SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended August 2, 1997 COMMISSION FILE NO. 0-17870
LECHTERS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY No. 13-2821526
STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION IDENTIFICATION NO.)
1 Cape May Street, Harrison, NEW JERSEY 07029
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (973) 481-1100
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, and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO
The number of shares of the Registrant's common stock, without par
value, outstanding at September 12, 1997: 17,155,086:
LECHTERS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR QUARTER ENDED AUGUST 2, 1997
INDEX
PAGE NO.
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
August 2, 1997 and February 1, 1997 1
Consolidated Statements of Income
for the Thirteen and Twenty-Six Weeks Ended
August 2, 1997 and August 3, 1996 2
Consolidated Statements of Cash Flows
for the Twenty-Six Weeks Ended
August 2, 1997 and August 3, 1996 3
Consolidated Statement of Shareholders'
Equity for the Twenty-Six Weeks Ended
August 2, 1997 4
Notes to Consolidated Financial Statements 5-6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-8
PART II. Other Information
Item 6. Exhibits and Reports 9
<PAGE> 3
LECHTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share
amounts)
<TABLE>
<CAPTION>
August 2, February
1997 1,
1997
<S> <C> <C>
A S S E T S (unaudite
d)
Current Assets:
Cash and Cash Equivalents $ $ 7,022
12,688
Marketable Securities 38,252 54,084
Accounts Receivable 12,904 5,561
Merchandise Inventories 112,056 100,442
Prepaid Expenses 8,448
5,734
Total Current Assets 184,348 172,843
Property and Equipment:
Fixtures and Equipment 68,269 66,828
Leasehold Improvements 102,912
102,855
171,124 169,740
Less Accumulated Depreciation 81,428 74,356
& Amortization
Net Property and 89,696 95,384
Equipment
Other Assets
5,488 4,106
Total Assets $ $272,333
279,532
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities
Accounts Payable $14,471 $ 3,264
Dividends Payable - Preferred 0 1,010
Stock
Salaries, Wages and Other 18,825 13,318
Accrued Expenses
Taxes, Other Than Income Taxes 1,628 1,318
Income Taxes Payable 22 1,979
Total Current Liabilities 20,889
34,946
Long-Term Debt
5% Convertible Subordinated
Debentures
due September 27, 2001 (Net
of Unamortized 59,416 58,853
Discount of $5,584 and
$6,147, respectively)
Total Long-Term Debt 59,416 58,853
Deferred Income Taxes and 22,698 22,183
Other Deferred Credits
Shareholders' Equity:
Convertible Preferred Stock,
$100 Par Value
Authorized 1,000,000
Shares,
Issued and Outstanding -
Series A - 149,999
Shares; Series B - 50,001 20,000 20,000
Shares
Common Stock, No Par Value,
Authorized 50,000,000
Shares,
Issued and Outstanding 58 58
17,155,086
Unrealized Holding Loss on
Available
for Sale Securities (7) (29)
Additional Paid-In Capital 62,273 62,273
Retained Earnings
80,148 88,106
Total Shareholders' Equity 170,408
162,472
Total Liabilities and $ $272,333
Shareholders' Equity 279,532
</TABLE>
See accompanying notes to consolidated financial
statements.
- 1 -
<PAGE> 4
LECHTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Thirteen Weeks Twenty-Six Weeks
Ended Ended
August August August August 3,
2, 3, 2,
1997 1996 1997 1996
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net Sales $ $ $ $177,719
95,114 92,727 180,243
Cost of Goods Sold
(including 72,266 70,849 137,418 135,227
occupancy and
indirect costs)
Gross Profit 22,848 21,878 42,825 42,492
Selling, General and
Administrative 27,892 25,853 55,383 51,361
Expenses
Operating Loss (5,044) (3,975) (12,558) (8,869)
Other Expenses
(Income):
Interest Expense 1,134 1,186 2,280 2,742
Interest Income (618) (369) (1,306) (845)
Loss (Gain) on Sale
of (10) (44)
Government 1 4
Securities
Total Other Expenses 506 930 1,901
(Income) 818
Loss Before Income (5,550) (4,793) (13,488) (10,770)
Taxes
Income Tax Benefit (2,275) (5,530) (4,416)
(1,965)
Net Loss (3,275) (2,828) (7,958) (6,354)
Preferred Stock 253 505 336
Dividend Requirement 252
Net Loss Applicable to
Common ($3,528 ($3,080 ($8,463) ($6,690)
Shareholders ) )
Net Loss Per Common ($0.21) ($0.49) ($0.39)
Share ($0.18)
Weighted Average Common
Shares 17,155, 17,155, 17,155,0 17,155,00
Outstanding 000 000 00 0
</TABLE>
See accompanying notes to consolidated financial statements.
