PROSPECTUS SUPPLEMENT
To Prospectus dated May 14, 1996
$140,000,000
PAMIDA, INC.
11 3/4% Senior Subordinated
Notes Due 2003
December 12, 1996
RECENT DEVELOPMENTS
Attached hereto and incorporated herein by this reference are copies of
the Quarterly Reports on Form 10-Q of Pamida, Inc. and Pamida Holdings
Corporation for the quarterly period ended October 27, 1996.
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
This Prospectus Supplement, together with the Prospectus dated May 14,
1996 (including the Prospectus Appendix), is to be used by Citicorp
Securities, Inc. in connection with offers of the Notes referred to above in
market-making transactions at negotiated prices related to prevailing market
prices at the time of sale. Citicorp Securities, Inc. may act as principal or
agent in such transactions.
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR
[X] 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 27, 1996
Commission File Number 33-57990
PAMIDA, INC
(Exact name of registrant as specified in its charter)
Delaware 47-0626426
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
8800 "F" Street, Omaha, Nebraska 68127
(Address of principal executive offices) (Zip Code)
(402) 339-2400
(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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Class of Common Stock Outstanding at December 11, 1996
Common Stock 1,000 Shares
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PAMIDA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
October 27, January 28,
ASSETS: 1996 1996
Current assets: -------- --------
Cash $ 9,890 $ 7,298
Accounts receivable, less allowance for
doubtful accounts of $50 18,521 11,824
Merchandise inventories 183,633 150,837
Property held for sale 1,854 -
Prepaid expenses 3,434 2,953
-------- --------
Total current assets 217,332 172,912
Property, buildings and equipment,
less accumulated depreciation and
amortization of $59,189 and $55,464 43,334 46,371
Leased property under capital leases,
less accumulated amortization
of $16,158 and $13,496 28,687 30,977
Deferred financing costs 3,302 3,746
Other assets 8,500 4,464
-------- --------
$301,155 $258,470
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 90,527 $ 63,087
Loan and security agreement 62,797 31,588
Accrued compensation 2,759 5,923
Accrued interest 2,494 6,353
Store closing reserve 4,344 7,818
Other accrued expenses 11,768 10,823
Income taxes payable 9,574 9,716
Current maturities of long-term debt 46 1,334
Current obligations under capital leases 1,614 1,847
-------- --------
Total current liabilities 185,923 138,489
Long-term debt, less current maturities 140,376 140,411
Obligations under capital leases,
less current obligations 35,425 36,559
Other long-term liabilities 3,270 4,237
Commitments and contingencies - -
Common stockholders' equity:
Common stock, $.01 par value;
10,000 shares authorized; 1,000
shares issued and outstanding, - -
Additional paid-in capital 17,000 17,000
Retained earnings (80,839) (78,226)
-------- --------
Total common stockholders' equity (63,839) (61,226)
-------- --------
$301,155 $258,470
======== ========
See notes to consolidated financial statements.
PAMIDA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands)
(Unaudited)
Three Months Ended Nine Months Ended
October 27, October 29, October 27, October 29,
1996 1995 1996 1995
-------- -------- -------- --------
Sales $151,980 $176,206 $439,583 $517,120
Cost of goods sold 115,534 133,404 334,466 392,867
-------- -------- -------- --------
Gross profit 36,446 42,802 105,117 124,253
Expenses:
Selling, general and
administrative 28,815 36,071 89,272 107,748
Interest 6,318 6,612 18,458 19,232
-------- -------- -------- --------
35,133 42,683 107,730 126,980
Income (loss) before income
tax provision (credit) 1,313 119 (2,613) (2,727)
Income tax provision (credit) - 33 - (1,418)
-------- -------- -------- --------
Net income (loss) $ 1,313 $ 86 $ (2,613) $ (1,309)
======== ======== ======== ========
See notes to consolidated financial statements.
PAMIDA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Nine Months Ended
October 27, October 29,
1996 1995
-------- --------
Cash Flows From Operating Activities:
Net loss $(2,613) $(1,309)
-------- --------
Adjustments to reconcile net loss to net
cash used in operations:
Depreciation and amortization 8,427 11,507
Provision for LIFO inventory valuation 450 750
Deferred retirement benefit - 36
Other (40) (1,095)
Decrease in store closing reserve (4,663) -
Increase in merchandise inventories (33,246) (53,803)
Increase in other operating assets (6,322) (6,725)
Increase in accounts payable 27,440 38,978
Decrease in other operating liabilities ( 5,998) (11,041)
-------- --------
Total Adjustments (13,952) (21,393)
-------- --------
Net cash used in operating activities (16,565) (22,702)
-------- --------
Cash Flows From Investing Activities:
Proceeds from disposal of fixed assets 40 1,154
Assets acquired for sale, net 364 -
Construction notes receivable (5,207) (2,248)
Capital expenditures (4,521) (6,024)
Other 12 11
-------- --------
Net cash used in investing activities (9,312) (7,107)
-------- --------
Cash Flows From Financing Activities:
Borrowings under loan and security agreement, net 31,209 35,306
Principal payments on capital lease obligations (1,367) (1,572)
Principal payments on long-term debt (1,323) (142)
Payments for deferred finance costs (50) (13)
-------- --------
Net cash provided by financing activities 28,469 33,579
-------- --------
Net increase in cash 2,592 3,770
Cash at beginning of year 7,298 7,059
-------- --------
Cash at end of period $ 9,890 $10,829
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest $22,317 $23,104
Income taxes:
Payments to taxing authorities 312 3,477
Payments to Pamida Holdings Corporation for benefit
of loss from operations - 888
Refunds received from taxing authorities (170) (72)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITY:
Capital lease obligations incurred when
the Company entered into lease agreements
for new store facilities. $ - $ 7,630
See notes to consolidated financial statements.
PAMIDA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED OCTOBER 27, 1996 AND OCTOBER 29, 1995
(Unaudited)
(Dollars in Thousands)
1.Management Representation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information. In the opinion of management, all adjustments
necessary for a fair presentation of the results of operations for the interim
periods have been included. All such adjustments are of a normal recurring
nature. Because of the seasonal nature of the business, results for interim
periods are not necessarily indicative of a full year's operations. The
accounting policies followed by Pamida Inc. (the "Company") and additional
footnotes are reflected in the consolidated financial statements contained in
the Form 10-K Annual Report of the Company for the fiscal year ended January
28, 1996.
2.Inventories
Substantially all inventories are stated at the lower of cost (last-in, first-
out) or market. Total inventories would have been higher at October 27, 1996
and January 28, 1996 by $6,150 and $5,700 respectively, had the FIFO (first-
in, first-out) method been used to determine the cost of all inventories.
Quarterly LIFO inventory determinations reflect assumptions regarding fiscal
year-end inventory levels and the estimated impact of annual inflation.
3.Related Party Transactions
In each of March, June and September 1995, the Company paid $79, $79 and $78,
respectively, to Pamida Holdings Corporation (Holdings) to enable Holdings to
make dividend payments to preferred stockholders. In September and October
1995, the Company paid a total of $652 to Holdings as a reimbursement for
certain tax benefits, which amount Holdings used to repurchase certain of its
outstanding promissory notes and to repay to the Company certain intercompany
advances. No such payments have been made during fiscal 1997.
4.Committed Revolving Loan and Security Agreement
Effective September 1, 1996, the term of the Company's committed Loan and
Security Agreement (the Agreement) was extended by one additional year to
March of 1999, and the Agreement was also amended to allow borrowings up to a
maximum of $80,000 for the period from September 1, 1996 through December 10,
1996.
5.Reclassifications
Certain reclassifications have been made to the prior year's financial
statements to conform to the current year's presentation.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Thousands)
The following is management's discussion and analysis of certain significant
factors which have affected the company's results of operations and financial
condition for the periods included in the accompanying consolidated financial
statements.
RESULTS OF OPERATIONS
The following table sets forth an analysis of various components of the
Consolidated Statements of Operations as a percentage of sales for the three
and nine months ended October 27, 1996 and October 29, 1995:
Three Months Ended Nine Months Ended
Oct.27, Oct.29, Oct.27, Oct.29,
1996 1995 1996 1995
------ ------ ------ ------
Sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 76.0% 75.7% 76.1% 76.0%
------ ------ ------ ------
Gross profit 24.0% 24.3% 23.9% 24.0%
Selling, general and
administrative expenses 19.0% 20.5% 20.3% 20.8%
------ ------ ------ ------
Operating income 5.0% 3.8% 3.6% 3.2%
Interest expense 4.1% 3.7% 4.2% 3.7%
------ ------ ------ ------
Income (loss) before income tax
provision (credit) 0.9% 0.1% (0.6%) (0.5%)
Income tax provision (credit) - - - (0.3%)
------ ------ ------ ------
Net income (loss) 0.9% 0.1% (0.6%) (0.2%)
====== ====== ====== ======
Sales - As of the end of fiscal 1996, the Company closed forty stores in
unprofitable or highly competitive markets which did not fit the Company's
niche market strategy. Consequently, the Company experienced a decrease in
total sales for the third quarter and first nine months of fiscal 1997.
