SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR
[X] 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 4, 1997
Commission File Number 1-10619
PAMIDA HOLDINGS CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 47-0696125
- ------------------------------- ----------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
8800 "F" STREET, OMAHA, NEBRASKA 68127
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(402) 339-2400
----------------------------------------------------
(Registrant's telephone number, including area code)
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 practicable date:
CLASS OF COMMON STOCK OUTSTANDING AT JUNE 2, 1997
--------------------- ---------------------------
Common Stock 5,004,942 Shares
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
ASSETS: May 4, February 2,
Current assets: 1997 1997
----------- -----------
<S> <C> <C>
Cash ...................................................... $ 9,003 $ 6,973
Accounts receivable, less allowance for
doubtful accounts of $50 ................................ 8,694 6,919
Merchandise inventories ................................... 159,294 157,490
Prepaid expenses .......................................... 3,163 2,993
Property held for sale .................................... -- 1,748
----------- -----------
Total current assets ................................... 180,154 176,123
----------- -----------
Property, buildings and equipment, less accumulated
depreciation and amortization of $62,955 and $61,364 ...... 42,764 42,403
Leased property under capital leases, less accumulated
amortization of $15,272 and $14,604 ....................... 27,065 27,713
Deferred financing costs .................................... 3,248 3,176
Other assets ................................................ 20,854 19,773
----------- -----------
$ 274,085 $ 269,188
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable .......................................... $ 60,113 $ 54,245
Loan and security agreement ............................... 66,157 57,115
Accrued compensation ...................................... 3,842 3,860
Accrued interest .......................................... 3,153 7,668
Store closing reserve ..................................... 3,422 4,521
Other accrued expenses .................................... 10,390 10,112
Income taxes - deferred and current payable ............... 8,078 8,101
Current maturities of long-term debt ...................... 47 47
Current obligations under capital leases .................. 1,765 1,781
----------- -----------
Total current liabilities .............................. 156,967 147,450
Long-term debt, less current maturities ..................... 169,170 168,000
Obligations under capital leases, less current obligations .. 33,570 33,999
Other long-term liabilities ................................. 4,923 4,825
Commitments and contingencies ............................... -- --
Preferred stock subject to mandatory redemption
and reserve for dividends payable ......................... 2,322 2,217
Common stockholders' equity:
Common stock, $.01 par value; 10,000,000 shares authorized;
5,004,942 shares issued and outstanding, ................ 50 50
Additional paid-in capital ................................ 968 968
Accumulated deficit ....................................... (93,885) (88,321)
----------- -----------
Total common stockholders' deficit ...................... (92,867) (87,303)
----------- -----------
$ 274,085 $ 269,188
=========== ===========
</TABLE>
See notes to consolidated financial statements.
PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended
----------------------
May 4, April 28,
1997 1996
--------- ---------
Sales .................................... $ 144,564 $ 131,786
Cost of goods sold ....................... 111,296 100,211
--------- ---------
Gross profit ............................. 33,268 31,575
--------- ---------
Expenses:
Selling, general and administrative .... 30,974 29,211
Interest ............................... 7,753 7,106
--------- ---------
38,727 36,317
--------- ---------
Loss before income tax benefit ........... (5,459) (4,742)
Income tax benefit ....................... -- --
--------- ---------
Net loss ................................. (5,459) (4,742)
Less provision for preferred dividends and
discount amortization .................. 105 93
--------- ---------
Net loss available for common stock ...... $ (5,564) $ (4,835)
========= =========
Loss per common share .................... $ (1.11) $ (.97)
========= =========
See notes to consolidated financial statements.
