Registration No. 333-
As filed with the Securities and Exchange Commission on October 19, 1999
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
Registration Statement
Under
The Securities Act of 1933
FACTORY 2-U STORES, INC.
(Exact name of registrant as specified in its charter)
Delaware 51-0299573
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
4000 Ruffin Road, San Diego, California 92123
(Address of Principal Executive Offices) (Zip Code)
Employee Compensation Agreements
(Full title of the plan)
Michael M. Searles
Factory 2-U Stores, Inc.
4000 Ruffin Road, San Diego, California 92123
(858) 627-1800
(Name, address and telephone number of agent for service)
Copy to:
Theodore H. Latty, Esq.
Hughes Hubbard & Reed LLP
350 South Grand Avenue
Los Angeles, California 90071-3442
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of Amount Proposed Maximum Proposed Amount of
Securities to be to be Offering Price Maximum Aggregate Registration
Registered Registered* Per Share** Offering Price** Fee
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<S> <C> <C> <C> <C>
Common Stock,
par value 658,995 shares $24.84 $16,369,436 $4,550.70
$.01 per share
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</TABLE>
* This Registration Statement also relates to such indeterminate number of
additional shares as may be issuable pursuant to stock splits, stock dividends,
or similar transactions.
** The proposed maximum offering price per share of Common Stock and the
proposed maximum aggregate offering price are calculated solely for the purpose
of determining the registration fee pursuant to Rule 457(h) under the Securities
Act of 1933, and are based on a price of $24.84 per share, which is the average
of the high and low sale prices of the Common Stock on October 18, 1999, as
quoted on the Nasdaq National Market.
<PAGE>
PART 1
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Pursuant to the requirements of the Note to Part I of Form S-8 and
Rule 428(b)(1) of the Rules under the Securities Act of 1933, as amended, the
information required by Part I of Form S-8 has been distributed, pursuant to
individual employee compensation agreements (the "Employee Compensation
Agreements"), to each of the employees of Factory 2-U Stores, Inc. who is
identified as a Selling Stockholder in this Registration Statement. The
information contained in the Employee Compensation Agreements, together with the
documents incorporated by reference as described in Item 3 of Part II of this
Registration Statement, constitute a Section 10(a) Prospectus.
PROSPECTUS FOR RESALES
The material which follows, up to but not including the page
beginning Part II of this Registration Statement, constitutes a prospectus,
prepared on Form S-3, in accordance with General Instruction C to Form S-8, to
be used in connection with resales of securities acquired under the Employee
Compensation Agreements.
<PAGE>
PROSPECTUS
FACTORY 2-U STORES, INC.
658,995 SHARES OF COMMON STOCK
(Par Value $.01 per Share)
This Prospectus relates to the reoffer and resale of an aggregate of
658,995 shares of our Common Stock, par value $.01 per share, which we have
issued to the Selling Stockholders named in this Prospectus under employee
compensation agreements. The shares have not been registered prior to the filing
of the Registration Statement of which this Prospectus is a part. The shares may
be offered for sale, from time to time, by the Selling Stockholders on the
Nasdaq National Market, where our Common Stock is currently traded, on any
securities exchanges or other quotation systems on which our Common Stock may
then be traded, in the over-the-counter market or in negotiated transactions,
all at prices and on terms then obtainable.
We will not receive any of the proceeds of sales made hereunder. We
are paying all expenses of registration incurred in connection with the
preparation and filing of the Registration Statement, but the Selling
Stockholders will pay all selling and other expenses incurred by them.
Our Common Stock is quoted on the Nasdaq National Market under the
symbol "FTUS." On October 18, 1999, the closing price of our Common Stock as
quoted on the Nasdaq National Market was $23-5/8 per share.
Our principal executive offices are located at 4000 Ruffin Road, San
Diego, California 92123. Our telephone number is (858) 627-1800.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is October 19, 1999.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
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<S> <C>
The Company...................................................................2
Risk Factors..................................................................3
Forward-Looking Statements....................................................4
Selling Stockholders..........................................................4
Plan of Distribution..........................................................5
Where You Can Find More Information...........................................6
Experts.......................................................................7
Sec Position Regarding Indemnification........................................7
</TABLE>
THE COMPANY
We operate a chain of 177 off-price retail apparel and housewares
stores under the names Family Bargain Center and Factory 2-U in Arizona,
California, Nevada, New Mexico, Oregon, Texas and Washington.
