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UNITED STATES
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): July 15, 1998
Richman Gordman 1/2 Price Stores, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-24328 47-0771211
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No)
12100 West Center Road, Omaha, Nebraska 68144
(Address of principal executive offices)
Registrant's telephone number, including area code:
(402) 691-4000
Not Applicable
(Former name or former address, if changed since last report.)
Page 1 of 8
Exhibit Index appears on page 5.
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS
Distribution Center Financing
On July 15, 1998, the Registrant consummated a mortgage on its
distribution center in Omaha, Nebraska (the "Distribution Center") in
conjunction with several transactions related to the facility. The Distribution
Center consists of three separate buildings and the land on which the buildings
are located. Prior to the consummation of these transactions, the Registrant
owned one of these buildings, the land beneath two of the buildings and a
contiguous parcel of unimproved land. The remaining buildings and land
comprising the Distribution Center (collectively, the "GC Properties") were
owned by Gordman Properties Company ("GC"), a Nebraska partnership, which is
owned by Jerome P. Gordman and Nelson T. Gordman, both directors of the
Registrant.
The Registrant obtained a mortgage loan from Patrician Financial Company
Limited Partnership, a Massachusetts limited partnership, in the amount of
$6,750,000, bearing interest at the rate of 7.47% per annum, which is secured by
a deed of trust with regard to the Distribution Center. To facilitate obtaining
the mortgage financing, the Registrant (through a wholly-owned subsidiary)
purchased from GC the GC Properties for a total price of $3,121,400. The
proceeds were used as follows: $1,663,000 paid into escrow to prepetition
creditors as described below; $363,000 placed as temporary deposits required
under the mortgage agreement; $143,000 paid in loan fees and commissions; and
the remaining $1,460,000 will be used to reduce borrowings under the
Registrant's line of credit agreement with Congress Financial Corporation
(Central).
Final Payment Made under Chapter 11 Plan of Reorganization
Approximately $1,663,000 of the mortgage loan proceeds was used to pay
into escrow the balance of the Registrant's remaining obligation to its Class 3
Creditors (the "Creditors") on July 15, 1998. This payment represents the last
in a series of payments to the Creditors totaling $25,690,000 under the Plan.
Series B Option Common Stock
On June 25, 1998, the Registrant's stockholders approved an amendment to
the Registrant's Amended and Restated Certificate of Incorporation. The
amendment reflects the terms of the option (the "Option") to which the shares of
the Registrant's Series B Option Common Stock (the "Series B Stock") are
subject, as affected by the Waiver of Creditors' Committee of Deferred Payment
of 1998 Minimum Payment granted on January 24, 1998. As so amended, the record
date with respect to the exercise of the Option is the first business day
following the escrow of the balance of the remaining obligation to the Creditors
(the "Valuation Date"), and the exercise price is the fair market value on the
Valuation Date. To exercise the Option, the Registrant must appoint an
investment
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banker within 30 days following the Valuation Date to appraise the value of the
Series B Stock, provide notice of exercise to the holders of the Series B Stock
within 30 days after its receipt of the appraisal, and mail the payment to
Series B Stock holders within 120 days after its receipt of the appraisal.
As noted above, the final payment to the Creditors was paid into escrow
on July 15, 1998. Accordingly, for purposes of the Option, the Valuation Date is
July 16, 1998, and the investment banker must be appointed on or before August
15, 1998. The Registrant has engaged the firm of Murray, Devine & Co. to perform
the appraisal of the Series B Stock.
On July 16, 1998, the Registrant issued a news release regarding the
escrow of its remaining obligation to the Creditors and related matters. Please
see EXHIBIT 99 -- NEWS RELEASE.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
(99) Additional Exhibit -- News Release
No other exhibits are applicable.
[Remainder of page intentionally left blank.]
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SIGNATURES
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 hereunto duly authorized.
Richman Gordman 1/2 Price Stores, Inc.
Date: 7/21/98 By: /s/ Jeffrey J. Gordman
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Jeffrey J. Gordman,
President and Chief Executive Officer
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EXHIBIT INDEX
Exhibit Page
(99) Additional Exhibit -- News Release 6
No other exhibits are applicable.
