FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended October 28, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-631
ROSE'S STORES, INC.
Incorporated Under the Laws of Delaware
I.R.S. Employer Identification No. 56-0382475
P. H. Rose Building
218 South Garnett Street
Henderson, North Carolina 27536
Telephone No. 919/430-2600
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 practical date.
As of November 16, 1995, of the 10,000,000 shares of common stock
delivered to First Union National Bank of North Carolina as Escrow Agent
pursuant to the Modified and Restated First Amended Joint Plan of
Reorganization, the Company has 7,952,180 shares of common stock outstanding.
The remaining 1,216,641 shares held in escrow will be distributed by FUNB in
satisfaction of disputed Class 3 claims as and when such claims are resolved.
If all pending claims are resolved adversely to the Company, approximately
8,989,718 shares of common stock will be outstanding. If all pending claims
are resolved in accordance with the Company's records, approximately 8,672,739
shares of common stock will be outstanding. The foregoing estimates do not
include any additional shares that may be issued with respect to late-filed
claims which the Bankruptcy Court may allow which have not been filed as of
the date hereof or the effect of negotiated settlements made for amounts in
excess of amounts shown in the Company's records. To the extent that escrowed
shares of common stock are not used to satisfy claims, they will revert to the
Company and will be retired or held in the treasury of the Company.
<PAGE>
ROSE'S STORES, INC.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
(Amounts in thousands except per share amounts)
The following summary of financial information of Rose's Stores, Inc. (the
"Company"), which is unaudited, reflects all adjustments which are, in the
opinion of management, necessary to reflect a fair statement of the
information presented. Beginning in May 1995, the statements of operations
and balance sheets reflect the application of Fresh Start accounting as
described in the Company's quarterly report on Form 10-Q, for the quarter
ended April 29, 1995, and are therefore not comparable to the prior year.
ROSE'S STORES, INC.
STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Successor | Predecessor
Thirteen | Thirteen
Weeks Ended | Weeks Ended
October 28, 1995 | October 29, 1994
<S> <C> | <C>
Revenue: |
Gross sales $ 162,937 | 178,531
Leased department sales 4,995 | 6,088
Net sales 157,942 | 172,443
Leased department income 1,140 | 1,248
Total revenue 159,082 | 173,691
Costs and Expenses: |
Cost of sales 119,900 | 129,178
Selling, general and administrative 38,858 | 39,313
Depreciation and amortization (857) | 2,246
Interest 1,956 | 1,520
Total costs and expenses 159,857 | 172,257
|
Earnings (Loss) Before Reorganization Benefit (Expense) (775) | 1,434
Reorganization Benefit (Expense) - | (3,936)
|
Net Earnings (Loss) $ (775) | (2,502)
Earnings (Loss) Per Share $ (0.09) | (0.13)
Weighted Average Shares 8,990 | 18,758
</TABLE>
See notes to financial statements
PAGE
<PAGE>
ROSE'S STORES, INC.
STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Successor | Predecessor
Twenty-Six | Thirteen Thirty-Nine
Weeks Ended | Weeks Ended Weeks Ended
October 28, 1995 | April 29, 1995 October 29, 1994
<S> <C> | <C> <C>
Revenue: |
Gross sales $ 331,425 | 159,407 528,345
Leased department sales 10,759 | 5,117 17,970
Net sales 320,666 | 154,290 510,375
Leased department income 2,318 | 1,114 3,698
Total revenue 322,984 | 155,404 514,073
Costs and Expenses: |
Cost of sales 242,371 | 116,838 383,409
Selling, general and administrative 79,454 | 35,486 118,900
Depreciation and amortization (1,648) | 1,812 7,108
Interest 3,674 | 726 4,925
Total costs and expenses 323,851 | 154,862 514,342
|
Earnings (Loss) Before Reorganization |
Benefit (Expense) (867) | 542 (269)
Reorganization Benefit (Expense) - | (3,847) (54,746)
Fresh Start Revaluation - | (17,432) -
Loss Before Extraordinary Item (867) | (20,737) (55,015)
Extraordinary Item - Gain on Debt Discharge - | 90,924 -
Net Earnings (Loss) $ (867) | 70,187 (55,015)
Net Earnings (Loss) Per Share Before |
Extraordinary Item $ (0.10) | (1.11) (2.93)
Earnings (Loss) Per Share $ (0.10) | 3.74 (2.93)
Weighted Average Shares 8,990 | 18,758 18,758
</TABLE>
See notes to financial statements
PAGE
<PAGE>
ROSE'S STORES, INC.