Prior to July 31, 1998, we operated through our wholly-owned
subsidiaries, General Textiles and Factory 2-U, Inc. We acquired General
Textiles (which was our principal operating subsidiary) in 1993, while it was
operating under Chapter 11 of the Bankruptcy Code. At that time, General
Textiles was operating only the Family Bargain Center chain. Between December
31, 1992 and March 1, 1998, the Family Bargain Center chain expanded from 108
stores in four states to 124 stores in six states. In November 1995, we acquired
Factory 2-U, Inc. and began to coordinate the purchasing, warehousing and
delivery operations for the Family Bargain Center and Factory 2-U chains.
Between November 1995 and March 1998, the Factory 2-U chain increased from 33
stores in three states to 38 stores in three states. Subsequently, several
Family Bargain Center stores were converted into Factory 2-U stores.
In July 1998, we merged General Textiles and Factory 2-U, Inc. into
a new corporation, General Textiles, Inc. In November 1998, we merged General
Textiles, Inc. into ourselves, converted our previous three classes of stock
into a single class of Common Stock, and changed our name from Family Bargain
Corporation to Factory 2-U Stores, Inc.
Our 177 stores average 13,300 square feet and are located mostly in
strip centers. Our products include a broad range of family apparel, domestic
goods and housewares. Our typical customers are families with below average
income, who generally are profiled as discount store shoppers. Our merchandising
strategy is to offer first quality recognizable national and discount store
brands at a substantial discount, generally 20% to 50% below that offered by the
national discount chains. Our stores are well-lit and present the merchandise
primarily on hanging fixtures. We also use strategically placed in-store signage
to emphasize the savings and create increased customer awareness.
<PAGE>
RISK FACTORS
THERE ARE A NUMBER OF FACTORS ABOUT THE COMPANY OF WHICH A PERSON
WHO IS CONSIDERING PURCHASING SHARES SHOULD BE PARTICULARLY AWARE. THEY INCLUDE
THE FOLLOWING:
SIGNIFICANT NET LOSSES:
We have incurred net losses most years since we were formed in 1993,
and General Textiles, formerly our principal operating subsidiary, incurred
significant losses, from its inception in 1987. Those losses led General
Textiles to commence a proceeding under Chapter 11 of the Bankruptcy Code in
1992. Although we had net income of $1.5 million for the 26 week period ended
July 31, 1999, we had net losses of $6.2 million and $5.3 million, after payment
of preferred stock dividends, in fiscal 1997 and 1998, respectively. There is no
assurance that we will have profits in any future periods.
COMPETITION:
Our stores compete with large discount retail chains (such as
Wal-Mart, K- Mart, Mervyn's and Target) and regional off-price chains (such as
MacFrugal's), many of which are better known and have substantially greater
resources than our two chains. While our off-price marketing strategy differs
from the strategy of many of our competitors, many of our competitors could, if
they wanted to do so, compete directly with us in offering merchandise targeted
at the typical Family Bargain Center and Factory 2-U customers.
SEASONALITY:
Our business is seasonal in nature, with its highest levels of sales
in the "Back-to-School" (August and September) and Christmas (November and
December) seasons. As a result, our working capital requirements fluctuate
during the year and are highest between mid-summer and the beginning of the
Christmas season. The seasonality of our business makes it particularly
difficult to predict our full year results on the basis of interim results
during our first and second fiscal quarters.
