FORM 10-Q EXHIBIT INDEX ON
PAGE 15
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 2, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Commission file number 0-22682
CARSON PIRIE SCOTT & CO.
(Exact name of registrant as specified in its charter)
ILLINOIS 37-0175980
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
331 West Wisconsin Avenue, Milwaukee, Wisconsin 53203
(Address of principal executive offices) (Zip Code)
414-347-4141
(Registrant's telephone number, including area code)
--------------------------------------------
(Former name, former address and former fiscal year,
if changed from last report)
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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
Number of shares outstanding of each of the issuer's classes of common
stock, as of September 5, 1997:
Common Stock, $.01 par value 15,801,298 shares, exclusive
of 21,555,068 shares held by subsidiaries of the registrant
Page 1
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Carson Pirie Scott & Co. and Subsidiaries
Consolidated Balance Sheets
As of August 2, 1997
(Unaudited)
(dollars in thousands)
August 2, February 1,
Assets 1997 1997
- -------------------- -------- -----------
Current assets:
Cash and cash equivalents $ 17,887 20,618
Accounts receivable, net 237,398 267,433
Merchandise inventories 198,502 190,646
Other current assets 19,630 16,265
-------- ---------
Total current assets 473,417 494,962
Property, fixtures and
equipment, net 190,220 174,260
Net deferred tax assets 39,095 42,909
Other assets 10,785 11,916
--------- ---------
$ 713,517 724,047
========= ==========
Liabilities and Shareholders' Equity
- ------------------------------------
Current liabilities:
Current maturities of
long-term debt $ 2,765 2,854
Accounts payable 66,903 58,178
Accrued expenses 96,161 96,978
------- -------
Total current liabilities 165,829 158,010
Long-term debt,
less current maturities 139,825 159,635
Other liabilities 49,989 47,585
------- -------
Total liabilities 355,643 365,230
------- -------
Shareholders' equity:
Common stock 158 159
Paid-in capital 171,616 176,954
Unamortized stock compensation (28) (167)
Unrealized gain on investments 118 96
Retained earnings 186,010 181,775
------- -------
Total shareholders' equity 357,874 358,817
------- -------
$ 713,517 724,047
======= =======
See accompanying notes to consolidated financial statements.
Page 2
<PAGE>
Carson Pirie Scott & Co. and Subsidiaries
Consolidated Statements of Operations
Three months ended August 2, 1997 and August 3, 1996
(Unaudited)
(dollars in thousands, except per share amounts)
Three months ended
----------------------
August 2, August 3,
1997 1996
-------- ---------
Net sales $ 243,765 224,986
Cost of sales (154,268) (141,464)
Selling, general and
administrative expenses (74,192) (71,470)
Depreciation and amortization (5,003) (4,031)
Other expense (3,554) (42)
------- --------
Income from operations 6,748 7,979
Interest expense, net (4,055) (3,391)
-------- --------
Income before income taxes 2,693 4,588
Income tax expense (1,066) (1,808)
-------- --------
Net income $ 1,627 2,780
======== ========
Primary net income
per share $ 0.10 0.17
======== ========
Weighted average number
of common and common
equivalent shares 16,447,657 16,782,011
=========== ===========
See accompanying notes to consolidated financial statements.
Page 3
<PAGE>
Carson Pirie Scott & Co. and Subsidiaries
Consolidated Statements of Operations
Six months ended August 2, 1997 and August 3, 1996
(Unaudited)
(dollars in thousands, except per share amounts)
Six months ended
----------------------
August 2, August 3,
1997 1996
-------- ---------
Net sales $ 501,899 461,755
Cost of sales (322,023) (295,206)
Selling, general and
administrative expenses (150,484) (142,710)
Depreciation and amortization (10,050) (8,063)
Other expense (4,011) (135)
------- -------
Income from operations 15,331 15,641
Interest expense, net (8,318) (7,135)
Gain on sale of
marketable securities - 14,892
Other expense - (2,827)
-------- -------
Income before income taxes 7,013 20,571
Income tax expense (2,777) (8,105)
-------- --------
Net income $ 4,236 12,466
======== ========
Primary net income
per share $ 0.26 0.74
======== ========
Weighted average number
of common and common
equivalent shares 16,478,631 16,791,250
=========== ===========
See accompanying notes to consolidated financial statements.
Page 4
<PAGE>
Carson Pirie Scott & Co. and Subsidiaries
Consolidated Statements of Cash Flows
Six months ended August 2, 1997 and August 3, 1996
(Unaudited)
(dollars in thousands)
Six months ended
-----------------------
August 2, August 3,
1997 1996
-------- ---------
Net cash provided by
operating activities $ 50,992 35,619
------- ------
Cash flows from investing activities:
Proceeds from sale of
marketable securities 100 31,094
Purchases of property
and equipment (27,556) (27,243)
Proceeds from disposition
of assets - 603
------- -------
Net cash provided (used) by
investing activities (27,456) 4,454
------- -------
Cash flows from financing activities:
Stock options exercised 1,909 481
Repurchase of common stock (7,445) (7,366)
Repayments of long-term
debt and other obligations (1,489) (1,713)
Net repayments under
receivables facility (20,211) (45,000)
Debt issuance costs and other 969 (4,913)
------- -------
Net cash used by
financing activities (26,267) (58,511)
-------- -------
Net decrease in cash
and cash equivalents (2,731) (18,438)
Cash and cash equivalents at
beginning of the period 20,618 44,384
------- -------
Cash and cash equivalents
at end of the period $ 17,887 25,946
======= =======
See accompanying notes to consolidated financial statements.
Page 5
<PAGE>
Carson Pirie Scott & Co. and Subsidiaries
Notes to Consolidated Financial Statements
August 2, 1997
(Unaudited)
(1) The Company
Carson Pirie Scott & Co.(CPS) and its subsidiaries (together, the Company)
operate 52 traditional department stores and four furniture stores which are
located in Illinois, Wisconsin, Indiana and Minnesota.
(2) Opinion of Management
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments, consisting of normal recurring accruals,
considered necessary to present fairly the Company's consolidated financial
statements. All intercompany balances and transactions have been eliminated in
consolidation. The accompanying consolidated financial statements should be read
in conjunction with the consolidated financial statements and notes thereto
filed in CPS's annual report on Form 10-K for the year ended February 1, 1997.
The results of operations for the six months ended August 2, 1997 are not
necessarily indicative of the results to be expected for the full year due to
the seasonal nature of the retail industry.
(3) Derivative Financial Instruments
Interest rate cap agreements are used by the Company in the management of its
interest rate risk. The net amounts paid under interest rate cap agreements
designated as hedges are capitalized and recognized over the life of the
underlying debt agreements, as an adjustment to interest expense. When
applicable, the related amounts receivable from the counter - parties are
included in other current assets. The Company deferred gains and losses related
to various hedged interest rate derivative financial instrument agreements since
the underlying debt was outstanding.
(4) Year 2000 Information System Preparation Costs
The Company previously disclosed on a Form 8-K dated June 30, 1997 filed with
the Securities and Exchange Commission that the Company entered into a lease
agreement to upgrade its mainframe computer system processor. The new processor
provides the Company with increased capacity that is necessary for the Company
to operate its existing systems and simultaneously test year 2000 information
system upgrades. The terminated lease was recorded by the Company as a capital
lease and the $3.1 million undepreciated asset value was written down to zero.
Page 6
<PAGE>
Carson Pirie Scott & Co. and Subsidiaries
Notes to Consolidated Financial Statements
August 2, 1997
(Unaudited)
The Company records year 2000 information system preparation costs in other
expense. The Company anticipates these costs will be approximately $5.1 million
in 1997, of which $4.3 million was recorded for the six months ended August 2,
1997. The Company estimated in its first quarter 10-Q that year 2000 costs would
be approximately $2.0 million in 1997. The estimate increased to $5.1 million to
reflect the lease termination.
(5) Share Repurchases
During the six months ended August 2, 1997, the Company repurchased 244,300
shares of its common stock for $7.4 million under its $20.0 million buyback
program.
Page 7
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The financial information, discussion, and analysis which follow are based upon
and should be read in conjunction with the Consolidated Financial Statements and
the Notes thereto.
