<PAGE>
================================================================================
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 May 3, 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 June 11, 1997, there were 17,900,053 shares of the Registrant's
Common Stock, par value $0.01 per share, outstanding.
Exhibit Index on Page 14
Page 1
<PAGE>
(DEBTOR-IN-POSSESSION)
FORM 10-Q
MAY 3, 1997
INDEX
Part I. Financial Information Page
----
Item 1 - Consolidated Financial Statements
- Consolidated Balance Sheets - May 3, 1997 and February 1, 1997 3
- Consolidated Statements of Operations and Accumulated Deficit
for the three months ended May 3, 1997 and May 4, 1996 4
- Consolidated Statements of Cash Flows for the three months
ended May 3, 1997 and May 4, 1996 5
- Notes to Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
Part II. Other Information
Item 1 - Legal Proceedings 14
Item 3 - Defaults Upon Senior Securities 14
Item 6 - Exhibits and Reports on Form 8-K 14
2
<PAGE>
LAMONTS APPAREL, INC.
(DEBTOR-IN-POSSESSION)
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MAY 3, FEBRUARY 1,
1997 1997
-------- -----------
<S> <C> <C>
Current Assets:
Cash $1,827 $2,066
Receivables - net 2,005 1,595
Inventories 41,422 37,559
Prepaid expenses and other 1,418 1,528
Restricted cash and deposits 813 714
-------- --------
Total current assets 47,485 43,462
Property and equipment - net of accumulated depreciation and amortization of
$28,326 and $27,506, respectively 29,082 30,653
Leasehold interests 3,370 3,477
Excess of cost over net assets acquired - net 11,510 11,591
Deferred financing costs - net 1,808 1,989
Restricted cash and deposits 1,142 1,142
Other assets 691 958
-------- --------
Total assets $95,088 $93,272
-------- --------
-------- --------
Liabilities not subject to settlement under reorganization proceedings:
Current Liabilities:
Borrowings under DIP Facility $26,088 $23,141
Accounts payable 16,142 13,578
Accrued payroll and related costs 1,904 2,285
Accrued taxes 1,302 812
Accrued interest 723 616
Accrued store closure costs 992 1,050
Other accrued expenses 6,501 5,325
Current maturities of obligations under capital leases 12 12
-------- --------
Total current liabilities 53,664 46,819
Obligations under capital leases 2,850 2,846
Other 257 302
-------- --------
Total liabilities not subject to settlement under reorganization proceedings 56,771 49,967
-------- --------
Liabilities subject to settlement under reorganization proceedings 102,636 102,858
-------- --------
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 62,985 62,972
Accumulated deficit (127,483) (122,704)
-------- --------
Total stockholders' equity (deficit) (64,319) (59,553)
-------- --------
Total liabilities and stockholders' equity (deficit) $95,088 $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
--------------------------
MAY 3, MAY 4,
1997 1996
------------ -----------
<S> <C> <C>
Revenues $37,648 $37,922
Cost of merchandise sold 24,567 24,348
------------ -----------
Gross profit 13,081 13,574
------------ -----------
Operating and administrative expenses 14,380 15,775
Depreciation and amortization 1,872 2,037
Impairment of long-lived assets - 4,170
------------ -----------
Operating costs 16,252 21,982
------------ -----------
Loss from operations before other income (expense)
and reorganization expenses (3,171) (8,408)
Other income (expense):
Interest expense (contractual interest of $3.4 million
in 1997 and 1996) (1,212) (1,198)
Other 3 3
------------ -----------
Loss from operations before reorganization expenses (4,380) (9,603)
Reorganization expenses 399 670
------------ -----------
Net loss (4,779) (10,273)
Accumulated deficit, beginning of period (122,704) (105,406)
------------ -----------
Accumulated deficit, end of period ($127,483) ($115,679)
------------ -----------
------------ -----------
Net loss per common share ($0.27) ($0.57)
------------ -----------
------------ -----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
LAMONTS APPAREL, INC.
(DEBTOR-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------
MAY 3, MAY 4,
1997 1996
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($4,779) ($10,273)
Adjustments to reconcile net loss to net cash used
in operating activities before reorganization items:
Depreciation and amortization 1,872 2,037
Impairment of long-lived assets - 4,170
Reorganization expenses 399 670
Increase in inventories (3,863) (5,414)
Increase in accounts payable 2,564 4,220
Other 1,749 1,963
------------ -----------
Net cash used in operating activities before
reorganization items (2,058) (2,627)
Operating cash flows used by reorganization items:
Payments for professional fees and other expenses
related to the Chapter 11 proceedings (931) (596)
------------ -----------
Net cash used in operating activities (2,989) (3,223)
------------ -----------
Cash flows from investing activities:
Capital expenditures (204) (170)
Proceeds from sale of land and building - 4,459
Other 233 24
------------ -----------
Net cash provided by investing activities 29 4,313
------------ -----------
Cash flows from financing activities:
Post-petition borrowings under working capital facility 44,905 45,637
Post-petition payments under working capital facility (41,958) (45,987)
Principal payments on obligations under capital leases (212) (221)
Other (14) (17)
------------ -----------
Net cash provided by (used in) financing activities 2,721 (588)
------------ -----------
Net increase (decrease) in cash (239) 502
Cash, beginning of period 2,066 1,581
------------ -----------
Cash, end of period $1,827 $2,083
------------ -----------
------------ -----------
Supplemental disclosures of cash flow information:
Cash interest payments made $1,088 $1,184
------------ -----------
------------ -----------
Supplemental disclosure of noncash investing and
financing activities:
Capital lease relating to sale-leaseback of
Alderwood store - $2,835
------------ -----------
------------ -----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
LAMONTS APPAREL, INC.
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)MAY 3, 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 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 has again deferred final confirmation of the Plan in
order to afford Lamonts additional time in which to explore opportunities to
raise capital.
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.
