<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 May 3, 1997
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 May 3, 1997, 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>
MAY 3, FEBRUARY 1, MAY 4,
1997 1997 1996
----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 11,997 $ 18,264 $ 12,870
Income taxes receivable 231 229 2,000
Accounts receivable 1,627 1,297 1,898
Inventory 46,638 40,778 47,191
Prepaid rents 4,438 4,485 4,583
Other prepaid expenses 2,720 2,656 2,681
-------- -------- --------
Total current assets 67,651 67,709 71,223
Property and equipment, net 53,088 54,892 60,004
Deferred charges and other intangible assets,
net of accumulated amortization of $1,522, $1,490
and $1,318 6,971 7,031 7,053
Deferred income taxes -- -- 839
Other assets 711 715 1,146
-------- -------- --------
Total assets $128,421 $130,347 $140,265
======== ======== ========
LIABILITIES
Current liabilities:
Current portion of distribution center financing $ 992 $ 978 $ 918
Accounts payable, trade 16,474 16,543 17,901
Accrued expenses 13,335 13,247 14,303
-------- -------- --------
Total current liabilities 30,801 30,768 33,122
Distribution center financing 11,104 11,355 12,097
Other long-term liabilities 7,892 8,011 9,313
-------- -------- --------
Total liabilities 49,797 50,134 54,532
-------- -------- --------
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value; authorized
1,000,000; none issued
Common stock, $.001 par value; authorized
30,000,000; issued 12,680,375; outstanding
12,190,375 13 13 13
Additional paid-in capital 78,259 78,259 78,242
Retained earnings 934 2,523 8,060
Treasury stock (490,000 shares) at cost (582) (582) (582)
-------- -------- --------
Total stockholders' equity 78,624 80,213 85,733
-------- -------- --------
Total liabilities and stockholders' equity $128,421 $130,347 $140,265
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
<PAGE> 4
UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
------------------------------
MAY 3, MAY 4,
1997 1996
----------- -----------
<S> <C> <C>
Net sales $ 87,022 $ 88,873
Cost of goods sold, including
buying and occupancy costs 68,815 70,172
----------- -----------
Gross profit 18,207 18,701
General, administrative and
store operating expenses 19,680 19,418
----------- -----------
Operating loss (1,473) (717)
Interest expense, net 102 245
----------- -----------
Loss before income taxes (1,575) (962)
Provision (benefit) for income taxes 14 (352)
----------- -----------
Net loss $ (1,589) $ (610)
=========== ===========
Net loss per
common share $ (0.13) $ (0.05)
=========== ===========
Weighted average number of
common and common equivalent
shares outstanding 12,190,375 12,190,375
</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>
THIRTEEN WEEKS ENDED
-----------------------
MAY 3, MAY 4,
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,589) $ (610)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization of property and equipment 2,325 2,534
Amortization of deferred charges and other
intangible assets 59 53
Loss on disposal of assets 50 44
Compensation expense -- 60
Benefit from deferred income taxes -- (28)
Deferred lease assumption revenue amortization (129) (138)
Changes in operating assets and liabilities:
Accounts receivable (330) (128)
Income taxes receivable (2) 719
Inventory (5,860) (6,790)
Accounts payable and accrued expenses (29) 2,493
Prepaid expenses (17) 145
Other assets and liabilities 16 (136)
------- -------
Net Cash Used in Operating Activities (5,506) (1,782)
------- -------
INVESTING ACTIVITIES:
Capital expenditures (571) (1,845)
Deferred payment for property and equipment 47 (324)
------- -------
Net Cash Used for Investing Activities (524) (2,169)
------- -------
FINANCING ACTIVITIES:
Repayments of long-term debt (237) (219)
------- -------
Net Cash Used in Financing Activities (237) (219)
------- -------
Net decrease in cash and cash equivalents (6,267) (4,170)
Cash and cash equivalents, beginning of period 18,264 17,040
------- -------
Cash and cash equivalents, end of period $11,997 $12,870
======= =======
</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 weeks
ended May 3, 1997 and May 4, 1996 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 1996 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.
