FORM 10-Q/A
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 April 29, 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 Company (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
Company 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 close of the period covered by this report.
Class Shares Outstanding
Common Stock, no par value -
The 18,758,000 formerly outstanding shares of Common Stock of the Company were
cancelled on April 28, 1995, and 10,000,000 shares of the reorganized Company
were issued in escrow to First Union National Bank on April 28, 1995, but
under the terms of the escrow agreement, the shares have no voting rights
until distributed to the beneficial owners thereof, pursuant to the Company's
Modified and Restated First Amended Joint Plan of Reorganization.
<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 below for the thirteen weeks ended April 29, 1995 and
April 30, 1994.
ROSE'S STORES, INC.
STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
For the Thirteen Weeks Ended
April 29, 1995 April 30, 1994
<S> <C> <C>
Revenue:
Gross sales $ 159,407 174,583
Leased department sales 5,117 5,514
Net sales 154,290 169,069
Leased department income 1,114 1,300
Total revenue 155,404 170,369
Costs and Expenses:
Cost of sales 116,838 126,696
Selling, general and administrative 35,486 40,181
Depreciation and amortization 1,812 2,475
Interest 726 1,784
Total costs and expenses 154,862 171,136
Earnings (Loss) before reorganization benefit (expense) 542 (767)
Reorganization benefit (expense) (Note 1) (3,847) (58,781)
Fresh start revaluation (17,432) -
Loss before extraordinary item (20,737) (59,548)
Extraordinary item - gain on debt discharge 90,924 -
Net Earnings (Loss) $ 70,187 (59,548)
Earnings (Loss) per share before
extraordinary item (Note 2) $ (1.11) -
Net Earnings (Loss) per share (Note 2) $ 3.74 (3.17)
Weighted Average Shares (Note 2) 18,758 18,758
Note 1
Certain information concerning benefits (expenses) resulting from the Company's
reorganization are as follows:
Closed store provision (59 closings) $ - (55,000)
DIP financing fees, amortization & expenses (1,342) (424)
Estimated professional fees (2,318) (3,115)
Other reorganization costs and expenses (187) (242)
TOTAL REORGANIZATION COSTS $ (3,847) (58,781)
Note 2
The 18,758 formerly outstanding shares of the Company used to calculate earnings (loss) per
share were cancelled on April 28, 1995.
</TABLE>
See notes to financial statements
<PAGE>
ROSE'S STORES, INC.
BALANCE SHEETS
(Amounts in thousands)
<TABLE>
<CAPTION>
April 29, January 28, April 30,
1995 1995 1994
(Unaudited) (Audited) (Unaudited)
<S> <C> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 622 1,350 1,863
Accounts receivable 9,235 12,140 13,314
Inventories 185,129 119,567 234,467
Prepaid merchandise 7,100 6,632 9,199
Other current assets 2,475 5,531 7,252
Total current assets 204,561 145,220 266,095
Property and Equipment, at cost
Less accumulated depreciation and amortization - 34,707 40,704
Deferred Income Tax Benefits - 3,164 6,447
Other Assets - 95 653
$ 204,561 183,186 313,899
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Reclamation claims $ - - 2,271
DIP financing - 600 13,100
Current maturities of capital lease obligations 400 628 2,043
Bank drafts outstanding 5,762 - -
Accounts payable 37,642 23,392 38,623
Short-term debt 58,654 - -
Reserve for store closings and remerchandising 4,952 8,530 41,027
Deferred tax liabilities - 3,164 6,447
Accrued salaries and wages 5,262 7,821 7,138
Reorganization payables 4,352 - -
Other current liabilities 13,421 9,076 16,038
Total current liabilities 130,445 53,211 126,687
Liabilities Subject to Settlement Under
Reorganization Proceedings - 156,474 221,464
Excess of Net Assets Over Reorganization Value 32,021 - -
Capital Lease Obligations (excluding current maturities) 593 646 1,601
Deferred Income 1,481 1,993 1,922
Accumulated Postretirement Benefit Obligation 5,021 6,048 5,678
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) - (40,313) (48,580)
35,000 (16,568) (24,835)
Treasury stock, at cost (Cancelled 4/28/95) - (18,618) (18,618)
Total stockholders' equity (deficit) 35,000 (35,186) (43,453)
$ 204,561 183,186 313,899
</TABLE>
See notes to financial statements
<PAGE>
ROSE'S STORES, INC.
