<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 28, 1995
-----------------
FAMILY BARGAIN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-16309 51-0299573
- ------------------------ ------------------------ ------------------
(State of incorporation) (Commission File Number) (IRS Empl. ID No.)
315 East 62nd Street, New York, New York 10021
---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (212) 980-9670
---------------
<PAGE> 2
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired.
Filed with this report are the following financial statements of Capin
Mercantile Corporation (now called Factory 2-U, Inc.):
(1) Unaudited balance sheet as of November 10, 1995 and the
related statements of operations and cash flows for the ten
months ended October 31, 1994 and the period ended November
10, 1995.
(b) Pro Forma Financial Information.
Filed with this report are the following unaudited pro forma financial
statements of the registrant:
(1) Pro forma consolidated balance sheet as of October 28, 1995.
(2) Pro forma consolidated statement of operations for the nine
months ended October 28, 1995.
(3) Pro forma consolidated statement of operations for year ended
December 31, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to signed on its behalf by the
undersigned hereunto duly authorized.
FAMILY BARGAIN CORPORATION
--------------------------------------
/s/ William W. Mowbray
Chief Financial Officer
<PAGE> 3
CAPIN MERCANTILE CORPORATION
BALANCE SHEET
(UNAUDITED)
NOVEMBER 10, 1995
<TABLE>
<S> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 777,000
Receivables:
Trade accounts, less allowance for doubtful accounts
and sales returns of $155,000 32,000
Other 565,000
-----------
Total receivables 597,000
Merchandise inventories 10,233,000
Prepaid expenses 197,000
-----------
Total current assets 11,804,000
-----------
Land held for development 531,000
Property, plant and equipment, net 7,856,000
Other 38,000
-----------
Total assets $20,229,000
===========
</TABLE>
<PAGE> 4
CAPIN MERCANTILE CORPORATION
BALANCE SHEET, CONTINUED
(UNAUDITED)
NOVEMBER 10, 1995
<TABLE>
<S> <C>
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
- ----------------------------------------
Current liabilities:
Note payable to bank $ 3,625,000
Trade accounts payable 15,837,000
Accrued expenses 2,353,000
Current installments of long term debt 3,381,000
------------
Total current liabilities 25,196,000
Commitments and contingencies -
Long-term debt, net of current portion 2,240,000
Other non-current liabilities 487,000
------------
Total liabilities 27,923,000
------------
Stockholders' deficiency:
Common stock, $0.01 par value, 1,000,000 shares
authorized, 165,652 shares issued and outstanding 2,000
Additional paid-in capital 7,235,000
Deficit (14,931,000)
------------
Total stockholders' deficiency (7,694,000)
------------
Total liabilities and stockholders' deficiency $ 20,229,000
============
</TABLE>
See accompanying notes to condensed interim financial statements.
2
<PAGE> 5
CAPIN MERCANTILE CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
TEN MONTHS ENDED OCTOBER 31, 1994
THE PERIOD ENDED NOVEMBER 10, 1995
<TABLE>
<CAPTION>
1994 1995
----------- -----------
<S> <C> <C>
Net sales $71,783,000 $47,457,000
Cost of sales 52,761,000 34,717,000
----------- -----------
Gross margin 19,022,000 12,740,000
General and administrative expenses 28,262,000 22,107,000
----------- -----------
Operating loss (9,240,000) (9,367,000)
Other income (expense), net (264,000) (415,000)
----------- -----------
Net loss $(9,504,000) $(9,782,000)
=========== ===========
</TABLE>
See accompanying notes to condensed interim financial statements.
3
<PAGE> 6
CAPIN MERCANTILE CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
TEN MONTHS ENDED OCTOBER 31, 1994
THE PERIOD ENDED NOVEMBER 10, 1995
<TABLE>
<CAPTION>
1994 1995
----------- -----------
<S> <C> <C>
Net cash used by operating activities $(4,347,000) $(3,930,000)
Cash flows from investing activities:
Proceeds from sale of property and equipment 71,000 234,000
Decrease in notes receivable from non-operating affiliates 5,000 (16,000)
Collections of notes receivable 27,000 31,000
Additions to property, plant, and equipment (728,000) (61,000)
Decrease in cash value of officers' life insurance 126,000 66,000
----------- -----------
Net cash provided by (used in) investing activities (499,000) 254,000
----------- -----------
Cash flows from financing activities:
Decrease in cash surrender value policy loans (32,000) -
Borrowings on line of credit 17,445,000 25,542,000
Repayments of line of credit (13,445,000) (21,917,000)
Net payments of long-term debt (173,000) (379,000)
Net payments on notes payable to related parties (218,000) (264,000)
Cash contributions 402,000 -
Cash distributions (225,000) -
----------- -----------
Net cash provided in financing activities 3,754,000 2,982,000
----------- -----------
Net decrease in cash (1,092,000) (694,000)
Cash and cash equivalents, beginning of period 1,729,000 1,471,000
----------- -----------
Cash and cash equivalents, end of period $ 637,000 $ 777,000
=========== ===========
</TABLE>
See accompanying notes to condensed interim financial statements.
