ITEM 1. BUSINESS
THE COMPANY
GENERAL HISTORY
Richman Gordman 1/2 Price Stores, Inc. (the "Company") is the outgrowth of a retail clothing business in Omaha dating back almost to the turn of the century. The Company's predecessor was formed in 1915 by Sam Richman. In 1936, his son-in-law, Dan Gordman, joined him in the business, later becoming his partner. In 1948, the Gordman family purchased the Richman family's interests, with Dan Gordman becoming the Chairman and Chief Executive Officer of Richman Gordman Stores. Until 1993, the Richman Gordman companies remained privately owned, with all of the stock owned by members of Dan Gordman's family.
RICHMAN GORDMAN STORES, INC.
Richman Gordman Stores, Inc. was the parent company of 1/2 Price Stores, a regional retailer in the Midwest that operated the 1/2 Price Stores, a chain of off-price stores offering first quality merchandise at one-half the traditional department store full retail prices or one-half of manufacturers' suggested retail price. Richman Gordman Stores was also the parent company of Richman Gordman Department Stores which operated a separate chain of moderate-end and full-price department stores. Richman Gordman Stores was a holding company owning all of the Common Stock of 1/2 Price Stores and Richman Gordman Department Stores.
RICHMAN GORDMAN DEPARTMENT STORES, INC.
Richman Gordman Department Stores, Inc. was a moderately priced department store chain which at its peak consisted of 15 stores located in five Midwestern states. Occupying a niche between mass merchants and traditional department stores, Richman Gordman Department Stores was positioned as a promotional, popularly priced, branded, family department store. Three major factors led to Richman Gordman Department Stores' eventual loss in market share and financial stability: (i) national retailing trends favoring discount shopping; (ii) a decision to upscale the merchandise offered by Richman Gordman Department Stores; and (iii) an increasing overhead burden.
As part of the reorganization discussed below, and based on the above factors, management decided to convert many of the Richman Gordman Department Stores chain to the 1/2 Price Stores; those Richman Gordman Department Stores that were not converted to 1/2 Price Stores were closed.
1/2 PRICE STORES, INC.
The first 1/2 Price store opened in 1972 as an outlet for marked-down Richman Gordman Department Stores merchandise. The concept evolved into an independent chain with separate buying, operations, advertising and human resource staffs.
The 1/2 Price concept is to offer top quality, name brand merchandise at half of department store and specialty store regular prices. 1/2 Price Stores is able to execute this concept through opportunistic buying strategies including the purchase of manufacturers' close-outs and overstocks, in season purchases, other retailers' canceled orders, merchandise made from excess piece goods and bulk production overruns. The quality and negotiating strength of the 1/2 Price Stores' buying staff have enabled the 1/2 Price Stores to acquire merchandise at substantial discounts from normal wholesale prices, sell at up to half off department and specialty store regular prices and achieve strong gross margins. Please see "ITEM 1. BUSINESS -- THE COMPANY -- MERCHANDISING" for a discussion of the Company's current merchandise strategy.
THE BANKRUPTCY
PLAN OF REORGANIZATION
On June 17, 1992, Richman Gordman Stores, Richman Gordman Department Stores and 1/2 Price Stores filed for protection under the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Nebraska. During the bankruptcy proceedings, the Companies operated as debtors-in-possession.
On October 5, 1993, the Bankruptcy Court confirmed the Debtors' First Amended Joint Plan of Reorganization Under Chapter 11, as modified (the "Plan"), and the Plan became effective on October 20, 1993 (the "Effective Date"). The Bankruptcy Court approved the Company's application to close the case during 1997. The Bankruptcy Court retains jurisdiction to interpret the terms of and settle disputes arising from the Plan through the term of the Plan. The Plan provided for the issuance of Common Stock to former shareholders and management (the "Series A Common Stock") and to unsecured creditors (the "Series B Option Common Stock").
Under the Plan, the Creditors' Committee, as the representative of the Company's general unsecured creditors (the "Creditors"), will continue in existence during the term of the Plan for the following primary purposes: (1) monitoring compliance with the Plan; (2) monitoring defaults and granting waivers and modifications of the Plan; and (3) exercising rights and duties expressly granted in the Plan.
The Company also issued a secured note in the amount of $4 million to Harris Trust and Savings Bank ("Harris Bank") in partial satisfaction of pre-bankruptcy obligations. This note was payable in equal installments over five years, and was paid in full during 1997. Harris Bank was also the largest unsecured creditor and, at March 30, 1998, held approximately
10.4% of the Company's Series B Option Common Stock on a fully diluted basis. The Company also has an obligation to pay $200,205 to the Dan Gordman Fund, an obligation which arose out of the personal portion of an insurance policy on the life of Dan Gordman which was paid to Harris Bank in partial satisfaction of its claim described above. This remaining obligation is scheduled to be paid in full in fiscal 1998.
The Plan provided that Richman Gordman Stores and 1/2 Price Stores merge into Richman Gordman Department Stores. These mergers took place on the Effective Date. Additionally, pursuant to the Plan, the Company was formed and Richman Gordman Department Stores was merged into it.
As contemplated by the Plan, on the Effective Date, the Company entered into a Credit Agreement with Congress Financial Corporation. The original agreement was for a $25 million maximum facility with a four-year term through October 20, 1997, with provisions for annual renewals unless either party gives notice of non-renewal within 90 days prior to contract expiration. The Credit Agreement is the Company's primary credit facility. The amount the Company may borrow is determined by a formula based on eligible inventory. This line of credit is secured by substantially all of the current assets of the Company, including general intangibles.
The Company subsequently amended and extended the Congress Credit Agreement. The maximum facility was increased to $27.5 million, the interest rate was reduced to 1% over the prime rate, the agreement was extended to October 20, 1999, the definition of eligible inventories was expanded, and the borrowing advance rate was increased.
PAYMENT OBLIGATIONS TO CREDITORS
On the Effective Date of the Plan, the Creditors (with claims in the approximate aggregate amount of $50,156,000) received cash in the total amount of $10,000,000. In addition, the Creditors received 10,200,000 shares of Series B Option Common Stock, or 34% of the total authorized Common Stock.
