<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended October 31, 1998
Commission File Number 000-24328
RICHMAN GORDMAN 1/2 PRICE STORES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 47-0771211
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
12100 WEST CENTER ROAD, OMAHA, NEBRASKA 68144
(Address of principal executive offices) (zip code)
(402) 691-4000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
--- ---
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
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Class of Common Stock Outstanding at October 31, 1998
- --------------------- -------------------------------
Common Stock:
Series A 19,260,000 shares
Series B Option 10,200,000 shares
<PAGE> 2
RICHMAN GORDMAN 1/2 PRICE STORES, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
PAGE
----
PART I - FINANCIAL INFORMATION
<S> <C> <C>
Item 1 - Financial Statements (Unaudited)
Consolidated Balance Sheets as of
October 31, 1998 and January 31, 1998......................................3
Consolidated Statements of Operations -
Three Months and Nine Months Ended
October 31, 1998 and November 1, 1997.................................4
Consolidated Statements of Cash Flows -
Nine Months Ended October 31, 1998
and November 1, 1997..................................................5
Notes to Consolidated Financial Statements.....................................6 - 7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................................................8 - 12
PART II - OTHER INFORMATION
Items 1-3 - None...........................................................................13
Item 4 - Submission of Matters to a Vote of Security Holders............................13
Item 5 - Other Information..............................................................13
Item 6 - Exhibits and Reports on Form 8-K...............................................13
Signatures ...............................................................................15
Exhibit Index .......................................................................................16
</TABLE>
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RICHMAN GORDMAN 1/2 PRICE STORES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
OCTOBER 31, 1998 JANUARY 31, 1998 NOVEMBER 1, 1997
---------------- ---------------- -----------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 464,759 $ 453,830 192,885
Accounts receivable, less allowance for doubtful
accounts of $775,017 and $708,909 1,434,934 1,172,613 1,319,426
Merchandise inventories
Inventories 35,519,709 25,435,507 37,004,911
Prepaid inventories 153,469 2,224,725 3,220,017
LIFO reserves (6,508,852) (6,298,851) (7,731,083)
------------ ------------ ------------
Total Merchandise Inventories 29,164,326 21,361,381 32,493,845
Prepaid expenses and other current assets 2,125,190 1,500,062 1,893,266
------------ ------------ ------------
Total current assets 33,189,209 24,487,886 35,899,422
PROPERTY, BUILDINGS AND EQUIPMENT, net 16,622,847 12,698,277 13,190,926
OTHER ASSETS 287,147 74,124 161,624
------------ ------------ ------------
$ 50,099,203 $ 37,260,287 $ 49,251,972
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit borrowings $ 11,785,280 $ 2,946,658 $ 17,824,083
Accounts payable 11,150,551 9,478,564 8,979,855
Accrued expenses 5,352,347 5,556,870 4,937,131
Taxes accrued and withheld 2,893,102 2,607,020 2,528,211
Current portion of long-term debt 104,347 2,100,201 4,163,441
Current maturites of capital lease obligations 984,272 1,273,386 1,322,467
------------ ------------ ------------
Total current liabilities 32,269,899 23,962,699 39,755,188
LONG TERM NOTE PAYABLE, net of current portion 6,645,653 -- --
CAPITAL LEASE OBLIGATIONS, net of current portion 7,185,529 7,985,563 8,285,996
OTHER LONG-TERM LIABILITIES 317,576 450,011 723,380
STOCKHOLDERS' EQUITY:
Common stock
Series A common stock: $.01 par value; 19,800,000
shares authorized; 19,260,000 shares issued 192,600 192,600 192,600
Series B option common stock: $.01 par value; 10,200,000
shares authorized, issued and outstanding 102,000 102,000 102,000
Paid-in capital 4,562,886 4,562,886 4,562,886
Retained earnings (accumulated deficit) (951,220) 230,248 (4,144,358)
Less: Treasury Stock, at cost, 2,565,000 shares (225,720) (225,720) (225,720)
------------ ------------ ------------
Total stockholders' equity 3,680,546 4,862,014 487,408
------------ ------------ ------------
$ 50,099,203 $ 37,260,287 $ 49,251,973
============ ============ ============
</TABLE>
See notes to consolidated financial statements.
