SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 10-Q
(MARK ONE)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1996
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 1-5787
LEVITZ FURNITURE CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 23-1657490
- ------------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6111 BROKEN SOUND PARKWAY, N.W., BOCA RATON, FL 33487-2799
- --------------------------------------------------- --------------
(Address of Principal Executive Offices) (Zip Code)
(561) 994-6006
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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.
On July 31, 1996, there were 1,000 shares of Common Stock, par value $0.40,
outstanding.
<PAGE>
<TABLE>
<CAPTION>
PART I: FINANCIAL INFORMATION
ITEM 1. Financial Statements
LEVITZ FURNITURE CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
June 30, March 31,
1996 1996
(Unaudited)
----------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,627 $ 12,755
Receivables 39,104 34,025
Inventories 161,763 140,918
Deposits and prepaid expenses 4,930 3,820
--------- ---------
Total current assets 214,424 191,518
--------- ---------
PROPERTY AND EQUIPMENT, net 218,648 225,509
--------- ---------
PROPERTY UNDER CAPITAL LEASES, net 126,713 134,944
--------- ---------
OTHER ASSETS:
Intangible leasehold interests 16,644 17,053
Deferred financing fees 4,355 6,820
Goodwill 18,564 18,693
Other 5,807 5,707
--------- ---------
45,370 48,273
--------- ---------
$ 605,155 $ 600,244
========= =========
LIABILITIES AND STOCKHOLDER'S DEFICIT
CURRENT LIABILITIES:
Cash overdrafts $ 20,879 $ 17,912
Current portion of long-term debt 8,487 2,441
Current portion of obligations under capital leases 4,306 4,845
Accounts payable, trade 74,419 55,933
Accrued expenses and other liabilities 79,383 79,640
Payable to parent 11,739 5,904
Deferred income taxes 3,727 4,628
Revolver borrowings 50,904 52,516
--------- ---------
Total current liabilities 253,844 223,819
--------- ---------
LONG-TERM DEBT, net of current portion 280,479 286,775
--------- ---------
OBLIGATIONS UNDER CAPITAL LEASES, net of current portion 77,637 82,922
--------- ---------
OTHER NONCURRENT LIABILITIES 28,451 24,423
--------- ---------
DEFERRED INCOME TAXES 49,287 54,041
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S DEFICIT:
Common stock, at par value 1 1
Capital in excess of par 57,853 57,853
Minimum pension liability (654) (654)
Retained earnings (deficit) (141,743) (128,936)
--------- ---------
Total stockholder's deficit (84,543) (71,736)
--------- ---------
$ 605,155 $ 600,244
========= =========
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
LEVITZ FURNITURE CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands except share data)
(Unaudited)
THREE MONTHS ENDED JUNE 30,
---------------------------
1996 1995
------------ ------------
<S> <C> <C>
Net sales $ 228,128 $ 241,862
--------- ---------
Costs and expenses:
Cost of sales 126,513 128,058
Selling, general and administrative expenses 90,310 101,387
Store closing charge 8,295 --
Depreciation and amortization 6,899 7,375
--------- ---------
232,017 236,820
--------- ---------
Operating income (loss) (3,889) 5,042
Interest expense, net 12,795 13,233
--------- ---------
Loss before income taxes (16,684) (8,191)
Income tax benefit 5,879 3,006
--------- ---------
Loss before extraordinary items (10,805) (5,185)
Extraordinary item, net of tax benefit
of $1,090 (Note 4) (2,002) --
--------- ---------
Net loss $ (12,807) $ (5,185)
========= =========
Earnings (loss) per common share (Note 4 and 6):
Income (loss) before extraordinary item $ (10,805) $ (5,185)
Extraordinary item (2,002) --
--------- ---------
Net loss per common share $ (12,807) $ (5,185)
========= =========
Weighted average number of common shares outstanding 1,000 1,000
========= =========
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
LEVITZ FURNITURE CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
THREE MONTHS ENDED JUNE 30,
---------------------------
1996 1995
----------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (12,807) $ (5,185)
---------- ----------
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 3,970 4,199
Amortization 2,929 3,176
Provision for deferred taxes (5,655) (4,198)
Loss (gain) on disposal of property and equipment (279) 21
