereto do hereby agree that the Employment Agreement shall
be amended as follows:
1. Section 2, entitled "Term of Employment," is amended to read in
its entirety as follows:
The term of employment pursuant to this Agreement shall commence on
January 1, 1992, and shall continue through the close of business on December
31, 2000, subject to the terms and conditions of this Agreement.
2. Section 4, entitled "Salary," is amended by deleting the provision
immediately following the table and by adding the following sentence after the
table:
The minimum base salary for each year during the term of this Agreement
beginning with 1998 shall be increased by 5% of the minimum base salary for the
immediately preceding year; provided, however, that nothing in this Agreement
shall preclude the Company from paying the Executive a base salary in excess of
that set forth herein for all or part of any calendar year during the term of
this Agreement.
<PAGE> 2
3. All of the remaining terms of the Agreement, to the extent they
are not inconsistent with the terms hereof, shall remain in full force and
effect, without amendment or modification.
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as of the date and year first above written.
GENERAL HOST CORPORATION
By: Theodore Everingham
----------------------------
Title: Vice President, General
Counsel & Secretary
Harris J. Ashton
---------------------------
Harris J. Ashton
<PAGE> 1
EXHIBIT 11
GENERAL HOST CORPORATION
ADDITIONAL EARNINGS PER SHARE INFORMATION (UNAUDITED)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Twelve Weeks Ended Twenty-Eight Weeks Ended
----------------------- ------------------------
August 10, August 11, August 10, August 11,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Earnings (loss) for full dilution:
Net income (loss) $ (2,277) $ 657 $ 3,325 $ 3,451
Add interest on 8% Convertible
Debentures, net of tax effect 1,200 1,117 2,800 2,800
--------- --------- --------- ---------
Income (loss), as adjusted $ (1,077) $ 1,774 $ 6,125 $ 6,251
========= ========= ========= =========
Shares used for calculating primary
earnings per share 24,414 24,414 24,414 24,414
Additional shares resulting from
assumed conversion of 8% Convertible
Debentures 7,611 7,611 7,611 7,611
Additional shares resulting from
assumed exercise of stock options 162 0 103 0
--------- --------- --------- ---------
32,187 32,025 32,128 32,025
========= ========= ========= =========
Fully diluted earnings (loss) per share $ (.03)1 $ .06 1 $ .19 1 $ .20 1
========= ========= ========= =========
</TABLE>
1 This calculation is submitted in accordance with Regulation S-K item 601
(b)(11) although it is contrary to paragraph 40 of APB Opinion 15 because it
produces an anti-dilutive result.
<PAGE> 1
EXHIBIT 15
September 24, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
We are aware that the August 10, 1997 Quarterly Report on Form 10-Q of General
Host Corporation which includes our report dated September 4, 1997 (issued
pursuant to the provisions of Statements on Auditing Standards No. 71 and 42),
is incorporated by reference in its Registration Statement No. 33-50020 on Form
S-8 filed on July 27, 1992 and its Registration Statement No. 333-32845 on Form
S-8 filed on August 5, 1997. We are also aware of our responsibilities under
the Securities Act of 1933.
Yours very truly,
Price Waterhouse LLP
Detroit, Michigan
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-25-1998
<PERIOD-START> JAN-27-1997
<PERIOD-END> AUG-10-1997
<CASH> 50,359
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 94,448
<CURRENT-ASSETS> 159,981
<PP&E> 384,935
<DEPRECIATION> 177,330
<TOTAL-ASSETS> 394,188
<CURRENT-LIABILITIES> 91,154
<BONDS> 191,463
0
0
<COMMON> 31,752
<OTHER-SE> 71,688
<TOTAL-LIABILITY-AND-EQUITY> 394,188
<SALES> 302,697
<TOTAL-REVENUES> 302,537
<CGS> 211,850
<TOTAL-COSTS> 211,850
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,447
<INCOME-PRETAX> 3,325
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,325
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,325
<EPS-PRIMARY> .14
<EPS-DILUTED> .14
</TABLE>