BALANCE SHEETS
(Amounts in thousands)
<TABLE>
<CAPTION>
Successor | Predecessor Predecessor
October 28, | January 28, October 29,
1995 | 1995 1994
(Unaudited) | (Audited) (Unaudited)
<S> <C> | <C> <C>
Assets |
Current Assets |
Cash and cash equivalents $ 609 | 1,350 620
Accounts receivable 18,867 | 12,140 23,109
Inventories 200,206 | 119,567 164,841
Other current assets 3,815 | 12,163 13,845
Total current assets 223,497 | 145,220 202,415
Property and Equipment, at cost |
Less accumulated depreciation and amortization 3,647 | 34,707 36,297
Other Assets - | 3,259 6,719
$ 227,144 | 183,186 245,431
Liabilities and Stockholders' Equity (Deficit) |
Current Liabilities |
DIP financing $ - | 600 34,975
Accounts payable 35,441 | 23,392 33,505
Short-term debt 81,657 | - -
Reserve for store closings and remerchandising 2,411 | 8,530 5,720
Deferred tax liabilities - | 3,164 6,447
Accrued salaries and wages 4,915 | 7,821 6,892
Other current liabilities 22,465 | 9,704 14,446
Total current liabilities 146,889 | 53,211 101,985
|
Liabilities Subject to Settlement Under |
Reorganization Proceedings - | 156,474 173,248
Excess of Net Assets Over Reorganization Value, |
Net of Amortization 39,073 | - -
Deferred Income 1,143 | 1,993 2,229
Other Liabilities 5,906 | 6,694 6,888
Stockholders' Equity (Deficit) |
Common Stock, Authorized 10,000 shares 35,000 | - -
Voting common stock (Cancelled 4/28/95) - | 2,250 2,250
Non-voting Class B stock (Cancelled 4/28/95) - | 18,795 18,795
Paid-in Capital-Stock Warrants (Cancelled 4/28/95) - | 2,700 2,700
Retained earnings (Accumulated deficit) (867) | (40,313) (44,046)
34,133 | (16,568) (20,301)
Treasury stock, at cost (Cancelled 4/28/95) - | (18,618) (18,618)
Total stockholders' equity (deficit) 34,133 | (35,186) (38,919)
$ 227,144 | 183,186 245,431
</TABLE>
See notes to financial statements
PAGE
<PAGE>
ROSE'S STORES, INC.
STATEMENT OF CASH FLOWS (Unaudited)
(Amounts in thousands)
<TABLE>
<CAPTION>
Successor | Predecessor
Twenty-Six | Thirteen Thirty-Nine
Weeks Ended | Weeks Ended Weeks Ended
October 28, 1995 | April 29, 1995 October 29, 1994
<S> <C> | <C> <C>
Cash flows from operating activities: |
Net earnings (loss) $ (867)| 70,187 (55,015)
Adjustments to reconcile net loss to net cash |
provided by (used in) operating activities: |
Depreciation and amortization (1,648)| 1,812 7,108
(Gain) loss on disposal of property |
and equipment (2)| (1) (278)
LIFO expense (credit) - | (364) (2,079)
Provision for closed stores - | - 43,000
Fresh start revaluation and debt discharge - | (73,492) -
Cash provided by (used in) assets and liabilities: |
(Increase) decrease in accounts receivable (10,834)| (630) (8,052)
(Increase) decrease in inventories (15,077)| (40,291) 40,388
(Increase) decrease in other current |
and non-current assets 4,401 | (3,620) 4,596
Increase (decrease) in accounts payable (2,201)| 14,361 (6,257)
Increase (decrease) in accrued expenses |
and other liabilities (743)| (2,142) (6,709)
Net cash increase (decrease) in provisions for |
closed stores (2,524)| (1,108) (12,417)
Increase (decrease) in deferred income (338)| (201) (67)
Increase (decrease) in other liabilities 92 | 7 382
Net cash provided by (used in) operating |
activities (29,741)| (35,482) 4,600
|
Cash flows from investing activities: |
Purchases of property and equipment (3,327)| (510) (1,275)
Proceeds from disposal of property |
and equipment 2 | 5 733
Net cash provided by (used in) investing |
activities (3,325)| (505) (542)
|
Cash flows from financing activities: |
Net activity on lines of credit 23,003 | 58,654 (49,179)
Proceeds (payments) of DIP Facility - | (600) 34,975
Payments on pre-petition secured debt - | (26,423) -
Payments of unsecured claims (1,768)| (1,593) -
Principal payments on capital lease |