POTENTIAL ANTI-TAKEOVER EFFECTS OF RIGHTS PLAN AND CLASSIFIED BOARD OF
DIRECTORS; POSSIBLE ISSUANCES OF PREFERRED STOCK:
We have a Shareholder Rights Plan which could substantially dilute
the holdings of anyone who acquires 15% or more of our Common Stock without
approval of our Board of Directors. This may deter or substantially delay
mergers, tender offers or other possible takeover attempts, even if they are
favored by a majority of our stockholders. Also, our Board of Directors is
"classified," with only one-third of the directors coming up for election each
year. The existence of a classified board may deter or delay mergers, tender
offers or other possible takeover attempts favored by holders of a majority of
our Common Stock. Finally, Three Cities Investors owns a majority in voting
power of our Common Stock, and therefore it would be difficult or impossible for
anyone to acquire the Company if the Three Cities Investors (or most of them)
<PAGE>
did not favor the acquisition. Anything which makes an acquisition of us more
difficult could reduce the price investors would be willing to pay for our
Common Stock.
FORWARD-LOOKING STATEMENTS
Certain statements in this Prospectus, or in documents incorporated
by reference into this Prospectus, are forward-looking statements. Those
forward-looking statements are subject to uncertainties that may cause the
actual results to differ from the results anticipated by the forward-looking
statements. Factors which may cause actual results to differ from those
anticipated by forward-looking statements include, among others, general
economic and business conditions (both nationally and in the regions in which we
operate); government regulations (including regulations regarding temporary
immigration of agricultural workers and minimum wages of agricultural and other
workers); claims asserted against us; competition; changes in our business
strategy or development plans; difficulties attracting and retaining qualified
personnel; and the other factors described under the caption "Risk Factors," or
in the "Management's Discussion and Analysis of Financial Condition and Results
of Operations" sections of our Annual Report on Form 10-K and our Quarterly
Reports on Form 10-Q.
SELLING STOCKHOLDERS
The Selling Stockholders are certain former nonemployee directors
and certain current and former employees of the Company who acquired shares of
Common Stock under individual Employee Compensation Agreements before we filed
the Registration Statement of which this Prospectus is a part.
The following table sets forth the name of each Selling Stockholder,
the number of shares of Common Stock beneficially owned by such Selling
Stockholder as of October 14, 1999, the number of shares covered by this
Prospectus, and the number of shares which will be beneficially owned after the
sale of the shares covered by this Prospectus.
<PAGE>
<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY
NAME OF SELLING BENEFICIALLY SHARES COVERED BY OWNED AFTER
STOCKHOLDER<F1> OWNED THIS PROSPECTUS THIS OFFERING
- ------------------------- ---------------- ------------------- -----------------
<S> <C> <C> <C>
Mowbray, William W. 220,828 86,665 134,163
Somerville, James P 155,222 86,665 68,557
Searles, Michael 300,742 242,662 58,080
Spatz, Jonathan W. 102,883 76,265 26,618
McNabb, B. Mary 90,112 34,666 55,446
Baker, James M. 26,752 25,999 753
Rosenberg, Andrew S. 28,934 17,333 11,601
Burgos, Rogelio E. 28,631 17,333 11,298
Parks, Tracy W. 21,661 16,639 5,022
Lewis, Donna Lee 4,333 4,333 0
Rinderle, Dwight K. 15,131 4,333 10,798
Thornsberry, Dennis M. 11,754 3,466 8,288
Cass, William F. 29,258 8,667 20,591
Loudermilk, Edie 13,487 5,199 8,288
Lettington, Randie D. 14,447 5,199 9,248
Collazo, Judy 18,015 8,666 9,349
Nelson, Claudine F. 2,604 2,599 5
Plotkin, Norman G. 27,319 12,306 15,013
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<FN>
<F1>
Mr. Searles has been a director and an officer of the Company (or a subsidiary
thereof) since 1998; Ms. McNabb is Executive Vice President, Merchandising and
General Merchandise Manager and has been an officer of the Company since 1990;
Mr. Cass is Executive Vice President, Store Operations and has been an officer
of the Company since 1996; Mr. Parks is Executive Vice President, Information
Systems and Chief Information Officer and has been an officer of the Company
since 1998; Mr. Plotkin is Executive Vice President, Store Development and
General Counsel and has been an officer of the Company since 1998; Messrs.
Burgos, Rosenberg, Rinderle and Thornsberry and Mesdames Loudermilk, Lettington
and Collazo are employees of the Company. Mr. Somerville was a director of the
Company from 1997 to June 1999; Mr. Spatz was Executive Vice President and Chief
Operating Officer and was an officer of the Company from 1997 to July 1999 and
Messrs. Baker and Mowbray and Mesdames Lewis and Nelson were employees of the
Company.