3
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RICHMAN GORDMAN 1/2 PRICE STORES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
OCTOBER 31, 1998 NOVEMBER 1, 1997 OCTOBER 31, 1998 NOVEMBER 1, 1997
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
NET SALES:
Sales, excluding leased business $ 49,510,721 $ 47,184,821 $ 129,974,306 $ 120,493,403
Sales, leased business
(department leased in 1998) -- 3,938,084 -- 10,680,316
------------- ------------- ------------- -------------
NET SALES 49,510,721 51,122,905 129,974,306 131,173,719
COST OF SALES 31,810,706 32,819,996 83,756,991 84,811,275
------------- ------------- ------------- -------------
Gross Profit 17,700,016 18,302,909 46,217,315 46,362,444
LICENSE FEE INCOME 650,709 -- 1,745,827 --
OPERATING AND
ADMINISTRATIVE EXPENSES 17,583,004 17,422,402 47,407,748 49,510,199
------------- ------------- ------------- -------------
Income (Loss) from operations 767,720 880,507 555,393 (3,147,755)
------------- ------------- ------------- -------------
INTEREST EXPENSE 579,661 743,483 1,736,862 2,250,361
------------- ------------- ------------- -------------
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAX 188,060 137,024 (1,181,468) (5,398,116)
PROVISION FOR INCOME TAXES -- -- -- --
------------- ------------- ------------- -------------
NET INCOME (LOSS) $ 188,060 $ 137,024 $ (1,181,468) $ (5,398,116)
============= ============= ============= =============
BASIC AND DILUTED
INCOME (LOSS) PER COMMON SHARE $ 0.01 $ 0.01 $ (0.04) $ (0.20)
============= ============= ============= =============
WEIGHTED AVERAGE
SHARES OUTSTANDING 26,895,000 26,895,000 26,895,000 26,895,000
============= ============= ============= =============
</TABLE>
4
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RICHMAN GORDMAN 1/2 PRICE STORES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
OCTOBER 31, 1998 NOVEMBER 1, 1997
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (1,181,468) $ (5,398,116)
Adjustments to reconcile net loss to
Net cash used by operating activities:
Depreciation and amortization 1,516,715 1,601,806
Gain on sale of land and equipment (150,298) --
LIFO provision (credit) 210,000 (131,665)
Net changes in assets and liabilities:
Accounts receivable (262,321) (537,115)
Merchandise inventory (8,012,945) (7,047,260)
Prepaid expenses and other current assets (625,097) (9,776)
Other assets (213,023) 32,372
Accounts payable 1,671,343 1,941,195
Other accrued expenses (36,807) 660,679
------------ ------------
Net cash used in operating activities (7,083,901) (8,887,880)
============ ============
CASH FLOWS FROM INVESTING ACTIVITIES:
Net capital expenditures (5,580,859) (1,126,568)
Proceeds from sale of land 289,873 770,000
------------ ------------
Net cash used in investing activities (5,290,986) (356,568)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from line of credit borrowings 8,838,622 10,542,351
Payments on obligations under capitalized leases (1,089,148) (985,864)
Proceeds from long term note payable 6,750,000 --
Payments on unsecured creditor obligations (2,099,556) (426,595)
Payments on long term notes (14,102) (80,826)
------------ ------------
Net cash provided by financing activities 12,385,816 9,049,066
------------ ------------
NET INCREASE (DECREASE) IN CASH 10,929 (195,382)
CASH, Beginning of period 453,830 388,267
------------ ------------
CASH, End of period $ 464,759 $ 192,885
============ ============
</TABLE>
5
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RICHMAN GORDMAN 1/2 PRICE STORES, INC. AND SUBSIDIARY
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. MANAGEMENT REPRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information. In the opinion of management, all
adjustments necessary for a fair presentation of the results of
operations for the interim periods have been included. All such
adjustments are of a normal recurring nature. Because of the seasonal
nature of the business, results for interim periods are not necessarily
indicative of a full year's operations. The accounting policies followed
by Richman Gordman 1/2 Price Stores, Inc. and subsidiary (the "Company")
and additional footnotes are reflected in the audited consolidated
financial statements contained in the Annual Report on Form 10-K of the
Company for the fiscal year ended January 31, 1998.