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, in
each fiscal quarter in which income is realized, is computed using the weighted
average number of common and common equivalent shares (stock options)
outstanding during the quarter.
In February 1997, the Financial Accounting Standards Board issued Financial
Accounting Standard No. 128, "Earnings Per Share" ("SFAS 128"). SFAS 128 will
require the Company to replace the current presentation of "primary" per share
data with "basic" and "diluted" per share data. Currently, outstanding common
stock equivalents are antidilutive and therefore management estimates that the
future adoption of SFAS 128 currently will not have a material impact on the
Company's per share data. SFAS 128 will be adopted by the Company for periods
ending after December 15, 1997.
3. FINANCING ARRANGEMENTS
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 $23.5 million was utilized at
May 3, 1997.
<PAGE> 7
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 May 3, 1997, 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.
The Company has pledged to Chase as collateral the shares of common and
preferred stock of its subsidiaries.
4. INCOME TAXES
The provision (benefit) for income taxes consists of (dollars in
thousands):
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------
May 3, May 4,
1997 1996
------ -----
<S> <C> <C>
Currently payable:
Federal $-- $(242)
State 14 (82)
--- -----
14 (324)
--- -----
Deferred:
Federal -- (23)
State -- (5)
--- -----
-- (28)
--- -----
$14 $(352)
=== =====
</TABLE>
<PAGE> 8
Reconciliation of the provision (benefit) for income taxes from the U.S.
Federal statutory rate to the Company's effective rate is as follows:
<TABLE>
<CAPTION>
Thirteen Weeks Ended
-----------------------------------------------
May 3, 1997 May 4, 1996
------------------- -------------------
<S> <C> <C> <C> <C>
Tax at Federal rate (34%) $(536) (34.0)% $(327) (34.0)%
State income taxes, net of (36) (2.2)% (58) (6.0)%
federal benefit
Goodwill amortization 18 1.1% 18 1.8%
Other 4 .2% 15 1.6%
Valuation Allowance 564 35.8% 0 0.0%
----- ----- ----- -----
$ 14 0.9% $(352) (36.6)%
===== ===== ===== =====
</TABLE>
The net deferred tax asset reflects the tax impact of temporary
differences. The components of the net deferred tax asset are as follows:
<TABLE>
<S> <C>
Assets:
Inventory $ 245
Accruals and reserves 1,189
Compensation 1,569
NOL and credit carryforwards 2,440
------
5,443
------
Liabilities:
Depreciation 1,750
Prepaid rent 1,299
------
3,049
------
Valuation allowance 2,394
------
Net deferred tax asset $ 0
======
</TABLE>
Future realization of the tax benefits attributable to these existing
deductible temporary differences ultimately depends on the existence of
sufficient taxable income within the carryforward period available under the tax
law at the time of the tax deduction. Because it is more likely than not that
the net deferred tax asset will not be realized, a valuation allowance has been
recorded. As of May 3, 1997, 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 $3.125 per share upon exercise,
(ii) the compensation expense deduction is not limited by future enacted tax
laws and (iii) there is sufficient taxable income within the carry-forward
period available. The underlying options of the compensation related deferred
tax asset are exercisable through December 31, 1999.
<PAGE> 9
At May 3, 1997, the Company has pre-acquisition net operating loss
carryforwards, aggregating approximately $0.5 million, available to reduce
future taxable income in certain states, expiring through 2004.
5. 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
--------------------
May 3, May 4,
1997 1996
------- -------
<S> <C> <C>
Cash interest:
Interest expense, net per
statements of operations $102 $ 245
Less: Non-cash
interest expense (15) (14)
---- -------
Net cash interest expense,
including interest
income of $177 and $196 $ 87 $ 231
==== =======
Net income tax
payments (refunds) $ 16 $(1,043)
==== =======
</TABLE>
<PAGE> 10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FIRST QUARTER FISCAL 1997 VERSUS FIRST QUARTER FISCAL 1996
Net sales for the first quarter of Fiscal 1997 decreased 2.1% from the
first quarter of Fiscal 1996, to $87.0 million from $88.9 million, principally
from a decrease in average price rather than in sales volume. Average stores
open decreased from 580 to 567; see, "Properties," regarding the Company's real
estate plan. Comparable store sales for the first quarter of Fiscal 1997
declined 0.4%. (In May 1997, net sales decreased 9% from May 1996, to $30.6
million from $33.5 million; comparable store sales for May 1997 declined 6%.)