</FN>
</TABLE>
PLAN OF DISTRIBUTION
The Selling Stockholders are offering their shares of Common Stock
as principals for their own account. We will not receive any proceeds from the
sale of any shares of Common Stock sold by the Selling Stockholders as part of
this offering. The Selling Stockholders may sell the shares from time to time in
one or more transactions on the Nasdaq National Market, where our Common Stock
is currently traded, on any securities exchanges or other quotation systems on
which our Common Stock may then be traded, in the over-the-counter market or in
negotiated transactions, all at prices and on terms then available. Some or all
of the shares may be sold through brokers acting on behalf of the Selling
Stockholders or to dealers for resale by such dealers, and in connections with
such sales, such brokers or dealers may receive compensation in the form of
discounts, fees or commissions from the Selling Stockholders and the purchasers
of such shares for whom they may act as broker or agent (which discounts, fees
or commissions are not anticipated to exceed those customary in the types of
transactions involved).
<PAGE>
The Selling Stockholders and any broker or dealer participating in
the distribution of shares in connection with this offering may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, in which event
any discounts or commissions received by such brokers or dealers may be deemed
to be underwriting discounts and commissions under the Securities Act.
Shares of Common Stock covered by this Prospectus which qualify for
sale pursuant to Rule 144 under the Securities Act may also be sold under Rule
144.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, as well as proxy
statements and other information, with the Securities and Exchange Commission.
You may read and copy any document we file with the SEC at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain
further information about the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. Our SEC filings are also available to the public over
the Internet at the SEC's web site (http://www.sec.gov). Our Common Stock is
listed on the Nasdaq National Market and you may inspect the Company's SEC
filings at the offices of the National Association of Securities Dealers, Inc.,
1735 K Street, N.W., Washington, D.C. 20006.
This Prospectus is part of a Registration Statement on Form S-8
filed by the Company with the SEC under the Securities Act. As permitted by SEC
rules, this Prospectus does not contain all of the information included in the
Registration Statement and the accompanying exhibits filed with the SEC. You may
refer to the Registration Statement and its exhibits for more information.
The SEC allows us to "incorporate by reference" into this Prospectus
the information we file with the SEC. This means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this Prospectus. If we
subsequently file updating or superseding information in a document that is
incorporated by reference into this Prospectus, the subsequent information will
also become part of this Prospectus and will supersede the earlier information.
We are incorporating by reference the following documents that we
have filed with the SEC:
o Our Annual Report on Form 10-K for the year ended January 30, 1999;
o Our Quarterly Reports on Form 10-Q (including any amendments) for
the quarters ended May 1, 1999 and July 31, 1999; and
o The description of our Common Stock contained in our registration
statement filed with the SEC under the Securities Exchange Act of
1934 and subsequent amendments and reports filed to update such
description.
<PAGE>
We are also incorporating by reference into this Prospectus all of
its future filings with the SEC under Sections 13(a), 13(c), 14, or 15(d) of
Securities Exchange Act of 1934 until this offering has been completed.
You may obtain a copy of any of our filings which are incorporated
by reference, at no cost, by writing to or telephoning us at the following
address:
Factory 2-U Stores, Inc.
4000 Ruffin Road
San Diego, California 92123
Attention: Chief Financial Officer
Telephone: (858) 627-1800
You should rely only on the information provided in this Prospectus
or incorporated by reference. We have not authorized anyone to provide you with
different information. You should not assume that the information in this
Prospectus is accurate as of any date other than the date on the first page of
the Prospectus. We are not making this offer of securities in any state or
country in which the offer or sale is not permitted
EXPERTS
The financial statements incorporated by reference in this Form S-8
have been audited by Arthur Andersen LLP, independent public accountants, for
the fiscal years ended January 31, 1998 and January 30, 1999, as indicated in
their reports with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said reports.
The consolidated statements of operations, stockholders' equity, and
cash flows of Family Bargain Corporation and subsidiaries for the year ended
February 1, 1997, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, incorporated by reference herein and upon the
authority of said firm as experts in accounting and auditing.
