UNITED STATES
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 4, 1996 or
-------------------
_______ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the transition period from _________________ to _____________________
Commission file number 0-14577
---------------
Gantos, Inc.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Michigan 38-1414122
- --------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3260 Patterson, S.E., Grand Rapids, Michigan 49512
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (616) 949-7000
--------------------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes __ X __ No _______
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes __ X __ No _______
Number of shares of common stock outstanding at June 7, 1996: 7,579,288
--------------
<PAGE>
GANTOS, INC.
Page
Number
------
PART I. FINANCIAL INFORMATION
Statements of Income 3
Balance Sheets 4
Statements of Cash Flows 5
Notes to Financial Statements 6-7
Management's Discussion and Analysis of
Results of Operations and Financial Condition 8-10
PART II. OTHER INFORMATION
Exhibits and Reports on Form 8-K 11
Signatures 12
Page 2 of 12 pages.
<PAGE>
<TABLE>
<CAPTION>
GANTOS, INC.
STATEMENTS OF INCOME
(Amounts in thousands, except per share and store data)
13 Weeks Ended
--------------------------
May 4, April 29,
1996 1995
------ ---------
<S> <C> <C>
Net sales $ 50,365 $ 49,086
Cost of sales (including buying,
distribution and occupancy costs) (38,612) (38,437)
----------- -----------
Gross income 11,753 10,649
Selling, general and administrative expense (9,744) (10,479)
Finance charge and other revenue 1,111 1,050
----------- -----------
Operating income 3,120 1,220
Interest expense (572) (200)
----------- -----------
Income before reorganization
items and income taxes 2,548 1,020
Reorganization items:
Professional fees -- (526)
Interest earned on accumulating cash from
Chapter 11 proceedings -- 251
----------- -----------
Net reorganization items -- (275)
----------- -----------
Income before income taxes 2,548 745
Income taxes -- --
----------- -----------
Net income $ 2,548 $ 745
=========== ===========
Net income per share $ 0.34 $ 0.17
=========== ===========
Outstanding Shares 7,577,290 7,577,290
=========== ===========
Estimated weighted average shares outstanding 7,577,290 4,343,175
=========== ===========
Stores open at end of period 113 113
=========== ===========
<FN>
See accompanying notes to financial statements
</TABLE>
Page 3 of 12 pages.
<PAGE>
<TABLE>
<CAPTION>
GANTOS, INC.
BALANCE SHEETS
(Amounts in thousands, except share data)
May 4, February 3, April 29,
1996 1996 1995
------ ----------- ---------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,929 $ 1,453 $ 1,416
Accounts receivable, less allowance for
doubtful accounts of $547, $572 and
$523 at May 4, 1996, February 3, 1996
and April 29, 1995, respectively 23,381 22,619 24,429
Merchandise inventories 26,695 23,955 28,819
Prepaid expenses and other 2,951 2,851 2,729
-------- -------- --------
Total current assets 55,956 50,878 57,393
-------- -------- --------
Property and equipment, at cost:
Leasehold improvements 29,086 28,375 28,197
Furniture and fixtures 31,249 32,243 28,831
Other 961 418 3,099
-------- -------- --------
Total property and equipment 61,296 61,036 60,127
Less - Accumulated depreciation
and amortization (44,749) (43,504) (42,300)
-------- -------- --------
Net property and equipment 16,547 17,532 17,827
-------- -------- --------
Total assets $ 72,503 $ 68,410 $ 75,220
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 15,908 $ 12,119 $ 16,179
Accrued expenses and other 10,878 12,716 11,998
Current provision for facilities closings 2,417 2,417 3,654
-------- -------- --------
Total current liabilities 29,203 27,252 31,831
-------- -------- --------
Long-term debt 11,940 12,395 16,273
-------- -------- --------
Liabilities subject to compromise -- -- 1,886
-------- -------- --------
Shareholders' equity:
Preferred stock, $.01 par value, 2,000,000
shares authorized; none issued
Common stock, $.01 par value, 20,000,000
shares authorized; approximately
7,577,000 issued and outstanding
at May 4, 1996, February 3, 1996,
and April 29, 1995 76 76 74
Additional paid-in capital 40,652 40,603 40,045
Accumulated deficit (9,368) (11,916) (14,889)
-------- -------- --------
Total shareholders' equity 31,360 28,763 25,230
-------- -------- --------
Commitments -- -- --
-------- -------- --------
Total liabilities and shareholders' equity $ 72,503 $ 68,410 $ 75,220
======== ======== ========
<FN>
See accompanying notes to financial statements.