Under the Plan, the Company remains obligated to the Creditors. The following is a summary of all of the material provisions of the Company's obligation to make payments to the Creditors. The summary is qualified with reference to the complete terms and conditions of the obligation as contained in the Plan.
ANNUAL MINIMUM PAYMENT OBLIGATION
The Annual Minimum Payment obligation is an unconditional obligation to make payments in the amounts set forth in the column titled Annual Minimum Payment, on the schedule which follows. All scheduled payments received on this obligation will be applied first to accrued stated interest and then payments of stated principal. Any payments in excess of the cumulative total of stated principal and interest ($14,865,000) will be considered as payments of additional interest. To the extent the cash flow contingencies, as detailed below, allow additional payments in excess of the Annual Minimum Payment column, such
payments were to be considered prepayments of the Annual Minimum Payment obligation to be applied first to accrued stated interest (if any) and then to stated principal.
The Company operates on a fiscal year basis, and its Fiscal Years through 1998 end on the dates shown below:
ACTUAL CASH BALANCE. The Company was obligated to pay, for each of Fiscal Years 1993- 1997: (1) 100% of Actual Cash Balance, as defined in the Plan, to a maximum of Cumulative Plan Cash Balance shown above, and (2) 50% of Excess Cash Balance, as defined in the Plan. The fourth column represents the Company's original estimate of Actual Cash Balance for the Fiscal Years indicated.
OTHER TERMS. In no event will the Company be required to pay with respect to any Fiscal Year an amount which, when added to prior payments of Actual Cash Balance and Excess Cash Balance, exceeds the greater of Cumulative Minimum Payments or Cumulative Actual Cash Balance. In January, 1997, the Creditors' Committee agreed to defer for up to one year the $1.9 million payment due for Fiscal Year 1996 under the Plan. In January, 1998, the Creditors' Committee agreed to defer $1.8 million of the remaining obligation. This $1.8 million, which represents all of the remaining payments required under the Plan, is scheduled to be escrowed in three installments of $200,000 at the end of April, July and October, 1998, with the final $1.2 million escrowed on January 31, 1999. The unpaid obligation will bear interest at 12% until escrowed and is secured by an interest in the Company's distribution center. Escrowed payments will be disbursed to the creditor group on or before September 15, 1998 and March 15, 1999. Additionally, the Creditors will receive an additional amount should the Company execute a sale/leaseback or other disposition of buildings #1 and/or #3 of its distribution center prior to February 1, 2000, as the Company has agreed to disburse 1.25%
of the gross proceeds of any such sale or disposition of buildings #1 and/or #3 of its distribution center to such creditors. However, it is not certain that such a transaction will occur.
Creditors were also entitled to tax refunds, if any, for the Fiscal Years ended prior to the bankruptcy filing date in excess of an aggregate of $500,000 for those years. Also, the Creditors are entitled to payments of amounts equal to income tax benefits realized solely from the reduction of taxable income which would otherwise be reported on the Company's federal and state income tax returns for Fiscal Years 1993 through 1997 resulting from utilization of pre-bankruptcy tax attributes (i.e., net operating loss carry forwards, capital loss carry forwards (if any), alternative minimum tax credit carry forwards, charitable contribution carry forwards and general business credits including targeted job credits) and payments to Creditors. No such benefits were realized in fiscal 1997, and the Creditors are not entitled to any such tax benefits in the future.
On April 29, 1994, the Creditors were sent the annual payment for Fiscal Year 1993 required by the Plan. The payment totaled $4,152,613, composed of the following:
Payments to creditors required by the Plan for Fiscal Year 1994 in the total amount of $6,073,260 were paid on April 28, 1995, and consisted of the following amounts:
Payments to creditors required by the Plan for Fiscal Year 1995 in the total amount of $1,480,477 consisted of the following amounts:
For Fiscal Year 1995, no Annual Cash Balance up to Plan Cash Balance or Excess Cash Balance were available. The Annual Minimum Payment was computed by crediting the previous two years' payment up to Plan Cash Balance and Excess Cash Balance Payments to the required Cumulative Minimum Payment.
For Fiscal Year 1996, no Annual Cash Balance up to Plan Cash Balance or Excess Cash Balance were available. In addition, the Creditors' Committee agreed to allow the Company to defer the 1996 Minimum Payment of $1,939,000 for up to one year in exchange for a subordinated security interest in certain real and personal property associated with the Company's distribution center facility.
In Fiscal Year 1997, a payment to the creditors of $1,967,000 was escrowed on January 31, 1998 and disbursed to creditors on March 18, 1998. This payment was made in accordance with the Waiver of Creditors' Committee of Deferred Payment of 1998 Minimum Payment dated January 24, 1998, which also deferred the payment of the remaining $1.8 million obligation until fiscal 1998 (the "1998 Creditors' Committee Waiver").
SERIES B REPURCHASE OPTION
The Series B Option Common Stock is subject to an option to purchase exercisable by the Company or the Trustee of the R.G. Stock Trust in 1998 (the "Option"). Pursuant to the 1998 Creditors' Committee Waiver, the exercise date of the Option was extended until the Company fulfills its obligations under the Plan. The Option is noted upon the face of the Series B Option Common Stock certificates. If the Option is exercised, the holder or holders of shares must sell them for a price equal to the fair value of the shares, as determined by an independent appraisal on the day following the escrow of the remaining fixed obligation of $1.8 million plus accrued interest. Holders of the Series B Option Stock will not have any rights of appraisal similar to dissenters' rights if they dispute the market value as determined by the independent appraisal.
Although with respect to the Company's Fiscal Years ended January 29, 1994, and January 28, 1995, the Company made Excess Cash Balance payments of $1,444,613 and $1,832,611, respectively, to Creditors, the Company's cash position during Fiscal Year 1995 was such that all of the prior Excess Cash Balance payments were utilized to make a portion of the $5.5 million minimum payment to creditors required for Fiscal Year 1995. No Excess Cash Balance payments were generated for Fiscal Years 1996 or 1997, and no such payments will be required for Fiscal Year 1998. Therefore the Excess Cash Balance payments will result in no reduction from fair market value in the Option exercise price.