2. DESCRIPTION OF BUSINESS
The Company operated 32 1/2 Price Stores as of October 31, 1998 and
November 1, 1997. During the past year, the Company has closed one store
and opened one store. The 1/2 Price Store concept is to offer instantly
recognizable brand name merchandise at prices up to one-half off
department and specialty store regular prices through a visually
appealing and well organized store environment that presents strong
clarity of offer. On October 20, 1993, the Company emerged from Chapter
11 of the United States Bankruptcy Code pursuant to a confirmed Plan of
Reorganization (the "Plan"). On July 15, 1998, the Company escrowed the
final payment owed to pre-petition creditors under the Plan. Debt
payments to creditors totaled $26.6 million over the term of the Plan.
3. MERCHANDISE INVENTORIES
Merchandise inventories are stated at the lower of cost (on a last-in,
first-out, or LIFO basis) or market. Total inventories would have been
higher at October 31, 1998 and January 31, 1998, by $6,508,852 and
$6,298,851 respectively, had the FIFO (first-in, first-out) method been
used to determine the cost of all inventories. Working capital and
stockholders' equity would also be increased by these amounts under FIFO.
Quarterly LIFO inventory determinations reflect assumptions regarding
fiscal year-end inventory levels and the estimated impact of annual
inflation.
4. INCOME TAXES
As of January 31, 1998 (the Company's most recent tax year-end), the
Company had net operating loss carryforwards of approximately $28
million, which expire through 2012. A valuation allowance has been
provided against this net operating loss benefit until
6
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realization of these benefits becomes more likely than not. No income tax
benefit was recorded for any part of fiscal 1998 and 1997 because of the
uncertainty of the realization of such benefits in the future.
5. SERIES B OPTION
The Company and the former preferred shareholder's designee have the
first and second option, respectively, to purchase all or a portion of
the 10,200,000 shares of Series B Option Common Stock at a price equal to
the appraised fair value of the stock determined as of July 16, 1998, the
business day following the date on which the final payment to the
unsecured creditors was escrowed. The firm of Murray, Devine & Co.
of Philadelphia, PA appraised the stock at a value of $0.076 per share.
On October 26, 1998, the Company disclosed its intention to repurchase
all Series B shares, in accordance with the terms of the Plan. On or
prior to January 28, 1999, each record holder of Series B Stock as of
July 16, 1998, will receive payment for all of its registered shares and
all Series B stock shall be deemed canceled as of January 28, 1999.
6. EARNINGS PER SHARE
Financial Accounting Standards Board (FASB) statement No. 128, Earning
Per Share, requires dual presentation of Basic and Diluted earnings per
share for all periods for which an income statement is presented. Basic
earnings per share are based on the weighted average outstanding common
shares during the period. Diluted earnings per share are based on the
weighed outstanding common shares and the effects of all dilutive
potential common shares, such as stock options. All prior periods
earnings per share have been restated in accordance with SFAS No. 128.
7. LONG TERM DEBT
During the second quarter of fiscal 1998, the Company secured mortgage
financing on its distribution center. The $6,750,000 mortgage bears
interest at 7.47% with a 25 year amortization schedule for the monthly
payments and a balloon payment due in ten (10) years.
8. ACCOUNTING PRONOUNCEMENT
In June 1997, the FASB issued SFAS No. 131, Disclosure About Segments of
an Enterprise and Related Information, which will be effective later in
1998. SFAS No. 131 establishes standards for the way public enterprises
report information about operating segments. The Company currently
complies with most provisions of this statement and any incremental
disclosure required by that statement in the Company's 1998 10-K is
expected to be minimal.