There is no assurance that net sales and comparable store sales will not
continue to decrease.
Gross profits decreased by $0.5 million to $18.2 million in the first
quarter of Fiscal 1997 from $18.7 million in the first quarter of Fiscal 1996,
decreasing as a percentage of net sales to 20.9% from 21.0%. The decrease in
gross profits as a percentage of net sales was primarily attributable to a
decrease in the merchandise margin rate partially offset by a decrease in
landlord charges. 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. 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 second quarter of Fiscal 1996 the
Company replaced its older proprietary brands of clothing with its new AVENUE
[by design] brand. (Substantially all clothing carried a proprietary brand.) The
transition from the older proprietary brands of clothing may have had an adverse
effect on sales and merchandise margin rates in the first quarter of Fiscal
1997.
General, administrative and store operating expenses were $19.7 million in
the first quarter of Fiscal 1997, compared to $19.4 million in the comparable
quarter of the previous year. As a percentage of net sales, general,
administrative and store operating expenses increased to 22.6% from 21.8%,
principally from higher store payroll costs as a percentage of net sales.
During the first quarter of Fiscal 1997, the Company incurred an operating
loss of $1.5 million compared to an operating loss of $0.7 million in the
comparable quarter of the previous year. The operating loss in the first quarter
of Fiscal 1997 was 1.7% of net sales. There is no assurance that operating
losses will not continue to increase.
Net interest expense was $0.1 million in the first quarter of Fiscal 1997
and $0.2 million in the comparable quarter of the previous year.
The Company had a provision for income taxes of $14,000 in the first
quarter of Fiscal 1997. The Company had an income tax benefit of $0.4 million in
the comparable quarter of the previous year. A benefit was not recorded in
Fiscal 1997 due to the uncertainty regarding realization of such tax benefits.
During the first quarter of Fiscal 1997, the Company incurred a net loss
of $1.6 million compared to a net loss of $0.6 million in the comparable quarter
of the previous year. There is no assurance that net losses will not continue to
increase.
<PAGE> 11
A SINGLE MERCHANDISE ASSORTMENT COMMENCING IN MID-SPRING 1996
The Company's merchandising had a divisional structure at the beginning of
Fiscal 1996, 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
first unified merchandise assortment arrived in Mid-Spring 1996.
A new function, product development, was established in April 1996, when
the Company recruited an experienced executive to handle the development of
fashion content and design for merchandise assortments arriving in Fiscal 1997
and thereafter.
The Company believes Fiscal 1997 will be 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 decreased to $12.0 million at May 3, 1997 from
$12.9 million at May 4, 1996 and $18.3 million at February 1, 1997. The income
taxes receivable was $0.2 million at May 3, 1997, $2.0 million at May 4, 1996
and $0.2 million at February 1, 1997.
Inventory was $46.6 million at May 3, 1997, $47.2 million at May 4, 1996
and $40.8 million at February 1, 1997. The Company's inventory levels peak in
early May and December. During Fiscal 1996, the highest inventory level was
$50.6 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. Import purchases constituted approximately 54%
of total purchases in the first quarter of Fiscal 1997 and approximately 47% of
total purchases in the first quarter of Fiscal 1996.
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
$23.5 million was utilized at May 3, 1997. 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 May 3, 1997 as collateral for obligations in
the ordinary course of business under casualty insurance policies.
