<PAGE>
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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 August 2, 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 0-15542
LAMONTS APPAREL, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware #75-2076160
(State of Incorporation) (I.R.S. Employer Identification Number)
12413 Willows Road N.E., Kirkland, Washington 98034
(Address of Principal Executive Offices)
(425) 814-5700
(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
--- ---
As of September 12, 1997, there were 17,900,053 shares of the
Registrant's Common Stock, par value $0.01 per share, outstanding.
Exhibit Index on Page 16
Page 1
<PAGE>
LAMONTS APPAREL, INC.
(DEBTOR-IN-POSSESSION)
FORM 10-Q
AUGUST 2, 1997
INDEX
<TABLE>
<CAPTION>
Part I. Financial Information Page
----
<S> <C> <C>
Item 1 Consolidated Financial Statements
- Consolidated Balance Sheets - August 2, 1997 and February 1, 1997 3
- Consolidated Statements of Operations and Accumulated Deficit for
the three months ended August 2, 1997 and August 3, 1996 4
- Consolidated Statements of Operations and Accumulated Deficit for
the six months ended August 2, 1997 and August 3, 1996 5
- Consolidated Statements of Cash Flows for the six months ended
August 2, 1997 and August 3, 1996 6
- Notes to Consolidated Financial Statements 7
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations 11
Part II. Other Information
Item 1 - Legal Proceedings 16
Item 3 - Defaults Upon Senior Securities 16
Item 5 - Other Information 16
Item 6 - Exhibits and Reports on Form 8-K 16
</TABLE>
2
<PAGE>
LAMONTS APPAREL, INC.
(DEBTOR-IN-POSSESSION)
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AUGUST 2, FEBRUARY 1,
1997 1997
----------- -----------
<S> <C> <C>
Current Assets:
Cash $2,091 $2,066
Receivables - net 3,298 1,595
Inventories 46,438 37,559
Prepaid expenses and other 1,491 1,528
Restricted cash and deposits 975 714
----------- -----------
Total current assets 54,293 43,462
Property and equipment - net of accumulated depreciation and amortization of
$29,732 and $27,506, respectively 27,940 30,653
Leasehold interests 3,263 3,477
Excess of cost over net assets acquired - net 11,429 11,591
Deferred financing costs - net 1,627 1,989
Restricted cash and deposits 1,142 1,142
Other assets 659 958
----------- -----------
Total assets $100,353 $93,272
----------- -----------
----------- -----------
Liabilities not subject to settlement under reorganization proceedings:
Current Liabilities:
Borrowings under DIP Facility $28,548 $23,141
Accounts payable 21,544 13,578
Accrued payroll and related costs 2,436 2,285
Accrued taxes 1,591 812
Accrued interest 811 616
Accrued store closure costs 1,036 1,050
Other accrued expenses 5,255 5,325
Current maturities of obligations under capital leases 12 12
----------- -----------
Total current liabilities 61,233 46,819
Obligations under capital leases 2,846 2,846
Other 212 302
----------- -----------
Total liabilities not subject to settlement under reorganization proceedings 64,291 49,967
----------- -----------
Liabilities subject to settlement under reorganization proceedings 102,415 102,858
----------- -----------
Commitments and Contingencies
Stockholders' Equity (Deficit):
Common stock, $0.01 par value, 40,000,000 shares authorized, 17,900,053
shares issued and outstanding 179 179
Additional paid-in capital 62,997 62,972
Accumulated deficit (129,529) (122,704)
----------- -----------
Total stockholders' equity (deficit) (66,353) (59,553)
----------- -----------
Total liabilities and stockholders' equity (deficit) $100,353 $93,272
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
3
<PAGE>
LAMONTS APPAREL, INC.
(DEBTOR-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF OPERATIONS
AND ACCUMULATED DEFICIT
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------
AUGUST 2, AUGUST 3,
1997 1996
--------- ---------
<S> <C> <C>
Revenues $49,483 $49,657
Cost of merchandise sold 31,471 31,607
-------- --------
Gross profit 18,012 18,050
-------- --------
Operating and administrative expenses 16,347 17,201
Depreciation and amortization 1,889 2,000
-------- --------
Operating costs 18,236 19,201
-------- --------
Loss from operations before other income
(expense) and reorganization expenses (224) (1,151)
Other income (expense):
Interest expense (contractual interest of
$3.4 million in 1997 and 1996) (1,228) (1,257)
Other 1 2
-------- --------
Loss from operations before reorganization expenses (1,451) (2,406)
Reorganization expenses 595 985
-------- --------
Net loss (2,046) (3,391)
Accumulated deficit, beginning of period (127,483) (115,679)
-------- --------
Accumulated deficit, end of period ($129,529) ($119,070)
-------- --------
-------- --------
Net loss per common share ($0.11) ($0.19)
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
4
<PAGE>
LAMONTS APPAREL, INC.
(DEBTOR-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF OPERATIONS
AND ACCUMULATED DEFICIT
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------------------
AUGUST 2, AUGUST 3,
1997 1996
--------- ---------
<S> <C> <C>
Revenues $87,131 $87,579
Cost of merchandise sold 56,038 55,954
--------- ---------
Gross profit 31,093 31,625
--------- ---------
Operating and administrative expenses 30,727 32,977
Depreciation and amortization 3,761 4,037
Impairment of long-lived assets -- 4,170
--------- ---------
Operating costs 34,488 41,184
--------- ---------
Loss from operations before other income (expense) and
reorganization expenses (3,395) (9,559)
Other income (expense):
Interest expense (contractual interest of $6.8 million in
1997 and 1996) (2,440) (2,455)
Other 4 5
--------- ---------
Loss from operations before reorganization expenses (5,831) (12,009)
Reorganization expenses 994 1,655
--------- ---------
Net loss (6,825) (13,664)
Accumulated deficit, beginning of period (122,704) (105,406)
--------- ---------
Accumulated deficit, end of period ($129,529) ($119,070)
--------- ---------
--------- ---------
Net loss per common share ($0.38) ($0.76)
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
5
<PAGE>
LAMONTS APPAREL, INC.