<TABLE>
<CAPTION>
PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
THREE MONTHS ENDED
May 4, April 28,
1997 1996
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss ............................................. $ (5,459) $ (4,742)
--------- ---------
Adjustments to reconcile net loss to net cash from operations:
Depreciation and amortization of fixed assets
and intangibles ................................ 2,905 2,674
Provision for LIFO inventory valuation ........... 150 150
Noncash interest expense ......................... 1,167 987
Accretion of original issue debt discount ........ 41 39
(Gain) loss on disposal of assets ................ 11 (26)
Decrease in store closing reserve ................ (1,099) (2,003)
(Increase) decrease in merchandise inventories ... (1,954) 8,985
Increase in other operating assets ............... (3,486) (3,107)
Increase in accounts payable ..................... 5,868 5,675
Decrease in interest payable ..................... (4,542) (4,078)
Decrease in income taxes payable ................. (23) (10)
Increase (decrease) in other operating liabilities 358 (4,368)
--------- ---------
Total adjustments ............................. (604) 4,918
--------- ---------
Net cash from operating activities .......... (6,063) 176
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposal of assets .................... 1,810 26
Construction notes receivable ....................... 140 (565)
Principal payments received on notes receivable ... 4 4
Assets acquired for sale ............................ -- (353)
Capital expenditures ................................ (2,222) (508)
--------- ---------
Net cash from investing activities .......... (268) (1,396)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under loan and security agreement ......... 9,042 2,614
Principal payments on capital lease obligations ...... (445) (401)
Payments for deferred finance costs .................. (225) --
Principal payments on other long-term debt ........... (11) (52)
--------- ---------
Net cash from financing activities .................... 8,361 2,161
--------- ---------
Net increase in cash ................................... 2,030 941
Cash at beginning of year .............................. 6,973 7,298
--------- ---------
Cash at end of period .................................. $ 9,003 $ 8,239
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
(1) Cash paid (received) during the period for:
Interest $ 11,087 $ 10,158
Income taxes:
Payments to taxing authorities 32 180
Refunds received from taxing authorities (9) (170)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITY:
(1) Amortization of discount on junior cumulative
preferred stock recorded as a direct charge to
retained earnings 13 12
(2) Provision for dividends payable 92 81
(3) In-kind payment of accrued interest on
promissory notes:
Promissory notes 1,140 975
Accrued interest (1,140) (975)
</TABLE>
See notes to consolidated financial statements.
PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MAY 4, 1997 AND APRIL 28, 1996
(Unaudited)
(Dollars in Thousands)
1. MANAGEMENT REPRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. In the opinion of management, all adjustments necessary
for a fair presentation of the results of operations for the interim periods
have been included. All such adjustments are of a normal recurring nature.
Because of the seasonal nature of the business, results for interim periods are
not necessarily indicative of a full year's operations. The accounting policies
followed by Pamida Holdings Corporation (the "Company") and additional footnotes
are reflected in the consolidated financial statements contained in the Form
10-K Annual Report of the Company for the fiscal year ended February 2, 1997.
2. INVENTORIES
Substantially all inventories are stated at the lower of cost (last-in,
first-out) or market. Total inventories would have been higher at May 4, 1997
and February 2, 1997 by $6,724 and $6,574 respectively, had the FIFO (first-in,
first-out) method been used to determine the cost of all inventories. Quarterly
LIFO inventory determinations reflect assumptions regarding fiscal year-end
inventory levels and the estimated impact of annual inflation. Actual inventory
levels and annual inflation could vary from estimates made on a quarterly basis.
3. RELATED PARTY TRANSACTIONS
No payments have been made to the Company by Pamida, Inc., and no related party
transactions have occurred between such companies during fiscal 1998 and 1997.
4. LOSS PER COMMON SHARE
Loss per common share was calculated using the weighted average common shares
and dilutive common share equivalents outstanding during the period using the
treasury stock method.
5. RECENTLY ISSUED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings Per Share" which specifies the computation, presentation and
disclosure requirements for earnings per share. The objective of the statement
is to simplify the computation of earnings per share. The impact on the
Company's earnings per share is not materially different than earnings per share
determined in accordance with current guidance. SFAS No. 128 is applicable for
fiscal years ending after December 15, 1997.
6. RECLASSIFICATIONS
Certain reclassifications have been made to the prior year's financial
statements to conform to the current year's presentation.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Thousands)
The following is management's discussion and analysis of certain significant
factors which have affected the Company's results of operations and financial
condition for the periods included in the accompanying consolidated financial
statements.
