<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 August 3, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________ to ______________________
Commission file number 019774
United Retail Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 51 0303670
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
365 West Passaic Street, Rochelle Park, NJ 07662
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 845-0880
________________________________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
<PAGE> 2
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 (the "1934 Act") 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
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the 1934 Act
subsequent to the distribution of securities under a plan confirmed by a court.
YES NO
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
As of August 3, 1996, 12,190,375 shares of the registrant's common
stock, $.001 par value per share, were outstanding.
<PAGE> 3
ITEM 1. FINANCIAL STATEMENTS UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AUGUST 3, FEBRUARY 3, JULY 29,
1996 1996 1995
------------ ------------ ------------
ASSETS (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 17,773 $ 17,040 $ 27,434
Income taxes receivable -- 2,719 --
Accounts receivable 1,619 1,770 6,053
Inventory 39,527 40,401 34,602
Prepaid rents 4,513 4,473 4,435
Other prepaid expenses 2,857 2,936 2,418
Deferred income taxes 463 -- 933
------------ ------------ ------------
Total current assets 66,752 69,339 75,875
Property and equipment, net 58,552 60,737 60,436
Deferred charges and other intangible assets,
net of accumulated amortization of $1,373, $1,265
and $1,161 6,997 6,846 6,952
Deferred income taxes 763 811 4,188
Other assets 1,087 1,300 1,055
------------ ------------ ------------
Total assets $ 134,151 $ 139,033 $ 148,506
============ ============ ============
LIABILITIES
Current liabilities:
Current portion of distribution center financing $ 936 $ 901 $ 866
Accounts payable, trade 14,200 15,210 15,438
Accrued expenses 13,976 14,834 14,844
Income taxes payable 438 -- 3,830
------------ ------------ ------------
Total current liabilities 29,550 30,945 34,978
Distribution center financing 11,856 12,333 12,792
Other long-term liabilities 8,983 9,472 8,647
------------ ------------ ------------
Total liabilities 50,389 52,750 56,417
------------ ------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value; authorized
1,000,000; none issued
Common stock, $.001 par value; authorized 13 13 13
30,000,000; issued 12,680,375; outstanding
12,190,375
Additional paid-in capital 78,259 78,182 78,057
Retained earnings 6,072 8,670 14,601
Treasury stock (490,000 shares) at cost (582) (582) (582)
------------ ------------ ------------
Total stockholders' equity 83,762 86,283 92,089
------------ ------------ ------------
Total liabilities and stockholders' equity $ 134,151 $ 139,033 $ 148,506
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
<PAGE> 4
UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
-------------------------------- --------------------------------
AUGUST 3, JULY 29, AUGUST 3, JULY 29,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 96,178 $ 99,122 $ 185,051 $ 183,976
Cost of goods sold, including
buying and occupancy costs 78,664 77,112 148,836 142,896
------------ ------------ ------------ ------------
Gross profit 17,514 22,010 36,215 41,080
General, administrative and
store operating expenses 20,480 20,074 39,898 38,937
------------ ------------ ------------ ------------
Operating (loss) income (2,966) 1,936 (3,683) 2,143
Interest (income) expense, net (34) (79) 211 (89)
------------ ------------ ------------ ------------
(Loss) income before income taxes (2,932) 2,015 (3,894) 2,232
(Benefit) provision for income taxes (944) 839 (1,296) 940
------------ ------------ ------------ ------------
Net (loss) income $ (1,988) $ 1,176 $ (2,598) $ 1,292
============ ============ ============ ============
Net (loss) income per
common share $ (0.16) $ 0.09 $ (0.21) $ 0.10
============ ============ ============ ============
Weighted average number of
common and common equivalent
shares outstanding 12,190,375 13,251,270 12,190,375 13,313,669
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
<PAGE> 5
UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
-------------------------
AUGUST 3, JULY 29,
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (2,598) $ 1,292
Adjustments to reconcile net (loss) income to net cash
from operating activities:
Depreciation and amortization of property and equipment 5,046 4,953
Amortization of deferred charges and other
intangible assets 109 121
Loss on disposal of assets 234 11
Compensation expense 77 121
Benefit from deferred income taxes (415) (665)
Deferred lease assumption revenue amortization (272) 120
Changes in operating assets and liabilities:
Accounts receivable 151 581
Income taxes receivable 2,719 -
Inventory 874 2,916
Accounts payable and accrued expenses (1,228) 373
Prepaid expenses 39 (448)
Income taxes payable 438 2,203
Other assets and liabilities (277) 2,459
-------- --------
Net Cash From Operating Activities 4,897 14,037
-------- --------
INVESTING ACTIVITIES:
Capital expenditures (3,097) (4,705)
Deferred payment for property and equipment (625) -
-------- --------
Net Cash Used for Investing Activities (3,722) (4,705)
-------- --------
FINANCING ACTIVITIES:
Net proceeds from issuance of common stock - 4
Repayments of long-term debt (442) (408)
-------- --------
Net Cash Used for Financing Activities (442) (404)
-------- --------
Net increase in cash and cash equivalents 733 8,928
Cash and cash equivalents, beginning of period 17,040 18,506
-------- --------
Cash and cash equivalents, end of period $ 17,773 $ 27,434
======== ========
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
<PAGE> 6
UNITED RETAIL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of United
Retail Group, Inc. and its subsidiaries (the "Company"). All significant
intercompany accounts and transactions have been eliminated.
The consolidated financial statements as of and for the thirteen and
twenty-six weeks ended August 3, 1996 and July 29, 1995 are unaudited and are
presented pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, the consolidated financial statements should be read in
conjunction with the financial statement disclosures contained in the Company's
1995 Annual Report. In the opinion of management, the accompanying consolidated
financial statements reflect all adjustments necessary (which are of a normal
recurring nature) to present fairly the financial position and results of
operations and cash flows for the interim periods, but are not necessarily
indicative of the results of operations for a full fiscal year.
Certain prior year balances have been reclassified to conform with the
fiscal 1996 presentation.
2. NET (LOSS) INCOME PER SHARE
Net loss per common share excludes common equivalent shares (stock
options), because their effect is anti-dilutive. Net income per common share is
computed using the weighted average number of common and common equivalent
shares (stock options) outstanding during the period.
3. FINANCING ARRANGEMENTS
In March 1994, the Company closed a fifteen-year $8.0 million loan
bearing interest at 8.64%. Interest and principal are payable in equal monthly
installments beginning May 1, 1994. The loan is collateralized by a mortgage on
the national distribution center owned by the Company in Troy, Ohio.
The Company and The Chase Manhattan Bank ("Chase") are parties to
agreements providing two credit facilities, the term of which expires in
February 1999. The first facility provides for the issuance by Chase of trade
letters of credit for the account of the Company in an aggregate amount at any
time of up to $25.0 million, of which $20.3 million was utilized at
<PAGE> 7
August 3, 1996. The second facility provides for revolving credit loans totaling
a maximum of $15.0 million, of which up to $10.0 million would be available for
standby letters of credit for general corporate purposes. As of August 3, 1996,
the Company has not drawn upon its revolving credit facility except to issue
standby letters of credit totaling $4.0 million as collateral for obligations
under casualty insurance policies.
The Company is obligated to maintain several financial covenants,
including a current ratio and a fixed charges ratio, and has restrictions on
paying dividends, as well as a limitation on aggregate capital expenditures.
4. OTHER OPERATING ACTIVITIES
In July 1995, the Company agreed to assume the lease obligations of 21
stores previously operated by another retail chain. In order to induce the
Company to assume these leases, the assignor of the leases paid the Company
approximately $3.5 million. This payment has been recorded as accrued rent
payable and will be amortized against rent expense over the life of the assumed
leases.
5. INCOME TAXES
The (benefit) provision for income taxes consists of (dollars in
thousands):
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
--------------------------- ---------------------------
August 3, July 29, August 3, July 29,
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Currently payable:
Federal $(672) $1,361 $ (914) $1,473
State 115 99 33 132
----- ------ ------- ------
(557) 1,460 (881) 1,605
----- ------ ------- ------
Deferred:
Federal (317) (643) (340) (679)
State (70) 22 (75) 14
----- ------ ------- ------
(387) (621) (415) (665)
----- ------ ------- ------
$(944) $ 839 $(1,296) $ 940
===== ====== ======= ======
</TABLE>
<PAGE> 8
Reconciliation of the (benefit) provision for income taxes from the U.S.
Federal statutory rate to the Company's effective rate is as follows:
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------------------------------------------------
August 3, 1996 July 29, 1995
-------------------------- -----------------------
<S> <C> <C> <C> <C>
Tax at Federal rate (34%) $(997) (34.0)% $685 34.0%
State income taxes, net of 30 1.0% 104 5.2%
federal benefit
Goodwill amortization 18 0.6% 18 0.9%
Other 5 0.2% 32 1.5%
----- ----- ---- ----
$(944) (32.2)% $839 41.6%
===== ===== ==== ====
</TABLE>
<TABLE>
<CAPTION>
Twenty-six Weeks Ended
--------------------------------------------------------------
August 3, 1996 July 29, 1995
-------------------------- -----------------------
<S> <C> <C> <C> <C>
Tax at Federal rate (34%) $(1,324) (34.0)% $759 34.0%
State income taxes, net of (28) (0.7)% 125 5.6%
federal benefit
Goodwill amortization 35 0.9% 35 1.6%
Other 20 0.5% 21 0.9%
------- ----- ---- ----
$(1,297) (33.3)% $940 42.1%
======= ===== ==== ====
</TABLE>
The net deferred tax asset reflects the tax impact of temporary
differences. The components of the net deferred tax asset are as follows:
Assets:
Inventory $ 745
Accruals and reserves 173
Compensation 2,096
-------
3,014
Liabilities:
Depreciation (1,788)
-------
Net deferred tax asset $ 1,226
=======
Future realization of the tax benefits attributable to these existing
deductible temporary differences ultimately depends on the existence of
sufficient taxable income within the carryback and/or carryforward period
available under the tax law at the time of the tax deduction. As of August 3,
1996, the compensation related deferred tax asset will be fully realizable upon
the exercise of all of the outstanding options only if (i) the market price of
the stock equals or exceeds $3.875 per share upon exercise and (ii) the
compensation expense
<PAGE> 9
deduction is not limited by future enacted tax laws. The underlying options of
the compensation related deferred tax asset are exercisable through December 31,
1999.
At August 3, 1996, the Company has pre-acquisition net operating loss
carryforwards, aggregating approximately $0.6 million, available to reduce
future taxable income in certain states, expiring through 2004.
6. SUPPLEMENTAL CASH FLOW INFORMATION
Net cash flow from operating activities includes cash payments for
interest and income taxes as follows (dollars in thousands):
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
--------------------------- ---------------------------
August 3, July 29, August 3, July 29,
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Cash interest:
Interest expense (income),
net per statements of income $ (34) $ (79) $ 211 $ (89)
Less: Non-cash
interest income(expense) 34 (8) 20 (53)
------- ------ ------- -----
Net cash interest, including
interest income of $299, $314,
$495 and $829 $ 0 $ (87) $ 231 $(142)
======= ===== ======= =====
Income tax refunds $(2,995) $(262) $(4,038) $(423)
======= ===== ======= =====
</TABLE>
<PAGE> 10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SECOND QUARTER FISCAL 1996 VERSUS SECOND QUARTER FISCAL 1995
Net sales for the second quarter of Fiscal 1996 decreased 3.0% from the
second quarter of Fiscal 1995, to $96.2 million from $99.1 million, principally
from a decrease in sales volume rather than a change in average price. Average
stores open increased from 537 to 582; see, however, "Properties," regarding the
Company's plan for future store openings. Comparable store sales decreased 8.3%
for the second quarter of Fiscal 1996. There is no assurance that sales and
comparable store sales will not continue to decrease. (Net sales for August 1996
were $24.7 million compared to $24.6 million in August 1995; comparable store
sales for the month decreased 1.8%.)