Sales for the third quarter of fiscal 1997 decreased by $24,226 or 13.8%
compared to sales for the third quarter of fiscal 1996. Similarly, sales for
the first nine months of fiscal 1997 decreased by $77,537 or 15.0%.
Comparable store sales during the third quarter and first nine months of
fiscal 1997 decreased $3,997 or 2.7% and $10,874 or 2.6%, respectively. This
decrease can be traced to a combination of factors including clearance
activity, shifting of advertising break dates and the residual effects of the
warehouse management system implementation discussed in the Form 10-Q filing
for the second quarter of fiscal 1997.
The Company operated 149 stores at the end of the third quarter of fiscal 1997
as compared with 181 stores at the end of the third quarter of fiscal 1996.
Since October 29, 1995, the Company has opened ten stores in new markets,
relocated three stores and closed forty-two stores.
Gross profit - The company's merchandise gross profit as a percentage of sales
improved .7% in the first nine months of fiscal 1997 and improved .6% in the
the third quarter as compared to the same periods of fiscal 1996. However,
this improvement was offset by additional costs in the warehouse and
distribution areas during the implementation of the new warehouse management
system this year, which were disclosed in the Form 10-Q for the second quarter
of fiscal 1997. Accordingly, as a percentage of sales, gross profit decreased
slightly from 24.3% for the third quarter of fiscal 1996 to 24.0% for the
third quarter of fiscal 1997. Gross profit as a percentage of sales was 23.9%
for the first nine months of fiscal 1997 and 24.0% for the first nine months
of fiscal 1996.
Selling, general and administrative (SG&A) expense decreased $7,256 or 20.1%
for the third quarter of fiscal 1997 compared to the third quarter of fiscal
1996 and decreased $18,476 or 17.1% for the first nine months of fiscal 1997
compared to the first nine months of fiscal 1996. As a percentage of sales,
SG&A expense was 19.0% for the third quarter of fiscal 1997 and 20.5% for the
third quarter of fiscal 1996 and was 20.3% for the first nine months of fiscal
1997 compared to 20.8% for the first nine months of fiscal 1996.
The reduction in SG&A expense for the third quarter of fiscal 1997 was
primarily attributable to a 16.5% decrease in store payroll costs and a 13.2%
decrease in store occupancy costs. In addition, store controllable and
advertising costs decreased 20.7% and 41.6% respectively. All of these areas
of expense were impacted by the elimination of costs related to the forty
stores which were closed as of the end of fiscal 1996. SG&A costs were also
positively impacted by reduced accruals for management bonuses and the
elimination of amortization of goodwill and favorable leasehold interests
resulting from the write-off of these items in the fourth quarter of fiscal
1996. The decreases in SG&A costs were offset by a $391 reduction in other
income which was attributable largely to one-time gains realized in fiscal
1996 primarily from the sale of idle transportation company assets.
The reduction in SG&A expense for the first nine months of fiscal 1997 was
primarily attributable to a 15.4% decrease in store payroll costs and a 14.1%
decrease in store occupancy costs. In addition, store controllable and
advertising costs decreased 18.1% and 31.3% respectively. These areas of
expense were impacted by the elimination of costs related to the forty stores
closed as of the end of fiscal 1996. SG&A costs were also positively impacted
by reduced accruals for management bonuses and the elimination of amortization
of goodwill and favorable leasehold interests resulting from the write-off of
these items in the fourth quarter of fiscal 1996. The decreases in SG&A costs
were offset by a $1,394 reduction in other income which was attributable
largely to one-time gains realized in fiscal 1996 primarily from the sale of
idle transportation company assets.
Interest expense decreased $294 or 4.4% for the third quarter of fiscal 1997
compared to the same period of fiscal 1996 and decreased $774 or 4.0% for the
first nine months of fiscal 1997 compared to the same period of fiscal 1996.
The decrease was due to a reduction in interest related to capital leases,
primarily as a result of the forty stores closed as of the end of fiscal 1996,
and a decrease in interest costs related to industrial development bonds which
were paid off in August of 1996. These decreased costs were offset somewhat
by increased costs of revolver borrowings.
Income tax benefit - No income tax expense was recorded on income in the
third quarter of fiscal 1997 due to the existence of unutilized tax loss carry
forwards from prior year store closing charges. Similarly, no income tax
benefit was recorded on losses for the first nine months of fiscal 1997 due to
the uncertainty of realization of those tax benefits. Due to the amount of
unutilized tax loss carry forwards available, the Company does not expect to
tax-effect quarterly income or losses for any period in fiscal 1997. In the
prior year, no such tax loss carry forwards existed, and a tax expense of $33
was recorded in the third quarter of fiscal 1996 and a tax benefit of $1,418
was recorded in fiscal 1996 for the first nine months, consistent with the
company's expected effective tax rate.
LIQUIDITY AND CAPITAL RESOURCES
The Company's business is seasonal with first quarter sales (February through
April) being lower than sales during the other three quarters. Fourth quarter
sales (November through January) have represented approximately 29% of the
full year's retail sales in recent years and normally involve a greater
proportion of higher margin sales.
Funds used in operating activities were $16,565 in the first nine months of
fiscal 1997 compared to a usage of $22,702 in the first nine months of
fiscal 1996. This $6,137 reduction in net cash used by operating activities
resulted primarily from changes in inventories and other operating
liabilities, offset somewhat by changes in accounts payable, results of
operations and store closing reserves.
The Company satisfies its seasonal liquidity requirements primarily through a
combination of funds provided from operations and from the company's
committed Loan and Security Agreement (the Agreement) which provides for
revolving borrowings of up to $70,000. Borrowings under the Agreement bear
interest at a rate which is .75% per annum greater than the applicable prime
rate. The amounts the Company is permitted to borrow are determined by a
formula based upon the amount of the company's eligible inventory from time to
time. Such borrowings are secured by security interests in all of the current
assets (including inventory) of the Company and by liens on certain real
estate interests and other property of the Company. Pamida Holdings
Corporation (Holdings) and two subsidiaries of the Company have guaranteed the
payment and performance of the company's obligations under the Agreement and
have pledged some or all of their respective assets, including the stock of
the Company owned by Holdings, to secure such guarantees.
The Agreement contains provisions imposing operating and financial
restrictions on the Company. Certain provisions of the Agreement require the
maintenance of specified amounts of tangible net worth (as defined) and
working capital (as defined) and the achievement of specified minimum amounts
of cash flow (as defined). Other restrictions in the Agreement and those
provided under the Indenture relating to the Senior Subordinated Notes will
affect, among other things, the ability of the Company to incur additional
indebtedness, pay dividends, repay indebtedness prior to its stated maturity,
create liens, enter into leases, sell assets or engage in mergers or
acquisitions, make capital expenditures and make investments. These covenants
currently have not had an impact on the Company's ability to fully utilize the
revolving credit facility. However, certain of the covenants, such as those
which restrict the ability of the Company to incur indebtedness or encumber
its property or which impose restrictions on or otherwise limit the Company's
ability to engage in sale-leaseback transactions, may at some future time
prevent the Company from pursuing its store expansion program at the rate that
the Company desires.
Obligations under the Agreement were $62,797 at October 27, 1996 and $55,909
at October 29, 1995. These borrowings are senior to the Senior Subordinated
Notes of the Company. The Company had long-term debt and obligations under
capital leases of $175,801 as of October 27, 1996 and $189,566 at October 29,
1995. The Company's ability to satisfy scheduled principal and interest
payments under such obligations in the ordinary course of business is
dependent primarily upon the sufficiency of the Company's operating cash flow.
At October 27, 1996, the Company was in compliance with all covenants
contained in its various financing agreements.
The Company paid Holdings $79, $79 and $78, during the first, second and third
quarters respectively, of fiscal 1996 under a tax-sharing agreement to enable
Holdings to pay quarterly dividends to its preferred stockholders. Since
Holdings conducts no operations of its own, the only cash requirement of
Holdings relates to preferred stock dividends in the aggregate annual amount
of approximately $315; and the Company is expressly permitted under its
existing credit facilities to pay dividends to Holdings to fund such preferred
stock dividends. However, the General Corporation Law of the State of
Delaware, under which the Company and Holdings are incorporated, allows a
corporation to declare or pay a dividend only from its surplus or from the
current or the prior year's earnings. Due to the retained deficit, resulting
primarily from the forty store closings and the write-off of goodwill and
other long-lived assets recognized in the fourth quarter of fiscal 1996, the
Company and Holdings may pay dividends in fiscal 1997 and in ensuing years
only to the extent that the Company and Holdings satisfy the applicable
statutory standards which includes holdings' having a net worth equal to at
least the aggregate par value of the preferred stock which amounts to $2. The
Company did not declare or pay any dividends to Holdings during the first
three quarters of fiscal 1997, and Holdings did not declare or pay the
preferred stock dividends payable on February 29, 1996, May 31, 1996, August
31, 1996 or November 30, 1996. The cumulative dividend rate on the preferred
stock increases by 0.5% per quarter (with a maximum aggregate increase of 5%)
on each quarterly dividend payment date on which the preferred stock dividends
are not paid currently on a cumulative basis. Any unpaid dividends are added
to the liquidation value until paid in cash. Such nonpayment of preferred
stock dividends does not accelerate the redemption rights of the preferred
stockholders.
