SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 10-Q
(MARK ONE)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended DECEMBER 31, 1999
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 1-12046
-------
LEVITZ FURNITURE INCORPORATED
--------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 23-2351830
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7887 NORTH FEDERAL HIGHWAY, BOCA RATON, FL 33487-1613
- ------------------------------------------ ----------
(Address of Principal Executive Offices) (Zip Code)
(561) 994-6006
--------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
On January 31, 2000, there were 30,071,621 shares of the registrant's Common
Stock outstanding of which 26,497,959 shares were Voting Common Stock and
3,573,662 shares were Non-Voting Common Stock, with 249,007 shares held by the
registrant in its treasury.
<PAGE>
THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS FORWARD LOOKING STATEMENTS WITHIN
THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 WITH RESPECT
TO THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF THE COMPANY,
INCLUDING STATEMENTS UNDER THE CAPTION "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS". THESE FORWARD LOOKING STATEMENTS
INVOLVE CERTAIN RISKS AND UNCERTAINTIES. NO ASSURANCE CAN BE GIVEN THAT ANY OF
SUCH MATTERS WILL BE REALIZED. FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD LOOKING STATEMENTS INCLUDE,
AMONG OTHERS, THE FOLLOWING POSSIBILITIES: (1) BANKRUPTCY COURT ACTIONS OR
PROCEEDINGS RELATED TO THE BANKRUPTCY OF LFI AND ITS SUBSIDIARIES; (2)
COMPETITIVE PRESSURE IN LFI's INDUSTRY; (3) GENERAL ECONOMIC CONDITIONS; (4)
CHANGES IN THE FINANCIAL MARKETS AFFECTING LFI's FINANCIAL STRUCTURE AND LFI's
COST OF CAPITAL AND BORROWED MONEY; (5) INVENTORY RISKS DUE TO CHANGES IN MARKET
DEMAND OR LFI'S BUSINESS STRATEGIES; (6) CHANGES IN EFFECTIVE TAX RATES; (7)
UNCERTAINTIES INHERENT IN LFI'S OPERATIONS; AND (8) UNCERTAINTIES WITH REGARD TO
THE PRIVATE LABEL CREDIT CARD PROGRAM. LFI HAS NO DUTY UNDER THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995 TO UPDATE THE FORWARD LOOKING
STATEMENTS IN THIS QUARTERLY REPORT ON FORM 10-Q.
LEVITZ FURNITURE INCORPORATED AND SUBSIDIARIES
FORM 10-Q
DECEMBER 31, 1999
TABLE OF CONTENTS PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets.............................. 3
Consolidated Condensed Statements of Operations.................... 4
Consolidated Condensed Statements of Cash Flows.................... 5
Notes to Consolidated Condensed Financial Statements............... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Comparison of Operations...................................... 12
Liquidity and Capital Resources............................... 14
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................... 18
Signatures ........................................................ 19
Exhibit Index........................................................ 20
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
LEVITZ FURNITURE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
DECEMBER 31,
1999 MARCH 31,
(UNAUDITED) 1999
---------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,063 $ 3,046
Receivables 20,762 21,861
Inventories 93,461 84,232
Deposits and prepaid expenses 3,915 4,432
Income taxes receivable -- 20
Property under agreement of sale -- 95,571
Deferred income taxes 110 --
--------- ---------
Total current assets 122,311 209,162
--------- ---------
PROPERTY AND EQUIPMENT, net 34,326 38,867
--------- ---------
PROPERTY UNDER CAPITAL LEASES, net 28,341 33,303
--------- ---------
OTHER ASSETS:
Intangible leasehold interests 5,265 5,637
Property held for disposal 8,831 32,469
Deferred income taxes -- 4,440
Other 18,127 9,764
--------- ---------
32,223 52,310
--------- ---------
$ 217,201 $ 333,642
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES NOT SUBJECT TO COMPROMISE
CURRENT LIABILITIES:
Outstanding checks and cash overdrafts $ 14,692 $ 8,823
Current portion of long-term debt -- 6,962
Current portion of obligations under capital lease 393 9,846
Accounts payable, trade 34,281 23,060
Accrued expenses and other liabilities 70,853 73,979
Income taxes payable 93 --
Deferred income taxes -- 11,590
DIP Facility 66,486 144,618
--------- ---------
Total current liabilities 186,798 278,878
--------- ---------
OBLIGATIONS UNDER CAPITAL LEASES, net of current portion 26,015 29,368
--------- ---------
OTHER NONCURRENT LIABILITIES 7,729 4,290
--------- ---------
DEFERRED INCOME TAXES 7,049 --
--------- ---------
LIABILITIES SUBJECT TO COMPROMISE 301,482 301,326
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT:
Common stock, at par value 303 303
Capital in excess of par 213,560 213,560
Retained earnings (deficit) (525,434) (493,782)
Treasury stock, 249,007 shares at cost (301) (301)
--------- ---------
Total stockholders' deficit (311,872) (280,220)
--------- ---------
$ 217,201 $ 333,642
========= =========
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
3
<PAGE>
LEVITZ FURNITURE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands except share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 147,517 $ 182,175 $ 393,836 $ 522,736
------------ ------------ ------------ ------------
Costs and expenses:
Cost of sales 81,518 108,076 221,677 301,240
Selling, general and administrative
expenses 69,840 77,756 175,542 228,026
Depreciation and amortization 1,916 4,686 6,919 14,603
Interest expense, net 3,161 7,580 13,537 22,369
------------ ------------ ------------ ------------
156,435 198,098 417,675 566,238
------------ ------------ ------------ ------------
Loss before reorganization items and
income taxes (8,918) (15,923) (23,839) (43,502)
------------ ------------ ------------ ------------
Reorganization items:
Loss on store closings -- 17,921 3,050 39,056
Professional fees 2,161 1,607 4,763 4,914
------------ ------------ ------------ ------------
Total 2,161 19,528 7,813 43,970
------------ ------------ ------------ ------------
Loss before income taxes (11,079) (35,451) (31,652) (87,472)
Income taxes -- -- -- --
------------ ------------ ------------ ------------
Net loss $ (11,079) $ (35,451) $ (31,652) $ (87,472)
============ ============ ============ ============
Net loss per common share $ (0.37) $ (1.18) $ (1.05) $ (2.92)
============ ============ ============ ============
Weighted average number of common
shares outstanding 30,071,621 30,043,746 30,071,621 30,007,246
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
4
<PAGE>
LEVITZ FURNITURE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED DECEMBER 31,
-----------------------------
1999 1998
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (31,652) $ (87,472)
--------- ---------
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation 4,182 8,743
Amortization 2,737 5,860
Loss/(gain) on disposal of property and equipment (14) 60
Amortization of deferred financing fees -- 1,658
Amortization of deferred compensation -- 298
Pension expense (27) 298
Other -- 319
Reorganization items, non-cash 465 29,700
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Decrease (increase) in:
Receivables 1,099 1,810
Inventories (9,229) 25,560
Deposits and prepaid expenses 517 (334)
Other, net (8,373) (2,710)
Increase (decrease) in:
Accounts payable, trade 11,282 (8,261)
Accrued expenses and other liabilities (4,355) 10,175
Income taxes payable (93) (65)
Other noncurrent liabilities (531) 89
--------- ---------
Total adjustments (2,340) 73,200
--------- ---------
NET CASH USED IN OPERATING ACTIVITIES (33,992) (14,272)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (3,901) (5,514)
Proceeds from sale of property and equipment and
other assets 118,606 11,832
--------- ---------
NET CASH PROVIDED BY INVESTING ACTIVITIES 114,705 6,318
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit facilities 459,450 669,591
Repayments under credit facilities (537,582) (649,634)
Principal payments on long-term debt (6,962) (75)
Principal payments under capital lease obligations (471) (1,985)
Increase (decrease) in cash overdrafts 5,869 (8,951)
Acquisition of treasury stock -- (13)
--------- ---------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (79,696) 8,933
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,017 979
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,046 5,339
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,063 $ 6,318
========= =========
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
5
<PAGE>
LEVITZ FURNITURE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
December 31, 1999
(Unaudited)
1. CHAPTER 11 PROCEEDINGS AND BASIS OF PRESENTATION:
On September 5, 1997 (the "Petition Date"), Levitz Furniture
Incorporated, a Delaware corporation ("LFI" or the "Company"), and 11
of its subsidiaries (collectively, the "Debtors"), including, Levitz
Furniture Corporation, a Florida corporation and wholly-owned
subsidiary of LFI ("Levitz"), filed voluntary petitions for relief
under Chapter 11, Title 11 of the United States Code (the "Bankruptcy
Code") with the United States Bankruptcy Court for the District of
Delaware, Wilmington, Delaware under Case No. 97-1842(MFW). Pursuant to
Sections 1107 and 1108 of the Bankruptcy Code, LFI, as debtor and
debtor-in-possession, has continued to manage and operate its assets
and businesses pending the confirmation of a reorganization plan or
plans and subject to the supervision and orders of the Court.
On July 7 1999, the Debtors filed a "Disclosure Statement" and a "Joint
Plan of Reorganization" ("Plan of Reorganization" or "Plan"), pursuant
to Section 1125 of the Bankruptcy Code with the Court. The Disclosure
Statement sets forth certain information regarding, among other things,
significant events that have occurred during the Debtors' Chapter 11
cases and the anticipated organization, operation and financing of
"Reorganized Levitz". The Disclosure Statement describes the Plan of
Reorganization, certain effects of Plan confirmation, certain risk
factors associated with securities to be issued under the Plan, and the
manner in which distribution will be made under the Plan. In addition,
the Disclosure Statement discusses the confirmation process and the
voting procedures that holders of claims in impaired classes must
follow for their votes to be counted. The Plan of Reorganization sets
forth certain information, among other things, the classification and
treatment of claims and interests, means for implementation of the
Plan, acceptance or rejection of the Plan and effect of rejection by
one or more classes of claims or interests, provisions for governing
distributions, the treatment of executory contracts and leases,
conditions precedent to confirmation of the Plan and the occurrence of
the effective date of the Plan.
The Plan of Reorganization provides, among other things, that as of the
Plan effective date stockholders and other parties holding equity
interests in the Company will not receive any distributions and
unsecured creditors will receive a distribution of stock in a
"Reorganized Levitz".
Although the Plan of Reorganization provides for the Debtors' emergence
from bankruptcy, there can be no assurances given that the Debtors will
proceed with this Plan or that the Court will confirm the Plan, or that
such Plan will be consummated.
On January 26, 2000, the Court approved a motion to extend the
exclusivity period to file a plan of reorganization to March 31, 2000.
This extension would accommodate potential alternative options to the
Plan previously submitted on July 7, 1999.
The consolidated financial statements have been presented in accordance
with the American Institute of Certified Public Accountants Statement
of Position 90-7, "Financial Reporting by Entities in Reorganization
under the Bankruptcy Code"(SOP 90-7) and have been prepared in
accordance with generally accepted accounting principles applicable to
a going concern, which principles, except as otherwise disclosed,
assume that assets will be realized and liabilities will be discharged
in the ordinary course of business. As a result of the Chapter 11 cases
and circumstances relating to this event, including LFI's debt
structure, its recurring losses, and current economic conditions, such
realization of assets and liquidation of liabilities are subject to
significant uncertainty. While under the protection of Chapter 11, the
Company may sell or otherwise dispose of assets, and liquidate or
6
<PAGE>
settle liabilities, for amounts other than those reflected in the
financial statements. Additionally, the amounts reported on the
consolidated balance sheet could materially change because of changes
in business strategies and the effects of an approved plan of
reorganization.