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, minus any write-down or
valuation allowance with respect to the deferred tax asset relating to
Performance Options, and (ii) capital expenditures not to exceed $6.5 million in
Fiscal 1997 and thereafter $10.0 million per annum, plus during the period
<PAGE> 12
after Fiscal 1996 (y) $10 million plus (z) if adjusted cash flow (as defined in
the agreements) after February 1, 1997 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 1.0 to 1.0,
except from May 1, 1997 to July 5, 1997, when it shall not be less than .95 to
1.0, (iii) the ratio of current assets to current liabilities not be less than
1.25 to 1.0, (iv) cash flow (as defined and calculated in the agreements) 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, not be less than:
<TABLE>
<CAPTION>
Month Ended Amount
----------- ------
<S> <C>
07/05/97 $26.7 million
08/02/97 $25.5 million
08/30/97 $21.8 million
09/27/97 $21.2 million
11/01/97 $15.6 million
11/29/97 $13.8 million
01/03/98 $31.5 million
01/31/98 $26.6 million
</TABLE>
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.
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 credit facilities and cash flows from operating
activities will be available to meet anticipated working capital needs,
including seasonal financing needs, for the next 12 months. The preceding
sentence constitutes forward-looking information under the 1995 Private
Securities Litigation Reform Act (the "Reform Act") and is subject to the
uncertainties and other risk factors referred to under the caption "Future
Results." There is no assurance that the Company will continue to comply with
the covenants under the agreements for its credit facilities if net losses
continue to increase.
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 annual adjustments in the
discount rate will not increase materially the cost of the Company's proprietary
credit card programs.
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> 13
PROPERTIES
The Company leased 563 retail stores at May 3, 1997, of which 308 stores
were located in strip shopping centers, 226 stores were located in malls and 29
were located in downtown shopping districts. The Company's retail square footage
was 2.2 million square feet at May 3, 1997 and 2.3 million square feet at May 4,
1996. The Company presently plans to reduce retail square footage by
approximately 100,000 additional square feet during the remainder of Fiscal
1997. The Company will decrease the retail square footage gradually by letting
underperforming leases expire. The Company plans to open new mall stores only in
exceptional circumstances. The Company intends to pay the costs of new store
openings from net cash provided by operating activities. The preceding sentences
of this paragraph constitute forward-looking information under the Reform Act
and are subject to the uncertainties and other risk factors referred to under
the caption "Future Results".
New stores and newly remodeled stores will use The Avenue(R) trade name.
TAX MATTERS
The Company's federal income tax returns for Fiscal 1994 and Fiscal 1995
are being audited by the Internal Revenue Service.
COMPUTER SYSTEMS
The Company will modify its computer software programs to accommodate
dates after 1999. The cost of modifications is expected to be less than $1.0
million in the remainder of Fiscal 1997.
SEASONALITY
The Company's business is usually seasonal. From Fiscal 1991 through
Fiscal 1995, the first half of each year provided a greater portion of the
Company's annual operating income. In Fiscal 1996, however, the operating loss
in the first half exceeded the operating loss in the second half.
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 by
the Company due to possible (i) miscalculation of fashion trends, (ii) shifting
shopping patterns, both within the specialty store sector and in other channels
of distribution, (iii) extreme or unseasonable weather conditions, (iv) economic
downturns, weakness in overall consumer demand, and variations in the demand for
women's fashion apparel, (v) imposition by vendors, or their third-party
factors, of more onerous payment terms for domestic merchandise purchases, (vi)
acceleration in the rate of business failures and inventory liquidations in the
specialty store sector of the women's apparel industry, and (vii) disruptions in
the sourcing of merchandise abroad, including (a) China's assumption of control
of Hong Kong later this year, (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.
<PAGE> 14
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
The following options to purchase shares of the Company's common stock
were issued without registration under the Securities Act of 1933 pursuant to
the Company's 1996 Stock Option Plan:
<TABLE>
<CAPTION>
Number of
Date of Grant Class of Grantee Underlying Shares Exercise Price
------------- ---------------- ----------------- --------------
<S> <C> <C> <C>
5/27/97 Directors 15,000 $3.250
5/27/97 Officers 10,000 $3.250
5/27/97 Employees 25,500 $3.250
2/27/97 Officers 25,000 $3.125
2/27/97 Employees 47,000 $3.125
12/2/96 Officer 25,000 $3.000
8/22/96 Officer 20,000 $3.000
-------
Total: 167,500
=======
</TABLE>
The grantees are officers and directors of United Retail Group, Inc.
and officers and employees of its subsidiaries.