On October 11, 1996, the Company retained an investment banking firm, with the
approval of the Court, to explore opportunities to raise additional capital.
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."
6
<PAGE>
Pre-petition liabilities subject to settlement under reorganization proceedings
include the following (dollars in thousands):
MAY 3, FEBRUARY 1,
1997 1997
------- ----------
Accounts payable and accrued liabilities $ 23,128 $ 23,121
Capital lease obligations 11,000 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 70 83
-------- --------
$102,636 $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 June 11,
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.
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
7
<PAGE>
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 May 3, 1997,
subject to the outcome of issues discussed in Note 1, no additional
impairment has occurred during the quarter ended May 3, 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". 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.
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. (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, this amendment has been
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.
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 in the payment of any amount due thereunder, the interest rate
on such default shall be the greater of (i)
8
<PAGE>
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. At
May 3, 1997, the Base Rate was 8.5% and the Eurodollar Rate for the quarter
was 5.69%.
The Company has expensed fees of approximately $186,000 for the BankBoston
Facility as of May 3, 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.
Subject to the approval of the Court of an amendment to the fee letter, 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.
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 quarters ended May 3, 1997 and May 4, 1996 were 17,900,053 and 17,899,549,
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.)
9
<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, 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 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 has again deferred final confirmation of the Plan in
order to afford Lamonts additional time in which to explore opportunities to
raise additional capital.
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.
On October 11, 1996, the Company retained an investment banking firm, with the
approval of the Court, to explore opportunities to raise additional capital.
10
<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 ended May 3, 1997 ("1st Quarter 1997")
compared to the quarter ended May 4, 1996 ("1st Quarter 1996").
REVENUES. Revenues of $37.6 million for the 1st Quarter 1997 decreased 0.7%
on a total store basis from $37.9 million for the 1st Quarter 1996. This
decrease is attributable to the closure of 5 stores that were operating
during the quarter in the prior year. Comparable store revenues increased
7.2% for the 1st Quarter 1997 as compared to the same period for the prior
year. Management believes that comparable store revenues
have increased due to increased levels of inventory and overall improvement
in the quality of the merchandise offered in the stores compared to the 1st
Quarter 1996.
GROSS PROFIT. Gross profit, as a percentage of revenues decreased to 34.7%
during the 1st Quarter 1997 compared to 35.8% during the 1st Quarter 1996.
The decrease in gross margin is primarily attributed to the markdowns
associated with the carry over of fall merchandise resulting from lower sales
due to the winter storms.
OPERATING AND ADMINISTRATIVE EXPENSES. Operating and administrative expenses
of $14.4 million in the 1st Quarter 1997 decreased 8.8% from $15.8 million in
the 1st Quarter 1996. The $1.4 million decrease is primarily the result of a
reduction in operating costs attributable to closed stores operating in the
1st Quarter 1996 of $1.0 million and $0.4 million in other miscellaneous
operating and administrative expenses reflecting the continuing effects of
the operating expense containment programs instituted in prior periods.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense of $1.8
million for the 1st Quarter 1997 decreased $0.2 million as compared to $2.0
million for the 1st Quarter 1996. The decrease primarily relates to assets
retired as a result of store closures and assets becoming fully depreciated or
amortized.
IMPAIRMENT OF LONG-LIVED ASSETS. No impairment of long-lived assets was
recognized during the 1st Quarter 1997, as compared to $4.2 million recognized
in the 1st Quarter 1996.
INTEREST EXPENSE. Interest expense of $1.2 million for the 1st Quarter 1997 did
not change from 1st Quarter 1996.
REORGANIZATION EXPENSES. Reorganization expenses of $0.4 million for the 1st
Quarter 1997 and $0.7 million for the 1st Quarter 1996 represent costs directly
related to the Company's Chapter 11 case and consist primarily of professional
fees.
11
<PAGE>
NET LOSS. The Company reported a net loss of $4.8 million for the 1st Quarter
1997 as compared to a net loss of $10.3 million for the 1st Quarter 1996. The
loss for the 1st Quarter 1997 decreased $5.5 million from the prior period
primarily due to (i) the decrease in operating and administrative expenses of
$1.4 million, (ii) reduction in the impairment of long-lived assets recognized
of $4.2 million, (iii) reduction in reorganization expenses of $0.3 million,
offset by a decrease in gross profit of $0.5 million.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW
The Company used $2.1 million of cash for operating activities before
reorganization items for the 1st Quarter 1997, a decrease of $0.5 million as
compared to $2.6 million used in the 1st Quarter 1996. Funds were used primarily
to acquire inventory.
The difference in investing activities from the 1st Quarter 1997 to the 1st
Quarter 1996 of $4.3 million results primarily from net sale proceeds of $4.5
million received in the sale-leaseback of the Company's Alderwood store
during the 1st Quarter 1996.
The Company received $2.7 million in financing activities in the 1st Quarter
1997 as compared to using $0.6 million in the 1st Quarter 1996. The $3.3
million difference is the result of higher net borrowings under the Company's
working capital facility.
As of May 3 1997, the Company had $1.8 million of cash and an additional $0.8
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, this amendment has been
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.
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 in the payment of any amount due thereunder, the interest rate
on 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. At May 3, 1997, the Base Rate was
8.5% and the Eurodollar Rate for the quarter was 5.69%.
The Company has expensed fees of approximately $186,000 for the BankBoston
Facility in the quarter ended May 3, 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. Subject to the approval of the Court of an amendment to
the fee letter, 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).
12
<PAGE>
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 June 11, 1997, the Company had $25.8 million of borrowings outstanding
under the BankBoston Facility with additional borrowing capacity thereunder
of $4.9 million.
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).
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.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
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.
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 May 3, 1997) and 13-1/2% Notes ($0.8 million
in principal and prepetition accrued interest as of May 3, 1997) (see Note 1 of
the Notes to the Consolidated Financial Statements contained elsewhere in this
document).
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
10.1 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.