obligations (255)| (281) (1,634)
Increase (decrease) in bank drafts outstanding (601)| 5,502 445
Other 12,674 | - -
Net cash provided by (used in) financing |
activities 33,053 | 35,259 (15,393)
|
Net decrease in cash (13)| (728) (11,335)
Cash and cash equivalents at beginning of period 622 | 1,350 11,955
Cash and cash equivalents at end of period $ 609 | 622 620
|
Non cash activities in closed store reserve: |
Provision for closed stores - | - (43,000)
Retirement of net book value of assets 17 | 623 7,018
Write-off of leases - | - (114)
Write-off of inventory - | - 2,549
</TABLE>
See notes to financial statements
<PAGE>
Notes to Financial Statements:
(1) On September 5, 1993, the Company filed a voluntary Petition for Relief
under Chapter 11, Title 11 of the United States Code (the "Bankruptcy
Code") with the United States Bankruptcy Court for the Eastern District
of North Carolina (the "Bankruptcy Court"). The Company's Modified and
Restated First Amended Joint Plan of Reorganization (the "Plan") was
approved by order of the Bankruptcy Court on April 24, 1995. On April 28,
1995, the Company's Modified and Restated First Amended Joint Plan of
Reorganization (the "Plan") became effective. The periods and dates prior
to the Company's emergence from Chapter 11 are referred to as those of the
predecessor company (the "Predecessor") while the period and dates
subsequent to its emergence are referred to as those of the successor
company (the "Successor").
During the twenty-six weeks since emergence, distributions of the common
stock, no par value, of the Company (the "Common Stock") were made to
holders of Allowed Class 3 Unsecured Claims (as defined under the Plan) in
accordance with the provisions of the Plan. As the result of distributions
of the Common Stock pursuant to the Plan, as of November 16, 1995, the
Company has 7,952 shares of Common Stock outstanding of the 10,000 shares
of Common Stock which were delivered to First Union National Bank of North
Carolina ("FUNB") as escrow agent pursuant to the Plan on the Effective
Date. In addition, as of November 16, 1995, and pursuant to the provisions
of the Plan, 831 shares have reverted to the Company from escrow to be
retired or held in the treasury of the Company.
The remaining 1,217 shares held in escrow will be distributed by FUNB in
satisfaction of disputed Class 3 claims as and when such claims are
resolved.
The disputed Class 3 claims which remain unresolved at October 30, 1995
were primarily claims of landlords with respect to leases which were
rejected during the course of the Chapter 11 proceeding and general
liability claims being resolved under an alternative dispute resolution
program established by the Bankruptcy Court. If all pending claims are
resolved adversely to the Company, approximately 1,038 additional shares
of Common Stock will be issued and outstanding, and there will be a total
of approximately 8,990 shares of Common Stock issued and outstanding. If
all pending claims are resolved in accordance with the Company's records
and/or position as to such claims, approximately 721 additional shares of
Common Stock will be issued, and there will be a total of approximately
8,673 shares of Common Stock issued and outstanding. The foregoing esti-
mates do not include any additional shares that may be issued with respect
to late-filed claims which the Bankruptcy Court may allow which have not
been filed as of the date hereof or the effect of negotiated settlements
made for amounts in excess of amounts shown in the Company's records. To
the extent that escrowed shares of Common Stock are not used to satisfy
claims, they will revert to the Company and will be retired or held in the
treasury of the Company.