Gross profits decreased by $4.5 million to $17.5 million in the second
quarter of Fiscal 1996 from $22.0 million in the second quarter of Fiscal 1995,
decreasing as a percentage of net sales to 18.2% from 22.2%. The decrease in
gross profits as a percentage of net sales was primarily attributable to a
decrease in the merchandise margin rate and higher occupancy costs as a
percentage of net sales, partially offset by a reduction in the payroll expense
for merchants and planners. There is no assurance that gross profits will not
continue to decrease.
The women's apparel industry is subject to rapidly changing consumer
fashion preferences. The Company's performance depends on the operational
flexibility to respond to such changes quickly. The Company believes that
inaccuracy of its merchandise assortment contributed to the decrease in sales
and merchandise margin rates. See, "A Single Merchandise Assortment in
Mid-Spring 1996." The industry has also been subject to shifting shopping
patterns, both within the Company's sector (the specialty store sector) and in
other channels of distribution, such as department stores, catalogues and
electronic media. The Company also believes that consumer pressure to reduce
prices throughout the women's apparel industry has become a permanent influence
on the retail marketplace. Finally, in the first half of Fiscal 1996 the Company
began to give greater prominence to its new The Avenue(R) brand of merchandise
and the transition from its older proprietary brands may have had an adverse
effect on sales and merchandise margin rates.
General, administrative and store operating expenses were $20.5 million
in the second quarter of Fiscal 1996, compared to $20.1 million in the second
quarter of the previous year, principally from higher payroll costs, resulting
principally from an increase in the number of stores. As a percentage of net
sales, general, administrative and store operating expenses increased to 21.3%
from 20.3%. (The increase in the minimum wage enacted in August 1996 will not
have a material effect on general, administrative and store operating expenses.)
During the second quarter of Fiscal 1996, the Company incurred an
operating loss of $3.0 million compared to operating income of $1.9 million for
the second quarter of Fiscal 1995. The operating loss was 3.1% of net sales.
There is no assurance that the Company will not continue to incur operating
losses.
Net interest income was $34,000 for the second quarter of Fiscal 1996,
compared to $79,000 in the second quarter of Fiscal 1995.
The Company had an income tax benefit of $0.9 million in the second
quarter of Fiscal 1996 and a provision for income taxes of $0.8 million in the
second quarter of Fiscal 1995.
The Company incurred a net loss of $2.0 million for the second quarter
of Fiscal 1996, compared to net income of $1.2 million for the second quarter of
Fiscal 1995.
<PAGE> 11
FIRST HALF FISCAL 1996 VERSUS FIRST HALF FISCAL 1995
Net sales for the first half of Fiscal 1996 increased 0.6% from the
first half of Fiscal 1995, to $185.1 million from $184.0 million, principally
from an increase in average stores open. Average stores open increased from 533
to 580. Comparable store sales decreased 5.2% for the first half of Fiscal 1996.
Gross profits decreased by $4.9 million to $36.2 million in the first
half of Fiscal 1996 from $41.1 million in the first half of Fiscal 1995,
decreasing as a percentage of net sales to 19.6% from 22.3%. The decrease in
gross profits as a percentage of net sales was primarily attributable to a
decrease in the merchandise margin rate and higher occupancy costs as a
percentage of net sales, partially offset by a reduction in the payroll expense
for merchants and planners.
General, administrative and store operating expenses were $39.9 million
in the first half of Fiscal 1996, compared to $38.9 million in the first half of
the previous year, principally from higher payroll costs, resulting principally
from an increase in the number of stores, partially offset by lower benefits
expenses. As a percentage of net sales, general, administrative and store
operating expenses increased to 21.6% from 21.2%.
During the first half of Fiscal 1996, the Company incurred an operating
loss of $3.7 million compared to operating income of $2.1 million for the first
half of Fiscal 1995. The operating loss was 2.0% of net sales.
Net interest expense was $211,000 for the first half of Fiscal 1996,
compared to net interest income of $89,000 in the first half of Fiscal 1995. The
net interest expense resulted principally from reduced interest income (lower
rates on smaller invested cash balances) combined with bank fees associated with
the extension of the Company's credit facilities.
The Company had an income tax benefit of $1.3 million in the first half
of Fiscal 1996 and a provision for income taxes of $0.9 million in the first
half of Fiscal 1995.
The Company incurred a net loss of $2.6 million for the first half of
Fiscal 1996, compared to net income of $1.3 million for the first half of Fiscal
1995.
<PAGE> 12
A SINGLE MERCHANDISE ASSORTMENT COMMENCING IN MID-SPRING 1996
The Company's merchandising had a divisional structure in the first
half of Fiscal 1995, with one team of merchants providing inventory for stores
located principally in malls and a separate team of merchants providing
different inventory for stores concentrated in strip shopping centers. In order
to improve its merchandise assortments, the Company changed from a divisional
merchandising methodology to one in which a single team provides the same
inventory for all the Company's stores. The separate teams of merchants for mall
stores and strip shopping center stores were unified in the third quarter of
Fiscal 1995.
The unified merchandising structure has three specialized components.
Product development is a new function that was added to the existing
merchandising function and product quality function. In April 1996, the Company
recruited an experienced executive to handle product development, that is,
fashion content and design.
The first unified merchandise assortment arrived in Mid-Spring 1996.
The Company believes Fiscal 1996 is a period of transition for the unified team
of merchants and the new product development team. There is no assurance that
the new merchandising structure will increase sales and improve merchandise
margin rates.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash on hand was $17.8 million at August 3, 1996; $17.0
million at February 3, 1996; and $27.4 million at July 29, 1995.
Inventory was $39.5 million at August 3, 1996; $40.4 million at
February 3, 1996; and $34.6 million at July 29, 1995. The Company's inventory
levels peak in early May and December. During Fiscal 1995, the highest inventory
level was $54.9 million. Import purchases are made in U.S. dollars and are
generally financed by trade letters of credit. Short-term trade credit
represents a significant source of financing for domestic merchandise purchases.
Trade credit arises from the willingness of the Company's domestic vendors to
grant extended payment terms for inventory purchases and is generally financed
either by the vendor or a third-party factor. In Fiscal 1995, domestic purchases
and import purchases each constituted approximately one-half of total purchases.
The Company has agreements with The Chase Manhattan Bank ("Chase")
providing two credit facilities until February 1999. The first facility provides
for the issuance by Chase of trade letters of credit for the account of the
Company in an aggregate amount at any time of up to $25.0 million, of which
$20.3 million was utilized at August 3, 1996. The second facility provides for
revolving credit loans totaling a maximum of $15.0 million, of which up to $10.0
million would be available for standby letters of credit for general corporate
purposes. The credit facilities are secured by a pledge of the stock of the
Company's subsidiaries and the Company's investments in cash equivalents. Also,
merchandise purchased under trade letters of credit is subject to a security
interest pursuant to the Letter of Credit Agreement. Finally, the Company is
required to maintain most of its deposit account balances at Chase, where the
deposits are subject to a right of offset by Chase. Loans under the revolving
credit facility will bear interest, at the option of the Company, at either (i)
the higher of the Federal Funds Rate plus 0.5% or the prime commercial lending
rate of Chase, or (ii) the London Interbank Offered Rate plus 1.5%. The Company
has not drawn upon its revolving credit facility except to issue standby letters
of credit totaling $4.0 million at August 3, 1996 as collateral for obligations
in the ordinary course of business under casualty insurance policies.
<PAGE> 13
The agreements for the credit facilities contain a number of financial
covenants, including (i) tangible net worth to equal at least $70.0 million
plus, for each fiscal year ending after February 3, 1996, for which net income
shall be positive, an amount equal to 50% of net income, and (ii) capital
expenditures not to exceed (A) $6.5 million in Fiscal 1996 and (B) after Fiscal
1996, $10.0 million per annum plus, during the period after Fiscal 1996 the sum
of (x) $10.0 million plus (y) if adjusted cash flow (as defined in the
agreements) after February 4, 1996 is positive, 75% of adjusted cash flow for
the period. The agreements also require: (i) the ratio of total debt (excluding
accrued and payable expenses incurred in the ordinary course of business) to
tangible net worth not be .45 to 1.0 or more, (ii) the fixed charges ratio (as
defined in the agreements) not be less than 0.9 to 1.0 through January 4, 1997
and thereafter not be less than 1.0 to 1.0, (iii) the ratio of current assets to
current liabilities not be less than 1.25 to 1.0, (iv) cash flow not be less
than minimum amounts specified in the agreements, and (v) liquidity, defined as
the sum of cash plus cash equivalents plus the unused commitment under the
revolving credit facility, in Fiscal 1996 not be less than:
Month Amount
----- ------
8/4-8/31 $21 million
9/1-10/5 $20 million
10/6-11/2 $13 million
11/3-11/30 $10 million
12/1-1/4 $27 million
1/5-2/1 $21 million
The agreements also include certain restrictive covenants that impose
limitations (subject to certain exceptions) on the Company with respect to,
among other things, making or owning certain investments, declaring or paying
dividends, acquiring Common Stock or preferred stock of the Company, making
loans, engaging in any line of business other than apparel retailing, engaging
in certain transactions with affiliates, or consolidating, merging or making
acquisitions outside the ordinary course of business. The Company does not
believe that continued compliance with the covenants under the agreements for
the credit facilities will materially restrict its anticipated operations. It
would constitute an event of default under the agreements if a majority of the
Company's outstanding Common Stock were to be held by one person, or an
investment group, other than an affiliate of The Limited, Inc., or Raphael
Benaroya, the Chairman of the Board, President and Chief Executive Officer of
the Company.
The Company believes that its credit facilities, together with cash
flows from operating activities, will be adequate to meet anticipated working
capital needs, including seasonal financing needs, for the next 12 months.
The accounts receivable from the Company's proprietary credit cards are
purchased daily by Citibank (South Dakota), N.A. ("Citibank") at a discount that
is adjusted annually. There is no assurance that the annual adjustment in the
discount rate will not increase materially the cost of the Company's proprietary
credit card programs.
The Company's agreements with Chase and with Citibank have been filed,
or incorporated by reference, as exhibits to this Report. The above summaries of
these agreements are qualified in their entirety by reference to these exhibits.
Overseas production of merchandise purchased by the Company is mainly
in South Asia (principally Hong Kong, Taiwan, India, and South Korea) and Turkey
and is obtained through independent agents. The Company's operations may be
adversely affected by political instability resulting in disruption of trade
with foreign countries in which the Company's foreign suppliers are located, the
adoption of additional regulations relating to imports or duties, the imposition
of taxes or other charges on imports, any significant fluctuation of the value
of the dollar against foreign currencies, and restrictions on the transfer of
funds.
<PAGE> 14
PROPERTIES
The Company leased 579 retail stores at August 3, 1996, of which 309
stores were located in strip shopping centers, 240 stores were located in malls
and 30 were located in downtown shopping districts. The Company's retail square
footage was 2.2 million square feet at July 29, 1995 and August 3, 1996.
The Company presently plans to maintain approximately the same amount
of retail square footage and to obtain increases in net sales from higher sales
per square foot. There is no assurance, however, that net sales will increase.
The Company plans to open new mall stores only in exceptional circumstances and
to decrease the retail square footage in mall locations gradually by letting
underperforming leases expire. Subject to space availability, the Company plans
to open stores in strip shopping centers to replace mall stores that close. The
Company intends to pay the costs of new store openings from net cash provided by
operating activities.
New stores and newly remodeled stores will use The Avenue(R) trade
name.
In the first half of Fiscal 1995, the Company was conducting an
experiment with a total of 55 new stores and remodeled stores that sold both
large size merchandise and smaller "missy" sizes in separate departments. The
Company discontinued "missy" assortments in those stores and sells large sizes
there exclusively. (No writeoff was taken in connection with the discontinuance
of the "missy" assortments.) The conversion was completed in the second quarter
of Fiscal 1996.