RESULTS OF OPERATIONS
The following table sets forth an analysis of various components of the
Consolidated Statements of Operations as a percentage of sales for the three
months ended May 4, 1997 and April 28, 1996:
Three Months Ended
---------------------
May 4, April 28,
1997 1996
------- -------
Sales ....................................... 100.0% 100.0%
Cost of goods sold .......................... 77.0 76.0
------- -------
Gross profit ................................ 23.0 24.0
Selling, general and administrative expenses. 21.4 22.2
------- -------
Operating income ............................ 1.6 1.8
Interest expense ............................ 5.4 5.4
------- -------
Loss before income tax benefit .............. (3.8) (3.6)
Income tax benefit .......................... - ( - )
------- -------
Net loss .................................... (3.8) (3.6)
======= =======
SALES for the first quarter of fiscal 1998 increased by $12,778 or 9.7% from
sales for the first quarter of fiscal 1997. The Company operated 149 stores at
the end of the first quarter of fiscal 1998 as compared with 144 stores during
the first quarter of fiscal 1997. Since April 28, 1996 the Company has opened
eight stores in new markets, relocated two stores and closed three stores. The
increase in total sales was primarily attributable to comparable store sales
increases and the effects of the net increase in the number of stores in
operation during the first quarter of fiscal 1998 as compared with last year.
Comparable store sales for the first quarter increased by 6.6% compared to last
year.
The Company experienced sales increases in most merchandise categories. The
largest increases were in the pharmacy prescriptions, housewares, lawn and
garden, sporting goods, men's denim, women's shoes, women's plus size apparel,
misses tops and grocery areas. The Company experienced sales declines in only a
few areas, with men's fashions, automotive and beauty aids having the largest
decreases.
Gross profit increased $1,693 or 5.4% for the first quarter of fiscal 1998
compared to the first quarter of last year as a result of the increases in
sales. As a percentage of sales, gross profit decreased to 23.0% for the first
quarter of fiscal 1998 as compared to 24.0% for the first quarter last year.
This was caused primarily by a normal level of clearance and markdown activity
this year as compared with a lower level of clearance and markdown activity in
the first quarter of last year.
SELLING, GENERAL AND ADMINISTRATIVE (SG&A) Expense increased $1,763 or 6.0% for
the first quarter of fiscal 1998, compared to the first quarter of fiscal 1997.
As a percentage of sales, SG&A expense decreased to 21.4% for the first quarter
of fiscal 1998 as compared to 22.2% last year. Approximately 53.7% of the net
increase in SG&A expense was attributable to planned higher corporate general
and administrative expenses, primarily due to increases in payroll, incentive
compensation expenses and professional fees. Store controllable, payroll and
occupancy costs also increased over last year as planned to accommodate the
higher sales activity.
INTEREST expense increased $647 or 9.1% for the first quarter of fiscal 1998
compared to the same period of fiscal 1997. The increase was due primarily to
increased revolver borrowings to support higher investments in basic inventory
and the Company's seasonal operating pattern. There was also an increase in
interest expense attributable to the promissory notes which require quarterly
interest to be paid in kind.
INCOME TAX BENEFIT - No income tax benefit on losses will be recorded until the
Company can establish with a reasonable degree of certainty the potential
utilization of certain tax loss carry forwards from prior year store closing
charges. The Company does not expect to record any income tax expenses or
benefits during fiscal 1998. No income tax benefits or expenses were recorded in
fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's business is seasonal with first quarter sales (February through
April) lower than sales during the other three quarters; fourth quarter sales
(November through January) have represented approximately 30% of the full year's
sales in recent years and normally involve a greater proportion of higher margin
sales.
The Company has satisfied its seasonal liquidity requirements primarily through
a combination of funds provided from operations and from a revolving credit
facility. Funds used by operating activities totaled $6,063 for the first
quarter of fiscal 1998, and funds provided from operations totaled $176 in the
first quarter of fiscal 1997. The change in cash flow from operating activities
from fiscal 1997 to fiscal 1998 was primarily the result of the inventory
liquidation associated with the forty stores closed in the first quarter of
fiscal 1997.
Effective March 17, 1997, the term of Pamida, Inc.'s (Pamida) committed Loan and
Security Agreement (the Agreement) was extended to March 2000 and the maximum
borrowing limit of the facility was increased to $95,000. Prior to March 17,
1997, borrowings under the Agreement bore interest at a rate of 0.75% per annum
greater than the applicable prime rate. Effective March 17, 1997, borrowings
under the Agreement bear interest at a rate which is tied to the applicable
prime rate or the London Interbank Offered Rate (LIBOR), generally at Pamida's
discretion. The amounts Pamida is permitted to borrow are determined by a
formula based upon the amount of Pamida's eligible inventory. Such borrowings
are secured by security interests in all of the current assets (including
inventory) of Pamida and by liens on certain real estate interests and other
property of Pamida. The Company and two subsidiaries of Pamida have guaranteed
the payment and performance of Pamida's obligations under the Loan and Security
Agreement and have pledged some or all of their respective assets, including the
stock of Pamida owned by the Company, to secure such guarantees.