The Company made capital expenditures of $4,521 during the first nine months
of fiscal 1997 compared to $6,024 during the first nine months of fiscal 1996.
The Company has opened a total of eight new stores in fiscal 1997 and will
consider additional opportunities for new store locations as they arise.
Capital expenditures are expected to total approximately $5,400 in fiscal 1997
and to be funded from cash flow from operations. The costs of buildings and
land for new store locations are expected to be financed by operating or
capital leases with unaffiliated landlords. The Company's expansion program
will require inventory of approximately $1,000 to $1,200 for each store in a
new market, which the Company expects to finance through trade credit,
borrowings under the Agreement and cash flow from operations.
On a long-term basis, the Company's expansion will require continued
investments in store locations, working capital and distribution and
infrastructure enhancements. The Company expects to continue to finance some
of these investments through leases from unaffiliated landlords, trade credit,
borrowings under the Agreement and cash flow from operations, but ultimately
will need to explore additional sources of funds which may include both debt
(mid-term to long-term) and equity capital. Currently, it is not possible for
the Company to predict with any certainty either the timing or the
availability of any such additional financing.
INFLATION
The Company uses the LIFO method of inventory valuation in its financial
statements; as a result, the cost of merchandise sold approximates current
costs. Due to the revaluation of property, buildings and equipment in
connection with the purchase transaction in 1986, as well as the recent
opening of new stores, depreciation expense closely approximates current
costs. The Company's rental expense is generally fixed and, except for small
amounts of percentage rentals, has not been affected by inflation.
PART II - OTHER INFORMATION
Items 1-5: None
Item 6:
(a) Exhibits.
- 10.1 Amendment No. 3 to Loan and Security Agreement among Pamida,
Inc. and Seaway Importing Company, as Borrowers, Congress
Financial Corporation (Southwest) and BankAmerica Business
Credit, Inc., as Lenders, and Congress Financial Corporation
(Southwest), as Agent, dated September 16, 1996
- 10.2 Amendment No. 1 to Employment Agreement among Pamida
Holdings Corporation, Pamida, Inc., and Steven S. Fishman dated
August 29, 1996
- 27.1 Financial Data Schedule (EDGAR version only)
(b) Reports on Form 8-K.
A report on Form 8-K was filed during the quarter for which this
Form 10-Q is filed. Such report had a Date of Report of October 16,
1996, and related to Item 4, Changes in Registrant's Certifying
Accountant. An amendment to such Form 8-K was filed on November 1,
1996.
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.
PAMIDA, INC.
(Registrant)
Date: December 11, 1996
By: /s/ Steven S. Fishman
Steven S. Fishman, Chairman,
President and Chief Executive
Officer
Date: December 11, 1996
By: /s/ Todd D. Weyhrich
Todd D. Weyhrich
Vice President - Controller
Exhibit 10.1
AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT
PAMIDA, INC.
8800 F Street
Omaha, Nebraska 68127
SEAWAY IMPORTING COMPANY
8800 F Street
Omaha, Nebraska 68127
September 16, 1996
Congress Financial Corporation (Southwest)
1201 Main Street
Dallas, Texas 75250
BankAmerica Business Credit, Inc.
40 East 52nd Street
New York, New York 10017
Gentlemen:
Congress Financial Corporation (Southwest), a Texas corporation in its
individual capacity ("Congress"), BankAmerica Business Credit, Inc., formerly
known as BA Business Credit Inc., a Delaware corporation ("BABC," together
with Congress each individually a "Lender" and collectively, "Lenders"),
Pamida, Inc., a Delaware corporation ("Pamida"), Seaway Importing Company, a
Nebraska corporation ("Seaway," together with Pamida, collectively,
"Borrowers") and Congress Financial Corporation (Southwest), a Texas
corporation, as Agent for Lenders (in such capacity, "Agent") have entered
into certain financing arrangements pursuant to the Loan and Security
Agreement, dated March 30, 1993, by and among Agent, Lenders and Borrowers (as
amended by Amendment No. 1 to Loan and Security Agreement dated as of January
23, 1995 and Amendment No. 2 to Loan and Security Agreement dated as of
January 28, 1996 and as amended hereby, the "Loan Agreement", and together
with all agreements, documents and instruments at any time executed and/or
delivered in connection therewith or related thereto, as the same now exist or
may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced, collectively, the "Financing Agreements").
Borrowers have requested that the "Maximum Credit" provided for in the
Financing Agreements be temporarily increased and that certain other
provisions of the Financing Agreements be amended, and Agent and Lenders are
willing to temporarily increase the Maximum Credit and amend certain other
provisions of the Financing Agreements, subject to the terms and conditions
contained herein. By this Amendment, Agent, Lenders and Borrowers desire and
intend to evidence such amendments.
In consideration of the foregoing and the agreements and covenants
contained herein, the parties hereto agree as follows:
1. Definitions.
(a) All references to the term "Maximum Credit" in any of the Financing
Agreements shall be deemed, and each such reference is hereby amended, to mean
(i) from September 1, 1996 through and including December 10, 1996, the amount
of $80,000,000 and (ii) Thereafter, the amount of $70,000,000.
(b) All references to the term "Renewal Date" in any of the Financing
Agreements shall be deemed, and each such reference is hereby amended, to mean
March 31, 1999.
(c) All capitalized terms used herein shall have the meanings assigned
hereto in the other Financing Agreements, unless otherwise defined herein.
2. Revolving Loans; Advance Rate. Section 2.1(a) of the Loan Agreement is
hereby deleted in its entirety and the following substituted therefore:
(a) Subject to, and upon the terms and conditions contained herein and in
the other Financing Agreements, at the request of Borrowers, each of Lenders
severally, but not jointly, agrees to lend to Borrowers and authorizes and
appoints Agent to make Loans to Borrowers, for the account of and as Agent for
Lenders, in such amounts from time to time as Agent shall determine, in its
discretion, at Borrowers' request during the periods indicated below of up to
the percent of the value of Eligible Inventory of Borrowers indicated for such
period (or such greater or lesser percentage thereof as Agent may determine
from time to time):
Period Percent
------ -------
(i) from September 1, 1996 through 50%
and including December 10, 1996
(ii) thereafter, in any year:
(A) from March 1 through and 45%
including April 30
(B) from October 1 through and 45%
including November 30
(C) at all other times 40%
3. Representations, Warranties and Covenants. In addition to the continuing
representations, warranties and covenants heretofore or hereafter made by
Borrowers to Agent and Lenders pursuant to the Financing Agreements, Borrowers
hereby represent, warrant and covenant with and to Agent and Lenders as
follows (which representations, warranties and covenant are continuing and
shall survive the execution and delivery hereof and shall be incorporated into
and made a part of the Financing Agreements):
(a) No Event of Default exists on the date of this Amendment (after giving
effect to the amendments to the Financing Agreements made by this Amendment).
(b) This Amendment and the other amendment agreements delivered in
connection herewith, have been duly authorized, executed and delivered by each
of Borrowers and are in full force and effect as of the date hereof, and the
agreements and obligations of each of Borrowers contained herein and therein
constitute legal, valid and binding obligations of each of Borrowers
enforceable against each of Borrowers in accordance with their respective
terms.
(c) All required consents or approvals of any persons other than Lenders
and Agent to the authorization, execution and delivery of this Amendment and
the other amendment agreements delivered in connection herewith have been
obtained by each of Borrowers and Guarantors, and the authorization, execution
and delivery hereof does not violate or breach any provision of or constitute
a default under any material indenture, mortgage, deed of trust, agreement or
instrument to which any of Borrowers or Guarantors is or may be bound,
including, without limitation, the Note Indenture.
4. Conditions Precedent. The effectiveness of the amendments contained
herein shall be subject to the satisfaction of each of the following
conditions precedent in a manner satisfactory to Agent on behalf of Lenders:
(a) Agent shall have received, in form and substance satisfactory to Agent,
an executed original of this Amendment, duly authorized, executed and
delivered by each of Borrowers and Guarantors;
(b) Agent shall have received, in form and substance satisfactory to Agent,
an executed original of Amendment No. 3 to Deed of Trust, Security Agreement
and Assignment of Leases and Rents by Pamida in favor of Old Republic National
Title Insurance Company, as trustee, for the benefit of Agent and Lenders,
duly authorized, executed and delivered by the parties thereto;
(c) Agent shall have received, in form and substance satisfactory to Agent,
an executed original of Amendment No. 3 to Leasehold Deed of Trust, Security
Agreement and Assignment of Leases and Rents by Pamida in favor of Old
Republic National Title Insurance Company, as trustee, for the benefit of
Agent and Lenders, duly authorized, executed and delivered by the parties
thereto;
(d) Agent shall have received, in form and substance satisfactory to Agent,
an executed original of Amendment No. 3 to Co-Lending and Agency Agreement,
duly authorized, executed and delivered by each of Agent and Lenders;
(e) Agent shall have received, in form and substance satisfactory to Agent,
a secretary's certificates for each of Borrowers and Guarantors with respect
to directors' resolutions, incumbency and other matters as Agent may require,
and
(f) No Event of Default shall have occurred and be continuing and no event
shall have occurred or condition be existing and continuing which, with notice
or passage of time or both, would constitute an Event of Default.
