<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): January 22, 1999
-------------------------------
COUNTY SEAT STORES, INC.
(Exact Name of Registrant as Specified in Charter)
Minnesota 0-23913 41-1272706
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
469 Seventh Avenue, 11th Floor, New York, New York 10018
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (212) 714-4800
------------------------
-----------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
On January 22, 1999, County Seat Stores, Inc. and CSS Trade Names,
Inc., its wholly-owned subsidiary, filed voluntary petitions for reorganization
under chapter 11 of title 11 of the United States Code, in the United States
Bankruptcy Court for the Southern District Court of New York.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
The following exhibit is filed as part of this report:
EXHIBIT NO. DESCRIPTION
99.1 Press Release, dated January 22, 1999
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its be signed on its
behalf by the undersigned hereunto duly authorized.
COUNTY SEAT STORES, INC
(Registrant)
Dated: January 26, 1999 By: /s/ BRETT D. FORMAN
------------------------------------
Brett D. Forman, Chief Operating
Officer and Executive Vice President
2
<PAGE>
Exhibit 99.1
[LETTERHEAD OF COUNTY SEAT]
FOR IMMEDIATE RELEASE
CONTACT:
Brett Forman Sue Wasudev (financial community)
Executive Vice President Ellen Paz (media community)
County Seat Stores Citigate Dewe Rogerson Inc.
(212) 714-4810 (212) 688-6840
COUNTY SEAT STORES FILES FOR REORGANIZATION
WITH $75 MILLION OF DEBTOR-IN-POSSESSION FINANCING
STORES ARE OPEN FOR BUSINESS AS USUAL
NEW YORK, JANUARY 22, 1999 - County Seat Stores, Inc. announced today that it
and CSS Trade Names, Inc. a wholly-owned subsidiary, filed voluntary
petitions for reorganization under Chapter 11 of the United States Bankruptcy
Code. The filings, which were made in the United States Bankruptcy Court for
the Southern District of New York, will enable the company to conduct
business as usual under protection of the Court while it develops a plan to
reduce and reorganize its debt and strengthen its financial position.
County Seat also announced that it has obtained a $70 million
debtor-in-possession financing commitment, including a $50 million sub-limit
for letters of credit, from BankBoston Retail Finance Inc. The company has
also received an additional $5 million debtor-in-possession financing
commitment from BackBay Capital Funding, L.L.C. Upon court approval, these
financings will enable the company to meet future inventory needs and fulfill
obligations associated with operating its business, including payroll and
prompt payment for merchandise received subsequent to the filing.
"The decision to file was a difficult one," said Brett Forman, Chief
Operating Officer of County Seat Stores. "We believe that, notwithstanding
the severe liquidity problems that we have encountered over the past few
months. County Seat's business and future prospects remain fundamentally
strong."
He continued, "We are confident that, with the liquidity provided by the $75
million of debtor-in-possession financing facilities and the breathing room
that court protection under Chapter 11 will afford, County Seat will
ultimately emerge from Chapter 11 a stronger company."
<PAGE>
COUNTY SEAT STORES
PAGE 2
The company has been unable to overcome severe liquidity problems relating,
in large part, to an approximate 12% decline in same-stores sales for the
1998 third-quarter. The company encountered significant disruptions in the
flow of merchandise as a result of problems with the installation and
integration of a new management information system (MIS) and the relocation
of the company's distribution center from Minnesota to Baltimore.
To insure that stores had fall and winter merchandise on a timely basis, the
company was forced to stop shipping spring and summer merchandise earlier
than planned, to significantly discount merchandise to make room in the
stores for fall and winter merchandise, and to ship fall and winter
merchandise earlier than planned. The financial results for the company's
third quarter created defaults and limited availability under the company's
working capital facility. While the company attempted to alleviate liquidity
problems by raising funds through a private offering of new debt and or equity
securities during the latter part of 1998, the required amount of new funds
could not be obtained.
"We believe that we have identified and substantially rectified the problems
associated with our management information system and the relocation of our
distribution center," Forman said. "Additionally, in October 1998, we
instituted a new merchandising strategy based on a maximum price point of
$14.99 for most of the company's merchandise. We have already seen positive
results from these steps. Comparable sales for the months of October through
December 1998 increased by 7.4%."
County Seat is among the nation's largest mall-based specialty retailers of
casual apparel, operating 418 stores in 41 states in the eastern, midwestern
and southern regions of the United States, including 375 County Seat stores,
15 County Seat Outlet stores, 22 Levi's Outlet stores and six Old Farmer's
Almanac General stores. The company reported in its Form 10-Q for the quarter
ended October 31, 1998, that Levi Strauss & Co. had terminated its license
pursuant to which the company operated its Levi Outlet stores and the company
had entered into a non-binding letter of intent to sell the assets associated
with those stores to a third party. While that third party has recently
expressed the intention of not going forward at this time, negotiations are
continuing. If a definitive agreement can be reached, the company intends to
seek expedited Bankruptcy Court approval of that sale. If an agreement cannot
be reached, the company intends to proceed on an expedited basis to dispose
of its Levi's Outlet stores.
ALL FORWARD LOOKING STATEMENTS MADE BY THE COMPANY INVOLVE MATERIAL RISKS AND
UNCERTAINTIES AND ARE SUBJECT TO CHANGE BASED ON FACTORS BEYOND THE COMPANY'S
CONTROL. ACCORDINGLY, THE COMPANY'S FUTURE PERFORMANCE AND FINANCIAL RESULTS
MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED IN ANY SUCH
FORWARD-LOOKING STATEMENTS. SUCH FACTORS INCLUDE, BUT ARE NOT LIMITED TO,
THOSE DESCRIBED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE COMPANY DOES NOT UNDERTAKE TO PUBLICLY UPDATE OR REVISE ITS
FORWARD-LOOKING STATEMENTS EVEN IF EXPERIENCE OR FUTURE CHANGES MAKE IT CLEAR
THAT ANY PROJECTED RESULTS EXPRESSED OR IMPLIED THEREIN WILL NOT BE REALIZED.