27.1 Financial Data Schedule.
(b) Reports filed on Form 8-K:
None
14
<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: June 11, 1997 BY:/S/ DEBBIE BROWNFIELD
Debbie Brownfield
Executive Vice President
Chief Financial Officer
15
<PAGE>
SECOND AMENDMENT
SECOND AMENDMENT dated as of May 23, 1997 (this "AMENDMENT"), by and among
LAMONTS APPAREL, INC., a Delaware corporation and a debtor and debtor in
possession under Chapter 11 of the Bankruptcy Code (the "BORROWER"), having its
principal place of business at 12413 Willows Road N.E., Kirkland, WA 98034,
BANKBOSTON, N.A. (f/k/a "The First National Bank of Boston"), a national banking
association with its head office at 100 Federal Street, Boston, Massachusetts
02110 (the "BANK"), and BANKBOSTON, N.A. (f/k/a "The First National Bank of
Boston"), as Agent (the "AGENT") amending certain provisions of the Debtor in
Possession and Exit Financing Loan Agreement by and among the Borrower, the
Bank, and the Agent dated as of June 4, 1996, as previously amended by a First
Amendment dated as of November 8, 1996 (as so amended, the "LOAN AGREEMENT").
Terms not otherwise defined herein which are defined in the Loan Agreement shall
have the respective meanings herein assigned to such terms in the Loan
Agreement.
WHEREAS, the Borrower has requested that the Bank agree to amend the terms
of the Loan Agreement in certain respects; and
WHEREAS, the Bank is willing to amend the terms of the Loan Agreement in
such respects, upon the terms and subject to the conditions contained herein;
and
NOW, THEREFORE, in consideration of the mutual agreements contained in the
Loan Agreement, herein and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
Section 1. AMENDMENTS TO DEFINITIONS. Section 1.1 of the Loan Agreement
is hereby amended as follows:
DEFINITION OF "BORROWING BASE." Section 1.1 of the Loan Agreement is
further amended by deleting the words "the lesser of (x) $1,910,000 or (y) 60%"
appearing in each of clause (a)(ii) and clause (b)(ii) of the definition of the
term "Borrowing Base," and substituting therefor, in each case, the words "the
lesser of (x) $1,600,000 or (y) 80%."
DEFINITION OF "DIP MATURITY DATE." Section 1.1 of the Loan Agreement is
further amended by deleting the words "June 30, 1997" appearing in clause (a) of
the definition of the term "DIP Maturity Date," and substituting therefor the
words "February 27, 1998."
<PAGE>
-2-
NEW DEFINITION OF "SECOND AMENDMENT ORDER." Section 1.1 of the Loan
Agreement is further amended by adding to Section 1.1 in the appropriate
location in the alphabetical sequence the following new definition:
"SECOND AMENDMENT ORDER. See the Second Amendment, dated as of May 23,
1997, to this Agreement."
DEFINITION OF "FINANCING ORDER." From and after the effectiveness of this
Amendment, the term "Financing Order" as referred to in the Loan Documents shall
refer to the Financing Order as in effect immediately prior to the effective
time of this Amendment, as supplemented by the final order (the "Second
Amendment Order") of the Bankruptcy Court approving this Amendment.
Section 2. AMENDMENT TO SECTION 2.2(D) OF THE LOAN AGREEMENT. Section
2.2(d) of the Loan Agreement is hereby amended by inserting after the words
"during the period beginning on December 15, 1996, and ending on January 31,
1997," appearing in Section 2.2(d) the words "and, if the Exit Facility Date has
not then occurred, also during the period beginning on December 15, 1997, and
ending on January 31, 1998."
Section 3. AMENDMENT TO SECTION 2.4(E) OF THE LOAN AGREEMENT. Section
2.4(e) of the Loan Agreement is hereby amended by deleting the words "during
each of the period beginning on December 15, 1997 and ending on January 15, 1998
and the period beginning on December 15, 1998 and ending on January 15, 1999"
appearing in Section 2.4(e) and by substituting therefor the words "during each
period beginning on December 15 of any calendar year and ending on January 31 of
the immediately following calendar year."
Section 4. AMENDMENT OF SECTION 8 OF THE LOAN AGREEMENT. Section 8 of
the Loan Agreement is amended by deleting subsection (t) thereof in its entirety
and substituting therefor the following:
"(t) On and after the Effective Date, the Financing Order has been
entered, has not been reversed, stayed, or (except as provided in the
Interim Amendment Order, the Final Amendment Order, or the Second Amendment
Order, or with the written approval of the Agent) modified, amended or
supplemented, and remains in full force and effect."
Section 5. AMENDMENT TO SECTION 10.1(A)(VI) OF THE LOAN AGREEMENT.
Section 10.1(a)(vi) of the Loan Agreement is hereby amended by inserting after
the words "January 29, 2000," appearing in Section 10.1(a)(vi) the words "or
any subsequent fiscal year in which the Exit Maturity Date is scheduled to
occur."
<PAGE>
-3-
Section 6. AMENDMENT TO SECTION 10.2(L) OF THE LOAN AGREEMENT. Section
10.2(l) of the Loan Agreement is hereby amended by deleting the words "July 3,
1999," appearing in Section 10.2(l) and by substituting therefor the words
"February 27, 2000."
Section 7. AMENDMENTS TO SECTION 10.3 OF THE LOAN AGREEMENT. Section 10.3
of the Loan Agreement is hereby amended as follows:
CAPITAL EXPENDITURES (SECTION 10.3(A)). Section 10.3(a) of the Loan
Agreement is amended by striking the last period and amount set forth in the
table in Section 10.3(a) and by substituting therefor the following periods and
amounts:
PERIOD AMOUNT
------------------------------------ ----------
January 31, 1999 - February 5, 2000 $5,500,000
February 6, 2000 - February 27, 2000 $1,000,000
Section 10.3(a) of the Loan Agreement is further amended by deleting the words
"January 31, 1999 through July 3, 1999" appearing in the parenthetical following
the table and substituting therefor the words "January 31, 2000 through February
27, 2000."