5. Amendment Fee. Borrowers shall pay to Agent for the account of Lenders an
amendment fee in an amount equal to $50,000, which amount shall be payable
simultaneously with the execution hereof, which fee is fully earned as of the
date hereof, shall be in addition to all other amounts payable under the
Financing Agreements, shall constitute part of the Obligations and may, at
Agent's option, be charged directly to any account(s) of Borrowers maintained
with Agent or Lenders.
6. Effect of this Amendment. Except as modified pursuant hereto, no other
changes or modifications to the Financing Agreements are intended or implied
and in all other respects the Financing Agreements are hereby specifically
ratified, restated and confirmed by all parties hereto as of the effective
date hereof. To the extent of any conflict between the terms of this
Amendment and the other Financing Agreements, the terms of this Amendment
shall control.
7. Further Assurances. The parties hereto shall execute and deliver such
additional documents and take such additional action as may be necessary or
desirable to effectuate the provisions and purposes of this Amendment.
8. Governing Law. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in
accordance with the laws of the State of New York.
9. Binding Effect. This Amendment shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
assigns.
10. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one
and the same agreement. In making proof of this Amendment, it shall not be
necessary to produce or account for more than one counterpart thereof signed
by each of the parties hereto.
Please sign the enclosed counterpart of this Amendment in the space
provided below, whereupon this Amendment, as so accepted by Agent and Lenders,
shall become a binding agreement among Borrowers, Agent and Lenders.
Very truly yours,
PAMIDA, INC.
By: /s/ George R. Mihalko
Title: Sr. V.P. & CFO
SEAWAY IMPORTING COMPANY
By: /s/ George R. Mihalko
Title: Sr. V.P. & CFO
AGREED:
CONGRESS FINANCIAL CORPORATION
(SOUTHWEST), individually and as Agent
By: /s/ Edward Franco
Title: Vice President
BANKAMERICA BUSINESS CREDIT, INC., formerly
known as BA Business Credit Inc.
By: /s/ Patrick J. Wilson
Title: Vice President
ACKNOWLEDGED AND AGREED:
PAMIDA HOLDINGS CORPORATION
By: /s/ George R. Mihalko
Title: Sr. V.P. & CFO
PAMIDA TRANSPORTATION COMPANY
By: /s/ George R. Mihalko
Title: Sr. V.P. & CFO
Exhibit 10.2
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
This Amendment No. 1 to Employment Agreement is made and entered into on
the 29th day of August, 1996, among PAMIDA HOLDINGS CORPORATION ("Holdings"),
a Delaware corporation, PAMIDA, INC. ("Pamida"), a Delaware corporation, and
STEVEN S. FISHMAN (the "Executive"). Holdings and Pamida collectively are
referred to in this Amendment No. 1 as the "Companies".
WHEREAS, the Companies and the Executive are parties to an Employment
Agreement dated September 22, 1995 (the "Employment Agreement"); and
WHEREAS, the Companies and the Executive now desire to amend the
Employment Agreement as more particularly set forth below;
NOW, THEREFORE, the Companies and the Executive agree as follows:
1. Pursuant to Paragraph 6 of the Employment Agreement, the Companies and the
Executive agree that the Executive's incentive bonus program for the fiscal
year of Holdings ending February 2, 1997 ("Fiscal 1997") shall be the
following:
(a) If the consolidated earnings of Holdings and its subsidiaries (on a
first-in, first-out basis with respect to merchandise inventories)
before interest, taxes, depreciation, and amortization for Fiscal 1997
(the "EBITDA") is less than $43,000,000, then the Executive shall not
be entitled to any incentive bonus for Fiscal 1997.
(b) If the EBITDA equals or exceeds $43,000,000, then the Executive's
incentive bonus for Fiscal 1997 shall be determined as a percentage of
the Executive's base salary from the matrix attached to this Amendment
No. 1 taking into account (i) the EBITDA and (ii) the percentage
increase or decrease in the comparable store sales of Pamida for Fiscal
1997 compared with the fiscal year ended January 28, 1996. Comparable
store sales percentage increases or decreases shall be determined in
accordance with Pamida's historical practices.
(c) For purposes of such matrix, comparable store sales percentage
increases of more than 5% shall be treated as increases of 5%,
comparable store sales decreases of more than 2% shall be treated as
decreases of 2%, and EBITDA of more than $49,000,000 shall be treated
as EBITDA of $49,000,000.
(d) For purposes of applying such matrix, the Executive's base salary shall
be deemed to be $500,000.
(e) The maximum incentive bonus that the Executive shall have the
opportunity to earn for Fiscal 1997 is $500,000.
(f) EBITDA amounts between whole millions of dollars and comparable store
sales percentage increases or decreases between whole percentages shall
be interpolated on a straight-line basis for purposes of applying such
matrix.
(g) Solely by way of illustration of the application of such matrix, if the
EBITDA is $44,250,000 and the comparable store sales percentage
increase for Fiscal 1997 is 2.6%, then the Executive's incentive bonus
for Fiscal 1997 would be $246,250.
The Executive's incentive bonus for Fiscal 1997 (if any) shall be paid to the
Executive as soon as practicable after Holdings has received the final audit
report with respect to Fiscal 1997 from its independent accountants.
2. The provisions of this Amendment No. 1 are intended to satisfy the
requirements of Paragraph 6 of the Employment Agreement for the fiscal year of
Holdings ending in 1997.
3. This Amendment No. 1 shall be effective as of January 29, 1996.
4. As hereby amended, the Employment Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the Companies and the Executive have executed this
Amendment No. 1 to Employment Agreement on the day and year first above
written.
PAMIDA HOLDINGS CORPORATION,
a Delaware corporation
By: /s/ Frank A. Washburn
Frank A. Washburn, Executive
Vice President
PAMIDA, INC., a Delaware
corporation
By: /s/ Frank A. Washburn
Frank A. Washburn, Executive
Vice President
/s/ Steven S. Fishman
Steven S. Fishman
Pamida, Inc.
Bonus a % of Pay
Comp store sales increase
EBITDA| -2.0%| -1.0%| 0.0%| 1.0%| 2.0%| 3.0%| 4.0%| 5.0%
- -------|-------|-------|-------|-------|-------|-------|-------|-------
<43| 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0
43| 20.0%| 25.0%| 30.0%| 35.0%| 40.0%| 45.0%| 50.0%| 55.0%
44| 25.0%| 30.0%| 35.0%| 40.0%| 45.0%| 50.0%| 55.0%| 60.0%
45| 30.0%| 35.0%| 40.0%| 45.0%| 50.0%| 55.0%| 60.0%| 65.0%
46| 37.5%| 42.5%| 47.5%| 52.5%| 57.5%| 62.5%| 67.5%| 72.5%
47| 45.0%| 50.0%| 55.0%| 60.0%| 65.0%| 70.0%| 75.0%| 80.0%
48| 55.0%| 60.0%| 65.0%| 70.0%| 75.0%| 80.0%| 85.0%| 90.0%
49| 65.0%| 70.0%| 75.0%| 80.0%| 85.0%| 90.0%| 95.0%| 100.0%
- ----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR
[X] 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 27, 1996
Commission File Number 1-10619
PAMIDA HOLDINGS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 47-0696125
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
8800 "F" Street, Omaha, Nebraska 68127
(Address of principal executive offices) (Zip Code)
(402) 339-2400
(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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Class of Common Stock Outstanding at December 11, 1996
Common Stock 5,004,942 Shares
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
October 27, January 28,
ASSETS: 1996 1996
Current assets: -------- --------
Cash $ 9,890 $ 7,298
Accounts receivable, less allowance for
doubtful accounts of $50 18,495 11,816
Merchandise inventories 183,633 150,837
Property held for sale 1,854 -
Prepaid expenses 3,436 2,953
-------- --------
Total current assets 217,308 172,904
Property, buildings and equipment,
less accumulated depreciation and
amortization of $59,189 and $55,464 43,334 46,371
Leased property under capital leases,
less accumulated amortization
of $16,158 and $13,496 28,687 30,977
Deferred financing costs 3,357 3,809
Other assets 8,500 4,464
-------- --------
$301,186 $258,525
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 90,527 $ 63,087
Loan and security agreement 62,797 31,588
Accrued compensation 2,759 5,923
Accrued interest 3,181 6,992
Store closing reserve 4,344 7,818
Other accrued expenses 11,768 10,823
Income taxes payable 8,718 8,861
Current maturities of long-term debt 46 1,334
Current obligations under capital leases 1,614 1,847
-------- --------
Total current liabilities 185,754 138,273
Long-term debt, less current maturities 166,874 163,746
Obligations under capital leases,
less current obligations 35,425 36,559
Other long-term liabilities 3,270 4,237
Commitments and contingencies - -
Preferred stock subject to mandatory redemption
and reserve for dividends payable 2,115 1,826
Common stockholders' equity:
Common stock, $.01 par value; 10,000,000
shares authorized; 5,004,942 shares
issued and outstanding, 50 50
Additional paid-in capital 968 968
Retained earnings (93,270) (87,134)
-------- --------
Total common stockholders' equity (92,252) (86,116)
-------- --------
$301,186 $258,525
======== ========
See notes to consolidated financial statements.