Results of Operations
Comparison of the three months ended August 2, 1997 and August 3, 1996
Net sales. Net sales were $243.8 million for the three months ended August 2,
1997 as compared to $225.0 million for the three months ended August 3, 1996, an
increase of $18.8 million or 8.3%. The net sales increase was due to new store
openings, offset slightly by the closing of one underperforming location, and a
5.5% comparable store sales increase. The Company opened department store
locations at the Cherryvale Mall located in Rockford, Illinois in June 1996 and
at the Fox Valley Mall located in Aurora, Illinois in October 1996. In addition,
the Company opened a freestanding furniture location in Brookfield, Wisconsin in
October, 1996. The 5.5% comparable store sales increase for the quarter was
broad-based encompassing most merchandise categories.
Gross margin. Gross margin was $89.5 million for the 1997 three-month period
versus $83.5 million for the 1996 three-month period, an increase of $6.0
million or 7.2%. Gross margin as a percentage of net sales was 36.7% for the
1997 three-month period compared to 37.1% for the comparable prior period. The
margin rate decrease was primarily due to the mix of merchandise sold and a
higher level of markdowns.
Selling, general and administrative expenses. Selling, general and
administrative expenses were $74.2 million for the 1997 three-month period
versus $71.5 million for the 1996 three-month period, an increase of $2.7
million or 3.8%. Selling, general and administrative expenses as a percentage of
sales were 30.4% and 31.8% for the quarters ended August 2, 1997 and August 3,
1996, respectively. The decrease in rate resulted primarily from the controlling
of fixed expenses, which were distributed over a larger sales base in the
current period.
Depreciation and amortization. Depreciation and amortization increased to $5.0
million for the three months ended August 2, 1997 from $4.0 million for the
three months ended August 3, 1996. Depreciation expense increased $1.0 million
for the 1997 period as the Company's capital expenditure program increased the
carrying value of property, fixtures and equipment. The Company anticipates that
the level of depreciation expense will continue to rise as the Company continues
its capital expenditures for new store acquisitions and store renovations.
Other expense. The Company recorded $3.7 million in year 2000 information system
preparation costs for the quarter ended August 2, 1997, which includes the
write-down of the terminated lease described in Note 4 to the Consolidated
Financial Statements.
Page 8
<PAGE>
Interest expense, net. Interest expense, net increased to $4.1 million for the
three-month period ended August 2, 1997 as compared to $3.4 million for the
three-month period ended August 3, 1996. The increase was due primarily to the
absence of interest income in 1997 from the Company's interest in 9% Junior
Subordinated Exchange Debentures Due 2004 of County Seat Holdings, Inc., which
were written down to zero in the third quarter of 1996 and subsequently sold in
the first quarter of 1997.
Income tax expense. Income tax expense for the three months ended August 2, 1997
and August 3, 1996 was $1.1 million and $1.8 million, respectively, resulting in
effective income tax rates of 39.6% and 39.4%, respectively. These rates differ
from the federal statutory rate of 35.0% due primarily to state and local income
taxes.
Comparison of the six months ended August 2, 1997 and August 3, 1996
Net sales. Net sales were $501.9 million for the six months ended August 2, 1997
as compared to $461.8 million for the six months ended August 3, 1996, a
increase of $40.1 million or 8.7%. The net sales increase was due to new store
openings, offset slightly by the closing of one underperforming location, and a
4.7% comparable store sales increase. The Company opened department store
locations at the Cherryvale Mall located in Rockford, Illinois in June 1996 and
at the Fox Valley Mall located in Aurora, Illinois in October 1996. In addition,
the Company opened a freestanding furniture location in Brookfield, Wisconsin in
October, 1996. The 4.7% comparable store sales increase was broad-based
encompassing most merchandise categories.
Gross margin. Gross margin was $179.9 million for the 1997 six-month period
versus $166.5 million for the 1996 six-month period, an increase of $13.4
million or 8.0%. Gross margin as a percentage of net sales was 35.8% for the
1997 six-month period compared to 36.1% for the comparable prior period. The
gross margin rate decrease was primarily due to the mix of merchandise sold and
higher markdowns in the second quarter.
Selling, general and administrative expenses. Selling, general and
administrative expenses were $150.5 million for the 1997 six-month period versus
$142.7 million for the 1996 six-month period, an increase of $7.8 million or
5.4%. Selling, general and administrative expenses as a percentage of sales were
30.0% and 30.9% for the six months ended August 2, 1997 and August 3, 1996,
respectively. The increase in expense dollars was primarily due to costs
associated with new stores, higher wage rates and higher bad debt more than
offset by finance charge income. The decrease in rate resulted primarily from
the controlling of fixed expenses, which were distributed over a larger sales
base in the current period.
Page 9
<PAGE>
Depreciation and amortization. Depreciation and amortization increased to $10.1
million for the six months ended August 2, 1997 from $8.1 million for the six
months ended August 3, 1996. Depreciation expense increased $2.0 million for the
1997 period as the Company's capital expenditure program increased the carrying
value of property, fixtures and equipment. The Company anticipates that the
level of depreciation expense will continue to rise as the Company continues its
capital expenditures for new store acquisitions and store renovations.
Other expense. The Company recorded $4.3 million in year 2000 information system
preparation costs for the six months ended August 2, 1997, which includes the
write-down of the terminated lease described in Note 4 of the Consolidated
Financial Statements.
Interest expense, net. Interest expense, net increased to $8.3 million for the
six-month period ended August 2, 1997 as compared to $7.1 million for the
six-month period ended August 3, 1996. The increase was due primarily to the
absence of interest income in 1997 from the Company's interest in 9% Junior
Subordinated Exchange Debentures Due 2004 of County Seat Holdings, Inc., which
were written down to zero in the third quarter of 1996 and subsequently sold in
the first quarter of 1997.
Gain on sale of marketable securities. During the six months ended August 3,
1996, the Company sold 1,026,550 shares of Proffitt's, Inc. common stock for
$31.1 million and realized a gain of $14.9 million.
Other expense. The Company made a $2.5 million cash contribution to the Carson
Pirie Scott Foundation during the six months ended August 3, 1996.
Income tax expense. Income tax expense for the six months ended August 2, 1997
and August 3, 1996 was $2.8 million and $8.1 million, respectively, resulting in
effective income tax rates of 39.6% and 39.4%, respectively. These rates differ
from the federal statutory rate of 35.0% due primarily to state and local income
taxes.
Liquidity and Capital Resources
The Company's cash and cash equivalents position on August 2, 1997 totaled $17.9
million and outstanding debt totaled $142.6 million, resulting in a net debt
position (Net Debt) of $124.7 million. Net Debt is outstanding debt less cash
and cash equivalents. The Company believes Net Debt is a useful measure of its
liquidity position given the Company's ability to apply cash to its outstanding
debt. For the six months ended August 2, 1997, Net Debt declined $17.2 million,
which is primarily due to net cash provided by operations, offset by
expenditures under the Company's capital expenditure program and repurchases of
common stock under the CPS buyback program.
National Bank of the Great Lakes (NBGL), the Company's wholly owned subsidiary,
extends credit to the Company's customers through the NBGL credit card program.
The NBGL credit card program is subject to economic and competitive factors,
many of which are beyond the Company's control, that may materially affect the
future profitability of the NBGL credit card program.
Page 10
<PAGE>
Among these factors are increasing competition from third party cards, which has
negatively affected the percentage of net sales transacted on the NBGL credit
card. The percentage of net sales transacted on NBGL credit cards declined
approximately 3.2 percentage points for the six months ended August 2, 1997
compared to the six months ended August 3, 1996 and may continue to decline.
Despite this decrease in penetration, NBGL generated an additional $2.9 million
in finance charge income during the six months ended August 2, 1997 on its
credit card portfolio due to higher average balances. Another factor is the
increasing number of personal bankruptcy filings by holders of NBGL's credit
cards, which may continue to increase. NBGL write-offs related to customer
bankruptcy filings increased from $1.8 million for the six months ended August
3, 1996 to $2.6 million for the six months ended August 2, 1997. These factors
and others could materially affect the profitability of the NBGL credit
operations.