PLAN COVENANTS, DEFAULTS AND WAIVERS
The Plan contains a number of covenants. The covenants include the Company's agreement to maintain its corporate existence, to maintain its books in accordance with generally accepted accounting principles and provide reports to creditors, to pay its taxes, to keep its property free of certain liens, not to make prohibited investments, not to guarantee debts of third parties, not to make loans to other parties, not to make distributions on account of its
stock, to maintain customary insurance and to comply with environmental and pension laws. The breach of any of these covenants will result in an event of default.
The Plan also describes certain occurrences that are defined as events of default. These events include the failure to make payments pursuant to the annual Minimum Payment Obligation, the failure to perform or observe any of the terms or provisions of the Plan, the entering of an order of relief under the Bankruptcy Code is granted to or against the Company, the Company voluntarily or involuntarily makes an assignment for the benefit of creditors, applies for or consents to the appointment of a receiver, trustee, custodian or similar officer for all or for any substantial part of its assets, voluntarily or involuntarily institutes any bankruptcy, insolvency, liquidation, reorganization, readjustment, dissolution, or similar proceeding, the entry of a judgment against the Company in an amount exceeding the Company's insurance coverage by more than $200,000.
Following an event of default, a majority of the Creditors' Committee may accelerate the Cumulative Minimum Payments due under the Plan. The Creditor's Committee, by a two-thirds vote of its members, may waive for up to six months any payment required under the Plan and defer the due date of some payments. The Creditors' Committee will, if requested in writing by a majority in number or dollar amount of the Creditors, declare an acceleration of any remaining unpaid annual payments, described above.
Additional information in response to this Item 1 is incorporated by reference to the "Products and Services" section of the Company's Annual Report to Shareholders for the fiscal year ended January 31, 1998 (the "1997 Annual Report").
ITEM 2.
ITEM 2. PROPERTIES.
Information in response to this Item 2 is incorporated by reference to the "Products and Services" Section of the 1997 Annual Report.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
As noted above, the Company's predecessor entities filed for bankruptcy protection in 1992, and in 1993 the United States Bankruptcy Court for the District of Nebraska approved the Plan under which the Company continues to operate. For a detailed discussion of the Plan, please see "ITEM 1. BUSINESS -- THE COMPANY -- THE BANKRUPTCY -- PLAN OF REORGANIZATION." Additionally, the Bankruptcy Court has retained jurisdiction to insure that the purpose and intent of the Plan are carried out as well as to consider any modifications of the Plan and to hear any claims, controversies, suits and disputes against the Company that may arise during the five-year term of the Plan.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There are no items to report.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Information in response to this Item 5 is incorporated by reference to the "Shareholder Information" section of the 1997 Annual Report.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA.
Information in response to this Item 6 is incorporated by reference to the "Selected Financial Data" section of the 1997 Annual Report.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Information in response to this Item 7 is incorporated by reference to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of the 1997 Annual Report.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Information in response to this Item 8 is incorporated by reference to the Consolidated Financial Statements, notes thereto and report thereon contained in the 1997 Annual Report.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
There are no items to report.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
MANAGEMENT
DIRECTORS
Three members of the Gordman family are Directors of the Company: Jerome P. Gordman, Nelson T. Gordman, and Jeffrey J. Gordman. Nelson and Jerome Gordman are brothers; Jerome Gordman is the father of Jeffrey J. Gordman. Jeffrey J. Gordman is also President and Chief Executive Officer. The table below sets forth the name, age and position of the Company's Directors as well as the means of designation pursuant to the Plan:
(1) Member of the Compensation Committee. (2) Member of the Executive Committee. (3) Member of the Audit Committee. (4) Designated as a member of the Board by the Gordman Trustee. (5) Designated as a member of the Board by the Creditors' Committee.
All Directors, other than Seth Lehr, were appointed on the Effective Date. On October 1, 1996, Mr. Lehr was nominated by Jeffrey Gordman, as President and Chief Executive Officer, to fill
the vacancy created by the resignation of Dennis Reaves, in accordance with the terms of the Plan. Mr. Lehr was elected on October 29, 1996, by the Board of Directors to serve the remaining term of Mr. Reaves' directorship.
The Directors will serve during the term of the Plan which commenced on the Effective Date of the Plan and will end on the later of September 15, 1998, or payment in full to Creditors of amounts due under the Plan. If the Company makes the final payment to Creditors under the plan when due pursuant to the Creditors' Committee Waiver dated January 31, 1999, the plan would end on or before March 15, 1999. Accordingly, shareholders will not be able to vote on the election of Directors until expiration of the term of the Plan.
In the event of the death, resignation, or incapacity of any of the initial Directors, a successor Director will be chosen as follows:
- Successor Directors to Directors selected by the Creditors' Committee will be chosen by the remaining Directors selected by the Creditors' Committee and any successor Directors to Directors selected by the Creditors' Committee.
- Successor Directors to the Directors selected by the Chief Executive Officer will be chosen by the Chief Executive Officer or any successor thereto.
- Successor Directors to the Directors chosen by Dan Gordman will be selected by the Gordman Trustee. Mr. Jeffrey J. Gordman currently serves as both Chief Executive Officer of the Company and the Gordman Trustee.
Within forty-five days after the expiration of the term of the Plan, the then-Chairman of the Board of Directors shall call a special meeting to provide for the election of new members of the Board of Directors. Shareholders will not have cumulative voting rights with respect to the election of Directors.
OFFICERS
The table below sets forth the name, age and position of the Company's executive officers:
BIOGRAPHIES OF DIRECTORS AND OFFICERS
DIRECTORS
Mr. Paul M. Bass, Jr. is the Chairman of the Board of Directors. From 1988 to the present, he has been Vice Chairman of First Southwest Company, a Dallas-based regional investment banking firm. Mr. Bass specializes in corporate finance, investment management and public finance. Mr. Bass is also presently a Director and Chairman of the Audit Committee and a member of the Executive Committee of California Federal Savings F.S.B., a Director of Keystone Consolidated Industries (also Chairman of Audit Committee), a Director of Source Services, Inc. (also a member of Executive Committee), a Director and Chairman of the Board of MACC Private Equities Inc., a Director of Jayhawk Acceptance Corporation, and a Director of Compx International. Mr. Bass holds a B.B.A. in Finance from Southern Methodist University.