SEASONALITY
The Company's business is seasonal, with the first half of each fiscal
year usually providing a greater portion of the Company's annual net sales and
operating income.
INFLATION AND CHANGING PRICES
Inflation has not had a significant effect on the Company's operations.
FUTURE RESULTS
Future results could differ materially from those currently anticipated
due to (i) rapid changes in, or miscalculation of, fashion trends, (ii) extreme
or unseasonable weather conditions, (iii) economic downturns, weakness in
overall consumer demand, inflation and cyclical variations in the retail market
for women's fashion apparel, (iv) an acceleration in the rate of business
failures and inventory liquidation's in the specialty store sector of the
women's apparel industry, (v) an increase in the rate of bad debt expense among
the Company's proprietary credit card holders, (vi) the risks attendant to the
sourcing of merchandise abroad, including (a) China's assumption of control of
Hong Kong in 1997, (b) China's claims to sovereignty over Taiwan, (c) North
Korea's claims to sovereignty over South Korea, (d) exchange rate fluctuations,
(e) political instability, (f) trade sanctions or restrictions, (g) changes in
quota and duty regulations, (h) delays in shipping or (i) increased costs of
transportation, (vii) the imposition of more onerous payment terms for
merchandise purchases, and (viii) the replacement of the Company's older
proprietary brands with its new The Avenue(R) brand merchandise.
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
The following exhibits are filed herewith:
Number Description
------ -----------
10.1 Amendment No. 8, dated August 22, 1996, to Letter of
Credit Agreement among United Retail Group, Inc. (the
"Corporation"), its subsidiaries and The Chase
Manhattan Bank ("Chase")
10.2 Amendment No. 7, dated August 22, 1996, to Credit
Agreement among the Corporation, its subsidiaries and
Chase
10.3 Letter, dated August 23, 1996, with respect to Credit
Agreement between the Corporation and Citibank (South
Dakota) N.A. ("Citibank")
27 Financial Data Schedule
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended May 4, 1996 are incorporated herein by reference:
Number Description
------ -----------
10.1* Severance Pay Agreement, dated May 28, 1996, between
the Corporation and Raphael Benaroya
10.2* Severance Pay Agreement, dated May 28, 1996, between
the Corporation and George R. Remeta
10.3 Amended and Restated Term Sheet Agreement for
Hosiery, dated as of December 29, 1995, between The
Avenue, Inc. and American Licensing Group, Inc.
(Confidential portions have been deleted and filed
separately with the Secretary of the Commission)
The Corporation's 1996 Stock Option Plan set forth as Exhibit A to the
Corporation's proxy statement on Schedule 14A for its 1996 annual meeting of
stockholders is incorporated herein by reference.*
<PAGE> 16
The following exhibits to the Corporation's Current Report on Form 8-K, dated
March 22, 1996, are incorporated herein by reference:
Number Description
------ -----------
10.1 Amendment No. 7, dated March 5, 1996, to Letter of
Credit Agreement among the Corporation, its
subsidiaries and Chase
10.2 Amendment No. 6, dated March 5, 1996, to the Credit
Agreement among the Corporation, its subsidiaries and
Chase
10.3* Employment Agreement, dated March 1, 1996 , between
the Corporation and Kenneth P. Carroll
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended July 29, 1995 are incorporated herein by reference:
Number in Filing Description
---------------- -----------
10.1 Amendment No. 5, dated January 31, 1995, to the
Credit Agreement among the Corporation, its
subsidiaries and Chase
10.2 Amendment No. 6, dated January 31, 1995, to the
Letter of Credit Agreement among the Corporation,
its subsidiaries and Chase
The following exhibits to the Corporation's Amended Current Report on Form 8-KA,
dated May 22, 1995, are incorporated herein by reference:
Number in Filing Description
---------------- -----------
10.1 Amended and Restated Gloria Vanderbilt Intimate
Apparel Sublicense Agreement, dated May 22, 1995,
between United Retail Incorporated and American
Licensing Group Limited Partnership ("ALGLP")
10.2 Gloria Vanderbilt Sleepwear Sublicense Agreement,
dated May 22, 1995, between United Retail
Incorporated and ALGLP
The following exhibits to the Corporation's Annual Report on Form 10-K for the
year ended January 28, 1995 are incorporated herein by reference:
Number in Filing Description
---------------- -----------
10.1* Incentive Compensation Program Summary
21 Subsidiaries of the Corporation
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended October 29, 1994 are incorporated herein by reference:
Number in Filing Description
---------------- -----------
10.1* Restated Retirement Savings Plan
10.2* Restated Supplemental Retirement Savings Plan
<PAGE> 17
The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the
period ended July 30, 1994 is incorporated herein by reference:
Number in Filing Description
---------------- -----------
10.2* Letter from the Corporation to Raphael Benaroya
and George R. Remeta, dated May 20, 1994,
regarding their respective Restated Employment
Agreements, dated November 1, 1991
The following exhibits to the Corporation's amended Annual Report on Form 10-KA
for the year ended January 29, 1994 are incorporated herein by reference:
Number in Filing Description
---------------- -----------
10.3 Amendment, dated December 6, 1993, to Credit
Agreement between the Corporation and Citibank
10.4 Term Sheet Agreement, dated as of May 4, 1993,
with respect to Amended and Restated Gloria
Vanderbilt Hosiery Sublicense Agreement
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended October 30, 1993 are incorporated herein by reference:
Number in Filing Description
---------------- -----------
10.1 Amendment Nos. 3 and 4, dated September 30, 1993
and November 18, 1993, respectively, to Credit
Agreement among the Corporation, its subsidiaries
and Chase
10.2 Amendment Nos. 4 and 5, dated September 30, 1993
and November 18, 1993, respectively, to Letter of
Credit Agreement among the Corporation, its
subsidiaries and Chase
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended July 31, 1993 are incorporated herein by reference:
Number in Filing Description
---------------- -----------
4.1 Amended By-Laws of the Corporation, as amended
June 1, 1993
4.2 Amendment No. 1, dated June 1, 1993, to Restated
Stockholders' Agreement, dated December 23, 1992,
between the Corporation and certain of its
stockholders
The Corporation's Restated 1990 Stock Option Plan set forth as Exhibit A to the
Corporation's proxy statement on Schedule 14A for its 1993 annual meeting of
stockholders is incorporated herein by reference.*
<PAGE> 18
The following exhibits to the Corporation's Current Report on Form 8-K, dated
January 6, 1993, are incorporated herein by reference:
Number in Filing Description
---------------- -----------
4.2 Restated Stockholders' Agreement, dated December
23, 1992, between the Corporation and certain of
its stockholders
10.1 Amendment No. 1, dated March 17, 1992, to Letter
of Credit Agreement between the Corporation, its
subsidiaries and Chase
10.2 Amendment No. 2, dated May 4, 1992, to Letter of
Credit Agreement between the Corporation its
subsidiaries and Chase
10.3 Amendment No. 3, dated July 2, 1992, to Letter of
Credit Agreement between the Corporation , its
subsidiaries and Chase
10.4 Amendment No. 1, dated May 4, 1992, to Credit
Agreement between the Corporation, its
subsidiaries and Chase
10.5 Amendment No. 2, dated July 2, 1992, to Credit
Agreement between the Corporation, its
subsidiaries and Chase
10.6 Second Amendment to Lease, dated June 30, 1992, to
Office Lease between Mack Passaic Street
Properties Co. and Sizes Unlimited, Inc. (now
known as United Retail Incorporated)
10.7 Guaranty of Lease, dated June 30, 1992, made by
Sizes Unlimited Holding Corporation (now known as
United Retail Holding Corporation) to Mack Passaic
Street Properties Co.
The following exhibits to the Corporation's Registration Statement on Form S-1
(Registration No. 33-44499), as amended, are incorporated herein by reference:
Number in Filing Description
---------------- -----------
3.1 Amended and Restated Certificate of Incorporation
of the Corporation
4.1 Specimen Certificate for Common Stock of the
Corporation
10.2.1 Software License Agreement, dated as of April 30,
1989, between The Limited Stores, Inc. and Sizes
Unlimited, Inc.
10.2.2 Amendment to Software License Agreement, dated
December 10, 1991
10.7 Amended and Restated Gloria Vanderbilt Hosiery
Sublicense Agreement, dated as of April 30, 1989,
between American Licensing Group, Inc. (Licensee)
and Sizes Unlimited, Inc. (Sublicensee)
10.11 Office Lease, dated June 12, 1987, between Mack
Passaic Street Properties Co. and Sizes Unlimited,
Inc. and Amendment thereto dated August 21, 1988
10.12 Amended and Restated Master Affiliate Sublease
Agreement, dated as of July 17, 1989, among Lane
Bryant, Inc., Lerner Stores, Inc. (Landlord) and
Sizes Unlimited, Inc. (Tenant) and Amendment
thereto, dated July 17, 1989
10.23* Restated Employment Agreement, dated November 1,
1991, between the Corporation and Raphael Benaroya
10.25* Restated Employment Agreement, dated November 1,
1991, between the Corporation and George R. Remeta
10.29* Restated 1989 Management Stock Option Plan, dated
November 1, 1991
<PAGE> 19
10.30* Performance Option Agreement, dated July 17, 1989,
between Lernmark, Inc. (now known as United Retail
Group, Inc.) and Raphael Benaroya and First
Amendment thereto, dated November 1, 1991
10.31* Performance Option Agreement, dated July 17, 1989,
between Lernmark, Inc. and George R. Remeta and
First Amendment thereto, dated November 1, 1991
10.32* Second Amendment, dated November 1, 1991, to
Performance Option Agreements with Raphael
Benaroya and George R. Remeta
10.33* 1991 Stock Option Agreement, dated November 1,
1991, between the Corporation and Raphael Benaroya
10.34* 1991 Stock Option Agreement, dated November 1,
1991, between the Corporation and George R. Remeta
10.38 Management Services Agreement, dated August 26,
1989, between American Licensing Group, Inc. and
ALGLP
10.39 First Refusal Agreement, dated August 31, 1989,
between the Corporation and ALGLP
10.40 Credit Agreement, dated February 24, 1992, among
the Corporation, its subsidiaries and Chase
10.41 Letter of Credit Agreement, dated February 24,
1992, among the Corporation, its subsidiaries and
Chase
- -------------------------
*A compensatory plan for the benefit of the Corporation's management or a
management contract.
- ---------
(b) No Current Reports on Form 8-K were filed by the Corporation during the
fiscal quarter ended August 3, 1996.
<PAGE> 20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
(Registrant) UNITED RETAIL GROUP, INC.