A subsidiary of the Company has the right to borrow, subject to certain
limitations, including compliance with certain restrictive covenants, up to
$216.0 million under a receivables facility. As of August 2, 1997, borrowings
under the receivables facility totaled $93.3 million. In addition, the Company
has the right to borrow, subject to certain limitations, up to $150.0 million
under a working capital facility. The working capital facility had outstanding
letters of credit for $18.9 million as of August 2, 1997, which reduce
availability. No cash borrowings were outstanding under the working capital
facility during the six months ended August 2, 1997. In May 1997, the
receivables and working capital facilities were amended. The working capital
facility was amended to reduce fees and extend the maturity of the facility to
June 2000. The receivables facility was amended to reduce fees, extend the
maturity of $125.0 million of the facility to June 2000 and adjust the maturity
on the remaining $75.0 million of the facility to May 1998. The remaining $16.0
million commitment under the receivables facility matures in June 2000.
In fiscal 1997, the Company anticipates spending $60 million for capital
expenditures which will be allocated as follows: store programs of $46 million
which includes the completion of five store renovations, and the purchase of one
store in February 1997 that was previously leased by the Company; technology
programs of $4 million and other programs of $10 million.
As of February 1, 1997, the Company had federal and state net operating loss
(NOL) carryforwards of approximately $128 million. Although subject to certain
limitations, the future utilization of the NOL carryforwards and other tax
benefits will enable the Company to reduce its cash requirements for income tax
payments in the next several fiscal years from that which would otherwise be
payable.
Page 11
<PAGE>
The Company believes that it will have sufficient funds available from cash on
hand, cash from operations, the receivables facility and the working capital
facility to satisfy the Company's needs for working capital, planned capital
expenditures, debt service and operations during the next several fiscal years.
However, the Company can give no assurance that the Company's future operating
performance, net sales and cash flows, all of which are subject to financial,
general and regional economic, competitive and other factors affecting the
Company, many of which are beyond its control, will be adequate to generate
sufficient funds to meet the Company's needs during the next several fiscal
years.
For the year ending January 31, 1998, or fiscal 1997, the Company will adopt the
Financial Accounting Standards Board's (FASB) Statement of Financial Standards
No. 128, "Earnings per Share" (SFAS No. 128), which specifies changes in the
computation, presentation and disclosure requirements of earnings per share
information. The Company does not believe the adoption of SFAS No. 128 will have
a material impact on its annual earnings per share calculation.
For the year ending January 30, 1999, or fiscal 1998, the Company will adopt the
FASB's Statement of Financial Standards No. 130, "Reporting Comprehensive
Income" (SFAS No. 130), which establishes standards for reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. In addition, in fiscal 1998, the Company will adopt FASB's
Statement of Financial Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (SFAS No. 131), which establishes standards
for the way public business enterprises are to report information about
operating segments in annual financial statements and related disclosures to
shareholders.
Seasonality and Inflation
The Company's business is seasonal in nature with a high proportion of sales and
net income generated in November and December. Over the last several years, the
Company's customers have demonstrated an inclination to buy closer to the time
of need. In response, the Company has been adjusting the flow of merchandise to
better anticipate customer buying patterns.
Working capital requirements fluctuate during the year, increasing somewhat in
mid-summer in anticipation of the fall merchandising season and increasing
substantially prior to the Christmas season when the Company must carry
significantly higher inventory levels. Inflationary pressures on the cost of
merchandise inventory and operating expenses have been low, and historically,
have been offset by a combination of comparable-store sales increases and
improved productivity.
Page 12
<PAGE>
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The Company held an annual meeting of shareholders on June 4, 1997 for
the following purposes:
Item 1: To elect seven directors;
Item 2: To approve the 1997 Senior Executive Bonus Plan;
Item 3: To approve the 1993 Stock Incentive Plan, as amended and
restated as of March 19, 1997; and
Item 4: To ratify the appointment of KPMG Peat Marwick LLP as the
Company's independent accountants for the fiscal year ending January 31, 1998.
The number of votes cast for and withheld for each nominee for the
Company's Board of Directors were as follows:
FOR WITHHELD
Stanton J. Bluestone 14,421,843 379,556
John W. Burden III 14,421,843 379,556
Mark Dickstein 14,421,843 379,556
Chaim Y. Edelstein 14,421,843 379,556
William I. Jenkins 14,421,843 379,556
Mark L. Kaufman 14,421,843 379,556
Michael R. MacDonald 14,421,843 379,556
The number of votes cast for, against, abstain, and nonvote for Items 2,
3 and 4 were as follows:
FOR AGAINST ABSTAIN NONVOTE
Item 2 14,511,614 242,845 4,840 42,100
Item 3 11,380,381 3,401,754 6,334 12,930
Item 4 14,796,389 4,015 995 0
Page 13
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibits
----------
See Exhibit Index on page 15 of this Quarterly Report on Form 10-Q.
(b) Reports on Form 8-K
--------------------------
The following reports on Form 8-K were filed on the dates indicated
below during the quarter ended August 2, 1997:
May 16, 1997 Reported under Item 5 the Company's earnings
for the first quarter.
June 30, 1997 Reported under Item 5 the Company's agreement
to upgrade its mainframe computer system processor
and the write-down to zero of the undepreciated
asset value of the capital lease for the existing
processor.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunder duly authorized.
Date: September 15, 1997
Carson Pirie Scott & Co.
/s/ David J. Biese
----------------------------
David J. Biese
Vice President, Controller
(chief accounting officer
and authorized officer)
Page 14
<PAGE>
EXHIBIT INDEX
Copies of documents listed below which are identified with an asterisk (*)have
previously been filed with the Securities and Exchange Commission (the
Commission) as exhibits to registration statements or reports filed with the
Commission and are incorporated into this Quarterly Report on Form 10-Q by
reference and made a part hereof. The exhibit number and the file number of each
document previously filed and incorporated into this Quarterly Report on Form
10-Q by reference are set forth below. Exhibits not identified with an asterisk
are filed with this Quarterly Report on Form 10-Q.
Exhibit Sequential Page
Number Description Numbers
- --------- --------------- ---------------
10.1B Second Amendment of Amended and Restated
Receivables Purchase Agreement, dated
as of May 15, 1997.
10.2A First Amendment to Revolving Credit
and Guaranty Agreement, dated as of
May 15, 1997.
10.3B Second Amendment of Liquidity Agreement,
dated as of May 15, 1997.
10.3C Third Amendment of Liquidity Agreement,
dated as of July 2, 1997.
11.1 Computation of Per Share Earnings.
27 Financial Data Schedule.
Page 15
EXHIBIT 10.1B
Dated as of May 15, 1997
Carson Pirie Scott & Co.
331 West Wisconsin Avenue
Milwaukee, Wisconsin 53203
Attention: Charles J. Hansen, Esq.
CPS Department Stores, Inc.
331 West Wisconsin Avenue
Milwaukee, Wisconsin 53203
Attention: Charles J. Hansen, Esq.
Re: Second Amendment of Amended and Restated Receivables
Purchase Agreement dated as of July 22, 1994 (this "Amendment")
Ladies and Gentlemen:
Reference is hereby made to that certain Amended and Restated
Receivables Purchase Agreement, dated as of July 22, 1994 (as amended and
supplemented through the date hereof, the "Purchase Agreement"), among Great
Lakes Credit Corp., a Delaware corporation (the "Purchaser") and the sellers
from time to time party thereto (the "Sellers"). You have requested that the
Purchaser agree to amend the Purchase Agreement which the Purchaser is willing
to do subject to the terms and conditions hereof. Terms used herein and not
otherwise defined herein which are defined in the Purchase Agreement shall have
the same meaning herein as defined therein.
1. Accordingly, subject to the following terms and conditions, the
Purchase Agreement shall be, and it hereby is, effective as of the date hereof
(the "Effective Date") subject to Section 3 of this Amendment, amended as
follows:
(a) Each reference to "CPS" in Sections 5.01(d), 5.01(i),
5.01(s), 6.01(a), 6.02, 6.03, 6.08(c), 6.12, 6.14 and 6.18(c) of the
Purchase Agreement shall be, and hereby is, amended by replacing such
reference with the term "NBGL" therein.
(b) Clause (A) in Section 5.01(a)(iii) of the Purchase
Agreement shall be, and hereby is, amended by replacing the phrase "if
the Servicer is not CPS, then CPS," with the phrase "if the Servicer is
not NBGL, then CPS," therein.
(c) Section 6.01(b) of the Purchase Agreement shall be, and
hereby is, amended by replacing the parenthetical "(if CPS is not the
Servicer)" with the parenthetical "(if NBGL is not the Servicer)"
therein.
(d) Sections 6.01(b) and (d) of the Purchase Agreement shall
be, and hereby are, amended by replacing the parenthetical "(and, if
CPS is not the Servicer, CPS)" with the parenthetical "(and if NBGL is
not the Servicer, NBGL)" therein.