7
<PAGE> 8
PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company's key performance indicators for the third quarter and nine months
of fiscal 1998 in terms of sales, profitability and liquidity are as follows:
COMPARABLE STORE SALES
1998 1997
---- ----
Third Quarter +2.8% +1.3%
First Nine Months +8.1% (4.9)%
PROFITABILITY
<TABLE>
<CAPTION>
Third Quarter
(all dollars in thousands)
---------------------------------------------------
1998 1997 Change
---------------- ------------ ------------
<S> <C> <C> <C>
Gross margin percentage 35.7% 35.8% (0.1)%
Operating and interest expenses, % of sales 36.7% 35.5% 1.2%
Operating and interest expenses $ 18,163 $ 18,166 0.0%
Operating Income $ 768 $ 881 $ (113)
Net Income $ 188 $ 137 $ 51
</TABLE>
<TABLE>
<CAPTION>
First Nine Months
(all dollars in thousands)
---------------------------------------
1998 1997 Change
---------- ---------- -----------
<S> <C> <C> <C>
Gross margin percentage 35.6% 35.3% 0.3
Operating and interest expenses, % of sales 37.8% 39.5% (1.7)%
Operating and interest expenses $ 49,145 $ 51,761 (5.1)%
Operating Income (loss) $ 555 $ (3,148) $ 3,703
Net loss $ (1,181) $ (5,398) $ 4,217
</TABLE>
8
<PAGE> 9
LIQUIDITY
<TABLE>
<CAPTION>
First Nine Months
(all dollars in thousands)
---------------------------------------------
1998 1997 Change
----------- ----------- ----------
<S> <C> <C> <C>
Average unused availability on line of credit $ 10,176 $ 7,643 33.1%
Unused availability at end of period $ 12,197 $ 7,697 58.5%
Average borrowings on line of credit $ 9,406 $ 12,992 (27.6)%
Borrowings on line of credit at end of period $ 11,785 $ 17,824 (33.9)%
Cash flow from operations $ (7,083) $ (8,888) 20.3%
Average investment in inventory, at retail $ 51,814 $ 51,190 1.2%
(Excluding footwear which was leased for 1998)
</TABLE>
RESULTS OF OPERATIONS
The following table sets forth the components of the Consolidated Statements of
Operations as a percent to Sales:
<TABLE>
<CAPTION>
Third Quarter First Nine Months
Three Months Ended Nine Months Ended
----------------------- -------------------
October November October November
31, 1998 1, 1997 31, 1998 1, 1997
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of Sales 64.3% 64.2% 64.4% 64.7%
----- ----- ----- -----
Gross Profit 35.7% 35.8% 35.6% 35.3%
License Fee Income 1.3% -- 1.3% --
Operating and Administrative Expenses 35.5% 34.1% 36.5% 37.7%
----- ----- ----- -----
Income (Loss) from Operations 1.6% 1.7% 0.4% (2.4)%
Interest Expense 1.2% 1.5% 1.3% 1.7%
----- ----- ----- -----
Net Income (Loss) Before Income for Taxes 0.4% 0.3% (0.9)% (4.1)%
Provision for Income Taxes -- -- -- --
----- ----- ----- -----
Net Income (Loss) 0.4% 0.3% (0.9)% (4.1)%
===== ===== ===== =====
</TABLE>
Net Sales for the third quarter of fiscal 1998 decreased by $1,612,000, or 3.2%,
compared to net sales in the third quarter of fiscal 1997. Net Sales for the
first nine months of fiscal 1998 decreased by $1,200,000, or 0.9%, compared to
net sales in the first nine months for 1997. The comparable store sales for the
third quarter increased by $1,293,000, or 2.8%. Comparable store sales
year-to-date increased by 8.1%. Comparable store sales exclude sales associated
with the footwear business, which was leased to Shoe Corporation of America in
the fourth quarter of 1997. The increases in comparable store sales were
partially offset by the impact of leasing the footwear business starting in the
fourth quarter of fiscal 1997. Comparable store sales have increased in each of
the nine months of fiscal 1998. Year-to-date, six of seven merchandise divisions
have comparable store sales increases. These results are attributable to
increasing the proportion of merchandise in highly recognizable name brands,
adjusting the merchandise mix to higher growth departments, shifting the
marketing strategy to showcase the merchandise through Sunday newspaper
preprints and television and, improving the execution in the stores.
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Gross Profit for the third quarter in 1998 decreased by 3.3%. The gross margin
percentage was 35.7% for the third quarter of fiscal 1998 compared to 35.8% in
the third quarter of fiscal 1997. Gross profit decreased $145,000, or 0.3%, in
the first nine months of fiscal 1998 compared to the first nine months of 1997.
The gross margin percentage was 35.6% in the first nine months of 1998 versus
35.3% in fiscal 1997.
Operating and Administrative Expenses increased by $160,602 or 0.9% in the third
quarter of fiscal 1998 compared to the same period in fiscal 1997. As a percent
of net sales, operating and administrative expenses were 35.5% in the third
quarter of fiscal 1998 compared to 34.1% in fiscal 1997. Operating and
Administrative expenses decreased by $2,102,451, or 4.2%, for the first nine
months of fiscal 1998 compared to fiscal 1997. As a percent of net sales,
operating and administrative expenses were 36.5% and 37.7% respectively, for the
first nine months of 1998 and 1997. The increase in operating and administrative
expenses during the third quarter was primarily due to the $201,000 of
pre-opening expenses associated with a new store opened in the second quarter of
fiscal 1998. The year-to-date decrease in operating and administrative expenses
was primarily the result of reduced costs at the corporate offices and
distribution center, lower depreciation and the closing of a low sales volume
store in fiscal 1997.
