SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 20, 1996
Golden Books Family Entertainment, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-14399 06-1104930
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
850 Third Avenue, New York, New York 10022
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:(212) 753-8500
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
As reported in the Current Report on Form 8-K dated August 20,
1996, filed by Golden Books Family Entertainment, Inc. (the "Company") on August
30, 1996, the Company acquired substantially all of the television and film
library properties of Broadway Video Entertainment, L.P. ("BVE L.P.") and its
affiliates (which constituted substantially all of the assets of BVE, L.P.) and
assumed the profit participations payable and all liabilities incurred in
connection with the exploitation of such assets after the closing (the
"Acquisition") pursuant to an Asset Purchase Agreement, dated as of July 30,
1996, among BVE, L.P., Broadway Video Enterprises, Inc., Lone Ranger Music,
Inc., Palladium Limited Partnership, the Company and certain of the Company's
subsidiaries.
The Company hereby files this Amendment on Form 8-K/A to file the
historical financial statements and pro forma financial statements required
pursuant to Item 7 of Form 8-K with respect to the Acquisition, to the extent
not previously filed.
(a) Financial statements of businesses acquired.
(i) Broadway Video Entertainment, L.P.
Unaudited Interim Condensed Consolidated Financial
Statements:
Unaudited Condensed Consolidated Balance Sheet as
of June 30, 1996
Unaudited Condensed Consolidated Statement of
Operations for the six months ended June 30, 1996
and 1995
Unaudited Condensed Consolidated Statements of
Cash Flows for the six months ended June 30, 1996
and 1995
Unaudited Condensed Consolidated Statements of
Changes in Partners' Capital for the six months
ended June 30, 1996
Notes to Unaudited Condensed Consolidated
Financial Statements
(b) Pro forma financial information.
Golden Books Family Entertainment, Inc.
Unaudited Pro Forma Condensed Balance Sheet as of
August 3, 1996
Unaudited Pro Forma Condensed Statement of
Operations for the year ended February 3, 1996
Unaudited Pro Forma Condensed Statement of
Operations for the six months ended August 3, 1996
Notes to Unaudited Pro Forma Condensed Financial
Statements
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GOLDEN BOOKS FAMILY ENTERTAINMENT, INC.
Dated: October 15, 1996 By: /s/ Philip E. Rowley
Philip E. Rowley
Chief Financial Officer and
Executive Vice President
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND EXHIBITS
FINANCIAL STATEMENT DESCRIPTION
(a)(i) Broadway Video Entertainment, L.P.:
Unaudited Interim Condensed Consolidated Financial
Statements:
Unaudited Condensed Consolidated Balance Sheet as
of June 30, 1996
Unaudited Condensed Consolidated Statement of
Operations for the six months ended June 30, 1996
and 1995
Unaudited Condensed Consolidated Statements of
Cash Flows for the six months ended June 30, 1996
and 1995
Unaudited Condensed Consolidated Statements of
Changes in Partners' Capital for the six months
ended June 30, 1996
Notes to Unaudited Condensed Consolidated
Financial Statements
(b) Pro forma financial information:
Golden Books Family Entertainment, Inc.
Unaudited Pro Forma Condensed Balance Sheet as of
August 3, 1996
Unaudited Pro Forma Condensed Statement of
Operations for the year ended February 3, 1996
Unaudited Pro Forma Condensed Statement of
Operations for the six months ended August 3, 1996
Notes to Unaudited Pro Forma Condensed Financial
Statements
<PAGE>
BROADWAY VIDEO ENTERTAINMENT, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
6/30/96 12/31/95
------------- ------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 5,289,216 $ 2,507,302
Accounts receivable, net 1,791,214 1,434,173
Prepaid expenses and other current assets 158,898 139,592
------------- ------------
Total current assets 7,239,328 4,081,067
Film library, net 4,471,281 4,709,694
Deferred writers advances 200,633 132,152
Other assets 2,666,447 2,660,663
------------- ------------
$ 14,577,689 $11,583,576
============= ============
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accrued interest payable $ 1,619,870 $ 1,051,702
Accrued expenses and other current liabilities 2,586,730 2,047,673
------------- ------------
Total current liabilities 4,206,600 3,099,375
Long-term debt-bank 3,033,333 -
Long-term debt-subordinated 13,535,948 12,975,272
Other liabilities 224,525 197,831
Partners' capital (6,422,717) (4,688,902)
------------- ------------
$ 14,577,689 $11,583,576
============= ============
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
BROADWAY VIDEO ENTERTAINMENT, L.P.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30,