</TABLE>
Page 4 of 12 pages.
<PAGE>
<TABLE>
<CAPTION>
GANTOS, INC.
STATEMENTS OF CASH FLOWS
(Thousands)
13 Weeks Ended
-----------------------
May 4, April 29,
1996 1995
------ ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,548 $ 745
-------- --------
Adjustments to reconcile net income to
net cash provided (used) by operating activities:
Reorganization items -- 275
Cash used for store closings -- (11)
Depreciation and amortization 1,258 1,593
Restricted stock compensation expense 48 23
Changes in assets and liabilities:
Accounts receivable (762) 648
Merchandise inventories (2,740) (6,275)
Prepaid expenses and other (100) 618
Accounts payable 3,789 7,705
Accrued expenses and other (1,838) (810)
-------- --------
Total adjustments (345) 3,766
-------- --------
Net cash provided by operating activities
before reorganization items 2,203 4,511
-------- --------
Adjustment to reconcile reorganization items
to cash used by reorganization items
Net change to liabilities subject to compromise -- (63,055)
Net non-cash change to liabilities
subject to compromise -- 31,982
-------- --------
Net cash payments on liabilities subject
to compromise -- (31,073)
Reorganization items -- (275)
Change in accrued interest receivable -- 88
Change in accrued bankruptcy expenses -- (629)
-------- --------
Net cash used by reorganization items -- (31,889)
-------- --------
Net cash provided (used) by
operating activities 2,203 (27,378)
-------- --------
Cash flows from investing activities:
Capital expenditures (337) (816)
-------- --------
Net cash used by investing activities (337) (816)
-------- --------
Cash flows from financing activities:
Principal payments under capital lease
obligations and other long-term debt (455) (25)
Net borrowings under revolving
credit notes payable -- 3,677
Other 65 (587)
-------- --------
Net cash provided (used) by financing activities (390) 3,065
-------- --------
Net increase (decrease) in cash
and cash equivalents 1,476 (25,129)
Cash and cash equivalents at beginning of period 1,453 26,545
-------- --------
Cash and cash equivalents at end of period $ 2,929 $ 1,416
======== ========
Supplemental Disclosures of Cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $ 452 $ 39
Income taxes $ 14 $ 17
<FN>
See accompanying notes to financial statements.
</TABLE>
Page 5 of 12 pages.
<PAGE>
GANTOS, INC.
NOTES TO FINANCIAL STATEMENTS
1. The interim financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted
pursuant to such rules and regulations, although the Company believes that
the disclosures are adequate to make the information presented not
misleading. Nevertheless, it is recommended that these financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the
fiscal year ended February 3, 1996.
The accompanying interim financial statements reflect all adjustments
which are, in the opinion of management, necessary to a fair statement of
the results of the interim periods presented and necessary to present
fairly the financial position as of May 4, 1996, February 3, 1996 and
April 29, 1995 and the results of operations and cash flows for the
thirteen weeks ended May 4, 1996 and April 29, 1995. Certain amounts from
the prior year have been reclassified to conform with the presentation
used in the current year. All adjustments are of a normal and recurring
nature.
The results of operations for the thirteen week periods ended May 4, 1996
and April 29, 1995 are not necessarily indicative of the results to be
expected for the full year due to the seasonal nature of the business.
2. Inventories are stated at the lower of cost or market. A physical
inventory to determine actual cost of merchandise sold is taken at least
two times per year.