4
<PAGE> 7
CAPIN MERCANTILE CORPORATION
NOTES TO UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS
NOVEMBER 10, 1995
1. Unaudited Condensed Interim Financial Statements
The accompanying unaudited condensed financial statements of Capin
Mercantile Corporation (the "Company" or "CMC") do not include all of the
information and footnotes required by generally accepted accounting
principals for annual financial statements and should be read in
conjunction with the financial statements for the year ended December 31,
1994 filed previously.
In the opinion of management, these interim financial statements reflect
all adjustments which are necessary to a fair statement of the results of
the interim periods presented. All such adjustments are of a normal
recurring nature.
2. Acquisition by Family Bargain Corporation
On November 13, 1995, Family Bargain Corporation ("FBC") acquired all of
the outstanding shares of common stock of the Company. The acquisition
was completed pursuant to the Stock Purchase Agreement, dated August 29,
1995, by and between the FBC and the former shareholders of CMC.
In connection with the stock purchase, certain former shareholders of CMC
agreed to accept $1,249,000 plus an additional payment (the "Contingent
Payment") of $600,000, the amount of which is subject to adjustment, in
return for approximately $4.7 million in indebtedness owed to them by CMC.
The Contingent Payment will be adjusted up or down, as described in the
Stock Purchase Agreement, based upon the net proceeds from the sale, or
appraised value at a future date, of certain real property consisting of a
facility that housed the CMC corporate offices, distribution center, and
undeveloped land and is included in long-term debt in the adjusted amount
of $915,000.
3. Restructuring of Debt and Accounts Payable
The Company has negotiated or is in the process of negotiating a
restructuring of certain of its debt and trade payable obligations. The
form of this restructuring has generally been agreements by creditors to
accept payment of invoices dated prior to September, 1, 1995 in
installments over a 24 month term.
4. Revolving Credit Facility
Concurrent with the purchase of the Company by FBC in November 1995, the
Company repaid 100% of its former line of credit with the proceeds of a
new line of credit (the "New Line") with a new lender. The New Line is a
$10 million revolving line of credit comprised of advances limited to a
percentage of eligible inventory and bears interest at a floating rate
based on a prime rate of interest plus 2%.
5
<PAGE> 8
FAMILY BARGAIN CORPORATION AND SUBSIDIARIES
AND
FACTORY 2-U, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
OCTOBER 28, 1995
Set forth below are the respective historical balance sheets of Family
Bargain Corporation and Subsidiaries ("FBC") as of October 28, 1995, Factory
2-U, Inc.("Factory 2-U"), formerly known as Capin Mercantile Corporation, as of
November 10, 1995 and the combined pro forma financial position as though the
combination had occurred on October 28, 1995.
The presentation reflects the purchase of all of the common stock of
Factory 2-U and the assumption of the net liabilities of Factory 2-U by FBC.
The pro forma combined balance sheet should be read in conjunction with the
historical financial statements of FBC, the historical financial statements of
Capin Mercantile Corporation (called Factory 2-U herein) included in the
original filing of the Current Report on Form 8-K dated November 28, 1995, the
historical financial statements of Capin Mercantile Corporation included with
this amendment and the pro forma statements of operations included with this
amendment.
The pro forma financial statements include allocations of the purchase
price to the assets and liabilities of Factory 2-U based on preliminary
estimates of their fair values on the date of acquisition. Final allocations
will be made based on the sales price of assets expected to be disposed of in
the near future or appraised value.
The pro forma financial information set forth below is not necessarily
indicative of the future financial position of FBC or the financial position
that would have been reported had the transaction been completed on October 28,
1995.