The appropriateness of using the going concern basis is dependent upon,
among other things, confirmation of a plan of reorganization, future
profitable operations, the ability to comply with the terms of the DIP
Facility and the ability to generate sufficient cash from operations
and financing arrangements to meet obligations.
In the Chapter 11 cases, substantially all unsecured liabilities as of
the Petition Date are subject to compromise or other treatment under a
plan of reorganization which must be confirmed by the Bankruptcy Court
after submission to any required vote by affected parties. For
financial reporting purposes, those liabilities and obligations whose
treatment and satisfaction is dependent on the outcome of the Chapter
11 cases have been segregated and classified as liabilities subject to
compromise under reorganization proceedings in the consolidated balance
sheets. Generally, all actions to enforce or otherwise effect repayment
of pre-Chapter 11 liabilities as well as all pending litigation against
the Debtors are stayed while the Debtors continue their business
operations as debtors-in-possession. Unaudited schedules have been
filed by the Debtors with the Court setting forth the assets and
liabilities of the Debtors as of the Petition Date as reflected in the
Debtor's accounting records. LFI notified all known claimants subject
to the August 10, 1998 bar date of their need to file a proof of claim
with the Court. A bar date is the date by which claims against LFI must
be filed if the claimants wish to receive any distribution in the
Chapter 11 cases. Differences between amounts shown by the Debtors and
claims filed by creditors are being investigated and will be either
amicably resolved or adjudicated before the Court. The ultimate amount
of and settlement terms for such liabilities are subject to an approved
plan of reorganization and accordingly are not presently determinable.
Under the Bankruptcy Code, the Debtors may elect to assume or reject
real estate leases, employment contracts, personal property leases,
service contracts and other pre-petition executory contracts, subject
to Court approval. Claims for damages resulting from the rejection of
real estate leases and other executory contracts will be subject to
separate bar dates. The Debtors have not reviewed all real estate
leases for assumption or rejection. Since the Petition Date, the
Debtors had rejected leases for twenty-five store locations. The Court
has extended the time for which the Debtors may assume or reject
unexpired leases of nonresidential real property to February 28, 2000.
The liabilities subject to compromise include a reserve for an
estimated amount that may be claimed by lessors for leases that have
been rejected and for any executory contracts that are expected to be
rejected through December 31, 1999. The Debtors will continue to
analyze their real estate leases and executory contracts and may assume
or reject additional leases and contracts. Such rejections could result
in additional liabilities subject to compromise.
Levitz Furniture Incorporated, a Delaware corporation, was incorporated
in December 1984 for the purpose of acquiring Levitz.
In the opinion of Management, the accompanying unaudited consolidated
condensed financial statements contain all adjustments consisting of
normal recurring accruals necessary to present fairly the financial
position as of December 31, 1999; the results of operations and cash
flows for the periods then ended. The results of operations for the
period ended December 31, 1999, are not necessarily indicative of the
results to be expected for the full year.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. It is suggested that these
condensed consolidated financial statements be read in conjunction with
the financial statements and notes thereto included in LFI's audited
financial statements for the year ended March 31, 1999, which is
included in its Form 10-K.
7
<PAGE>
2. DEBT:
LFI and substantially all of its subsidiaries, as
debtors-in-possession, are parties to a Postpetition Credit Agreement,
as amended, dated as of September 5, 1997 (the "DIP Facility") with BT
Commercial Corporation (BTCC) as agent. The DIP Facility has been
approved by the Court and includes a total commitment comprised of
revolving notes of $95.0 million, an initial overadvance term note of
$10.0 million and a subsequent overadvance term loan of $5.0 million.
Letter of Credit obligations under the revolver portion of the DIP
Facility are limited to $25.0 million. The DIP Facility is intended to
provide LFI with the cash and liquidity to conduct its operations and
pay for merchandise shipments at normal levels during the course of the
Chapter 11 proceedings.
Loans made under the DIP Facility revolving notes bear interest, at
Levitz's option, at a rate equal to either Bankers Trust Company's
prime rate plus 1.5% or BTCC's LIBOR rate plus 3.75%. The overadvanced
term notes bear interest at 16.0%. Levitz is required to pay an unused
line fee of 0.5%, and a letter of credit fee of 2.0% on any outstanding
letter of credit.
The maximum borrowings, excluding the term commitments, under the DIP
Facility are limited to 85% of eligible accounts receivable and 75% of
eligible inventory (as defined in the DIP Facility). Qualification of
accounts receivable and inventory items as "eligible" is subject to
unilateral change at the discretion of the lenders. Excess availability
under the DIP Facility at January 31, 2000 was $10.6 million.
The DIP Facility is secured by substantially all of the assets of
Levitz and its subsidiaries and a perfected pledge of stock of LFI's
and all of Levitz's subsidiaries. The lenders under the DIP Facility
also have a super-priority administrative expense claim against the
estate of the Debtors. The DIP Facility contains restrictive covenants
including, among other things, the maintenance of minimum earnings
before interest, taxes, depreciation and amortization as defined
(EBITDA), limitations on the incurrence of additional indebtedness,
liens, contingent obligations, sales of assets, capital expenditures
and a prohibition on paying dividends.
On September 16, 1999, the DIP Facility was amended to include, among
other things, an extension of the DIP Facility expiration date until
June 30, 2000 and a reduction in the EBITDA requirements for September
and December 1999. On January 7, 2000, the DIP Facility was amended to
include, among other things, an additional commitment of $5.0 million.
The additional commitment was in the form of a subsequent overadvance
term loan as referred to above.
The DIP Facility expires on June 30, 2000. Levitz has not achieved the
required minimum earnings before interest, taxes, depreciation and
amortization (EBITDA) covenant required by the DIP Facility as of
December 31, 1999 and does not expect to satisfy the EBITDA level as of
March 31, 2000 that the DIP Facility currently requires to be achieved
at that date. BTCC, as agent, has agreed to waive the non-compliance
with the EBITDA covenant at December 31 and has initiated the
solicitation of approval of that waiver by members of the bank group.
Management intends to negotiate with the bank group for modification of
the existing EBITDA requirement at March 31, 2000. Although Management
believes these negotiations will be successful, there can be no
assurances given that the DIP Facility lenders will grant the
amendments or waivers to the DIP Facility.
3. LIABILITIES SUBJECT TO COMPROMISE:
The principal categories of obligations classified as liabilities
subject to compromise under reorganization proceedings are identified
below. The amounts below in total may vary significantly from the
stated amount of proofs of claim that have been filed with the Court
and may be subject to future adjustment depending on Court action,
further developments with respect to potential disputed claims,
determination as to the value of any collateral securing claims, or
other events.
8
<PAGE>
Additional claims may arise from the rejection of additional real
estate leases and executory contracts by the Debtors.
DECEMBER 31,
1999
(DOLLARS IN
LIABILITIES SUBJECT TO COMPROMISE THOUSANDS)
--------------------------------- ----------
Accounts payable, trade $ 38,580
Accrued expenses 15,290
13.375% Senior Notes due 10/15/98 96,031 (1)
9.625% Senior Subordinated Notes due 7/15/03 101,337 (1)
Senior Deferred Coupon Debentures due 6/15/02 8,716 (1)
Reserve for lease rejection claims 19,787
Executive retirement and employment agreements 17,318
General liability claims 736
Reserve for previous store closings 1,353
Common area maintenance 234
Real estate taxes 1,602
Personal property taxes 498
---------
$ 301,482
=========
(1) Includes accrued interest at September 4, 1997.
As a result of the Chapter 11 filing, no principal or interest payments
will be made on most pre-petition debt without Court approval or until
a plan of reorganization providing for the repayment terms has been
confirmed by the Court and becomes effective. Interest on pre-petition
unsecured obligations has not been accrued after the Petition Date
except that interest expense and principal payments will continue to be
recorded on capital lease obligations unless the Debtors reject the
leases. If a capital lease is rejected the obligation will be limited
to the lease rejection claim. Contractual interest expense of $17.4
million was not recorded on certain pre-petition debt for the periods
ended December 31, 1999 and 1998.
4. PRIVATE-LABEL CREDIT CARD PROGRAM:
On September 4, 1998 Levitz and its operating subsidiaries entered into
an agreement ("Merchant Agreement") with Household Bank (SB), N.A.
("Household") whereby Household would provide financing to individual
consumers purchasing merchandise from Levitz ("Private-Label Credit
Card Program"). The Court approved the Merchant Agreement and granted a
first priority and security interest and lien to Household on certain
reserves ("Merchant Risk Reserve") retained or accumulated by
Household, totaling $14.2 million at December 31, 1999, and gave
administrative expense status to substantially all obligations arising
under the Merchant Agreement. Both the reserves and obligations are
limited to a certain maximum amount under the Merchant Agreement.
Levitz funds the Merchant Risk Reserve through a reduction of 3.5% on
customer accounts financed.
At December 31, 1999, Household's portfolio balance was $478.4 million.
Levitz recorded income of $22.1 million and $4.2 million for the nine
month periods ended December 31, 1999 and 1998, respectively. The
income recorded for the nine month period ended December 31, 1999 was
derived from the Merchant Agreement with Household. The income recorded
for the same period of the prior year was derived from the former
agreement with General Electric Capital Corporation and the Merchant
Agreement.
Levitz is exposed to market risk under the terms of the Household
Agreement. Levitz may pay a fee or may receive income, based upon the
relationship among the interest earned on the portfolio, the amount of
the servicing fee, the cost of capital, promotional discount fees and
credit losses. A one percent increase or decrease in
9
<PAGE>
the finance charge to customers or the cost of capital or the credit
loss rate would increase or decrease the annual income from the
portfolio by $3.5 million to $5.5 million.
Levitz is obligated for all credit losses under the portfolio,
including the GECC portfolio transferred to Household, up to a maximum
of 15% of average outstanding receivables and for 50% of all credit
losses above 15%. Although credit losses on a monthly basis have been
lower than that reflected in Household's notice in October 1999, credit
losses are significantly higher than in the first year of the program
from September 1998 through August 1999. The increase in credit losses
has reduced the monthly income realized from the program and has also
negatively impacted cash flow from the program which is expected to
continue in future periods. Levitz believes that it may be required to
seek additional financing to meet its obligations under the Merchant
Agreement. While Levitz believes alternatives exist to obtain such
financing, there can be no assurances given that such financing will be
obtained.
5. REORGANIZATION ITEMS:
Store Closings
In September 1999 Levitz provided an additional $3.1 million store
closing reserve based on revised estimates of when closed stores would
be sold. Cash charges included $1.5 million for the revised estimate of
expenses on idle space for continuing stores, $0.2 million for rental
of equipment for closed stores and $0.9 million for additional
continuing expenses for closed stores. Non-cash charges included an
additional write-down of property held for disposal in the amount of
$0.5 million.
Professional fees
Professional fees include accounting, legal and consulting services
provided to LFI and the Creditors' Committee which, subject to Court
approval, are required to be paid by LFI while it is in Chapter 11.