2. The Purchaser and the Sellers each represents and warrants as to
itself for the benefit of the Purchaser and the Secured Parties that:
<PAGE>
(a) it is in full compliance with all of the material terms,
conditions and all other provisions of this Amendment, the Purchase
Agreement and each of the other Transaction Documents, in each case as
of the Effective Date; and
(b) its representations and warranties contained in this
Amendment, the Purchase Agreement and the other Transaction Documents
are true and correct in all material respects, in each case as though
made on and as of the Effective Date, except to the extent such
representations and warranties relate solely to an earlier date (and
then as of such earlier date); and
(c) both before and after giving effect to this Amendment, no
Purchase Termination Event nor any event or condition which but for the
lapse of time or the giving of notice, or both, would constitute a
Purchase Termination Event has occurred and is continuing or would
result from the execution and delivery of this Amendment or any other
document arising in connection with or pursuant to this Amendment; and
(d) this Amendment has been duly authorized, executed and
delivered on its behalf, and each of (i) the Purchase Agreement, both
before being amended and supplemented hereby and as amended and
supplemented hereby, (ii) each of the other Transaction Documents to
which it is a party and (iii) this Amendment, constitutes its legal,
valid and binding obligation enforceable against it in accordance with
the terms hereof or thereof.
3. Section 1 of this Amendment shall become effective only once all of
the pre-conditions set forth below in this Section 3 have been satisfied:
(a) the second amendment of the Liquidity Agreement, the
Transfer Supplement, the Seasonal Commitment Certificate and the
Guaranty, each dated as of the date hereof, shall be effective; and
(b) the Agent has received, in form and substance satisfactory
to the Agent, all documents, certificates and opinions as the Agent may
reasonably request and all other matters incident to the execution
hereof are satisfactory to the Agent.
4. National Bank of the Great Lakes hereby acknowledges and agrees that
it will be bound by the terms and conditions of each Transaction Document and
Section 2.19 of the Intercreditor Agreement, in each case as the Servicer.
5. The Purchase Agreement, as amended and supplemented hereby or as
contemplated herein, and all rights and powers created thereby and thereunder or
under the other Transaction Documents, and all other documents executed in
connection therewith, are in all respects ratified and confirmed. From and after
the Effective Date, the Purchase Agreement shall be deemed to be amended and
supplemented as herein provided, and, except as so amended and supplemented, the
Purchase Agreement, each of the other Transaction Documents and all other
documents executed in connection therewith shall remain in full force and
effect.
6. This Amendment may be executed in two or more counterparts, each of
which shall constitute an original but both or all of which, when taken
together, shall constitute but one instrument.
<PAGE>
Please signify your agreement and acceptance of the foregoing by
executing this Amendment in the space provided below.
Very truly yours,
GREAT LAKES CREDIT CORP., as
Purchaser
By /s/ Charles J. Hansen
--------------------------
Title Vice President
Accepted and Agreed to:
CARSON PIRIE SCOTT & CO., as
a Seller
By /s/ Charles J. Hansen
---------------------------
Title Vice President
CPS DEPARTMENT STORES, INC., as
a Seller
By /s/ Charles J. Hansen
---------------------------
Title Vice President
NATIONAL BANK OF THE GREAT LAKES,
as a Seller and Servicer
By /s/ Charles J. Hansen
---------------------------
Title Vice President
Consented to:
LASALLE NATIONAL BANK, as Collateral Agent
By \s\ Michael B. Evans
---------------------------
Title First Vice President
ABN AMRO BANK N.V., as Agent
By \s\ Jon R. Bottorf
---------------------------
Title Group Vice President
By \s\ Robert J. Graff
---------------------------
Title Group Vice President and Director
EXHIBIT 10.2A
FIRST AMENDMENT TO REVOLVING CREDIT AND GUARANTY AGREEMENT
This First Amendment to Revolving Credit and Guaranty Agreement (the
"Amendment") dated as of May 15, 1997 among Carson Pirie Scott & Co., (the
"Borrower") certain subsidiaries of the Borrower, as guarantors (the
"Guarantors") the Banks party hereto, and ABN AMRO Bank N.V., as Agent;
W I T N E S S E T H:
WHEREAS, the Borrower, Guarantors, Banks and ABN AMRO Bank N.V., as
Agent, have heretofore executed and delivered a Credit Agreement dated as of May
24, 1996 (the "Credit Agreement"); and
WHEREAS, the parties hereto desire to amend the Credit Agreement as
provided herein;
NOW, THEREFORE, for good and valuable consideration the receipt of
which is hereby acknowledged, the parties hereto agree that the Credit Agreement
shall be and hereby is amended as follows:
1. The defined terms "Applicable Margin" and "Final Maturity Date"
contained in Section 1.01 of the Credit Agreement are hereby amended in their
entirety and as so amended shall read as follows:
"Applicable Margin" means, on any date, for any Alternate Base
Rate Loan or Eurodollar Loan, the rate per annum set forth below, as in
effect on such date as determined pursuant to the provisions of the
definition of Pricing Date:
LEVEL EURODOLLAR LOANS ALTERNATE BASE RATE LOANS
Level I Status 0.75% 0%
Level II Status 1.00% 0%
Level III Status 1.25% 0%
Level IV Status 1.50% 0.25%
Level V Status 1.75% 0.50%
Level VI Status 2.00% 0.75%
"Final Maturity Date" shall mean the earlier to occur of (i)
June 30, 2000 and (ii) the termination of the Total Commitment in
accordance with Section 7.01 hereof.
2. The Banks hereby confirm that the amendments to the Receivables
Agreement Documents attached as Appendix I to this Amendment do not have a
material adverse effect on the Borrower or upon the rights and remedies of the
Required Banks or any Bank.
3. The Borrower and each Guarantor represents and warrants to each
Bank and the Agent that (a) each of the representations and warranties set forth
in Article III of the Credit Agreement is true and correct on and as of the date
of this Amendment as if made on and as of the date hereof and as if each
reference therein to the Credit Agreement referred to the Credit Agreement as
amended hereby; (b) no Default and no Event of Default has occurred and is
continuing; and (c) without limiting the effect of the foregoing, the Borrower's
and each Guarantor's execution, delivery and performance of this Amendment have
been duly authorized, and this Amendment has been executed and delivered by a
duly authorized officer of the Borrower and each Guarantor's.
<PAGE>
4. The Borrower hereby acknowledges and agrees that the
Security Documents and the liens and security interests created and provided for
thereunder shall be and remain in full force and effect and shall continue to
secure all Obligations. Nothing herein contained shall in any manner affect or
impair the priority of the liens and security interests created and provided for
by the Security Documents as to the indebtedness which would be secured thereby
prior to giving effect to this Amendment.
5. This Amendment shall become effective upon the satisfaction
of all of the following conditions precedent:
(a) The Borrower, the Guarantors, the Banks and the
Agent shall have executed and delivered this Amendment; and
(b) The Banks shall have received the written opinion of
Charles J. Hansen, Esq., Vice President and General Counsel of the
Borrower and certain of the Guarantors in form and substance acceptable
to the Agent.
This Amendment may be executed in any number of counterparts and by
different parties hereto on separate counterpart signature pages, each of which
when so executed shall be an original but all of which shall constitute one and
the same instrument. Except as specifically amended and modified hereby, all of
the terms and conditions of the Credit Agreement and the other Loan Documents
shall remain unchanged and in full force and effect. All references to the
Credit Agreement in any document shall be deemed to be references to the Credit
Agreement as amended hereby. All capitalized terms used herein without
definition shall have the same meaning herein as they have in the Credit
Agreement. This Amendment shall be construed and governed by and in accordance
with the internal laws of the State of Illinois.
Dated as of the date first above written.
CARSON PIRIE SCOTT & CO.
By: \s\ Charles J. Hansen
---------------------------
Title: Vice President
ABN AMRO BANK N.V., in its individual capacity
as a Bank and Agent
By: \s\ David Hannah
---------------------------
Title: Group Vice President
By: \s\ Willem Van Beer
---------------------------
Title: Vice President
<PAGE>
DRESDNER BANK AG, New York and Grand Cayman
Branches
By: \s\ John W. Sweeney
---------------------------
Title: Assistant Vice President
By: \s\ Christopher E. Sarisky
---------------------------
Title: Assistant Treasurer
THE CIT GROUP/BUSINESS CREDIT, INC.