PAMIDA HOLDINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands)
(Unaudited)
Three Months Ended Nine Months Ended
October 27, October 29, October 27, October 29,
1996 1995 1996 1995
-------- -------- -------- --------
Retail Sales $151,980 $176,206 $439,583 $517,120
Cost of goods sold 115,534 133,404 334,466 392,867
-------- -------- -------- --------
Gross profit 36,446 42,802 105,117 124,253
EXPENSES:
Selling, general and
administrative 28,822 36,079 89,295 107,769
Interest 7,435 7,614 21,669 22,136
-------- -------- -------- --------
36,257 43,693 110,964 129,905
Income (loss) before income
tax credit and extraordinary
item 189 (891) (5,847) (5,652)
Income tax credit - (1,021) - (4,211)
-------- -------- -------- --------
Income (loss) before
extraordinary item 189 130 (5,847) (1,441)
Extraordinary item - 371 - 371
-------- -------- -------- --------
Net income (loss) 189 501 (5,847) (1,070)
Less preferred dividends
and discount amortization 99 90 289 271
-------- -------- -------- --------
Net income (loss) available
for common stock $ 90 $ 411 $ (6,136) $ (1,341)
======== ======== ======== ========
Income (loss) per common share:
Income (loss) before
extraordinary item $ .02 $ .01 $ (1.23) $ (.34)
Extraordinary item - .07 - .07
-------- -------- -------- --------
Income (loss) per common
share $ .02 $ .08 $ (1.23) $ (.27)
======== ======== ======== ========
See notes to consolidated financial statements.
PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Nine Months Ended
October 27, October 29,
1996 1995
-------- --------
Cash Flows From Operating Activities:
Net loss $(5,847) $(1,070)
-------- --------
Adjustments to reconcile net loss to net
cash used in operations:
Depreciation and amortization of fixed
assets and intangibles 8,435 11,515
Provision for LIFO inventory valuation 450 750
Noncash interest expense 3,092 2,789
Other 79 (980)
Deferred retirement benefits - 36
Extraordinary item - (371)
Decrease in store closing reserve (4,663) -
Increase in merchandise inventories (33,246) (53,803)
Increase in other operating assets (6,306) (6,742)
Increase in accounts payable 27,440 38,978
Decrease in other operating liabilities ( 5,999) (12,945)
-------- --------
Total Adjustments (10,718) (20,773)
-------- --------
Net cash used in operating activities (16,565) (21,843)
-------- --------
Cash Flows From Investing Activities:
Proceeds from disposal of fixed assets 40 1,154
Assets acquired for sale, net 364 -
Construction notes receivable (5,207) (2,248)
Capital expenditures (4,521) (6,024)
Other 12 11
-------- --------
Net cash used in investing activities (9,312) (7,107)
-------- --------
Cash Flows From Financing Activities:
Borrowings under loan and security agreement, net 31,209 35,306
Proceeds from sale of stock - 18
Principal payments on capital lease obligations (1,367) (1,572)
Payments to redeem subordinated notes - (641)
Dividends paid - (236)
Principal payments on long-term debt (1,323) (142)
Payments for deferred finance costs (50) (13)
-------- --------
Net cash provided by financing activities 28,469 32,720
-------- --------
Net increase in cash 2,592 3,770
Cash at beginning of year 7,298 7,059
-------- --------
Cash at end of period $ 9,890 $ 10,829
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
(1) Cash paid (received) during the period for:
Interest $ 22,317 $ 23,104
Income taxes:
Payments to taxing authorities 312 3,477
Refunds received from taxing authorities (170) (72)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITY:
(1) Capital lease obligations incurred when the
Company entered into lease agreements for
new store facilities $ - $ 7,630
(2) Amortization of discount on junior cumulative
preferred stock recorded as a direct charge
to retained earnings 36 35
(3) Provision for dividends payable 253 -
(4) In-kind payment of accrued interest on
promissory notes:
Promissory notes 3,044 2,471
Accrued interest (3,044) (2,471)
See notes to consolidated financial statements.
PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED OCTOBER 27, 1996 AND OCTOBER 29, 1995
(Dollars in Thousands)
(Unaudited)
1.Management Representation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information. In the opinion of management, all adjustments
necessary for a fair presentation of the results of operations for the interim
periods have been included. All such adjustments are of a normal recurring
nature. Because of the seasonal nature of the business, results for interim
periods are not necessarily indicative of a full year's operations. The
accounting policies followed by Pamida Holdings Corporation (the Company) and
additional footnotes are reflected in the consolidated financial statements
included in the Company's annual report to stockholders for the fiscal year
ended January 28, 1996. Those consolidated financial statements were
incorporated by reference in the Company's Form 10-K Annual Report for the
fiscal year ended January 28, 1996.
2.Inventories
Substantially all inventories are stated at the lower of cost (last-in, first-
out) or market. Total inventories would have been higher at October 27, 1996
and January 28, 1996 by $6,150 and $5,700 respectively, had the FIFO (first-
in, first-out) method been used to determine the cost of all inventories.
Quarterly LIFO inventory determinations reflect assumptions regarding fiscal
year-end inventory levels and the estimated impact of annual inflation.
3.Extraordinary Item
On July 31, 1995, the Company made an offer to purchase for cash 39.5% of the
aggregate outstanding principal amount of 14% Subordinated Promissory Notes of
Pamida Holdings Corporation. The offered purchase price was 50% of the
principal amount to be purchased. In the third quarter of fiscal 1996, the
Company redeemed Notes with a face value of $1,281 for cash payment of $641,
resulting in a gain of $371.
4.Related Party Transactions
In each of March, June and September 1995, the Company received $79, $79 and
$78 respectively from Pamida, Inc. (Pamida) to enable the Company to make
dividend payments to preferred stockholders. In September and October 1995,
the Company received a total of $652 from Pamida as a reimbursement for
certain tax benefits derived by Pamida. The latter remittance was used by the
Company primarily to make principal payments on its outstanding promissory
notes (see note 3 above) and to repay intercompany advances from Pamida. No
such payments have been received from Pamida during fiscal 1997.
5.Income (Loss) Per Common Share
Income(loss) per common share was calculated using the weighted average common
shares and dilutive common share equivalents outstanding during the period
using the treasury stock method.
6.Committed Revolving Loan and Security Agreement
Effective September 1, 1996, the term of Pamida, Inc.'s (Pamida) committed
Loan
and Security Agreement (the Agreement) was extended by one additional year to
March of 1999, and the Agreement was amended to allow borrowings up to a
maximum
of $80,000 for the period from September 1, 1996 through December 10, 1996.
7.Reclassifications
Certain reclassifications have been made to the prior year's financial
statements to conform to the current year's presentation.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Thousands)
The following is management's discussion and analysis of certain significant
factors which have affected the Company's results of operations and financial
condition for the periods included in the accompanying consolidated financial
statements.
RESULTS OF OPERATIONS
The following table sets forth an analysis of various components of the
Consolidated Statements of Operations as a percentage of sales for the three
and nine months ended October 27, 1996 and October 29, 1995:
Three Months Ended Nine Months Ended
Oct.27, Oct.29, Oct.27, Oct.29,
1996 1995 1996 1995
------ ------ ------ ------
Sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 76.0% 75.7% 76.1% 76.0%
------ ------ ------ ------
Gross profit 24.0% 24.3% 23.9% 24.0%
Selling, general and
administrative expenses 19.0% 20.5% 20.3% 20.8%
------ ------ ------ ------
Operating income 5.0% 3.8% 3.6% 3.2%
Interest expense 4.9% 4.3% 4.9% 4.3%
------ ------ ------ ------
Income (loss) before income tax
credit and extraordinary item 0.1% (0.5%) (1.3%) (1.1%)
Income tax credit - (0.6%) - (0.8%)
------ ------ ------ ------
Income (loss) before
extraordinary item 0.1% 0.1% (1.3%) (0.3%)
Extraordinary item - 0.2% - 0.1%
------ ------ ------ ------
Net income (loss) 0.1% 0.3% (1.3%) (0.2%)
====== ====== ====== ======
Sales - As of the end of fiscal 1996, the Company closed forty stores in
unprofitable or highly competitive markets which did not fit the Company's
niche market strategy. Consequently, the Company experienced a decrease in
total sales for the third quarter and first nine months of fiscal 1997. Sales
for the third quarter of fiscal 1997 decreased by $24,226 or 13.8% compared to
sales for the third quarter of fiscal 1996. Similarly, sales for the first
nine months of fiscal 1997 decreased by $77,537 or 15.0%.
