FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 28, 1995
ROSE'S STORES, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-631 56-0382475
(Commission File Number) (IRS Employer Identification No.)
218 S. Garnett Street
Henderson, North Carolina
27536
(Address of principal executive offices) (Zip Code)
(919) 430-2600
(Registrant's telephone number, including area code)<PAGE>
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ITEM 5:
(Amounts in thousands, except per share amounts)
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, Raleigh Division (the "Court"). The Company is in
possession of its property and is maintaining and operating its property
as a debtor-in-possession pursuant to the provisions of Sections 1107
and 1108 of the Bankruptcy Code. On August 1, 1994, the Company filed
with the Court a proposed Joint Plan of Reorganization with the consent
of the official unsecured creditors committee, the pre-petition secured
senior noteholders, and the official equity committee. On October 5,
1994, the Court approved a First Amended Disclosure Statement that
described the proposed First Amended Joint Plan of Reorganization (the
"Plan") and approving the solicitation of acceptances and rejections of
the Plan from various classes of creditors and equity holders prior to
the Court's holding a confirmation hearing. On December 14, 1994, the
Court confirmed the Plan and entered an order ("Confirmation Order") to
that effect.
The Company is required by the Plan to discuss its financial performance
through December 31, 1994. The Company included annual 1994 projections
in its October 5, 1994 Disclosure Statement. Below are the Company's
actual results for the eleven periods ended December 31, 1994 compared
to eleven periods of the projection included in the Disclosure Statement
and to eleven periods ended January 1, 1994.
Summary of Financial Information
For the eleven periods ended December 31, 1994 and January 1, 1994:
(Unaudited Results)
1994 1994 1993
DECEMBER DECEMBER DECEMBER
YTD YTD YTD
ACTUAL PROJECTION ACTUAL
Number of stores 113 113 215
Net Sales - Owned $694,418 713,148 1,148,116
FIFO Gross Margin - Net Sales 24.18% 24.06% 22.80%
SG&A Expense - % of Net Sales 21.20% 20.81% 22.92%
Operating Cash Flow
(EBITDA - FIFO basis) 25,728 28,371 6,980
Operating Profit (Loss) 14,296 17,984 (16,888)
Net Loss (43,131) (39,551) (59,993)
Capital Expenditures 1,591 2,884 8,721
Pre-petition Secured Debt
& Interest 26,423 26,579 108,405
DIP Working Capital Facility - - -
Net Working Capital (1) 128,311 126,786 219,109
(1) Current Assets (Inventory at FIFO) less Current Liabilities
NOTE: The Company's fiscal year ends on the last Saturday in January.<PAGE>
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Sales
Same store sales increased by 1.5% year-to-date compared to a projected
same store sales increase of 4.3% year-to-date. Unseasonably warm
weather negatively impacted the sale of apparel merchandise in November
and December.
Gross Margin
Higher than planned markon and lower than planned shrinkage offset
markdowns that were higher than projected. The improvement in the gross
margin rate over last year is due to significantly improved shrinkage
and higher markon.
SG&A Expenses
SG&A dollars were less than plan but were higher as a percent to sales
due to the sales shortfall. The SG&A rate improvement over last year
is due to the closing of 102 less profitable stores.
Operating Cash Flow (EBITDA - FIFO basis)
Although the December year-to-date EBITDA was less than projected, it
exceeded the $25,000 required for the Company to emerge from Chapter 11
as set forth in the Plan. Also, it represents a significant improvement
over the pre-LIFO EBITDA for 1993 which was negatively affected by out-
of-stocks preceding and immediately following the Company's filing for
Chapter 11.
January Sales
On February 1, 1995, the Company reported a decrease of 4.2% in same
store sales for the four weeks ended January 28, 1995. Total sales for
the period were $38,414, compared with $56,679 for the four weeks ended
January 29, 1994. During the period, the Company operated 113 stores
compared with 172 stores a year ago.
For the fiscal year ended January 28, 1995, same store sales increased
1.2% over last year. Total sales, which in 1994 exclude sales for 102
stores the Company closed during the first half of the year, were
$756,336 compared to $1,245,697 last year.