The Agreement contains provisions imposing operating and financial restrictions
on the Company. Certain provisions of the Agreement require the maintenance of
specified amounts of tangible net worth (as defined) and working capital (as
defined) and the achievement of specified minimum amounts of cash flow (as
defined). Other restrictions in the Agreement and those provided under the
Indenture relating to the Senior Subordinated Notes will affect, among other
things, the ability of Pamida to incur additional indebtedness, pay dividends,
repay indebtedness prior to its stated maturity, create liens, enter into
leases, sell assets or engage in mergers or acquisitions, make capital
expenditures and make investments. These covenants currently have not had an
impact on the Company's ability to fully utilize the revolving credit facility.
However, certain of the covenants, such as those which restrict the ability of
the Company to incur indebtedness or encumber its property or which impose
restrictions on or otherwise limit the Company's ability to engage in
sale-leaseback transactions, may at some future time prevent the Company from
pursuing its store expansion program at the rate that the Company desires.
Obligations under the Agreement were $66,157 at May 4, 1997 and $34,202 at April
28, 1996. As noted above, this facility expires in March 2000, and the Company
intends to refinance any outstanding balance by such date. Borrowings under the
Agreement are senior to the Senior Subordinated Notes of the Company. The
Company had long-term debt and obligations under capital leases of $202,740 at
May 4, 1997 and $201,147 at April 28, 1996. The Company's ability to satisfy
scheduled principal and interest payments under such obligations in the ordinary
course of business is dependent primarily upon the sufficiency of the Company's
operating cash flow and continued access to financial markets. At May 4, 1997,
the Company was in compliance with all covenants contained in its various
financing agreements.
On December 18, 1992, the promissory notes of the Company were amended effective
as of December 1, 1992 to provide that, until the obligations of Pamida and the
Company under certain of Pamida's credit agreements have been repaid, the
quarterly interest payments on the promissory notes of the Company will be paid
in kind. Since the Company conducts no operations of its own, the only cash
requirement of the Company relates to preferred stock dividends in the aggregate
annual amount for fiscal 1998 totaling approximately $385; and Pamida is
expressly permitted under its existing credit facilities to pay dividends to the
Company to fund such preferred stock dividends. However, the General Corporation
Law of the State of Delaware, under which the Company and Pamida are
incorporated, allows a corporation to declare or pay a dividend only from its
surplus or from the current or the prior year's earnings. Due to the accumulated
deficit resulting primarily from the store closings and the write-off of
goodwill and other long-lived assets recognized in the fourth quarter of fiscal
1996, the Company and Pamida did not declare or pay any cash dividends in fiscal
1997 or the first quarter of fiscal 1998 and may pay cash dividends in future
periods only to the extent that the Company and Pamida satisfy the applicable
statutory standards which include the Company's having a net worth equal to at
least the aggregate par value of the preferred stock which amounts to $2. The
cumulative dividend rate on the preferred stock increases by 0.5% per quarter
(with a maximum aggregate increase of 5%) on each quarterly dividend payment
date on which the preferred stock dividends are not paid currently on a
cumulative basis. Any unpaid dividends are added to the liquidation value until
paid in cash. Such nonpayment of preferred stock dividends does not accelerate
the redemption rights of the preferred stockholders.