By: \s\ Allison Luedman
---------------------------
Title: Assistant Secretary
BANK OF MONTREAL
By: \s\ Dennis Rourke
---------------------------
Title: Director
THE BANK OF NEW YORK
By: \s\ Michael Flannery
---------------------------
Title: Vice President
CAISSE NATIONALE DE CREDIT AGRICOLE
By: \s\ David Bouhl, F.V.P.
---------------------------
Title: Head of Corporate Banking
Chicago
FIRST BANK (N.A.)
By: \s\ Alan Holman
---------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: \s\ Peter L. Griswold
---------------------------
Title: Director
<PAGE>
THE FUJI BANK, LIMITED
By: \s\ Peter L. Chinnici
---------------------------
Title: Joint General Manager
<PAGE>
GUARANTORS' CONSENT
Each of the undersigned acknowledges and agrees that while the
following is not required, each confirms that: (i) it consents to the Amendment
to the Credit Agreement as set forth above; (ii) all of the Loan Documents to
which it is a party remain in full force and effect for the benefit and security
of, among other things, the Credit Agreement as modified hereby; (iii) all
references in such Loan Documents to the Credit Agreement shall be deemed a
reference to the Credit Agreement as amended hereby; (iv) its consent to any
further amendments to the Credit Agreement shall not be required as a result of
this consent having been obtained, except to the extent, if any, required by the
Credit Agreement; and (v) each of the undersigned will continue to execute and
deliver any and all instruments or documents as may be required by the Agent or
Required Banks to confirm any of the foregoing.
CPS HOLDING CO.
CPS DEPARTMENT
FRANKLIN STREET CORPORATION
TELEGRAPH-120 CORPORATION
1-29 S. STATE STREET CORP.
331 W. WISCONSIN AVENUE CORPORATION
CARSON PIRIE SCOTT INSURANCE SERVICES, INC.
CPS HOTEL MANAGEMENT SERVICES, INC.
HIGHLAND AVENUE CORPORATION
1-65 U.S. 30 CORP.
LATHROP AVENUE CORPORATION
LINCOLN CICERO CORPORATION
URBANA CENTRAL DEVELOPMENT CO.
151 MANNHEIM CORP.
P.A. BERGNER & CO.
By: \s\ Charles J. Hansen
---------------------------
Title: Vice President
<PAGE>
APPENDIX I
Dated as of May 15, 1997
Great Lakes Credit Corp.
331 West Wisconsin Avenue
Milwaukee, Wisconsin 53203
Attention: Darren R. Jackson
Carson Pirie Scott & Co.
331 West Wisconsin Avenue
Milwaukee, Wisconsin 53203
Attention: Charles J. Hansen, Esq.
Re: Second Amendment of Liquidity Agreement
dated as of July 22, 1994 (this "Amendment")
Ladies and Gentlemen:
Reference is hereby made to that certain Liquidity Agreement, dated as
of July 22, 1994 (as amended, supplemented and otherwise modified through the
date hereof, the "Liquidity Agreement"), among Great Lakes Credit Corp., a
Delaware corporation (the "Borrower"), and ABN AMRO Bank N.V., as agent (the
"Agent") for and on behalf of the Lenders. You have requested that the Agent
agree to amend the Liquidity Agreement which the Agent is willing to do subject
to the terms and conditions hereof. Terms used herein and not otherwise defined
herein which are defined in the Liquidity Agreement shall have the same meaning
herein as defined therein.
1. Accordingly, subject to the following terms and conditions,
the Liquidity Agreement shall be, and it hereby is, effective as of the date
hereof (the "Effective Date") subject to Section 3 of this Amendment, amended as
follows:
(a) The first sentence of Section 3.01 of the Liquidity
Agreement shall be, and hereby is, amended by replacing the term
"Termination Date" with the phrase "applicable Lender's Termination
Date (or, with respect to any B-Holder, prior to such B-Holder's
Commitment Termination Date)" therein and by replacing the term "Banks"
with the phrase "Lenders (other than WINDMILL)" in clause (ii) thereof.
(b) The B-Holders shall be considered to be "Lenders" for
purposes of Section 3.02 of the Liquidity Agreement.
(c) Section 3.02(a) of the Liquidity Agreement shall be, and
hereby is, amended by deleting the sentence "No Incremental Payment
shall be made by any Lender on or after such Lender's Termination
Date." and replacing it with the following:
If an Incremental Payment is so requested of any
B-Holder then each B-Holder shall make to the Borrower its pro
rata share (based on its Original Investment as a percentage
of the aggregate Original Investments of all B-Holders) of
such Incremental Payment, subject to the terms hereof and of
<PAGE>
the Transfer Agreement; provided, however, that the Investment
of any B-Holder after giving effect to such Incremental
Payment shall not exceed such B-Holder's Original Investment.
No Incremental Payment shall be made by any Lender after such
Lender's Termination Date (or, with respect to any B-Holder,
after such B-Holder's Commitment Termination Date).
(d) The fourth and last sentence of Section 3.02(a) of the
Liquidity Agreement shall be, and hereby is, amended by replacing the
term "Banks" with the phrase "Lenders (other than WINDMILL)" therein
and by replacing each term "Bank" with the term "Lender" therein.
(e) Section 3.06(b)(ii) of the Liquidity Agreement shall be,
and hereby is, amended and restated in its entirety to be and to read
as follows:
(ii) during the period from the B-Certificate
Initiation Date to the Commitment Termination Date, monthly in
arrears on the Payment Date for each calendar month for the
immediately prior Settlement Period, commencing on the first
Payment Date following the B-Certificate Initiation Date, and
on the Commitment Termination Date, a fee (which shall not be
less than zero Dollars ($0)) equal to the B-Certificate
Commitment Rate on an amount equal to the sum of the Original
Investment for each B-Holder minus the sum of the Investment
for each B-Holder arising under the B-Certificate, calculated
on the basis of actual number of days elapsed and a three
hundred sixty (360) day year;
(f) The phrase "thirty basis points (0.30%)" in Section
3.06(b)(iii) of the Liquidity Agreement shall be, and hereby is,
amended in its entirety to be and to read as follows:
twenty-five basis points (0.25%)
(g) The third sentence of Section 6.02 of the Liquidity
Agreement shall be, and hereby is, amended by replacing the term "Bank"
with the phrase "Lender (other than WINDMILL)" therein.
(h) Section 6.02(f) of the Liquidity Agreement shall be, and
hereby is, amended by adding, immediately prior to the period at the
end thereof, the following parenthetical:
(as determined after giving effect to an increase in
the Additional Advance Rate as a result of such
Incremental Payment)
(i) The first sentence of the last paragraph of Section
10.05(c) of the Liquidity Agreement shall be, and hereby is, amended by
replacing the term "Interest" with the phrase "commitment to make Loans
hereunder or all or any part of its Interest" therein.
(j) The second to last sentence of the last paragraph of
Section 10.05(c) of the Liquidity Agreement shall be, and hereby is,
amended by replacing the term "Original Investment" with the terms
"B-Certificate Initiation Date", "Commitment Termination Date","
therein.
<PAGE>
(k) Clause (iv) of the definition of "Bank Termination Date"
in Schedule X of the Liquidity Agreement shall be, and hereby is,
amended in its entirety to be and to read as follows:
(iv) June 30, 2000
(l) The definition of "Carson's Consolidated Net Worth" in
Schedule X of the Liquidity Agreement shall be, and hereby is, amended
in its entirety to be and to read as follows:
"Carson's Consolidated Amount" shall mean, at any
date, the amount by which (a) the total consolidated assets
(minus all assets which would be classified as intangible
assets) of Carson and its Subsidiaries exceed (b) the total
consolidated liabilities of Carson and its Subsidiaries, all
computed and calculated in accordance with GAAP.
(m) Clause (ii) of the definition of "Eurodollar Rate" in
Schedule X of the Liquidity Agreement shall be, and hereby is, amended
in its entirety to be and to read as follows:
(ii) one-half percent (0.50%)
(n) The definition of "Minimum Amount" in Schedule X of the
Liquidity Agreement shall be, and hereby is, amended in its entirety to
be and to read as follows:
"Minimum Amount" shall mean, $250,000,000 plus 75% of
positive Net Income of Carson and its Subsidiaries for each
Fiscal Year of Carson commencing on or after February 4, 1996
(but without subtraction for any negative Net Income for any
such period).