STATEMENTS OF CASH FLOWS (Unaudited)
(Amounts in thousands)
<TABLE>
<CAPTION>
For the Thirteen Weeks Ended
April 29, 1995 April 30, 1994
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 70,187 (59,548)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,812 2,475
(Gain) loss on disposal of property and equipment (1) (310)
LIFO expense (credit) (364) 172
Provision for closed stores - 55,000
Fresh start revaluation and debt discharge (73,492) -
Cash provided by (used in) assets and liabilities:
(Increase) decrease in accounts receivable (630) 1,743
(Increase) decrease in prepaid merchandise (468) 1,558
(Increase) decrease in inventories (40,291) (31,489)
(Increase) decrease in other current and non-current assets (3,152) 51
Increase (decrease) in accounts payable 14,361 (97)
Increase (decrease) in accrued expenses and other liabilities (2,142) (3,150)
Increase (decrease) in reserves for closed stores $ (1,731) 58,986
Non cash activities in closed store reserve:
Provision for closed stores - (55,000)
Retirement of net book value of assets 623 6,901
Net cash increase (decrease) in provisions for
closed stores (1,108) 10,887
Increase (decrease) in deferred income (201) (374)
Increase (decrease) in accumulated postretirement
benefit obligation 7 64
Net cash provided by (used in) operating activities (35,482) (23,018)
Cash flows from investing activities:
Purchases of property and equipment (510) (278)
Proceeds from disposal of property and equipment 5 712
Net cash provided by (used in) investing activities (505) 434
Cash flows from financing activities:
Net activity on lines of credit 58,654 -
Proceeds (payments) of DIP Facility (600) 13,100
Payments on pre-petition secured debt (26,423) -
Payments of unsecured claims (1,593) -
Principal payments on capital lease obligations (281) (607)
Increase (decrease) in bank drafts outstanding 5,502 -
Other - (1)
Net cash provided by (used in) financing activities 35,259 12,492
Net decrease in cash (728) (10,092)
Cash and cash equivalents at beginning of period 1,350 11,955
Cash and cash equivalents at end of period $ 622 1,863
</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") (See Part II, Item
1, Legal Proceedings). 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 "Effective Date"), the Company closed on its
exit financing loan, thereby satisfying the last condition of the Plan
and emerged from bankruptcy. The exit financing is a $125,000 three-
year revolving credit facility (to be reduced by $5,000 on each
anniversary) with a letter of credit sublimit in the aggregate
principal amount of $40,000 with the First National Bank of Boston and
The CIT Group/Business Credit, Inc., as facility agents. The revolving
credit facility is secured by a perfected first priority lien and
security interest in all of the assets of the Company. On the
Effective Date, pursuant to the Plan, the Company paid in full the
claims of its Pre-Petition Secured Lenders in the amount of $26,423,
all amounts owing to GE Capital Corporation (the "Debtor-in-Possession
(DIP) Facility"), and various administrative and tax claims as defined
in the Plan. Under the exit financing facility, trade suppliers which
extend credit to the Company will be supported by a $5,000 letter of
credit and a subordinated lien of $15,000 in the real estate properties
of the Company.
The revolving credit facility includes certain financial covenants and
financial maintenance tests, including those relating to earnings
before interest, taxes, depreciation and amortization (EBITDA), debt
service coverage, capital expenditures limitations, minimum
stockholders' equity, and minimum/maximum inventory levels, which are
measured quarterly. The facility also includes restrictions on the
incurrence of additional liens and indebtedness and a requirement that
the facility be paid down to certain levels for 30 consecutive days
between December 1st and February 15th each year.