(DEBTOR-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------------
AUGUST 2, AUGUST 3,
1997 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($6,825) ($13,664)
Adjustments to reconcile net loss to net cash used in operating
activities before reorganization items:
Depreciation and amortization 3,761 4,037
Impairment of long-lived assets -- 4,170
Reorganization expenses 994 1,655
Increase in inventories (8,879) (14,812)
Increase in accounts payable 7,966 7,599
Other (156) 1,848
--------- ---------
Net cash used in operating activities before reorganization
items (3,139) (9,167)
Operating cash flows used by reorganization items:
Payments for professional fees and other expenses related
to the Chapter 11 proceedings (1,566) (1,360)
--------- ---------
Net cash used in operating activities (4,705) (10,527)
--------- ---------
Cash flows from investing activities:
Capital expenditures (474) (335)
Proceeds from sale of property and equipment 4 4,459
Other 257 45
--------- ---------
Net cash provided by (used in) investing activities (213) 4,169
--------- ---------
Cash flows from financing activities:
Post-petition borrowings under working capital facility 100,962 128,372
Post-petition payments under working capital facility (95,555) (120,576)
Principal payments on obligations under capital leases (436) (445)
Other (28) (33)
--------- ---------
Net cash provided by financing activities 4,943 7,318
--------- ---------
Net increase in cash 25 960
Cash, beginning of period 2,066 1,581
--------- ---------
Cash, end of period $2,091 $2,541
--------- ---------
--------- ---------
Supplemental disclosures of cash flow information:
Cash interest payments made $2,196 $2,489
--------- ---------
--------- ---------
Supplemental disclosure of noncash investing and
financing activities:
Capital lease relating to sale-leaseback of store -- $2,835
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
6
<PAGE>
LAMONTS APPAREL, INC.
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
AUGUST 2, 1997
NOTE 1 - PETITION FOR RELIEF UNDER CHAPTER 11
On January 6, 1995 (the "Petition Date"), Lamonts Apparel, Inc. (the
"Company" or "Lamonts") filed a voluntary petition for relief (the "Filing")
under Chapter 11 ("Chapter 11") of title 11 of the United States Code (the
"Bankruptcy Code") in the United States Bankruptcy Court (the "Court") for
the Western District of Washington at Seattle. In Chapter 11, the Company
has continued to manage its affairs and operate its business as a
debtor-in-possession. As a debtor-in-possession in Chapter 11, the Company
may not engage in transactions outside of the ordinary course of business
without approval, after notice and hearing, of the Court. The Company and
representatives of the committees that represent Lamonts' unsecured trade
creditors, bondholders and equityholders (the "Committees") have reached an
understanding regarding the material economic terms of a proposed consensual
plan of reorganization designed to enable the Company to emerge from Chapter
11. On August 23, 1996, that plan was filed with the Court, along with the
proposed disclosure statement relating to the plan. On October 23, 1996, an
amended plan of reorganization ("the Plan") and an amended disclosure
statement (the "Disclosure Statement") were filed with the Court. The
Disclosure Statement was approved by the Court on October 24, 1996, and the
Plan and Disclosure Statement were transmitted to all impaired creditors and
equity security holders along with ballots for the purpose of soliciting
acceptances of the Plan. A hearing to consider confirmation of the Plan (the
"Confirmation Hearing") commenced on January 6, 1997, and the Court
determined that the requisite majorities of each class of the Company's
impaired creditors and equity security holders voted in favor of acceptance
of the Plan and that all requirements for confirmation of the Plan had been
satisfied, except that, as requested by Lamonts and the Committees, the
Confirmation Hearing was continued to April 14, 1997, to consider certain
"Deferred Confirmation Requirements". At the request of Lamonts and the
Committees, the Court further deferred final confirmation of the Plan in
order to afford Lamonts additional time in which to explore opportunities to
raise capital.
On August 13, 1997, the Company entered into a commitment letter (the
"Commitment Letter") with BankBoston, N.A., (f/k/a "The First National Bank
of Boston") ("BankBoston") pursuant to which BankBoston would provide the
Company with an additional $10 million term loan. The Court approved the
Commitment Letter pursuant to the "Stipulation re Commitment by BankBoston,
N.A. for Term Loan Financing; and Order Thereon" entered into by the Company
and the Committees. The additional credit facility is subject to a number of
conditions, including but not limited to, completion of definitive
documentation, approval of the Court, and customary closing conditions. The
Company has filed a motion for Court approval of the proposed additional
credit facility which is currently set for hearing on September 19, 1997.
There can be no assurances that such approval will be obtained or that such
other conditions will be met. The proposed additional credit facility is
discussed further in Note 3.
The Plan provides that the Company's current equity holders will be
substantially diluted. The confirmation and effectiveness of the Plan, the
implementation of the Company's proposed business plan and the Company's
proposed equity distribution are each subject to numerous uncertainties set
forth in detail in the Plan and Disclosure Statement, and the Plan is subject
to modifications and / or withdrawal. Accordingly, the value of the
Company's common stock remains highly speculative.
As of the Petition Date, payment of pre-petition liabilities to unsecured
creditors, including trade creditors and noteholders, and pending litigation
against the Company are generally stayed while the Company continues its
business operations as a debtor-in-possession. In a Chapter 11
reorganization plan, the rights of the creditors may be significantly
altered. Creditors may receive substantially less than the full face amount
of claims. Certain creditors have filed claims with the Court substantially
in excess of amounts reflected in the Company's financial statements. The
Company continues to analyze and reconcile the claims filed by creditors with
the Company's financial records, but believes it has made appropriate
provision for all claims filed. However, no estimate of the amount of
adjustments, if any, from recorded amounts, to amounts to be realized by
creditors, is available at this time. These liabilities are included in the
balance sheet as "liabilities subject to settlement under reorganization
proceedings."
As a result of the Company's Chapter 11 filing, the Company is currently in
default under the indentures governing the Company's 10-1/4% Subordinated
Notes due November 1999 (the "10-1/4% Notes") and the 13-1/2% Senior
Subordinated Notes which were due February 1995 (the "13-1/2% Notes"). As a
result, all unpaid principal of, and accrued pre-petition interest on, such
debt became immediately due and payable. The payment of such debt and
accrued but unpaid interest is prohibited during the pendency of the
Company's Chapter 11 case, and these liabilities have been included in the
balance sheet as "liabilities subject to settlement under reorganization
proceedings".
7
<PAGE>
Pre-petition liabilities subject to settlement under reorganization proceedings
include the following (dollars in thousands):
AUGUST 2, FEBRUARY 1,
1997 1997
--------- ----------
Accounts payable and accrued liabilities $23,140 $23,121
Capital lease obligations 10,781 11,216
10-1/4% Notes (including pre-petition accrued
interest) related party 67,600 67,600
13-1/2% Notes (including pre-petition accrued
interest) 838 838
Notes payable 56 83
--------- ---------
$102,415 $102,858
--------- -----------
--------- -----------
The reductions in capital lease obligations consist of payments to landlords
for store locations in the ongoing business operations of the Company.