Comparable store sales during the third quarter and first nine months of
fiscal 1997 decreased $3,997 or 2.7% and $10,874 or 2.6%, respectively. This
decrease can be traced to a combination of factors including clearance
activity, shifting of advertising break dates and the residual effects of the
warehouse management system implementation discussed in the Form 10-Q filing
for the second quarter of fiscal 1997.
The Company operated 149 stores at the end of the third quarter of fiscal 1997
as compared with 181 stores at the end of the third quarter of fiscal 1996.
Since October 29, 1995, the Company has opened ten stores in new markets,
relocated three stores and closed forty-two stores.
Gross profit - The Company's merchandise gross profit as a percentage of sales
improved .7% in the first nine months of fiscal 1997 and improved .6% in the
third quarter as compared to the same periods of fiscal 1996. However, this
improvement was offset by additional costs in the warehouse and distribution
areas during the implementation of the new warehouse management system this
year, which were disclosed in the Form 10-Q for the second quarter of fiscal
1997. Accordingly, as a percentage of sales, gross profit decreased slightly
from 24.3% for the third quarter of fiscal 1996 to 24.0% for the third quarter
of fiscal 1997. Gross profit as a percentage of sales was 23.9% for the first
nine months of fiscal 1997 and 24.0% for the first nine months of fiscal 1996.
Selling, general and administrative (SG&A) expense decreased $7,257 or 20.1%
for the third quarter of fiscal 1997 compared to the third quarter of fiscal
1996 and decreased $18,474 or 17.1% for the first nine months of fiscal 1997
compared to the first nine months of fiscal 1996. As a percentage of sales,
SG&A expense was 19.0% for the third quarter of fiscal 1997 and 20.5% for the
third quarter of fiscal 1996 and was 20.3% for the first nine months of fiscal
1997 compared to 20.8% for the first nine months of fiscal 1996.
The reduction in SG&A expense for the third quarter of fiscal 1997 was
primarily attributable to a 16.5% decrease in store payroll costs and a 13.2%
decrease in store occupancy costs. In addition, store controllable and
advertising costs decreased 20.7% and 41.6% respectively. All of these areas
of expense were impacted by the elimination of costs related to the forty
stores which were closed as of the end of fiscal 1996. SG&A costs were also
positively impacted by reduced accruals for management bonuses and the
elimination of amortization of goodwill and favorable leasehold interests
resulting from the write-off of these items in the fourth quarter of fiscal
1996. The decreases in SG&A costs were offset by a $391 reduction in other
income which was attributable largely to one-time gains realized in fiscal
1996 primarily from the sale of idle transportation company assets.
The reduction in SG&A expense for the first nine months of fiscal 1997 was
primarily attributable to a 15.4% decrease in store payroll costs and a 14.1%
decrease in store occupancy costs. In addition, store controllable and
advertising costs decreased 18.1% and 31.3% respectively. These areas of
expense were impacted by the elimination of costs related to the forty stores
closed as of the end of fiscal 1996. SG&A costs were also positively impacted
by reduced accruals for management bonuses and the elimination of amortization
of goodwill and favorable leasehold interests resulting from the write-off of
the latter items in the fourth quarter of fiscal 1996. The decreases in SG&A
costs were offset by a $1,394 reduction in other income which was attributable
largely to one-time gains realized in fiscal 1996 primarily from the sale of
idle transportation company assets.
Interest expense decreased $179 or 2.4% for the third quarter of fiscal 1997
compared to the same period of fiscal 1996 and decreased $467 or 2.1% for the
first nine months of fiscal 1997 compared to the same period of fiscal 1996.
The decrease was due to a reduction in interest related to capital leases,
primarily as a result of the forty stores closed as of the end of fiscal 1996,
and a decrease in interest costs related to industrial development bonds which
were paid off in August of 1996. These decreased costs were offset somewhat
by increased costs of revolver borrowings and by a slight increase in interest
attributable to the promissory notes which require quarterly interest payments
to be paid in kind and added to principal.
Income tax benefit - No income tax expense was recorded on income in the
third quarter of fiscal 1997 due to the existence of unutilized tax loss carry
forwards from prior year store closing charges. Similarly, no income tax
benefit was recorded on losses for the first nine months of fiscal 1997 due to
the uncertainty of realization of those tax benefits. Due to the amount of
unutilized tax loss carry forwards available, the Company does not expect to
tax-effect quarterly income or losses for any period in fiscal 1997. In the
prior year, no such tax loss carry forwards existed, and tax benefits of
$1,021 and $4,211 were recorded in fiscal 1996 for the third quarter and first
nine months, respectively, consistent with the Company's expected effective
tax rate.
LIQUIDITY AND CAPITAL RESOURCES
The Company's business is seasonal with first quarter sales (February through
April) being lower than sales during the other three quarters. Fourth quarter
sales (November through January) have represented approximately 29% of the
full year's retail sales in recent years and normally involve a greater
proportion of higher margin sales.
Funds used in operating activities were $16,565 in the first nine months of
fiscal 1997 compared to a usage of $21,843 in the first nine months of
fiscal 1996. This $5,278 reduction in net cash used by operating activities
resulted primarily from changes in inventories and other operating
liabilities, offset somewhat by changes in accounts payable, results of
operations and store closing reserves.
The Company satisfies its seasonal liquidity requirements primarily through a
combination of funds provided from operations and from Pamida, Inc.'s (Pamida)
committed Loan and Security Agreement (the Agreement) which provides for
revolving borrowings of up to $70,000. Borrowings under the Agreement bear
interest at a rate which is .75% per annum greater than the applicable prime
rate. The amounts Pamida is permitted to borrow are determined by a formula
based upon the amount of Pamida's eligible inventory from time to time. Such
borrowings are secured by security interests in all of the current assets
(including inventory) of Pamida and by liens on certain real estate interests
and other property of Pamida. The Company and two subsidiaries of Pamida have
guaranteed the payment and performance of Pamida's obligations under the
Agreement and have pledged some or all of their respective assets, including
the stock of Pamida owned by the Company, to secure such guarantees.
The Agreement contains provisions imposing operating and financial
restrictions on the Company. Certain provisions of the Agreement require the
maintenance of specified amounts of tangible net worth (as defined) and
working capital (as defined) and the achievement of specified minimum amounts
of cash flow (as defined). Other restrictions in the Agreement and those
provided under the Indenture relating to the Senior Subordinated Notes will
affect, among other things, the ability of the Company to incur additional
indebtedness, pay dividends, repay indebtedness prior to its stated maturity,
create liens, enter into leases, sell assets or engage in mergers or
acquisitions, make capital expenditures and make investments. These covenants
currently have not had an impact on the Company's ability to fully utilize the
revolving credit facility. However, certain of the covenants, such as those
which restrict the ability of the Company to incur indebtedness or encumber
its property or which impose restrictions on or otherwise limit the Company's
ability to engage in sale-leaseback transactions, may at some future time
prevent the Company from pursuing its store expansion program at the rate that
the Company desires.
Obligations under the Agreement were $62,797 at October 27, 1996 and $55,909
at October 29, 1995. These borrowings are senior to the Senior Subordinated
Notes of the Company. The Company had long-term debt and obligations under
capital leases of $202,299 as of October 27, 1996 and $211,901 at October 29,
1995. The Company's ability to satisfy scheduled principal and interest
payments under such obligations in the ordinary course of business is
dependent primarily upon the sufficiency of the Company's operating cash flow.
At October 27, 1996, the Company was in compliance with all covenants
contained in its various financing agreements.
Pamida paid the Company $79, $79 and $78, during the first, second and third
quarters respectively, of fiscal 1996 under a tax-sharing agreement to enable
the Company to pay quarterly dividends to its preferred stockholders. Since
the Company conducts no operations of its own, the only cash requirement of
the Company relates to preferred stock dividends in the aggregate annual
amount of approximately $315; and Pamida is expressly permitted under its
existing credit facilities to pay dividends to the Company to fund such
preferred stock dividends. However, the General Corporation Law of the State
of Delaware, under which the Company and Pamida are incorporated, allows a
corporation to declare or pay a dividend only from its surplus or from the
current or the prior year's earnings. Due to the retained deficit, resulting
primarily from the forty store closings and the write-off of goodwill and
other long-lived assets recognized in the fourth quarter of fiscal 1996, the
Company and Pamida may pay dividends in fiscal 1997 and in ensuing years only
to the extent that the Company and Pamida satisfy the applicable statutory
standards which includes the Company's having a net worth equal to at least
the aggregate par value of the preferred stock which amounts to $2. The
Company did not declare or pay the preferred stock dividends payable on
February 29, 1996, May 31, 1996, August 31, 1996 or November 30, 1996. The
cumulative dividend rate on the preferred stock increases by 0.5% per quarter
(with a maximum aggregate increase of 5%) on each quarterly dividend payment
date on which the preferred stock dividends are not paid currently on a
cumulative basis. Any unpaid dividends are added to the liquidation value
until paid in cash. Such nonpayment of preferred stock dividends does not
accelerate the redemption rights of the preferred stockholders.