- 2 -
<PAGE> 5
LECHTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
Twenty-Six Weeks Ended
August 2, August 3,
1997 1996
(unaudited)
<S> <C> <C>
Cash Flows From Operating
Activities:
Net Loss ($7,958) ($6,354)
Adjustments to Reconcile Net
Loss to Net
Cash Used In Operating
Activities:
Depreciation and Amortization 8,591 8,349
Other 982 888
Changes in Assets and
Liabilities:
Increase in Accounts Receivable (7,343) (4,529)
Increase in Merchandise (11,614) (9,061)
Inventories
Increase in Prepaid Expenses (2,714) (5,676)
Increase in Accounts Payable,
Accrued Expenses and Taxes
Other 17,024 10,542
Than Income Taxes
Decrease in Income Taxes (1,957) (665)
Payable
Increase in Other Assets (869) (687)
Net Cash Used In Operating (5,858) (7,193)
Activities
Cash Flows From Investing
Activities:
Capital Expenditures (3,336) (3,907)
Decrease in Available for Sale
Securities 15,870 15,185
Net Cash Provided by
Investing Activities 12,534 11,278
Cash Flows From Financing
Activities:
Issuance of Preferred Stock 0 20,000
Payment of Senior Notes 0 (17,625)
Payment of Preferred Stock (1,010) --
Dividend
Net Cash (Used In) Provided by
Financing (1,010) 2,375
Activities
Net Increase in Cash and
Cash Equivalents 5,666 6,460
Cash and Cash Equivalents,
Beginning of 7,022 4,234
Period
Cash and Cash Equivalents, End 12,688 $10,694
of Period
Supplemental Disclosure of Cash
Flows
Information:
Non Cash Investing Activities:
Unrealized Holding Loss
Adjustment $38 ($252)
on Available for Sale
Securities
Cash Paid During the Period
for:
Interest $121 $ 1,100
Income Taxes $1,923 $ 665
</TABLE>
See accompanying notes to consolidated financial
statements.
- 3 -
<PAGE> 6
LECHTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Amounts in thousands)
<TABLE>
<CAPTION>
Common Preferr Additio Unreali
Stock ed nal Retaine zed
Stock Paid-In d Holding Total
Issued Earning Gain
Issued Capital s (Loss)
<S> <C> <C> <C> <C> <C> <C>
Balance, February $58 $20,000 $62,273 $88,106 ($29) $170,40
1, 1997 8
Net Loss - Twenty-
Six Weeks -- -- -- (7,958) -- (7,958)
Ended August 2,
1997
Unrealized
Holding Loss -- 22 22
Adjustment -- -- --
Balance, August
2, 1997 $58 $20,000 $62,273 $80,148 ($7) $162,47
(unaudited) 2
</TABLE>
See accompanying notes to consolidated financial statements.
- 4 -
<PAGE> 7
LECHTERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. GENERAL
The accompanying unaudited Consolidated Financial Statements have
been prepared in accordance with the instructions for Form 10-Q
and do not include all 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 for interim periods have been included.
The Company's results of operations for the thirteen and twenty-
six weeks ended August 2, 1997 are not necessarily indicative of
the operating results for the full year.
Certain reclassifications have been made to the financial
statements of the prior year to conform with the classifications
used for Fiscal 1997.