Revised Projections for 1995 - 1997
The Company provided annual projections for the years 1995 through 1997
in the Disclosure Statement. Based upon the 1994 actual results to date
the Company has revised those projections using the same assumptions
that were described in the Disclosure Statement. Below is a summary of
the new projections.
ALTHOUGH EVERY EFFORT WAS MADE TO BE ACCURATE, THESE FORECASTS WERE NOT
PREPARED WITH A VIEW TOWARD COMPLIANCE WITH THE GUIDELINES ESTABLISHED
BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS, THE FINANCIAL
ACCOUNTING STANDARDS BOARD, OR THE RULES AND REGULATIONS OF THE
SECURITIES AND EXCHANGE COMMISSION REGARDING PROJECTIONS. FURTHERMORE,
THE FORECASTS HAVE NOT BEEN AUDITED OR REVIEWED BY ROSE'S STORES, INC.
INDEPENDENT CERTIFIED ACCOUNTANTS. WHILE PRESENTED WITH NUMERICAL
SPECIFICITY, THE FORECASTS ARE BEYOND THE CONTROL OF THE COMPANY.
CONSEQUENTLY, THE FORECASTS SHOULD NOT BE REGARDED AS A REPRESENTATION
OR WARRANTY BY ROSE'S STORES, INC., OR ANY OTHER PERSONS, THAT THE
FORECASTS WILL BE REALIZED. ACTUAL RESULTS MAY VARY MATERIALLY FROM
THOSE PRESENTED IN THE FORECASTS. HOLDERS OF CLAIMS AND INTEREST MUST
MAKE THEIR OWN DETERMINATIONS AS TO THE REASONABLENESS OF SUCH
ASSUMPTIONS AND THE RELIABILITY OF THE FORECASTS.
1995 1996 1997
YTD YTD YTD
PROJECTION PROJECTION PROJECTION
Number of stores 113 113 113
Net Sales - Owned $748,200 770,646 801,471
FIFO Gross Margin - Net Sales 23.45% 23.55% 23.75%
SG&A Expense - % of Net Sales 21.71% 21.72% 21.77%
Operating Cash Flow
(EBITDA - FIFO basis) 18,440 19,674 21,679
Operating Profit 6,192 7,085 10,029
Net Income (Loss) (2) (699) 6,942 9,829
Capital Expenditures 6,000 6,000 6,000
New Secured Notes
(Year-end Balance) 21,423 13,923 6,962
Average Revolver Borrowings 35,006 32,044 29,757
Ending Net Working Capital (1) 103,338 101,159 102,587
(1) Current Assets (Inventory at FIFO) less Current Liabilities
(excluding Current Portion of New Secured Notes)
(2) The net loss for 1995 includes $6,907 in reorganization costs.
NOTE: These projections were prepared using the Company's current
financial reporting accounting practices in order to provide comparable
annual financial data. Adoption of Fresh Start accounting will result
in changes to those practices.
The foregoing projections are made as of the date of filing this Form
8-K. The Company does not hereby undertake any obligation to up-date
such projections in the future, even if the assumptions on which these
projections were made should prove to be incorrect or even if the
company makes new projections in the future.
Equity Value
In the disclosure statement, the Company estimated the net equity value,
of the shares that will be outstanding as of the Effective Date, will
be in the range of $50,000 to $80,000. Based upon the Company's revised
projections, the Company believes the net equity value will most likely
be at the lower part of that range, but there can be no assurance that
the market value of the Reorganized Rose's net equity will fall within
the Company's estimated range.
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Changes to Subscription Rights
Under the terms of the Plan, the holders of the Common Stock Interests
in Class 5 are to receive rights to subscribe for and purchase up to
100% of the shares of New Rose's Common Stock to be issued on or within
thirty days of the Effective Date. The Plan has been amended to provide
that the subscription price for New Rose's Common Stock is to be $6.50
per share and that any cash remaining in the Subscription Proceeds
Escrow after resolution of all Disputed Class 3 Claims will be
distributed to the holders of Allowed Claims in Class 3, and has been
otherwise amended to make other conforming modifications required by
these changes.
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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 hereunto duly authorized.
ROSE'S STORES, INC.
Date: February 7, 1995 By:/s/
Jeanette R. Peters
Senior Vice President
Chief Financial Officer