CONSOLIDATED EBITDA UNTIL EXIT FACILITY DATE (SECTION 10.3(B)). Section
10.3(b) of the Loan Agreement is amended by inserting in the table in Section
10.3(b), following the last date and amount, the following dates and amounts:
MINIMUM CUMULATIVE
CONSOLIDATED EBITDA
DATE SINCE FEBRUARY 4, 1996
----------------- ----------------------
July 5, 1997 $5,000,000
August 2, 1997 $5,600,000
August 30, 1997 $6,200,000
October 4, 1997 $7,000,000
November 1, 1997 $7,300,000
November 29, 1997 $8,100,000
January 3, 1998 $14,000,000
January 31, 1998 $12,500,000
<PAGE>
-4-
MINIMUM/MAXIMUM INVENTORY UNTIL EXIT FACILITY DATE (SECTION 10.3(C)).
Section 10.3(c) of the Loan Agreement is amended by inserting in the table in
Section 10.3(c), following the last date and amounts, the following dates and
amounts:
DATE MINIMUM AMOUNT MAXIMUM AMOUNT
-------------- -------------- --------------
July 5, 1997 $41,400,000 $50,600,000
August 2, 1997 $39,300,000 $48,000,000
August 30, 1997 $38,000,000 $46,500,000
October 4, 1997 $43,000,000 $52,500,000
November 1, 1997 $48,100,000 $58,700,000
November 29, 1997 $51,800,000 $63,300,000
January 3, 1998 $35,200,000 $43,100,000
January 31, 1998 $35,400,000 $43,300,000
MINIMUM/MAXIMUM INVENTORY ON AND AFTER EXIT FACILITY DATE IF A CAPITAL
RAISING EVENT HAS NOT OCCURRED (SECTION 10.3(D)). Section 10.3(d) of the
Loan Agreement is amended by deleting the dates and amounts following May 3,
1997 in the table in Section 10.3(d), and inserting in place thereof the
following dates and amounts:
DATE MINIMUM AMOUNT MAXIMUM AMOUNT
-------------- -------------- --------------
August 2, 1997 $39,300,000 $48,000,000
November 1, 1997 $48,100,000 $58,700,000
January 31, 1998 $35,400,000 $43,300,000
May 2, 1998 $37,200,000 $45,600,000
August 1, 1998 $40,100,000 $49,000,000
October 31, 1998 $49,100,000 $59,900,000
January 30, 1999 $36,100,000 $44,200,000
May 1, 1999 $37,900,000 $46,500,000
July 31, 1999 $40,900,000 $50,000,000
November 6, 1999 $50,100,000 $61,100,000
February 5, 2000 $36,800,000 $45,100,000
DEBT SERVICE COVERAGE RATIO ON AND AFTER EXIT FACILITY DATE IF A CAPITAL
RAISING EVENT HAS NOT OCCURRED (SECTION 10.3(E)). Section 10.3(e) of the
Loan Agreement is amended by inserting immediately in the table in Section
10.3(e), following the last date and ratio, the following new dates and
ratios:
DATE MINIMUM RATIO
--------------- -------------
August 2, 1999 1.00 to 1.00
November 6, 1999 1.00 to 1.00
February 5, 2000 1.00 to 1.00
MINIMUM/MAXIMUM INVENTORY ON AND AFTER EXIT FACILITY DATE IF A CAPITAL
RAISING EVENT HAS OCCURRED (SECTION 10.3(F)). Section 10.3(f) of the Loan
Agreement is
<PAGE>
-5-
amended by deleting the dates and amounts following May 3, 1997 in the table
in Section 10.3(f), and inserting in place thereof the following dates and
amounts:
DATE MINIMUM AMOUNT MAXIMUM AMOUNT
---------------- -------------- --------------
August 2, 1997 $39,300,000 $48,000,000
November 1, 1997 $48,100,000 $58,700,000
January 1, 1998 $35,400,000 $43,300,000
May 2, 1998 $39,700,000 $48,100,000
August 1, 1998 $42,600,000 $51,500,000
October 31, 1998 $51,600,000 $62,400,000
January 30, 1999 $38,600,000 $46,700,000
May 1, 1999 $40,400,000 $49,000,000
July 31, 1999 $43,400,000 $52,500,000
November 6, 1999 $52,600,000 $63,600,000
February 5, 2000 $39,300,000 $47,600,000
DEBT SERVICE COVERAGE RATIO ON AND AFTER EXIT FACILITY DATE IF A CAPITAL
RAISING EVENT HAS OCCURRED (SECTION 10.3(G)). Section 10.3(g) of the Loan
Agreement is amended by inserting immediately in the table in Section
10.3(g), following the last date and ratio, the following new dates and
ratios:
DATE MINIMUM RATIO
-------------- -------------
August 2, 1999 2.00 to 1.00
November 6, 1999 2.00 to 1.00
February 5, 2000 2.00 to 1.00
Section 8. AMENDMENTS TO EXHIBITS. The Exhibits to the Loan Agreement
are hereby amended as follows:
EXHIBT A (FORM OF BORROWING BASE REPORT) AND EXHIBIT E (FORM OF
COMPLIANCE CERTIFICATE). Exhibit A and Exhibit E of the Loan Agreement are
hereby amended by deleting Exhibit A (Form of Borrowing Base Report), and
Exhibit E (Form of Compliance Certificate) thereof in their entirety and
substituting in place thereof the Form of Borrowing Base Report, and Form of
Compliance Certificate attached hereto, as Exhibit A, and Exhibit E,
respectively.
EXHIBIT D (FORM OF EXIT NOTE). Exhibit D to the Loan Agreement is hereby
amended by deleting the date "[__________], 1996" appearing on page one
thereof and substituting therefor, the date "[____________], 199__".