The Company's New Equity Compensation Plan was adopted on February 14,
1995 and was designed for the benefit of the executives and key employees
of the Company by allowing the grant of a variety of different types of
equity-based compensation to eligible participants. The plan provides for
the
<PAGE>
granting of a maximum of 700 shares of stock. Under the New Equity
Compensation Plan, 388 nonqualified stock options were granted on July 27,
1995. The option price per share is $2.875 for the first half of the
shares and $5.750 for the remainder of the shares. The options vest over a
three year period. One half of the options expire in five years and the
remainder in seven years.
The exercise of outstanding stock options and warrants would result in an
anti-dilutive effect on loss per share and are excluded from the
calculations of earnings (loss) per share.
(2) The 18,758 formerly outstanding shares of the Company used to calculate
Predecessor's earnings (loss) per share were cancelled on April 28, 1995.
The number of shares used in the Successor's earnings (loss) per share
calculations is 8,990, the number of shares that will be issued and
outstanding if all pending claims are resolved adversely to the Company.
If all pending claims are resolved in accordance with the Company's
records, 8,673 shares will be issued and outstanding. Currently, 7,952
shares are outstanding. The foregoing estimates do not include any
additional shares that may be issued with respect to late-filed claims
which the Bankruptcy Court may allow which have not been filed as of the
date hereof or the effect of negotiated settlements made for amounts in
excess of amounts shown in the Company's records. To the extent that
escrowed shares of Common Stock are not used to satisfy claims, they will
revert to the Company and will be retired or held in the treasury of the
Company.
(3) As part of Fresh Start accounting adopted as of April 29, 1995, the Com-
pany recorded an excess of net assets over reorganization value of $32,021
which is being amortized over 10 years. During the third quarter, the
excess of net assets over reorganization value was increased by $8,728 for
a net tax refund offset by increases in the reserve for workers' compensa-
tion claims and the allowance for receivables for the Predecessor Company.
The amortization of deferred credit is included with depreciation and
amortization.
(4) If the Company had emerged from Chapter 11 at the beginning of the year,
the application of Fresh Start accounting would have resulted in year-to-
date (thirty-nine weeks ended October 28, 1995) net earnings on a pro
forma basis of approximately $599.
(5) Accounts receivable is net of allowance for doubtful accounts of $3,642 as
of October 28, 1995 and $25 as of January 28, 1995 and October 29, 1994.
(6) The Company's consolidated financial statements for years prior to January
1995 include the accounts of a wholly-owned subsidiary after elimination
of intercompany accounts and transactions. In January 1995, the wholly-
owned subsidiary was merged with the Company.
(7) The operating results presented herein are not necessarily indicative of
the operating results for a full year due to seasonal factors, among other
reasons.
PAGE
<PAGE>
(8) Certain information concerning benefits (expenses) resulting from the
Company's reorganization are as follows:
<TABLE>
<CAPTION>
Successor | Predecessor
Thirteen | Thirteen
Weeks Ended | Weeks Ended
October 28, 1995| October 29, 1994
|
<S> <C> | <C>
DIP financing fees, amortization and expenses $ - | (844)
Estimated professional fees - | (2,817)
Other reorganization costs and expenses - | (275)
TOTAL REORGANIZATION EXPENSE $ - | (3,936)
</TABLE>
<TABLE>
<CAPTION>
Successor | Predecessor
Twenty-Six | Thirteen Thirty-Nine
Weeks Ended | Weeks Ended Weeks Ended
October 28, 1995| April 29, 1995 October 29, 1994
<S> <C> | <C> <C>
Closed store provision (59 closings) $ - | - (43,000)
DIP financing fees, amortization and expenses - | (1,342) (1,778)
Estimated professional fees - | (2,318) (9,331)
Other reorganization costs and expenses - | (187) (637)
TOTAL REORGANIZATION EXPENSE $ - | (3,847) (54,746)
</TABLE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Dollar amounts in thousands)
General
On May 1, 1995, the Company announced that it had satisfied all conditions
required under its plan of reorganization and had emerged from Chapter 11 of the
United States Bankruptcy Code on April 28, 1995 (the "Effective Date"). In
accordance with SOP 90-7, the Company adopted Fresh Start accounting. Under
Fresh Start accounting, a new reporting entity was created, and the Company was
required to adjust its assets and liabilities to reflect their estimated fair
market value at the Effective Date, which reduced depreciation and amortization
related to property and equipment; and created a deferred credit, excess of net
assets over reorganization value, which is being amortized over 10 years.