(o) Clause (f) of the definition of "Permitted Investments" in
Schedule X of the Liquidity Agreement shall be, and hereby is, amended
by replacing the phrase "substantially all the assets of which are
comprised of securities of the type described in clauses (a) through
(e) above" as follows:
which money market funds have assets in excess of One Billion
Dollars ($1,000,000,000) and comply with Rule 2a-7 of the
Securities and Exchange Commission as in effect on the date
hereof
(p) The following definitions shall be, and hereby are, added
to Schedule X of the Liquidity Agreement as alphabetically appropriate:
"B-Certificate Commitment Rate" shall have the
meaning ascribed to such term in the B-Certificate.
"B-Certificate Initiation Date" shall have the
meaning ascribed to such term in the B-Certificate.
"Commitment Termination Date" shall have the meaning
ascribed to such term in the B-Certificate.
"Net Income" shall mean, for any Person and for any
period, the net income (loss) of such Person for such period,
provided that (i) all gains and all losses realized by such
<PAGE>
Person and its Subsidiaries upon the sale or other disposition
(including, without limitation, pursuant to sale and leaseback
transactions) of property or assets which are not sold or
otherwise disposed of in the ordinary course of business, or
pursuant to the sale of any capital stock of such Person or
any subsidiary, shall be excluded, (ii) net income or net loss
of any Person combined with such Person on a "pooling of
interests" basis attributable to any period prior to the date
of such combination shall be excluded, and (iii) net income of
any Person which is not a Subsidiary of such Person and which
is consolidated with such Person or is accounted for by such
Person by the equity method of accounting shall be included
only to the extent of the amount of dividends or distributions
paid to such Person or a Subsidiary.
"Original Investment" shall have the meaning
ascribed to such term in the B-Certificate.
2. The Borrower represents and warrants to the Agent that:
(a) it is in full compliance with all of the material terms,
conditions and all other provisions of this Amendment, the Liquidity
Agreement and each of the other Transaction Documents, in each case as
of the Effective Date; and
(b) its representations and warranties contained in this
Amendment, the Liquidity Agreement and the other Transaction Documents
are true and correct in all material respects, in each case as though
made on and as of the Effective Date, except to the extent such
representations and warranties relate solely to an earlier date (and
then as of such earlier date); and
(c) both before and after giving effect to this Amendment, no
Termination Event nor Potential Termination Event has occurred and is
continuing or would result from the execution and delivery of this
Amendment or any other document arising in connection with or pursuant
to this Amendment; and
(d) this Amendment has been duly authorized, executed and
delivered on its behalf, and each of the Liquidity Agreement, both
before being amended and supplemented hereby and as amended and
supplemented hereby, each of the other Transaction Documents to which
it is a party and this Amendment constitutes its legal, valid and
binding obligation enforceable against it in accordance with the terms
hereof or thereof.
3. Section 1 of this Amendment shall become effective only once
all of the pre-conditions set forth below in this Section 3 have been satisfied:
(a) the first amendment of B-Certificate, the Transfer
Supplement and the Seasonal Commitment Certificate, each dated as of
the date hereof, shall be effective; and
(b) the Agent has received, in form and substance satisfactory
to the Agent, all documents, certificates and opinions as the Agent may
reasonably request and all other matters incident to the execution
hereof are satisfactory to the Agent.
<PAGE>
4. Notwithstanding Section 2.2 of the Transfer Agreement, the
Lenders and each of the parties hereto consent to the distribution on the date
hereof to the B-Holder of an amount equal to all Investment and Discount owed to
the B-Holder.
5. The Liquidity Agreement, as amended and supplemented hereby or
as contemplated herein, and all rights and powers created thereby and thereunder
or under the other Transaction Documents, and all other documents executed in
connection therewith, are in all respects ratified and confirmed. From and after
the Effective Date, the Liquidity Agreement shall be deemed to be amended and
supplemented as herein provided, and, except as so amended and supplemented, the
Liquidity Agreement, each of the other Transaction Documents and all other
documents executed in connection therewith shall remain in full force and
effect.
6. This Amendment may be executed in two or more counterparts,
each of which shall constitute an original but both or all of which, when taken
together, shall constitute but one instrument.
Please signify your agreement and acceptance of the foregoing by
executing this Amendment in the space provided below.
Very truly yours,
ABN AMRO BANK N.V., as Agent
By
---------------------------
Title
-------------------------
By
---------------------------
Title
------------------------
Accepted and Agreed to:
GREAT LAKES CREDIT CORP., as Borrower
By
---------------------------------
Title
------------------------------
Consented to:
LASALLE NATIONAL BANK, as Collateral Agent
By
---------------------------------
Title
------------------------------
EXHIBIT 10.3B
Dated as of May 15, 1997
Great Lakes Credit Corp.
331 West Wisconsin Avenue
Milwaukee, Wisconsin 53203
Attention: Darren R. Jackson
Carson Pirie Scott & Co.
331 West Wisconsin Avenue
Milwaukee, Wisconsin 53203
Attention: Charles J. Hansen, Esq.
Re: Second Amendment of Liquidity Agreement
dated as of July 22, 1994 (this "Amendment")
Ladies and Gentlemen:
Reference is hereby made to that certain Liquidity Agreement, dated as
of July 22, 1994 (as amended, supplemented and otherwise modified through the
date hereof, the "Liquidity Agreement"), among Great Lakes Credit Corp., a
Delaware corporation (the "Borrower"), and ABN AMRO Bank N.V., as agent (the
"Agent") for and on behalf of the Lenders. You have requested that the Agent
agree to amend the Liquidity Agreement which the Agent is willing to do subject
to the terms and conditions hereof. Terms used herein and not otherwise defined
herein which are defined in the Liquidity Agreement shall have the same meaning
herein as defined therein.
1. Accordingly, subject to the following terms and conditions, the
Liquidity Agreement shall be, and it hereby is, effective as of the date hereof
(the "Effective Date") subject to Section 3 of this Amendment, amended as
follows:
(a) The first sentence of Section 3.01 of the Liquidity
Agreement shall be, and hereby is, amended by replacing the term
"Termination Date" with the phrase "applicable Lender's Termination
Date (or, with respect to any B-Holder, prior to such B-Holder's
Commitment Termination Date)" therein and by replacing the term "Banks"
with the phrase "Lenders (other than WINDMILL)" in clause (ii) thereof.
(b) The B-Holders shall be considered to be "Lenders" for
purposes of Section 3.02 of the Liquidity Agreement.
(c) Section 3.02(a) of the Liquidity Agreement shall be, and
hereby is, amended by deleting the sentence "No Incremental Payment
shall be made by any Lender on or after such Lender's Termination
Date." and replacing it with the following:
If an Incremental Payment is so requested of any
B-Holder then each B-Holder shall make to the Borrower its pro
rata share (based on its Original Investment as a percentage
of the aggregate Original Investments of all B-Holders) of
such Incremental Payment, subject to the terms hereof and of
<PAGE>
the Transfer Agreement; provided, however, that the Investment
of any B-Holder after giving effect to such Incremental
Payment shall not exceed such B-Holder's Original Investment.
No Incremental Payment shall be made by any Lender after such
Lender's Termination Date (or, with respect to any B-Holder,
after such B-Holder's Commitment Termination Date).
(d) The fourth and last sentence of Section 3.02(a) of the
Liquidity Agreement shall be, and hereby is, amended by replacing the
term "Banks" with the phrase "Lenders (other than WINDMILL)" therein
and by replacing each term "Bank" with the term "Lender" therein.
(e) Section 3.06(b)(ii) of the Liquidity Agreement shall be,
and hereby is, amended and restated in its entirety to be and to read
as follows:
(ii) during the period from the B-Certificate
Initiation Date to the Commitment Termination Date, monthly in
arrears on the Payment Date for each calendar month for the
immediately prior Settlement Period, commencing on the first
Payment Date following the B-Certificate Initiation Date, and
on the Commitment Termination Date, a fee (which shall not be
less than zero Dollars ($0)) equal to the B-Certificate
Commitment Rate on an amount equal to the sum of the Original
Investment for each B-Holder minus the sum of the Investment
for each B-Holder arising under the B-Certificate, calculated
on the basis of actual number of days elapsed and a three
hundred sixty (360) day year;
(f) The phrase "thirty basis points (0.30%)" in Section
3.06(b)(iii) of the Liquidity Agreement shall be, and hereby is,
amended in its entirety to be and to read as follows:
twenty-five basis points (0.25%)
(g) The third sentence of Section 6.02 of the Liquidity
Agreement shall be, and hereby is, amended by replacing the term "Bank"
with the phrase "Lender (other than WINDMILL)" therein.