In accordance with the Bankruptcy Code, the Company can seek Court approval
for the rejection of executory contracts, including real property leases.
Any such rejection may give rise to a prepetition unsecured claim for breach
of contract. In connection with the Company's Chapter 11 proceedings, the
Company continues to review all of its obligations under its executory
contracts. As of August 2, 1997, the Company has rejected 14 real property
leases and certain executory contracts and assumed 5 leases (with certain
conditions and limitations).
As a result of the reorganization proceedings, the Company may sell or
otherwise realize assets and liquidate or settle liabilities for amounts
other than those reflected in the consolidated financial statements. Further,
a plan of reorganization could materially change the amounts currently
recorded in the consolidated financial statements, including amounts recorded
for the excess of cost over net assets acquired. The accompanying
consolidated financial statements do not include any adjustments that might
result from the outcome of these matters or adjustments that might result
should the Company be unable to continue as a going concern. Generally if a
debtor-in-possession is unable to emerge from Chapter 11, such
debtor-in-possession could be required to liquidate its assets.
Costs associated with the reorganization of the Company are charged to
expense as incurred. Under the requirements of the Chapter 11 filing, the
Company is required to pay certain expenses of the Committees. The amounts
charged to reorganization expense by the Company have consisted and will
continue to consist primarily of write-off of property and equipment,
professional fees, lease related costs and severance costs.
NOTE 2 - BASIS OF PRESENTATION
The consolidated financial statements present the consolidated financial
position and results of operations of the Company and its subsidiaries. All
subsidiaries of the Company are inactive. All significant intercompany
transactions and account balances have been eliminated in consolidation. The
financial statements included herein should be read in conjunction with the
audited, annual financial statements for the fiscal year ended February 1,
1997, included in the Company's Annual Report on Form 10-K. The year-end
condensed balance sheet was derived from audited financial statements, but
does not include all disclosures required by generally accepted accounting
principles.
The accompanying consolidated financial statements of the Company have been
prepared on a going concern basis of accounting, and, for the periods
subsequent to the Filing, in accordance with the American Institute of
Certified Public Accountants Statement of Position 90-7, FINANCIAL REPORTING
BY ENTITIES IN REORGANIZATION UNDER THE BANKRUPTCY CODE. Recurring losses
from operations and the matters discussed herein related to the Filing raise
substantial doubt about the Company's ability to continue as a going concern.
The ability of the Company to continue as a going concern is dependent upon,
among other things, (i) the ability to comply with its debtor-in-possession
financing agreement, (ii) confirmation of a plan of reorganization under the
Bankruptcy Code, (iii) the ability to achieve profitable operations after
such confirmation and (iv) the ability to generate sufficient cash from
operations to meet its obligations.
8
<PAGE>
The consolidated financial statements presented herein reflect all
adjustments that are, in the opinion of management, necessary to present
fairly the operating results for the periods reported. Except as discussed
in Note 1, all such adjustments are normal and recurring in nature. The
results of operations for the quarterly periods are not necessarily
indicative of results for the entire year.
IMPAIRMENT OF LONG-LIVED ASSETS
In the first quarter of Fiscal 1996, the Company adopted Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" ("Statement
No. 121"). Statement No. 121 requires that long-lived assets and certain
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. If impairment has occurred, an impairment loss must be
recognized.
Statement No. 121 requires that assets be grouped and evaluated at the lowest
level for which there are identifiable cash flows that are largely
independent of the cash flows of other groups of assets. The Company has
identified this lowest level to be principally individual stores. The
Company considers historical performance and future estimated results in its
evaluation of potential impairment and then compares the carrying amount of
the asset to the estimated future cash flows expected to result from the use
of the asset. If the carrying amount of the asset exceeds estimated expected
undiscounted future cash flows, the Company measures the amount of the
impairment by comparing the carrying amount of the asset to its fair value.
The estimation of fair value is measured by discounting expected future cash
flows at a rate commensurate with the Company's borrowing rate.
During the first quarter of Fiscal 1996, the Company recognized a non-cash
impairment loss of $4.2 million. Of the total impairment loss, $2.3 million
represents impairment of property and equipment, $1.3 million relates to
excess of cost over net assets acquired and $0.6 million pertains to
leasehold interests. Based on estimates by management as of August 2, 1997,
subject to the outcome of issues discussed in Note 1, no additional
impairment has occurred during the six months ended August 2, 1997.
Considerable management judgment is necessary to estimate discounted future
cash flows. Accordingly, actual results could vary significantly from such
estimates.
OTHER
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" ("Statement
No. 128"). All companies are required to comply with the disclosure
requirements of the statement and the Company will adopt the policy in the
4th Quarter of its Fiscal year ending January 31, 1998. Management is
currently evaluating the requirements of Statement No. 128.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 "Comprehensive Income" ("Statement No.
130"). Statement No. 130 establishes standards for reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. Statement No. 130 is effective for fiscal years
beginning after December 15, 1997 and requires restatement of earlier periods
presented. Management is currently evaluating the requirements of Statement
No. 130.
NOTE 3 - LOAN AND SECURITY AGREEMENTS
On February 17, 1995, the Company received approval from the Court for a Loan
and Security Agreement (the "Old DIP Facility") with Foothill Capital
Corporation ("Foothill"). The Old DIP Facility provided for a borrowing
capacity of up to $32.0 million in revolving loans, including up to $15.0
million of letters of credit, subject to borrowing base limitations based
upon, among other things, the value of inventory and certain real property.
On June 4, 1996, the Company entered into a loan and security agreement (the
"BankBoston Facility") with BankBoston, N.A. replacing the Old DIP Facility,
after a hearing by the Court and the entering of an order approving such
financing. Although Foothill had taken no action to declare the Company in
default as of the date on which the Old DIP Facility was terminated, the
Company was in violation of the net worth maintenance covenant in the Old DIP
Facility.
Pursuant to the BankBoston Facility, the Company is able to borrow up to $32
million in revolving loans (including $3 million of letters of credit),
subject to borrowing base limitations based upon, among other things, the
value of inventory and certain real property, during the pendency of the
Company's Chapter 11 proceeding or until June 30, 1997, whichever is sooner.
The BankBoston Facility was amended as of May 23, 1997, to extend the term of
the BankBoston Facility to February 27, 1998, and this amendment was approved
by the Court. Subject to BankBoston's approval of a plan of reorganization
and other specified conditions, the BankBoston Facility will continue for a
two year period following the effective date of a plan of reorganization.