Also pursuant to the Plan, the Company issued and delivered to First
Union National Bank of North Carolina, as Escrow Agent for the
unsecured creditors of the Company, 9,850 shares of the Company's new
common stock for distribution on allowed claims of unsecured creditors
in accordance with a schedule for distributions set forth in the Plan;
and 150 shares of the Company's new common stock were delivered to the
Escrow Agent for distribution to officers of the Company pursuant to a
consummation bonus plan approved by order of the Bankruptcy Court on
February 14, 1995. An initial distribution of stock to unsecured
creditors whose claims have been allowed will commence on or before
June 12, 1995 pursuant to the Plan amounting to seventy percent (70%)
of the stock relating to allowed claims. Subsequent distributions for
allowed unsecured claims, payments for administrative claims and
resolution of disputed claims will be made in accordance with the
<PAGE>
Notes to Financial Statements (Continued):
(1) Continued
provisions of the Plan and applicable orders of the Bankruptcy Court.
The consummation of the Plan resulted in a gain on extinguishment of
debt of $90,924.
On the Effective Date, all shares of the Company's pre-emergence Voting
Common Stock and Non-Voting Class B Stock were cancelled and the record
owners of such stock as of such date became entitled to warrants to
purchase the new common stock of the Company. One warrant will be
issued for every 4.377 shares of pre-emergence Voting Common Stock or
Non-Voting Class B Stock and will allow the holder to purchase one
share of the new common stock. The warrants may be exercised at any
time until they expire on April 28, 2002. The initial warrant exercise
price of $14.45 was calculated pursuant to a formula set forth in the
Plan. The formula requires that the total allowed and disputed claims
of the Company's unsecured creditors be divided by 10,000, the number
of shares of the reorganized Company's stock to be issued under the
Plan. This formula will be adjusted on each of the first three
anniversaries of April 28, 1995 to reflect adjustments to the total of
allowed and disputed claims of the Company's unsecured creditors, and
will be further adjusted on the fourth, fifth and sixth anniversaries
to reflect 105%, 110% and 115%, respectively of the total of the
allowed and disputed claims of the unsecured creditors. Although there
can be no assurance, the Company anticipates that the warrant exercise
price will decrease as certain disputed claims are resolved over time.
(2) In 1990, the American Institute of Certified Public Accountants issued
Statement of Position 90-7 ("SOP 90-7") "Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code" (sometimes called
"Fresh-Start Reporting"). The application of Fresh-Start Reporting
changed the Company's basis of accounting for financial reporting
purposes. Specifically, SOP 90-7 required the adjustment of the
Company's assets and liabilities to reflect their estimated fair market
value at the Effective Date. At the same time, the Company made
certain reclassifications between gross margin and expenses and changed
the method of accruing certain expenses between periods. Accordingly,
the statements of operations and changes in cash flows commencing May
1995, and the balance sheets beginning with April 1995, will not be
comparable to the financial information for prior periods.
In accordance with SOP 90-7, the reorganization value of the Company
was determined as of the Effective Date. The reorganization value of
$35,000 was derived by an outside company using various valuation
methods, including discounted cash flow analyses (utilizing the
Company's projections), analyses of the market values of other publicly
traded companies whose businesses are reasonably comparable, and
analyses of the present value of the Company's equity.