(h) Section 6.02(f) of the Liquidity Agreement shall be, and
hereby is, amended by adding, immediately prior to the period at the
end thereof, the following parenthetical:
(as determined after giving effect to an increase in
the Additional Advance Rate as a result of such Incremental Payment)
(i) Section 9.11 of the Liquidity Agreement shall be, and
hereby is, amended by replacing the term "CPS" with the term "NBGL"
therein.
(j) Clause (i) in Section 10.04(b) of the Liquidity Agreement
shall be, and hereby is, amended by replacing the phrase "either Carson
or CPS" with the term "any Seller" therein.
(k) The first sentence of the last paragraph of Section
10.05(c) of the Liquidity Agreement shall be, and hereby is, amended by
replacing the term "Interest" with the phrase "commitment to make Loans
hereunder or all or any part of its Interest" therein.
<PAGE>
(l) The second to last sentence of the last paragraph of
Section 10.05(c) of the Liquidity Agreement shall be, and hereby is,
amended by replacing the term "Original Investment" with the terms
""B-Certificate Initiation Date", "Commitment Termination Date","
therein.
(m) Clause (iv) of the definition of "Bank Termination Date"
in Schedule X of the Liquidity Agreement shall be, and hereby is,
amended in its entirety to be and to read as follows:
(iv) June 30, 2000
(n) The definition of "Carson's Consolidated Net Worth" in
Schedule X of the Liquidity Agreement shall be, and hereby is, amended
in its entirety to be and to read as follows:
"Carson's Consolidated Net Worth" shall mean, at any
date, the amount by which (a) the total consolidated assets
(minus all assets which would be classified as intangible
assets) of Carson and its Subsidiaries exceed (b) the total
consolidated liabilities of Carson and its Subsidiaries, all
computed and calculated in accordance with GAAP.
(o) Clause (ii) of the definition of "Eurodollar Rate" in
Schedule X of the Liquidity Agreement shall be, and hereby is, amended
in its entirety to be and to read as follows:
(ii) one-half percent (0.50%)
(p) The definition of "Minimum Amount" in Schedule X of the
Liquidity Agreement shall be, and hereby is, amended in its entirety to
be and to read as follows:
"Minimum Amount" shall mean, $250,000,000 plus 75% of
positive Net Income of Carson and its Subsidiaries for each
Fiscal Year of Carson commencing on or after February 4, 1996
(but without subtraction for any negative Net Income for any
such period).
(q) Clause (f) of the definition of "Permitted Investments" in
Schedule X of the Liquidity Agreement shall be, and hereby is, amended
by replacing the phrase "substantially all the assets of which are
comprised of securities of the type described in clauses (a) through
(e) above" as follows:
which money market funds have assets in excess of One Billion
Dollars ($1,000,000,000) and comply with Rule 2a-7 of the
Securities and Exchange Commission as in effect on the date
hereof
(r) The following definitions shall be, and hereby are, added
to Schedule X of the Liquidity Agreement as alphabetically appropriate:
"B-Certificate Commitment Rate" shall have the
meaning ascribed to such term in the B-Certificate.
"B-Certificate Initiation Date" shall have the
meaning ascribed to such term in the B-Certificate.
<PAGE>
"Commitment Termination Date" shall have the meaning
ascribed to such term in the B-Certificate.
"NBGL" shall mean National Bank of the Great Lakes.
"Net Income" shall mean, for any Person and for any
period, the net income (loss) of such Person for such period,
provided that (i) all gains and all losses realized by such
Person and its Subsidiaries upon the sale or other disposition
(including, without limitation, pursuant to sale and leaseback
transactions) of property or assets which are not sold or
otherwise disposed of in the ordinary course of business, or
pursuant to the sale of any capital stock of such Person or
any subsidiary, shall be excluded, (ii) net income or net loss
of any Person combined with such Person on a "pooling of
interests" basis attributable to any period prior to the date
of such combination shall be excluded, and (iii) net income of
any Person which is not a Subsidiary of such Person and which
is consolidated with such Person or is accounted for by such
Person by the equity method of accounting shall be included
only to the extent of the amount of dividends or distributions
paid to such Person or a Subsidiary.
"Original Investment" shall have the meaning
ascribed to such term in the B-Certificate.
2. The Borrower represents and warrants to the Agent that:
(a) it is in full compliance with all of the material terms,
conditions and all other provisions of this Amendment, the Liquidity
Agreement and each of the other Transaction Documents, in each case as
of the Effective Date; and
(b) its representations and warranties contained in this
Amendment, the Liquidity Agreement and the other Transaction Documents
are true and correct in all material respects, in each case as though
made on and as of the Effective Date, except to the extent such
representations and warranties relate solely to an earlier date (and
then as of such earlier date); and
(c) both before and after giving effect to this Amendment, no
Termination Event nor Potential Termination Event has occurred and is
continuing or would result from the execution and delivery of this
Amendment or any other document arising in connection with or pursuant
to this Amendment; and
(d) this Amendment has been duly authorized, executed and
delivered on its behalf, and each of (i) the Liquidity Agreement, both
before being amended and supplemented hereby and as amended and
supplemented hereby, (ii) each of the other Transaction Documents to
which it is a party and, (iii) this Amendment, constitutes its legal,
valid and binding obligation enforceable against it in accordance with
the terms hereof or thereof.
3. Section 1 of this Amendment shall become effective only once all of
the pre-conditions set forth below in this Section 3 have been satisfied:
(a) the second amendment of the Purchase Agreement, the
Transfer Supplement, the Seasonal Commitment Certificate and the
Guaranty, each dated as of the date hereof, shall be effective; and
<PAGE>
(b) the Agent has received, in form and substance satisfactory
to the Agent, all documents, certificates and opinions as the Agent may
reasonably request and all other matters incident to the execution
hereof are satisfactory to the Agent.
4. Notwithstanding Section 2.2 of the Transfer Agreement, the Lenders
and each of the parties hereto consent to the distribution on the date hereof to
the B-Holder of an amount equal to all Investment and Discount owed to the
B-Holder.
5. The Liquidity Agreement, as amended and supplemented hereby or as
contemplated herein, and all rights and powers created thereby and thereunder or
under the other Transaction Documents, and all other documents executed in
connection therewith, are in all respects ratified and confirmed. From and after
the Effective Date, the Liquidity Agreement shall be deemed to be amended and
supplemented as herein provided, and, except as so amended and supplemented, the
Liquidity Agreement, each of the other Transaction Documents and all other
documents executed in connection therewith shall remain in full force and
effect.
6. This Amendment may be executed in two or more counterparts, each of
which shall constitute an original but both or all of which, when taken
together, shall constitute but one instrument.
Please signify your agreement and acceptance of the foregoing by executing this
Amendment in the space provided below.
Very truly yours,
ABN AMRO BANK N.V., as Agent
By \s\ Jon R. Bottorf
---------------------------
Title Group Vice President
By \s\ Robert J. Graff
---------------------------
Title Group Vice President and Director
Accepted and Agreed to:
GREAT LAKES CREDIT CORP., as Borrower
By \s\ Charles J. Hansen
---------------------------
Title Vice President
Consented to:
LASALLE NATIONAL BANK, as Collateral Agent
By \s\ Michael B. Evans
---------------------------
Title First Vice President
EXHIBIT 10.3C
Dated as of July 2, 1997
Great Lakes Credit Corp.
331 West Wisconsin Avenue
Milwaukee, Wisconsin 53203
Attention: Darren R. Jackson
Carson Pine Scott & Co.
331 West Wisconsin Avenue
Milwaukee, Wisconsin 53203
Attention: Charles J. Hansen, Esq.