The Company made capital expenditures of $4,521 during the first nine months
of fiscal 1997 compared to $6,024 during the first nine months of fiscal 1996.
The Company has opened a total of eight new stores in fiscal 1997 and will
consider additional opportunities for new store locations as they arise.
Capital expenditures are expected to total approximately $5,400 in fiscal 1997
and to be funded from cash flow from operations. The costs of buildings and
land for new store locations are expected to be financed by operating or
capital leases with unaffiliated landlords. The Company's expansion program
will require inventory of approximately $1,000 to $1,200 for each store in a
new market, which the Company expects to finance through trade credit,
borrowings under the Agreement and cash flow from operations.
On a long-term basis, the Company's expansion will require continued
investments in store locations, working capital and distribution and
infrastructure enhancements. The Company expects to continue to finance some
of these investments through leases from unaffiliated landlords, trade credit,
borrowings under the Agreement and cash flow from operations, but ultimately
will need to explore additional sources of funds which may include both debt
(mid-term to long-term) and equity capital. Currently, it is not possible for
the Company to predict with any certainty either the timing or the
availability of any such additional financing.
INFLATION
The Company uses the LIFO method of inventory valuation in its financial
statements; as a result, the cost of merchandise sold approximates current
costs. Due to the revaluation of property, buildings and equipment in
connection with the purchase transaction in 1986, as well as the recent
opening of new stores, depreciation expense closely approximates current
costs. The Company's rental expense is generally fixed and, except for small
amounts of percentage rentals, has not been affected by inflation.
Part II - OTHER INFORMATION
Items 1-2:None
Item 3:
The General Corporation Law of Delaware, under which the registrant is
incorporated, allows a corporation to declare or pay a dividend only from its
surplus or from the current or the prior year's earnings. Due to the retained
deficit resulting primarily from store closings and the write-off of goodwill
and other long-lived assets in the fourth quarter of fiscal 1996, the
registrant may pay dividends in fiscal 1997 and in ensuing years only to the
extent that the registrant satisfies the applicable statutory standards, which
includes the registrant's having a net worth equal to at least the aggregate
par value of its outstanding preferred stock, which amounts to $2.
Accordingly, the registrant was restricted from declaring or paying the
quarterly dividends payable on February 29, May 31, August 31, and November
30, 1996, with respect to the outstanding 16.25% Senior Cumulative Preferred
Stock and 14.25% Junior Cumulative Preferred Stock of the registrant and does
not anticipate paying dividends on the registrant's preferred stock in the
foreseeable future. As of the date of this report, the total preferred stock
dividend arrearage was $342. Pursuant to the Certificate of Incorporation of
the registrant, the cumulative dividend rate on the registrant's preferred
stock increases by 0.5% per quarter (with a maximum aggregate increase of 5%)
on each quarterly dividend payment date on which the preferred stock dividends
are not paid currently on a cumulative basis. Any unpaid dividends are added
to the liquidation value of the preferred stock until paid in cash. Such
nonpayment of preferred stock dividends does not accelerate the redemption
rights of the preferred stockholders.
Items 4-5:None
Item 6:
(A) Exhibits.
- 10.1 Amendment No. 3 to Loan and Security Agreement among Pamida, Inc.
and Seaway Importing Company, as Borrowers, Congress Financial
Corporation (Southwest) and BankAmerica Business Credit, Inc., as
Lenders, and Congress Financial Corporation (Southwest), as Agent,
dated
September 16, 1996
- 10.2 Amendment No. 1 to Employment Agreement among Pamida Holdings
Corporation, Pamida, Inc., and Steven S. Fishman dated August 29, 1996
- 27.1 Financial Data Schedule (EDGAR version only)
(b) Reports on Form 8-K.
A report on Form 8-K was filed during the quarter for which this Form
10-Q is filed. Such report had a Date of Report of October 16, 1996, and
related to Item 4, Changes in Registrant's Certifying Accountant. An
amendment to such Form 8-K was filed on November 1, 1996.
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.
PAMIDA HOLDINGS CORPORATION
(Registrant)
Date: December 11, 1996
By: /s/ Steven S. Fishman
Steven S. Fishman, Chairman,
President and Chief Executive Officer
Date: December 11, 1996
By: /s/ Todd D. Weyhrich
Todd D. Weyhrich
Vice President - Controller
AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT
PAMIDA, INC.
8800 F Street
Omaha, Nebraska 68127
SEAWAY IMPORTING COMPANY
8800 F Street
Omaha, Nebraska 68127
September 16, 1996
Congress Financial Corporation (Southwest)
1201 Main Street
Dallas, Texas 75250
BankAmerica Business Credit, Inc.
40 East 52nd Street
New York, New York 10017
Gentlemen:
Congress Financial Corporation (Southwest), a Texas corporation in its
individual capacity ("Congress"), BankAmerica Business Credit, Inc., formerly
known as BA Business Credit Inc., a Delaware corporation ("BABC," together
with Congress each individually a "Lender" and collectively, "Lenders"),
Pamida, Inc., a Delaware corporation ("Pamida"), Seaway Importing Company, a
Nebraska corporation ("Seaway," together with Pamida, collectively,
"Borrowers") and Congress Financial Corporation (Southwest), a Texas
corporation, as Agent for Lenders (in such capacity, "Agent") have entered
into certain financing arrangements pursuant to the Loan and Security
Agreement, dated March 30, 1993, by and among Agent, Lenders and Borrowers (as
amended by Amendment No. 1 to Loan and Security Agreement dated as of January
23, 1995 and Amendment No. 2 to Loan and Security Agreement dated as of
January 28, 1996 and as amended hereby, the "Loan Agreement", and together
with all agreements, documents and instruments at any time executed and/or
delivered in connection therewith or related thereto, as the same now exist or
may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced, collectively, the "Financing Agreements").
Borrowers have requested that the "Maximum Credit" provided for in the
Financing Agreements be temporarily increased and that certain other
provisions of the Financing Agreements be amended, and Agent and Lenders are
willing to temporarily increase the Maximum Credit and amend certain other
provisions of the Financing Agreements, subject to the terms and conditions
contained herein. By this Amendment, Agent, Lenders and Borrowers desire and
intend to evidence such amendments.
In consideration of the foregoing and the agreements and covenants
contained herein, the parties hereto agree as follows:
1. Definitions.
(a) All references to the term "Maximum Credit" in any of the Financing
Agreements shall be deemed, and each such reference is hereby amended, to mean
(i) from September 1, 1996 through and including December 10, 1996, the amount
of $80,000,000 and (ii) Thereafter, the amount of $70,000,000.
(b) All references to the term "Renewal Date" in any of the Financing
Agreements shall be deemed, and each such reference is hereby amended, to mean
March 31, 1999.
(c) All capitalized terms used herein shall have the meanings assigned
hereto in the other Financing Agreements, unless otherwise defined herein.
2. Revolving Loans; Advance Rate. Section 2.1(a) of the Loan Agreement is
hereby deleted in its entirety and the following substituted therefore:
(a) Subject to, and upon the terms and conditions contained herein and in
the other Financing Agreements, at the request of Borrowers, each of Lenders
severally, but not jointly, agrees to lend to Borrowers and authorizes and
appoints Agent to make Loans to Borrowers, for the account of and as Agent for
Lenders, in such amounts from time to time as Agent shall determine, in its
discretion, at Borrowers' request during the periods indicated below of up to
the percent of the value of Eligible Inventory of Borrowers indicated for such
period (or such greater or lesser percentage thereof as Agent may determine
from time to time):
Period Percent
------ -------
(i) from September 1, 1996 through 50%
and including December 10, 1996
(ii) thereafter, in any year:
(A) from March 1 through and 45%
including April 30
(B) from October 1 through and 45%
including November 30
(C) at all other times 40%
3. Representations, Warranties and Covenants. In addition to the continuing
representations, warranties and covenants heretofore or hereafter made by
Borrowers to Agent and Lenders pursuant to the Financing Agreements, Borrowers
hereby represent, warrant and covenant with and to Agent and Lenders as
follows (which representations, warranties and covenant are continuing and
shall survive the execution and delivery hereof and shall be incorporated into
and made a part of the Financing Agreements):
(a) No Event of Default exists on the date of this Amendment (after giving
effect to the amendments to the Financing Agreements made by this Amendment).
(b) This Amendment and the other amendment agreements delivered in
connection herewith, have been duly authorized, executed and delivered by each
of Borrowers and are in full force and effect as of the date hereof, and the
agreements and obligations of each of Borrowers contained herein and therein
constitute legal, valid and binding obligations of each of Borrowers
enforceable against each of Borrowers in accordance with their respective
terms.