<PAGE>
Notes to Financial Statements (Continued):
(2) Continued
The adjustments to reflect the consummation of the Plan and the
adoption of Fresh-Start Reporting, including the gain on debt discharge
for liabilities subject to settlement under reorganization proceedings,
the adjustment to restate assets and liabilities at their fair value,
and the adjustment to non-current assets for the excess of the fair
value of net assets which exceeded reorganization value, have been
reflected in the accompanying financial statements as follows:
BALANCE SHEETS
(Amounts in thousands)
<TABLE>
<CAPTION>
Actual Fresh Restated
April 29, Debt Start April 29,
1995 Discharge Accounting 1995
<S> <C> <C> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 622 622
Accounts receivable 12,076 (2,841)(a) 9,235
Inventories 160,111 25,018 (b) 185,129
Prepaid merchandise 7,100 7,100
Other current assets 2,475 2,475
Total current assets 182,384 - 22,177 204,561
Property and Equipment, at cost,
Less accumulated depreciation
and amortization 33,703 (33,703)(c) -
Other Assets 6,302 - (6,302)(c) -
$ 222,389 - (17,828) 204,561
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Current maturities of capital lease
obligations $ 400 400
Bank drafts outstanding 5,762 5,762
Accounts payable 37,642 37,642
Short-term debt 58,654 58,654
Reserve for store closings and
remerchandising 4,952 4,952
Accrued salaries and wages 5,212 50 (d) 5,262
Reorganization payables - 4,352 (e) 4,352
Other current liabilities 9,543 3,878 (f) 13,421
Total current liabilities 122,165 4,352 3,928 130,445
Liabilities Subject to Settlement
Under Reorganization Proceedings 130,276 (130,276)(g) -
Excess of Net Assets Over
Reorganization Value - 32,021 (h) 32,021
Capital Lease Obligations 593 593
Deferred Income 1,792 (311)(i) 1,481
Accumulated Postretirement Benefit
Obligation 6,055 (1,034)(j) 5,021
Stockholders' Equity (Deficit) (38,492) 90,924 (k) (17,432)(l) 35,000
$ 222,389 (35,000) 17,172 204,561
</TABLE>
<PAGE>
Notes to Financial Statements (Continued):
(2) Continued
Explanations of adjustment columns of the balance sheet are as follows:
(a) To reflect appropriate current value of accounts receivable
(b) Adjust inventories to current market value
(c) Write off of long-term assets
(d) Increased bonuses payable as a result of emergence from
bankruptcy
(e) Reclassified pre-petition priority claims and cure amounts
(f) Accrued an additional year of property taxes to reflect
such taxes on assessment date basis, increased insurance
and loss reserves, and accrued any remaining reorganization
costs to be incurred after emergence from Chapter 11
(g) Unsecured pre-petition claims settled as follows:
(a) $4,352 of priority claims and cure amounts reclassified to
current liabilities
(b) The remaining unsecured claims settled with stock
(h) The excess reorganization value was allocated to non-
current assets, with any excess recorded as a deferred
credit to be amortized over the period of expected benefit
but not more than 10 years.
(i) Reduction of deferred income to current value
(j) Adjustment to reverse unrecognized gain on transition
obligation
(k) To record the settlement of liabilities subject to
settlement reorganization proceedings in accordance with
the Plan.
(l) Value of new company established
(3) 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.
(4) The operating results presented herein are not necessarily indicative of
the operating results for a full year due to seasonal factors, among other
reasons.
(5) Included in the reorganization costs for the first quarter of 1994 was a
provision of $55,000 for the estimated costs of closing 59 stores in 1994
and to realign corporate and administrative costs accordingly.
(6) The fresh start revaluation of $17,432 reflects the net expense to record
assets at their fair values and liabilities at their present values in
accordance with the provisions of SOP 90-7 and to reduce noncurrent assets
below their fair values for the excess of the fair values of assets over
the reorganization value.
(7) LIFO expense (credit) is included as an adjustment to reconcile net loss
to net cash used in operating activities in the statements of cash flows
because LIFO expense (credit) is a noncash item included in cost of sales
to adjust inventories stated on a FIFO basis to a LIFO basis.
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Amounts in thousands)
Chapter 11 Proceedings
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") Case No. 93-01365-5-ATS.
Technical modifications to the Company's First Amended Joint Plan of
Reorganization (which was confirmed by the Bankruptcy Court on December
14, 1995) were approved by orders of the Bankruptcy Court dated February
3, 1995 and February 13, 1995 and a Modified and Restated First Amended
Joint Plan of Reorganization (the "Plan") was approved by order of the
Bankruptcy Court on April 24, 1995. 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").
For a further discussion of the Chapter 11 proceedings, see Note 1 to
the Financial Statements.
Thirteen Weeks Ended April 29, 1995 compared to Thirteen Weeks Ended
April 30, 1994
Revenue
The Company reported sales for the first quarter of 1995 of $159,407, a
decrease of $15,176, or 8.7%, from the first quarter of 1994. The
decline in sales was primarily attributable to a decline in sales on a
comparable store basis of 3.1%, together with the decrease in the number
of stores (106 in 1995 as compared to 113 in 1994). (Month-to-date
sales trends are available from the offices of the Company upon
request.)