6. LOSS PER SHARE:
Common stock equivalents consist of stock options, restricted stock and
warrants. As of December 31, 1999 and 1998, there were common stock
equivalents outstanding for 6,133,115 and 6,848,445 shares,
respectively. All common stock equivalents have an antidilutive impact
on LFI's loss from continuing operations for the periods presented and,
therefore, are not included in LFI's computation of diluted loss per
share.
7. CONSOLIDATED STATEMENTS OF CASH FLOWS:
Supplemental disclosures of cash flow information (dollars in
thousands):
Nine Months Ended
December 31,
-----------------
1999 1998
------ ------
Interest paid $15,461 $20,164
======= =======
Income tax paid (refunded), net $ 97 $ 63
======= =======
10
<PAGE>
8. RECLASSIFICATIONS:
Effective March 31, 1999, LFI elected to reclassify certain revenues in
its consolidated condensed statements of operations. As a result, net
sales and selling, general and administrative ("SG&A") expenses have
been restated for the nine month periods ended December 31, 1999 and
1998. LFI now reflects delivery income and miscellaneous revenue in
SG&A expenses. Previously, these revenues were included in net sales.
The effect of this reclassification was to reduce net sales and SG&A
expenses by $12.7 million and $15.8 million for the nine month periods
ended December 31, 1999 and 1998, respectively.
Certain other amounts in prior year's consolidated condensed financial
statements have been reclassified to conform to the current year's
presentation.
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
GENERAL
On September 5, 1997 (the "Petition Date"), Levitz Furniture Incorporated, a
Delaware corporation ("LFI"), and 11 of its subsidiaries (collectively, the
"Debtors"), including, Levitz Furniture Corporation, a Florida corporation and
wholly-owned subsidiary of LFI ("Levitz"), filed voluntary petitions for relief
under Chapter 11, Title 11 of the United States Code (the "Bankruptcy Code")
with the United States Bankruptcy Court for the District of Delaware,
Wilmington, Delaware ("the Court"). The bankruptcy cases of LFI and Levitz and
their affiliates are being jointly administered, for procedural purposes only,
under Case No. 97-1842(MFW). Pursuant to Sections 1107 and 1108 of the
Bankruptcy Code, LFI, as debtor and debtor-in-possession, has continued to
manage and operate its assets and businesses pending the confirmation of a
reorganization plan or plans and subject to the supervision and orders of the
Court.
COMPARISON OF OPERATIONS
The following table sets forth LFI's results of operations expressed as a
percentage of net sales for the periods indicated:
<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
-------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------- ------------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales 55.3 59.3 56.3 57.6
----- ----- ----- -----
Gross profit 44.7 40.7 43.7 42.4
Selling, general and administrative
expenses 47.3 42.7 44.6 43.6
Depreciation and amortization 1.3 2.6 1.8 2.8
Interest expense 2.1 4.2 3.4 4.3
----- ----- ----- -----
Loss before reorganization items
and income taxes (6.0) (8.8) (6.1) (8.3)
Reorganization items (1.5) (10.7) (1.9) (8.4)
----- ----- ----- -----
Net loss (7.5)% (19.5)% (8.0)% (16.7)%
===== ===== ===== =====
Comparable store sales increase/
(decrease) 4.9 % (5.4)% 0.5 % (0.2)%
===== ===== ===== =====
</TABLE>
THREE MONTHS ENDED DECEMBER 31, 1999 COMPARED TO THREE MONTHS ENDED
DECEMBER 31, 1998
Net sales of $147.5 million for the three month period ended December 31, 1999
decreased $34.7 million or 19.0% from net sales of $182.2 million in the same
period for the prior year. Comparable store net sales increased $6.8 million or
4.9%, new store net sales were $1.1 million and net sales for the forty-two
closed stores for the same period of the prior year were $42.6 million.
12
<PAGE>
Gross profit as a percentage of net sales increased to 44.7% for the three month
period ended December 31, 1999 compared to 40.7% in the same period of the prior
year. Gross profit for the three month period ended December 31, 1998 includes a
write-down of excess, discontinued and damaged inventory of $4.8 million.
Excluding the inventory write-down, gross profit as a percentage of net sales
was 43.3% for the three month period ended December 31, 1998.
Selling, general and administrative (SG&A) expenses of $69.8 million for the
period ended December 31, 1999 decreased $8.0 million or 10.3% from SG&A
expenses of $77.8 million in the same period for the prior year. The reduction
in SG&A expenses included $16.9 million due to the closing of forty-two stores
during the last six months of Fiscal 1999. The reduction in SG&A expenses for
closed stores was offset by an increase in SG&A expenses for comparable stores
of $7.7 million, a $0.4 million increase for new stores and a $0.8 million
increase for corporate expenses. The increase in comparable store SG&A expenses
was due to an increase in: (1) advertising expense of $4.7 million for increased
use of radio, TV, preprint circulars, and finance promotions under the Company's
private-label credit card program; (2) salaries and benefits of $1.1 million
which was primarily due to the increase in net sales; (3) occupancy of $2.7
million due to the sale-leaseback of owned property and leasehold interests; and
(4) other expenses of $2.0 million primarily associated with the inefficiencies
caused by the warehouse consolidation program. The increase in comparable store
SG&A expenses were offset by an increase in service fee income of $2.8 million
under the Company's private-label credit card program.
Depreciation and amortization for the three month period ended December 31, 1999
decreased to $1.9 million from $4.7 million or 59.6% from the same period of the
prior year. The decrease was primarily due to the closing of forty-two stores
and the disposal of owned and leased properties.
Interest expense for the three month period ended December 31, 1999 decreased to
$3.2 million from $7.6 million for the same period of the prior year. The
decrease was primarily due to reduced borrowings under the DIP Facility as a
result of sales of real estate properties and leasehold interests, the net
proceeds from which were used to pay down the DIP Facility as required. Interest
on pre-petition unsecured obligations has not been accrued after the Petition
Date except that interest expense continues to be recorded on capital lease
obligations. Contractual interest expense of $5.8 million was not recorded on
certain pre-petition unsecured debt for the three month periods ended December
31, 1999 and 1998.
Reorganization items for the three month period ended December 31, 1998 included
a charge of $21.1 million for the closing of twenty-seven stores and the
elimination of certain support functions. Professional fees and other expenses
related to bankruptcy services rendered during the three month periods ended
December 31, 1999 and 1998 were $2.2 million and $1.6 million, respectively.
LFI has not recorded any tax benefits for the losses incurred during the periods
ended December 31, 1999 and 1998. LFI does not anticipate recording any tax
provision for the remainder of Fiscal 2000, subject to changes in operating
performance.
As a result of the aforementioned factors, net loss for the three month period
ended December 31, 1999 amounted to $11.1 million or 7.5% of net sales as
compared to net loss of $35.5 million or 19.5% of net sales for the same period
of the prior year.
NINE MONTHS ENDED DECEMBER 31, 1999 COMPARED TO NINE MONTHS ENDED
DECEMBER 31, 1998
Net sales of $393.8 million for the nine month period ended December 31, 1999
decreased $128.9 million or 24.7% over net sales of $522.7 million in the same
period for the prior year. Comparable store net sales increased $2.4 million or
0.5%, new store sales were $2.8 million and net sales for the forty-two closed
stores for the same period of the prior year were $134.1 million.
Gross profit as a percentage of net sales increased to 43.7% for the nine month
period ended December 31, 1999 compared to 42.4% in the same period of the prior
year. Gross profit for the nine month period ended December 31, 1998 includes a
write-down of excess,
13
<PAGE>
discontinued and damaged inventory of $4.8 million. Excluding the inventory
write-down, gross profit as a percentage of net sales was 43.3% for the nine
month period ended December 31, 1998.
Selling, general and administrative ("SG&A") expenses decreased $52.5 million
for the nine month period ended December 31, 1999 as compared to the same period
for the prior year. The reduction in SG&A expenses included $54.8 million due to
the closing of forty-two stores during the last six months of Fiscal 1999 and
$1.1 million in the reduction of corporate expenses. SG&A expenses increased
$0.9 million for the addition of one new store. SG&A expenses decreased in
comparable stores primarily due to the increase in service fee income of $15.9
million from the Private-Label Credit Card Program. This was offset by an
increase in advertising expense of $4.1 million, salaries and benefits of $1.2
million, occupancy of $2.8 million and other costs of $2.2 million. Advertising
expense increased due to the increase in media promotions of $2.9 million and
the increase in "interest free" promotions offered under the Company's
Private-Label Credit Card Program of $1.2 million. Salaries and benefits and
other expenses increased due to the inefficiencies in the implementation of the
warehouse rationalization program and a realignment of store positions.
Occupancy costs increased due to the sale leaseback of owned properties and the
sale of leasehold interests which increased rent on leased properties.
Interest expense for the nine month period ended December 31, 1999 decreased to
$13.5 million from $22.4 million for the same period of the prior year. The
decrease was primarily due to reduced borrowings under the DIP Facility as a
result of sales of real estate properties and leasehold interests, the net
proceeds from which were used to pay down the DIP Facility as required. Interest
on pre-petition unsecured obligations has not been accrued after the Petition
Date except that interest expense continues to be recorded on capital lease
obligations. Contractual interest expense of $17.4 million was not recorded on
certain pre-petition unsecured debt for the nine month periods ended December
31, 1999 and 1998.
Reorganization items for the nine month period ended December 31, 1999 included
a charge of $3.1 million for revised estimates of continuing expenses on closed
stores and idle space in continuing stores as well as an additional write-down
on property held for disposal. Reorganization items for the nine month period
ended December 31, 1998 included a charge of $21.1 million for the closing of
fifteen stores in under-performing markets and the elimination of certain
support functions and the closing of warehouses in certain locations. Also
included as reorganizational items are professional fees of $4.8 million and
$4.9 million for accounting, legal and consulting services provided to the
Debtors and the Creditors' Committee while the Debtors are in Chapter 11 for the
nine month periods ended December 31, 1999 and 1998, respectively.
LFI has not recorded any tax benefits for the loss incurred during the nine
month periods ended December 31, 1999 and 1998. LFI does not anticipate
recording any tax provision for the remainder of Fiscal 2000, subject to changes
in operating performance.
Net loss for the nine month period ended December 31, 1999 was $31.7 million or
8.0% of net sales as compared to a net loss of $87.5 million or 16.7% of net
sales for the same period of the prior year.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
LFI's only material asset is the common stock of Levitz and, therefore, its
ability to pay cash dividends, interest and principal, is dependent upon
dividends and other payments from Levitz. LFI's ability to obtain cash from
Levitz is restricted by the Bankruptcy Court, the DIP Facility, the indentures
relating to Levitz's outstanding indebtedness and Florida law. LFI's only
outstanding obligations are $8.7 million of Senior Deferred Coupon Debentures
due June 15, 2002, which includes accrued interest through September 4, 1997,
that are unsecured and are classified as liabilities subject to compromise.
Levitz's primary sources of liquidity are cash flow from operations (including
the proceeds from customer credit obligations under the Private-Label Credit
Card Program by
14
<PAGE>
Household), trade credit and borrowings under the DIP Facility. During the nine
month period ended December 31, 1999, Levitz used approximately $24.3 million of
net cash flow in operations before changes in operating assets and liabilities.