Mr. Paul M. Buxbaum is a Director of the Company. From 1973 to 1978, Mr. Buxbaum was a field representative for liquidators of retail discount specialty and department stores. In 1978 he opened a chain of mass merchandising off-price retail men's clothing stores in greater Los Angeles and in 1982 he sold the eight stores which were doing in excess of $8 million dollars in annual sales. Mr. Buxbaum is the President and Secretary Treasurer of Buxbaum, Ginsberg & Associates, a national merchandising firm organized in 1983 as a consulting firm which emphasizes restructuring needs and recovery services to companies on a nationwide basis. Mr. Buxbaum is also President of BGA Consulting which provides loan evaluations for major banks, financial institutions and insurance companies. He is also a Director and Chairman of the Board of Ames Department Stores, Inc. of Rockyhill, Connecticut and serves on the Compensation and Finance/Audit committees. Mr. Buxbaum attended California State University in Northridge where he studied business and finance.
Mr. Jeffrey J. Gordman is Vice-Chairman of the Board of Directors, President and Chief Executive Officer for the Company. At the Company, Mr. Gordman previously held positions in merchandising, store operations and information technology. In addition, Mr. Gordman designed the Planning and Allocation function for 1/2 Price Stores, including the organization structure and business processes, and oversaw its implementation in 1994. Prior to joining the Company in 1990, Mr. Gordman was a mergers and acquisitions analyst for Shearson Lehman Brothers, a New York-based investment banking firm now known as Lehman Brothers. Mr. Gordman graduated cum laude from the Wharton School at the University of Pennsylvania in 1986 with a B.S. in Economics. Mr. Gordman also earned a Masters of Management at the Sloan School, Massachusetts Institute of Technology in 1990.
Mr. Jerome P. Gordman, Director, has 32 years of department store and specialty store experience. He joined Richman Gordman in 1962 after active duty with the Army as a lieutenant. He helped develop the Company into a five-state retailer during his 23 years with Richman Gordman. He rose to Chief Operating Officer of Richman Gordman Department Stores and Executive Vice President of Richman Gordman Stores. In 1984, Mr. Gordman joined Kalico's, Inc., a specialty store, as its President. After the closing of Kalico's, Inc. in 1997, Mr. Gordman became the Managing Partner of Gordman Properties Company, a company with diversified real estate holdings in Nebraska and Iowa. Mr. Gordman graduated from the Wharton School at the University of Pennsylvania with a B.S. in Economics.
Mr. Nelson T. Gordman, a Director of the Company, is currently involved in real estate development and management. He was previously President and COO of Richman Gordman Department Stores and of Richman Gordman Stores, the parent company of both Richman Gordman Department Stores and 1/2 Price Stores. Mr. Gordman joined the Company in 1962 after completing studies at the University of Pennsylvania's Wharton School and, in various capacities, participated in and directed Richman Gordman's growth to 30 stores, five states and $250 million in annual sales volume.
Mr. Seth J. Lehr is a Director of the Company. Mr. Lehr is a Managing Director, Corporate Finance with Legg Mason, Inc., a New York Stock Exchange-listed regional investment banking firm. Mr. Lehr specializes in general corporate finance with an emphasis on the retail, apparel, merchandising and consumer products industries. Mr. Lehr began his investment banking career with The First Boston Corporation and Goldman, Sachs & Co. Mr. Lehr then became a vice president of Shearson Lehman Brothers. Mr. Lehr graduated with honors from the University of Pennsylvania and received an MBA from The Wharton School of the University of Pennsylvania.
Mr. Thomas J. Noonan, Jr. is a Director of the Company. Mr. Noonan's principal business experience over the past approximately ten years has been managing and advising troubled and underperforming businesses. In this regard he is presently an Executive Vice-President and Chief Financial Officer of Herman's Sporting Goods, Inc., a specialty sporting goods retailer in the process of liquidation. Previously, he had served as a Managing Director of Taggart/Fasola Group, a manager of troubled and underperforming businesses, and as a Director and Executive Vice President of Intrenet, Inc. Previously, Mr. Noonan served as Vice President-Finance for Pilot Freight Carriers, Inc., Senior Vice President-Finance for Purolator Courier Corporation, and
a number of line and financial positions with Airco, Inc. Mr. Noonan holds a B.S. degree from Fordham University and an M.B.A. from St. John's University.
Mr. Philip Scheipe is a Director of the Company. Mr. Scheipe has over 30 years experience in the apparel and retail fields. Prior to retiring in 1994, for the last fifteen years he was employed by Levi Strauss & Co. in the positions of General Manager of DAE Financial Services and Vice President of the Elesco Factors Division. Mr. Scheipe has broad experience in financial disciplines and business reorganizations. He graduated from Pennsylvania State University and is presently active as a consultant.
OFFICERS
Mr. Lance Graves is the Executive Vice President of Merchandising and Marketing. He joined the Company in January, 1998 after 22 years in the retail business. He previously held senior merchandising positions with QVC, Ames Department Stores and Mervyns Department Stores. Mr. Graves holds a bachelors degree from the University of Nebraska and an M.B.A. from the University of Michigan.
Mr. James H. Cooke is the Vice President, Stores. He joined the Company in 1987 after a sixteen year career with an Ohio-based discount chain. While with that company, he served in a variety of operational positions. Prior to that time, Mr. Cooke served in the United States Air Force. He is a graduate of Ohio University.
Mr. Michael A. Mallaro is the Vice President of Finance and Chief Financial Officer. He joined the Company in June, 1997. Prior to joining the Company, he spent 12 years with the accounting firm Deloitte & Touche. He was selected for admission to that firm's ownership as an audit partner in 1997, but declined the invitation prior to joining Richman Gordman. He holds the C.P.A. and C.M.A. designations and has a bachelors degree from the University of Iowa.