3. Net income per share is computed using the weighted average number of
common shares outstanding during each period.
4. The Company opened one new store on June 1, 1996.
5. Effective April 25, 1996, the Company amended its Revolving Credit
Agreement. The commitment, term, borrowing rate and total credit available
under the agreement remain the same but the Amendment allows the Company
to reduce the committed amount or terminate the agreement without any
prepayment penalty or fees after March 26, 1996. Other changes include
adjustments to the fixed charge ratio covenant and reduction of the
earnings before interest, taxes, depreciation and amortization covenant.
6. On March 19, 1996, the Company's Board of Directors adopted the Gantos,
Inc. 1996 Stock Option Plan (the "1996 Plan"). Pursuant to the 1996 Plan,
subject to shareholder approval of the 1996 Plan at the 1996 Annual
Meeting of Shareholders, 1,000,000 Common Shares are reserved for issuance
pursuant to options or stock appreciation rights granted or to be granted,
and pursuant to restricted stock awarded or to be awarded, to key
employees of the Company, as the Company's Board of Directors or the
Compensation Committee shall determine.
Page 6 of 12 pages.
<PAGE>
7. On March 19, 1996, the Company's Board of Directors adopted the Gantos,
Inc. Employee Stock Purchase Plan (the "Stock Purchase Plan"). Pursuant
to the Stock Purchase Plan, subject to shareholder approval at the 1996
Annual Meeting of Shareholders, eligible employees of the Company will be
granted the right to purchase a maximum aggregate of 200,000 Common Shares.
Shares issued under the Stock Purchase Plan may be authorized but unissued
shares, reacquired shares or shares bought on the open market.
Page 7 of 12 pages.
<PAGE>
GANTOS, INC.
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Results of Operations
Thirteen Weeks Ended May 4, 1996 Compared to Thirteen Weeks Ended April 29,
1995
The following table indicates the percentage relationships to net sales of
various revenue and expense items for the thirteen week periods ended May 4,
1996 and April 29, 1995.
<TABLE>
<CAPTION>
As a percent of net
sales for the thirteen
weeks ended
----------------------
May 4, April 29,
1996 1995
------ ---------
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of sales (including buying,
distribution and occupancy costs) (76.7) (78.3)
----- -----
Gross income 23.3 21.7
Selling, general and administrative expense (19.3) (21.3)
Finance charge and other revenue 2.2 2.1
----- -----
Operating income 6.2 2.5
Interest expense (1.1) (0.4)
----- -----
Income before reorganization
items and income taxes 5.1 2.1
Reorganization items:
Professional fees -- (1.1)
Interest earned on accumulating cash from
Chapter 11 proceedings -- 0.5
----- -----
Net reorganization items -- (0.6)
----- -----
Income before income taxes 5.1 1.5
Income taxes -- --
----- -----
Net income 5.1% 1.5%
=== ===
</TABLE>
Net sales for the thirteen weeks ended May 4, 1996 were approximately $50.4
million, an increase of approximately $1.3 million, compared to net sales of
approximately $49.1 million in the same period of the prior fiscal year. Net
sales for stores in operation throughout both periods increased 2.9%, or $1.4
million, for the first quarter of 1996 compared to the same period in the prior
year. The 2.9% increase in comparable store sales is comprised of a 6.8%
increase in average sales dollars per unit, a 3.6% decrease in unit sales and
a decrease of 0.3% due to a change in merchandise mix. The increase in
average sales dollars is primarily the result of increases in the sportswear
divisions. The effect of closing two stores in 1995 and opening only one new
store in 1995 resulted in a $0.1 million decrease in sales compared to the
prior year. The Company experienced negative comparable store sales during
the latter part of the first quarter and management expects this trend to
continue into the second quarter. The Company opened one new store in
June 1996.
Page 8 of 12 pages.