6
<PAGE> 9
FAMILY BARGAIN CORPORATION
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
OCTOBER 28, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
FAMILY BARGAIN PRO FORMA
CORPORATION ADJUSTMENTS PRO FORMA
AND SUBSIDIARIES FACTORY 2-U, INC. DEBIT (CREDIT COMBINED
---------------- ----------------- -------------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash $ 142 777 (675) (A) 244
Merchandise inventories 27,623 10,233 - 37,856
Other current assets 8,953 794 (4,942) (B) 4,805
-------- ------- ----- ------
Total current assets 36,718 11,804 (5,617) 42,905
Fixed assets, net 7,259 8,387 493 (C) 16,139
Other assets 1,528 38 - 1,566
Goodwill 28,521 7,180 (D) 35,701
-------- ------ ----- ------
$ 74,026 20,229 2,056 96,311
======== ====== ===== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 10,592 15,837 7,843 (E) 18,586
Other accrued expenses 6,447 2,353 (673) (F) 9,473
Revolving credit note - 3,625 3,625 (G) 0
Current installments of long term debt - 3,381 625 (H) 2,756
------- ------ ------ ------
Total current liabilities 17,039 25,196 11,420 30,815
Revolving credit note, less current maturities 19,932 - (3,625) (I) 23,557
Long-term debt, less current maturities 9,840 2,240 167 (J) 11,913
Other liabilities 1,734 487 (2,324) (K) 4,545
------- ------ ------ ------
Total liabilities 48,545 27,923 5,638 70,830
------- ------ ------ ------
Stockholders' equity:
Series A convertible preferred stock 26,981 - - 26,981
Common stock 7 2 2 (L) 7
Additional paid-in capital 19,796 7,235 7,235 (M) 19,796
Accumulated deficit (21,303) (14,931) (14,931) (N) (21,303)
-------- ------ ------ ------
Total stockholders' equity (deficit) 25,481 (7,694) (7,694) 25,481
-------- ------ ------ ------
$ 74,026 20,229 (2,056) 96,311
======== ====== ====== ======
</TABLE>
7
<PAGE> 10
FAMILY BARGAIN CORPORATION
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
OCTOBER 28, 1995
(1) PRO FORMA ADJUSTMENTS TO THE BALANCE SHEET
The total purchase price and fair value of the assets acquired at November
10, 1995 to record the acquisition of Factory 2-U, Inc. are summarized as
follows (in thousands):
<TABLE>
<S> <C> <C>
Purchase price:
Cash paid to former shareholders $ 675
Note payable to former shareholders 125
Cash investment by parent 325
Estimated acquisition costs and cash investment 400 1,525
------
Assumption of the net liabilities of Factory 2-U
at estimated fair value (including notes payable to
former shareholders) 5,655
------
Excess of purchase price over the fair value
of assets acquired, recorded as goodwill $7,180
======
</TABLE>
The adjustment to record the acquisition of Factory 2-U and eliminate
Factory 2-U's stockholders' equity follows (in thousands):
<TABLE>
<CAPTION>
DEBIT (CREDIT)
<S> <C> <C>
Cash (payments to former shareholders) $ (675)(A)
Elimination of intercompany receivable (4,942)(B)
Fixed assets (to reflect fair value) 493 (C)
Goodwill 7,180 (D)
Accounts payable:
Elimination of intercompany payable $ 4,942
Discount on restructured trade accounts payable 366
Reclassification of restructured payables to long-term 2,535 7,843 (E)
-------
Other accrued expenses:
Accrual of acquisition costs (Factory 2-U's books) (225)
Accrual of acquisition costs incurred by parent
net of cash invested by parent of $325 (400)
Reclassification of payable to former shareholder (48) (673)(F)
-------
Reclassification of revolving credit note to long-term
(to reflect refinancing) 3,625 (G)
Payments of obligations to former shareholders 625 (H)
Reclassification of revolving credit note to long-term
(to reflect refinancing) (3,625)(I)
Reclassification of payable to former shareholder 167 (J)
Other liabilities:
Adjustment of liabilities to fair value 179
Discount on restructured trade accounts payable 151
Reclassification of payable to former shareholder (119)
Reclassification of restructured payables to long-term (2,535) (2,324)(K)
-------
Payments of former shareholder debt
Common stock 2 (L)
Additional paid-in capital 7,235 (M)
Accumulated deficit (14,931)(N)
--------
$ 0
========
</TABLE>
(2) DEFERRED TAXES
The acquisition resulted in the recognition of deferred tax assets which
have been offset in their entirety by a valuation allowance.