At the same time, the Company made certain reclassifications between gross mar-
gin and expenses and changed the method of accruing certain expenses between
periods. In addition, as a result of the Company's emergence, reorganization
expense and income taxes recognized by the Company prior to April 28, 1995, are
not comparable to amounts, if any, recognized subsequent to the Effective Date.
For further information, see Note 1 to the financial statements and the Com-
pany's quarterly report on Form 10-Q for the quarter ended April 29, 1995.
<PAGE>
To facilitate a better comparison of the Company's operating results for the
periods presented, the following discussion of the results of operations is
presented, in part, on a pro forma basis (as described below) for the thirty-
nine weeks ended October 28, 1995. The combined historical statements of
operations for the thirteen weeks ended April 29, 1995 (Predecessor) and twenty-
six weeks ended October 28, 1995 (Successor), are not included in the discussion
due to the lack of comparability caused by the adoption of Fresh Start account-
ing at the end of the first quarter. Certain items in the Successor's pro forma
statements of operations are not affected by Fresh Start adjustments and are
comparable to the historical combined results of the Predecessor and the
Successor.
The pro forma statements of operations combine the results of operations of the
Predecessor and Successor for the thirty-nine weeks ended October 28, 1995 and
give effect to the transactions occurring in conjunction with the Plan as if the
Effective Date had occurred, and such transactions had been consummated, on
January 29, 1995. The statements of operations have been adjusted to reflect:
the reduction in depreciation and amortization expense due to the write-off of
property and equipment, property under capital leases and other intangible
assets; the elimination of the effects of historical reorganization items;
amortization of excess net assets over reorganization value; the effects of
changing to the accrual method for advertising; the reversal of LIFO credits;
and the recording of an appropriate income tax expense.
PAGE
<PAGE>
Pro Forma Results of Operations (Unaudited)
The following table sets forth the results of operations for the thirteen and
thirty-nine weeks ended October 28, 1995, and October 29, 1994:
(Dollar amounts in thousands,
except per share amounts.)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-nine Weeks Ended
October 28, October 29, October 28, October 29,
1995 1994 1995 1994
Successor | Predecessor Successor | Predecessor
Historical | Historical Pro Forma | Historical
<S> <C> | <C> <C> | <C>
Revenue: | |
Gross sales $ 162,937 | 178,531 490,832 (a)| 528,345
Leased department sales 4,995 | 6,088 15,876 (a)| 17,970
Net sales 157,942 | 172,443 474,956 (a)| 510,375
Leased department income 1,140 | 1,248 3,432 (a)| 3,698
Total revenue 159,082 | 173,691 478,388 | 514,073
| |
Costs and Expenses: | |
Cost of sales 119,900 | 129,178 357,979 | 383,409
Selling, general and administrative 38,858 | 39,313 117,458 | 118,900
Depreciation and amortization (857) | 2,246 (2,446) | 7,108
Interest 1,956 | 1,520 4,400 (a)| 4,925
Total costs and expenses 159,857 | 172,257 477,391 | 514,342
| |
Earnings (Loss) Before Reorganization | |
Benefit (Expense) and Income Taxes (775) | 1,434 997 | (269)
Reorganization benefit (expense) - | (3,936) - | (54,746)
| |
Earnings (Loss) Before Income Taxes (775) | (2,502) 997 | (55,015)
Income taxes - | - 398 | -
Net Earnings (Loss) (775) | (2,502) 599 | (55,015)
Earnings (Loss) Per Share (0.09)(b)| (0.13)(b) 0.07(b) | (2.93)(b)
Weighted Average Shares 8,990 (b)| 18,758(b) 8,990(b) | 18,758 (b)
</TABLE>
(a) The Successor's pro forma amounts represent the combination of the
Successor's historical amounts with the Predecessor's historical amounts.