9
<PAGE>
The BankBoston Facility provides that for Base Rate (as defined therein)
loans, interest will accrue at the rate of 1.5% per annum in excess of the
Base Rate, payable monthly in arrears. For Eurodollar loans, the interest
rate will be the Eurodollar Rate (as defined therein) plus 2.75% (adjusted as
provided therein). The BankBoston Facility also provides that in the event of
a default, the interest rate following such default shall be the greater of
(i) 3.0% per annum in excess of the Base Rate and (ii) the applicable rate on
the loan, payable on demand. The interest rates for both Base Rate loans and
Eurodollar loans are subject to adjustment after the Plan is approved and
other conditions described in the BankBoston Facility have occurred based on
financial ratios of the Company specified in the BankBoston Facility. For the
six months ended August 2, 1997, the weighted average Base Rate was 8.5% and
the weighted average Eurodollar Rate was 5.6%.
The Company has expensed fees of approximately $328,000 for the BankBoston
Facility for the six months ended August 2, 1997. Fees payable under the
BankBoston Facility consist primarily of monthly payments equal to 0.5%
(adjusted as provided therein) of the average unused borrowing capacity and
monthly payments equal to 0.125% of the borrowing capacity. There will be an
additional fee in the amount of $560,000 after the effective date of a plan
of reorganization and the satisfaction of certain conditions described in the
BankBoston Facility. The fee shall be payable as follows: (a) if the
conditions are satisfied prior to December 31, 1997, $336,000 shall be
payable on the date the conditions are satisfied and $224,000 shall be
payable on December 31, 1997 (or, if earlier, the time of termination of the
Exit Commitments, as defined), or (b) if the conditions are satisfied on or
after December 31, 1997, $336,000 shall be payable on the date the conditions
are satisfied and $224,000 shall be payable on December 31, 1998 (or, if
earlier, the time of termination of the Exit Commitments).
Borrowings under the BankBoston Facility, together with cash flow from
operations, may be used by the Company to finance general working capital
requirements, including purchases of inventory and other expenditures
permitted under the BankBoston Facility. The BankBoston Facility is secured
by inventory and substantially all other assets and is an allowed
administrative expense claim with superpriority over other administrative
expenses in the Chapter 11 case. The BankBoston Facility imposes limitations
on the Company with respect to, among other things, (i) consolidations,
mergers, and sales of assets, (ii) capital expenditures in excess of
specified levels and (iii) the prepayment of certain indebtedness.
Additionally, the Company must comply with certain operating and financial
covenants (as described therein). Although the Company failed to comply with
certain covenants related to inventory levels for the months ending July 6,
1996 and August 3, 1996, the Company requested and received a waiver relating
to such breaches.
On August 13, 1997, the Company entered into the Commitment Letter with
BankBoston to amend the BankBoston Facility to provide an additional $10
million term loan (the "Term Loan"). The Company and the Committees executed
the "Stipulation re Commitment by BankBoston, N.A. for Term Loan Financing;
and Order Thereon," which was approved by the Court on August 15, 1997.
Pursuant to the Commitment Letter, (a) the proposed Term Loan would mature on
the earlier of (i) twenty-seven months after the closing date of the Term
Loan and (ii) the maturity date of the revolving loans under the BankBoston
Facility, and the maturity date would be subject to extension for two
consecutive one year periods on the terms and conditions set forth in the
Commitment Letter including, among others, payment of specified extension
fees; (b) interest on the Term Loan would be the same as the nondefault rate
for the revolving loans under the BankBoston Facility; (c) collateral for the
Term Loan would be the same as the collateral for the revolving loans under
the BankBoston Facility, including all real estate leasehold interests of the
Company; (d) a third party guarantor of the Term Loan will be issued warrants
under the Company's plan of reorganization granting the right to acquire up
to 20% of the reorganized Company's outstanding equity at an initial exercise
price of $4 million; and (e) fees for the Term Loan will include a closing
fee of $500,000 and additional closing fees and extension fees equal to 5% of
the average outstanding daily principal balance of the Term Loan.
Consummation of the Term Loan is subject to a number of conditions,
including, but not limited to, completion of definitive documentation,
approval of the court (after notice and a hearing currently scheduled for
September 19, 1997) and customary closing conditions. Pursuant to the
Commitment Letter, all conditions must be satisfied by October 31, 1997.
There can be no assurances that such approval will be obtained or that such
other conditions will be met.
NOTE 4 - LOSS PER COMMON SHARE
Net loss per common share has been computed by dividing net loss by the
weighted average number of common shares outstanding during the period. The
common stock equivalents, represented by stock options and warrants were not
considered in the calculation as they either have an exercise price greater
than the applicable market price, or the effect of assuming their exercise or
conversion would be anti-dilutive. The weighted average number of shares
outstanding for the quarter and six months ended August 2, 1997 were
17,900,053.
The weighted average number of shares outstanding for the quarter and six
months ended August 3, 1996 were 17,899,970 and 17,899,759, respectively.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
The Company is involved in various matters of litigation arising in the
ordinary course of business. In the opinion of management, the ultimate
outcome of all such matters should not have a material adverse effect on the
financial position of the Company, but, if decided adversely to the Company,
could have a material effect upon the Company's anticipated plan of
reorganization and operating results during the period in which the
litigation is resolved. (See also Part II, Item 1.)
10
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain information and statements included in Management's Discussion and
Analysis of Financial Condition and Results of Operations including, without
limitation, statements containing the words "believes", "anticipates",
"expects" and words of a similar import, constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements involve known and unknown
risks, uncertainties, and other factors that may cause the actual results,
performance, or achievements of the Company (defined below), to be materially
different from any future results, performance, or achievements expressed or
implied by such forward-looking statements. Although it is not possible to
itemize all the factors and specific events that could affect the outlook of
the Company, factors that could significantly impact the expected results
include, among others, (i) national and local general economic and market
conditions, (ii) demographic changes, (iii) liability and other claims
asserted against the Company, (iv) competition, (v) the loss of significant
customers or suppliers, (vi) fluctuations in operating results, (vii) changes
in business strategy or development plans, (viii) business disruptions, (ix)
the ability to attract and retain qualified personnel, and (x) the
confirmation of the Plan and the terms thereof. The Company disclaims any
obligations to update any such factors or to announce publicly the result of
any revisions to any forward-looking statements contained or incorporated by
reference herein to reflect untrue events or developments.
BACKGROUND
Lamonts Apparel, Inc. (the "Company") retails brand-name apparel and
accessories for the entire family through its 38 full-line apparel stores.