Changes in operating assets and liabilities further reduced net cash flow from
operations by $9.7 million. Increases in inventory of $9.2 million, other assets
(largely the Household Merchant Risk Reserve under the Private-Label Credit Card
Program) of $8.4 million and the reduction of accrued expenses and other
liabilities of $4.4 million had an unfavorable impact on cash flow. Cash flow
was favorably impacted by an increase in trade payables of $11.2 million due to
better payment terms with trade vendors and a decrease in customer receivables
of $1.1 million. The decrease in accrued expenses was primarily due to the
reduction in accrued interest of $2.1 million on the DIP Facility due to reduced
borrowings, reduction in accrued real estate taxes and other taxes of $3.2
million due to the closing of stores and required pre-payment of real estate
taxes under the sale-leaseback agreement, reduction of closed store reserves of
$3.0 million and the reduction of other accrued operating costs of $1.3 million
due to store closings.
Cash provided by investing activities for the nine month period ended December
31, 1999 includes $43.8 million of proceeds from leasehold interests or asset
sales of closed facilities and $74.8 million in proceeds from sale-leaseback
transactions on continuing stores. The net proceeds from which were applied as
repayments to the DIP Facility as required by the agreement.
Levitz's total capital expenditures were approximately $3.9 million during the
nine month period ended December 31, 1999. Levitz spent $0.3 million on
renovations and equipment for one new store in Valencia, CA and $3.6 million for
existing store improvements and equipment. Management plans to spend
approximately $5.0 million for capital expenditures in the current fiscal year
of which approximately $2.9 million is for maintenance of existing facilities.
Net cash used in financing activities amounted to $79.7 million during the nine
month period ended December 31, 1999. Repayments under the DIP Facility were
$78.1 million. Principal payments under long-term obligations, to include the
pay off of mortgages on the sale of owned property, were $7.4 million and
outstanding checks and cash overdrafts increased $5.9 million.
Debt
LFI and substantially all of its subsidiaries, as debtors-in-possession, are
parties to a Postpetition Credit Agreement, as amended, dated as of September 5,
1997 (the "DIP Facility") with BT Commercial Corporation (BTCC) as agent. The
DIP Facility has been approved by the Court and includes a total commitment
comprised of revolving notes of $95.0 million, an initial overadvance term note
of $10.0 million and a subsequent overadvance term loan of $5.0 million. Letter
of Credit obligations under the revolver portion of the DIP Facility are limited
to $25.0 million. The DIP Facility is intended to provide LFI with the cash and
liquidity to conduct its operations and pay for merchandise shipments at normal
levels during the course of the Chapter 11 proceedings.
Loans made under the DIP Facility revolving notes bear interest, at Levitz's
option, at a rate equal to either Bankers Trust Company's prime rate plus 1.5%
or BTCC's LIBOR rate plus 3.75%. The overadvanced term notes bear interest at
16.0%. Levitz is required to pay an unused line fee of 0.5%, and a letter of
credit fee of 2.0%.
The maximum borrowings, excluding the term commitments, under the DIP Facility
are limited to 85% of eligible accounts receivable and 75% of eligible inventory
(as defined in the DIP Facility). Qualification of accounts receivable and
inventory items as "eligible" is subject to unilateral change at the discretion
of the lenders. Excess availability under the DIP Facility at January 31, 2000
was $10.6 million.
The DIP Facility is secured by substantially all of the assets of Levitz and its
subsidiaries and a perfected pledge of stock of LFI's and all of Levitz's
subsidiaries. The lenders under the DIP Facility also have a super-priority
administrative expense claim against the estate of the Debtors. The DIP Facility
contains restrictive covenants including, among other things, the maintenance of
minimum earnings before interest, taxes, depreciation and amortization as
defined (EBITDA), limitations on the incurrence of
15
<PAGE>
additional indebtedness, liens, contingent obligations, sales of assets, capital
expenditures and a prohibition on paying dividends.
On September 16, 1999, the DIP Facility was amended to include, among other
things, an extension of the DIP Facility expiration date until June 30, 2000 and
a reduction in the EBITDA requirements for September and December 1999. On
January 7, 2000, the DIP Facility was amended to include, among other things, an
additional commitment of $5.0 million. The additional commitment was in the form
of a subsequent overadvance term loan as referred to above.
The DIP Facility expires on June 30, 2000. Levitz has failed to achieve the
required minimum earnings before interest, taxes, depreciation and amortization
(EBITDA) covenant required by the DIP Facility as of December 31, 1999 and does
not expect to satisfy the EBITDA level as of March 31, 2000 that the DIP
Facility currently requires to be achieved at that date. BTCC, as agent, has
agreed to waive the non-compliance with the EBITDA covenant at December 31 and
has initiated the solicitation of approval of that waiver by members of the bank
group. Management intends to negotiate with the Bank Group for modification of
the existing EBITDA requirement at March 31, 2000. Although Management believes
these negotiations will be successful, there can be no assurances given that the
DIP Facility lenders will grant such amendments or waivers to the DIP Facility.
Private-Label Credit Card Program
On September 4, 1998 Levitz and its operating subsidiaries entered into an
agreement ("Merchant Agreement") with Household Bank (SB), N.A. ("Household")
whereby Household would provide financing to individual consumers purchasing
merchandise from Levitz ("Private-Label Credit Card Program"). The Court
approved the Merchant Agreement and granted a first priority and security
interest and lien to Household on certain reserves ("Merchant Risk Reserve")
retained or accumulated by Household, totaling $14.2 million at December 31,
1999, and gave administrative expense status to substantially all obligations of
Levitz arising under the Merchant Agreement. Both the reserves and obligations
are limited to a certain maximum amount under the Merchant Agreement. Levitz
funds the Merchant Risk Reserve through a reduction of 3.5% on customer accounts
financed.
At December 31, 1999, Household's portfolio balance was $478.4 million. Levitz
recorded income of $22.1 million and $4.2 million for the nine month periods
ended December 31, 1999 and 1998, respectively. The income recorded for the nine
month period ended December 31, 1999 was derived from the Merchant Agreement
with Household. The income recorded for the same period of the prior year was
derived from the former agreement with General Electric Capital Corporation and
the Merchant Agreement.
Levitz is exposed to market risk under the terms of the Household Agreement.
Levitz may pay a fee or may receive income, based upon the relationship among
the interest earned on the portfolio, the amount of the servicing fee, the cost
of capital, promotional discount fees and credit losses. A one percent increase
or decrease in the finance charge to customers or the cost of capital or the
credit loss rate would increase or decrease the annual income from the portfolio
by $3.5 million to $5.5 million.
Levitz is obligated for all credit losses under the portfolio, including the
GECC portfolio transferred to Household, up to a maximum of 15% of average
outstanding receivables and for 50% of all credit losses above 15%. Although
credit losses on a monthly basis have been lower than that reflected in
Household's notice in October 1999, credit losses are significantly higher than
in the first year of the program from September 1998 through August 1999. The
increase in credit losses has reduced the monthly income realized from the
program and has also negatively impacted cash flow from the program which is
expected to continue in future periods. Levitz believes that it may be required
to seek additional financing to meet its obligations under the Merchant
Agreement. While Levitz believes alternatives exist to obtain such financing,
there can be no assurances given that such financing would be obtained.
16
<PAGE>
Going Concern
Levitz' liquidity in recent months has decreased as a result of continuing
operating losses and increased working capital requirements, primarily related
to the private label credit card program. It is likely that Levitz will need to
obtain additional financing to maintain adequate liquidity. While Levitz
believes alternatives exist to obtain such financing, there can be no assurances
given that such financing would be obtained.
On July 7 1999, the Debtors filed a "Disclosure Statement" and a "Joint Plan of
Reorganization" ("Plan of Reorganization" or "Plan"). The Disclosure Statement
sets forth certain information regarding, among other things, significant events
that have occurred during the Debtors' Chapter 11 cases and the anticipated
organization, operation and financings of "Reorganized Levitz". The Disclosure
Statement describes the Plan of Reorganization, certain effects of Plan
confirmation, certain risk factors associated with securities to be issued under
the Plan, and the manner in which distribution will be made under the Plan. In
addition, the Disclosure Statement discusses the confirmation process and the
voting procedures that holders of claims in impaired classes must follow for
their votes to be counted. The Plan of Reorganization sets forth certain
information, among other things, the classification and treatment of claims and
interests, means for implementation of the Plan, acceptance or rejection of the
Plan and effect of rejection by one or more classes of claims or interests,
provisions for governing distributions, the treatment of executory contracts and
leases, conditions precedent to confirmation of the Plan and the occurrence of
the effective date of the Plan.
The Plan of Reorganization provides, among other things, that as of the Plan
effective date stockholders and other parties holding equity interests in the
Company will not receive any distributions and unsecured creditors will receive
a distribution of stock in a "Reorganized Levitz".
Although the Plan of Reorganization provides for the Debtors' emergence from
bankruptcy, there can be no assurances given that the Plan will be confirmed by
the Court, or that such Plan will be consummated.
On January 26, 2000, the Court approved a motion to extend the exclusivity
period to file a plan of reorganization to March 31, 2000. This extension would
accommodate potential alternative options to the Plan previously submitted on
July 7, 1999. After the expiration of the exclusivity period, creditors will
have the right to propose alternative plans of reorganization.
17
<PAGE>
PART II OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10.68: Amendment No. 14 dated as of December 14,
1999 to the Postpetition Credit Agreement among Levitz
Furniture Incorporated, et al. and BT Commercial
Corporation, as agent.
Exhibit 10.69: Amendment No. 15 dated as of January 7,
2000 to the Postpetition Credit Agreement among Levitz
Furniture Incorporated, et al. and BT Commercial
Corporation, as agent.
Exhibit 27: Financial Data Schedule
(b) Report on Form 8-K: None.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Security Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LEVITZ FURNITURE INCORPORATED
(Registrant)
Date: February 14, 2000 /s/ MICHAEL MCCREERY
-----------------------------------------
Michael McCreery
Senior Vice President and
Chief Financial Officer
19
<PAGE>
EXHIBIT INDEX
Exhibits to Form 10-Q
NUMBER
EXHIBIT TABLE EXHIBIT
10.68 Amendment No. 14 dated as of December 14, 1999 to the
Postpetition Credit Agreement among Levitz Furniture
Incorporated, et al. and BT Commercial Corporation, as
agent.
10.69 Amendment No. 15 dated as of January 7, 2000 to the
Postpetition Credit Agreement among Levitz Furniture
Incorporated, et al. and BT Commercial Corporation, as
agent.