Options become exercisable in five equal annual installments commencing
one year after the date of grant.
The above grants were exempt from the registration provisions of the
Securities Act under Section 4(2) thereof because all the grantees are members
of the Company's management. Nevertheless, the Company intends to file a
registration statement with respect to its 1996 Stock Option Plan.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) The fifth Annual Meeting of Stockholders was held on May 27,
1997.
(c) The fifth Annual Meeting of Stockholders elected directors for terms
ending at the sixth Annual Meeting of Stockholders, as follows:
<TABLE>
<CAPTION>
Name For Withhold Authority to Vote
---- --- --------------------------
<S> <C> <C>
Joseph A. Alutto 9,603,345 38,600
Raphael Benaroya 9,603,345 38,600
Russell Berrie 9,389,438 252,507
Joseph Ciechanover 9,603,145 38,800
Ilan Kaufthal 9,603,345 38,600
Vincent Langone 9,603,345 38,600
Christina A. Mohr 9,603,345 38,600
George R. Remeta 9,603,345 38,600
Richard W. Rubenstein 9,603,345 38,600
</TABLE>
<PAGE> 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
The following exhibits are filed herewith:
Number Description
10.1 Amendment No. 10, dated May 30, 1997, to
Letter of Credit Agreement among the
Corporation, its subsidiaries and The Chase
Manhattan Bank ("Chase")
10.2 Amendment No. 9, dated May 30, 1997, to
Credit Agreement among the Corporation, its
subsidiaries and Chase
27 Financial Data Schedule
The following exhibits to the Corporation's Annual Report on Form 10-K for
the year ended February 1, 1997 are incorporated herein by reference:
Number in Filing Description
10.1 Amendment No. 9, dated January 31, 1997, to
Letter of Credit Agreement among the
Corporation, its subsidiaries and Chase
10.2 Amendment No. 8, dated January 31, 1997 to
Credit Agreement among the Corporation, its
subsidiaries and Chase
13 Sections of 1996 Annual Report to
Stockholders (including opinion of
Independent Public Accountants) that are
incorporated by reference in response to the
items of the Annual Report on Form 10-K
23.1 Consent of Independent Public Accountants
for the Corporation
The following exhibit to the Corporation's Quarterly Report on Form 10-Q for the
period ended November 2, 1996 is incorporated herein by reference:
Number in Filing Description
10.1* Restated Supplemental Retirement Savings
Plan
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended August 3, 1996 are incorporated herein by reference:
Number in Filing Description
10.1 Amendment No. 8, dated August 22, 1996, to
Letter of Credit Agreement among the
Corporation, its subsidiaries and 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")
<PAGE> 16
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 in Filing 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.*
The following exhibits to the Corporation's Current Report on Form 8-K, dated
March 22, 1996, are incorporated herein by reference:
Number in Filing 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
<PAGE> 17
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 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 Registrant
4.1 Specimen Certificate for Common Stock of
Registrant
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
10.30* Performance Option Agreement, dated July 17,
1989, between the Corporation, then known as
Lernmark, Inc., and Raphael Benaroya and
First Amendment thereto dated November 1,
1991
<PAGE> 19
10.31* Performance Option Agreement, dated July 17,
1989, between the Corporation 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 as of August
31, 1989, between the Corporation and ALGLP
10.40 Credit Agreement, dated as of February 24,
1992, among the Corporation, its
subsidiaries and Chase
10.41 Letter of Credit Agreement, dated as of
February 24, 1992, among the Corporation,
its subsidiaries and Chase
The following exhibit to the Restated Schedule 13D, dated February 5, 1997, of
Raphael Benaroya with respect to shares of Common Stock of the Corporation is
incorporated herein by reference:
Number in Filing Description
99.10 Amendment No. 2, dated February 1, 1997, to
Restated Stockholders' Agreement, dated
December 23, 1992, between the Corporation
and certain of its stockholders
- -------------------------
*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 May 3, 1997
<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: June 16, 1997
<PAGE> 21
EXHIBIT INDEX
The following exhibits are filed herewith:
Number Description