<PAGE>
Cost of sales, as a percent of net sales, decreased to 76.7% in the thirteen
weeks ended May 4, 1996, compared to 78.3% in the thirteen weeks ended April
29, 1995. The percentage decrease in cost of sales is primarily the result of
higher retail net sales combined with lower distribution and store occupancy
costs, partially offset by an increase in net markdowns taken, higher
shrinkage expense and lower vendor allowances in the first quarter of 1996
compared to the same period in the prior fiscal year.
Selling, general and administrative (SG&A) expense for the thirteen weeks
ended May 4, 1996 decreased approximately $0.7 million, compared to the same
period in the prior fiscal year. The decrease is primarily due to the
elimination of computer outsourcing fees, lower depreciation expense and lower
insurance expense, partially offset by an increase in bad debt expense during
the first quarter of 1996 compared to the first quarter of 1995. The Company
does not expect that these comparable period decreases will continue in
future periods.
Finance charge and other revenue increased approximately $61,000 in the first
quarter of 1996 compared to the first quarter of 1995. The increase is
primarily the result a new late fee policy implemented on the Gantos charge
card in October 1995, partially offset by a decrease in finance charge income
during the first quarter of 1996, compared to the same period in the prior
fiscal year.
Interest expense increased approximately $0.4 million during the thirteen
weeks ended May 4, 1996, compared to the same period in the prior fiscal year.
The increase is the result of the Company's emergence from Chapter 11
effective March 31, 1995. Both the revolving credit agreement and notes
accrued interest for the entire first quarter of 1996 compared to only one
month during the first quarter of 1995. During the first two months of 1995,
the Company was still in Chapter 11 Proceedings, and was not required to pay
interest on its unsecured or undersecured pre-petition debt.
Interest income and professional fees, shown separately under "Reorganization
Items" in the Statements of Income, will not be incurred during 1996 as a
result of the Company's emergence from Chapter 11 in 1995 and payments made to
creditors under the Plan.
The Company did not record a provision for taxes during the first quarter of
1996 or during the first quarter of 1995 due to the availability of net
operating loss carryforwards.
These factors resulted in net income of approximately $2.5 million, or $0.34
per share, in the first quarter of 1996 compared to net income of $0.7
million, or $0.17 per share, in the first quarter of 1995.
Page 9 of 12 pages.
<PAGE>
Liquidity and Capital Resources
Net cash provided by operating activities before reorganization items totaled
$2.2 million in the first quarter of 1996 compared to $4.5 million in the same
period a year ago. The decrease was primarily due to a smaller increase in
trade payables due to lower inventory levels, an increase in accounts
receivable compared to a decrease in the prior year and a larger decrease in
accrued items due primarily to the timing of payments. These decreases were
partially offset by an increase in net income of $1.8 million and a smaller
increase in merchandise inventories as a result of the Company's emphasis on
inventory management.
Net cash used by reorganization items was $31.9 million in the first quarter
of 1995. Pursuant to the Plan of Reorganization, during the first quarter of
1995, the Company used $28,373,000 of its cash, borrowed approximately
$2,700,000 from its new lenders, issued approximately $12,395,000 in original
principal amount of six-year notes payable, bearing interest at 12.75% a year,
and issued or committed to issue approximately $20,100,000 in Common Shares
(valued for this purpose at $4.16 a share), in payment of approximately
$57,863,000 of its liabilities subject to compromise, $5,192,000 in long-term
debt and $514,000 of accrued expenses, including the settlement costs of the
purported class action lawsuit.
Net cash used by financing activities in the first quarter of 1996 was
$390,000 compared to net cash provided of approximately $3.1 million in the
same period a year ago. The increase in cash used represents an Excess Cash
Flow payment made in March of 1996 with respect to the New Notes issued
pursuant to the Plan of Reorganization. In addition, the change is attributed
to cash provided in 1995 representing net borrowings by the Company under its
revolving credit facility after its emergence from Chapter 11, partially
offset by loan agreement fees paid upon execution of the Fleet revolving
credit agreement.
The Company has a revolving credit agreement expiring March 31, 1998, with
Fleet Bank N.A. (formerly NatWest Bank N.A.) and LaSalle National Bank with a
maximum commitment of $40 million, subject to a borrowing base formula and
lender reserves. As of June 7, 1996, the Company had no borrowings and
$181,800 in letters of credit outstanding under this facility.