Section 9. AMENDMENT FEE. The Borrower agrees to pay to the Agent, for
the PRO RATA accounts of the Banks, a Second Amendment amendment fee (the
"Amendment Fee") in the amount of $40,000. A portion of the Amendment Fee
equal to $20,000 shall be payable within one Business Day following entry by
the Bankruptcy Court of the Second Amendment Order, and the balance shall be
paid
<PAGE>
-6-
to the Agent ninety (90) days after entry of such order. The Borrower hereby
acknowledges and agrees that failure to pay either portion of the Amendment
Fee when due under this Section 9 shall constitute an Event of Default. The
Borrower hereby authorizes the Agent to debit its Operating Account to pay
the applicable portion of the Amendment Fee as and when due under this
Section 9.
Section 10. REPRESENTATIONS, WARRANTIES AND COVENANTS; NO DEFAULT;
AUTHORIZATION. The Borrower hereby represents, warrants and covenants to the
Agent as follows:
(a) Each of the representations and warranties of the Borrower contained
in the Loan Agreement or in any other Loan Documents was true and correct as
of the date as of which it was made and is true and correct in all material
respects as of the date of this Amendment except to the extent such
representations and warranties expressly related to a prior date (in which
case they shall be true and correct as of such earlier date); and no Default
or Event of Default has occurred and is continuing as of the date of this
Amendment;
(b) This Amendment has been duly authorized, executed and delivered by
the Borrower; and
(c) Upon entry of the Second Amendment Order, this Amendment shall
constitute the legal, valid and binding obligation of the Borrower,
enforceable in accordance with its terms.
Section 11. CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Amendment shall be subject to satisfaction of the following conditions on or
prior to June 26, 1997:
(a) The Agent shall have received copies, certified by a duly authorized
officer of the Borrower as of the date hereof, of the resolution of the board
of directors of the Borrower approving the transactions contemplated hereby
and the execution and delivery of this Amendment, and as to the titles,
incumbency, and specimen signatures of the officers signing this Amendment
and the documents relating thereto.
(b) The Agent shall have received a certificate of a duly authorized
officer of the Borrower (i) certifying that no amendments to the certificate
or articles of incorporation or organization of the Borrower have been
undertaken since such documents were last delivered to the Agent on the
Effective Date, and (ii) certifying that no amendments to the by-laws of the
Borrower have been undertaken since such documents were last delivered to the
Agent on the Effective Date.
<PAGE>
-7-
(c) The Agent shall have received evidence that the Bankruptcy Court
shall have entered the Second Amendment Order, which must be satisfactory in
all respects to the Agent and the Agent's Special Counsel, following
requisite and proper prior notice of at least fifteen (15) days to the
required parties in interest in the Case, and a related final hearing in the
Case if required by the Bankruptcy Court, under Section 364(c) of the
Bankruptcy Code and Bankruptcy Rule 4001(c) with respect to the matters set
forth in this Amendment. The Second Amendment Order shall be in full force
and effect and shall not have been reversed, modified, amended or stayed in
any respect. If the Second Amendment Order is the subject of a pending
appeal in any respect, none of the Second Amendment Order, the making of the
Loans, the issuance, extension or renewal of any Letters of Credit, or the
performance by the Borrower of any of its obligations under any of the Loan
Documents shall be the subject of a presently effective stay pending appeal.
The Borrower, the Agent and the Banks shall be entitled to rely in good faith
upon the Second Amendment Order notwithstanding any objection thereto or
appeal therefrom by any interested party. The Borrower, the Agent and the
Banks shall be permitted and required to perform their respective obligations
in compliance with this Amendment and the Loan Agreement notwithstanding any
such objection or appeal unless the Second Amendment Order has been stayed by
a court of competent jurisdiction.
(d) The Agent shall have received from the Borrower the most recently
required Borrowing Base Report as well as such other documents or instruments
relating hereto as the Agent shall have reasonably requested.
(e) The Agent shall have received a favorable legal opinion addressed to
the Banks and the Agent, dated as of the date hereof, in form and substance
satisfactory to the Agent, from Ryan, Swanson & Cleveland, counsel to the
Borrower.
Section 12. RATIFICATION, ETC. Except as expressly amended hereby, the
Loan Agreement, the other Loan Documents, and all documents, instruments and
agreements related thereto are hereby ratified and confirmed in all respects.
All references in the Loan Agreement or any related agreement or instrument
to the Loan Agreement or the DIP Notes shall hereafter refer to the Loan
Agreement or the DIP Notes as amended hereby.
Section 13. NO OTHER CHANGES; NO IMPLIED WAIVER. Except as expressly
provided herein, the Loan Agreement and the other Loan Documents shall be
unaffected hereby and shall continue in full force and effect, and nothing
contained herein shall constitute a waiver by the Agent or any Bank of any
right, remedy, Default, or Event of Default, or impair or otherwise affect
any Obligations, any other obligations of the Borrower, or any right of the
Agent or any Bank consequent thereon.
<PAGE>
-8-
Section 14. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but which together
shall constitute one and the same instrument.
Section 15. GOVERNING LAW. THIS AMENDMENT SHALL FOR ALL PURPOSES BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS (WITHOUT REFERENCE TO CONFLICTS OF LAW), AND,
PRIOR TO THE EXIT FACILITY DATE, BUT ONLY TO THE EXTENT APPLICABLE, THE
PROVISIONS OF THE BANKRUPTCY CODE.
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment as
a sealed instrument as of the date first above written.