2. NET LOSS PER SHARE
Net loss per share data were computed by dividing net loss,
reduced by the Convertible Preferred Stock Dividend requirement,
by the weighted average number of common shares outstanding
during the thirteen and twenty-six weeks ended August 2, 1997 and
August 3, 1996. Stock options, which are common stock
equivalents, were excluded from the weighted average of
outstanding shares because inclusion would reduce the loss per
share. The Company's 5% Convertible Subordinated Debentures
issued in September 1991 did not qualify as a common stock
equivalent at the time of issue and were not included in the
calculation of primary net loss per share for the periods ended
August 2, 1997 and August 3, 1996. The Company's Convertible
Preferred Stock issued on April 5, 1996 also did not qualify as a
common stock equivalent at the time of issue. For the purpose of
computing fully diluted net loss per share, the assumed
conversion of such debentures would have an anti-dilutive effect
on fully diluted loss per share for the thirteen and twenty-six
weeks ended August 2, 1997 and August 3, 1996. With respect to
the Convertible Preferred Stock, conversion of such preferred
stock would have an anti-dilutive effect on the calculation of
fully diluted loss per share for the thirteen and twenty-six
weeks ended August 2, 1997 and August 3, 1996.
3. RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS No. 128)
"Earnings per Share." The statement is effective for financial
statements for periods ending after December 15, 1997, and
changes the method in which net income per share will be
determined. Adoption of this statement by the Company will not
have a material impact on net income per share.
- 5 -
<PAGE> 8
4. AMENDMENT OF THE AMENDED AND RESTATED CREDIT AGREEMENT
On September 11, 1997, the Company and a group of banks executed
Amendment No. 1 of the Amended and Restated Credit Agreement
(Credit Agreement) dated May 23, 1996. The significant terms of
Amendment No. 1 included the authorization of the Company to
purchase, redeem or retire up to one million shares in aggregate
of its common stock, to make loans to employees, and allows
letters of credit to have extended expiration dates rather than
automatically expiring 90 days after issuance. The termination
date of the Credit Agreement remains May 22, 1998. The Board of
Directors of the Company, at its Meeting held September 11, 1997,
authorized the purchase, redemption or retirement by the Company
of its common stock to the extent permitted under the Credit
Agreement.
-6-
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THIRTEEN WEEKS ENDED AUGUST 2, 1997 IN COMPARISON WITH THIRTEEN WEEKS
ENDED AUGUST 3, 1996.
Net sales for the thirteen weeks ended August 2, 1997 increased
$2,387,000 to $95,114,000, a 2.6% increase over $92,727,000 reported
for the comparable thirteen week period of the prior fiscal year. The
sales increase was attributable to increased advertising activity by
the Company in support of our Lechters Housewares stores and to the
increase in the number of stores open over the prior year. For the
second quarter of Fiscal 1997, the Company's comparable store sales
increased 0.9% versus the prior year. During the second quarter of
Fiscal 1997, the Company opened one store and closed four. Stores open
as of August 2, 1997 totaled 645 compared to a total of 643 stores
open at August 3, 1996, an increase of 0.3%.
Gross Profit for the quarter increased $970,000 to $22,848,000 and was
24.0% as a percent of net sales, which was 0.4 percentage points above
the gross profit rate for the second quarter of the prior year. The
increase in gross margin was primarily attributable to both a lower
cost of goods sold for Lechters Housewares merchandise and better
absorption of fixed occupancy expenses resulting from the increase in
comparable store sales.
Selling, general and administrative expenses totaled $27,892,000, an
increase of $2,039,000 over the same period of the prior year. At
29.3% as a percent of net sales, the expense rate for the second
quarter was 1.4 percentage points higher than the rate for second
quarter of Fiscal 1996. The increase in selling, general and
administrative expenses was due to the planned increase in operating
expenses associated with two new stores, additional advertising
expenditures, and expenses and asset write-offs associated with the
closing of four stores during the second quarter of 1997.
Other Expenses for the quarter were $506,000, a $312,000 decrease from
the comparable period of the prior year. As a percent of sales, other
expenses declined 0.4% to 0.5%. The decrease was primarily
attributable to higher interest income which was the result of higher
balances of invested cash and marketable securities and higher market
interest rates.
TWENTY-SIX WEEKS ENDED AUGUST 2, 1997 IN COMPARISON WITH TWENTY-SIX
WEEKS ENDED AUGUST 3, 1996.
Net sales for the twenty-six weeks ended August 2, 1997 increased
$2,524,000 to $180,243,000, a 1.4% increase over $177,719,000 reported
for the comparable twenty-six week period of the prior fiscal year.