Mr. Martin Kresge joined the 1/2 Price Stores in August, 1997 as Vice President of Marketing. He has over 20 years of retail marketing experience, 16 as the top marketing executive. Most recently, he was the Vice President of Marketing for Lil' Things, a start-up superstore concept specializing in baby and juvenile products which filed bankruptcy reorganization proceedings in June 1997. Prior to that he was director of advertising and sales promotion for Leewards Creative Crafts. He earned his undergraduate degree from the University of Colorado and an M.B.A. from the University of Michigan.
Ronald K. Hall is the Vice President of Operations for the Company. Prior to joining the Company in May 1994, he completed a 29-year career as a Colonel in the United States Air Force. His last assignment was as Deputy Director, Command, Control, Communications, Computers and Intelligence for the United States Strategic Command at Offutt Air Force Base, Nebraska. In that position, he had responsibility for an annual budget of over $150 million while providing computer and communications support to the nation's nuclear war planners. From May 1994 until February 1997, he was Director of Systems Planning and Development in the Information Technology Department of the Company. Mr. Hall holds a BS in Industrial
Engineering from North Dakota State University and an MS degree in Systems Analysis from the Air Force Institute of Technology.
Mr. Norman J. Farrington is the Vice President, Chief Information Officer for the Company. He received a B.S. and a M.S. in Computer Science from Iowa State University. For a period of nine years, he owned and operated a successful computer consulting business. Prior to joining the Company in 1984, Mr. Farrington was on the faculty at Iowa State University teaching computer science. He has earned the professional designations of Certified Data Processor and Certified Systems Professional. Mr. Farrington is responsible for the development and information strategy and support systems.
Mr. Edward D. Williamson is the Vice President of Human Resources for the Company and is responsible for the human resources policy, training, benefits and compensation. Prior to joining the Company in October of 1989, he originated and directed the human resources department of Grisanti's, a restaurant chain, during the company's national expansion phase. Mr. Williamson received a B.G.S. degree in general administration from the University of Nebraska at Omaha, and currently holds the certification of Senior Professional in Human Resources (SPHR).
COMMITTEES
The Board of Directors has three standing committees: the Executive Committee, the Compensation Committee and the Audit Committee.
THE EXECUTIVE COMMITTEE
Mr. Bass, Mr. Noonan and Mr. Jeffrey Gordman are members of the Executive Committee. The Executive Committee is intended generally to function on behalf of the Board of Directors when the Board cannot be convened. The Executive Committee will not act independently of the Board on significant matters impacting the Company.
THE COMPENSATION COMMITTEE
Mr. Buxbaum, Mr. Scheipe, Mr. Bass and Mr. Lehr are members of the Compensation Committee. The primary functions of the Compensation Committee have been negotiating the employment agreement with the Company's President and Chief Executive Officer, Mr. Jeffrey J. Gordman, monitoring employment agreements with vice presidents, including considering changes to base salary and contract extensions, monitoring the bonus program for vice presidents, monitoring and granting awards pursuant to the 1997 Stock Option Plan and establishing compensation for additional officers that may be hired in the future.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Of the three current members of the Compensation Committee, none are executive officers of the Company, and no reportable interlocks exist with respect to any such current members. However, during fiscal 1996, Mr. Jeffrey Gordman and Mr. Jerome Gordman were members of
the Company's Compensation Committee. Mr. Jeffrey Gordman and Mr. Jerome Gordman are a present and former employee of the Company, respectively, and are each beneficial owners of more than 5% of the Common Stock. Mr. Jeffrey Gordman is the Company's President and Chief Executive Officer. Mr. Jerome Gordman was an employee of the Company for 23 years, ending in 1984.
THE AUDIT COMMITTEE
Mr. Noonan, Mr. Scheipe and Mr. Nelson Gordman are members of the Audit Committee. The Audit Committee is responsible for recommending selection of the independent auditors of the Company and reviewing audit results. The Committee has the authority to engage and retain its own professionals.
SECTION 16(a) REPORTING DELINQUENCIES
Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires the Company's officers and directors and holders of 10% or more of the outstanding shares of the Company's Common Stock (together, the "Reporting Persons") to file reports on Forms 3, 4 and 5 regarding their transactions in the Company's Common Stock. Based solely upon its review of the Company's records, copies of such Forms sent to the Company and/or written statements from Reporting Persons that no Form 5 was required, the Company believes that all Reporting Persons have appropriately filed all forms required to be filed during Fiscal Year 1997 pursuant to Section 16(a) of the Exchange Act, except that Mr. Lance Graves, Mr. Ronald Hall, Mr. Martin Kresge, and Mr. Michael Mallaro each filed late his respective Form 3; and Mr. James Cooke, Mr. Edward Williamson, Mr. Ronald Hall, Mr. Martin Kresge, Mr. Michael Mallaro, and Mr. Norman Farrington each filed late his respective Form 5 following the completion of the Company's fiscal year 1997.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
EMPLOYMENT AGREEMENT WITH MR. JEFFREY GORDMAN
On February 1, 1997, the Company entered into an employment agreement with Jeffrey J. Gordman, the Company's President and Chief Executive Officer. The following describes the terms and conditions of Mr. Gordman's employment agreement:
BASE SALARY. Mr. Gordman's employment agreement provides for an annual base salary of $225,000, subject to such increases and bonuses as the Compensation Committee of the Company's Board of Directors may from time to time determine.