The Company expects its cash on hand, cash flow from operations and borrowings
under the Fleet facility to be sufficient to meet its capital expenditure,
working capital and other liquidity needs during the remainder of 1996.
Capital expenditures for 1996 are estimated to be $6.0 million. These amounts
are expected to be used primarily to remodel and refixture 20 to 25 stores and
potentially open one to two new stores in 1996.
Page 10 of 12 pages.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
10.1 Amendment No. 1, dated April 25, 1996, to the
Revolving Credit Agreement dated March 10, 1995, among
Gantos, Inc., NatWest Bank, N.A. (now known as Fleet
Bank, N.A.), LaSalle National Bank and NatWest Bank,
N.A., as agent.
27 Financial Data Schedule.
(b) No reports on Form 8-K were filed by the Registrant
during the quarter for which this report is filed.
Page 11 of 12 pages.
<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 thereunto duly authorized.
Date: June 12, 1996
GANTOS, INC.
-----------------------------------
(Registrant)
By: /S/ J. E. BUNKA
-----------------------------------
J. E. BUNKA
ITS VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND TREASURER
(DULY AUTHORIZED OFFICER AND
PRINCIPAL FINANCIAL OFFICER)
Page 12 of 12 pages.
<PAGE>
EXHIBIT INDEX
Document Number and Description
10.1 Amendment No. 1, dated April 25, 1996, to the Revolving Credit
Agreement dated March 10, 1995, among Gantos, Inc., NatWest Bank,
N.A. (now known as Fleet Bank, N.A.), LaSalle National Bank and
NatWest Bank, N.A., as agent.
27 Financial Data Schedule
AMENDMENT NO. 1 TO CREDIT AGREEMENT
AMENDMENT NO. 1 TO CREDIT AGREEMENT, dated as of April 25, 1996 (this
"Amendment"), among GANTOS, INC., a Michigan Corporation (the "Borrower"),
NATWEST BANK N.A. and LASALLE NATIONAL BANK, as lenders (each individually, a
"Lender" and collectively, the "Lenders"), and NATWEST BANK N.A., as agent for
the Lenders (in such capacity, the "Agent").
WHEREAS, the Borrower, the Lenders, and the Agent are party to the
Revolving Credit Agreement, dated as of March 10, 1995 (as amended,
supplemented or modified from time to time in accordance with its terms, the
"Credit Agreement"); and
WHEREAS, subject to the terms and conditions hereof, the parties
hereto desire to amend certain provisions of the Credit Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and subject to the fulfillment of the conditions
set forth below, the parties hereto agree as follows:
1. Defined Terms. Unless otherwise specifically defined
herein, all capitalized terms used herein shall have the respective
meanings ascribed to such terms in the Credit Agreement.
2. Amendments to Credit Agreement. Subject to the
conditions as to effectiveness set forth in Paragraph 4 of this
Amendment, the Credit Agreement is hereby amended as follows:
(a) Section 2.06(b) is amended and restated in its entirety
as follows:
"(b) If, on or prior to March 27, 1996, the Total
Commitment shall be permanently terminated (whether by the
Borrower, as a result of an Event of Default or otherwise) or
the Total Commitment shall be permanently reduced, the Borrower
shall pay each Lender, through the Agent, on the date of, and
as a condition to, such termination or reduction a fee (the
"Reduction Fee") in an amount equal to one percent (1%) of the
principal amount of such permanent termination or reduction."
<PAGE>
(b) Section 7.09 is amended by replacing the amount "$6,500,000" set
forth in the second line thereof with the amount "$7,500,000".