The sales increase was attributable to additional promotional
activities of the Company and to the increase in the number of stores
open over the prior year. Through the first two quarters of Fiscal
1997, the Company's comparable store sales decreased 0.2% versus the
prior year. For the year to date, the Company has opened three stores
and closed seven stores. The net decrease of four stores for the year
has reduced the Company's retail selling space by 15,800 square feet
to approximately 2,416,400. As of August 2, 1997, the Company operated
645 stores as compared with 643 stores at August 3, 1996, an increase
of 0.3%.
-7-
<PAGE> 10
Gross Profit for the year to date increased $333,000 to $42,825,000
and was 23.8% as a percent of net sales which was 0.1 percentage
points below the gross profit rate for the comparable year to date
period of the prior year. The slight decrease in the gross margin rate
was primarily attributable to the under-absorption of occupancy
expenses given the decline of comparable store sales.
Selling, general and administrative expenses totaled $55,383,000, an
increase of $4,022,000 over the prior year. At 30.7% as a percent of
net sales, the expense rate for the year to date was 1.8 percentage
points higher than the rate for comparable twenty-six week period of
Fiscal 1996. The increase in selling, general and administrative
expenses was due to the increased operating expenses associated with
new stores, additional advertising expenditures, and expenses and
asset write-offs associated with store closings.
Other Expenses for the fiscal year to date were $930,000, a $971,000
decrease from $1,901,000 reported for the comparable period of the
prior year. As a percent of sales, other expenses declined 1.1% to
0.5%. The decrease was attributable to the lower interest expense due
to the repayment of the Company's senior notes during the prior
fiscal year and higher interest income which was the result of higher
balances of invested cash and marketable securities coupled with
higher interest rates.
LIQUIDITY AND CAPITAL RESOURCES.
Cash, cash equivalents and marketable securities increased $18,077,000
over the balances at the close of the second quarter of Fiscal 1996.
This increase was a significant reason for the aforementioned
improvement in Other Expenses, especially in the second quarter of
Fiscal 1996.
Cash flow during the twenty-six weeks ended August 2, 1997 as
reflected on the Statements of Cash Flows, produced an increase in
cash and cash equivalents of $5,666,000. Operating activities,
comprised of the operating loss of $7,958,000 adjusted for non-cash
expenses such as depreciation and amortization and by changes in
operating assets utilized $5,858,000 of cash to date during Fiscal
1997. Significant components of operating activities for the year to
date included depreciation and amortization which provided cash of
$8,591,000, merchandise inventories which increased using $11,614,000
of cash and accounts payable, accrued expenses and taxes other than
income taxes which increased and provided cash of $17,024,000. The
increases in inventory and accounts payable were normal as the Company
rebuilt its inventories from their low year end levels. Due to
inventory management programs instituted during Fiscal 1996, inventory
levels at February 1, 1997 were significantly lower resulting in the
higher change in this asset for the year to date, although total
merchandise inventories were $6,903,000 lower at August 2, 1997 than
at August 3, 1996. Investing activities, capital expenditures and
reductions in marketable (available for sale) securities produced
$12,534,000 in cash. Capital expenditures used $3,336,000 of cash
while the decrease in available for sale securities provided
$15,870,000 of cash. Capital expenditures were primarily for
construction of and fixtures for new locations and for enhancements to
the information technology infrastructure. Financing activities
utilized $1,010,000 of cash as the Company paid its initial dividend
on the convertible preferred stock issued in April 1996.
-8-
<PAGE> 11
Item 6 - Exhibits and Reports on Form 8-K
None
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.
LECHTERS, INC.
By: /s/ John W. Smolak
John W. Smolak
Senior Vice President and
Chief Financial Officer
Date: September 16, 1997
- 9-
AMENDMENT NO. 1
Dated as of September 11, 1997
to the
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of May 23, 1996
WHEREAS, LECHTERS, INC. ("the Borrower"), the BANKS listed
on signature pages to the Amended and Restated Credit Agreement
(the "Banks") and THE BANK OF MONTREAL, as Agent (the "Agent")
are parties to the Amended and Restated Credit Agreement, dated
as of May 23, 1996 (the "Credit Agreement"); and
WHEREAS, the Borrower, the Banks and the Agent wish to amend
the Credit Agreement in the manner hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, and promises herein contained and for good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Borrower, the Banks and the Agent agree
as follows:
Section 1. Definitions. Terms used in this Amendment No. 1
that are defined in the Credit Agreement are used with the
meanings therein ascribed to them.