27 Financial Data Schedule.
20
EXHIBIT NO. 10.68
FOURTEENTH AMENDMENT TO POSTPETITION
CREDIT AGREEMENT AND ADOPTING AGREEMENT
THIS FOURTEENTH AMENDMENT TO POSTPETITION CREDIT AGREEMENT AND ADOPTING
AGREEMENT, dated as of December 14, 1999 (this "AMENDMENT"), is among LEVITZ
FURNITURE INCORPORATED, a Delaware corporation and a debtor and debtor in
possession, LEVITZ FURNITURE CORPORATION, a Florida corporation and a debtor and
debtor in possession ("LFC"), LEVITZ FURNITURE REALTY CORPORATION, a Florida
corporation and a debtor and debtor in possession, LEVITZ SHOPPING SERVICE,
INC., a Florida corporation and a debtor and debtor in possession, LEVITZ
FURNITURE COMPANY OF THE MIDWEST, INC., a Colorado corporation and a debtor and
debtor in possession, LEVITZ FURNITURE COMPANY OF THE PACIFIC, INC., a
California corporation and a debtor and debtor in possession, LEVITZ FURNITURE
COMPANY OF WASHINGTON, INC., a Washington corporation and a debtor and debtor in
possession, LEVITZ FURNITURE COMPANY OF THE MIDWEST REALTY, INC., a Colorado
corporation and a debtor and debtor in possession, LEVITZ FURNITURE COMPANY OF
THE PACIFIC REALTY, INC., a California corporation and a debtor and a debtor in
possession, LEVITZ FURNITURE COMPANY OF WASHINGTON REALTY, INC., a Washington
corporation and debtor and a debtor in possession, LEVITZ REINSURANCE
CORPORATION, JOHN M. SMYTH COMPANY, an Illinois corporation and a debtor and
debtor in possession, and JOHN M. SMYTH REALTY COMPANY, an Illinois corporation
and a debtor and debtor in possession (collectively, the "EXISTING BORROWERS"),
LEVITZ FURNITURE COMPANY OF MASSACHUSETTS, INC., a Massachusetts corporation
(the "NEW BORROWER"; and collectively with the Existing Borrowers, the
"BORROWERS"), each Revolving Lender and Overadvance Term Lender signatories
hereto (collectively, the "LENDERS") and BT COMMERCIAL CORPORATION, a Delaware
corporation, acting in its capacity as collateral agent and agent for the
Lenders (in such capacity, together with its successors in such capacity, the
"AGENT"). Capitalized terms used in this Amendment and not otherwise defined
have the meanings assigned to such terms in the Postpetition Credit Agreement
dated as of September 5, 1997, as amended (as the same may be further amended,
restated, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), among the Borrowers, the Lenders and the Agent.
PRELIMINARY STATEMENTS:
A. The Existing Borrowers, the Lenders and the Agent are parties to the
Credit Agreement.
B. The Borrowers have requested that the Lenders and the Agent amend
the Credit Agreement in certain respects.
C. The Borrowers, the Lenders and the Agent have agreed to amend the
Credit Agreement on the terms and subject to the conditions of this Amendment.
AGREEMENT:
In consideration of the premises and the mutual agreements contained in
this Amendment, the Borrowers, the Lenders and the Agent agree as follows:
1. AMENDMENTS TO CREDIT AGREEMENT.
On the date each of the conditions set forth in SECTION 3 is satisfied
by the Borrowers (the "CLOSING DATE"), the Credit Agreement is amended as
follows:
1
<PAGE>
1.1 The Credit Agreement is amended by adding New Borrower as a
"Borrower" thereunder. Upon the effectiveness of this Amendment, all
references to "Borrower" contained in the Credit Agreement shall be
deemed to refer to each of the Existing Borrowers and New Borrower,
collectively.
1.2 Parts 6.1, 6.9, 6.10, [OTHERS?] of Schedule B to the Credit
Agreement are supplemented by adding the items set forth on Annex I
hereto relating to New Borrower.
2. ADOPTION AND CONFIRMATION.
2.1 CREDIT AGREEMENT AND NOTES. By its execution and delivery of
this Amendment, New Borrower hereby confirms that (i) upon the
effectiveness of this Amendment it will become a "Borrower" under the
Credit Agreement and each of the Notes, subject to all of the
covenants, undertakings, liabilities and obligations of the Borrowers
contained therein, including the joint and several obligations of the
Borrowers with respect to the Postpetition Obligations as further
provided in SECTION 11.16 of the Credit Agreement and (ii) all of the
representations and warranties contained in the Credit Agreement that
are applicable to it as a Borrower are true and correct as of the date
hereof after giving effect to this Amendment.
2.2 POST-PETITION SECURITY AGREEMENT. By its execution and
delivery of this Amendment, New Borrower hereby confirms that (i) upon
the effectiveness of this Amendment it will become a "Grantor" under
and as defined in the Post-Petition Security Agreement, subject to all
of the covenants, undertakings, liabilities and obligations of the
Grantors contained therein, (ii) all of the representations and
warranties contained in the Post-Petition Security Agreement that are
applicable to it as a Grantor are true and correct as of the date
hereof after giving effect to this Amendment and (iii) upon the
effectiveness of this Amendment, it grants to Collateral Agent, on
behalf and for the benefit of the Secured Parties, to secure all the
Secured Obligations a lien upon and security interest in, all of its
right, title and interest in, to and under the following: (A) Accounts;
(B) Chattel Paper; (C) Contracts; (D) Documents; (E) Equipment;
(F) General Intangibles; (G) Instruments; (H) Inventory; (I) Real
Estate; (J) all other of its goods and property whether tangible or
intangible, real, personal or mixed, whether now owned or hereafter
acquired by it, wherever located, (K) all Proceeds of each of the
foregoing and all accessions to, substitutions and replacements for,
and rents profits and products of, each of the foregoing, and (L) all
property of New Borrower held by any Secured Party, including, without
limitation, all property of every description, now or hereafter in the
possession or custody of or in transit to such Secured Party for any
purpose, including safekeeping, collection or pledge, for the account
of New Borrower, or as to which New Borrower may have any right or
power (all capitalized terms set forth in this subsection (iii), unless
otherwise defined herein, shall have the meaning assigned to such term
in the Post-Petition Security Agreement).
2.3 POST-PETITION PLEDGE AGREEMENT.
(a) On the Closing Date, Exhibit A to the Post-Petition
Pledge Agreement is amended and restated in its entirety in the
form set forth as Annex II hereto.
(b) By its execution and delivery of this Amendment, New
Borrower hereby confirms that (i) upon the effectiveness of this
Amendment it will become a "Borrower" and "Pledgor" under and as
defined in the Post-Petition Pledge Agreement, subject to all of
the covenants, undertakings, liabilities and obligations of the
2
<PAGE>
Borrowers and Pledgors contained therein, (ii) all of the
representations and warranties contained in the Post-Petition
Pledge Agreement that are applicable to it as a Borrower or
Pledgor thereunder are true and correct as of the date hereof
after giving effect to this Amendment and (iii) upon the
effectiveness of this Amendment, it pledges to the Collateral
Agent, on behalf and for the benefit of the Secured Parties, to
secure the Liabilities all of the following property and
interests in property: (a) all shares of capital stock of each
of the Issuers now or at any time or times hereafter owned by it
(collectively, the "Pledged Stock"); (b) all warrants, options
and other rights to acquire, and rights in and to, the capital
stock of the respective Issuers now or at any time or times
hereafter owned by it (collectively, the "Rights"); (c) all
other property now or at any time or times hereafter received,
receivable or otherwise distributed in respect of or in exchange
or substitution for any or all of the Pledged Stock and/or the
Rights, and all of its rights thereto, including, without
limitation, all dividends, cash and other payments and
distributions of any kind whatsoever; (d) the Pledged Debt and
the instruments evidencing the Pledged Debt, and all interest,
cash, instruments and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of
or in exchange for any or all of the Pledged Debt; (e) all
additional indebtedness from time to time owed to it by any
obligor of the Pledged Debt or any other Person and the
instruments evidencing such indebtedness, and all interest,
cash, instruments and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of
or in exchange for any or all of such indebtedness; and (f) all
proceeds of all of the foregoing. (All capitalized terms set
forth in this subsection (iii), unless otherwise defined herein,
shall have the meaning assigned to such term in the
Post-Petition Pledge Agreement after giving effect to this
Amendment.)
(c) By its execution and delivery of this Amendment, [OWNER
OF THE CAPITAL STOCK OF NEW BORROWER] hereby confirms that upon
the effectiveness of this Amendment it has pledged the capital
stock of New Borrower identified on Annex II to the Collateral
Agent, on behalf and for the benefit of the Secured Parties, to
secure the Liabilities (as defined in the Post-Petition Pledge
Agreement) and that such capital stock constitutes Pledged Stock
(as defined in the Post-Petition Pledge Agreement).
2.4 BORROWING AGENCY AGREEMENT. Upon the effectiveness of this
Amendment, New Borrower shall become a party to that certain Borrower
Agency Agreement dated as of September 5, 1997 among LFC, as borrowing
agent, and the Existing Borrowers, and appoints LFC as its borrowing
agent thereunder, subject to the terms of such agreement.
2.5 POST-PETITION COLLATERAL AGENCY AGREEMENT. Upon the
effectiveness of this Amendment, New Borrower acknowledges and consents
to the Post-Petition Collateral Agency Agreement.
3. CONDITIONS PRECEDENT.
This Amendment becomes effective upon satisfaction of the following
conditions:
3.1 AMENDMENT APPROVAL ORDER. This Amendment has been approved by the
Bankruptcy Court pursuant to an order (the "AMENDMENT APPROVAL ORDER"), which
order is in full force and effect and has not been reversed, modified, amended,
appealed or stayed. The Agent shall have been satisfied with the form and
substance (and the timing of the notice) of the motion for the entry
3
<PAGE>
of the Amendment Approval Order. In addition, the Agent shall have been
satisfied with the form and substance of the Amendment Approval Order.
3.2 EXPENSES. The Agent shall have been reimbursed for all fees and
expenses incurred by the Agent in connection with this Amendment.
3.3 DOCUMENTS. The Agent has received all of the following, each duly
executed and dated as of the Closing Date (or such other date as is satisfactory
to the Agent) in form and substance satisfactory to the Agent:
(a) FOURTEENTH AMENDMENT. Ten copies of this Amendment executed by
the LFC Funds Administrator, the Borrowers, the Agent and all Lenders;
(b) CERTIFICATE OF INCORPORATION, ETC. The Certificate of
Incorporation of New Borrower certified by the appropriate Secretary of State as
of a recent date, together with a good standing certificate from such Secretary
of State and a good standing certificate from the Secretaries of State of each
other State in it is required to be qualified to transact business;
(c) CERTIFIED RESOLUTIONS, ETC. A certificate of the Secretary or
Assistant Secretary of New Borrower certifying (i) the names and true signatures
of its officers authorized to sign this Amendment, (ii) its By-Laws and (iii)
resolutions of its Board of Directors approving and authorizing the execution,
delivery and performance of this Amendment;
(d) OPINION OF COUNSEL. An opinion of counsel to New Borrower;
(e) UCC MATTERS. Satisfactory reports of UCC searches with respect
to New Borrower and such UCC-1 financing statement signed by New Borrower as
debtor naming the Collateral Agent as secured party as the Agent my require;
(f) PLEDGED STOCK. For delivery to the Collateral Agent, the
original stock certificates evidencing the capital stock of New Borrower pledged
pursuant to the Post-Petition Pledge Agreement, together with undated stock
powers duly executed in blank in connection therewith; and
(g) OTHER. Such other documents as the Agent may reasonably
request.
4
<PAGE>
4. REPRESENTATIONS AND WARRANTIES.
Each of the Borrowers represents and warrants to the Agent and each
Lender that, after giving effect to this Amendment:
4.1 REPRESENTATIONS AND WARRANTIES. All representations and warranties
contained in the Credit Agreement and the other Credit Documents are true and
correct in all material respects on and as of the date of this Amendment, in
each case as if then made, other than representations and warranties that
expressly relate solely to an earlier date (in which case such representations
and warranties were true and accurate on and as of such earlier date).