------------------------------------
By: /S/ GEORGE R. REMETA
----------------------------------------------
George R. Remeta, Vice Chairman of the Board and Chief
Financial Officer - Authorized Signatory
By: /S/ JON GROSSMAN
----------------------------------------------
Jon Grossman, Vice President - Finance and Chief
Accounting Officer
Date: September 10, 1996
<PAGE> 21
EXHIBIT INDEX
The following exhibits are filed herewith:
Number Description
------ -----------
10.1 Amendment No. 8, dated August 22, 1996, to Letter
of Credit Agreement among United Retail Group,
Inc. (the "Corporation"), its subsidiaries and The
Chase Manhattan Bank ("Chase")
10.2 Amendment No. 7, dated August 22, 1996, to Credit
Agreement among the Corporation, its subsidiaries
and Chase
10.3 Letter, dated August 23, 1996, with respect to
Credit Agreement between the Corporation and
Citibank (South Dakota) N.A. ("Citibank")
27 Financial Data Schedule
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended May 4, 1996 are incorporated herein by reference:
Number Description
------ -----------
10.1* Severance Pay Agreement, dated May 28, 1996,
between the Corporation and Raphael Benaroya
10.2* Severance Pay Agreement, dated May 28, 1996,
between the Corporation and George R. Remeta
10.3 Amended and Restated Term Sheet Agreement for
Hosiery, dated as of December 29, 1995, between
The Avenue, Inc. and American Licensing Group,
Inc. (Confidential portions have been deleted and
filed separately with the Secretary of the
Commission)
The Corporation's 1996 Stock Option Plan set forth as Exhibit A to the
Corporation's proxy statement on Schedule 14A for its 1996 annual meeting of
stockholders is incorporated herein by reference.*
<PAGE> 22
The following exhibits to the Corporation's Current Report on Form 8-K, dated
March 22, 1996, are incorporated herein by reference:
Number Description
------ -----------
10.1 Amendment No. 7, dated March 5, 1996, to Letter of
Credit Agreement among the Corporation, its
subsidiaries and Chase
10.2 Amendment No. 6, dated March 5, 1996, to the
Credit Agreement among the Corporation, its
subsidiaries and Chase
10.3* Employment Agreement, dated March 1, 1996 ,
between the Corporation and Kenneth P. Carroll
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended July 29, 1995 are incorporated herein by reference:
Number in Filing Description
---------------- -----------
10.1 Amendment No. 5, dated January 31, 1995, to the
Credit Agreement among the Corporation, its
subsidiaries and Chase
10.2 Amendment No. 6, dated January 31, 1995, to the
Letter of Credit Agreement among the Corporation,
its subsidiaries and Chase
The following exhibits to the Corporation's Amended Current Report on Form 8-KA,
dated May 22, 1995, are incorporated herein by reference:
Number in Filing Description
---------------- -----------
10.1 Amended and Restated Gloria Vanderbilt Intimate
Apparel Sublicense Agreement, dated May 22, 1995,
between United Retail Incorporated and American
Licensing Group Limited Partnership ("ALGLP")
10.2 Gloria Vanderbilt Sleepwear Sublicense Agreement,
dated May 22, 1995, between United Retail
Incorporated and ALGLP
The following exhibits to the Corporation's Annual Report on Form 10-K for the
year ended January 28, 1995 are incorporated herein by reference:
Number in Filing Description
---------------- -----------
10.1* Incentive Compensation Program Summary
21 Subsidiaries of the Corporation
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended October 29, 1994 are incorporated herein by reference:
Number in Filing Description
---------------- -----------
10.1* Restated Retirement Savings Plan
10.2* Restated Supplemental Retirement Savings Plan
<PAGE> 23
The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the
period ended July 30, 1994 is incorporated herein by reference:
Number in Filing Description
---------------- -----------
10.2* Letter from the Corporation to Raphael Benaroya
and George R. Remeta, dated May 20, 1994,
regarding their respective Restated Employment
Agreements, dated November 1, 1991
The following exhibits to the Corporation's amended Annual Report on Form 10-KA
for the year ended January 29, 1994 are incorporated herein by reference:
Number in Filing Description
---------------- -----------
10.3 Amendment, dated December 6, 1993, to Credit
Agreement between the Corporation and Citibank
10.4 Term Sheet Agreement, dated as of May 4, 1993,
with respect to Amended and Restated Gloria
Vanderbilt Hosiery Sublicense Agreement
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended October 30, 1993 are incorporated herein by reference:
Number in Filing Description
---------------- -----------
10.1 Amendment Nos. 3 and 4, dated September 30, 1993
and November 18, 1993, respectively, to Credit
Agreement among the Corporation, its subsidiaries
and Chase
10.2 Amendment Nos. 4 and 5, dated September 30, 1993
and November 18, 1993, respectively, to Letter of
Credit Agreement among the Corporation, its
subsidiaries and Chase
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended July 31, 1993 are incorporated herein by reference:
Number in Filing Description
---------------- -----------
4.1 Amended By-Laws of the Corporation, as amended
June 1, 1993
4.2 Amendment No. 1, dated June 1, 1993, to Restated
Stockholders' Agreement, dated December 23, 1992,
between the Corporation and certain of its
stockholders
The Corporation's Restated 1990 Stock Option Plan set forth as Exhibit A to the
Corporation's proxy statement on Schedule 14A for its 1993 annual meeting of
stockholders is incorporated herein by reference.*
<PAGE> 24
The following exhibits to the Corporation's Current Report on Form 8-K, dated
January 6, 1993, are incorporated herein by reference:
Number in Filing Description
---------------- -----------
4.2 Restated Stockholders' Agreement, dated December
23, 1992, between the Corporation and certain of
its stockholders
10.1 Amendment No. 1, dated March 17, 1992, to Letter
of Credit Agreement between the Corporation, its
subsidiaries and Chase
10.2 Amendment No. 2, dated May 4, 1992, to Letter of
Credit Agreement between the Corporation its
subsidiaries and Chase
10.3 Amendment No. 3, dated July 2, 1992, to Letter of
Credit Agreement between the Corporation , its
subsidiaries and Chase
10.4 Amendment No. 1, dated May 4, 1992, to Credit
Agreement between the Corporation, its
subsidiaries and Chase
10.5 Amendment No. 2, dated July 2, 1992, to Credit
Agreement between the Corporation, its
subsidiaries and Chase
10.6 Second Amendment to Lease, dated June 30, 1992, to
Office Lease between Mack Passaic Street
Properties Co. and Sizes Unlimited, Inc. (now
known as United Retail Incorporated)
10.7 Guaranty of Lease, dated June 30, 1992, made by
Sizes Unlimited Holding Corporation (now known as
United Retail Holding Corporation) to Mack Passaic
Street Properties Co.
The following exhibits to the Corporation's Registration Statement on Form S-1
(Registration No. 33-44499), as amended, are incorporated herein by reference:
Number in Filing Description
---------------- -----------
3.1 Amended and Restated Certificate of Incorporation
of the Corporation
4.1 Specimen Certificate for Common Stock of the
Corporation
10.2.1 Software License Agreement, dated as of April 30,
1989, between The Limited Stores, Inc. and Sizes
Unlimited, Inc.
10.2.2 Amendment to Software License Agreement, dated
December 10, 1991
10.7 Amended and Restated Gloria Vanderbilt Hosiery
Sublicense Agreement, dated as of April 30, 1989,
between American Licensing Group, Inc. (Licensee)
and Sizes Unlimited, Inc. (Sublicensee)
10.11 Office Lease, dated June 12, 1987, between Mack
Passaic Street Properties Co. and Sizes Unlimited,
Inc. and Amendment thereto dated August 21, 1988
10.12 Amended and Restated Master Affiliate Sublease
Agreement, dated as of July 17, 1989, among Lane
Bryant, Inc., Lerner Stores, Inc. (Landlord) and
Sizes Unlimited, Inc. (Tenant) and Amendment
thereto, dated July 17, 1989
10.23* Restated Employment Agreement, dated November 1,
1991, between the Corporation and Raphael Benaroya
10.25* Restated Employment Agreement, dated November 1,
1991, between the Corporation and George R. Remeta
10.29* Restated 1989 Management Stock Option Plan, dated
November 1, 1991
<PAGE> 25
10.30* Performance Option Agreement, dated July 17, 1989,
between Lernmark, Inc. (now known as United Retail
Group, Inc.) and Raphael Benaroya and First
Amendment thereto, dated November 1, 1991
10.31* Performance Option Agreement, dated July 17, 1989,
between Lernmark, Inc. and George R. Remeta and
First Amendment thereto, dated November 1, 1991
10.32* Second Amendment, dated November 1, 1991, to
Performance Option Agreements with Raphael
Benaroya and George R. Remeta
10.33* 1991 Stock Option Agreement, dated November 1,
1991, between the Corporation and Raphael Benaroya
10.34* 1991 Stock Option Agreement, dated November 1,
1991, between the Corporation and George R. Remeta
10.38 Management Services Agreement, dated August 26,
1989, between American Licensing Group, Inc. and
ALGLP
10.39 First Refusal Agreement, dated August 31, 1989,
between the Corporation and ALGLP
10.40 Credit Agreement, dated February 24, 1992, among
the Corporation, its subsidiaries and Chase
10.41 Letter of Credit Agreement, dated February 24,
1992, among the Corporation, its subsidiaries and
Chase
- -------------------------
*A compensatory plan for the benefit of the Corporation's management or a
management contract.
<PAGE> 1
AMENDMENT NO. 8
AMENDMENT NO. 8 effective as of August 22, 1996 between UNITED
RETAIL GROUP, INC. (the "Company"); each of the Subsidiaries of the Company
identified under the caption "SUBSIDIARY GUARANTORS" on the signature pages
hereto (individually, a "Subsidiary Guarantor" and, collectively, the
"Subsidiary Guarantors" and, together with the Company, the "Obligors"); and THE
CHASE MANHATTAN BANK (successor in interest of The Chase Manhattan Bank, N.A.)
("Chase").
The Company, the Subsidiary Guarantors and Chase are parties
to a Letter of Credit Agreement dated as of February 24, 1992 (as heretofore
amended, the "Letter of Credit Agreement"), providing, subject to the terms and
conditions thereof, for letters of credit to be issued by Chase to the Company
in an aggregate face amount not exceeding $25,000,000.
The Company has requested Chase to consent to certain
amendments to the Letter of Credit Agreement, all on the terms and conditions
set forth herein and, accordingly, the parties hereto agree as follows:
Section 1. Definitions. Terms defined in the Letter
of Credit Agreement are used herein as defined therein unless amended hereby.
Section 2. Amendments. Subject to the satisfaction of the
conditions precedent specified in Section 4 below, but effective as of the date
hereof unless otherwise indicated herein, the Letter of Credit Agreement is
hereby amended as follows:
A. Definitions. Section 1.01 of the Letter of Credit
Agreement is amended by deleting the definition of "Fixed Charges
Ratio" and by substituting therefor:
""Fixed Charges Ratio shall mean, for any period of
determination thereof, (a) Cash Flow for the period of four consecutive fiscal
quarters then ended plus the aggregate amount of payments by the Company and its
Subsidiaries made in respect of Operating Lease Obligations during such period
to (b) Fixed Charges for such period; provided however, that, up to and
including the fiscal month ending January 4, 1997, Fixed Charges
Amendment No. 8 to Letter of Credit Agreement
<PAGE> 2
- 2 -
Ratio shall mean, for any period of determination thereof, (a) Cash Flow for the
period of 12 consecutive fiscal months then ended, if the determination date is
the end of a fiscal month or, if otherwise, as at the end of the preceding
fiscal month for the period of 12 consecutive fiscal months then ended; plus the
aggregate amount of payments by the Company and its Subsidiaries made in respect
of Operating Lease Obligations during such period to (b) Fixed Charges for such
period.
B. Prohibition of Fundamental Changes. Section 9.05 of the
Letter of Credit Agreement is hereby amended by deleting subsection (d) thereof
and substituting the following therefor:
"(d) Notwithstanding clauses (a) and (b) above, the
Company and its Subsidiaries may enter into any merger, consolidation
or amalgamation, or acquire the business or assets of, or capital stock
or other ownership interests of, any Person, so long as (i) the Company
has delivered audited financial statements pursuant to Section 9.01(b)
hereof for the fiscal year ending February 1, 1997; (ii) at the time of
any such transaction, and after giving effect thereto, no Default shall
have occurred and be continuing hereunder and (iii) the amount of
assets acquired by the Company and its Subsidiaries pursuant to any
such transactions or related series of transactions (together with all
other Restricted Transactions, but excluding any transactions
constituting Capital Expenditures permitted under Section 9.13 hereof)
shall not exceed $5,000,000."