See statements of operations included in the historical financial
statements.
(b) The 18,758 formerly outstanding shares of the Company used to calculate
Predecessor's earnings (loss) per share were cancelled on April 28, 1995.
The number of shares used in the Successor's earnings (loss) per share
calculations is 8,990, the number of shares that will be issued and
outstanding if all pending claims are resolved adversely to the Company.
If all pending claims are resolved in accordance with the Company's
records, 8,673 shares will be issued and outstanding. Currently, 7,952
shares are outstanding. The foregoing estimates do not include any
additional shares that may be issued with respect to late-filed claims
which the Bankruptcy Court may allow which have not been filed as of the
date hereof or the effect of negotiated settlements made for amounts in
excess of amounts shown in the Company's records. To the extent that
escrowed shares of Common Stock are not used to satisfy claims, they will
revert to the Company and will be retired or held in the treasury of the
Company.
<PAGE>
Revenue
The Company reported sales for the third quarter of 1995 of $162,937, a decrease
of $15,594, or 8.7%, from the third quarter of 1994, and year-to-date sales were
$490,832, a decrease of $37,513 or 7.1% from last year. The decreases for the
quarter and year-to-date were due in part to the decrease in the number of
stores (106 for 31 weeks and 105 for eight weeks in 1995 as compared to 113 in
1994). Sales on a comparable store basis decreased 3.0% for the third quarter of
1995 as compared to the third quarter of 1994, and decreased 1.4% year-to-date
as compared to the same period last year.
Costs and Expenses
Cost of sales as a percent of net sales was 75.9% for the third quarter and
74.9% for the comparable period of the prior year. Cost of sales for the year-
to-date as a percent of net sales was 75.4% for 1995 (pro forma) and 75.1% for
the comparable period of the prior year. Cost of sales decreased .4% for the
quarter due to a decrease in markdowns and increased .4% year-to-date due to an
increase in markdowns; and increased 1.2% for the quarter and .4% year-to-date
due to higher inventory shrinkage compared to the comparable periods of the
prior year. Cost of sales in 1994 was reduced .9% for the quarter and .4% year-
to-date by a LIFO credit. There was no LIFO credit in 1995. The increase in
the quarter and year-to-date cost of sales was offset somewhat by the reclassi-
fication of advertising co-op income and cash discounts to cost of sales result-
ing in a decrease of .9% in the quarter and 1.1% in the year-to-date cost of
sales.
Selling, general and administrative expenses (SG&A) as a percent of sales for
the third quarter were 24.6% in 1995 and 22.8% in the comparable period of the
prior year. Year-to-date SG&A expenses as a percentage of sales were 24.7% in
1995 (pro forma) and 23.3% in 1994. The increase as a percentage of sales was
due primarily to the reclassification of advertising co-op and cash discounts
from SG&A to gross margin. In addition, the lower sales resulted in a higher
SG&A percent to sales for the quarter.
On a pro forma basis, reorganization costs for 1995 would not have been in-
curred. The actual reorganization costs in the first quarter of $3,847 included
professional fees, DIP fees and expense amortizations, and other expenditures
related to the Chapter 11 filing. No reorganization costs were incurred
subsequent to the first quarter of 1995.
Included in reorganization costs for the third quarter of 1994 were $3,936 and
year-to-date were $11,746 for professional fees, DIP fees and expense
amortizations, and other expenditures related directly to the Chapter 11 filing.
Liquidity and Capital Resources
The Company is a party to a revolving credit agreement, which provides for a
revolving credit facility of up to $125,000 based on the Company's eligible
inventory. As of November 18, 1995, the Company had $81,323 outstanding in
short-term debt under its working capital facility, $12,366 in outstanding
letters of credit and unused availability of $23,584. The Company's liquidity
position was improved by a tax refund of $12,673, net of preparer fees, which
was received during the third quarter.