Lamonts currently operates in malls and regional shopping centers located in
the states of Alaska, Idaho, Oregon, Utah and Washington.
On January 6, 1995 (the "Petition Date"), Lamonts Apparel, Inc. (the
"Company" or "Lamonts") filed a voluntary petition for relief (the "Filing")
under Chapter 11 ("Chapter 11") of title 11 of the United States Code (the
"Bankruptcy Code") in the United States Bankruptcy Court (the "Court") for
the Western District of Washington at Seattle. In Chapter 11, the Company
has continued to manage its affairs and operate its business as a
debtor-in-possession. As a debtor-in-possession in Chapter 11, the Company
may not engage in transactions outside of the ordinary course of business
without approval, after notice and hearing, of the Court. The Company and
representatives of the committees that represent Lamonts' unsecured trade
creditors, bondholders and equityholders (the "Committees") have reached an
understanding regarding the material economic terms of a proposed consensual
plan of reorganization designed to enable the Company to emerge from Chapter
11. On August 23, 1996, that plan was filed with the Court, along with the
proposed disclosure statement relating to the plan. On October 23, 1996, an
amended plan of reorganization ("the Plan") and an amended disclosure
statement (the "Disclosure Statement") were filed with the Court. The
Disclosure Statement was approved by the Court on October 24, 1996, and the
Plan and Disclosure Statement were transmitted to all impaired creditors and
equity security holders along with ballots for the purpose of soliciting
acceptances of the Plan. A hearing to consider confirmation of the Plan (the
"Confirmation Hearing") commenced on January 6, 1997, and the Court
determined that the requisite majorities of each class of the Company's
impaired creditors and equity security holders voted in favor of acceptance
of the Plan and that all requirements for confirmation of the Plan had been
satisfied, except that, as requested by Lamonts and the Committees, the
Confirmation Hearing was continued to April 14, 1997, to consider certain
"Deferred Confirmation Requirements". At the request of Lamonts and the
Committees, the Court further deferred final confirmation of the Plan in
order to afford Lamonts additional time in which to explore opportunities to
raise additional capital.
On August 13, 1997, the Company entered into a commitment letter (the
"Commitment Letter") with BankBoston, N.A., (f/k/a "The First National Bank
of Boston") ("BankBoston") pursuant to which BankBoston would provide the
Company with an additional $10 million term loan. The Court approved the
Commitment Letter pursuant to the "Stipulation re Commitment by BankBoston,
N.A. for Term Loan Financing; and Order Thereon" entered into by the Company
and the Committees. The additional credit facility is subject to a number of
conditions, including but not limited to, completion of definitive
documentation, approval of the Court, and customary closing conditions. The
Company has filed a motion for Court approval of the proposed additional
credit facility which is currently set for hearing on September 19, 1997.
There can be no assurances that such approval will be obtained or that such
other conditions will be met. The proposed additional credit facility is
discussed further in the Liquidity and Capital Resources section.
The Plan provides that the Company's current equity holders will be
substantially diluted. The confirmation and effectiveness of the Plan, the
implementation of the Company's proposed business plan and the Company's
proposed equity distribution are each subject to numerous uncertainties set
forth in detail in the Plan and Disclosure Statement, and the Plan is subject
to modifications and / or withdrawal. Accordingly, the value of the
Company's common stock remains highly speculative.
11
<PAGE>
As of the Petition Date, payment of pre-petition liabilities to unsecured
creditors, including trade creditors and noteholders, and pending litigation
against the Company are generally stayed while the Company continues its
business operations as a debtor-in-possession. In a Chapter 11
reorganization plan, the rights of the creditors may be significantly
altered. Creditors may receive substantially less than the full face amount
of claims. Certain creditors have filed claims with the Court substantially
in excess of amounts reflected in the Company's financial statements. The
Company continues to analyze and reconcile the claims filed by creditors with
the Company's financial records, but believes it has made appropriate
provision for all claims filed. However, no estimate of the amount of
adjustments, if any, from recorded amounts, to amounts to be realized by
creditors, is available at this time.
As a result of the Company's Chapter 11 filing, the Company is currently in
default under the indentures governing the Company's 10-1/4% Subordinated
Notes due November 1999 (the "10-1/4% Notes") and the 13-1/2% Senior
Subordinated Notes which were due February 1995 (the "13-1/2% Notes"). As a
result, all unpaid principal of, and accrued pre-petition interest on, such
debt became immediately due and payable. The payment of such debt and
accrued but unpaid interest is prohibited during the pendency of the
Company's Chapter 11 case.
Management is continually evaluating store locations and operations to
determine whether to close, downsize or relocate stores that do not meet
performance objectives.
Management believes that Lamonts has made substantial progress in the period
since the Filing. The Company has closed unprofitable stores, eliminated
unprofitable merchandise lines and reduced operating expenses. In addition,
management has implemented new merchandising strategies designed to: (i)
improve the quality of merchandise offered while maintaining price points
geared to the Company's customer base, and (ii) reduce cash operating
expenses.
RESULTS OF OPERATIONS
The following discussion and analysis provides information with respect to
the results of operations for the quarter ("2nd Quarter 1997") and six month
period ("YTD 1997") ended August 2, 1997 compared to the quarter ("2nd
Quarter 1996") and six month period ("YTD 1996") ended August 3, 1996.
REVENUES. Revenues of $49.5 million for the 2nd Quarter 1997 decreased $0.2
million on a total store basis from $49.7 million for the 2nd Quarter 1996.
Revenues of $87.1 million for YTD 1997 decreased $0.5 million on a total
store basis from $87.6 million for YTD 1996. The decrease is attributable to
the closure of 4 stores that were operating during the prior year.
Comparable store revenues increased 5.8% for the 2nd Quarter 1997, as
compared to 2nd Quarter 1996. Comparable store revenues increased 6.4% for
YTD 1997 as compared to YTD 1996. Management believes that comparable store
revenues have increased due to increased levels of inventory and continued
improvement in the quality of the merchandise offered in the stores compared
to the prior year.
GROSS PROFIT. Gross profit, as a percentage of revenues, of 36.4% for the
2nd Quarter 1997 remained unchanged from the 2nd Quarter 1996. Gross profit,
as a percentage of revenues, decreased to 35.7% for YTD 1997, compared to
36.1% for YTD 1996. The decline in gross profit for YTD 1997 was associated
with the carry over of fall merchandise resulting from lower sales due to the
winter storms in certain markets of the Company.