The Company made capital expenditures of $2,222 in the first quarter of fiscal
1998 compared to $508 during the first quarter of fiscal 1997. The Company plans
to open three new stores in fiscal 1998 and will consider additional
opportunities for new store locations as they arise. Total capital expenditures
are expected to total approximately $9,500 in fiscal 1998. The Company expects
to fund these expenditures from cash flow from its operations. The costs of
buildings and land for new store locations are expected to be financed by
operating or capital leases with unaffiliated landlords. The Company's expansion
program also will require inventory of approximately $1,000 to $1,200 for each
new market store, which the Company expects to finance through trade credit,
borrowings under the Agreement and cash flow from operations. The recent changes
to the Agreement, along with expected improvements in the Company's cash flow
from operations, should provide adequate resources to meet the Company's
near-term liquidity requirements. On a long-term basis, the Company's expansion
will require continued investments in store locations, working capital and
distribution and infrastructure enhancements. The Company expects to continue to
finance some of these investments through leases from unaffiliated landlords,
trade credit, borrowings under the Agreement and cash flow from operations but
ultimately will need to explore additional sources of funds which may include
capital structure changes. Currently, it is not possible for the Company to
predict with any certainty either the timing or the availability of such
additional financing.
INFLATION
The Company uses the LIFO method of inventory valuation in its financial
statements; as a result, the cost of merchandise sold approximates current
costs. The Company's rental expense is generally fixed and, except for small
amounts of percentage rents and rentals adjusted by cost-of-living increases
tied to the Consumer Price Index or interest rates, has not been affected by
inflation.
FORWARD-LOOKING STATEMENTS
This management's discussion and analysis contains certain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "1995 Act"). Such statements are made in good faith by the Company
pursuant to the safe-harbor provisions of the 1995 Act. In connection with these
safe-harbor provisions, this management's discussion and analysis contains
certain forward-looking statements which reflect management's current views and
estimates of future economic circumstances, industry conditions, company
performance and financial results. The statements are based on many assumptions
and factors including sales results, expense levels, competition and interest
rates as well as other risks and uncertainties inherent in the Company's
business, capital structure and the retail industry in general. Any changes in
these factors could result in significantly different results for the Company.
The Company further cautions that the forward-looking information contained
herein is not exhaustive or exclusive. The Company does not undertake to update
any forward-looking statements which may be made from time to time by or on
behalf of the Company.
PART II - OTHER INFORMATION
ITEMS 1-2.
None
ITEM 3.
The General Corporation Law of Delaware, under which the registrant is
incorporated, allows a corporation to declare or pay a dividend only from its
surplus or from the current or the prior year's earnings. Due to the retained
deficit resulting primarily from store closings and the write-off of goodwill
and other long-lived assets in the fourth quarter of fiscal 1996, the registrant
was not permitted to pay dividends in fiscal 1997 and may pay dividends in
fiscal 1998 and ensuing years only to the extent that the registrant satisfies
the applicable statutory standards, which include the registrant's having a net
worth equal to at least the aggregate par value of its outstanding preferred
stock, which amounts to $2. Accordingly, the registrant was restricted from
declaring or paying the quarterly dividends payable during fiscal 1997 and on
February 28, 1997, with respect to the outstanding 16.25% Senior Cumulative
Preferred Stock and 14.25% Junior Cumulative Preferred Stock of the registrant
and does not anticipate paying dividends on the registrant's preferred stock in
the foreseeable future. Pursuant to the Certificate of Incorporation of the
registrant, the dividend rate on the registrant's preferred stock increases
cumulatively by 0.5% per quarter (with a maximum cumulative increase of 5%) on
each quarterly dividend payment date on which the preferred stock dividends are
not paid currently on a cumulative basis. As of the date of this report, the
total preferred stock dividend arrearage was $434, representing five quarterly
dividend payments at the applicable dividend rates. Any unpaid dividends are
added to the liquidation value of the preferred stock until paid in cash. Such
nonpayment of preferred stock dividends does not accelerate the redemption
rights of the preferred stockholders.
ITEMS 4-5:
None
ITEM 6:
(a) Exhibits.
- 10.1 Amendment No. 6 to Loan and Security Agreement among Pamida, Inc.
and Seaway Importing Company, as Borrowers, Congress Financial
Corporation (Southwest) and BankAmerica Business Credit, Inc., as
Lenders, and Congress Financial Corporation (Southwest), as Agent,
dated May 8, 1997
- 27.1 Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the quarter for which this
report is filed.
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.
PAMIDA HOLDINGS CORPORATION
---------------------------
(Registrant)
Date: June 4, 1997 By: /s/ Steven S. Fishman
Steven S. Fishman,
Chairman, President and
Chief Executive Officer
Date: June 4, 1997 By: /s/ Todd D. Weyhrich
Todd D. Weyhrich,
Chief Accounting Officer
AMENDMENT NO. 6 TO LOAN AND SECURITY AGREEMENT
PAMIDA, INC.