10.1 Amendment No. 10, dated May 30, 1997, to
Letter of Credit Agreement among the
Corporation, its subsidiaries and The Chase
Manhattan Bank ("Chase")
10.2 Amendment No. 9, dated May 30, 1997, to
Credit Agreement among the Corporation, its
subsidiaries and Chase
27 Financial Data Schedule
The following exhibits to the Corporation's Annual Report on Form 10-K for
the year ended February 1, 1997 are incorporated herein by reference:
Number in Filing Description
10.1 Amendment No. 9, dated January 31, 1997, to
Letter of Credit Agreement among the
Corporation, its subsidiaries and Chase
10.2 Amendment No. 8, dated January 31, 1997 to
Credit Agreement among the Corporation, its
subsidiaries and Chase
13 Sections of 1996 Annual Report to
Stockholders (including opinion of
Independent Public Accountants) that are
incorporated by reference in response to the
items of the Annual Report on Form 10-K
23.1 Consent of Independent Public Accountants
for the Corporation
The following exhibit to the Corporation's Quarterly Report on Form 10-Q for
the period ended November 2, 1996 is incorporated herein by reference:
Number in Filing Description
10.1* Restated Supplemental Retirement Savings
Plan
The following exhibits to the Corporation's Quarterly Report on Form 10-Q for
the period ended August 3, 1996 are incorporated herein by reference:
Number in Filing Description
10.1 Amendment No. 8, dated August 22, 1996, to
Letter of Credit Agreement among the
Corporation, its subsidiaries and 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")
<PAGE> 22
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 in Filing 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.*
The following exhibits to the Corporation's Current Report on Form 8-K, dated
March 22, 1996, are incorporated herein by reference:
Number in Filing 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
<PAGE> 23
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 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 Registrant
4.1 Specimen Certificate for Common Stock of
Registrant
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
10.30* Performance Option Agreement, dated July 17,
1989, between the Corporation, then known as
Lernmark, Inc., and Raphael Benaroya and
First Amendment thereto dated November 1,
1991
<PAGE> 25
10.31* Performance Option Agreement, dated July 17,
1989, between the Corporation 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 as of August
31, 1989, between the Corporation and ALGLP
10.40 Credit Agreement, dated as of February 24,
1992, among the Corporation, its
subsidiaries and Chase
10.41 Letter of Credit Agreement, dated as of
February 24, 1992, among the Corporation,
its subsidiaries and Chase
The following exhibit to the Restated Schedule 13D, dated February 5, 1997, of
Raphael Benaroya with respect to shares of Common Stock of the Corporation is
incorporated herein by reference:
Number in Filing Description
99.10 Amendment No. 2, dated February 1, 1997, to
Restated Stockholders' Agreement, dated
December 23, 1992, between the Corporation
and certain of its stockholders
- -------------------
*A compensatory plan for the benefit of the Corporation's management
or a management contract.
<PAGE> 1
[Execution Counterpart]
AMENDMENT NO. 10
AMENDMENT NO. 10 dated as of May 30, 1997, 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.),
as collateral agent for itself under the Letter of Credit Agreement (the
"Collateral Agent").
The Company, the Subsidiary Guarantors and the Collateral
Agent 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 the
Collateral Agent to the Company in an aggregate face amount not exceeding
$25,000,000.
The Company has requested the Collateral Agent 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 execution and delivery
hereof by the Company, each Subsidiary Guarantor and the Collateral Agent (and
the payment to the Collateral Agent of the amendment fee referred to in Section
2 of Amendment No. 9 to the Credit Agreement), but effective as of the date
hereof, the Letter of Credit Agreement is hereby amended as follows:
A. Fixed Charges Ratio. Section 9.12 of the Letter of Credit
Agreement is hereby amended in its entirety to read as follows:
"9.12 Fixed Charges Ratio. The Company will not permit the
Fixed Charges Ratio on any date during the period from and including
May 1, 1997 to and including July 5, 1997 to be less than .95 to 1, and
will not permit the Fixed Charges Ratio on any other date on or after
February 1, 1997 to be less than 1.0 to 1."