SEC POSITION REGARDING INDEMNIFICATION
Our certificate of incorporation provides for indemnification of
officers and directors, among other things, in instances in which they acted in
good faith and in a manner they reasonably believed to be in, or not opposed to,
our best interests and in which, with respect to criminal proceedings, they had
no reasonable cause to believe their conduct was unlawful. We have been informed
that, in the opinion of the SEC, insofar as directors, officers or other persons
who control us may become entitled under the provisions of our certificate of
incorporation to indemnification for liabilities arising under the Securities
Act, that indemnification is against public policy as expressed in that Act and
is therefore unenforceable.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by Factory 2-U Stores, Inc. (the
"Company") under the Securities Exchange Act of 1934 (the "Exchange Act") are
incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended January 30, 1999;
(b) The Company's Quarterly Reports on Form 10-Q (including any
amendments) for the quarters ended May 1, 1999 and July 31, 1999;
(c) All other reports filed by the Company pursuant to Section 13(a)
or 15(d) of the Exchange Act since January 30, 1999; and
(d) The description of the Company's Common Stock contained in the
Company's Registration Statement filed with the SEC under the Exchange Act
and subsequent amendments and reports filed to update such description.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date of this Registration
Statement and prior to the filing of a post-effective amendment which indicates
that all securities offered hereby have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of the filing of such documents.
Any statement contained in a document incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Registration Statement to the extent that a statement contained in a
subsequently filed document which is also incorporated by reference herein
modifies or supersedes such statement.
Item 4. DESCRIPTION OF SECURITIES
Not applicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's certificate of incorporation provides for
indemnification of directors and officers, among other things, in instances in
<PAGE>
which they acted in good faith and in a manner they reasonably believe to be in,
or not opposed to, the best interests of the Company, and in which, with respect
to criminal proceedings, they had no reason to believe that conduct was
unlawful.
Directors and officers may also be entitled to additional
indemnification under Section 145 of the General Corporation Law of Delaware.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
This Registration Statement covers the reoffer and resale of 658,995
shares of Common Stock issued by the Company under individual employee
compensation agreements, which shares were issued in transactions which are
exempt from registration under the Securities Act pursuant to Section 4(2)
thereof.
Item 8. EXHIBITS
<TABLE>
<CAPTION>
NUMBER DESCRIPTION METHOD OF FILING
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<S> <C> <C>
5.1 Opinion of Hughes Hubbard & Reed LLP Filed herewith
23.1 Consent of Arthur Andersen LLP Filed herewith
23.2 Consent of KPMG LLP Filed herewith
23.3 Consent of Hughes Hubbard & Reed LLP Contained in Exhibit 5.1
24.1 Powers of Attorney On signature pages
</TABLE>
Item 9. UNDERTAKINGS
(a) The Company hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represents a fundamental
change in the information set forth in the Registration
Statement;
<PAGE>
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the Company
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The Company hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the
Company's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions,
or otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
<PAGE>
SIGNATURES
THE REGISTRANT. Pursuant to the requirements of the Securities Act
of 1933, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Diego, State of California, on this 14th day
of October 1999.
FACTORY 2-U STORES, INC.
By: /S/ MICHAEL M. SEARLES
--------------------------------------
Michael M. Searles
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Michael Searles, Douglas C. Felderman and
Wm. Robert Wright II, and each of them, as his or her true and lawful
attorney-in-fact and agent, with full power of substitution, to sign for him or
her and in his or her name, in any and all capacities, all amendments (including
post-effective amendments) to the Registration Statement to which this power of
attorney is attached.