8
<PAGE> 11
FAMILY BARGAIN CORPORATION AND SUBSIDIARIES
AND
FACTORY 2-U, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED OCTOBER 28, 1995
Set forth below are the respective historical statements of operations of
Family Bargain Corporation and Subsidiaries ("FBC") for the nine months ended
October 28, 1995, Factory 2-U, Inc.("Factory 2-U"), formerly known as Capin
Mercantile Corporation, for the period from January 1, 1995 to November 10,
1995 and the combined pro forma statement of operations as though the
combination had occurred on January 29, 1995 for FBC and January 1, 1995 for
Factory 2-U.
The presentation reflects the purchase of all of the common stock of
Factory 2-U and the assumption of the net liabilities of Factory 2-U by FBC.
The pro forma combined statement of operations should be read in conjunction
with the historical financial statements of FBC, the historical financial
statements of Capin Mercantile Corporation included in the original filing of
the Current Report on Form 8-K dated November 28, 1995, the historical
financial statements of Capin Mercantile Corporation included with this
amendment and the pro forma balance sheet included with this amendment.
The pro forma financial information set forth below is not necessarily
indicative of future results of operations or results of operations had the
acquisition been completed as of January 29, 1995 or as of January 1, 1995.
9
<PAGE> 12
FAMILY BARGAIN CORPORATION
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED OCTOBER 28, 1995
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
FAMILY BARGAIN
CORPORATION PRO FORMA PRO FORMA
AND SUBSIDIARIES FACTORY 2-U, INC. ADJUSTMENTS COMBINED
---------------- ----------------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales $ 115,672 47,457 (7,193)(A) 155,936
Cost of sales 76,178 34,717 (5,264)(B) 105,631
---------- ------- ------- --------
Gross profit 39,494 12,740 (1,929) 50,305
---------- ------- ------- --------
Selling and administrative expenses 38,300 22,107 (9,470)(C) 50,937
Amortization of goodwill 943 - 247 (D) 1,190
---------- ------- ------- --------
Operating income 251 (9,367) 7,294 (1,822)
Interest expense and financing fees (2,302) (415) 62 (E) (2,779)
---------- ------- ------- --------
Net loss (2,051) (9,782) 7,356 (4,601)
Preferred stock dividends (2,280) - (2,280)
---------- ------- ------- --------
Net loss available to common stock $ (4,331) (9,782) 7,356 (6,881)
========== ======= ======= ========
Net income (loss) per common share and
common stock equivalents $ (1.08) $ (1.72)
Weighted average shares outstanding: 4,008,311 4,008,311
</TABLE>
10
<PAGE> 13
FAMILY BARGAIN CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED OCTOBER 28, 1995
(1) PERIODS PRESENTED
The unaudited pro forma condensed statement of operations includes the
results of Family Bargain Corporation for the nine months ended October
28, 1995 and the results of Factory 2-U, Inc. for the period from January
1, 1995 to November 10, 1995.
(2) ADJUSTMENTS TO STATEMENT OF OPERATIONS (IN THOUSANDS):
<TABLE>
<CAPTION>
DEBIT (CREDIT)
<S> <C> <C>
Sales (to eliminate closed stores) $7,193 (A)
Cost of sales (to eliminate closed stores) (5,264)(B)
General and administrative expenses
(to eliminate expenses related to closed stores
and to eliminate duplicative corporate expenses) (9,470)(C)
Amortization of goodwill (over 25 year period) 247 (D)
Interest expense and financing fees:
To eliminate interest expense on forgiven debt ($265)
To record interest on new debt to former shareholders 107
To record interest differential arising from increased
interest rate on refinanced revolving credit note 96 (62)(E)
----- -------
Total adjustments to statement of operations ($7,356)
=======
</TABLE>
(3) INCOME TAXES
As a result of historical operating losses, no provision for income taxes
is reflected on a pro forma basis.