C. Indebtedness. Section 9.07 of the Letter of Credit
Agreement is hereby amended by deleting subsection (c) thereof and substituting
the following therefor:
"(c) Indebtedness to the Company; provided that such
indebtedness is evidenced by a note (an "Intercompany Note")
substantially in the form of Exhibit A hereto containing the terms of
such Indebtedness (including, without limitation, the interest rate or
rates from time to time applicable to such Indebtedness, the final
maturity date for such Indebtedness, the amortization schedule, if any,
therefor,
Amendment No. 8 to Letter of Credit Agreement
<PAGE> 3
-3-
and any covenants and events of default applicable thereto);"
D. Investments. Section 9.08 of the Letter of Credit Agreement
is hereby amended by deleting subsection (g) thereof and substitututing the
following therefor:
"(g) additional Investments after February 3, 1996, so long as
(i) at the time of any such Investment, and after giving effect
thereto, no Default shall have occurred and be continuing hereunder;
(ii) the aggregate amount of Investments made by the Company and its
Subsidiaries pursuant to all such transactions (together with all other
Restricted Transactions) after February 3, 1996 shall not exceed
$5,000,000; and (iii) the Company shall have delivered audited
financial statements pursuant to Section 9.01(b) hereof for the fiscal
year ending February 1, 1997."
E. Restricted Payments. Section 9.09 of the Letter of Credit
Agreement is hereby amended by deleting said section thereof and substituting
the following therefor:
"9.09 Restricted Payments. The Company will not, nor will it
permit any of its Subsidiaries to make any Restricted Payment at any
time; provided however, that the Company may make Restricted Payments
so long as on the date of such Restricted Payment and after giving
effect thereto (i) the Company shall have delivered audited financial
statements pursuant to Section 9.01(b) hereof for the fiscal year
ending February 1, 1997; (ii) no Default shall have occurred and be
continuing; and (iii) the aggregate amount of all Restricted Payments
(together with all other Restricted Transactions) after February 3,
1996 shall not exceed $5,000,000."
F. Tangible Net Worth. Section 9.11 of the Letter of Credit
Agreement is hereby amended by deleting said section thereof and substituting
the following therefor:
Amendment No. 8 to Letter of Credit Agreement
<PAGE> 4
-4-
"9.11 Tangible Net Worth. The Company will not permit Tangible
Net Worth on any date (each such date a 'Determination Date') to be
less than $70,000,000 plus for each complete fiscal year ending after
February 3, 1996 and on or before such Determination Date for which Net
Income shall be positive, an amount equal to 50% of such Net Income."
G. Fixed Charge Coverage Ratio. Section 9.12 of the
Letter of Credit Agreement is hereby amended by deleting said
section thereof and substituting the following therefor:
"9.12 Fixed Charges Ratio. The Company will not
permit the Fixed Charges Ratio on any date (i) up to and
including the fiscal month ending January 4, 1997, to be
less than .9 to 1 and (ii) thereafter, to be less than 1.0
to 1."
H. Capital Expenditures. Section 9.13 of the Letter
of Credit Agreement is hereby amended (i) by deleting subsection
(a) thereof and substituting the following therefor:
"(a) Capital Expenditures of the Company and its Subsidiaries
(i) in the fiscal year ending February 1, 1997, in an aggregate amount
not exceeding $6,500,000 and (ii) thereafter, in an aggregate amount
not exceeding $10,000,000 in any other fiscal year; provided that the
Company has delivered audited financial statements pursuant to Section
9.01(b) hereof for the fiscal year ending February 1, 1997;"
and (ii) by deleting subsection (c) thereof and substituting the
following therefor:
"(c) additional Capital Expenditures made during the period
from and after February 4, 1996 in an aggregate amount not exceeding
(i) $10,000,000 plus (ii) if Adjusted Cash Flow for such period is
positive, 75% of Adjusted Cash Flow for such period; provided that the
Company has
Amendment No. 8 to Letter of Credit Agreement
<PAGE> 5
-5-
delivered audited financial statements pursuant to Section 9.01(b)
hereof for the fiscal year ending February 1, 1997."
I. Cash Flow. The Letter of Credit Agreement is
hereby amended by adding the following section thereto immediately following
Section 9.21 thereof:
"9.22 Cash Flow. The Company shall not permit the
Cash Flow for the following respective periods to be less
than the amounts indicated below opposite the respective
periods:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C> <C>
From July 7, 1996
through August 31, 1996 ($9,800,000)
From August 4, 1996
through October 5, 1996 ($4,000,000)
From September 1, 1996
through November 2, 1996 ($1,100,000)
From October 6, 1996
through November 30, 1996 ($1,100,000)
From November 3, 1996
through January 4, 1997 $6,500,000
From December 1, 1996
through February 1, 1997 $3,500,000"
</TABLE>
J. Liquidity. The Letter of Credit Agreement is hereby amended
by adding the following section thereto immediately following Section 9.22
thereof:
"9.23 Liquidity. The Company will not permit the sum of (x)
the aggregate amount of cash and Cash Equivalents
Amendment No. 8 to Letter of Credit Agreement
<PAGE> 6
-6-
held by the Company and its Subsidiaries plus (y) the aggregate unused
amount of the obligation of the Banks to extend credit under the Credit
Agreement (by means of Loans or Letters of Credit) under the caption
"Commitment" (as the same may be reduced at any time or from time to
time pursuant to Section 2.04 thereto) to be less than the amounts
indicated below at any time during each respective period:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C> <C>
From August 4, 1996
through August 31, 1996 $21,000,000
From September 1, 1996
through October 5, 1996 $20,000,000
From October 6, 1996
through November 2, 1996 $13,000,000
From November 3, 1996
through November 30, 1996 $10,000,000
From December 1, 1996
through January 4, 1997 $27,000,000
From January 5, 1997
through February 1, 1997 $21,000,000"
</TABLE>
K. Cash Account. The Letter of Credit Agreement is hereby
amended by adding the following section thereto immediately following Section
9.23 thereof:
"9.24 Cash Account. The Company and its Subsidiaries shall
maintain all cash and cash equivalents in deposit accounts (x) with
Chase or (y) pledged to Chase pursuant to documentation satifactory in
form and substance to the Chase; provided, however, that cash or cash
equivalents of the Company and its Subsidiaries maintained in the
accounts
Amendment No. 8 to Letter of Credit Agreement
<PAGE> 7
-7-
listed in Schedule IV hereto are excluded from this Section 9.24 in an
amount consisting of the fully collected balances for each such
respective account not exceeding the amounts provided in said
Schedule."
L. Events of Default. Section 10 of the Letter of Credit
Agreement is hereby amended by adding the word "or" at the end of subsection (m)
thereof, and adding the following immediately following subsection (m) thereof:
"(n) The Company shall default in the performance of any of
its obligations under Sections 9.22 through 9.24 (inclusive) hereof; or
(o) Any cash collateral account shall be established pursuant
to the Receivables Purchase Agreement dated as of June 3, 1992 among
the Company, United Retail Incorporated (formerly known as Sizes
Unlimited, Inc.) and Citibank;"
M. Addition of Schedule VIII and Exhibit A. The Letter of
Credit Agreement is hereby amended (i) by adding the words "SCHEDULE VIII"
immediately following the words "SCHEDULE VII" on page iii thereof; (ii) by
adding the words "EXHIBIT A" immediately following the words "SCHEDULE VIII" on
page iii thereof; (iii) by adding immediately following Schedule VII attached
thereto the schedule annexed hereto titled Schedule VIII and (iv) by adding
immediately following Schedule VIII attached thereto the exhibit annexed hereto
titled Exhibit A.
Section 3. Representations and Warranties. The Company
represents and warrants to Chase that (i) unless otherwise indicated in Schedule
1 hereto, the representations and warranties set forth in Section 8 of the
Letter of Credit Agreement are true and complete on the date hereof as if made
on and as of the date hereof and as if each reference in said Section 8 to "this
Agreement" included reference to this Amendment No. 8 and (ii) giving effect to
this Amendment No. 8, on the date hereof no Default has occurred and is
continuing.
Amendment No. 8 to Letter of Credit Agreement
<PAGE> 8
-8-
Section 4. Conditions Precedent. As provided in Section 2
above, the amendments to the Letter of Credit Agreement set forth in said
Section 2 shall each become effective, as of the date hereof unless otherwise
indicated in said Section 2, upon the satisfaction of the following conditions
precedent:
A. Execution by All Parties. This Amendment No. 8 shall have
been executed and delivered by each of the parties hereto.
B. Pledge of Securities. The Company shall have executed and
delivered a Pledge and Security Agreement pledging to Chase as Agent under the
Credit Agreement all of the securities maintained or thereafter held by the
Company and its Subsidiaries with Chase Securities Inc. (successor in interest
to Chemical Securities Inc.).
C. Amendment of Receivables Purchase Agreement. The Company
shall have provided evidence to Chase that Citibank (South Dakota), N.A.
("Citibank") has issued a waiver in the form of Schedule 2 attached hereto with
respect to the Receivables Purchase Agreement dated as of June 3, 1992 among the
Company, United Retail Incorporated (formerly known as Sizes Unlimited, Inc.)
and Citibank.
D. Documents. Chase shall have received the following
documents, each of which shall be satisfactory to Chase in form and substance:
(1) Corporate Documents. Certified copies of the charter and
by-laws (or equivalent documents) of each Obligor (or a certificate to
the effect that none of such documents has been amended since the date
the same have previously been delivered to Chase under the Letter of
Credit Agreement or an Amendment thereto) and of all corporate
authority for each Obligor (including, without limitation, board of
directors resolutions and evidence of the incumbency of officers) with
respect to the execution and delivery of this Amendment No. 8 and the
performance of
Amendment No. 8 to Letter of Credit Agreement
<PAGE> 9
-9-
the Letter of Credit Agreement as amended hereby, and any other
documents which such Obligor is to execute in connection with the
transactions contemplated hereby (and that Chase may conclusively rely
on such certificates until it receives notice in writing from such
Person to the contrary).
(2) Other Documents. Such other documents as Chase or
counsel to Chase may reasonably request.
Section 5. Miscellaneous. Except as herein provided, the
Letter of Credit Agreement shall remain unchanged and in full force and effect.
This Amendment No. 8 may be executed in any number of counterparts, all of which
taken together shall constitute one and the same amendatory instrument and any
of the parties hereto may execute this Amendment No. 8 by signing any such
counterpart. This Amendment No. 8 shall be governed by, and construed in
accordance with, the law of the State of New York.
Amendment No. 8 to Letter of Credit Agreement
<PAGE> 10
-10-
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 8 to be duly executed and delivered as of the day and year first
above written.
UNITED RETAIL GROUP, INC.
By /s/ Jon Grossman
-------------------------
Title: Vice President
Amendment No. 8 to Letter of Credit Agreement
<PAGE> 11
-11-
Each of the Subsidiary Guarantors, by its signature below,
hereby consents to the foregoing Amendment No. 8 for purposes of its Guarantee
under Section 6 of the Letter of Credit Agreement and agrees that the
obligations of the Company under the Letter of Credit Agreement, as amended by
said Amendment No. 8, shall constitute "Guaranteed Obligations" for all purposes
of said Section 6 and the Security Documents (as defined in the Letter of Credit
Agreement).
SUBSIDIARY GUARANTORS
UNITED RETAIL HOLDING UNITED RETAIL INCORPORATED
CORPORATION (formerly (formerly known as Sizes
known as Sizes Unlimited Unlimited, Inc.)
Holding Corporation)
By /s/ Jon Grossmann By /s/ Jon Grossmann
-------------------- ---------------------------
Title: Vice President Title: Vice President
SMART SIZE, INC. UNITED RETAIL LOGISTICS
OPERATIONS INCORPORATED
(formerly known as Sizes
Unlimited Florida, Inc.)
By /s/ Jon Grossmann By /s/ Jon Grossmann
-------------------- ---------------------------
Title: Vice President Title: Vice President
UNITED DISTRIBUTION SERVICES,
INC.
By /s/ Jon Grossmann
--------------------
Title: Vice President
Amendment No. 8 to Letter of Credit Agreement
<PAGE> 12
-12-
SUBSIDIARY GUARANTORS
THE AVENUE, INC.