Amortization of deferred financing fees 392 495
Interest accretion 73 --
Pension expense 350 1,248
Extraordinary loss related to early redemption of
debt, before tax benefit 3,092 --
Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables (5,079) (3,892)
Inventories (20,845) 4,714
Deposits and prepaid expenses (1,110) (1,477)
Income taxes receivable -- 3,054
Other, net (3) 16
Increase (decrease) in:
Accounts payable, trade 18,486 (3,485)
Accrued expenses and other liabilities 3,304 (12,705)
Payable to parent 5,835 1,152
Other noncurrent liabilities 5,281 (252)
---------- ----------
Total adjustments 10,741 (7,934)
---------- ----------
NET CASH USED IN OPERATING ACTIVITIES (2,066) (13,119)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (967) (3,076)
Proceeds from sale of property and equipment and
other assets 152 29
Proceeds from sale-leaseback of property -- 22,194
---------- ----------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (815) 19,147
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit agreement 103,400 100,000
Payments under credit agreement (105,011) (111,010)
Principal payments on long-term debt (324) (445)
Principal payments under capital lease obligations (1,260) (1,272)
Increase (decrease) in cash overdrafts 2,967 5,304
Payment of deferred financing fees (1,019) --
---------- ----------
NET CASH USED IN FINANCING ACTIVITIES (1,247) (7,423)
---------- ----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (4,128) (1,395)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 12,755 6,301
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 8,627 $ 4,906
========= =========
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
4
<PAGE>
LEVITZ FURNITURE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
1. BASIS OF PRESENTATION:
Levitz Furniture Corporation (Levitz), a Florida corporation, is a
wholly-owned subsidiary of Levitz Furniture Incorporated (LFI).
In the opinion of Management, the accompanying unaudited consolidated
condensed financial statements contain all adjustments consisting of
normal recurring accruals necessary to present fairly the financial
position as of June 30, 1996, the results of operations and cash flows
for the periods then ended. The results of operations for the period
ended June 30, 1996, are not necessarily indicative of the results to
be expected for the full year.
2. CONSOLIDATED STATEMENTS OF CASH FLOWS:
Supplemental disclosures of cash flow information (dollars in
thousands):
THREE MONTHS ENDED
JUNE 30,
------------------
1996 1995
------- -------
Interest paid $10,979 $13,832
======= =======
Income taxes refunded $(6,991) $(3,242)
======= =======
3. SALE-LEASEBACK:
In May 1995, under a sale-leaseback agreement, Levitz sold three
warehouse-showrooms and one satellite store for approximately $22.2
million and leased them back under a twenty year operating lease
agreement. The transaction produced a deferred gain of $3.6 million
which is being amortized over the twenty year lease period.
4. LONG-TERM DEBT AND REVOLVER BORROWINGS:
On July 1, 1996, Levitz and certain of its wholly owned subsidiaries
entered into new senior secured credit facilities providing for up to
$190.0 million of availability (collectively, the "Senior Secured
Facilities"). The Senior Secured Facilities are secured by
substantially all of the assets of Levitz and its subsidiaries and are
comprised of the Tranche A Facility (the "Tranche A Facility")
providing for up to $150.0 million and the Tranche B Facility (the
"Tranche B Facility") providing up to $40.0 million. The proceeds of
the Senior Secured Facilities were used to refinance indebtedness
incurred under the previous bank credit agreement, to provide liquidity
for working capital needs and for other general corporate purposes. The
Senior Secured Facilities will expire on July 1, 2001.
The Tranche A Facility consists of $115.0 million of revolving debt
(the "Tranche A Revolver") which is provided by BT Commercial
Corporation ("BTCC") and $35 million of term debt (the "Tranche A Term
Facility") provided by Apollo Investment Fund III, L.P., Apollo
Overseas Partners III, L.P. and Apollo U.K. Partners III, L.P.
(collectively "Apollo"). The maximum borrowings under the Tranche A
Revolver are calculated based upon inventory and receivable levels.