Interest Expense (Net) decreased by $163,800, or 22.0%, in the third quarter of
fiscal 1998 compared to 1997. For the first nine months of 1998 versus 1997,
interest expense decreased by $513,500, or 22.8%. The decrease in interest
expense was a result of decreases in borrowings on the Company's revolving line
of credit.
Net Income for the third quarter increased by $51,000, or 37.2%, compared to a
year ago. Net loss for the first nine months of fiscal 1998 was $1,182,000
compared to a $5,396,000 loss in fiscal 1997, an improvement $4,214,000, or
78.1%.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity, as defined by line of credit borrowings and excess
availability, has continued to strengthen significantly compared to last year.
Borrowings on the line of credit at quarter-end were $11,785,000, which was
33.9% less than a year ago. Average unused availability has been $10,176,000 in
fiscal 1998, compared to $7,643,000 in fiscal 1997, an improvement of
$2,533,000, or 33.1%. The low point in availability so far this year has been
$8.3 million.
Several factors have contributed to the Company's improved liquidity, including
increased inventory turnover, improved trade credit and the distribution center
mortgage. Inventory prepayments have declined over the past year. During the
third quarter of fiscal 1998, the Company prepaid 1% of its inventory purchases
compared to 31% in the third quarter for fiscal 1997. Over 99% of the Company's
inventory purchases are now made on normal credit terms from vendors and/or
factors. Approximately $1.5 million of the $6.0 million of the reduction in
borrowings on the line of credit at quarter end as compared to borrowings at the
end of the third quarter of fiscal 1997 was due to the proceeds from the
mortgage on the distribution center.
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During the second quarter of fiscal 1998, the Company secured an amendment to
its line of credit agreement with Congress Financial Corporation (Central). The
amendment (1) provides a $500,000 seasonal overadvance facility from September
15 to December 15 of each year, (2) increases the advances available under
certain classes of inventory by $250,000, (3) increases the maximum size of the
line from $27.5 million to $30 million from September 15 to December 15 each
year, and (4) extends the term of the agreement by one year to October 2000.
This financing agreement carries an interest rate of 1% over prime and has no
net worth, working capital or profitability covenants nor any clean down
provision.
The Company's primary ongoing cash requirements are for operating expenses and
inventory. The Company's primary sources for funds for its business activities
are cash from operations and borrowings under its revolving credit facility with
Congress Financial Corporation (Central). In addition, short term trade credit
(normally for 30-day periods) represents a significant source of financing for
merchandise inventories. The Company believes its cash flow sources will be
adequate to fund ongoing cash requirements.
SEASONALITY AND INFLATION
The Company's business is seasonal, with the back-to-school season (primarily
August) historically contributing approximately 10% of annual sales. The
Christmas season (November and December) accounts for approximately 28% of
annual sales. Sales and income are also affected by the timing of new store
openings. Although the Company's operations are influenced by general economic
conditions and inflationary pressures, the Company does not believe that
inflation has had a material effect on operations during the past three to five
years.
YEAR 2000
The Company is addressing the information technology (IT) issues surrounding the
year 2000 both in terms of IT systems and non-IT systems. Approximately 15% of
the Company's programs require some level of modification to become compliant
with the year 2000. The IT assessment has been completed and the testing phase
is expected to be completed by December 31, 1998. The non-IT assessment started
in July 1998 and is expected to be completed by December 31, 1998, including the
third party testing phase. During fiscal 1998, the Company will complete the
process of changing or replacing affected programs and fully testing the revised
versions. Management does not expect the cost of complying with the year 2000
issues to be material. The Company planned to replace several IT systems
regardless of the year 2000 issues and did not accelerate the replacement due to
year 2000. The Company's contingency plans are currently being determined and
are to be completed by December 1998. Management has determined that no material
effect or consequences on the company's results of operations is reasonably
likely to occur although no assurances can be given in that regard.