Section 2. Amendments. Upon and after the Effective Date
(as defined in Section 3 hereof), the Credit Agreement shall be
amended as follows:
(a) Section 1.7(b) shall be amended by inserting the
words "or amendment" immediately after the words "90 days
after the issuance" appearing in line 14 thereof;
(b) Section 4.11 shall be deleted in its entirety and
the following substituted therefor:
"Section 4.11. Dividends, Stock Purchases.
(a) Declare or pay any dividends, either in
cash or property, on any shares of its capital
stock of any class (except dividends or other
distributions payable solely in shares of common
stock of the Borrower); or
(b) Directly or indirectly, or through any
Subsidiary, purchase, redeem or retire any shares
of its capital stock of any class or any warrants,
rights or options to purchase or acquire any
shares of its capital stock; or
(c) Make any other payment or distribution,
either directly or indirectly or through any
Subsidiary, in respect of capital stock of the
Borrower; or
(d) Make, directly or indirectly, or permit
any Subsidiary to make, any Restricted Investment;
except that the Borrower may (A) declare and pay
preferred dividends not to exceed 6% per annum in
respect of the Perpetual Convertible Preferred
Stock, and (B) during such time as no Default or
Event of Default has occurred and is continuing,
purchase, redeem or retire up to one million
shares in the aggregate of its common stock
subsequent to the Effective Date.";
(c) Section 10.1 shall be amended by deleting the
definition of "Consolidated Fixed Charges" in its entirety
and substituting therefor the following definition:
"'Consolidated Fixed Charges' means, for any
period, the sum of (a) the aggregate amount of
principal payments of Indebtedness scheduled to
have been made by the Borrower and the
Consolidated Subsidiaries during such period,
determined on a consolidated basis, (b) to the
extent deducted in determining Consolidated Net
Income for such period, interest expense and rent
expense, (c) capital expenditures and (d) the
aggregate amount expended to purchase, redeem or
retire the common stock of the Borrower.";
(d) Section 10.1 shall be amended by deleting the
definition of "Restricted Investment" in its entirety and
substituting therefor the following definition:
"'Restricted Investment" means all
investments in or loans, advances or extensions of
credit to any Person by the Borrower or its
Subsidiaries except the following:
(a) investments, loans and advances by
the Borrower and its Subsidiaries in and to
Subsidiaries, including any investment in a
corporation which, after giving effect
thereto, will become a Subsidiary;
(b) investments in property to be used
in the ordinary course of business of the
Borrower and its Subsidiaries;
(c) investment in direct obligations
of, or obligations guaranteed by, the United
States of America or an agency thereof,
maturing within three years from the date of
acquisition thereof;
(d) (x) investments in municipal
securities, maturing within three years from
the date of acquisition thereof, which are
rated in one of the top two rating
classifications by Standard & Poor's
Corporation, Moody's Investors Services, Inc.
or other nationally recognized credit rating
agency of similar standing, and (y)
investments in debt securities of
corporations which are headquartered in the
United States, the senior debt securities of
which are rated at or above A- by Standard &
Poor's Corporation or at A3 or above by
Moody's Investors Services, Inc. (or another
nationally recognized credit rating agency of
similar standing if neither of such two named
agencies shall rate such securities);
(e) investments in certificates of
deposit, eurodollar time deposits or banker's
acceptances maturing within one year from the
date of origin, issued by, and bank accounts
with, commercial banks organized under the
laws of the United States or any state
thereof or Canada or any province thereof,
and having capital, surplus and undivided
profits aggregating at least $100,000,000;
(f) investments in commercial paper
maturing within 270 days or less from the
date of issuance and rated in one of the top
two rating classifications by Standard &
Poor's Corporation, Moody's Investors
Services, Inc. or other nationally recognized
credit rating agency of similar standing;
(g) investments in any investment
company having (at the time of investment)
assets of not less than $500,000,000 and a
substantial portion of the assets of which
are limited to investments of a character
which would be permitted to be made by the
Borrower pursuant to the provisions of
paragraphs (c), (d), (e) and (f) of this
definition and which shares under GAAP are
classified as current assets;
(h) investments in certain issues of
preferred stock known by various terms such
as "dutch-auction preferred", "capital-market
preferred", "remarketed preferred", and
"variable rate preferred", or similar terms
which, at the time of acquisition by the
Borrower or any Subsidiary is rated in one of
the top two rating classifications by
Standard & Poor's Corporation or Moody's
Investors Services, Inc.;
(i) other investments existing as of
May 16, 1991, provided that any such
investments which are not described in the
foregoing paragraphs of this definition are
disclosed to the Agent in writing on or prior
to the Agreement Date; and
(j) loans to employees of the Borrower
or its Subsidiaries, provided that the
aggregate outstanding principal amount of
such loans shall at no time exceed
$1,500,000."