Tranche B consists of a $40.0 million fixed asset sublimit. This fixed
asset sublimit will be permanently reduced each year effective July
1997 by an amount equal to the lesser of $5.0 million or 100% of Excess
Cash Flow (as defined in the Senior Secured Facilities). Asset sales
and the reduction of inventory and receivables (as defined in the
Senior Secured Facilities) below $115.0 million will also trigger
permanent reductions to the fixed asset sublimit.
5
<PAGE>
Loans made under the Tranche A Revolver and the Tranche B Facility bear
interest, at Levitz's option, at a rate equal to either Bankers Trust
Company's ("BTC's") prime lending rate plus 1.5% or BTC's LIBOR rate
plus 3.25%. The Tranche A Term Facility bears interest at a rate of
15.5%, payable in cash or, at Levitz's option, at any time prior to
July 1, 1999, by the issuance of up to $10.0 million of additional
Tranche A Term Notes, having a principal amount equal to the amount of
interest accrued and maturing on July 1, 2001. To the extent additional
Tranche A Term Notes are issued for interest, the amount available
under the Tranche A Revolver will be permanently decreased. If LFI
achieves a prescribed Fixed Charge Coverage Ratio, as defined, the
interest rate on the Tranche A Term Facility will be reset from 15.5%
to 11.0%.
In addition, LFI issued warrants to Apollo to purchase up to 5,000,000
shares of Common Stock of LFI at an initial exercise price of $4.125
per share, subject to downward adjustments if certain targeted stock
prices of LFI are not achieved in the future and other antidilution
provisions.
As a result of the July 1996 Refinancing, in the first quarter ended
June 30, 1996, LFI incurred a before-tax extraordinary loss of $3.1
million on the write-off of deferred financing fees related to the
termination of the previous bank credit agreement. The after-tax loss
was $2.0 million or $2,002 per share.
In order to comply with a consensus issued in November 1995 set forth
by the Emerging Issues Task Force in EITF 95-22 regarding
classification of certain debt instruments that include both a
requirement for a lock box arrangement and a subjective acceleration
clause, $50.9 million of the borrowings under the Tranche A Revolver
have been classified as Revolver Borrowings in current liabilities.
Under the terms of the Tranche A Revolver, however, Levitz will not be
required to repay this amount in the next year. Payment will only be
required at the expiration of the Tranche A Facility on July 1, 2001 or
if the borrowing base is reduced below the amount outstanding. Based on
anticipated borrowing base levels, Levitz believes the amount
outstanding under the Senior Secured Facilities will be due and payable
in July 2001.
As of July 31, 1996, Levitz had approximately $23.0 million of
availability under the Senior Secured Facilities. The Senior Secured
Facilities require LFI to achieve an interest coverage ratio beginning
December 31, 1996 and quarterly thereafter. It also contains
limitations on capital expenditures, additional indebtedness,
incurrence of liens, sale of assets, payment of dividends, investments
and other restrictions.
Since the proceeds under the Senior Secured Facilities were used to
repay the Credit Agreement, LFI has classified the balance outstanding
under the Credit Agreement as of June 30, 1996 in accordance with the
terms of the Senior Secured Facilities.
The retail furniture industry historically has been highly cyclical and
directly affected by, among other things, housing starts, existing home
sales, consumer confidence, the level of personal discretionary
spending, consumer credit availability and general economic conditions.
Furniture purchases are generally discretionary, and in view of the
fact that they represent a significant expenditure to the average
consumer, they are often deferred during times of economic uncertainty.
Decreased comparable store sales and gross profit over the past two
years which have continued during the first quarter of Fiscal 1997,
have significantly reduced operating income and the resulting cash flow
resulting in debt compliance and liquidity concerns.
Management has undertaken a number of steps to address the liquidity
needs of LFI and Levitz as well as compliance with the Senior Secured
Facilities. Based upon anticipated cash flow from operations and
existing borrowing capacity under the Senior Secured Facilities,
Management believes Levitz will be able to meet the covenants contained
in the Senior Secured Facilities during the foreseeable future, and has
sufficient cash flow to meet current cash needs. However, compliance
with such covenants will be dependent on the successful accomplishment
of Management's strategies and Levitz achieving improved comparable
store sales in Fiscal 1997. Actual results could differ from the
estimates used to set these covenants resulting in Levitz's failure to
be in compliance with the Senior Secured Facilities.