TERMINATION OF AGREEMENT AND SEVERANCE. Mr. Gordman's employment agreement provides for an initial term of three years, with annual extensions upon each anniversary of the date thereof if neither the Company nor Mr. Gordman gives notice of nonextension. The employment agreement with Mr. Gordman provides for termination for cause upon 15 days' written notice and opportunity to be heard at a Board of Directors meeting. The employment agreement further provides that Mr. Gordman or the Company may terminate the agreement
with or without cause upon 30 days' written notice. If Mr. Gordman's employment is terminated by the Company without cause, the employment agreement provides for severance payments equal to the then-present value of his then-current base salary and benefits for the remainder of the term of the employment agreement. If Mr. Gordman's employment is terminated by the Company for nonperformance, Mr. Gordman shall receive severance payments equal to his then-current base salary and benefits for the lesser of 12 months or the remaining term of the Agreement. If Mr. Gordman's employment is terminated by the Company for dishonesty or if Mr. Gordman resigns, Mr. Gordman shall receive base salary and benefits only through the termination date.
EXECUTIVE BENEFITS. Mr. Gordman's employment agreement also provides that he is entitled to the following executive benefits: (i) contribution by the Company to 401(k) plans on terms applicable to other senior management; and (ii) all other then current executive benefits offered by the Company. Mr. Gordman is also entitled to at least four weeks of paid vacation per year.
NONCOMPETITION: TRADE SECRETS. The employment agreement contains a covenant against competition with the Company for a period of one year within 50 miles of the Company's corporate offices and its stores if Mr. Gordman's employment is terminated for cause. The employment agreement also prohibits Mr. Gordman from disclosing or benefiting from the Company's trade secrets during the term of the agreement and at all times thereafter. Mr. Gordman is also prohibited by the employment agreement from hiring any employees of the Company within one year after the termination of his employment with the Company.
BONUS PROGRAM AND EMPLOYMENT AGREEMENTS FOR VICE PRESIDENTS
All of the Company's Vice Presidents (except Dean Williamson) are parties to employment agreements. These employment agreements provide for one to three-year terms, with a minimum base salary level for each of the three years. The employment agreements provide for severance payments in an amount equal to the greater of then-current salary for six months or for the remainder of the fiscal year during which notice is given in the event of termination for any reason other than expiration of the term of the employment agreement or the Vice President's misconduct or breach of the employment agreement. The employment agreements also provide for a review and possible extension not less than one year prior to expiration.
The Company adopted an Officer Incentive Program in March, 1997. In accordance with their employment agreements, all of the Vice Presidents participate in this bonus program, although no bonuses were earned or paid for Fiscal Year 1997. The Company anticipates that it will have a bonus plan for its Vice Presidents for 1998 as well. Bonuses are expected to be earned if the Company realizes net income in excess of $1 million for the year.
The Vice Presidents also participate in certain employee benefits, including health insurance and a 401(k) plan. In Fiscal Year 1997, the Company made matching contributions equal to 25% of each employee's contribution, but not in excess of 4% of the employee's compensation, and expects to do the same in fiscal 1998.
COVENANT NOT TO COMPETE
Pursuant to the Plan, Mr. Nelson Gordman, a Director, has executed a covenant not to compete anywhere in the United States with the Company in exchange for payments of $125,000 per annum through October 1998.
DIRECTORS
The Chairman of the Company's Board of Directors receives an annual fee of $25,000, and all other Directors receive an annual fee of $20,000. Each Director also receives $1,500 per board meeting attended. Directors attending board meetings by telephone receive $750 per meeting. Members of committees receive $1,000 per committee meeting attended. Committee members attending committee meetings by telephone receive $500 per meeting. Directors who are also officers or employees of the Company do not receive Directors fees. Such Directors, however, are reimbursed for expenses related to meeting attendance. The Board of Directors has adopted a policy requiring members to attend at least 75% of all meetings each year in order to receive compensation as a Director.
OFFICERS COMPENSATION
The following table summarizes the compensation of the Chief Executive Officer and the four additional most highly compensated officers during the Fiscal Years 1997, 1996 and 1995:
(1) Represents Fiscal Years commencing in January or February of the stated year.
(2) "Other Annual Compensation" is primarily in the form of, life insurance, reimbursement of health and dental insurance, health club memberships, value of company-paid automobiles, etc.
(3) "All Other Compensation" represents 401(k) matching contributions made by the Company.
OPTION GRANTS IN LAST FISCAL YEAR
(1) The Company's stock is not traded on any exchange and there is no active trading of the stock. The Company had a independent appraiser value to stock on September 12, 1997, upon granting of these options. The valuation at that time was estimated at $0.51 per share for these shares. No subsequent valuations have been performed and thus no incremental value is disclosed in this table.
(2) These options were forfeited by the recipient upon termination of employment in fiscal 1997.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The table below represents shares of Common Stock held by management. Additionally, the table includes those Creditors who, as of April 8, 1998, had been issued and hold shares of Common Stock in an amount that is equal to or greater than 5% of the Common Stock on a fully diluted basis.
(1) Presented on a fully-diluted basis assuming issuance of all 30,000,000 authorized shares; 29,280,000 presently issued and 26,715,000 outstanding.
(2) These 16,200,000 shares of Series A Common Stock are the property of the R.G. Stock Trust created by Dan Gordman. Mr. Jeffrey J. Gordman, the Gordman Trustee, is sole trustee of the trust and is Dan Gordman's designee for purposes of the Plan. The Gordman Trustee has exclusive voting and investment power with respect to the 16,200,000 shares of Series A Common Stock. There are three beneficiaries of the trust, Mr. Jeff Gordman, Mr. Nelson T. Gordman and Mr. Jerome P. Gordman, all members of the Board of Directors of the Company.
(3) See Note 2 above. As sole trustee of the R.G. Stock Trust, Jeff Gordman has exclusive voting and investment power with respect to 16,200,000 shares of Series A Common Stock. As a beneficiary of the trust with a 35% interest, Jeff Gordman in his individual capacity is the beneficial owner of 5,670,000 shares, plus an additional 4,860,000 shares representing the 30% beneficial interest in the trust of his father, Jerome Gordman.
(4) Nelson Gordman is the beneficial owner of 5,670,000 shares of Series A Common Stock as a beneficiary of the R.G. Stock Trust with a 35% interest. Through his interest in Gordman family entities which are registered owners of shares of Series B Option Common Stock, Nelson Gordman is the owner of an additional 632,939 shares of Series B Option Common Stock.