4.2 EVENTS OF DEFAULT. No Default or Event of Default has occurred
which has not been waived (or, in the case of an Event of Default, cured) under
the terms of the Credit Agreement.
4.3 ENFORCEABILITY. Upon approval by the Bankruptcy Court (as
contemplated by SECTION 3.1), this Amendment and the Credit Agreement, as
amended by this Amendment, will constitute legal, valid and binding obligations
of the LFC Funds Administrator and each of the Borrowers and will be enforceable
against such Persons in accordance with their respective terms.
4.4 CONSENTS. The execution and delivery by the LFC Funds Administrator
and each of the Borrowers of this Amendment does not require the consent or
approval of any Person other than the Bankruptcy Court (as contemplated by
SECTION 3.1), except such consents and approvals as have been obtained.
5. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER CREDIT
DOCUMENTS.
5.1 REFERENCES. Upon the effectiveness of this Amendment, each
reference in the Credit Agreement and the Post-Petition Pledge Agreement to
"this Agreement", "hereunder" "hereof", "herein" or words of like import, and
each reference in each of the other Credit Documents to the "Credit Agreement"
or "Post-Petition Pledge Agreement" shall mean and be a reference to the Credit
Agreement or the Post-Petition Pledge Agreement, as the case may be, as amended
by this Amendment.
5.2 RATIFICATION. Except as expressly set forth in this Amendment, all
of the terms and conditions of the Credit Agreement and the other Credit
Documents remain in full force and effect and are ratified and confirmed in all
respects. The execution and delivery of this Amendment by the Agent and each of
the Lenders in no way obligates the Agent or any of the Lenders at any time
hereafter to consent to any other amendment or modification of any term or
provision of the Credit Agreement or any of the other Credit Documents, whether
of a similar or different nature.
6. GOVERNING LAW.
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AMENDMENT IS
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS AND DECISIONS OF THE
STATE OF NEW YORK.
5
<PAGE>
7. HEADINGS; COUNTERPARTS.
Section headings in this Amendment are included for convenience of
reference only and do not constitute a part of this Amendment for any other
purpose. This Amendment may be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their duly authorized officers as of the date first
set forth above.
LFC FUNDS ADMINISTRATOR:
LEVITZ FURNITURE CORPORATION, a Florida
corporation, in its capacity as LFC Funds
Administrator
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
-------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
BORROWERS:
LEVITZ FURNITURE CORPORATION, a Florida
corporation, in its individual capacity
and it its capacity as the LFC Funds
Administrator
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
LEVITZ FURNITURE INCORPORATED, a Delaware
corporation
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
6
<PAGE>
LEVITZ FURNITURE REALTY CORPORATION, a
Florida corporation
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
LEVITZ SHOPPING SERVICE, a Florida
corporation
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
LEVITZ FURNITURE COMPANY OF THE MIDWEST,
INC., a Colorado corporation
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
LEVITZ FURNITURE COMPANY OF THE PACIFIC,
INC., a California corporation
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
LEVITZ FURNITURE COMPANY OF WASHINGTON,
INC., a Washington corporation
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
7
<PAGE>
LEVITZ FURNITURE COMPANY OF THE MIDWEST
REALTY, INC., a Colorado corporation
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
LEVITZ FURNITURE COMPANY OF THE PACIFIC
REALTY, INC., a California corporation
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
LEVITZ FURNITURE COMPANY OF WASHINGTON
REALTY, INC., a Washington corporation
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
JOHN M. SMYTH COMPANY, an Illinois
corporation
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
JOHN M. SMYTH REALTY COMPANY, an Illinois
corporation
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
8
<PAGE>
LEVITZ FURNITURE COMPANY OF MASSACHUSETTS,
INC., a Massachusetts corporation
By: /s/ MICHAEL E. MCCREERY
---------------------------------------
Name: Michael E. McCreery
-------------------------------------
Title: SVP/Chief Financial Officer
------------------------------------
9
<PAGE>
AGENT:
BT COMMERCIAL CORPORATION, in its
capacity as Agent
By: /s/ DEAN J. WHALEN
--------------------------------------
Name: Dean J. Whalen
------------------------------------
Title: Associate
-----------------------------------
REVOLVING LENDERS:
BT COMMERCIAL CORPORATION, a Delaware
corporation in its respective capacities
as Revolving Lender and Collateral Agent
By: /s/ DEAN J. WHALEN
--------------------------------------
Name: Dean J. Whalen
------------------------------------
Title: Associate
-----------------------------------
FINOVA CAPITAL CORPORATION, in its
capacity as Revolving Lender
By: /s/ GERARD C. WORDELL
--------------------------------------
Name: Gerard C. Wordell
------------------------------------
Title: Authorized Signer
-----------------------------------
HELLER FINANCIAL, INC., in its capacity
as Revolving Lender
By: /s/ DENNIS GRAHAM
--------------------------------------
Name: Dennis Graham
------------------------------------
Title: Assistant Vice President
-----------------------------------
LA SALLE NATIONAL BANK ASSOCIATION, in
its capacity as Revolving Lender
By: /s/ CHRISTOPHER G. CLIFFORD
--------------------------------------
Name: Christopher G. Clifford
------------------------------------
Title: Sr. VP
-----------------------------------
10
<PAGE>
TRANSAMERICA BUSINESS CREDIT CORPORATIONN,
in its capacity as Revolving Lender
By: /s/ R. L. HEINZ
---------------------------------------
Name: R. L. Heinz
-------------------------------------
Title: Senior Vice President
------------------------------------
GMAC BUSINESS CREDIT L.L.C., in its
capacity as Revolving Lender
By: /s/ THOMAS BRENT
---------------------------------------
Name: Thomas Brent
-------------------------------------
Title: Vice President
------------------------------------
OVERADVANCE TERM LENDER:
M.D. SASS CORPORATE RESURGENCE PARTNERS,
L.P.
By: /s/ ROBERT T. SYMINGTON
---------------------------------------
Name: Robert T. Symington
-------------------------------------
Title: Senior Vice President
------------------------------------
11
EXHIBIT NO. 10.69
FIFTEENTH AMENDMENT TO POSTPETITION
CREDIT AGREEMENT
THIS FIFTEENTH AMENDMENT TO POSTPETITION CREDIT AGREEMENT, dated as of
January 7, 2000 (this "Amendment"), is among LEVITZ FURNITURE INCORPORATED, a
Delaware corporation and a debtor and debtor in possession, LEVITZ FURNITURE
CORPORATION, a Florida corporation and a debtor and debtor in possession
("LFC"), LEVITZ FURNITURE REALTY CORPORATION, a Florida corporation and a debtor
and debtor in possession, LEVITZ SHOPPING SERVICE, INC., a Florida corporation
and a debtor and debtor in possession, LEVITZ FURNITURE COMPANY OF THE MIDWEST,
INC., a Colorado corporation and a debtor and debtor in possession, LEVITZ
FURNITURE COMPANY OF THE PACIFIC, INC., a California corporation and a debtor
and debtor in possession, LEVITZ FURNITURE COMPANY OF WASHINGTON, INC., a
Washington corporation and a debtor and debtor in possession, LEVITZ FURNITURE
COMPANY OF THE MIDWEST REALTY, INC., a Colorado corporation and a debtor and
debtor in possession, LEVITZ FURNITURE COMPANY OF THE PACIFIC REALTY, INC., a
California corporation and a debtor and a debtor in possession, LEVITZ FURNITURE
COMPANY OF WASHINGTON REALTY, INC., a Washington corporation and debtor and a
debtor in possession, LEVITZ REINSURANCE CORPORATION, JOHN M. SMYTH COMPANY, an
Illinois corporation and a debtor and debtor in possession, and JOHN M. SMYTH
REALTY COMPANY, an Illinois corporation and a debtor and debtor in possession
and LEVITZ FURNITURE COMPANY OF MASSACHUSETTS, INC., a Massachusetts corporation
(collectively, the "BORROWERS"), each Revolving Lender and Overadvance Term
Lender signatories hereto (collectively, the "LENDERS") and BT COMMERCIAL
CORPORATION, a Delaware corporation, acting in its capacity as collateral agent
and agent for the Lenders (in such capacity, together with its successors in
such capacity, the "AGENT"). Capitalized terms used in this Amendment and not
otherwise defined have the meanings assigned to such terms in the Postpetition
Credit Agreement dated as of September 5, 1997, as amended (as the same may be
further amended, restated, supplemented or otherwise modified from time to time,
the "CREDIT AGREEMENT"), among the Borrowers, the Lenders and the Agent.
PRELIMINARY STATEMENTS:
A. The Borrowers, the Lenders and the Agent are parties to the Credit
Agreement.
B. The Borrowers have requested that the Lenders and the Agent amend
the Credit Agreement in certain respects.
C. The Borrowers, the Lenders and the Agent have agreed to amend the
Credit Agreement on the terms and subject to the conditions of this Amendment.
AGREEMENT:
In consideration of the premises and the mutual agreements contained in
this Amendment, the Borrowers, the Lenders and the Agent agree as follows:
1. AMENDMENTS TO CREDIT AGREEMENT.
On the date each of the conditions set forth in SECTION 2 is satisfied
by the Borrowers (the "CLOSING DATE"), the Credit Agreement is amended as
follows:
1.3 The definition of "Borrowing Base" contained in Section 1.1 of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
1
<PAGE>
BORROWING BASE means, at any time, the sum at such time of:
(a) the Fixed Asset Sublimit, plus
(b) eighty-five percent (85%) of Eligible Accounts Receivable, plus
(c) seventy-five percent (75%) of Eligible Inventory; provided that
the foregoing percentage may be adjusted by the Agent in the exercise
of its Permitted Discretion based upon appraisals of the Borrowers'
inventory prepared from time to time at the Agent's or the Majority
Lenders' direction, plus
(d) solely for the purposes of accepting the borrowing of an
Initial Overadvance, $10,000,000 (the "Initial Overadvance Amount");
provided, that, effective as of the earlier to occur of (i) ten (10)
Business Days after the date on which the Overadvance Term Lender
receives notice from the Agent that Excess Availability is less than
$12,000,000 as contemplated under clause (i) of Article 2C or (ii) the
date on which the proceeds of an Initial Overadvance are received by
the Agent for the account of the Debtors, the Initial Overadvance
Amount will be automatically reduced to zero (-0-); and provided
further, that (I) in the event that the principal amount of any Initial
Overadvance is repaid as contemplated under Article 2C, the Initial
Overadvance Amount will automatically be reestablished at $10,000,000
and (ii) notwithstanding anything to the contrary contained in this
Agreement or any of the other Credit Documents, (x) only the
Overadvance Term Lender shall have any obligation to fund an Initial
Overadvance and (y) prior to any date on which the Initial Overadvance
Amount is reduced to zero pursuant to the initial proviso to this
paragraph (d), the Revolving Lenders shall have no obligation
whatsoever to make any Revolving Loan or other extension of credit
under this Agreement to the extent that, immediately before or after
giving effect to such Revolving Loan or extension of credit, Excess
Availability is less than $10,000,000, plus
(e) at any time that an Initial Overadvance is then outstanding and
solely for the purposes of accepting the borrowing of a Subsequent
Overadvance, $5,000,000 (the "Subsequent Overadvance Amount");
provided, that, effective as of the earlier to occur of (i) ten (10)
Business Days after the date on which the Overadvance Term Lender
receives notice from the Agent that Excess Availability is less than
$5,000,000 as contemplated under clause (ii) of Article 2C or (ii) the
date on which the proceeds of a Subsequent Overadvance are received by
the Agent for the account of the Debtors, the Subsequent Overadvance
Amount will be automatically reduced to zero (-0-); and provided
further, that (I) in the event that the principal amount of any
Subsequent Overadvance is repaid as contemplated under Article 2C, the
Subsequent Overadvance Amount will automatically be reestablished at
$5,000,000 and (ii) notwithstanding anything to the contrary contained
in this Agreement or any of the other Credit Documents, (x) only the
Overadvance Term Lender shall have any obligation to fund a Subsequent
Overadvance and (y) prior to any date on which the Subsequent
Overadvance Amount is reduced to zero pursuant to the initial proviso
to this paragraph (e), the Revolving Lenders shall have no obligation
whatsoever to make any Revolving Loan or other extension of credit
under this Agreement to the extent that, immediately before or after
giving effect to such Revolving Loan or extension of credit, Excess
Availability is less than $5,000,000, less
(f) the aggregate amount of the Borrowers' allowed professional
fees and disbursements to which the Postpetition Obligations and the
Prepetition Obligations may be subordinated pursuant to the Interim
2
<PAGE>
Financing Order and the Permanent Financing Order following a Default
or an Event of Default;
provided, that so long as the LFC Funds Administrator has delivered a
current Borrowing Base Certificate to the Agent in accordance with the
requirements of Section 7.2, the Agent may rely on such Borrowing Base
Certificate for purposes of computing the amounts referred to in
clauses (b) and (c) above.