Costs and Expenses
Year-to-date cost of sales as a percent to net sales was 75.7% for 1995
and 74.9% for 1994. The increase in the cost of sales was due primarily
to an increase in promotional markdowns as a percent of sales and a
decrease in markon which were offset somewhat by a decrease in the
shrink percent.
Selling, general and administrative expenses as a percent of net sales
were 23.0% in 1995 and 23.8% in 1994. The decrease was due in part to
the realignment of corporate and administrative costs as well as planned
reductions in store expenses that were made in the second quarter of
1994.
Reorganization costs during the first quarter of 1995 were $3,847 and
during the first quarter of 1994 were $58,781. Included in
reorganization costs are professional fees, DIP fees and expense
amortizations, and other expenditures related directly to the Chapter 11
filing. Also, included in the reorganization costs for the first
quarter of 1994 is a provision of $55,000 for the estimated costs of
closing 59 stores in 1994 and to realign corporate and administrative
costs accordingly.
The fresh start revaluation of $17,432 reflects the net expense to
record assets at their fair values and liabilities at their present
values in accordance with the provisions of SOP 90-7 and to reduce
noncurrent assets below their fair values for the excess of the fair
values of assets over the reorganization value.
Liquidity and Capital Resources
On the Effective Date, the Company satisfied the last condition under
the Plan for its emergence from bankruptcy by closing on its exit
financing loans. The exit financing is a $125,000 three-year revolving
credit facility (to be reduced by $5,000 on each anniversary) with a
letter of credit sublimit in the aggregate principal amount of $40,000
with the First National Bank of Boston and The CIT Group/Business
Credit, Inc., as facility agents. The revolving credit facility is
secured by a perfected first priority lien and security interest in all
of the assets of the Company. On the Effective Date, the Company drew
down $58,654 which was used to satisfy all outstanding indebtedness to
GE Capital Corporation (the "DIP Facility") and to the Pre-Petition
Secured Lenders as defined in the Plan. Under the exit financing
facility, trade suppliers which extend credit to the Company will be
supported by a $5,000 letter of credit and a subordinated lien of
$15,000 in the real estate properties of the Company.
The revolving credit facility includes certain financial covenants and
financial maintenance tests, including those relating to EBITDA, debt
service coverage, capital expenditures limitations, minimum earnings
stockholders' equity, and minimum/maximum inventory levels, which are
measured quarterly. The facility also includes restrictions on the
incurrence of additional liens and indebtedness and a requirement that
the facility be paid down to certain levels for 30 consecutive days
between December 1st and February 15th each year.
At the end of the first quarter of 1995, the Company had $58,654
outstanding under its working capital facility and $8,753 in outstanding
letters of credit. The Company's unused availability was $25,081 as of
April 29, 1995. The Company invested $510 in cash for property and
equipment in the first quarter of 1995 compared to $278 in the first
quarter of 1994.
Cash used in operating activities was $35,482 in the first quarter of
1995 and $23,018 in the first quarter of 1994. The Company expects to
realize positive cash flow from its 1995 operations.
On the Effective Date, the Company entered into a Warrant Agreement and
Escrow Agreement with First Union National Bank of North Carolina
("First Union") pursuant to which the Company issued to First Union
10,000 shares of Common Stock as Escrow Agent and 4,286 Warrants as
Warrant Agent. The Escrow Agreement and Warrant Agreement specify the
terms, conditions and procedures pursuant to which First Union will hold
and deliver shares of Common Stock and Warrants under the terms of the
Plan. (See Note 1 to the financial statements for further discussion.)
<PAGE>
PART II. OTHER INFORMATION
No securities (debt or equity) which were not registered under the
Securities Act of 1933 were sold by the Company during the fiscal
quarter ended April 29, 1995.
ITEM 1: Legal Proceedings (Amounts in thousands, except per share
amounts)
The Company's business ordinarily results in a number of negligence and
tort actions, most of which arise from injuries on store premises,
injuries from a product, or false arrest and detainer arising from
apprehending suspected shoplifters. The Company's liability for
uninsured general damages and punitive damages is not considered
material. No legal proceedings presently pending by or against the
Company are described because the Company believes that the outcome of
such litigation should not have a material adverse effect on the
financial position of the Company.