11
<PAGE> 14
FAMILY BARGAIN CORPORATION AND SUBSIDIARIES
AND
FACTORY 2-U, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 28, 1995
Set forth below are the respective historical statements of operations of
Family Bargain Corporation and Subsidiaries ("FBC") for the twelve months ended
January 28, 1995, Factory 2-U, Inc.("Factory 2-U"), formerly known as Capin
Mercantile Corporation, for the year ended December 31, 1994 and the combined
pro forma statement of operations as though the combination had occurred on
January 30, 1994 for FBC and January 1, 1994 for Factory 2-U.
The presentation reflects the purchase of all of the common stock of
Factory 2-U and the assumption of the net liabilities of Factory 2-U by FBC.
The pro forma combined statement of operations should be read in conjunction
with the historical financial statements of FBC, the historical financial
statements of Capin Mercantile Corporation included in the original filing of
the Current Report on Form 8-K dated November 28, 1995, the historical
financial statements of Capin Mercantile Corporation included with this
amendment and the pro forma balance sheet included with this amendment.
The pro forma financial information set forth below is not necessarily
indicative of future results of operations or results of operations had the
acquisition been completed as of January 30, 1994 or as of January 1, 1994.
12
<PAGE> 15
FAMILY BARGAIN CORPORATION
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 28, 1995
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
FAMILY BARGAIN
CORPORATION PRO FORMA PRO FORMA
AND SUBSIDIARIES FACTORY 2-U, INC. ADJUSTMENTS COMBINED
---------------- ----------------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales $146,520 93,876 (25,813)(A) 214,583
Cost of sales 97,085 69,055 (19,028)(B) 147,112
-------- ------- -------- --------
Gross profit 49,435 24,821 (6,785) 67,471
-------- ------- -------- --------
Selling and administrative expenses 45,510 31,474 (13,532)(C) 63,452
Amortization of goodwill 1,188 - 287 (D) 1,475
Management fees to affiliate 129 - - 129
-------- ------- -------- --------
Operating income 2,608 (6,653) 6,460 2,415
Interest expense and financing fees (2,813) (661) 17 (E) (3,457)
Other income - 668 (407)(F) 261
-------- ------- -------- --------
Loss from continuing operations before
income taxes and discontinued operations
and extraordinary gain (205) (6,646) 6,070 (781)
Income taxes (149) - - (149)
-------- ------- -------- --------
Loss before discontinued operations (354) (6,646) 6,070 (930)
Loss on disposal of discontinued operations,
net of income tax benefit (2,241) - - (2,241)
-------- ------- -------- --------
Loss before extraordinary gain (2,595) (6,646) 6,070 (3,171)
Extraordinary gain, net of income taxes 5,251 - - 5,251
-------- ------- -------- --------
Net income 2,656 (6,646) 6,070 2,080
Preferred stock dividends (2,030) - - (2,030)
-------- ------- -------- --------
Net income available to common stock $ 626 (6,646) 6,070 50
======== ======= ======== ========
Income (loss) applicable to common stock
per common share and common stock
equivalents:
Loss from continuing operations $ (0.59) $ (0.74)
Loss before extraordinary gain (1.15) (1.30)
Net income per common share 0.16 0.01
Weighted average shares outstanding: 4,008,311 4,008,311
</TABLE>
13
<PAGE> 16
FAMILY BARGAIN CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 28, 1995
(1) PERIODS PRESENTED
The unaudited pro forma condensed statement of operations includes the
results of Family Bargain Corporation for the fiscal year ended
January 28, 1995 and the results of Factory 2-U, Inc. the year ended
December 31, 1994.
(2) ADJUSTMENTS TO STATEMENT OF OPERATIONS (IN THOUSANDS):
<TABLE>
<CAPTION>
DEBIT (CREDIT)
<S> <C> <C>
Sales (to eliminate closed stores) $25,813 (A)
Cost of sales (to eliminate closed stores) (19,028) (B)
General and administrative expenses
(to eliminate expenses related to closed stores
and to eliminate duplicative corporate expenses) (13,532) (C)
Amortization of goodwill (over 25 year period) 287 (D)
Interest expense and financing fees:
To eliminate interest expense on forgiven debt ($210)
To record interest on new debt to former shareholders 123
To record interest differential arising from increased
interest rate on refinanced revolving credit note 70 (17) (E)
-----
Other income (to eliminate gain on sale of assets) 407 (F)
-------
Total adjustments to statement of operations ($6,070)
=======
</TABLE>
(3) INCOME TAXES
As a result of historical operating losses, no provision for income taxes
is reflected on a pro forma basis.
14