----------
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ Michael M. Searles
________________________________ Principal Executive October 14, 1999
Michael M. Searles Officer and Director
/s/ Douglas C. Felderman
________________________________ Principal Financial and October 14, 1999
Douglas C. Felderman Accounting Officer
/s/ Peter V. Handal
________________________________ Director October 14, 1999
Peter V. Handal
/s/ Ira Neimark
________________________________ Director October 14, 1999
Ira Neimark
/s/ Ronald Rashkow
________________________________ Director October 14, 1999
Ronald Rashkow
/s/ H. Whitney Wagner
________________________________ Director October 14, 1999
H. Whitney Wagner
/s/ Wm. Robert Wright II
________________________________ Director October 14, 1999
Wm. Robert Wright II
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER DESCRIPTION METHOD OF FILING PAGE
- ------ ----------- ---------------- ----
<S> <C> <C> <C>
5.1 Opinion of Hughes Hubbard & Reed Filed herewith
LLP
23.1 Consent of Arthur Andersen LLP Filed herewith
23.2 Consent of KPMG LLP Filed herewith
23.3 Consent of Hughes Hubbard & Reed Contained in Exhibit
LLP 5.1
24.1 Powers of Attorney Filed herewith
</TABLE>
Exhibit 5.1
October 18, 1999
Factory 2-U Stores, Inc.
4000 Ruffin Road
San Diego, California 92123
Re: REGISTRATION STATEMENT ON FORM S-8
Gentlemen:
We have represented Factory 2-U Stores, Inc., a Delaware corporation (the
"Company"), as special securities counsel in connection with the registration
under the Securities Act of 1933, as amended (the "Securities Act"), of 658,995
shares of the Company's common stock, $.01 par value (the "Shares"), issuable in
connection with certain employee compensation agreements (the "Compensation
Agreements"). The Shares are being registered by the Company on a Registration
Statement on Form S-8 to be filed with the Securities and Exchange Commission
(the "Commission") on or about the date hereof (the "Registration Statement").
As such special securities counsel, and for the purpose of rendering this
opinion, we have reviewed such corporate records and other documents as we have
deemed necessary, including, but not limited to, the following:
(a) Articles of Incorporation, as currently in effect, of the Company;
(b) Bylaws, as currently in effect, of the Company;
(c) The Compensation Agreements;
(d) Certain resolutions adopted by the Board of Directors of the Company
and related documents adopting and approving the Compensation Agreements; and
(e) The Registration Statement, in the form proposed to be filed with the
Commission under the Act, together with exhibits to be filed in connection
therewith and the form of Prospectus related thereto.
In addition, we have consulted with officers and other representatives of
the Company and have obtained such representations with respect to such matters
of fact as we have deemed necessary or advisable; however, we have not
necessarily independently verified the content of factual statements made to us
in connection therewith or the veracity of such representations. We have assumed
without independent verification or investigation (i) the genuineness of all
signatures, (ii) the authenticity of all documents submitted to us as originals
<PAGE>
Factory 2-U Stores, Inc.
October 18, 1999
Page 2
and (iii) the conformity to authentic original documents of all documents
submitted to us as certified, conformed or photostatic copies.
On the basis of the foregoing, such examinations of law and such other
information as we have deemed relevant under the circumstances, we are of the
opinion as of the date hereof that the Shares, when issued and sold pursuant to
the Compensation Agreements, will be validly issued, fully paid and
nonassessable shares of common stock of the Company.
The law covered by the opinion set forth above is limited to the laws of
the State of Delaware.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the Shares. In giving this consent, we do not
admit that we are in the category of persons whose consent is required under
Section 7 of the Securities Act or the rules or regulations of the Commission
promulgated thereunder.
Very truly yours,
HUGHES HUBBARD & REED LLP
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our reports dated
March 18, 1998 and March 19, 1999 incorporated by reference in Factory 2-U
Stores, Inc.'s Form 10-K for the years ended January 31, 1998 and January 30,
1999, and to all references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
San Diego, California
October 14, 1999
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Factory 2-U Stores, Inc. (formerly Family Bargain Corporation):
We consent to incorporation by reference in the registration statement (No.
333-_________) on Form S-8 of Factory 2-U Stores, Inc. of our report dated April
11, 1997, relating to the consolidated statements of operations, stockholders'
equity, and cash flows of Family Bargain Corporation and subsidiaries for the
year ended February 1, 1997, which report appears in the January 30, 1999,
annual report on Form 10-K of Factory 2-U Stores, Inc. We also consent to the
reference to our firm under the heading "Experts" in the prospectus.
KPMG LLP
San Diego, California
October 18, 1999