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") Case No. 93-01365-5-ATS (the
"Chapter 11 Case").
The Chapter 11 Case is described in the Form 10-K of the Company for the
year ended January 28, 1995. The following discussion sets forth
certain developments in the Chapter 11 Case during the first quarter of
1995 and through the date hereof, but is not intended to be an
exhaustive summary. For additional information regarding the effect of
the Chapter 11 Case on the Company, reference should be made to the
Bankruptcy Code.
Technical modifications to the Company's First Amended Joint Plan of
Reorganization (which was confirmed by the Bankruptcy Court on December
14, 1994) were approved by orders of the Bankruptcy Court dated February
3, 1995 and February 13, 1995 and a Modified and Restated First Amended
Joint Plan of Reorganization (the "Plan") was approved by order of the
Bankruptcy Court on April 24, 1995. All conditions to effectuation of
the Plan were met on April 28, 1995 (the "Effective Date"), and the Plan
became effective as of such date.
On the Effective Date, pursuant to the Plan, the Company paid in full
the claims of its Pre-Petition Secured Lenders, all amounts owing under
the DIP facility, and various administrative and tax claims due at the
Effective Date. Also pursuant to the Plan, the Company issued and
delivered to First Union National Bank of North Carolina, as Escrow
Agent for the unsecured creditors of the Company, 9,850 shares of the
Company's new common stock for distribution on allowed claims of
unsecured creditors in accordance with a schedule for distributions set
forth in the Plan; and 150 shares of the Company's new common stock were
delivered to the Escrow Agent for distribution to officers of the
Company pursuant to a consummation bonus plan approved by order of the
Bankruptcy Court on February 14, 1995. An initial distribution of stock
to unsecured creditors whose claims have been allowed will commence on
or before June 12, 1995 pursuant to the Plan amounting to seventy
percent (70%) of the stock relating to allowed claims. Subsequent
distributions for allowed unsecured claims, payments for administrative
claims and resolution of disputed claims will be made in accordance with
the provisions of the Plan and applicable orders of the Bankruptcy
Court.
On the Effective Date, all shares of the Company's pre-emergence Voting
Common Stock and Non-Voting Class B Stock were cancelled and the record
owners of such stock as of such date became entitled to warrants to
purchase the new common stock of the Company. One warrant will be
issued for every 4.377 shares of pre-emergence Voting Common Stock or
Non-Voting Class B Stock and will allow the holder to purchase one share
of the new common stock. The warrants may be exercised at any time
until they expire on April 28, 2002. The initial warrant exercise price
of $14.45 was calculated pursuant to a formula set forth in the Plan.
The formula requires that the total allowed and disputed claims of the
Company's unsecured creditors be divided by 10,000, the number of shares
of the reorganized Company's stock to be issued under the Plan. This
formula will be adjusted on each of the first three anniversaries of
April 28, 1995 to reflect adjustments to the total of allowed and
disputed claims of the Company's unsecured creditors, and will be
further adjusted on the fourth, fifth and sixth anniversaries to reflect
105%, 110% and 115%, respectively of the total of the allowed and
disputed claims of the unsecured creditors. Although there can be no
assurance, the Company anticipates that the warrant exercise price will
decrease as certain disputed claims are resolved over time.
On or about May 24, 1995, First Union National Bank of North Carolina as
Warrant Agent for the Company, pursuant to a Warrant Agreement and in
accordance with the Plan of Reorganization and applicable orders of the
Bankruptcy Court, commenced the process of distributing the warrants to
record owners of the pre-emergence Voting Common Stock and Non-Voting
Class B Stock of the Company. To obtain the warrant certificates, each
shareholder must deliver the stock certificates of pre-emergence stock
to the Warrant Agent and furnish certain information and documents to
the Warrant Agent. Inquiries regarding the warrant distribution
procedures are to be directed to First Union National Bank of North
Carolina, Shareholder Services Administration Group, 230 South Tryon
Street, 11th Floor, Charlotte, North Carolina 28288-1154, telephone
number (800)829-8432.