The Senior Secured Facilities and mortgages are secured by
substantially all assets of Levitz and its subsidiaries and a perfected
pledge of stock of all Levitz's subsidiaries.
6
<PAGE>
LFI and Levitz are subject to certain covenants and restrictions and
cross-default provisions as described in the respective agreements
and/or indentures, including among other restrictions the following:
provisions which require certain financial tests be met, restrictions
with respect to the sale of assets, annual capital expenditures,
ability to enter into sale-leaseback transactions or mortgage loans,
ability to redeem certain indebtedness, and limitations on the ability
to incur additional indebtedness, requirements to repurchase certain
indebtedness if a change in control occurs and limitations on the
ability to pay dividends or make certain other restricted payments by
Levitz or LFI.
LFI and Levitz are currently in compliance with all such covenants
under the Senior Secured Facilities and all applicable debt indentures.
5. SALE OF RECEIVABLES:
Levitz and General Electric Capital Corporation (GECC) are parties to
an Account Purchase Agreement (the Agreement), whereby GECC has agreed
to purchase Levitz's customer credit obligations without recourse.
Levitz accounts for the above transactions as a sale. Under the terms
of the Agreement, Levitz may pay GECC a fee or may receive income,
based upon the relationship among the interest earned on the portfolio
sold thereunder, the amount of the servicing fee, the prime rate and to
a limited extent, credit losses. The Agreement expires October 31,
1998, with automatic five-year renewals, unless canceled by either
party with twenty-six months' notice prior to scheduled termination.
For the three month periods ended June 30, 1996 and June 30, 1995,
Levitz recorded income under the Agreement of $3.8 million and $1.7
million, respectively. These amounts are included in selling, general
and administrative expenses as they represent an adjustment to the
estimated sales price of the receivables.
6. EARNINGS PER COMMON SHARE:
Earnings per common share are based on the weighted average number of
common shares outstanding during each period.
7. CLOSED STORES:
During the quarter ended June 30, 1996, Management developed a plan to
close five satellite stores effective October 31, 1996. The plan
resulted in a pre-tax charge for store closings of $8.3 million. The
charge includes the reduction of the carrying value of the store assets
to their estimated fair value net of selling expenses as well as
reserves for future rental payments under operating lease agreements.
Included in the store closing charge is a $2.4 million charge from the
adoption of SFAS No. 121 effective April 1, 1996 for one of the closed
stores.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following table sets forth Levitz's results of operations expressed as a
percentage of net sales for the periods indicated:
PERCENTAGE OF NET SALES
-----------------------
THREE MONTHS ENDED
JUNE 30,
----------------------
1996 1995
------- -------
Net sales 100.0 % 100.0 %
Cost of sales 55.5 52.9
------- -------
Gross profit 44.5 47.1
Selling, general and administrative expenses 39.6 41.9
Store closing charge 3.6 -
Depreciation and amortization 3.0 3.1
------- -------
Operating income (loss) (1.7) 2.1
Interest expense 5.6 5.5
------- -------
Loss before income taxes (7.3) (3.4)
Income tax benefit 2.6 1.2
------- -------
Loss before extraordinary items (4.7) (2.2)
Extraordinary items, net of tax (0.9) -
------- -------
Net loss (5.6)% (2.2)%
======= =======
Comparable store sales decrease (5.7)% (9.3)%
======= =======
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30, 1995
Net sales of $228.1 million for the period ended June 30, 1996 decreased $13.8
million or 5.7% from net sales of $241.9 million in the same period for the
prior year. Sales on a comparable store basis decreased 5.7%. Decreased net
sales and comparable store sales have reduced operating performance
significantly during the past two years. LFI has attempted to address this
decrease in net sales by, among other things: (i) hiring a new Chief Executive
Officer, President-Merchandise/Marketing and appointing a new President and
Chief Operating Officer; (ii) changing and outsourcing advertising to create a
new image; (iii) creating a new pricing policy to promote the best value for
customers; and (iv) adding new merchandise to the assortment to broaden the
customer base.