8800 F Street
Omaha, Nebraska 68127
SEAWAY IMPORTING COMPANY
8800 F Street
Omaha, Nebraska 68127
May 8, 1997
Congress Financial Corporation (Southwest)
1201 Main Street
Dallas, Texas 75250
BankAmerica Business Credit, Inc.
40 East 52nd Street
New York, New York 10017
Gentlemen:
Congress Financial Corporation (Southwest), a Texas corporation in its
individual capacity ("Congress"), BankAmerica Business Credit, Inc., formerly
known as BA Business Credit Inc., a Delaware corporation ("BABC," together with
Congress each individually a "Lenders" and collectively, "Lenders"), Pamida,
Inc., a Delaware corporation ("Pamida"), Seaway Importing Company, a Nebraska
corporation ("Seaway, " together with Pamida, collectively, "Borrowers") and
Congress Financial Corporation (Southwest), a Texas corporation, as Agent for
Lenders (in such capacity, "Agent") have entered into certain financing
arrangements pursuant to the Loan and Security Agreement, dated March 30, 1993,
by and among Agent, Lenders and Borrowers (as amended by Amendment No. 1 to Loan
and Security Agreement dated as of January 23, 1995, Amendment No. 2 to Loan and
Security Agreement dated as of January 28, 1996, Amendment No. 3 to Loan and
Security Agreement dated as of September 16, 1996, Amendment No. 4 to Loan and
Security Agreement dated as of January 31, 1997 and Amendment No. 5 to Loan and
Security Agreement dated as of March 17, 1997 and as amended hereby, the "Loan
Agreement", and together with all agreements, documents and instruments at any
time executed and/or delivered in connection therewith or related thereto, as
the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, collectively, the "Financing
Agreements").
Borrowers have requested certain amendments to the amounts of Consolidated
Adjusted Cash Flow (as defined in the Loan Agreement) which Borrowers are
required to maintain and Agent and Lenders are willing to amend such covenants
of the Financing Agreements, subject to the terms and conditions contained
herein. By this Amendment, Agent, Lenders and Borrowers desire and intend to
evidence such amendments.
In consideration of the foregoing and the agreements and covenants
contained herein, the parties hereto agree as follows:
1. CONSOLIDATED ADJUSTED CASH FLOW. Section 6.21 of the Loan Agreement is
hereby deleted in its entirety and the following substituted therefor:
"6.21 Consolidated Adjusted Cash Flow. For any fiscal year ending on the
Sunday nearest January 31 of each calendar year, Pamida and its
Subsidiaries shall not permit Consolidated Adjusted Cash Flow to be less
than the amount indicated for the following periods:
DATE AMOUNT
------------------------------------ ------------
(i) The fiscal quarter ending
on or about April 30 ($10,500,000)
(ii) The two (2) fiscal quarters,
cumulatively, ending on or
about July 31 ($ 9,500,000)
(iii) The three (3) fiscal quarters,
cumulatively, ending on or
about October 31 ($ 6,500,000)
(iv) The four (4) fiscal quarters,
cumulatively, ending on or
about January 31 $ 3,500,000
2. REPRESENTATIONS, WARRANTIES AND COVENANTS. In addition to the continuing
representations, warranties and covenants heretofore or hereafter made by
Borrowers to Agent and Lenders pursuant to the Financing Agreements,
Borrowers hereby represent, warrant and covenant with and to Agent and
Lenders as follows (which representations, warranties and covenant are
continuing and shall survive the execution and delivery hereof and shall be
incorporated into and made a part of the Financing Agreements):
(a) No Event of Default exists on the date of this Amendment (after giving
effect to the amendments to the Financing Agreements made by this
Amendment).
(b) This Amendment has been duly authorized, executed and delivered by
each of Borrowers and is in full force and effect as of the date
hereof, and the agreements and obligations of each of Borrowers
contained herein constitute legal, valid and binding obligations of
each of Borrowers enforceable against each of Borrowers in accordance
with their respective terms.