OPERATING AND ADMINISTRATIVE EXPENSES. Operating and administrative expenses
of $16.3 million for the 2nd Quarter 1997 decreased 5.0% or $0.9 million from
$17.2 million for the 2nd Quarter 1996. Operating and administrative
expenses of $30.7 million for YTD 1997 decreased 6.8% or $2.3 million from
$33.0 million for YTD 1996. The decrease is primarily the result of a
reduction in operating costs of $1.0 million and $2.0 million, in 2nd Quarter
1997 and YTD 1997, respectively, attributable to closed stores operating in
the prior year. In addition, operating and administrative expenses reflect
the continuing effects of the operating expense containment program
instituted in prior periods, partially offset by an increase in advertising
expenses.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense of $1.9
million for the 2nd Quarter 1997 decreased $0.1 million as compared to $2.0
million for the 2nd Quarter 1996. Depreciation and amortization expense of
$3.8 million for YTD 1997 decreased $0.2 million as compared to $4.0 million
for YTD 1996. The decrease primarily relates to assets retired as a result
of store closures and assets becoming fully depreciated or amortized.
12
<PAGE>
IMPAIRMENT OF LONG-LIVED ASSETS. A non-cash charge of $4.2 million for the
impairment of long-lived assets was recognized during YTD 1996 due to the
adoption of Statement of Financial Accounting Standards No. 121, see "Item 1
- -Consolidated Financial Statements - Note 2".
INTEREST EXPENSE. Interest expense was $1.2 million for 2nd Quarter 1997
compared to $1.3 million for 2nd Quarter 1996. The YTD 1997 expense was $2.4
million, compared to $2.5 million for YTD 1996. Interest expense is related
to outstanding borrowings under the BankBoston Facility (as defined below).
REORGANIZATION EXPENSES. Reorganization expenses of $0.6 million for the 2nd
Quarter 1997 decreased $0.4 million from $1.0 million for the 2nd Quarter
1996. The YTD 1997 expense of $1.0 million decreased $0.7 million from $1.7
million for the YTD 1996. The reorganization expenses represent costs
directly related to the Company's Chapter 11 case and consist primarily of
professional fees.
NET LOSS. The Company reported a net loss of $2.0 million for the 2nd
Quarter 1997 compared to a net loss of $3.4 million for the 2nd Quarter 1996.
The $1.4 million decrease from the prior period is primarily due to (i) the
decrease in operating and administrative expenses of $0.9 million, and (ii)
the reduction in reorganization expenses of $0.4 million.
The Company reported a net loss of $6.8 million for the YTD 1997 compared to
a net loss of $13.7 million for the YTD 1996. The decrease of $6.9 million
from the prior period resulted primarily from (i) no impairment of long-lived
assets YTD 1997 compared to the recognition of $4.2 million for the
impairment of long-lived assets YTD 1996, (ii) the decrease in operating and
administrative expenses of $2.3 million, and (iii) the reduction in
reorganization expenses of $0.7 million, offset by a decrease in gross profit
of $0.5 million.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW
The Company used $3.1 million of cash for operating activities before
reorganization items for YTD 1997, a decrease of $6.1 million as compared to
$9.2 million used for YTD 1996. The improvement is partially due to a
decrease in net loss. In addition, cash used for inventory purchases
decreased $5.9 million to $8.9 million for YTD 1997 from $14.8 million for
YTD 1996.
The difference in investing activities for YTD 1997 from YTD 1996 of $4.4
million results primarily from net sale proceeds of $4.5 million received in
the sale-leaseback of one of the Company's stores during YTD 1996.
The Company received $4.9 million from financing activities for YTD 1997 as
compared to $7.3 million for YTD 1996. The $2.4 million difference is the
result of lower net borrowings under the Company's working capital facility.
As of August 2, 1997, the Company had $2.0 million of cash and an additional
$1.0 million of current restricted cash, representing the funding of payroll
and taxes in connection with the Filing.
CAPITAL RESOURCES
On February 17, 1995, the Company received approval from the Court for a Loan
and Security Agreement (the "Old DIP Facility") with Foothill Capital
Corporation ("Foothill"). The Old DIP Facility provided for a borrowing
capacity of up to $32.0 million in revolving loans, including up to $15.0
million of letters of credit, subject to borrowing base limitations based
upon, among other things, the value of inventory and certain real property.
On June 4, 1996, the Company entered into a loan and security agreement (the
"BankBoston Facility") with BankBoston, N.A. (f/k/a "The First National Bank
of Boston") ("BankBoston") replacing the Old DIP Facility, after a hearing by
the Court and the entering of an order approving such financing. Although
Foothill had taken no action to declare the Company in default as of the date
on which the Old DIP Facility was terminated, the Company was in violation of
the net worth maintenance covenant in the Old DIP Facility.
Pursuant to the BankBoston Facility, the Company is able to borrow up to $32
million in revolving loans (including $3 million of letters of credit),
subject to borrowing base limitations based upon, among other things, the
value of inventory and certain real property, during the pendency of the
Company's Chapter 11 proceeding or until June 30, 1997, whichever is sooner.
The BankBoston Facility was amended as of May 23, 1997, to extend the term of
the BankBoston Facility to February 27, 1998, and this amendment was
approved by the Court. Subject to BankBoston's approval of a
13
<PAGE>
plan of reorganization and other specified conditions, the BankBoston
Facility will continue for a two year period following the effective date of
a plan of reorganization.
The BankBoston Facility provides that for Base Rate (as defined therein)
loans, interest will accrue at the rate of 1.5% per annum in excess of the
Base Rate payable monthly in arrears. For Eurodollar loans, the interest
rate will be the Eurodollar Rate (as defined therein) plus 2.75% (adjusted as
provided therein). The BankBoston Facility also provides that in the event of
a default, the interest rate following such default shall be the greater of
(i) 3.0% per annum in excess of the Base Rate and (ii) the applicable rate on
the loan, payable on demand. The interest rates for both Base Rate loans and
Eurodollar loans are subject to adjustment after the Plan is approved and
other conditions described in the BankBoston Facility have occurred based on
financial ratios of the Company specified in the BankBoston Facility. For the
six months ended August 2, 1997, the weighted average Base Rate was 8.5% and
the weighted average Eurodollar Rate was 5.6%.