LAMONTS APPAREL, INC.
debtor and debtor in possession
By: ____________________________
Name:
Title:
BANKBOSTON, N.A.
for itself and as Agent
By:____________________________
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF BORROWING BASE REPORT AND WORKSHEETS
<PAGE>
FORM OF
BORROWING BASE REPORT
---------------------
Dated:_____________
For Period Ended: _____________________
The undersigned, __________, the duly elected and qualified
_________________ of Lamonts Apparel, Inc., [debtor and debtor in possession*]
(the "Borrower"), hereby certifies pursuant to Section 10.1(a)(iv) of the
Debtor in Possession and Exit Financing Loan Agreement, dated as of June 4,
1996 (as amended, modified, supplemented or restated and in effect from time
to time, the "Loan Agreement"), among the Borrower, BankBoston, N.A. (f/k/a
"The First National Bank of Boston") and the other lending institutions that
are or may become parties thereto from time to time (collectively, the
"Banks") and BankBoston, N.A. (f/k/a "The First National Bank of Boston") in
its capacity as agent (the "Agent") for the Banks, that (a) the information
set forth in this Borrowing Base Report was true and correct as of the last
day of the period specified herein, (b) this Borrowing Base Report has been
prepared in accordance with the applicable provisions of the Loan Agreement
relating to the computation of the Borrowing Base and the various components
thereof, and (c) as of the date of this Borrowing Base Report, there exists
no Default or Event of Default.
Capitalized terms used herein without definition that are defined in the
Loan Agreement shall have the same meanings herein as in the Loan Agreement.
LAMONTS APPAREL, INC., [DEBTOR
AND DEBTOR IN POSSESSION*]
By:______________________________
Name:
Title:
*Applicable only for the period of time prior to the Exit Facility Date
<PAGE>
-2-
BORROWING BASE AS OF __________, 19 FOR THE PERIOD ENDED _________, 19__
<PAGE>
PRE-EXIT FACILITY DATE BORROWING BASE REPORT WORKSHEET
Book Value of inventory $__________
Less: consigned inventory $__________
returns not of first quality __________
obsolete inventory __________
inventory liened other than to Agent __________
inventory not in possession of Borrower
with no acceptale waiver __________
inventory held by Assembly with no
acceptable waiver __________
inventory outside the United States of
America __________
inventory shipped to a customer(s) __________
inventory not at a Permitted Inventory
Location __________
damaged inventory __________
inventory deemed ineligible by Agent __________
Total $
Eligible Inventory $__________
Gross inventory availability (Eligible Inventory
x___%) $__________
Less: Inventory Shrink Reserve (Book Value
x__%) $__________
Net inventory availability $__________
Kitsap Store availability:
the lesser of $1,600,000 or 80% of the
Kitsap Store appraisal $__________
Gross Availability (Net inventory availability
plus Kitsap Store availability) $__________
Less: outstanding DIP Loans $__________
outstanding Letters of Credit
Total $
Net availability $__________
<PAGE>
POST EXIT FACILITY DATE BORROWING BASE REPORT
WORKSHEET WITH NO CAPITAL RAISING EVENT
Book Value of inventory $__________
Less: consigned inventory $__________
returns not of first quality __________
obsolete inventory __________
inventory liened other than to Agent __________
inventory not in possession of Borrower
with no acceptale waiver __________
inventory held by Assembly with no
acceptable waiver __________
inventory outside the United States of
America __________
inventory shipped to a customer(s) __________
inventory not a Permitted Inventory
Location __________
damaged inventory __________
inventory deemed ineligible by Agent __________
Total $
Eligible Inventory $__________
Gross inventory availability (Eligible Inventory
x___%) $__________
Less: Inventory Shrink Reserve (Book Value
x__%) $__________
Landlord Lien Reserves __________
Total $
Net inventory availability $__________
Kitsap Store availability:
the lesser of $1,600,000 or 80% of the
Kitsap Store appraisal $__________
Gross Availability (Net inventory availability
plus Kitsap Store availability) $__________
Less: outstanding Exit Loans $__________
outstanding Letters of Credit __________
Total $
Net availability $__________
<PAGE>
POST EXIT FACILITY DATE BORROWING BASE REPORT
WORKSHEET AFTER A CAPITAL RAISING EVENT
Book Value of inventory $__________
Less: consigned inventory $__________
returns not of first quality __________
obsolete inventory __________
inventory liened other than to Agent __________
inventory not in possession of Borrower
with no acceptale waiver __________
inventory held by Assembly with no
acceptable waiver __________
inventory outside the United States of
America __________
inventory shipped to a customer(s) __________
inventory not a Permitted Inventory
Location __________
damaged inventory __________
inventory deemed ineligible by Agent __________
Total $
Eligible Inventory $__________
Gross inventory availability (Eligible Inventory
x 65%) $__________
Less: Inventory Shrink Reserve (Book Value
x__%) $__________
Landlord Lien Reserves __________
Total $
Net inventory availability $__________
Less: outstanding Exit Loans $__________
outstanding Letters of Credit __________
Total $
Net availability $__________
<PAGE>
EXHIBIT E
FORM OF COMPLIANCE CERTIFICATE AND WORKSHEET
<PAGE>
EXHIBIT E
---------
FORM OF
COMPLIANCE CERTIFICATE
----------------------
_______ __, 199__
To the Banks party to the Loan
Agreement referred to below
c/o BankBoston, N.A. (f/k/a "The First National Bank of Boston")
100 Federal Street
Boston, Massachusetts 02110
Attn: Steven B. Atwater, Director
Ladies and Gentlemen:
Reference is made to the Debtor in Possession and Exit Financing Loan
Agreement, dated as of June 4, 1996 (as amended, modified, supplemented or
restated and in effect from time to time, the "Loan Agreement"), by and among
Lamonts Apparel, Inc., [debtor and debtor in possession*] (the "Borrower"),
BankBoston, N.A. (f/k/a "The First National Bank of Boston") and the other
lending institutions party thereto (collectively, the "Banks") and
BankBoston, N.A. (f/k/a "The First National Bank of Boston") in its capacity
as agent (the "Agent") for the Banks. Capitalized terms used herein without
definition that are defined in the Loan Agreement shall have the respective
meanings assigned to such terms in the Loan Agreement.