(c) Section 7.10 is amended and restated in its entirety as
follows:
"SECTION 7.10. EBITDA. Permit EBITDA of the
Borrower and its subsidiaries at the end of each fiscal
quarter for the four-quarter period then ending to be
less than the respective amounts set forth below for the
periods indicated:
Period Amount
------ ------
Fiscal quarter ending April 29, 1995 $7,300,000
Fiscal quarter ending July 29, 1995 $7,000,000
Fiscal quarter ending October 28, 1995 $7,100,000
Fiscal quarter ending February 3, 1996 $8,100,000
Fiscal quarter ending May 4, 1996 $8,800,000
Fiscal quarter ending August 3, 1996 $9,600,000
Fiscal quarter ending November 2, 1996 $10,300,000
Fiscal quarter ending February 1, 1997
and thereafter $9,500,000 "
3. Representations and Warranties. The Borrower hereby
represents and warrants as follows (which representations and
warranties shall survive the execution and delivery of this
Amendment) as of the date hereof that:
(a) All representations and warranties contained in the Credit
Agreement and each of the other Loan Documents are true and correct in all
material respects as of the date hereof with the same force and effect as if
made on such date (except to the extent that any such representation or
warranty relates expressly to an earlier date).
(b) The Borrower has the corporate power and authority to execute,
deliver and carry out the terms and provisions of this Amendment and has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Amendment.
2
<PAGE>
(c) This Amendment has been duly executed and delivered and
constitutes the legal, valid and binding obligation of the Borrower, and is
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, reorganization, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally and by
general equity principles.
(d) No registration or filing with, consent or approval of, or other
action by, any Federal, State or other governmental agency, authority or
regulatory body is or will be required on behalf of the Borrower in connection
with the execution, delivery, performance, validity or enforcement of this
Amendment other than any such registration or filing which has been made or
any such consent, approval or other action which has been obtained and remains
in full force and effect and other than the filing of a Form 10-Q or a Form
10-K with the Securities and Exchange Commission.
(e) The execution, delivery and performance of this Amendment by the
Borrower will not violate any provision of the certificate or articles of
incorporation or bylaws of the Borrower or any of its subsidiaries or any law,
statute, rule or regulation, or any order or decree of any court or
governmental instrumentality applicable to the Borrower or any of its
subsidiaries, or violate, result in the breach of or constitute a default
under any indenture, agreement or other instrument to which the Borrower or
any of its subsidiaries or any of their respective properties or assets are or
may be bound.
(f) The Borrower is in compliance with all of the various covenants
and agreements applicable to it set forth in the Credit Agreement and each of
the other Loan Documents.
(g) No event has occurred and is continuing which constitutes or would
constitute, with the giving of notice or the lapse of time or both, an Event
of Default under the Credit Agreement or any of the other Loan Documents, or
an Event of Default (as defined in the Indenture) under the Indenture.
(h) The Borrower has no defense to or setoff, counterclaim or claim
against payment of the Obligations or enforcement of the Loan Documents based
upon a fact or circumstance existing or occurring on or prior to the date
hereof.
4. Conditions Precedent. Notwithstanding any term or provision of this
Amendment to the contrary, no amendment set forth in Paragraph 2 hereof shall
become effective until the Agent shall have determined that each of the
following conditions precedent shall have been satisfied.
3
<PAGE>
(a) All required corporate actions in connection with the execution
and delivery of this Amendment shall have been taken, and each shall be
satisfactory in form and substance to the Agent, and the Agent shall have
received all information and copies of all documents, including, without
limitation, records of requisite corporate action that the Agent may
reasonably request, to be certified by the appropriate corporate person or
government authorities.
(b) The fees of the Lenders described in Paragraph 5 hereof and all
reasonable fees, costs and expenses of the Agent in connection with this
Amendment, including, without limitation, reasonable fees, costs and expenses
of counsel to the Agent, shall have been paid in full to the persons entitled
thereto in immediately available funds.
(c) All representations and warranties made by the Borrower contained
in Paragraph 3 hereof shall be true and correct with the same effect as though
such representations and warranties had been made on the date of effectiveness
of the amendments contained in this Amendment after giving effect to such
amendments (unless any such representation or warranty speaks expressly to an
earlier date).