1996 1995
------------- ---------------
(UNAUDITED) (UNAUDITED)
Revenues $ 7,175,020 $ 5,633,508
Costs and expenses:
Direct costs 3,056,238 1,383,357
Selling expenses 330,796 16,893
General and administrative expenses 1,968,712 718,282
Management fees 1,107,001 956,000
------------- ---------------
Operating income before other deductions
and provision for income taxes 712,273 2,558,976
Other expenses:
Minority interest 4,286 -
Interest expense, net 1,386,904 1,119,836
------------- ---------------
Net (Loss) Income before income taxes (678,917) 1,439,140
Provision for income taxes 28,000 57,000
------------- ---------------
Net (Loss) Income $ (706,917) $ 1,382,140
============= ===============
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
BROADWAY VIDEO ENTERTAINMENT, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30,
1996 1995
---------------------------
(UNAUDITED) (UNAUDITED)
Net cash provided by operating activities $ 476,387 $ 3,020,645
INVESTING ACTIVITIES
Acquisition of film library (3,016)
Acquisition of property and equipment (98,559) -
------------- -------------
Net cash used in investing activities (101,575) -
FINANCING ACTIVITIES
Distribution to partners (1,026,898) -
Proceeds from long-term debt, bank 3,500,000 -
Loan proceeds to general partner (66,000) -
------------- -------------
Net cash used by financing activities 2,407,102 -
-
Net increase in cash 2,781,914 3,020,645
Cash and cash equivalents at beginning of period 2,507,302 6,430,452
------------- -------------
Cash and cash equivalents at end of period $ 5,289,216 $ 9,451,097
============= =============
SEE NOTES TO FINACNIAL STATEMENTS.
<PAGE>
BROADWAY VIDEO ENTERTAINMENT, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(UNAUDITED)
<TABLE>
<CAPTION>
BROADWAY VIDEO BROADWAY
ENTERPRISES, INC. VIDEO, INC. TOTAL
------------------------------------------
<S> <C> <C> <C>
Balance at December 31, 1995 ($4,754,970) $ 66,068 ($4,688,902)
NET LOSS FOR THE SIX MONTHS ENDED JUNE 30, 1996 (683,872) (23,045) (706,917)
DISTRIBUTIONS (993,421) (33,477) (1,026,898)
------------------------------------------
---------------- ----------- ------------
BALANCE AT JUNE 30, 1996 ($6,432,263) $ 9,546 ($6,422,717)
================ =========== ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
BROADWAY VIDEO ENTERTAINMENT, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1996 AND 1995
1. ORGANIZATION AND NATURE OF BUSINESS
Broadway Video Entertainment, L.P., (the "Partnership") was organized on August
1, 1994 as a limited partnership under the laws of the State of New York to
engage in acquiring, licensing and exploiting certain motion picture rights and
properties. In accordance with the Partnership Agreement, (the "Agreement"),
the initial capitalization of the Partnership occurred through a series of
transaction in which net assets were contributed from individual partners in
exchange for proportionate interests in the Partnership. In addition, debt was
issued to a third party.
2. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included
herein. Operating results for the six month periods ended June 30, 1996 and
1995 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1996 and 1995, respectively. For further information,
refer to the consolidated financial statements and footnotes thereto included
in the Partnership's annual financial report.
3. PRINCIPLES OF CONSOLIDATION
The consolidated unaudited interim financial statements included herein reflect
the accounts of the Partnership, its 50% owned subsidiary, McSpadden Smith
Music, LLC, and its Broadway Comics Division. Significant intercompany accounts
and transaction have been eliminated in consolidation.
4. RELATED PARTY TRANSACTIONS
The Partnership regularly enters into transactions with an affiliated company
in accordance with a ten-year Management Service Agreement (the "Service
Agreement"), as defined in the Agreement. Accordingly, during the six months
ended June 30, 1996 and 1995, management fees under the Service Agreement were
charged to the Partnership in the approximate amounts of $1,107,001 and
$956,000, respectively.
<PAGE>
BROADWAY VIDEO ENTERTAINMENT, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
5. RISKS AND UNCERTAINTIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities, and the
disclosure of contingent assets and liabilities, at the date of the financial
statements, as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
6. LEGAL PROCEEDINGS
The Partnership is involved in various legal proceedings from time to time in
the normal course of business. In management's opinion, the litigation in which
the Partnership is currently involved, both individually and in the aggregate,
is not material to the Partnership's financial condition or its results of
operation.