Gross profit as a percentage of net sales decreased to 44.5% from 47.1% for the
periods ended June 30, 1996 and 1995. The decrease in gross profit as a
percentage of net sales is attributable to a change in merchandise pricing
policy. In September 1995, Management changed to "a value pricing system" to
coincide with a new advertising program. In January 1996, Management again
changed the pricing policy which is expected to increase margins in the near
future. However, future increases are not expected to reach the margin levels of
prior periods.
Selling, general and administrative (SG&A) expenses decreased $11.1 million or
10.9% for the period ended June 30, 1996 as compared to the same period for the
prior year. As a percentage of net sales, SG&A expenses decreased to 39.6% from
41.9% for the periods ended June 30, 1996 and 1995, respectively. The dollar
decrease in SG&A expenses is primarily attributable to the reduction of 1,388
employees from 6,239 at June 30, 1995 to 4,851 at June 30, 1996. Salaries,
payroll taxes and employee benefit expenses decreased $8.4 million for the
period ended June 30, 1996 as compared to the same period of the prior year.
8
<PAGE>
During the quarter ended June 30, 1996, Management developed a plan to close
five satellite stores effective October 31, 1996. The store closing charge of
$8.3 million, pre-tax, includes the reduction of the carrying value of the store
assets to the estimated fair value net of selling expenses as well as reserves
for future rental payments under operating lease agreements.
Depreciation and amortization expenses decreased to $6.9 million for the period
ended June 30, 1996 from $7.4 million for the comparable period of the prior
year.
Operating loss was $3.9 million for the period ended June 30, 1996 as compared
to operating income of $5.0 million for the same period of the prior year. The
decrease in operating income is primarily attributable to the decrease in net
sales and the store closing charge.
Interest expense for the period ended June 30, 1996 decreased to $12.8 million
from $13.2 million for the same period of the prior year.
As a result of the aforementioned factors, loss before income taxes for the
period ended June 30, 1996 amounted to $16.7 million or 7.3% of net sales as
compared to loss of $8.2 million or 3.4% of net sales for the same period of the
prior year.
The income tax benefit was $5.9 million for the period ended June 30, 1996 as
compared to an income tax benefit of $3.0 million for the same period of the
prior year. The effective tax rate was 35.2% and 36.7% for the three month
periods ended June 30, 1996 and 1995, respectively.
Loss before extraordinary items for the period ended June 30, 1996 amounted to
$10.8 million or 4.7% of net sales as compared to a loss of $5.2 million or 2.2%
of net sales for the same period of the prior year. The results for the three
month period ended June 30, 1996 are not necessarily indicative of the results
that may be achieved for the full fiscal year.
An extraordinary loss, net of tax benefit, of $2.0 million for the period ended
June 30, 1996 was due to the write-off of deferred financing fees related to the
termination of the previous bank credit agreement.
Net loss for the period ended June 30, 1996 was $12.8 million or 5.6% of net
sales as compared to net loss of $5.2 million or 2.2% of net sales for the same
period of the prior year.
LIQUIDITY AND CAPITAL RESOURCES
Levitz's primary sources of liquidity are cash flow from operations (including
the proceeds from the sale of customer credit obligations) and borrowings under
the Senior Secured Facilities.
Net cash used in operating activities for the three month period ended June 30,
1996 amounted to $2.1 million as compared to net cash used in operating
activities of $13.1 million for the same period of the prior year. Net cash used
in operating activities includes an increase in inventory of approximately $20.8
million. The increase in inventory is primarily attributable to purchases for
new merchandise added to the assortment. The increase in inventory is offset by
a corresponding increase in trade payables of approximately $18.5 million.
Capital expenditures of $1.0 million during the period ended June 30, 1996 were
for maintenance and alterations of existing stores. Management estimates that
approximately $6.0 million to $10.0 million is required annually to adequately
maintain and/or improve its existing warehouse-showrooms and satellite stores.
Levitz does not expect to open any new stores in the current fiscal year.