This Compliance Certificate refers to the financial statements enclosed
herewith for the fiscal [year] [quarter] [month] ended _______. Pursuant to
Section 10.1(a)(iii) of the Loan Agreement, the Borrower, by the undersigned
officer of the Borrower (who has reviewed the Loan Documents) hereby
certifies to each of you as follows: (a) the information furnished in the
calculations attached hereto was true and correct as of the last day of the
fiscal [year] [quarter] [month] referred to above, which is the end of the
fiscal [year] [quarter] [month] next preceding the date of this certificate;
(b) as of the date of this certificate, there exists no Default or Event of
Default; and (c) the financial statements delivered herewith were prepared in
accordance with generally accepted accounting principles and the requirements
of the Loan Agreement.
<PAGE>
-2-
IN WITNESS WHEREOF, Lamonts Apparel, Inc. has executed this Compliance
Certificate as of the date first written above.
LAMONTS APPAREL, INC., [DEBTOR
AND DEBTOR IN POSSESSION*]
By:_______________________________
Name:
Title:
*Applicable only for the period of time prior to the Exit Facility Date
<PAGE>
-3-
COMPLIANCE CERTIFICATE WORKSHEET
LAMONTS APPAREL, INC.
SECTION GENERAL COVENANT DESCRIPTION COMPLIANCE
------- ---------------------------- ----------
10.2(a)(ii) $100,000 limit on certain priority claims yes/no
10.2.(a)(iii) $100,000 limit on Section 364 priority claims yes/no
10.2.(b)(v) $______ limit on purchase money Indebtedness/ yes/no
Capitalized Leases
10.2.(f)(y) $100,000 twelve month obsolete F&E limit yes/no
10.2.(g)(D) $100,000 limit on certain Indebtedness payments yes/no
10.2(l) Limit on number of stores and retail outlets yes/no
PERIOD MAXIMUM NUMBER ACTUAL
------ -------------- ------
5/5/96 - 2/1/97 42 _____
2/2/96 - 1/31/98 44 _____
2/1/98 - 1/30/99 48 _____
1/31/99 - 2/27/00 52 _____
10.3(a) Limit on Capital Expenditures yes/no
PERIOD LIMIT CARRY-OVER REVISED LIMIT ACTUAL
- ------ ----- ---------- ------------- ------
2/4/96 - 2/1/97 $1,500,000 0 $1,500,000 _________
2/2/97 - 1/31/98 $2,500,000 _______ _______ _________
2/1/98 - 1/30/99 $6,500,000 _______ _______ _________
1/31/99 - 2/5/00 $5,500,000 _______ _______ _________
1/31/00 - 2/27/00 $1,000,000 _______ _______ _________
<PAGE>
-4-
10.3(b) Minimum Cumulative Consolidated EBITDA yes/no
Minimum
DATE SINCE 2/4/96 ACTUAL
---- ------------ ------
5/4/96 ($ 2,900,000) ______
6/1/96 ($ 2,700,000) ______
7/6/96 ($ 2,600,000) ______
8/3/96 ($ 1,800,000) ______
8/31/96 ($ 1,050,000) ______
10/5/96 ($ 200,000) ______
11/2/96 $ 500,000 ______
11/30/96 $ 800,000 ______
1/4/97 $ 7,600,000 ______
2/1/97 $ 5,900,000 ______
3/1/97 $ 4,600,000 ______
4/5/97 $ 4,700,000 ______
5/3/97 $ 3,900,000 ______
5/31/97 $ 4,100,000 ______
7/5/97 $ 5,000,000 ______
8/2/97 $ 5,600,000 ______
8/30/97 $ 6,200,000 ______
10/4/97 $ 7,000,000 ______
11/1/97 $ 7,300,000 ______
11/29/97 $ 8,100,000 ______
1/3/98 $14,000,000 ______
1/31/98 $12,500,000 ______
<PAGE>
-5-
10.3.(c) Pre-Exit Facility Date Minimum/Maximum yes/no
Inventory Limits
ACTUAL ACTUAL
DATE MINIMUM AMOUNT MAXIMUM AMOUNT MINIMUM MAXIMUM
---- -------------- -------------- ------- -------
May 4, 1996 $35,400,000 $43,400,000 _______ _______
June 1, 1996 $36,900,000 $45,200,000 _______ _______
July 6, 1996 $36,600,000 $44,800,000 _______ _______
August 3, 1996 $36,200,000 $44,300,000 _______ _______
August 31, 1996 $37,800,000 $46,300,000 _______ _______
October 5, 1996 $39,100,000 $47,900,000 _______ _______
November 2, 1996 $43,500,000 $53,300,000 _______ _______
November 30, 1996 $47,500,000 $58,200,000 _______ _______
January 4, 1997 $31,000,000 $38,000,000 _______ _______
February 1, 1997 $31,100,000 $38,100,000 _______ _______
March 1, 1997 $34,300,000 $42,100,000 _______ _______
April 5, 1997 $34,000,000 $41,700,000 _______ _______
May 3, 1997 $35,400,000 $43,400,000 _______ _______
May 31, 1997 $37,000,000 $45,300,000 _______ _______
July 5, 1997 $41,400,000 $50,600,000 _______ _______
August 2, 1997 $39,300,000 $48,000,000 _______ _______
August 30, 1997 $38,000,000 $46,500,000 _______ _______
October 4, 1997 $43,000,000 $52,500,000 _______ _______
November 1, 1997 $48,100,000 $58,700,000 _______ _______
November 29, 1997 $51,800,000 $63,300,000 _______ _______
January 3, 1998 $35,200,000 $43,100,000 _______ _______
January 31, 1998 $35,400,000 $43,300,000 _______ _______
<PAGE>
-6-
10.3.(d) Minimum/Maximum Inventory Limit With No yes/no
Capital Raising Event
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
DATE MINIMUM AMOUNT MAXIMUM AMOUNT ACTUAL MINIMUM ACTUAL MAXIMUM
---- -------------- -------------- -------------- --------------
November 2, 1996 $43,500,000 $53,300,000 ______________ ______________
February 1, 1997 $31,100,000 $38,100,000 ______________ ______________
May 3, 1997 $35,400,000 $43,400,000 ______________ ______________