7. SUBSEQUENT EVENT
On August 20, 1996, pursuant to an Asset Purchase Agreement, dated as of
July 30, 1996 among Golden Books Family Entertainment, Inc. (the "Company") and
certain of its subsidiaries and the Partnership, substantially all of the
Partnerships' assets and certain liabilities incurred in connection with the
exploitation of such assets after the related closing were sold for an aggregate
purchase price of $81 million in cash and $10 million in Common Stock of the
Company (901,408 shares).
<PAGE>
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The following set forth the unaudited pro forma condensed balance sheet and
unaudited pro forma condensed statement of operations of Golden Books Family
Entertainment, Inc. (the "Company") for the six months ended August 3, 1996 and
the unaudited pro forma condensed statement of operations for the year ended
February 3, 1996, which are derived from the historical Consolidated Financial
Statements of the Company. The unaudited pro forma condensed statement of
operations for the periods presented give pro forma effect to (i) the issuance
of Series B Preferred Stock to Golden Press Holding, L.L.C. (the "GPH
Transaction"), (ii) the acquisition of substantially all of the television and
film library properties of Broadway Video Entertainment, L.P. ("BVE L.P.") and
its affiliates (which constituted substantially all of the assets of BVE, L.P.)
and the assumption of the profit participations payable and all liabilities
incurred in connection with the exploitation of such assets after the closing
(the "Acquisition"), (iii) the issuance of $115 million of Convertible Trust
Originated Preferred Securities by Golden Books Financing Trust (the "Preferred
Securities") (the "Offering"), (iv) the investment by a wholly-owned subsidiary
of Hallmark Cards, Incorporated ("Hallmark") in $25 million of common
stock, par value $.01 per share, of the Company (the "Company Common Stock")
(the "Hallmark Investment") and (v) the issuance of 84,967 additional
shares of Company Common Stock to Richard E. Snyder pursuant to his employment
agreement, in each case, as if such transactions had been consummated at the
beginning of the period presented. The unaudited pro forma condensed statements
of operations for the six months ended August 3, 1996 and the year ended
February 3, 1996 reflect the statements of operations information of BVE, L.P.
for the six months ended June 30, 1996 and the year ended December 31, 1995,
respectively. The unaudited pro forma condensed balance sheet gives pro forma
effect to (i) the Acquisition, (ii) the issuance of the Preferred Securities in
the Offering, (iii) the Hallmark Investment, (iv) the capital contribution of
$2.0 million by the Company to FUTECH Educational Products, Inc. ("FUTECH") and
(v) the issuance of 84,967 shares of Company Common Stock and options to
purchase 157,796 shares of Company Common Stock to Richard E. Snyder and other
future payments pursuant to his employment agreement, in each case, as if such
transactions had been consummated on August 3, 1996. The pro forma balance
sheet at August 3, 1996 reflects the financial position of BVE, L.P. as of June
30, 1996. The pro forma adjustments are described in the notes hereto and are
based upon available information and certain assumptions that the Company
believes are reasonable. The unaudited pro forma condensed financial statements
do not necessarily reflect the results of operations or the financial position
of the Company that actually would have resulted had the transactions above
been consummated as of the date or for the period indicated. The unaudited pro
forma condensed financial statements should be read in conjunction with the
notes hereto, the consolidated financial statements and notes thereto of the
Company for the year ended February 3, 1996 and for the six months ended
August 3, 1996 and the consolidated financial statements and the notes thereto
of BVE, L.P. for the year ended December 31, 1995 and for the six months ended
June 30, 1996.