The cash provided by investing activities for the quarter ended June 30, 1995
was primarily due to the sale-leaseback transaction as described in Note 3 of
the condensed financial statements.
The net cash used in financing activities for the periods ended June 30, 1996
and 1995 was for the payment of debt offset by increases in cash overdrafts
which is reflective of the timing of payments.
9
<PAGE>
On July 1, 1996, Levitz and certain of its wholly owned subsidiaries entered
into new senior secured credit facilities providing for up to $190.0 million of
availability (collectively, the "Senior Secured Facilities"). The Senior Secured
Facilities are secured by substantially all of the assets of Levitz and its
subsidiaries and are comprised of the Tranche A Facility (the "Tranche A
Facility") providing for up to $150.0 million and the Tranche B Facility (the
"Tranche B Facility") providing up to $40.0 million. The proceeds of the Senior
Secured Facilities were used to refinance indebtedness incurred under the Credit
Agreement, to provide liquidity for working capital needs and for other general
corporate purposes. The Senior Secured Facilities expire on July 1, 2001.
In addition, LFI issued warrants to Apollo to purchase up to 5,000,000 shares of
Common Stock of LFI at an initial exercise price of $4.125, subject to downward
adjustments if certain targeted stock prices of LFI are not achieved in the
future and other antidilution provisions.
In order to comply with a consensus issued in November 1995 set forth by the
Emerging Issues Task Force in EITF 95-22 regarding classification of certain
debt instruments that include both a requirement for a lock box arrangement and
a subjective acceleration clause, $50.9 million of the borrowings under the
Tranche A Facility have been classified as a current liability. Under the terms
of the Tranche A Facility, however, Levitz will not be required to repay this
amount in the next year. Payment will only be required at the expiration of the
Tranche A Facility on July 1, 2001 or if the borrowing base is reduced below the
amount outstanding. Based on anticipated borrowing base levels, Levitz believes
the amount outstanding will be due and payable in July 2001. See Note 4 of the
consolidated condensed financial statements.
Management has undertaken a number of steps to address the liquidity needs of
LFI and Levitz as well as compliance with the Senior Secured Facilities. Based
upon anticipated cash flow from operations and existing borrowing capacity under
the Senior Secured Facilities, Management believes LFI and Levitz will be able
to meet the covenants contained in the Senior Secured Facilities during the
foreseeable future and has sufficient cash flow to meet current cash needs.
However, compliance with such covenants will be dependent on the successful
accomplishment of management's strategies and Levitz achieving improved
comparable store sales in Fiscal 1997. Actual results could differ from the
estimates used to set these covenants resulting in Levitz's failure to be in
compliance with the Senior Secured Facilities. As of July 31, 1996, Levitz had
approximately $23.0 million of availability under the Senior Secured Facilities.
10
<PAGE>
PART II OTHER INFORMATION: NONE.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Security Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LEVITZ FURNITURE CORPORATION
----------------------------
(Registrant)
Date: August 13, 1996 /s/ PATRICK J. NOLAN
----------------------------
Patrick J. Nolan
Senior Vice President/Chief
Financial Officer and Treasurer
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 8,627
<SECURITIES> 0
<RECEIVABLES> 39,104
<ALLOWANCES> 0
<INVENTORY> 161,763
<CURRENT-ASSETS> 214,424
<PP&E> 218,648
<DEPRECIATION> 0
<TOTAL-ASSETS> 605,155
<CURRENT-LIABILITIES> 253,844
<BONDS> 280,479
0
0
<COMMON> 1
<OTHER-SE> (84,544)
<TOTAL-LIABILITY-AND-EQUITY> 605,155
<SALES> 228,128
<TOTAL-REVENUES> 228,128
<CGS> 126,513
<TOTAL-COSTS> 126,513
<OTHER-EXPENSES> 105,504
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,795
<INCOME-PRETAX> (16,684)
<INCOME-TAX> 5,879
<INCOME-CONTINUING> (10,805)
<DISCONTINUED> 0
<EXTRAORDINARY> (2,002)
<CHANGES> 0
<NET-INCOME> (12,807)
<EPS-PRIMARY> (12,807)
<EPS-DILUTED> 0
</TABLE>