(c) All required consents or approvals of any persons other than Lenders
and Agent to the authorization, execution and delivery of this Amendment and
the other amendment agreements delivered in connection herewith have been
obtained by each of Borrowers and Guarantors, and the authorization, execution
and delivery hereof does not violate or breach any provision of or constitute
a default under any material indenture, mortgage, deed of trust, agreement or
instrument to which any of Borrowers or Guarantors is or may be bound,
including, without limitation, the Note Indenture.
4. Conditions Precedent. The effectiveness of the amendments contained
herein shall be subject to the satisfaction of each of the following
conditions precedent in a manner satisfactory to Agent on behalf of Lenders:
(a) Agent shall have received, in form and substance satisfactory to Agent,
an executed original of this Amendment, duly authorized, executed and
delivered by each of Borrowers and Guarantors;
(b) Agent shall have received, in form and substance satisfactory to Agent,
an executed original of Amendment No. 3 to Deed of Trust, Security Agreement
and Assignment of Leases and Rents by Pamida in favor of Old Republic National
Title Insurance Company, as trustee, for the benefit of Agent and Lenders,
duly authorized, executed and delivered by the parties thereto;
(c) Agent shall have received, in form and substance satisfactory to Agent,
an executed original of Amendment No. 3 to Leasehold Deed of Trust, Security
Agreement and Assignment of Leases and Rents by Pamida in favor of Old
Republic National Title Insurance Company, as trustee, for the benefit of
Agent and Lenders, duly authorized, executed and delivered by the parties
thereto;
(d) Agent shall have received, in form and substance satisfactory to Agent,
an executed original of Amendment No. 3 to Co-Lending and Agency Agreement,
duly authorized, executed and delivered by each of Agent and Lenders;
(e) Agent shall have received, in form and substance satisfactory to Agent,
a secretary's certificates for each of Borrowers and Guarantors with respect
to directors' resolutions, incumbency and other matters as Agent may require,
and
(f) No Event of Default shall have occurred and be continuing and no event
shall have occurred or condition be existing and continuing which, with notice
or passage of time or both, would constitute an Event of Default.
5. Amendment Fee. Borrowers shall pay to Agent for the account of Lenders an
amendment fee in an amount equal to $50,000, which amount shall be payable
simultaneously with the execution hereof, which fee is fully earned as of the
date hereof, shall be in addition to all other amounts payable under the
Financing Agreements, shall constitute part of the Obligations and may, at
Agent's option, be charged directly to any account(s) of Borrowers maintained
with Agent or Lenders.
6. Effect of this Amendment. Except as modified pursuant hereto, no other
changes or modifications to the Financing Agreements are intended or implied
and in all other respects the Financing Agreements are hereby specifically
ratified, restated and confirmed by all parties hereto as of the effective
date hereof. To the extent of any conflict between the terms of this
Amendment and the other Financing Agreements, the terms of this Amendment
shall control.
7. Further Assurances. The parties hereto shall execute and deliver such
additional documents and take such additional action as may be necessary or
desirable to effectuate the provisions and purposes of this Amendment.
8. Governing Law. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in
accordance with the laws of the State of New York.
9. Binding Effect. This Amendment shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
assigns.
10. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one
and the same agreement. In making proof of this Amendment, it shall not be
necessary to produce or account for more than one counterpart thereof signed
by each of the parties hereto.
Please sign the enclosed counterpart of this Amendment in the space
provided below, whereupon this Amendment, as so accepted by Agent and Lenders,
shall become a binding agreement among Borrowers, Agent and Lenders.
Very truly yours,
PAMIDA, INC.
By: /s/ George R. Mihalko
Title: Sr. V.P. & CFO
SEAWAY IMPORTING COMPANY
By: /s/ George R. Mihalko
Title: Sr. V.P. & CFO
AGREED:
CONGRESS FINANCIAL CORPORATION
(SOUTHWEST), individually and as Agent
By: /s/ Edward Franco
Title: Vice President
BANKAMERICA BUSINESS CREDIT, INC., formerly
known as BA Business Credit Inc.
By: /s/ Patrick J. Wilson
Title: Vice President
ACKNOWLEDGED AND AGREED:
PAMIDA HOLDINGS CORPORATION
By: /s/ George R. Mihalko
Title: Sr. V.P. & CFO
PAMIDA TRANSPORTATION COMPANY
By: /s/ George R. Mihalko
Title: Sr. V.P. & CFO
Exhibit 10.2
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
This Amendment No. 1 to Employment Agreement is made and entered into on
the 29th day of August, 1996, among PAMIDA HOLDINGS CORPORATION ("Holdings"),
a Delaware corporation, PAMIDA, INC. ("Pamida"), a Delaware corporation, and
STEVEN S. FISHMAN (the "Executive"). Holdings and Pamida collectively are
referred to in this Amendment No. 1 as the "Companies".
WHEREAS, the Companies and the Executive are parties to an Employment
Agreement dated September 22, 1995 (the "Employment Agreement"); and
WHEREAS, the Companies and the Executive now desire to amend the
Employment Agreement as more particularly set forth below;
NOW, THEREFORE, the Companies and the Executive agree as follows:
1. Pursuant to Paragraph 6 of the Employment Agreement, the Companies and the
Executive agree that the Executive's incentive bonus program for the fiscal
year of Holdings ending February 2, 1997 ("Fiscal 1997") shall be the
following:
(a) If the consolidated earnings of Holdings and its subsidiaries (on a
first-in, first-out basis with respect to merchandise inventories)
before interest, taxes, depreciation, and amortization for Fiscal 1997
(the "EBITDA") is less than $43,000,000, then the Executive shall not
be entitled to any incentive bonus for Fiscal 1997.
(b) If the EBITDA equals or exceeds $43,000,000, then the Executive's
incentive bonus for Fiscal 1997 shall be determined as a percentage of
the Executive's base salary from the matrix attached to this Amendment
No. 1 taking into account (i) the EBITDA and (ii) the percentage
increase or decrease in the comparable store sales of Pamida for Fiscal
1997 compared with the fiscal year ended January 28, 1996. Comparable
store sales percentage increases or decreases shall be determined in
accordance with Pamida's historical practices.
(c) For purposes of such matrix, comparable store sales percentage
increases of more than 5% shall be treated as increases of 5%,
comparable store sales decreases of more than 2% shall be treated as
decreases of 2%, and EBITDA of more than $49,000,000 shall be treated
as EBITDA of $49,000,000.
(d) For purposes of applying such matrix, the Executive's base salary shall
be deemed to be $500,000.
(e) The maximum incentive bonus that the Executive shall have the
opportunity to earn for Fiscal 1997 is $500,000.
(f) EBITDA amounts between whole millions of dollars and comparable store
sales percentage increases or decreases between whole percentages shall
be interpolated on a straight-line basis for purposes of applying such
matrix.
(g) Solely by way of illustration of the application of such matrix, if the
EBITDA is $44,250,000 and the comparable store sales percentage
increase for Fiscal 1997 is 2.6%, then the Executive's incentive bonus
for Fiscal 1997 would be $246,250.
The Executive's incentive bonus for Fiscal 1997 (if any) shall be paid to the
Executive as soon as practicable after Holdings has received the final audit
report with respect to Fiscal 1997 from its independent accountants.
2. The provisions of this Amendment No. 1 are intended to satisfy the
requirements of Paragraph 6 of the Employment Agreement for the fiscal year of
Holdings ending in 1997.
3. This Amendment No. 1 shall be effective as of January 29, 1996.
4. As hereby amended, the Employment Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the Companies and the Executive have executed this
Amendment No. 1 to Employment Agreement on the day and year first above
written.
PAMIDA HOLDINGS CORPORATION,
a Delaware corporation
By: /s/ Frank A. Washburn
Frank A. Washburn, Executive
Vice President
PAMIDA, INC., a Delaware
corporation
By: /s/ Frank A. Washburn
Frank A. Washburn, Executive
Vice President
/s/ Steven S. Fishman
Steven S. Fishman
Pamida, Inc.
Bonus a % of Pay
Comp store sales increase
EBITDA| -2.0%| -1.0%| 0.0%| 1.0%| 2.0%| 3.0%| 4.0%| 5.0%
- -------|-------|-------|-------|-------|-------|-------|-------|-------
<43| 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0
43| 20.0%| 25.0%| 30.0%| 35.0%| 40.0%| 45.0%| 50.0%| 55.0%
44| 25.0%| 30.0%| 35.0%| 40.0%| 45.0%| 50.0%| 55.0%| 60.0%
45| 30.0%| 35.0%| 40.0%| 45.0%| 50.0%| 55.0%| 60.0%| 65.0%
46| 37.5%| 42.5%| 47.5%| 52.5%| 57.5%| 62.5%| 67.5%| 72.5%
47| 45.0%| 50.0%| 55.0%| 60.0%| 65.0%| 70.0%| 75.0%| 80.0%
48| 55.0%| 60.0%| 65.0%| 70.0%| 75.0%| 80.0%| 85.0%| 90.0%
49| 65.0%| 70.0%| 75.0%| 80.0%| 85.0%| 90.0%| 95.0%| 100.0%