<PAGE>
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AUGUST 3, 1996
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA
GOLDEN BOOKS BVE, L.P. ADJUSTMENTS PRO FORMA
------------ ---------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 73,894 $ 5,289 $ (78,200) (a) $ 129,444
110,750 (b)
(5,289) (c)
25,000 (d)
(2,000) (f)
Accounts receivable, net 43,595 1,791 45,386
Inventories 45,264 45,264
Net assets held for sale and other
current assets 33,067 159 (159) (c) 28,067
(5,000) (a)
------------ ---------- ----------- ---------
Total Current Assets 195,820 7,239 45,102 248,161
Property, plant & equipment, net 54,188 218 54,406
Film library, goodwill and other
intangibles, net - 6,244 85,680 (a) 91,924
Other non-current assets 6,911 877 2,000 (f) 9,788
------------ ---------- ----------- ---------
Total Assets $ 256,919 $ 14,578 $ 132,782 $ 404,279
============ ========== =========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES
Accounts payable $ 9,089 $ 298 $ (298) (c) $ 9,089
Profit participation payable - 1,385 $ 1,385
Accrued expenses and other current
liabilities 33,444 2,523 (2,523) (c) 33,957
513 (e)
------------ ---------- ----------- ---------
Total Current Liabilities 42,533 4,206 (2,308) 44,431
Long-term debt 149,854 16,569 (16,569) (h) 149,854
Pension liability 28,230 - 28,230
Other non-current liabilities 16,728 225 16,953
Company-Obligated Mandatorily Redeemable
Convertible Preferred Securities of
Golden Books Financing Trust Holding
Solely Convertible Debentures - - 110,750 (b) 110,750
STOCKHOLDERS' EQUITY (DEFICIT)
Series B Preferred Stock 65,000 - 65,000
Common stock 221 - 9 (a) 255
24 (d)
1 (e)
Additional paid-in capital 80,623 - 9,991 (a) 116,545
24,976 (d)
955 (e)
Retained earnings (deficit) (121,762) - (513) (e) (123,231)
(956) (e)
Cumulative translation adjustment (1,686) - (1,686)
Partners' capital - (6,422) 6,422 (a) -
Treasury stock (2,822) - (2,822)
------------ ---------- ----------- ---------
Total Stockholders' Equity (Deficit) 19,574 (6,422) 40,909 54,061
Total Liabilities and Stockholders'
Equity (Deficit) $ 256,919 $ 14,578 $ 132,782 $ 404,279
============ ========== =========== =========
</TABLE>
<PAGE>
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED FEBRUARY 3, 1996
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA
GOLDEN BOOKS BVE, L.P. ADJUSTMENTS PRO FORMA
------------ ---------- ----------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues $ 374,257 $ 9,536 $ $ 383,793
Costs and Expenses:
Cost of sales 281,392 2,756 3,699 (g) 287,847
Selling, general and
administrative expenses 129,020 5,505 804 (g) 135,329
Restructuring charges, net 6,701 - 6,701
------------ ---------- ----------- ---------
417,113 8,261 4,503 429,877
Income (loss) before interest
expense and other expenses,
taxes and distributions on
redeemable preferred securities
of subsidiary trust and other (42,856) 1,275 (4,503) (46,084)
Interest and other expenses, net 12,859 2,092 (1,822)(h) 13,342
213 (h)
Distribution on redeemable
preferred securities of
subsidiary trust - - 10,063 (i) 10,063
------------ ---------- ----------- ---------
Loss before taxes (55,715) (817) (12,957) (69,489)
Provision for income taxes 11,332 65 11,397
------------ ---------- ----------- ---------
Net loss $ (67,047) $ (882) $ (12,957) $ (80,886)
============ ========== =========== =========
Preferred dividends paid 848 8,512 (j) 9,360
------------ ----------- ---------
Net loss available to common
stockholders $ (67,895) $ (21,469) $ (90,246)
============ =========== =========
Weighted average shares 21,047 25,283
Loss per common share $ (3.23)(k) $ (3.57)(l)
============ =========
</TABLE>
<PAGE>
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED AUGUST 3, 1996
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA
GOLDEN BOOKS BVE, L.P. ADJUSTMENTS PRO FORMA
------------ ---------- ----------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues $ 134,856 $ 7,175 $ $ 142,031
Costs and Expenses:
Cost of sales 131,951 3,056 1,759 (g) 136,766
Selling, general and
administrative expenses 75,466 3,407 245 (g) 79,118
Restructuring charges, net 40,680 - 40,680
------------ ---------- ----------- ---------
248,097 6,463 2,004 256,564
Income (loss) before interest
expense and other expenses,
taxes and distributions on
redeemable preferred securities
of subsidiary trust and other (113,241) 712 (2,004) (114,533)
Interest and other expenses, net 4,391 1,391 (1,387)(h) 4,501
106 (h)
Distribution on redeemable
preferred securities of
subsidiary trust - - 5,031 (i) 5,031
------------ ---------- ----------- ---------
Loss before taxes (117,632) (679) (5,754) (124,065)
Provision for income taxes 522 28 550
------------ ---------- ----------- ---------
Net loss $ (118,154) $ (707) $ (5,754) $(124,615)
============ ========== =========== =========
Preferred dividends paid 2,561 2,119 (j) 4,680
------------ ----------- ---------
Net loss available to common
stockholders $ (120,715) $ (7,873) $(129,295)
============ =========== =========
Weighted average shares 21,968 26,285
Loss per common share $ (5.50)(k) $ (4.92)(l)
============ =========
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL
STATEMENTS
(DOLLARS IN THOUSANDS)
(a) Represents the Acquisition purchase price of $91,000 as represented by
$81,000 in cash consideration (from proceeds of issued Preferred Securities
- see Note (b)) and the issuance of $10,000 in Company Common Stock
(901,408 shares). Cash adjustment includes $2,200 in estimated transaction
costs and $5,000 in deposits for the Acquisition. Also reflects the
elimination of BVE, L.P.'s historical stockholders' deficit and the
recording of $91,924 of film library, goodwill and other intangible assets
associated with the Acquisition.