Re: Third Amendment of Liquidity Agreement
dated as of July 22 1994 (this "Amendment")
Ladies and Gentlemen:
Reference is hereby made to that certain Liquidity Agreement, dated as
of July 22, 1994 (as amended, supplemented and otherwise modified through the
date hereof, the "Liquidity Agreement"), among Great Lakes Credit Corp., a
Delaware corporation (the "Borrower"), and ABN AMRO Bank N.V, as agent (the
"Agent") for and on behalf of the Lenders. You have requested that the Agent
agree to amend the Liquidity Agreement which the Agent is willing to do subject
to the terms and conditions hereof. Terms used herein and not otherwise defined
herein which are defined in the Liquidity Agreement shall have the same meaning
herein as defined therein.
1. Accordingly, subject to the following terms and conditions, the
Liquidity Agreement shall be, and it hereby is, effective as of the date hereof
(the "Effective Date") subject to Section 3 of this Amendment, amended as
follows:
(a) The definition of "Majority Banks" in Schedule X of the
Liquidity Agreement shall be, and hereby is, amended in its entirety to
be and to read as follows:
"Majority Banks" shall mean, at any time, Banks and B-Holders
having in aggregate Aggregate Bank Commitments or Original Investments
(or, if the Commitment Termination Date has occurred, Investments), as
the case may be, in excess of sixty-six and two-thirds percent
(66-2/3%) of the Aggregate Commitment plus total Original Investment of
all B-Holders (or, if the Commitment Termination Date has occurred,
total Investment of all B-Holders) then in effect or, if the Aggregate
Commitment shall then have been terminated, such Banks and B-Holders as
together shall then own Investments in excess of sixty-six and
two-thirds percent (66-2/3%) of the Bank Investment plus total
Investment of all B-Holders at such time.
(b) The definition of "Required Banks" in Schedule X of the
Liquidity Agreement shall be, and hereby is, amended in its entirety to
be and to read as follows:
<PAGE>
"Required Banks" shall mean, at any time, Banks and B-Holders
having in aggregate Aggregate Bank Commitments or Original Investments
(or, if the Commitment Termination Date has occurred, Investments), as
the case may be, in excess of sixty-one percent (61%) of the Aggregate
Commitment plus total Original Investment of all B-Holders (or, if the
Commitment Termination Date has occurred, total Investment of all
B-Holders) then in effect or, if the Aggregate Commitment shall then
have been terminated, such Banks and B-Holders as together shall then
own Investments in excess of sixty-one percent (61%) of the Bank
Investment plus total Investment of all B-Holders at such time.
2. The Borrower represents and warrants to the Agent that:
(a) it is in full compliance with all of the material terms,
conditions and all other provisions of this Amendment, the Liquidity Agreement
and each of the other Transaction Documents, in each case as of the Effective
Date; and
(b) its representations and warranties contained in this
Amendment, the Liquidity Agreement and the other Transaction Documents are true
and correct in all material respects, in each case as though made on and as of
the Effective Date, except to the extent such representations and warranties
relate solely to an earlier date (and then as of such earlier date); and
(c) both before and after giving effect to this Amendment, no
Termination Event nor Potential Termination Event has occurred and is continuing
or would result from the execution and delivery of this Amendment or any other
document arising in connection with or pursuant to this Amendment; and
(d) this Amendment has been duly authorized, executed and
delivered on its behalf, and each of (i) the Liquidity Agreement, both before
being amended and supplemented hereby and as amended and supplemented hereby,
(ii) each of the other Transaction Documents to which it is a party and, (iii)
this Amendment, constitutes its legal, valid and binding obligation enforceable
against it in accordance with the terms hereof or thereof.
3. Section I of this Amendment shall become effective only once all of
the pre-conditions set forth below in this Section 3 have been satisfied:
(a) the second amendment of the Transfer Agreement, the second
amendment of the Security Agreement and the first amendment of the
B-Certificate, each dated as of the date hereof, shall be effective;
and
(b) the Agent has received, in form and substance satisfactory
to the Agent, all documents, certificates and opinions as the Agent may
reasonably request and all other matters incident to the execution
hereof are satisfactory to the Agent.
4. The Liquidity Agreement, as amended and supplemented hereby or as
contemplated herein, and all rights and powers created thereby and thereunder or
under the other Transaction Documents, and all other documents executed in
connection therewith, are in all respects ratified and confirmed. From and after
the Effective Date, the Liquidity Agreement shall be deemed to be amended and
supplemented as herein provided, and, except as so amended and supplemented, the
Liquidity Agreement, each of the other Transaction Documents and all other
documents executed in connection therewith shall remain in full force and
effect.
<PAGE>
5. This Amendment may be executed in two or more counterparts, each of
which shall constitute an original but both or all of which, when taken
together, shall constitute but one instrument.
Please signify your agreement and acceptance of the foregoing by
executing this Amendment in the space provided below.
Very truly yours,
ABN AMRO BANK N.V., as Agent
By: /s/ Thomas J. Educate
-------------------------
Title: Vice President
By: /s/ Jon R. Bottorf
-------------------------
Title: Group Vice President
Accepted and Agreed to:
GREAT LAKES CREDIT CORP., as Borrower
By: /s/ Charles J. Hansen
-------------------------
Titled: Vice President and Secretary
Consented to:
LASALLE NATIONAL BANK, as Collateral Agent
By: /s/ Brian D. Ames
-------------------------
Title: Trust Officer
EXHIBIT 11.1
Carson Pirie Scott & Co. and Subsidiaries
Computation of Per Share Earnings
(dollars in thousands, except per share amounts)
Three months ended
-------------------------------
August 2, 1997 August 3, 1996
-------------------------------
Net income $1,627 $2,780
========= =========
Primary:
Weighted average number of
common shares outstanding 15,866,071 16,223,009
Weighted average number of
common share equivalents--
stock options 581,586 559,002
----------- ---------
Total common and
common equivalent shares 16,447,657 16,782,011
----------- -----------
Primary net income per share $0.10 $0.17
========== ==========
Fully Diluted:
Weighted average number of
common shares outstanding 15,866,071 16,223,009
Weighted average number of
common share equivalents--
stock options 619,100 559,002
---------- ---------
Total common and common
equivalent shares 16,485,171 16,782,011
----------- -----------
Fully diluted net
income per share $0.10 $0.17
=========== ===========
Primary net income per share was computed using the treasury stock method,
assuming common share purchases at the average market price of the common shares
for the period.
Fully diluted net income per share was computed using the treasury stock method,
assuming common share purchases at the greater of the average market price of
the common shares for the period or the ending price of the common shares.
<PAGE>
Carson Pirie Scott & Co. and Subsidiaries
Computation of Per Share Earnings
(dollars in thousands, except per share amounts)
Six months ended
-------------------------------
August 2, 1997 August 3, 1996
-------------------------------
Net income $4,236 $12,466
========= =========
Primary:
Weighted average number of
common shares outstanding 15,894,157 16,274,457
Weighted average number of
common share equivalents--
stock options 584,474 516,793
----------- ---------
Total common and
common equivalent shares 16,478,631 16,791,250
----------- -----------
Primary net income per share $0.26 $0.74
========== ==========
Fully Diluted:
Weighted average number of
common shares outstanding 15,894,157 16,274,457
Weighted average number of
common share equivalents--
stock options 618,822 545,485
---------- ---------
Total common and common
equivalent shares 16,512,979 16,819,942
----------- -----------
Fully diluted net
income per share $0.26 $0.74
=========== ===========
Primary net income per share was computed using the treasury stock method,
assuming common share purchases at the average market price of the common shares
for the period.
Fully diluted net income per share was computed using the treasury stock method,
assuming common share purchases at the greater of the average market price of
the common shares for the period or the ending price of the common shares.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS OF AUGUST 2, 1997 AND
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED AUGUST 2, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> AUG-02-1997
<CASH> 17,887
<SECURITIES> 0
<RECEIVABLES> 237,398
<ALLOWANCES> 0
<INVENTORY> 198,502
<CURRENT-ASSETS> 473,417
<PP&E> 190,220
<DEPRECIATION> 0
<TOTAL-ASSETS> 713,517
<CURRENT-LIABILITIES> 165,829
<BONDS> 0
0
0
<COMMON> 158
<OTHER-SE> 357,716
<TOTAL-LIABILITY-AND-EQUITY> 713,517
<SALES> 501,899
<TOTAL-REVENUES> 501,899
<CGS> 322,023
<TOTAL-COSTS> 322,023
<OTHER-EXPENSES> 164,545
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,318
<INCOME-PRETAX> 7,013
<INCOME-TAX> 2,777
<INCOME-CONTINUING> 4,236
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,236
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
</TABLE>