(5) Jerome Gordman is the beneficial owner of 4,860,000 shares of Series A Common Stock as a beneficiary of the R.G. Stock Trust with a 30% interest. Through his interest in Gordman family
entities which are registered owners of shares of Series B Option Common Stock, Jerome Gordman is the owner of an additional 56,326 shares of Series B Option Common Stock.
(6) Represents shares presently exercisable under stock option grants.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The following table describes facilities that the Company leases from entities owned or controlled by Mr. Nelson Gordman and Mr. Jerome Gordman (both Directors of the Company).
- --------------
(1) Lease expires July 31, 2009 with a single option to renew for twenty years.
(2) The Distribution Center is composed of a total of 267,000 square feet (excluding internal mezzanine space of 111,400 square feet). The Company owns 103,700 square feet of the Distribution Center and the land beneath this portion ("Building 1"). Two portions totaling 163,300 square feet are leased from Gordman entities. One lease for approximately 82,000 square feet ("Building 2") expires April 30, 2003; the Gordman entity which leases Building 2 to the Company also owns the underlying land. The Company has four five-year options to extend the term of the Building 2 lease. The second lease for approximately 81,000 square feet ("Building 3") expires July 31, 1999. The land under Building 3 is owned by the Company and is leased to the Gordman entity lessor for a term also expiring July 31, 1999. Upon expiration of the Building 3 leases, the Company will own both the building and land for Building 3. Building 3 is being subleased to a third party effective in fiscal 1998. The Company and the Gordman entity are also parties to an Option Agreement giving the Company the option to purchase Building 2 and its underlying real estate at the end of the term or any option term at fair market value. If the Company does not exercise its purchase option on Building 2, the Gordman entity has the option to purchase Building 1 and/or Building 3 from the Company at fair market value. The Company and the Gordman entity are also parties to a Distribution Center Option Agreement which allows the Company to purchase Building 2 for $2,850,000 should it choose to do so in connection with a financing transaction, such as a sale-leaseback; the option expires on June 30, 1998.
(3) Lease expires October 31, 2000, with three renewal options of five years each.
(4) Lease expires February 28, 2001, with no renewal options.
(5) Lease expires July 31, 2005, with ten renewal options of five years each.
(6) Lease expires July 31, 2003, with one renewal options of five years.
(7) Lease expires October 31, 2010, with a first privilege to negotiate a second twenty year term.
During the bankruptcy proceedings, the Company conducted an extensive review of all locations. As a result, many locations owned by Gordman family members and other lessors were closed and the leases rejected as being unsuitable. Also during the bankruptcy proceedings, an independent third party analyzed the terms of remaining leases with Gordman family enterprises. While some leases were found to be above market and others below, the portfolio as a whole was found to be comparable to those from unaffiliated parties in comparable real estate markets.
While the Company is not materially dependent on one or several store locations, the Company is materially dependent on its Distribution Center located in Omaha, Nebraska. The Distribution Center is comprised of three buildings, one of which is owned by the Company. The remaining two buildings are owned by entities controlled by members of the Gordman family. Please see footnote 2 to the chart above. As part of extension of the Building 2 lease, in February, 1996, the Company granted the Gordman entity which is the lessor of Building 2 an easement over a portion of the Company's property. This easement provides for access to Building 2, including truck docking and parking.
As a result of the bankruptcy proceedings, four Gordman family partnerships ("Gordman Partnerships") received unsecured claims of $3,697,749, relating to the rejection of three store leases. Pursuant to these allowed unsecured claims, the Gordman Partnerships received the same treatment accorded other Class 3 Unsecured Claims under the Plan, namely Series B Option Common Stock, cash payments and the right to future cash payments to Creditors.
Three additional issues involving members of the Gordman family and the Company were resolved during fiscal 1996. First, the Company's claim against the Dan Gordman estate (the "Estate") approximating $77,000 and arising from a loan from the Company to Mr. Dan Gordman was settled pursuant to an Estate Claim Settlement Agreement (the "Estate Claim Agreement") between the Company and the Estate dated December 13, 1996. In accordance with the Estate Claim Agreement, the Estate paid the Company approximately $43,000 and agreed to pay up to an additional $34,000 from any dividends paid before April 15, 1999, on shares of the Company's Common Stock owned by the Estate. Second, pursuant to an Agreement Regarding Dan Gordman Fund between the Estate of Esther Gordman, the Dan Gordman Fund and the Company, dated December 13, 1996, the Company agreed to pay to the Esther Gordman Estate approximately $347,000, arising out of the personal portion of an insurance policy on the life of Dan Gordman, which was paid to one of the Company's Creditors, Harris Bank, pursuant to a collateral assignment of the policy. The Company is currently making
monthly payments of $50,000 following payment in full of Harris Bank, and the remaining balance due is $200,205, at January 31, 1998. Third, the Company released to Mr. Nelson Gordman its rights with regard to one or more insurance policies on the life of Mr. Nelson Gordman in exchange for approximately $13,500.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Financial Statements.
(1) A. The following financial statements are incorporated by reference to the 1997 Annual Report.
- Consolidated Balance Sheets as of January 31, 1998, and February 1, 1997 - Consolidated Statements of Operations for the fiscal years ended January 31, 1998, February 1, 1997 and February 3, 1996 - Consolidated Statements of Stockholders' Equity for the fiscal years ended January 31, 1998, February 1, 1997 and February 3, - Consolidated Statements of Cash Flows for the fiscal years ended January 31, 1998, February 1, 1997 and February 3, 1996 - Notes to Consolidated Financial Statements for fiscal years ended January 31, 1998, February 1, 1997 and February 3, 1996.
B. The Report of Independent Auditors with respect to the financial statements listed in A. above is also incorporated by reference to the 1997 Annual Report.
(2) The following financial statement schedule is filed with this Annual Report on Form 10-K:
- Schedule II -- Valuation and Qualifying Accounts.
(3) The following exhibits are filed herewith or incorporated by reference as set forth below:
(2) Plan of acquisition, reorganization, arrangement, liquidation or succession (incorporated by reference to the Company's Registration Statement on Form S-1 (Commission File No. 33-79382), filed with the Commission on May 26, 1994).