In addition, the Agent, in the exercise of its Permitted Discretion,
may (i) establish and increase or decrease reserves against Eligible
Accounts Receivable and Eligible Inventory, (ii) reduce the advance
rates provided for in this definition, or restore such advance rates to
any level equal to or below the advance rates in effect as of the date
of this Credit Agreement, and (iii) impose additional restrictions (or
eliminate the same) to the standards of eligibility set forth in the
definitions of "Eligible Accounts Receivable" and "Eligible Inventory".
The Agent will not increase the advance rates without receiving prior
consent of the Majority Term Lenders and the Overadvance Term Lender.
1.4 Section 1.1 of the Credit Agreement is hereby further amended by
adding the following definitions thereto in proper alphabetical order:
INITIAL OVERADVANCE has the meaning set forth in clause (i) of
Article 2C hereof.
SUBSEQUENT OVERADVANCE has the meaning set forth in clause
(ii) of Article 2C hereof.
1.5 Article 2C to the Credit Agreement is hereby amended and restated
in its entirety to read as follows:
ARTICLE 2C. OVERADVANCE TERM LOAN
Subject to the terms and conditions set forth in this Credit
Agreement, and in reliance on the representations and warranties of the
Borrowers set forth herein, from time to time prior to the Overadvance
Maturity Date the Overadvance Term Lender will make term loans
(collectively, the "Overadvance Term Loan") to the Borrowers as
follows:
(i) at any time that a Subsequent Overadvance is not
outstanding, and upon receipt of notice from the Agent that
Excess Availability is less than $12,000,000 (which amount
shall include the amount set forth in subsection (d) in the
definition of Borrowing Base), the Overadvance Term Lender
will make term loans (each an "Initial Overadvance") to the
Borrowers, as soon as reasonably practicable and in no event
more than 10 Business Days after receiving such notice from
the Agent, each in the original principal amount of
$10,000,000. In no event may more than one Initial
Overadvance be outstanding at any time. Notwithstanding
anything to the contrary contained in Section 4.7B and
Section 4.11 and provided that (A) no Default or Event of
Default then exists and (B) no Subsequent Overadvance shall
be outstanding after giving effect thereto, Borrowers shall
repay the principal amount of any Initial Overadvance in the
event that Excess Availability is equal to or greater than
$18,000,000 for the five (5) consecutive Business Days prior
to the date of such prepayment (after giving effect to the
repayment of any Subsequent Overadvance made during such five
day period or which is to be made contemporaneously with the
repayment of a Subsequent Overadvance); and
(ii) at any time that a Initial Overadvance is
outstanding, and upon receipt of notice from the Agent that
Excess Availability
3
<PAGE>
is less than $5,000,000 (which amount shall include the
amount set forth in subsection (e) in the definition of
Borrowing Base), the Overadvance Term Lender will make term
loans (each a "Subsequent Overadvance") to the Borrowers, as
soon as reasonably practicable and in no event more than 10
Business Days after receiving such notice from the Agent,
each in the original principal amount of $5,000,000. In no
event may more than one Subsequent Overadvance be outstanding
at any time. Notwithstanding anything to the contrary
contained in Section 4.7B and Section 4.11 and provided that
no Default or Event of Default then exists, Borrowers shall
repay the principal amount of any Subsequent Overadvance in
the event that Excess Availability is equal to or greater
than $12,000,000 for the five (5) consecutive Business Days
prior to the date of such prepayment.
The proceeds of each Initial Advance and each Subsequent
Advance will be immediately deposited with the Agent and,
notwithstanding the provisions of Section 4.11, will be applied by the
Agent to pay down the outstanding principal of the Revolving Loans on
such date. The Overadvance Term Loan shall be evidenced by an
Overadvance Term Note and shall be governed in all respects by the
terms of this Credit Agreement and the other Credit Documents.
1.4 Section 4.7B of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:
4.7B No Permitted Prepayment of Overadvance Term Loan.
Until payment in full of all Postpetition Obligations in
respect of Revolving Loans, Term Loans and Letter of Credit Obligations
and termination of the Revolving Commitments pursuant to the provisions
hereof, and except as provided in Article 2C with respect to the
repayment of (i) any Initial Overadvance in the event that Excess
Availability is equal to or greater than $18,000,000 for five (5)
consecutive Business Days and (ii) any Subsequent Overadvance in the
event that Excess Availability is equal to or greater than $12,000,000
for five (5) consecutive Business Days, the Borrowers may not prepay or
make any other payment or distribution of any kind (in cash, securities
or otherwise but excluding payments of accrued and unpaid interest,
fees and expenses) in respect of or in connection with the Overadvance
Term Loan at any time in whole or in part and all such principal
amounts otherwise distributable in respect of or in connection with the
Overadvance Term Loan shall be paid to the Agent for allocation to the
Postpetition Obligations in respect of Revolving Loans, Letters of
Credit Obligations and Term Loans as provided herein until all such
obligations are indefeasibly paid in full in cash and the Revolving
Commitments are fully terminated.
1.5 Section 5.2(d) of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
(d) The Borrowers will have Excess Availability of (i) if no
Initial Advance is then outstanding, at least $10,000,000 after giving
effect to such Revolving Loan or Letter of Credit; provided, that if an
Initial Advance is funded on such day by the Overadvance Term Lender as
set forth in Article 2C, then the representation and warranty set forth
in this Section 5.2(d)(i) will not be applicable or (ii) if an Initial
Advance is then outstanding, at least $5,000,000 after giving effect to
such Revolving Loan or Letter of Credit; provided, that if a Subsequent
Advance is funded on such day by the Overadvance Term Lender as set
forth in Article 2C, then the representation and warranty set forth in
this Section 5.2(d)(ii) will not be applicable.
2. CONDITIONS PRECEDENT.
4
<PAGE>
This Amendment becomes effective upon satisfaction of the following
conditions:
2.1 AMENDMENT APPROVAL ORDER. This Amendment has been approved by the
Bankruptcy Court pursuant to an order (the "AMENDMENT APPROVAL ORDER"), which
order is in full force and effect and has not been reversed, modified, amended,
appealed or stayed. Each of the Agent and the Overadvance Term Lender shall have
been satisfied with the form and substance (and the timing of the notice) of the
motion for the entry of the Amendment Approval Order. In addition, each of the
Agent and the Overadvance Term Lender shall have been satisfied with the form
and substance of the Amendment Approval Order.
2.2 EXPENSES. The Agent shall have been reimbursed for all fees and
expenses incurred by the Agent in connection with this Amendment.
2.3 DOCUMENTS. The Agent has received all of the following, each duly
executed and dated as of the Closing Date (or such other date as is satisfactory
to the Agent) in form and substance satisfactory to the Agent:
(h) FIFTEENTH AMENDMENT. Ten copies of this Amendment executed by
the LFC Funds Administrator, the Borrowers, the Agent and all
Lenders;
(i) AMENDED AND RESTATED OVERADVANCE TERM NOTE. For delivery to
the Overadvance Term Lender, an Amended and Restated
Overadvance Term Note, substantially in the form attached as
ANNEX I hereto; and
(j) OTHER. Such other documents as the Agent may reasonably
request.
3. REPRESENTATIONS AND WARRANTIES.
Each of the Borrowers represents and warrants to the Agent and each
Lender that, after giving effect to this Amendment:
3.1 REPRESENTATIONS AND WARRANTIES. All representations and warranties
contained in the Credit Agreement and the other Credit Documents are true and
correct in all material respects on and as of the date of this Amendment, in
each case as if then made, other than representations and warranties that
expressly relate solely to an earlier date (in which case such representations
and warranties were true and accurate on and as of such earlier date).
3.2 EVENTS OF DEFAULT. No Default or Event of Default has occurred
which has not been waived (or, in the case of an Event of Default, cured) under
the terms of the Credit Agreement.
3.3 ENFORCEABILITY. Upon approval by the Bankruptcy Court (as
contemplated by SECTION 2.1), this Amendment and the Credit Agreement, as
amended by this Amendment, will constitute legal, valid and binding obligations
of the LFC Funds Administrator and each of the Borrowers and will be enforceable
against such Persons in accordance with their respective terms.
5
<PAGE>
3.4 CONSENTS. The execution and delivery by the LFC Funds Administrator
and each of the Borrowers of this Amendment does not require the consent or
approval of any Person other than the Bankruptcy Court (as contemplated by
SECTION 2.1), except such consents and approvals as have been obtained.
4. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER CREDIT
DOCUMENTS.
4.1 REFERENCES. Upon the effectiveness of this Amendment, each
reference in the Credit Agreement to "this Agreement", "hereunder" "hereof",
"herein" or words of like import, and each reference in each of the other Credit
Documents to the "Credit Agreement" shall mean and be a reference to the Credit
Agreement as amended by this Amendment.
4.2 RATIFICATION. Except as expressly set forth in this Amendment, all
of the terms and conditions of the Credit Agreement and the other Credit
Documents remain in full force and effect and are ratified and confirmed in all
respects. The execution and delivery of this Amendment by the Agent and each of
the Lenders in no way obligates the Agent or any of the Lenders at any time
hereafter to consent to any other amendment or modification of any term or
provision of the Credit Agreement or any of the other Credit Documents, whether
of a similar or different nature.