Amendment No. 10 to Letter of Credit Agreement
<PAGE> 2
- 2 -
B. Cash Flow. Section 9.22 of the Letter of Credit Agreement
is hereby amended in its entirety to read as follows:
"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 December 1, 1996
through February 1, 1997 $ 1,000,000
January 5, 1997
through March 1, 1997 ($ 9,000,000)
From February 2, 1997
through March 29, 1997 ($ 1,500,000)
From March 2, 1997
through May 3, 1997 $ 3,000,000
From March 30, 1997
through May 31, 1997 $ 2,700,000
From May 4, 1997
through July 5, 1997 $ 2,100,000
From June 1, 1997
through August 2, 1997 $ 0
From July 6, 1997
through August 30, 1997 ($ 4,500,000)
From August 3, 1997
through October 4, 1997 ($ 1,600,000)
From August 31, 1997
through November 1, 1997 $ 0
From October 5, 1997
through November 29, 1997 $ 500,000
From November 2, 1997
through January 3, 1998 $ 8,000,000
From November 30, 1997
through January 31, 1998 $ 2,600,000".
</TABLE>
Amendment No. 10 to Letter of Credit Agreement
<PAGE> 3
- 3 -
Section 3. Miscellaneous. Except as herein provided, the
Letter of Credit Agreement shall remain unchanged and in full force and effect.
This Amendment No. 10 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. 10 by signing any such
counterpart. This Amendment No. 10 shall be governed by, and construed in
accordance with, the law of the State of New York.
Amendment No. 10 to Letter of Credit Agreement
<PAGE> 4
- 4 -
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 10 to be duly executed and delivered as of the day and year first
above written.
UNITED RETAIL GROUP, INC. THE CHASE MANHATTAN BANK,
individually and as
Collateral Agent
By /s/ GEORGE REMETA By /s/ CAROL A. ULMER
------------------------- -------------------------
Name: George Remeta Name: Carol A. Ulmer
Title: Vice Chairman Title: Vice President
Each of the Subsidiary Guarantors, by its signature below,
hereby consents to the foregoing Amendment No. 10 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. 10, 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/ Kenneth P. Carroll By /s/ Kenneth P. Carroll
------------------------- -------------------------
Name: Kenneth P. Carroll Name: Kenneth P. Carroll
Title: President Title: President
SMART SIZE, INC. UNITED RETAIL LOGISTICS
OPERATIONS INCORPORATED
(formerly known as Sizes
Unlimited Florida, Inc.)
By /s/ Kenneth P. Carroll By /s/ Kenneth P. Carroll
------------------------- -------------------------
Name: Kenneth P. Carroll Name: Kenneth P. Carroll
Title: President Title: President
Amendment No. 10 to Letter of Credit Agreement
<PAGE> 5
- 5 -
UNITED DISTRIBUTION THE AVENUE, INC.
SERVICES,INC.
By /s/ Kenneth P. Carroll By /s/ Barry Goldin
------------------------- -------------------------
Name: Kenneth P. Carroll Name: Barry Goldin
Title: President Title: President
Amendment No. 10 to Letter of Credit Agreement
<PAGE> 1
[Execution Counterpart]
AMENDMENT NO. 9
AMENDMENT NO. 9 dated as of May 30, 1997, 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 signature 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 execution and delivery
hereof by the Company, each Subsidiary Guarantor, the Majority Banks and the
Agent (and the payment to the Agent of an amendment fee in the amount of
$10,000), but effective as of the date hereof, the Credit Agreement is hereby
amended as follows:
A. Fixed Charges Ratio. Section 9.12 of the Credit Agreement
is hereby amended in its entirety to read as follows:
"9.12 Fixed Charges Ratio. The Company will not permit the
Fixed Charges Ratio on any date during the period from and including
May 1, 1997 to and including July 5, 1997 to be less than .95 to 1, and
will not permit the Fixed Charges Ratio on any other date on or after
February 1, 1997 to be less than 1.0 to 1."