(d) Counterparts of this Amendment shall have been duly executed and
delivered on behalf of the Borrower, the Lenders and the Agent.
5. Fees. The Borrower shall pay to the Agent for the account of the
Lenders a fee of $35,000 with respect to this Amendment, which fee shall be
distributed to the Lenders as follows:
Lender Fee
------ ---
NatWest Bank N.A. $21,875
LaSalle National Bank $13,125
6. Continued Effectiveness. The term "Agreement", "hereof", "herein"
and similar terms as used in the Credit Agreement, and references in the other
Loan Documents to the Credit Agreement, shall mean and refer to, from and
after the effective date of the amendments contained herein as determined in
accordance with Paragraph 4 hereof, the Credit Agreement as amended by this
Amendment. Each of the parties hereto agrees that, as amended by this
Amendment, all of the covenants and agreements and other provisions contained
in the Credit Agreement and other Loan Documents are hereby ratified and
confirmed in all respects and shall remain in full force and effect from and
after the date of this Amendment.
4
<PAGE>
7. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be an original, and all of which, taken
together, shall constitute a single instrument. Delivery of an executed
counterpart of a signature page to this Amendment by telecopier shall be
effective as delivery of a manually executed counterpart of this Amendment.
8. Governing Law. This Amendment shall be construed in accordance with
and governed by the laws of the State of New York (without giving effect to
the conflicts of laws principles thereof).
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
GANTOS, INC., as Borrower
By: /s/ L. Douglas Gantos
------------------------
Name: L. Douglas Gantos
Title: President
NATWEST BANK N.A., as Agent and as a Lender
By: ________________________
Name:
Title:
LASALLE NATIONAL BANK, as a Lender
By: ________________________
Name:
Title:
5
<PAGE>
7. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be an original, and all of which, taken
together, shall constitute a single instrument. Delivery of an executed
counterpart of a signature page to this Amendment by telecopier shall be
effective as delivery of a manually executed counterpart of this Amendment.
8. Governing Law. This Amendment shall be construed in accordance with
and governed by the laws of the State of New York (without giving effect to
the conflicts of laws principles thereof).
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
GANTOS, INC., as Borrower
By: ________________________
Name:
Title:
NATWEST BANK N.A., as Agent and as a Lender
By: /s/ Eric Rubin
------------------------
Name: Eric Rubin
Title: Vice President
LASALLE NATIONAL BANK, as a Lender
By: ________________________
Name:
Title:
5
<PAGE>
7. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be an original, and all of which, taken
together, shall constitute a single instrument. Delivery of an executed
counterpart of a signature page to this Amendment by telecopier shall be
effective as delivery of a manually executed counterpart of this Amendment.
8. Governing Law. This Amendment shall be construed in accordance with
and governed by the laws of the State of New York (without giving effect to
the conflicts of laws principles thereof).
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
GANTOS, INC., as Borrower
By: ________________________
Name:
Title:
NATWEST BANK N.A., as Agent and as a Lender
By: ________________________
Name:
Title:
LASALLE NATIONAL BANK, as a Lender
By: /s/ Mary S. Josephs
------------------------
Name: Mary S. Josephs
Title: Vice President
5
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM STATEMENTS OF INCOME AND BALANCE
SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-01-1997
<PERIOD-END> MAY-04-1996
<CASH> $ 2,929
<SECURITIES> 0
<RECEIVABLES> 23,928
<ALLOWANCES> 547
<INVENTORY> 26,695
<CURRENT-ASSETS> 55,956
<PP&E> 61,296
<DEPRECIATION> 44,749
<TOTAL-ASSETS> 72,503
<CURRENT-LIABILITIES> 29,203
<BONDS> 11,940
<COMMON> 76
0
0
<OTHER-SE> 31,284
<TOTAL-LIABILITY-AND-EQUITY> 72,503
<SALES> 50,365
<TOTAL-REVENUES> 50,365
<CGS> 38,612
<TOTAL-COSTS> 38,612
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 572
<INCOME-PRETAX> 2,548
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,548
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
</TABLE>