By /s/ Barry Goldin
--------------------
Title: President
Amendment No. 8 to Letter of Credit Agreement
<PAGE> 13
-13-
CHASE
THE CHASE MANHATTAN BANK
(as successor in interest of The
Chase Manhattan Bank, N.A.),
By /s/ Carol A. Ulmer
-----------------------------
Title: Vice President
Amendment No. 8 to Letter of Credit Agreement
<PAGE> 14
SCHEDULE 1
to
Amendment No. 8
dated as of August 22, 1996
to
Letter of Credit Agreement
Section 8.02(a)
The consolidated balance sheet of the Company and its
consolidated Subsidiaries as at February 3, 1996, with the audit report thereon
of Coopers & Lybrand (the "1996 Balance Sheet"), and the audited statement of
income of the Company and its consolidated Subsidiaries for the fiscal year
ended on such date, heretofore furnished to Chase, fairly present the financial
condition of the Company and its consolidated Subsidiaries as at said date and
the consolidated results of its operations for such fiscal year, all in
accordance with generally accepted accounting principles. Neither the Company
nor any of its Subsidiaries has as of the date hereof any material contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments, except as
referred to or reflected or provided for in the 1996 Balance Sheet (or disclosed
in the notes thereto). Since February 3, 1996, there has been no material
adverse change in the assets, prospects, business, operations, financial
condition, liabilities or capitalization of the Company and its consolidated
Subsidiaries as a whole from that set forth in said audited financial statements
as at said date.
Section 8.08
The Company is an employer of certain participants in the
multiemployer District 65 Pension Plan (the "Plan").
The Company and certain other employers withdrew from the
Plan, which takes the position that a mass withdrawal has occurred.
Amendment No. 8 to Letter of Credit Agreement
<PAGE> 15
15
The Company has been negotiating with actuaries for the Plan
and with counsel to the Plan regarding the amount of the Company's withdrawal
liability.
The Company has received an offer from the Plan to settle its
liability arising from the withdrawal from the Plan for approximately $100,000,
including any exercise taxes that may be payable.
Amendment No. 8 to Letter of Credit Agreement
<PAGE> 16
SCHEDULE 2
to
Amendment No. 8
dated as of August 22, 1996
to
Letter of Credit Agreement
______________, 1996
George R. Remeta
Vice Chairman and CEO
United Retail Group, Inc.
365 West Passaic Street
Rochelle Park, NJ 07662
Dear Mr. Remeta:
Citibank (South Dakota), N.A. has reviewed United Retail Group
Inc.'s (URGI) request for waiver of the Fixed Charges Covenant/Fixed Charges
Ratio, set out in Section 9.12 of the Credit Plan Agreement dated April 24,
1992.
Citibank is willing to waive but not amend URGI's Fixed
Charges Ratio until January 4, 1997. Commencing with the quarter ended August 3,
1996, URGI agrees to provide our service provider, Citicorp Retail Services,
Inc. (CRS), within 14 business days of the end of the next two fiscal quarters,
with actual forecast financial information, in a format similar to that enclosed
with your facsimile transmission of August 6, 1996, assessing URGI's compliance
with each of its financial covenants as set forth in its Agreement and
specifically with the Fixed Charges Covenant as set forth in Section 9.12 of the
Agreement pro forma as though it had not been waived. Citibank's waiver will be
effective upon receipt of a signed copy of amendments of the Fixed Charges Ratio
covenant in the Credit Agreement and Letter of Credit Agreement between URGI and
The Chase Manhattan Bank in the form attached hereto.
Amendment No. 8 to Letter of Credit Agreement
<PAGE> 17
2
Citibank trusts that this is acceptable to you. If so, please
sign and return a copy of this letter indicating URGI's consent to the terms
stated herein.
Sincerely,
Jock Paladino
Citibank (South Dakota)
Amendment No. 8 to Letter of Credit Agreement
<PAGE> 18
3
Agreed to and Accepted By:
UNITED RETAIL GROUP, INC.
By:
------------------------------
Title: Vice Chairman
Date:
Amendment No. 8 to Letter of Credit Agreement
<PAGE> 19
SCHEDULE VIII
Excluded Accounts
<TABLE>
<CAPTION>
Bank Company Description Maximum Amount
- ---- ------- ----------- --------------
<S> <C> <C> <C>
Mellon Bank URI Payroll $1,000
Disbursement
Mellon Bank URI Payroll Direct $1,000
Deposit
Citibank URI Employee Choice $80,000
Benefits
Mercantile Bank URI Disbursement Acct. $1,000
Interchange Bank URI Home Office $400,000
Depository Account
Bank One URLO Payroll $1,000
Disbursement
Barclay's Bank UR INT. Disbursement $100,000
PNC Bank AVE Disbursement $1,000
PNC Bank AVE Custody Account $5,000
Various URI Various Local $3,500,000
Store Depository
Accounts
</TABLE>
Legend
URI: United Retail, Inc.
UR INT: United Retail International
URLO: United Retail Logistics Operations
AVE: The Avenue, Inc.
Amendment No. 8 to Letter of Credit Agreement
<PAGE> 20
EXHIBIT A
[Form of Intercompany Note]
PROMISSORY NOTE
$[AMOUNT] August 22, 1996
New York, New York
ON DEMAND, FOR VALUE RECEIVED, [NAME OF PROMISSOR], a [Name of
Jurisdiction] [corporation\limited liability company] (the "Company"), hereby
promises to pay to the order of UNITED RETAIL GROUP, INC. (the "Lender"), at the
principal office of The Chase Manhattan Bank in New York City, the principal sum
of [AMOUNT] Dollars (or such lesser amount as shall equal the aggregate unpaid
principal amount of advances or loans made by the Lender to the Company), in
lawful money of the United States of America and in immediately available funds,
and to pay interest on the unpaid principal amount of the loan, at such office,
in like money and funds, for the period commencing on the date hereof until such
loans shall be paid in full, at a rate per annum equal to [rate]%, such interest
to be payable on demand (or, in the absence of demand, on the last business day
of each month). Interest shall be computed on the basis of a year of 365 days or
366 days, as the case may be, and actual days elapsed.
The date and amount of each loan made by the Lender to the
Company, and each payment made on account of the principal thereof, shall be
recorded by the Lender on its books and, prior to any transfer of this Note,
endorsed by the Lender on the schedule attached hereto or any continuation
thereof, provided that the failure of the Lender to make any such recordation or
endorsement shall not affect the obligations of the Company to make a payment
when due of any amount owing hereunder in respect of the loans made by the
Lender.
The Company may at its option pay all or any part of the
principal of this Note before maturity, together with any accrued interest
thereon.
The Company hereby promises to pay costs of collection and
reasonable attorney's fees in case default is made in the payment of this Note.
Promissory Note
<PAGE> 21
- 2 -
This Note shall be governed by, and construed in accordance
with, the law of the State of New York.
[PROMISSOR]
By_________________________
Title:
Pay to the order of The Chase Manhattan Bank.
UNITED RETAIL GROUP, INC.
By_________________________
Title:
Promissory Note
<PAGE> 22
- 3 -
SCHEDULE TO NOTE
This Note evidences loans made on the date hereof to the
Company, in the principal amounts, subject to the payments of principal set
forth below:
Loan Principal Amount Interest Maturity Notation
Date of Loans Rate Date Made By
---- -------- ---- ---- -------
Promissory Note
<PAGE> 1
AMENDMENT NO. 7
AMENDMENT NO. 7 dated as of August 22, 1996 between UNITED RETAIL
GROUP, INC. (the "Company"); each of the Subsidiaries of the Company identified
under the caption "SUBSIDIARY GUARANTORS" on the signature pages hereto
(individually, a "Subsidiary Guarantor" and, collectively, the "Subsidiary
Guarantors" and, together with the Company, the "Obligors"); each of the lenders
that is a signatory hereto identified under the caption "BANKS" on the signatory
pages hereto; and THE CHASE MANHATTAN BANK (successor in interest of The Chase
Manhattan Bank, N.A.), as agent for the Banks (the "Agent") and as collateral
agent for the Banks under the Credit Agreement and for itself under the Letter
of Credit Agreement (the "Collateral Agent").
The Company, the Subsidiary Guarantors, the Banks, the Agent and the
Collateral Agent are parties to a Credit Agreement dated as of February 24, 1992
(as heretofore amended, the "Credit Agreement"), providing, subject to the terms
and conditions thereof, for extensions of credit (by making of loans and issuing
letters of credit) to be made by said Banks to the Company in an aggregate
principal or face amount not exceeding $15,000,000.
The Company has requested the Banks to consent to certain amendments to
the Credit Agreement, all on the terms and conditions set forth herein and,
accordingly, the parties hereto agree as follows:
Section 1. Definitions. Terms defined in the Credit Agreement are used
herein as defined therein unless amended hereby.
Section 2. Amendments. Subject to the satisfaction of the conditions
precedent specified in Section 4 below, but effective as of the date hereof
unless otherwise indicated herein, the Credit Agreement is hereby amended as
follows:
A. Definitions. Section 1.01 of the Credit Agreement is amended by
deleting the definition of "Fixed Charges Ratio" and by substituting therefor:
""Fixed Charges Ratio shall mean, for any period of determination
thereof, (a) Cash Flow for the period of four
Amendment No. 7 to Credit Agreement
<PAGE> 2
-2-
consecutive fiscal quarters then ended plus the aggregate amount of payments by
the Company and its Subsidiaries made in respect of Operating Lease Obligations
during such period to (b) Fixed Charges for such period; provided however, that,
up to and including the fiscal month ending January 4, 1997, Fixed Charges Ratio
shall mean, for any period of determination thereof, (a) Cash Flow for the
period of 12 consecutive fiscal months then ended, if the determination date is
the end of a fiscal month or, if otherwise, as at the end of the preceding
fiscal month for the period of 12 consecutive fiscal months then ended; plus the
aggregate amount of payments by the Company and its Subsidiaries made in respect
of Operating Lease Obligations during such period to (b) Fixed Charges for such
period.
B. Prohibition of Fundamental Changes. Section 9.05 of the Credit
Agreement is hereby amended by deleting subsection (d) thereof and substituting
the following therefor:
"(d) Notwithstanding clauses (a) and (b) above, the Company
and its Subsidiaries may enter into any merger, consolidation or
amalgamation, or acquire the business or assets of, or capital stock or
other ownership interests of, any Person, so long as (i) the Company
has delivered audited financial statements pursuant to Section 9.01(b)
hereof for the fiscal year ending February 1, 1997; (ii) at the time of
any such transaction, and after giving effect thereto, no Default shall
have occurred and be continuing hereunder and (iii) the amount of
assets acquired by the Company and its Subsidiaries pursuant to any
such transactions or related series of transactions (together with all
other Restricted Transactions, but excluding any transactions
constituting Capital Expenditures permitted under Section 9.13 hereof)
shall not exceed $5,000,000."
C. Indebtedness. Section 9.07 of the Credit Agreement is hereby amended
by deleting subsection (c) thereof and substituting the following therefor:
Amendment No. 7 to Credit Agreement
<PAGE> 3
-3-
"(c) Indebtedness to the Company; provided that such
indebtedness is evidenced by a note (an "Intercompany Note")
substantially in the form of Exhibit E hereto containing the terms of
such Indebtedness (including, without limitation, the interest rate or
rates from time to time applicable to such Indebtedness, the final
maturity date for such Indebtedness, the amortization schedule, if any,
therefor, and any covenants and events of default applicable thereto);"
D. Investments. Section 9.08 of the Credit Agreement is hereby amended
by deleting subsection (g) thereof and substitututing the following therefor:
"(g) additional Investments after February 3, 1996, so long as
(i) at the time of any such Investment, and after giving effect
thereto, no Default shall have occurred and be continuing hereunder;
(ii) the aggregate amount of Investments made by the Company and its
Subsidiaries pursuant to all such transactions (together with all other
Restricted Transactions) after February 3, 1996 shall not exceed
$5,000,000; and (iii) the Company shall have delivered audited
financial statements pursuant to Section 9.01(b) hereof for the fiscal
year ending February 1, 1997."