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EXHIBIT (99)
ADDITIONAL EXHIBIT -- NEWS RELEASE
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News Release July 14, 1998
For Release: Immediate
Contact: Jeff Gordman, President and Chief Executive Officer,
(402) 691-4000
Re: RICHMAN GORDMAN 1/2 PRICE STORES ANNOUNCE IMPROVED
OPERATING PERFORMANCE AND INTRODUCE NEW STORE DESIGN
CONCEPT
OMAHA (Neb.) Richman Gordman 1/2 Price Stores will escrow the final payment of
$1.6 million required under its 1993 Plan of Organization on July 15. In
addition, the Company will introduce a new design concept for its stores in
conjunction with the opening of its 32nd store, which is located in St. Louis,
MO.
According to President and CEO Jeff Gordman, Richman Gordman 1/2 Price Stores'
improved financial condition and financing capacity have allowed the corporation
to escrow the creditor payment, which represents the last in a series of
required payments totaling $25.4 million over the past five years.
"Completing our obligations to creditors under the plan of reorganization is a
significant milestone for the Company, and allows us to move forward to the next
phase of growth," Gordman says. "On behalf of the Company, I would like to thank
the creditor community for its patience and support."
Richman Gordman 1/2 Price Stores, which generated sales of $193 million for
1997, attributes its financial achievements to the changes in senior management
and strategic direction that occurred in May 1996, at which time Jeff Gordman
was appointed president and chief executive officer. He joined the Company in
1990 after working for Lehman Brothers, a New York investment bank. Gordman and
his senior management team have directed the Richman Gordman 1/2 Price Stores in
achieving significant improvements in its financial performance, including
positive trends in comparable store sales, gross margins, cash flow, and four
consecutive quarters of significant improvement in profitability.
The positive results that have been achieved were the result of several key
initiatives implemented during the past two years:
- A focused merchandising strategy, involving significant expansion in the
quantity of famous name brands in a broad range of categories concentrated
on family apparel and decorative home items.
- A targeted advertising campaign primarily utilizing television and Sunday
newspaper supplements to convey the Company's selling proposition of top
quality name brands at up to 50 percent off department store regular prices
every day.
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- A renewed focus on customer service to ensure shoppers have a pleasant and
enjoyable shopping experience.
- An enhanced shopping environment with emphasis on visually appealing
merchandise presentations in easy-to-shop stores.
- More efficient utilization of assets resulting in a reduction in operating
expenses.
"As a corporation, we have worked diligently to improve our bottom line through
the implementation of these initiatives in all 31 stores," Gordman says. "We are
committed to the long-term growth of Richman Gordman 1/2 Price Stores through
the expansion of our store base in both existing and new markets. As part of our
growth strategy, we are expanding our three-store presence in the St. Louis
market with the opening of a new store on July 20."
The new St. Louis store represents a prototype of a new store design concept for
the 1/2 Price Stores. "We worked with Design Forum of Dayton, Ohio - one of the
nation's top retail design firms recognized for its work with Ann Taylor, the
Disney Store, and Land Rover - to create this new store design," he explains.
"The new store concept reflects a more upscale, unique environment through the
creative utilization of design elements, including upgraded fixtures,
merchandise presentation, signage, and graphics." The new store design will be
utilized for all the new 1/2 Price Stores, as well as the retrofitting of
several existing stores in the near future.
Richman Gordman has also secured several improvements in its line of credit
agreement with its lender Congress Financial, including a seasonable increase in
the size of its line from $27.5 million to $30 million, and an extension of the
term of the agreement from October 1999 to October 2000. "We believe this
amendment is a demonstration of the strong support we have from our primary
lender as a result of the improvements in our financial performance," Gordman
states.
Gordman is the great-grandson of the Company's founder, Sam Richman, who founded
a retail company in 1915. Richman's son-in-law Dan Gordman joined the company in
1936, and built Richman Gordman Department Stores into a 15-store chain.
Gordman, who was Jeff's grandfather, also started the 1/2 Price Stores in 1972,
expanding it into a 15-store chain by the early 1990s. Following the Company's
reorganization in 1993, the Richman Gordman stores were closed and the 1/2 Price
Stores were expanded.
The 1/2 Price Stores concept is to offer top-quality, name-brand merchandise at
up to 50 percent off department and specialty store regular prices every day.
The Company operates 31 stores across the Midwest, including Colorado, Illinois,
Iowa, Kansas, Missouri, Nebraska, Oklahoma, and South Dakota.
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