5. GOVERNING LAW.
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AMENDMENT IS
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS AND DECISIONS OF THE
STATE OF NEW YORK.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
6
<PAGE>
6. HEADINGS; COUNTERPARTS.
Section headings in this Amendment are included for convenience of
reference only and do not constitute a part of this Amendment for any other
purpose. This Amendment may be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their duly authorized officers as of the date first
set forth above.
LFC FUNDS ADMINISTRATOR:
LEVITZ FURNITURE CORPORATION, a Florida
corporation, in its capacity as LFC Funds
Administrator
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
BORROWERS:
LEVITZ FURNITURE CORPORATION, a Florida
corporation, in its individual capacity
and it its capacity as the LFC Funds
Administrator
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
LEVITZ FURNITURE INCORPORATED, a Delaware
corporation
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
7
<PAGE>
LEVITZ FURNITURE REALTY CORPORATION, a
Florida corporation
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
LEVITZ SHOPPING SERVICE, a Florida
corporation
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
LEVITZ FURNITURE COMPANY OF THE MIDWEST,
INC., a Colorado corporation
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
LEVITZ FURNITURE COMPANY OF THE PACIFIC,
INC., a California corporation
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
LEVITZ FURNITURE COMPANY OF WASHINGTON,
INC., a Washington corporation
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
8
<PAGE>
LEVITZ FURNITURE COMPANY OF THE MIDWEST
REALTY, INC., a Colorado corporation
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
LEVITZ FURNITURE COMPANY OF THE PACIFIC
REALTY, INC., a California corporation
By: /s/ MICHAEL E. MCCREERY
-------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
LEVITZ FURNITURE COMPANY OF WASHINGTON
REALTY, INC., a Washington corporation
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
JOHN M. SMYTH COMPANY, an Illinois
corporation
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
JOHN M. SMYTH REALTY COMPANY, an Illinois
corporation
By: /s/ MICHAEL E. MCCREERY
--------------------------------------
Name: Michael E. McCreery
------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------
9
<PAGE>
LEVITZ FURNITURE COMPANY OF MASSACHUSETTS,
INC., a Massachusetts corporation
By: /s/ MICHAEL E. MCCREERY
---------------------------------------
Name: Michael E. McCreery
-------------------------------------
Title: SVP/Chief Financial Officer
------------------------------------
10
<PAGE>
AGENT:
BT COMMERCIAL CORPORATION, in its capacity
as Agent
By: /s/ DEAN J. WHALEN
--------------------------------------
Name: Dean J. Whalen
-------------------------------------
Title: Associate
------------------------------------
REVOLVING LENDERS:
BT COMMERCIAL CORPORATION, a Delaware
corporation in its respective capacities
as Revolving Lender and Collateral Agent
By: /s/ DEAN J. WHALEN
---------------------------------------
Name: Dean J. Whalen
-------------------------------------
Title: Associate
------------------------------------
FINOVA CAPITAL CORPORATION, in its
capacity as Revolving Lender
By: /s/
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
HELLER FINANCIAL, INC., in its capacity
as Revolving Lender
By: /s/ DENNIS GRAHAM
--------------------------------------
Name: Dennis Graham
------------------------------------
Title: Assistant Vice President
-----------------------------------
LA SALLE NATIONAL BANK ASSOCIATION, in
its capacity as Revolving Lender
By: /s/ CHRISTOPHER G. CLIFFORD
--------------------------------------
Name: Christopher G. Clifford
------------------------------------
Title: Sr. VP
-----------------------------------
11
<PAGE>
TRANSAMERICA BUSINESS CREDIT
CORPORATIONN, in its capacity as
Revolving Lender
By: /s/ R. L. HEINZ
------------------------------------
Name: R. L. Heinz
-----------------------------------
Title: SVP
----------------------------------
GMAC BUSINESS CREDIT L.L.C., in its
capacity as Revolving Lender
By: /s/ THOMAS BRENT
-------------------------------------
Name: Thomas Brent
-----------------------------------
Title: Vice President
----------------------------------
OVERADVANCE TERM LENDER:
M.D. SASS CORPORATE RESURGENCE PARTNERS,
L.P.
By: /s/ ROBERT T. SYMINGTON
-------------------------------------
Name: Robert T. Symington
-----------------------------------
Title: Senior Vice President
----------------------------------
12
<PAGE>
ANNEX I TO FIFTEENTH AMENDMENT
AMENDED AND RESTATED OVERADVANCE TERM NOTE
[Attached]
13
<PAGE>
AMENDED AND RESTATED OVERADVANCE TERM NOTE
$15,000,000.00 _______________, 1999
FOR VALUE RECEIVED, each of the undersigned, (collectively, the
"Borrowers") jointly and severally promises to pay to the order of M.D. Sass
Corporate Resurgence Partners, L.P. (the "Overadvance Term Lender") at [ADDRESS]
in lawful money of the United States of America and in immediately available
funds at [DESCRIBE ACCOUNT] of the Credit Agreement, the principal amount of
fifteen MILLION DOLLARS ($15,000,000.00), or such lesser amount as may then
constitute the unpaid aggregate principal amount of the Overadvance Term Loan
evidenced by this Note, on the Overadvance Maturity Date or such earlier date as
this Note may become due in accordance with the terms of the Credit Agreement
referred to below. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings assigned thereto in the Credit
Agreement.
Each of the Borrowers further agrees, on a joint and several basis, to
pay to the Overadvance Term Lender (i) interest on the unpaid principal amount
owing hereunder monthly in arrears on the last Business Day of each month of the
Borrowers at an interest rate equal per annum equal to 16%, from the date hereof
until this Note is paid in full in accordance with its terms, in like money and
(ii) a fee in the amount of $75,000 payable monthly in arrears on the last
Business Day of each month of the Borrowers until this Note is paid in full in
accordance with its terms.
If any payment of this Note becomes due and payable on a day other than
a Business Day, the maturity thereof shall be extended to the next succeeding
Business Day, and with respect to payments of principal, interest thereon shall
be payable to the then applicable rate during such extension.
This note is the Overadvance Term Note referred to in and executed and
delivered pursuant to that certain Postpetition Credit Agreement dated as of
September 5, 1997 (as the same has been modified through (and including) the
fourteenth amendment thereto and as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among the Borrowers, the Overadvance Term Lender, certain other financial
institutions as Lenders and BT Commercial Corporation, as Agent.
The Postpetition Obligations evidenced by this Note are secured by
certain Collateral Documents. Reference is made to such Collateral Documents and
the Credit Agreement for the terms and conditions governing the Collateral which
secured the Postpetition Obligations. Except as provided in the Credit
Agreement, no principal payment or other distribution of any kind (in cash,
securities or otherwise but excluding payments of accrued and unpaid interest,
fees and expenses) shall be made in respect of the Overadvance Term Loan at any
time in whole or in part, and all such principal amounts otherwise distributable
in respect of or in connection with the Overadvance Term Loan shall be paid to
the Agent for allocation to the Postpetition Obligations in respect of Revolving
Loans, Letters of Credit Obligations and Term Loans as provided herein, until
all such Postpetition Obligations owing are indefeasibly paid in full in cash
and the Revolving Commitments are fully terminated. In addition, as provided in
the Credit Agreement and except as set forth in the Credit Agreement, the
Overadvance Term Lender shall be bound by all modifications, extensions of
maturity, waivers and amendments to the Credit Agreement executed by the Agent,
Lenders, Majority Lenders and/or Majority Term Lenders (as applicable) and that
none of the same shall require advance notice to, or the consent of, any
Overadvance Term Lender.
Borrowers promise to pay all reasonable costs and expenses, including
reasonable attorneys fees incurred in the collection and enforcement of this
Note. Borrowers and any endorsers of this Note hereby consent to renewals and
extensions of time to or after the maturity hereof, without notice.
14
<PAGE>
Each Borrower (and each endorser, guarantor or surety hereof) hereby
waives presentment, demand, protest and notice of any kind. No failure to
exercise and no delay in exercising any rights hereunder on the part of the
holder hereof shall operate as a waiver of such rights.
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS NOTE SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.
IN WITNESS WHEREOF, each Borrower has caused this Note to be executed
and delivered by such Borrower's duly authorized officer as of the date first
set forth above.
LEVITZ FURNITURE CORPORATION, a Florida
corporation
By:
-----------------------------------------
Name: Michael E. McCreery
-----------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------------
LEVITZ FURNITURE INCORPORATED, a Delaware
corporation
By:
-----------------------------------------
Name: Michael E. McCreery
-----------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------------
LEVITZ FURNITURE REALTY CORPORATION, a
Florida corporation
By:
-----------------------------------------
Name: Michael E. McCreery
-----------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------------
15
<PAGE>
LEVITZ SHOPPING SERVICE, INC., a Florida
corporation
By:
-----------------------------------------
Name: Michael E. McCreery
-----------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------------
LEVITZ FURNITURE COMPANY OF THE MIDWEST,
INC., a Colorado corporation
By:
-----------------------------------------
Name: Michael E. McCreery
-----------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------------
LEVITZ FURNITURE COMPANY OF THE PACIFIC,
INC., a California corporation
By:
-----------------------------------------
Name: Michael E. McCreery
-----------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------------
LEVITZ FURNITURE COMPANY OF WASHINGTON,
INC., a Washington corporation
By:
-----------------------------------------
Name: Michael E. McCreery
-----------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------------
LEVITZ FURNITURE COMPANY OF THE MIDWEST
REALTY, INC., a Colorado corporation
By:
-----------------------------------------
Name: Michael E. McCreery
-----------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------------
16
<PAGE>
LEVITZ FURNITURE COMPANY OF THE PACIFIC
REALTY, INC., a California corporation
By:
-----------------------------------------
Name: Michael E. McCreery
-----------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------------
LEVITZ FURNITURE COMPANY OF WASHINGTON
REALTY, INC., a Washington corporation
By:
-----------------------------------------
Name: Michael E. McCreery
-----------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------------
JOHN M. SMYTH COMPANY, an Illinois
corporation
By:
-----------------------------------------
Name: Michael E. McCreery
-----------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------------
JOHN M. SMYTH REALTY COMPANY, an Illinois
corporation
By:
-----------------------------------------
Name: Michael E. McCreery
-----------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------------
LEVITZ FURNITURE COMPANY OF
MASSACHUSETTS, INC., a Massachusetts
corporation
By:
-----------------------------------------
Name: Michael E. McCreery
-----------------------------------------
Title: SVP/Chief Financial Officer
-----------------------------------------
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE NINE MONTH PERIOD ENDED DECEMBER 31, 1999 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 4,063
<SECURITIES> 0
<RECEIVABLES> 20,762
<ALLOWANCES> 0
<INVENTORY> 93,461
<CURRENT-ASSETS> 122,311
<PP&E> 94,326
<DEPRECIATION> 0
<TOTAL-ASSETS> 217,201
<CURRENT-LIABILITIES> 186,798
<BONDS> 0
0
0
<COMMON> 303
<OTHER-SE> (312,175)
<TOTAL-LIABILITY-AND-EQUITY> 217,201
<SALES> 393,836
<TOTAL-REVENUES> 393,836
<CGS> 108,076
<TOTAL-COSTS> 108,076
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,537
<INCOME-PRETAX> (31,552)
<INCOME-TAX> 0
<INCOME-CONTINUING> (31,652)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (31,652)
<EPS-BASIC> (1.05)
<EPS-DILUTED> 0
</TABLE>