E. Restricted Payments. Section 9.09 of the Credit Agreement is hereby
amended by deleting said section thereof and substituting the following
therefor:
"9.09 Restricted Payments. The Company will not, nor will it
permit any of its Subsidiaries to make any Restricted Payment at any
time; provided however, that the Company may make Restricted Payments
so long as on the date of such Restricted Payment and after giving
effect thereto (i) the Company shall have delivered audited financial
statements pursuant to Section 9.01(b) hereof for the fiscal year
ending February 1, 1997; (ii) no Default shall have occurred and be
continuing; and (iii) the aggregate amount of all Restricted Payments
(together with all other
Amendment No. 7 to Credit Agreement
<PAGE> 4
-4-
Restricted Transactions) after February 3, 1996 shall not exceed
$5,000,000."
F. Tangible Net Worth. Section 9.11 of the Credit Agreement is
hereby amended by deleting said section thereof and substituting the following
therefor:
"9.11 Tangible Net Worth. The Company will not permit Tangible
Net Worth on any date (each such date a 'Determination Date') to be
less than $70,000,000 plus for each complete fiscal year ending after
February 3, 1996 and on or before such Determination Date for which Net
Income shall be positive, an amount equal to 50% of such Net Income."
G. Fixed Charge Coverage Ratio. Section 9.12 of the Credit Agreement is
hereby amended by deleting said section thereof and substituting the following
therefor:
"9.12 Fixed Charges Ratio. The Company will not permit the
Fixed Charges Ratio on any date (i) up to and including the fiscal
month ending January 4, 1997, to be less than .9 to 1 and (ii)
thereafter, to be less than 1.0 to 1."
H. Capital Expenditures. Section 9.13 of the Credit Agreement is hereby
amended (i) by deleting subsection (a) thereof and substituting the following
therefor:
"(a) Capital Expenditures of the Company and its Subsidiaries
(i) in the fiscal year ending February 1, 1997, in an aggregate amount
not exceeding $6,500,000 and (ii) thereafter, in an aggregate amount
not exceeding $10,000,000 in any other fiscal year; provided that the
Company has delivered audited financial statements pursuant to Section
9.01(b) hereof for the fiscal year ending February 1, 1997;"
and (ii) by deleting subsection (c) thereof and substituting the following
therefor:
Amendment No. 7 to Credit Agreement
<PAGE> 5
- 5 -
"(c) additional Capital Expenditures made during the period
from and after February 4, 1996 in an aggregate amount not exceeding
(i) $10,000,000 plus (ii) if Adjusted Cash Flow for such period is
positive, 75% of Adjusted Cash Flow for such period; provided that the
Company has delivered audited financial statements pursuant to Section
9.01(b) hereof for the fiscal year ending February 1, 1997."
I. Cash Flow. The Credit Agreement is hereby amended by adding the
following section thereto immediately following Section 9.21 thereof:
"9.22 Cash Flow. The Company shall not permit the Cash Flow
for the following respective periods to be less than the amounts
indicated below opposite the respective periods:
<TABLE>
<CAPTION>
Period Amount
<S> <C>
From July 7, 1996
through August 31, 1996 ($9,800,000)
From August 4, 1996
through October 5, 1996 ($4,000,000)
From September 1, 1996
through November 2, 1996 ($1,100,000)
From October 6, 1996
through November 30, 1996 ($1,100,000)
From November 3, 1996
through January 4, 1997 $6,500,000
From December 1, 1996
through February 1, 1997 $ 3,500,000"
</TABLE>
Amendment No. 7 to Credit Agreement
<PAGE> 6
- 6 -
J. Liquidity. The Credit Agreement is hereby amended by adding the
following section thereto immediately following Section 9.22 thereof:
"9.23 Liquidity. The Company will not permit the sum of (x)
the aggregate amount of cash and Cash Equivalents held by the Company
and its Subsidiaries plus (y) the aggregate unused amount of the
Commitment to be less than the amounts indicated below at any time
during each respective period:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
From August 4, 1996
through August 31, 1996 $21,000,000
From September 1, 1996
through October 5, 1996 $20,000,000
From October 6, 1996
through November 2, 1996 $13,000,000
From November 3, 1996
through November 30, 1996 $10,000,000
From December 1, 1996
through January 4, 1997 $27,000,000
From January 5, 1997
through February 1, 1997 $21,000,000"
</TABLE>
K. Cash Account. The Credit Agreement is hereby amended by adding the
following section thereto immediately following Section 9.23 thereof:
"9.24 Cash Account. The Company and its Subsidiaries shall
maintain all cash and cash equivalents in deposit accounts (x) with The
Chase Manhattan Bank or (y) pledged to the Agent pursuant to
documentation satifactory in form and
Amendment No. 7 to Credit Agreement
<PAGE> 7
-7-
substance to the Agent; provided, however, that cash or cash
equivalents of the Company and its Subsidiaries maintained in the
accounts listed in Schedule IV hereto are excluded from this Section
9.24 in an amount consisting of the fully collected balances for each
such respective account not exceeding the amounts provided in said
Schedule."
L. Events of Default. Section 10 of the Credit Agreement is
hereby amended by adding the word "or" at the end of subsection (m) thereof, and
adding the following immediately after subsection (m) thereof:
"(n) The Company shall default in the performance of any of
its obligations under Sections 9.22 through 9.24 (inclusive) hereof; or
(o) Any cash collateral account shall be established pursuant
to the Receivables Purchase Agreement dated as of June 3, 1992 among
the Company, United Retail Incorporated (formerly known as Sizes
Unlimited, Inc.) and Citibank;"
M. Addition of Schedule IV and Exhibit E. The Credit Agreement
is hereby amended (i) by adding the words "SCHEDULE IV" immediately following
the words "SCHEDULE III" on page iv thereof; (ii) by adding the words "EXHIBIT
E" immediately following the words "EXHIBIT D" on page iv thereof; (iii) by
adding immediately following Schedule III attached thereto the schedule annexed
hereto titled Schedule IV and (iv) by adding immediately following Exhibit D
attached thereto the exhibit annexed hereto titled Exhibit E.
Section 3. Representations and Warranties. The Company
represents and warrants to the Banks that (i) unless otherwise indicated in
Schedule 1 hereto, the representations and warranties set forth in Section 8 of
the Credit Agreement are true and complete on the date hereof as if made on and
as of the date hereof and as if each reference in said Section 8 to "this
Agreement" included reference to this Amendment No. 7 and (ii)
Amendment No. 7 to Credit Agreement
<PAGE> 8
-8-
giving effect to this Amendment No. 7, on the date hereof no Default has
occurred and is continuing.
Section 4. Conditions Precedent. As provided in Section 2
above, the amendments to the Credit Agreement set forth in said Section 2 shall
each become effective, as of the date hereof unless otherwise indicated in said
Section 2, upon the satisfaction of the following conditions precedent:
A. Execution by All Parties. This Amendment No. 7 shall have
been executed and delivered by each of the parties hereto.
B. Pledge of Securities. The Company shall have executed and
delivered a Pledge and Security Agreement satisfactory in form and substance to
the Agent pledging to the Agent all of the securities maintained or thereafter
held by the Company and its Subsidiaries with Chase Securities Inc. (successor
in interest to Chemical Securities Inc.).
C. Amendment of Receivables Purchase Agreement. The Company
shall have provided evidence to the Agent that Citibank (South Dakota), N.A.
("Citibank") has issued a waiver in the form of Schedule 2 attached hereto with
respect to the Receivables Purchase Agreement dated as of June 3, 1992 among the
Company, United Retail Incorporated (formerly known as Sizes Unlimited, Inc.)
and Citibank.
D. Documents. The Agent shall have received the following
documents, each of which shall be satisfactory to the Agent in form and
substance:
(1) Corporate Documents. Certified copies of the charter and
by-laws (or equivalent documents) of each Obligor (or a certificate to
the effect that none of such documents has been amended since the date
the same have previously been delivered to the Agent under the Credit
Agreement or an Amendment thereto) and of all corporate authority for
each Obligor (including, without limitation,
Amendment No. 7 to Credit Agreement
<PAGE> 9
-9-
board of directors resolutions and evidence of the incumbency of
officers) with respect to the execution and delivery of this Amendment
No. 7 and the performance of the Credit Agreement as amended hereby,
and any other documents which such Obligor is to execute in connection
with the transactions contemplated hereby (and that the Agent and each
Bank may conclusively rely on such certificates until it receives
notice in writing from such Person to the contrary).
(2) Other Documents. Such other documents as the Agent or any
Bank or counsel to the Banks may reasonably request.
E. Amendment Fee. The Company shall have paid to the Agent,
for account of each of the Banks, an amendment fee equal to $25,000.
Section 5. Miscellaneous. Except as herein provided, the
Credit Agreement shall remain unchanged and in full force and effect. This
Amendment No. 7 may be executed in any number of counterparts, all of which
taken together shall constitute one and the same amendatory instrument and any
of the parties hereto may execute this Amendment No. 7 by signing any such
counterpart. This Amendment No. 7 shall be governed by, and construed in
accordance with, the law of the State of New York.
Amendment No. 7 to Credit Agreement
<PAGE> 10
-10-
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 7 to be duly executed and delivered as of the day and year first
above written.
UNITED RETAIL GROUP, INC.
By /s/ Jon Grossman
--------------------------------------
Title: Vice President
Amendment No. 7 to Credit Agreement
<PAGE> 11
-11-
Each of the Subsidiary Guarantors, by its signature below,
hereby consents to the foregoing Amendment No. 7 for purposes of its Guarantee
under Section 6 of the Credit Agreement and agrees that the obligations of the
Company under the Credit Agreement, as amended by said Amendment No. 7, shall
constitute "Guaranteed Obligations" for all purposes of said Section 6 and the
Security Documents (as defined in the Credit Agreement).
SUBSIDIARY GUARANTORS
UNITED RETAIL HOLDING UNITED RETAIL INCORPORATED
CORPORATION (formerly (formerly known as Sizes
known as Sizes Unlimited Unlimited, Inc.)
Holding Corporation)
By /s/ Jon Grossman By /s/ Jon Grossman
- -------------------------------------- ---------------------------
Title: Vice President Title: Vice President
SMART SIZE, INC. UNITED RETAIL LOGISTICS
OPERATIONS INCORPORATED
(formerly known as Sizes
Unlimited Florida, Inc.)
By /s/ Jon Grossman By /s/ Jon Grossman
- -------------------------------------- ---------------------------
Title: Vice President Title: Vice President
UNITED DISTRIBUTION SERVICES, THE AVENUE, INC.
INC.
By /s/ Jon Grossman By /s/ Barry Goldin
- -------------------------------------- ---------------------------
Title: Vice President Title: President
Amendment No. 7 to Credit Agreement
<PAGE> 12
-12-
BANKS AND AGENT
THE CHASE MANHATTAN BANK
(as successor in interest of The
Chase Manhattan Bank, N.A.),
By /s/ Carol A. Ulmer
-------------------------
Title: Vice President
THE CHASE MANHATTAN BANK
(as successor in interest
of The Chase Manhattan
Bank, N.A.), as Agent and
as Collateral Agent
By /s/ Carol A. Ulmer
-------------------------
Title: Vice President
Amendment No. 7 to Credit Agreement
<PAGE> 13
SCHEDULE 1
to
Amendment No. 7
dated as of August 22, 1996
to
Credit Agreement
Section 8.02(a)
The consolidated balance sheet of the Company and its
consolidated Subsidiaries as at February 3, 1996, with the audit report thereon
of Coopers & Lybrand (the "1996 Balance Sheet"), and the audited statement of
income of the Company and its consolidated Subsidiaries for the fiscal year
ended on such date, heretofore furnished to Chase, fairly present the financial
condition of the Company and its consolidated Subsidiaries as at said date and
the consolidated results of its operations for such fiscal year, all in
accordance with generally accepted accounting principles. Neither the Company
nor any of its Subsidiaries has as of the date hereof any material contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments, except as
referred to or reflected or provided for in the 1996 Balance Sheet (or disclosed
in the notes thereto). Since February 3, 1996, there has been no material
adverse change in the assets, prospects, business, operations, financial
condition, liabilities or capitalization of the Company and its consolidated
Subsidiaries as a whole from that set forth in said audited financial statements
as at said date.