The Company has expensed fees of approximately $328,000 for the BankBoston
Facility for the six months ended August 2, 1997. Fees payable under the
BankBoston Facility consist primarily of monthly payments equal to 0.5%
(adjusted as provided therein) of the average unused borrowing capacity and
monthly payments equal to 0.125% of the borrowing capacity. There will be an
additional fee in the amount of $560,000 after the effective date of a plan
of reorganization and the satisfaction of certain conditions described in the
BankBoston Facility. The fee shall be payable as follows: (a) if the
conditions are satisfied prior to December 31, 1997, $336,000 shall be
payable on the date the conditions are satisfied and $224,000 shall be
payable on December 31, 1997 (or, if earlier, the time of termination of the
Exit Commitments, as defined), or (b) if the conditions are satisfied on or
after December 31, 1997, $336,000 shall be payable on the date the conditions
are satisfied and $224,000 shall be payable on December 31, 1998 (or, if
earlier, the time of termination of the Exit Commitments).
Borrowings under the BankBoston Facility, together with cash flow from
operations, may be used by the Company to finance general working capital
requirements, including purchases of inventory and other expenditures
permitted under the BankBoston Facility. The BankBoston Facility is secured
by inventory and substantially all other assets of the Company and is an
allowed administrative expense claim with superpriority over other
administrative expenses in the Chapter 11 case. The BankBoston Facility
imposes limitations on the Company with respect to, among other things, (i)
consolidations, mergers, and sales of assets, (ii) capital expenditures in
excess of specified levels and (iii) the prepayment of certain indebtedness.
Additionally, the Company must comply with certain operating and financial
covenants (as described therein). Although the Company failed to comply with
certain covenants related to inventory levels for the months ending July 6,
1996 and August 3, 1996, the Company requested and received a waiver relating
to such breaches.
As of September 12, 1997, the Company had $27.8 million of borrowings
outstanding under the BankBoston Facility with additional borrowing capacity
thereunder of $4.2 million.
On August 13, 1997, the Company entered into the Commitment Letter with
BankBoston to amend the BankBoston Facility to provide an additional $10
million term loan (the "Term Loan"). The Company and the Committees executed
the "Stipulation re Commitment by BankBoston, N.A. for Term Loan Financing;
and Order Thereon," which was approved by the Court on August 15, 1997.
Pursuant to the Commitment Letter, (a) the proposed Term Loan would mature on
the earlier of (i) twenty-seven months after the closing date of the Term
Loan and (ii) the maturity date of the revolving loans under the BankBoston
Facility, and the maturity date would be subject to extension for two
consecutive one year periods on the terms and conditions set forth in the
Commitment Letter including, among others, payment of specified extension
fees; (b) interest on the Term Loan would be the same as the nondefault rate
for the revolving loans under the BankBoston Facility; (c) collateral for the
Term Loan would be the same as the collateral for the revolving loans under
the BankBoston Facility, including all real estate leasehold interests of the
Company; (d) a third party guarantor of the Term Loan will be issued warrants
under the Company's plan of reorganization granting the right to acquire up
to 20% of the reorganized Company's outstanding equity at an initial exercise
price of $4 million; and (e) fees for the Term Loan will include a closing
fee of $500,000 and additional closing fees and extension fees equal to 5% of
the average outstanding daily principal balance of the Term Loan.
Consummation of the Term Loan is subject to a number of conditions,
including, but not limited to, completion of definitive documentation,
approval of the court (after notice and a hearing currently scheduled for
September 19, 1997) and customary closing conditions. Pursuant to the
Commitment Letter, all conditions must be satisfied by October 31, 1997.
There can be no assurances that such approval will be obtained or that such
other conditions will be met.
The Company's primary cash requirement is the procurement of inventory which
is currently funded through (i) borrowings under the BankBoston Facility (ii)
trade credit and (iii) cash generated from operations. Like other apparel
retailers, the Company is dependent upon its ability to obtain trade credit,
which is generally extended by its vendors and a small number of factoring
institutions that continually monitor the Company's credit lines. If the
Company continues to obtain the trade credit terms it is currently receiving,
the Company believes that borrowings under the BankBoston Facility and cash
generated from operations will provide the cash necessary to fund the
Company's immediate cash requirements. The adequacy of the Company's
long-term capital resources and liquidity will depend on whether and when the
Plan is confirmed, as well as other factors.
OTHER
The Company has never declared or paid cash dividends on its Common Stock or
any other equity security, and does not anticipate paying cash dividends on
the Common Stock, or any other equity security, in the foreseeable future.
Any future determination as to the payment of dividends will depend upon
certain debt instrument limitations, future earnings, results of operations,
capital requirements and the financial condition of the Company. The ability
of the Company to pay dividends is restricted under the terms of the
BankBoston Facility. Such restrictions prohibit the payment of dividends for
the foreseeable future. In addition, the Bankruptcy Code prohibits the
Company's payment of cash dividends (during the pendency of the Company's
Chapter 11 case).
14
<PAGE>
SEASONALITY
The Company's revenues are seasonal, with the Christmas season (included in
the Quarter ending the Saturday closest to January 31) being its strongest
period.
15
<PAGE>
PART II. OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
Except as discussed herein, no material change has occurred in the litigation
described in "Item 3 - Legal Proceedings" on pages 7 through 9 of the Company's
Annual Report on Form 10-K for the Year ended February 1, 1997, for which such
item is incorporated herein by reference.
In March 1995, the Company brought an action against one of its landlords,
Hickel Investment Company ("Hickel"), to recover overpayments of common area
maintenance and other charges made to Hickel. After trial, on August 13,
1997, the United States District Court for the District of Alaska entered a
minute order lodging with the clerk the court's proposed decision (the
"proposed decision"). The proposed decision would rule that the Company is
entitled to judgment against Hickel for an amount in excess of $1 million.
The Company has not reflected the judgment in the Consolidated Financial
Statements. If entered, such a judgment would be subject to possible stay
and/or appeal. There can be no assurances that the proposed judgment will be
entered, that the Company will be successful on any appeal, or that the
Company will be able to enforce or collect such judgment.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
As a result of the Filing, the Company is currently in default under the
indentures governing the 10-1/4% Notes ($67.6 million in principal and
prepetition accrued interest as of August 2, 1997) and 13-1/2% Notes ($0.8
million in principal and prepetition accrued interest as of August 2, 1997)
(see Note 1 of the Notes to the Consolidated Financial Statements contained
elsewhere in this document).