ITEM 2: Changes in Securities
For information with respect to this Item, see Item 1 - Legal
Proceedings.
<PAGE>
ITEM 6: Exhibits and Reports on Form 8-K
(a) All exhibits included in the Company's 1994 Form 10-K are
included herein by reference.
(b) The Company filed the following reports on Form 8-K
during the quarter covered by this report:
Form 8-K dated January 28, 1995, reporting in
Item 5 the financial performance through
December 31, 1994, and revised projections for
1995 to 1997.
Form 8-K dated February 13, 1995, reporting in
Item 5 the Bankruptcy Court approved amendment
changing the record date for distributions of
the New Rose's Warrants and New Rose's Common
Stock Secondary Distribution to the Effective
Date of the Plan.
Form 8-K dated April 24, 1995, reporting in
Item 5 the approval by the Bankruptcy Court of
a Modified and Restated First Amended Joint
Plan of Reorganization which was filed as an
exhibit in Item 7. In addition, the Company
filed in Item 7 various exhibits relating to
its obligations with respect to the
compensation of its officers and directors, the
Short-Term Incentive Compensation Plan and New
Equity Compensation Plan.
Form 8-K dated May 1, 1995, reporting in Item 5
the effectuation of the Plan on April 28, 1995.
In addition, the quantitative maintenance
criteria for inclusion in the Nasdaq National
Market System, set forth in Part III, Section 5
of Schedule D to the NASD Bylaws, and the
status of the Company's compliance with each of
such criteria were included. The Company also
included in Item 7 the Proforma Financial
Statement of Rose's Stores, Inc., as of April
29, 1995.
Form 8-K dated April 28, 1995, reporting in
Item 5 that the Company entered into a Warrant
Agreement and Escrow Agreement with First Union
National Bank of North Carolina on April 28,
1995. In addition, the Company reported that
it had satisfied the last condition under the
Modified Plan for its emergence from bankruptcy
by closing on its exit financing loans. The
Company also included various exhibits relating
to these events in Item 7 including a copy of
the Revolving Credit Agreement.
Form 8-K dated April 28, 1995, reporting in
Item 5 the revision of the Independent
Auditor's Report and Note 18, Subsequent
Events, to the financial statements due to the
Company's emergence from Chapter 11. The
financial statements were included as an
exhibit in Item 7.
Form 8-K dated April 29, 1995, reporting in
Item 5 a summary of the Company's 1995
financial plan which includes the actual
operating results for the quarter ended April
29, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
ROSE'S STORES, INC.
Date: September 25, 1995 By: /s/ R. Edward Anderson
R. Edward Anderson
President,
Chief Executive Officer
Date: September 25, 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/A for the quarter ended April 29, 1995, and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000085149
<NAME> ROSE'S STORES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-27-1996
<PERIOD-END> APR-29-1995<F1>
<CASH> 622
<SECURITIES> 0
<RECEIVABLES> 11,748
<ALLOWANCES> (2,513)
<INVENTORY> 185,129
<CURRENT-ASSETS> 204,561
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 204,561
<CURRENT-LIABILITIES> 130,445
<BONDS> 0
<COMMON> 35,000
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 204,561
<SALES> 154,290
<TOTAL-REVENUES> 155,404
<CGS> 116,838
<TOTAL-COSTS> 116,838
<OTHER-EXPENSES> 37,298
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 726
<INCOME-PRETAX> (20,737)
<INCOME-TAX> 0
<INCOME-CONTINUING> (20,737)
<DISCONTINUED> 0
<EXTRAORDINARY> 90,924
<CHANGES> 0
<NET-INCOME> 70,187<F2>
<EPS-PRIMARY> 3.74<F3>
<EPS-DILUTED> 3.74<F3>
<FN>
<F1>The Company emerged from Chapter 11 on April 28, 1995, and adopted Statement of
Position 90-7. (See Notes to the Financial Statements.)
<F2>Includes reorganization expense of $3,847 and fresh start revaluation of
$17,432.
<F3>The 18,758 formerly outstanding shares of the Company used to calculate
earnings (loss) per share were cancelled on April 28, 1995.
</FN>
</TABLE>