<PAGE>
The Company's liquidity is also impacted by vendor credit terms. In order to
support vendor credit terms, the Company provides its vendors which extend
credit with a second lien security interest in $15,000 of its real property and
a $5,000 letter of credit. This security interest continues through the end of
April, 1996.
The Company invested $1,752 in cash for property and equipment in the third
quarter of 1995 compared to $491 invested in the third quarter of 1994. Year-
to-date cash investment in property and equipment was $3,837 in 1995 (combined
successor and predecessor) compared to $1,275 in 1994. The 1995 expenditures
were primarily for store remodels, new softline fixturing, and new computer
software. The 1994 expenditures were primarily for store improvements and new
computer software.
Cash used in operating activities, primarily to fund increased inventory levels,
was $21,693 in the third quarter of 1995 and $65,223 year-to-date (combined
successor and predecessor). Cash used in operating activities during the third
quarter of 1994 was $28,235 and cash provided by operating activities was $4,600
year-to-date. The proceeds from sale of inventory in closed stores contributed
to the year-to-date increase in cash from operating activities in 1994.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
ITEM 6: Exhibits and Reports on Form 8-K
(b) The Company filed the following current reports on Form 8-K during
the quarter ended October 28, 1995:
(i) Report on Form 8-K dated August 18, 1995, reporting under Item
5 the final 30% distribution of 2,044,050 shares of common
stock to the holders of Allowed Class 3 claims. In addition, a
summary of shares distributed and currently outstanding as
well as the estimated final number of shares that will be
distributed and outstanding was provided.
(ii) Report on Form 8-K dated September 2, 1995, reporting under
Item 5 the Revised Plan for 1995 and the amended EBITDA
(earnings before interest, taxes, depreciation and
amortization) covenants for the remainder of fiscal 1995. The
Fiscal 1995 Summary Revised Financial Plan was included as an
exhibit in Item 7.
(iii) Report on Form 8-K dated September 30, 1995, reporting under
Item 5 the monthly and year-to-date financial results and
other financial data for the period ended September 30, 1995,
together with projected financial information for similar
periods as contained in the Company's plan for the year ended
January 27, 1996. The financial results were included as an
exhibit in Item 7.
(iv) Report on Form 8-K dated October 28, 1995, reporting under
Item 5 the monthly and year-to-date financial results and
other financial data for the period ended October 28, 1995,
together with projected financial information for similar
periods as contained in the Company's plan for the year ended
January 27, 1996. The financial results were included as an
exhibit in Item 7.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ROSE'S STORES, INC.
Date December 11, 1995 By /s/ R. Edward Anderson
R. Edward Anderson
President,
Chief Executive Officer
Date December 11, 1995 By /s/ Jeanette R. Peters
Jeanette R. Peters
Senior Vice President,
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Rose's
Stores, Inc., Form 10-Q for the quarter ended October 28, 1995 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000085149
<NAME> ROSES STORES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-27-1996
<PERIOD-END> OCT-28-1995<F1>
<CASH> 609
<SECURITIES> 0
<RECEIVABLES> 22,509
<ALLOWANCES> (3,642)
<INVENTORY> 200,206
<CURRENT-ASSETS> 223,497
<PP&E> 3,676
<DEPRECIATION> (29)
<TOTAL-ASSETS> 227,144
<CURRENT-LIABILITIES> 146,889
<BONDS> 0
<COMMON> 35,000
0
0
<OTHER-SE> (867)
<TOTAL-LIABILITY-AND-EQUITY> 227,144
<SALES> 320,666
<TOTAL-REVENUES> 322,984
<CGS> 242,371
<TOTAL-COSTS> 242,371
<OTHER-EXPENSES> 77,806
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,674
<INCOME-PRETAX> (867)
<INCOME-TAX> 0
<INCOME-CONTINUING> (867)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (867)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> 0
<FN>
<F1>The Company emerged from Chapter 11 on April 28, 1995. The results included
above are for twenty-six weeks and represent those of the successor company.
</FN>
</TABLE>