ITEM 5 - OTHER INFORMATION
Effective July 1, 1997, Peter Aaron resigned as Executive Vice President of
the Company. Mr. Aaron currently serves as a consultant to the Company and
may continue, from time to time, to render consulting services to the Company.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit No. Description of Exhibit
----------- ----------------------
3.1 Amended and Restated Certificate of Incorporation of
the Registrant. (6)
3.2 Amended and Restated By-laws of the Registrant.(9)
4.1 Specimen Stock Certificate. (5)
4.2 Indenture (the "Indenture"), dated October 30, 1992
between the Registrant and First Trust National
Association, as Trustee (the "Trustee"), relating to
the Registrant's 10-1/4% Senior Subordinated Notes due
1999 (the "Notes"). (4)
4.3 First Supplemental Indenture to the Indenture dated
October 30, 1992. (5)
4.4 Second Supplemental Indenture to the Indenture dated
December 1, 1993. (7)
4.5 Third Supplemental Indenture to the Indenture dated
June 10, 1994. (8)
4.6 Fourth Supplemental Indenture to the Indenture dated
October 18, 1994.(9)
4.7 Indenture (the "13-1/2% Indenture") dated as of
January 31, 1986 (including the form of 13-1/2% Senior
Subordinated Guaranteed Note), among the Registrant,
Texstyrene Plastics, Inc. ("TPI") and Bankers Trust
Company, as Trustee (the "13-1/2% Trustee") relating to
the Registrants 13-1/2% Senior Subordinated Guaranteed
Notes due February 15, 1995.(1)
4.8 First Supplemental Indenture to the 13-1/2% Indenture
dated December 30, 1986, among the Registrant, TPI and
the 13-1/2% Trustee. (3)
4.9 Second Supplemental Indenture to the 13-1/2% Indenture
dated October 4, 1988, among the Registrant, TPI and
the 13-1/2% Trustee. (2)
4.10 Third Supplemental Indenture to the 13-1/2% Indenture
dated October 29, 1992, among the Registrant, TPI and
the 13-1/2% Trustee. (4)
16
<PAGE>
4.11 Warrant Agreement dated September 21, 1992 between the
Registrant and Society National Bank, as Warrant Agent.
(4)
4.12 Warrant Agreement dated June 10, 1994 between the
Registrant and the other parties thereto (including the
form of Warrant attached thereto as Exhibit (A). (8)
4.13 Exchange Agreement, dated October 18, 1994, between the
Registrant and the holders of the Notes.(9)
4.14 Extension Agreement dated March 27, 1995, between
Lamonts Apparel, Inc. and the holders of the Company's
10-1/4% Subordinated Notes due 1999.(10)
10.26 Second Amendment dated May 23, 1997 to Loan and
Security Agreement dated June 4, 1996 between
BankBoston, N.A. (f/k/a "The First National Bank of
Boston") and Lamonts Apparel, Inc. (13)
27.1 Financial Data Schedule. *
99.1 Debtor's Plan of Reorganization Under Chapter 11 of the
Bankruptcy Code. (11)
99.2 Submission of "(Proposed) Disclosure Statement re
Debtor's Plan of Reorganization Under Chapter 11 of the
Bankruptcy Code". (11)
99.3 Plan Documentary Supplement.(11)
99.4 Debtor's Amended Plan of Reorganization Under Chapter
11 of the Bankruptcy Code.(12)
99.5 Amended Disclosure Statement re Debtor's Plan of
Reorganization Under Chapter 11 of the Bankruptcy
Code.(12)
99.6 Plan Documentary Supplement to "Debtor's Amended Plan
of Reorganization Under Chapter 11 of the Bankruptcy
Code".(12)
- ---------------------
* Filed herewith
(1) Incorporated by reference from Registration Statement Nos. 33-2292
and 33-2292-01 of the Registrant and TPI, respectively, as filed
with the Commission on December 19, 1985, and as amended on
January 3, 1986, January 29, 1986, February 6, 1986 and
February 11, 1986.
(2) Incorporated by reference from Quarterly Report on Form 10-Q of the
Registrant as filed with the Commission on November 10, 1988.
(3) Incorporated by reference from Annual Report on Form 10-K of the
Registrant as filed with the Commission on March 31, 1989.
(4) Incorporated by reference from Current Report on Form 8-K of the
Registrant as filed with the Commission on November 13, 1992.
(5) Incorporated by reference from Registration Statement No. 33-56038 of
the Registrant, initially filed with the Commission on December 22,
1992.
17
<PAGE>
(6) Incorporated by reference from Registration Statement No. 33-68720 of
the Registrant, initially filed with the Commission on September 14,
1993.
(7) Incorporated by reference from Annual Report on Form 10-K of the
Registrant as filed with the Commission on January 28, 1994.
(8) Incorporated by reference from Quarterly Report on Form 10-Q of the
Registrant as filed with the Commission on June 14, 1994.
(9) Incorporated by reference from Annual Report on Form 10-K of the
Registrant as filed with the Commission on January 27, 1995.
(10) Incorporated by reference from Quarterly Report on Form 10-Q of the
Registrant as filed with the Commission on April 21, 1995.
(11) Incorporated by reference from Quarterly Report on Form 10-Q of the
Registrant as filed with the Commission on September 16, 1996.
(12) Incorporated by reference from Quarterly Report on Form 10-Q of the
Registrant as filed with the Commission on December 17, 1996.
(13) Incorporated by reference from Quarterly Report on Form 10-Q of the
Registrant as filed with the Commission on June 17, 1997.
(b) Reports filed on Form 8-K:
None
18
<PAGE>
SIGNATURE
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.
Registrant: LAMONTS APPAREL, INC.
Date: September 12, 1997 By: /s/ Debbie Brownfield
-----------------------------------
Debbie Brownfield
Executive Vice President
Chief Financial Officer
19
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<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-02-1997
<PERIOD-END> AUG-02-1997
<CASH> 2,091
<SECURITIES> 0
<RECEIVABLES> 3,298
<ALLOWANCES> 0
<INVENTORY> 46,438
<CURRENT-ASSETS> 54,293
<PP&E> 27,940
<DEPRECIATION> 0
<TOTAL-ASSETS> 100,353
<CURRENT-LIABILITIES> 61,233<F1>
<BONDS> 0
0
0
<COMMON> 179
<OTHER-SE> (66,532)
<TOTAL-LIABILITY-AND-EQUITY> 100,353
<SALES> 87,131
<TOTAL-REVENUES> 87,131
<CGS> 56,038
<TOTAL-COSTS> 56,038
<OTHER-EXPENSES> 35,482<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,440
<INCOME-PRETAX> (6,825)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,825)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
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<EPS-PRIMARY> (0.38)
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<FN>
<F1>Excludes liabilities subject to compromise under reorganization proceedings.
<F2>Includes: Operating and administrative expenses of $30,727; Depreciation &
amortization of $3,761; and Reorganization expenses of $994.
</FN>
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