(c) All required consents or approvals of any persons other than Lenders
and Agent to the authorization, execution and delivery of this
Amendment have been obtained by each of Borrowers and Guarantors, and
the authorization, execution and delivery hereof does not violate or
breach any provision of or constitute a default under any material
indenture, mortgage, deed of trust, agreement or instrument to which
any of Borrowers or Guarantors is or may be bound, including, without
limitation, the Note Indenture.
3. CONDITIONS PRECEDENT. The effectiveness of the amendments contained herein
shall be subject to the satisfaction of each of the following conditions
precedent in a manner satisfactory to Agent on behalf of Lenders:
(a) Agent shall have received, in form and substance satisfactory to
Agent, an executed original of this Amendment, duly authorized,
executed and delivered by each of Borrowers, Guarantors and BABC; and
(b) no Event of Default shall have occurred and be continuing and no event
shall have occurred or condition be existing and continuing which,
with notice or passage of time or both, would constitute an Event of
Default.
4. EFFECT OF THIS AMENDMENT. Except as modified pursuant hereto, no other
changes or modifications to the Financing Agreements are intended or
implied and in all other respects the Financing Agreements are hereby
specifically ratified, restated and confirmed by all parties hereto as of
the effective date hereof. To the extent of any conflict between the terms
of this Amendment and the other Financing Agreements, the terms of this
Amendment shall control.
5. FURTHER ASSURANCES. The parties hereto shall execute and deliver such
additional documents and take such additional action as may be necessary or
desirable to effectuate the provisions and purposes of this Amendment.
6. GOVERNING LAW. The rights and obligations hereunder of each of the parties
hereto shall be governed by and interpreted and determined in accordance
with the laws of the State of New York.
7. BINDING EFFECT. This Amendment shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
assigns.
8. COUNTERPARTS. This Amendment may be executed in any number of counterparts,
but all of such counterparts shall together constitute but one and the same
agreement. In making proof of this Amendment, it shall not be necessary to
produce or account for more than one counterpart thereof signed by each of
the parties hereto.
Please sign the enclosed counterpart of this Amendment in the space
provided below, whereupon this Amendment, as so accepted by Agent and Lenders,
shall become a binding agreement among Borrowers, Agent and Lenders.
Very truly yours,
PAMIDA, INC.
By: /S/ GEORGE R. MIHALKO
Title: SENIOR VICE PRESIDENT & CFO
SEAWAY IMPORTING COMPANY
By: /S/ GEORGE R. MIHALKO
Title: SENIOR VICE PRESIDENT & CFO
AGREED:
CONGRESS FINANCIAL CORPORATION
(SOUTHJWEST), individually and as Agent
By: /S/ EDWARD FRANCO
Title: SENIOR VICE PRESIDENT
BANKAMERICA BUSINESS CREDIT, INC.,
formerly known as BA Business Credit Inc.
By: /S/ PATRICK J. WILSON
Title: VICE PRESIDENT
ACKNOWLEDGED AND AGREED:
PAMIDA HOLDINGS CORPORATION
By: /S/ GEORGE R. MIHALKO
Title: SENIOR VICE PRESIDENT & CFO
PAMIDA TRANSPORTATION COMPANY
By: /S/ GEORGE R. MIHALKO
Title: SENIOR VICE PRESIDENT & CFO
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
Consolidated Balance Sheet of Pamida Holdings Corporation and Subsidiary as of
May 4, 1997 and the related Consolidated Statement of Operations for the 13
weeks then ended and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000864760
<NAME> PAMIDA HOLDINGS CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-01-1998
<PERIOD-END> MAY-04-1997
<CASH> 9,003
<SECURITIES> 0
<RECEIVABLES> 8,744
<ALLOWANCES> 50
<INVENTORY> 159,294
<CURRENT-ASSETS> 180,154
<PP&E> 105,719
<DEPRECIATION> 62,955
<TOTAL-ASSETS> 274,085
<CURRENT-LIABILITIES> 156,967
<BONDS> 202,740
2,322
0
<COMMON> 50
<OTHER-SE> (92,917)
<TOTAL-LIABILITY-AND-EQUITY> 274,085
<SALES> 144,564
<TOTAL-REVENUES> 144,564
<CGS> 111,296
<TOTAL-COSTS> 142,270
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,753
<INCOME-PRETAX> (5,459)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,459)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,564)
<EPS-PRIMARY> (1.11)
<EPS-DILUTED> (1.11)
</TABLE>