Section 8.08
The Company is an employer of certain participants in the
multiemployer District 65 Pension Plan (the "Plan").
The Company and certain other employers withdrew from the
Plan, which takes the position that a mass withdrawal has occurred.
Amendment No. 7 to Credit Agreement
<PAGE> 14
-15-
The Company has been negotiating with actuaries for the Plan
and with counsel to the Plan regarding the amount of the Company's withdrawal
liability.
The Company has received an offer from the Plan to settle its
liability arising from the withdrawal from the Plan for approximately $100,000,
including any exercise taxes that may be payable.
Amendment No. 7 to Credit Agreement
<PAGE> 15
SCHEDULE 2
to
Amendment No. 7
dated as of August 22, 1996
to
Credit Agreement
______________, 1996
George R. Remeta
Vice Chairman and CEO
United Retail Group, Inc.
365 West Passaic Street
Rochelle Park, NJ 07662
Dear Mr. Remeta:
Citibank (South Dakota), N.A. has reviewed United Retail Group
Inc.'s (URGI) request for waiver of the Fixed Charges Covenant/Fixed Charges
Ratio, set out in Section 9.12 of the Credit Plan Agreement dated April 24,
1992.
Citibank is willing to waive but not amend URGI's Fixed
Charges Ratio until January 4, 1997. Commencing with the quarter ended August 3,
1996, URGI agrees to provide our service provider, Citicorp Retail Services,
Inc. (CRS), within 14 business days of the end of the next two fiscal quarters,
with actual forecast financial information, in a format similar to that enclosed
with your facsimile transmission of August 6, 1996, assessing URGI's compliance
with each of its financial covenants as set forth in its Agreement and
specifically with the Fixed Charges Covenant as set forth in Section 9.12 of the
Agreement pro forma as though it had not been waived. Citibank's waiver will be
effective upon receipt of a signed copy of amendments of the Fixed Charges Ratio
covenant in the Credit Agreement and Letter of Credit Agreement between URGI and
The Chase Manhattan Bank in the form attached hereto.
Citibank trusts that this is acceptable to you. If so, please
sign and return a copy of this letter indicating URGI's consent to the terms
stated herein.
Amendment No. 7 to Credit Agreement
<PAGE> 16
2
Sincerely,
Jock Paladino
Citibank (South
Dakota)
Amendment No. 7 to Credit Agreement
<PAGE> 17
-3-
Agreed to and Accepted By:
UNITED RETAIL GROUP, INC.
By:_______________________
Title: Vice Chairman
Date:
Amendment No. 7 to Credit Agreement
<PAGE> 18
SCHEDULE IV
Excluded Accounts
<TABLE>
<CAPTION>
Bank Company Description Maximum Amount
- ---- ------- ----------- --------------
<S> <C> <C> <C>
Mellon Bank URI Payroll $1,000
Disbursement
Mellon Bank URI Payroll Direct $1,000
Deposit
Citibank URI Employee Choice $80,000
Benefits
Mercantile Bank URI Disbursement Acct. $1,000
Interchange Bank URI Home Office $400,000
Depository Account
Bank One URLO Payroll $1,000
Disbursement
Barclay's Bank UR INT. Disbursement $100,000
PNC Bank AVE Disbursement $1,000
PNC Bank AVE Custody Account $5,000
Various URI Various Local $3,500,000
Store Depository
Accounts
</TABLE>
Legend
URI: United Retail, Inc.
UR INT: United Retail International
URLO: United Retail Logistics Operations
AVE: The Avenue, Inc.
Amendment No. 7 to Credit Agreement
<PAGE> 19
EXHIBIT E
[Form of Intercompany Note]
PROMISSORY NOTE
$[AMOUNT] August 22, 1996
New York, New York
ON DEMAND, FOR VALUE RECEIVED, [NAME OF PROMISSOR], a [Name of
Jurisdiction] [corporation\limited liability company] (the "Company"), hereby
promises to pay to the order of UNITED RETAIL GROUP, INC. (the "Lender"), at the
principal office of The Chase Manhattan Bank in New York City, the principal sum
of [AMOUNT] Dollars (or such lesser amount as shall equal the aggregate unpaid
principal amount of advances or loans made by the Lender to the Company), in
lawful money of the United States of America and in immediately available funds,
and to pay interest on the unpaid principal amount of the loan, at such office,
in like money and funds, for the period commencing on the date hereof until such
loans shall be paid in full, at a rate per annum equal to [rate]%, such interest
to be payable on demand (or, in the absence of demand, on the last business day
of each month). Interest shall be computed on the basis of a year of 365 days or
366 days, as the case may be, and actual days elapsed.
The date and amount of each loan made by the Lender to the
Company, and each payment made on account of the principal thereof, shall be
recorded by the Lender on its books and, prior to any transfer of this Note,
endorsed by the Lender on the schedule attached hereto or any continuation
thereof, provided that the failure of the Lender to make any such recordation or
endorsement shall not affect the obligations of the Company to make a payment
when due of any amount owing hereunder in respect of the loans made by the
Lender.
The Company may at its option pay all or any part of the
principal of this Note before maturity, together with any accrued interest
thereon.
The Company hereby promises to pay costs of collection and
reasonable attorney's fees in case default is made in the payment of this Note.
Promissory Note
<PAGE> 20
- 2 -
This Note shall be governed by, and construed in accordance
with, the law of the State of New York.
[PROMISSOR]
By_________________________
Title:
Pay to the order of The Chase Manhattan Bank.
UNITED RETAIL GROUP, INC.
By_________________________
Title:
Promissory Note
<PAGE> 21
-3-
SCHEDULE TO NOTE
This Note evidences loans made on the date hereof to the
Company, in the principal amounts, subject to the payments of principal set
forth below:
Loan Principal Amount Interest Maturity Notation
Date of Loans Rate Date Made By
Promissory Note
<PAGE> 1
[CITIBANK LOGO]
Citibank Cards
Customer Service Center
P.O. Box 6500
Sioux Falls, SD 57117-8500
August 23, 1996
George Remeta, Vice Chairman and CEO
United Retail Group, Inc.
365 West Passaic St.
Rochelle Park, NJ 07662
Dear Mr. Remeta:
Citibank (South Dakota), N.A. has reviewed United Retail Group Inc.'s (URGI)
request for waiver of the Fixed Charges Covenant/Fixed Charges Ratio, set out
in Section 9.12 of the Credit Plan Agreement dated April 24, 1992.
Citibank is willing to waive but not amend URGI's Fixed Charges Ratio until
January 4, 1997. Commencing with the quarter ended August 3, 1996, URGI agrees
to provide our service provider, Citicorp Retail Services, Inc. (CRS) within 14
business days of the end of the next two fiscal quarters, with actual forecast
financial information in a format similar to that enclosed with your facsimile
transmission of August 6, 1996, assessing URGI's compliance with each of its
financial covenants as set forth in its Agreement and specifically with the
Fixed Charges Covenant we set forth in Section 9.12 of the Agreement pro forme
as though it had not been waived. Citibank's waiver will be effective upon
receipt of a signed copy of Amendments of the Fixed Charges Ratio covenant in
the Credit Agreement and Letter of Credit Agreement between URGI and The Chase
Manhattan Bank in the form attached hereto.
Citibank trusts that this is acceptable to you. If so, please sign and return a
copy of this letter indicating URGI's consent to the terms stated herein.
Sincerely,
/s/ Jack Paladino
- ------------------------------------
Jack Paladino
Citibank (South Dakota), N.A.
Agreed To and Accepted By:
UNITED RETAIL GROUP, INC.
By: /s/ George Remeta
--------------------------------
Title: Vice Chairman
Date: August 23, 1996
Federal regulations require us to print the following statement:
The federal Equal Credit Opportunity Act prohibits creditors from discriminating
against credit applicants on the basis of race, color, religion, national
origin, sex, marital status, age (provided the applicant has the capacity to
enter into a binding contract); because all or part of the applicant's income
derives from any public assistance program; or because the applicant has in
good faith exercised any right under the Consumer Credit Protection Act. The
federal agency that administers compliance with this law concerning Citibank
(South Dakota), N.A. is the Comptroller of the Currency, Kansas City District
Office, 2345 Grand Avenue, Kansas City, MO 64108.
<PAGE> 2
AMENDMENT NO. 8
AMENDMENT NO. 8 effective as of August 22, 1996 between UNITED
RETAIL GROUP, INC. (the "Company"); each of the Subsidiaries of the Company
identified under the caption "SUBSIDIARY GUARANTORS" on the signature pages
hereto (individually, a "Subsidiary Guarantor" and, collectively, the
"Subsidiary Guarantors" and, together with the Company, the "Obligors"); and THE
CHASE MANHATTAN BANK (successor in interest of The Chase Manhattan Bank, N.A.)
("Chase").
The Company, the Subsidiary Guarantors and Chase are parties
to a Letter of Credit Agreement dated as of February 24, 1992 (as heretofore
amended, the "Letter of Credit Agreement"), providing, subject to the terms and
conditions thereof, for letters of credit to be issued by Chase to the Company
in an aggregate face amount not exceeding $25,000,000.
The Company has requested Chase to consent to certain
amendments to the Letter of Credit Agreement, all on the terms and conditions
set forth herein and, accordingly, the parties hereto agree as follows:
Section 1. Definitions. Terms defined in the Letter
of Credit Agreement are used herein as defined therein unless amended hereby.
Section 2. Amendments. Subject to the satisfaction of the
conditions precedent specified in Section 4 below, but effective as of the date
hereof unless otherwise indicated herein, the Letter of Credit Agreement is
hereby amended as follows:
A. Definitions. Section 1.01 of the Letter of Credit
Agreement is amended by deleting the definition of "Fixed Charges
Ratio" and by substituting therefor:
""Fixed Charges Ratio shall mean, for any period of
determination thereof, (a) Cash Flow for the period of four consecutive fiscal
quarters then ended plus the aggregate amount of payments by the Company and its
Subsidiaries made in respect of Operating Lease Obligations during such period
to (b) Fixed Charges for such period; provided however, that, up to and
including the fiscal month ending January 4, 1997, Fixed Charges Ratio shall
mean, for any period of determination thereof, (a) Cash Flow for the period of
12 consecutive fiscal months then ended, if the determination date is the end
of a fiscal month or, if otherwise, as at the end of the preceding fiscal month
for the period of 12 consecutive fiscal months then ended; plus the aggregate
amount of payments by the Company and its Subsidiaries made in respect of
Operating Lease Obligations during such period to (b) Fixed Charges for such
period.
Amendment No. 8 to Letter of Credit Agreement
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-01-1997
<PERIOD-START> FEB-04-1996
<PERIOD-END> AUG-03-1996
<CASH> 17,773
<SECURITIES> 0
<RECEIVABLES> 1,619
<ALLOWANCES> 0
<INVENTORY> 39,527
<CURRENT-ASSETS> 66,752
<PP&E> 116,866
<DEPRECIATION> 58,314
<TOTAL-ASSETS> 134,151
<CURRENT-LIABILITIES> 29,550
<BONDS> 11,856
0
0
<COMMON> 13
<OTHER-SE> 83,749
<TOTAL-LIABILITY-AND-EQUITY> 134,151
<SALES> 185,051
<TOTAL-REVENUES> 185,051
<CGS> 148,836
<TOTAL-COSTS> 148,836
<OTHER-EXPENSES> 39,898
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 211
<INCOME-PRETAX> (3,894)
<INCOME-TAX> (1,296)
<INCOME-CONTINUING> (2,598)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,598)
<EPS-PRIMARY> (0.21)
<EPS-DILUTED> 0
</TABLE>