(b) Represents the proceeds from the issuance of 2,300,000 shares of
Company-Obligated Mandatorily Redeemable Convertible Preferred Securities
of Golden Books Financing Trust Holding Solely Convertible Debentures for
an aggregate of $115,000, net of $4,250 in transaction costs. The
Company-Obligated Mandatorily Redeemable Convertible Preferred Securities
of Golden Books Financing Trust Holding Solely Convertible Debentures are
mandatorily redeemable in 2016.
(c) Represents the elimination of certain assets not acquired and certain
liabilities not assumed in connection with the Acquisition.
(d) Represents the receipt of the $25,000 proceeds and the issuance of
2,356,198 shares of Company Common Stock in connection with the Hallmark
Investment.
(e) Represents (i) $513 of special bonus and (ii) the issuance of 84,967
shares of Company Common Stock to Richard E. Snyder in connection with the
anti-dilution provision of his employment agreement in connection with the
Offering, the Acquisition and the Hallmark Investment.
(f) Represents the initial capital contribution of $2.0 million as called
for in the agreement with FUTECH.
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL
STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(g) Represents the incremental amortization due to the application of purchase
price accounting resulting from the preliminary allocation of the purchase
price to the film library, goodwill and other intangibles. The film library
(preliminarily estimated at $40,000) is being amortized using the
film-forecast method and the goodwill (preliminarily estimated at $51,924)
and other intangible assets are being amortized on a straight line basis
over a period of 25 years (preliminary estimate). The preliminary purchase
price allocation to the film library, goodwill and other intangibles and
the respective amortization periods are subject to finalization.
(h) Represents the elimination of BVE, L.P.'s historical long-term debt and
interest expense for the period presented as BVE, L.P.'s long-term debt
was retired by BVE, L.P. in connection with the Acquisition. Also
reflects the recognition of non-cash interest expense from amortization of
deferred financing costs from the Offering.
(i) Represents dividends paid for period on Company-Obligated Mandatorily
Redeemable Convertible Preferred Securities of Golden Books Financing Trust
Holding Solely Convertible Debentures. Calculated based on offering of
$115,000 of securities (See Note (b)) and a 8.75% annual dividend rate.
(j) Represents dividends of Company Common Stock paid on the Series B
Preferred Stock issued in connection with the GPH Transaction. Calculated
based on 195,000 shares of Company Common Stock issued quarterly utilizing
the August 3, 1996 closing price of the Company Common Stock. The dividend
on the Series A Preferred Stock is eliminated as the Series A Preferred
Stock was retired in connection with the GPH Transaction.
(k) Historical loss per share of Company Common Stock is calculated based
on weighted shares of 21,968,000 and 21,047,000 for the six months and year
ended August 3, 1996 and February 3, 1996, respectively.
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL
STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(l) The pro forma loss for the six months and year ended August 3, 1996 and
February 3, 1996, respectively, has been calculated based on the pro forma
effect of the GPH Transaction, the issuance of the Preferred Securities and
the Acquisition. The pro forma loss has been adjusted to reflect the 12%
Series B Preferred Stock dividend. The pro forma loss per share of Company
Common Stock has been calculated based on the historical weighted average
shares outstanding as adjusted for the issuance of shares of Company Common
Stock to Richard E. Snyder, the dividends of shares of Company Common Stock
payable to the holder of the Series B Preferred Stock (based on August 3,
1996 closing stock price), shares issued in connection with the Acquisition
and shares issued in connection with the Hallmark Investment. The resulting
adjusted pro forma weighted average shares for the six months and year
ended August 3, 1996 and February 3, 1996, are 26,285,000 and 25,283,000,
respectively. All other common stock equivalents including warrants,
options, Series A Preferred Stock and Series B Preferred Stock were deemed
anti-dilutive.