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FORWARD-LOOKING STATEMENTS
In this section of this Report on Form 10-Q, the Company and persons acting on
its behalf have made certain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 (the "1995 Act"). These
forward-looking statements are identified as including terms such as "may",
"will", "should", "anticipates", expects", "plans", "intends", or similar
language. Such statements are made in good faith by the Company and such persons
pursuant to the safe-harbor provisions of the 1995 Act. In connection with these
safe-harbor provisions, the Company has identified in its Annual Report to
Shareholders for the fiscal year ended January 31, 1998 (the "Annual Report"),
important factors which could cause actual results to differ materially from
those contained in any forward-looking statement made by or on behalf of the
Company. The Company further cautions that the factors identified in the Annual
Report are not exhaustive or exclusive. The Company does not undertake to update
any forward-looking statement which may be made from time to time by or on
behalf of the Company.
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PART II - OTHER INFORMATION
Items 1 - 3.
There are no items to report.
Item 4. - Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of shareholders on October 29, 1998.
A quorum of 22,838,495 shares, or approximately 84% of issued and
outstanding shares as of September 18, 1998, were represented in person
or by proxy. The sole proposal considered by shareholders at the meeting
was the election of Directors.
The shareholders elected seven Directors to serve until the 1999 Annual
Meeting of Shareholders or until the respective successors shall be
elected and qualified. These directors and the votes cast in favor of and
withheld with respect to each are as follows:
<TABLE>
<CAPTION>
Director For Withheld
- -------- --- --------
<S> <C> <C>
Jeffrey J. Gordman 19,687,199 3,151,296
Jerome P. Gordman 19,687,199 3,151,296
Nelson T. Gordman 19,687,199 3,151,296
Stewart M. Kasen 19,664,124 3,174,371
Seth J. Lehr 19,687,199 3,151,296
Thomas J. Noonan, Jr 19,687,199 3,151,296
Janice D. Stoney 19,687,199 3,151,296
</TABLE>
Item 5. - Other Information
On October 26, 1998, the Company announced its intention to exercise
its option to repurchase all of the issued and outstanding shares of
the Company's Series B stock. The Company hired the firm of Murray
Devine & Co. (the "Appraiser") to perform the appraisal of the Series B
Option Common Stock.
On or prior to, January 28, 1999, the Company shall cause the Stock
Transfer Agent to mail to each record owner of Series B Stock as of
July 16, 1998 (a "Record Holder") the applicable exercise option price,
which shall be equal to the number of shares shown on the records of
the Company to be held by such Record Holder on July 16, 1998, times
$0.076. The Series B Stock shall be deemed canceled as of January 28,
1999, and all certificates representing such Series B Stock shall be
null and void as of such date.
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Item 6 - Exhibits and Reports on Form 8-K.
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a report on Form 8-K on October 2, 1998 with
respect to Item 5 thereof. The 8-K announced the valuation
appraisal of Series B Option Common Stock to be $0.076.
The Company filed a report on Form 8-K on October 28, 1998
with respect to Item 5 thereof. The 8-K disclosed the
Company's intention to repurchase all Series B stock in
accordance with the terms of the Plan of Reorganization.
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<PAGE> 15
PART II - OTHER INFORMATION
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 thereunto duly authorized.
RICHMAN GORDMAN 1/2 PRICE
STORES, INC.
Date: December 14, 1998 By: /s/ Jeffrey J. Gordman
----------------- ------------------------------
Jeffrey J. Gordman, President
and Chief Executive Officer
Date: December 14, 1998 By: /s/ Michael A. Mallaro
----------------- -----------------------------
Michael A. Mallaro, Vice
President of Finance, Chief
Financial Officer, Secretary
and Treasurer
15
<PAGE> 16
EXHIBIT INDEX
Exhibit Description Page
- ------- ----------- ----
(27) Financial Data Schedule 17
16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> OCT-31-1998
<CASH> 464,759
<SECURITIES> 0
<RECEIVABLES> 2,209,951
<ALLOWANCES> 775,017
<INVENTORY> 29,164,326
<CURRENT-ASSETS> 33,189,209
<PP&E> 50,837,053
<DEPRECIATION> 34,214,206
<TOTAL-ASSETS> 50,099,203
<CURRENT-LIABILITIES> 32,269,899
<BONDS> 13,831,182
0
0
<COMMON> 294,600
<OTHER-SE> 3,385,946
<TOTAL-LIABILITY-AND-EQUITY> 50,099,203
<SALES> 129,974,306
<TOTAL-REVENUES> 129,974,306
<CGS> 83,756,991
<TOTAL-COSTS> 83,756,991
<OTHER-EXPENSES> 47,407,748
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,736,862
<INCOME-PRETAX> (1,181,468)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,181,468)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,181,468)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