Amendment No. 9 to Credit Agreement
<PAGE> 2
- 2 -
B. Cash Flow. Section 9.22 of the Credit Agreement is hereby
amended in its entirety to read as follows:
"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 December 1, 1996
through February 1, 1997 $ 1,000,000
January 5, 1997
through March 1, 1997 ($ 9,000,000)
From February 2, 1997
through March 29, 1997 ($ 1,500,000)
From March 2, 1997
through May 3, 1997 $ 3,000,000
From March 30, 1997
through May 31, 1997 $ 2,700,000
From May 4, 1997
through July 5, 1997 $ 2,100,000
From June 1, 1997
through August 2, 1997 $ 0
From July 6, 1997
through August 30, 1997 ($ 4,500,000)
From August 3, 1997
through October 4, 1997 ($ 1,600,000)
From August 31, 1997
through November 1, 1997 $ 0
From October 5, 1997
through November 29, 1997 $ 500,000
From November 2, 1997
through January 3, 1998 $ 8,000,000
From November 30, 1997
through January 31, 1998 $ 2,600,000".
</TABLE>
Amendment No. 9 to Credit Agreement
<PAGE> 3
- 3 -
Section 3. Miscellaneous. Except as herein provided, the
Credit Agreement shall remain unchanged and in full force and effect. This
Amendment No. 9 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. 9 by signing any such
counterpart. This Amendment No. 9 shall be governed by, and construed in
accordance with, the law of the State of New York.
Amendment No. 9 to Credit Agreement
<PAGE> 4
- 4 -
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 9 to be duly executed and delivered as of the day and year first
above written.
UNITED RETAIL GROUP, INC. THE CHASE MANHATTAN BANK,
individually and as Agent
and Collateral Agent
By /s/ George Remeta By /s/ Carol A. Ulmer
------------------------- -------------------------
Name: George Remeta Name: Carol A. Ulmer
Title: Vice Chairman Title: Vice President
Each of the Subsidiary Guarantors, by its signature below,
hereby consents to the foregoing Amendment No. 9 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. 9, 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/ Kenneth P. Carroll By /s/ Kenneth P. Carroll
------------------------- -------------------------
Name: Kenneth P. Carroll Name: Kenneth P. Carroll
Title: President Title: President
SMART SIZE, INC. UNITED RETAIL LOGISTICS
OPERATIONS INCORPORATED
(formerly known as Sizes
Unlimited Florida, Inc.)
By /s/ Kenneth P. Carroll By /s/ Kenneth P. Carroll
------------------------- -------------------------
Name: Kenneth P. Carroll Name: Kenneth P. Carroll
Title: President Title: President
Amendment No. 9 to Credit Agreement
<PAGE> 5
- 5 -
UNITED DISTRIBUTION THE AVENUE, INC.
SERVICES,INC.
By /s/ Kenneth P. Carroll By /s/ Barry Goldin
------------------------- -------------------------
Name: Kenneth P. Carroll Name: Barry Goldin
Title: President Title: President
Amendment No. 9 to Credit Agreement
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-02-1997
<PERIOD-END> MAY-03-1997
<CASH> 11,997
<SECURITIES> 0
<RECEIVABLES> 1,858
<ALLOWANCES> 0
<INVENTORY> 46,638
<CURRENT-ASSETS> 67,651
<PP&E> 115,379
<DEPRECIATION> 62,291
<TOTAL-ASSETS> 128,421
<CURRENT-LIABILITIES> 30,801
<BONDS> 11,104
0
0
<COMMON> 13
<OTHER-SE> 78,611
<TOTAL-LIABILITY-AND-EQUITY> 128,421
<SALES> 87,022
<TOTAL-REVENUES> 87,022
<CGS> 68,815
<TOTAL-COSTS> 68,815
<OTHER-EXPENSES> 19,680
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 102
<INCOME-PRETAX> (1,575)
<INCOME-TAX> 14
<INCOME-CONTINUING> (1,589)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,589)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