Section 3. Effective Date. This Amendment No. 1 shall be
effective as of September 11, 1997 (the "Effective Date") when
each of the following shall have occurred:
(a) the Borrower, the Banks and the Agent shall have
executed and delivered this Amendment No. 1; and
(b) each Representation and Warranty shall be true and
correct in all material respects at and as of the Effective
Date after giving effect to this Amendment No. 1.
Section 4. Representations and Warranties. The Borrower
hereby represents and warrants to the Banks and the Agent that:
(a) this Amendment No. 1 has been duly authorized,
executed and delivered by the Borrower and constitutes a
legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its
terms;
(b) the execution, delivery and performance of this
Amendment No. 1 does not require any Governmental Approval;
and
(c) no Default or Event of Default has occurred and is
continuing at and as of the Effective Date after giving
effect to this Amendment No. 1.
Section 5. Counterparts. This Amendment No. 1 may be
executed in any number of counterparts, each of which shall be
deemed to be an original, but all such separate counterparts
shall together constitute one and the same instrument.
Section 6. Ratification. Except to the extent hereby
amended, the Credit Agreement is and shall continue to be in full
force and effect and is hereby in all respects confirmed,
approved and ratified.
Section 7. Captions. Section captions in this Amendment
No. 1 are included herein for convenience of reference only and
shall not constitute a part of this Amendment No. 1 for any other
purpose or in any way affect the meaning or construction of any
provisions of this Amendment No. 1.
Section 8. Governing Law. This Amendment No. 1 shall be
construed in accordance with and governed by the law of the State
of New York (without giving effect to its choice of law
principles).
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 1 to the Credit Agreement to be executed and
delivered by their duly authorized officers as of the day first
written above.
LECHTERS, INC.
By:/s/ John W. Smolak
Name: John W. Smolak
Title: Senior Vice President &
Chief Financial Officer
BANK OF MONTREAL,
as Agent and as a Bank
By:/s/ Dennis W. Rourke
Name: Dennis W. Rourke
Title: Director
THE CHASE MANHATTAN BANK
(formerly known as
CHEMICAL BANK NEW JERSEY, N.A.),
as a Bank
By:/s/ Andrea Johnson
Name: Andrea Johnson
Title: Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> JAN-31-1998 JAN-31-1998
<PERIOD-START> MAY-4-1997 FEB-2-1997
<PERIOD-END> AUG-2-1997 AUG-2-1997
<CASH> 12,688 0
<SECURITIES> 38,252 0
<RECEIVABLES> 12,904 0
<ALLOWANCES> 0 0
<INVENTORY> 112,056 0
<CURRENT-ASSETS> 184,348 0
<PP&E> 171,124 0
<DEPRECIATION> 81,428 0
<TOTAL-ASSETS> 279,532 0
<CURRENT-LIABILITIES> 34,946 0
<BONDS> 59,416 0
0 0
20,000 0
<COMMON> 58 0
<OTHER-SE> 142,414 0
<TOTAL-LIABILITY-AND-EQUITY> 279,532 0
<SALES> 95,114 180,243
<TOTAL-REVENUES> 95,114 180,243
<CGS> 72,266 137,418
<TOTAL-COSTS> 27,892 55,383
<OTHER-EXPENSES> 506 930
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,134 2,280
<INCOME-PRETAX> (5,550) (13,488)
<INCOME-TAX> (2,275) (5,530)
<INCOME-CONTINUING> (3,275) (7,958)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (3,275) (7,958)
<EPS-PRIMARY> ($0.21) ($0.49)
<EPS-DILUTED> ($0.21) ($0.49)
</TABLE>