August 2, 1997 $39,300,000 $48,000,000 ______________ ______________
November 1, 1997 $48,100,000 $58,700,000 ______________ ______________
January 31, 1998 $35,400,000 $43,300,000 ______________ ______________
May 2, 1998 $37,200,000 $45,600,000 ______________ ______________
August 1, 1998 $40,100,000 $49,000,000 ______________ ______________
October 31, 1998 $49,100,000 $59,900,000 ______________ ______________
January 30, 1999 $36,100,000 $44,200,000 ______________ ______________
May 1, 1999 $37,900,000 $46,500,000 ______________ ______________
July 31, 1999 $40,900,000 $50,000,000 ______________ ______________
November 6, 1999 $50,100,000 $61,100,000 ______________ ______________
February 5, 2000 $36,800,000 $45,100,000 ______________ ______________
</TABLE>
10.3.(e) Debt Service Coverage Ratio with No Capital yes/no
Raising Event
ACTUAL
DATE MINIMUM RATIO RATIO (A)
---- ------------- ---------
November 2, 1996 0.22 to 1.00 _________
February 1, 1997 1.00 to 1.00 _________
May 3, 1997 1.00 to 1.00 _________
August 2, 1997 0.95 to 1.00 _________
November 1, 1997 1.00 to 1.00 _________
January 31, 1998 1.00 to 1.00 _________
May 2, 1998 1.00 to 1.00 _________
August 1, 1998 1.00 to 1.00 _________
October 31, 1998 1.00 to 1.00 _________
January 30, 1999 1.00 to 1.00 _________
May 1, 1999 1.00 to 1.00 _________
August 2, 1999 1.00 to 1.00 _________
November 6, 1999 1.00 to 1.00 _________
February 5, 2000 1.00 to 1.00 _________
<PAGE>
-7-
10.3.(f) Minimum/Maximum Inventory Limits With a yes/no
Capital Raising Event
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
DATE MINIMUM AMOUNT MAXIMUM AMOUNT ACTUAL MINIMUM ACTUAL MAXIMUM
---- -------------- -------------- -------------- --------------
November 2, 1996 $47,000,000 $57,600,000 ______________ ______________
February 1, 1997 $33,000,000 $40,400,000 ______________ ______________
May 3, 1997 $39,000,000 $47,800,000 ______________ ______________
August 2, 1997 $39,300,000 $48,000,000 ______________ ______________
November 1, 1997 $48,100,000 $58,700,000 ______________ ______________
January 1, 1998 $35,400,000 $43,300,000 ______________ ______________
May 2, 1998 $39,700,000 $48,100,000 ______________ ______________
August 1, 1998 $42,600,000 $51,500,000 ______________ ______________
October 31, 1998 $51,600,000 $62,400,000 ______________ ______________
January 30, 1999 $38,600,000 $46,700,000 ______________ ______________
May 1, 1999 $40,400,000 $49,000,000 ______________ ______________
July 31, 1999 $43,400,000 $52,500,000 ______________ ______________
November 6, 1999 $52,600,000 $63,600,000 ______________ ______________
February 5, 2000 $39,300,000 $47,600,000 ______________ ______________
</TABLE>
10.3.(g) Debt Service Coverage Ratio with a Capital yes/no
Raising Event
ACTUAL
DATE MINIMUM RATIO RATIO (A)
---- ------------- ---------
November 2, 1996 0.32 to 1.00 _________
February 1, 1997 1.30 to 1.00 _________
May 3, 1997 1.66 to 1.00 _________
August 2, 1997 1.90 to 1.00 _________
November 1, 1997 2.00 to 1.00 _________
January 31, 1998 2.00 to 1.00 _________
May 2, 1998 2.00 to 1.00 _________
August 1, 1998 2.00 to 1.00 _________
October 31, 1998 2.00 to 1.00 _________
January 30, 1998 2.00 to 1.00 _________
May 1, 1999 2.00 to 1.00 _________
August 2, 1999 2.00 to 1.00 _________
November 6, 1999 2.00 to 1.00 _________
February 5, 2000 2.00 to 1.00 _________
<PAGE>
-8-
(a) Debt Service Coverage Ratio Calculation Summary
Operating Cash Flow:
Consolidated EBITDA _____________
minus cash taxes _____________
minus cash Capital expenditures _____________
Operating Cash Flow
Total Debt Service:
Consolidated Total Interest Expense _____________
plus non-excluded cash financing fees _____________
plus principal Indebtedness payments _____________
plus principal Capitalized lease payments _____________
Total Debt Service
Operating Cash Flow divided by Total Debt Service _____________
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-02-1997
<PERIOD-END> MAY-03-1997
<CASH> 1,827
<SECURITIES> 0
<RECEIVABLES> 2,005
<ALLOWANCES> 0
<INVENTORY> 41,422
<CURRENT-ASSETS> 47,485
<PP&E> 29,082
<DEPRECIATION> 0
<TOTAL-ASSETS> 95,088
<CURRENT-LIABILITIES> 53,664<F1>
<BONDS> 0
0
0
<COMMON> 179
<OTHER-SE> (64,498)
<TOTAL-LIABILITY-AND-EQUITY> 95,088
<SALES> 37,648
<TOTAL-REVENUES> 37,648
<CGS> 24,567
<TOTAL-COSTS> 24,567
<OTHER-EXPENSES> 16,651<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,209
<INCOME-PRETAX> (4,779)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,779)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,779)
<EPS-PRIMARY> (0.27)
<EPS-DILUTED> 0
<FN>
<F1>Excludes liabilities subject to compromise under reorganization proceeding.
<F2>Includes: Operating and Adm. expense of $14,380; depreciation & amartization of
$1,872, and reorganization expenses of $399.
</FN>
</TABLE>