(3)(i) Amended and Restated Certificate of Incorporation of Richman Gordman 1/2 Price Stores, Inc. (incorporated by reference to the Company's Registration Statement on Form S-1 (Commission File No. 33-79382), filed with the Commission on May 26, 1994).
(3)(ii) Bylaws of Richman Gordman 1/2 Price Stores, Inc. (incorporated by reference to the Company's Registration Statement on Form S-1 (Commission File No. 33-79382), filed with the Commission on May 26, 1994).
(4)(i) Instruments defining the rights of security holders, including indentures -- Section 6.03(a), 7.09, and 10.03 of First Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code for Richman Gordman Stores, Inc., Richman Gordman Department Stores, Inc., and 1/2 Price Stores, Inc. -- Please see Exhibit (99)(i).
(4)(ii) Instruments defining the rights of security holders, including indentures -- Please see Exhibit (3)(i).
(4)(iii) Instruments defining the rights of security holders, including indentures -- Specimen Stock Certificate (incorporated by reference to the Company's Registration Statement on Form S-1 (Commission File No. 33-79382) filed with the Commission on May 26, 1994).
(9) Voting trust agreement -- not applicable.
(10)(i)(a) Material Contracts -- Credit Agreement between Richman Gordman 1/2 Price Stores, Inc. and Congress Financial Corporation dated October 20, 1993 (incorporated by reference to the Company's Registration Statement on Form S-1 (Commission File No. 33- 79382) filed with the Commission on May 26, 1994).
(10)(i)(b) Material Contracts -- Amendment No. 1 to Credit Agreement between Richman Gordman 1/2 Price Stores, Inc. and Congress Financial Corporation, dated January 28, 1994 (incorporated by reference to Amendment No. 4 to the Company's Registration Statement on Form S-1 (Commission File No. 33-79382) filed with the Commission on March 6, 1995).
(10)(i)(c) Material Contracts -- Amendment No. 2 to Credit Agreement between Richman Gordman 1/2 Price Stores, Inc. and Congress Financial Corporation, dated February 24, 1994 (incorporated by reference to Amendment No. 4 to the Company's Registration Statement on Form S-1 (Commission File No. 33-79382) filed with the Commission on March 6, 1995).
(10)(i)(d) Material Contracts -- Amendment No. 3 to Credit Agreement between Richman Gordman 1/2 Price Stores, Inc. and Congress Financial Corporation, dated September 11, 1995 (incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended February 3, 1996).
(10)(i)(e) Material Contracts -- Amendment No. 4 to Credit Agreement between Richman Gordman 1/2 Price Stores, Inc. and Congress Financial Corporation, dated May 6, 1996 (incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarterly period ended August 3, 1996).
(10)(i)(f) Material Contracts -- Amendment No. 5 to Credit Agreement between Richman Gordman 1/2 Price Stores, Inc. and Congress Financial Corporation, dated September 12, 1996 (incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarterly period ended August 3, 1996).
(10)(i)(g) Material Contracts -- Amendment No. 6 to Credit Agreement between Richman Gordman 1/2 Price Stores, Inc. and Congress Financial Corporation, dated January 31, 1997 (incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 1997).
(10)(i)(h) Material Contracts -- Amendment No. 7 to Credit Agreement between Richman Gordman 1/2 Price Stores, Inc. and Congress Financial Corporation, dated April 7, 1997 (incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 1997).
(10)(iv) Material Contracts -- Covenant Not To Compete between Richman Gordman 1/2 Price Stores, Inc. and Mr. Nelson Gordman (incorporated by reference to the Company's Registration Statement on Form S-1 (Commission File No. 33-79382) filed with the Commission on May 26, 1994).
(10)(v)(a) Material Contracts -- Vice President Incentive Program (incorporated by reference to the Company's Registration Statement on Form S-1 (Commission File No. 33-79382) filed with the Commission on May 26, 1994).
(10)(v)(b) Material Contracts -- Richman Gordman 1/2 Price Stores, Inc. 1997 Officer Incentive Program (incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 1997).
(10)(v)(c) Material Contracts -- Richman Gordman 1/2 Price Stores, Inc. 1997 Stock Option Plan (incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarterly period ended August 2, 1997).
(10)(vi) Material Contracts -- Employment Agreement between Richman Gordman 1/2 Price Stores, Inc. and Jeffrey J. Gordman, dated February 1, 1997 (incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 1997).
(10)(vii) Material Contracts -- Employment Agreement between Richman Gordman 1/2 Price Stores, Inc. and James Cooke dated February 1, 1997 (incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 1997).
(10)(viii) Material Contracts -- Employment Agreement between Richman Gordman 1/2 Price Stores, Inc. and Don DeGraeve dated February 1, 1997.
(10)(ix) Material Contracts -- Employment Agreement between Richman Gordman 1/2 Price Stores, Inc. and Norman Farrington, dated February 1, 1997.
(10)(x) Material Contracts -- Reduced Hour Agreement between Richman Gordman 1/2 Price Stores, Inc. and Dean Williamson dated February 1, 1997.
(10)(xi) Material Contracts -- Employment Agreement between Richman Gordman 1/2 Price Stores, Inc. and John W. Simkins dated February 1, 1997.
(10)(xii) Material Contracts -- Executive Benefit Amendment Agreement Between Richman Gordman 1/2 Price Stores, Inc. and Certain Executive Officers dated August 27, 1997.
(10)(xiii) Material Contracts -- Junior Indenture of Mortgage, Deed of Trust and Security Agreement from Richman Gordman 1/2 Price Stores, Inc. to Chicago Title Insurance Company, in trust for the benefit of Cathy Hershcopf, as agent for the Class 3 Creditors dated January 31, 1997 (incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 1997).
(10)(xiv) Material Contracts -- Junior Security Agreement between Richman Gordman 1/2 Price Stores, Inc. and Cathy Hershcopf, as agent for the Class 3 Creditors, dated as of January 31, 1997 (incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 1997).
(10)(xv) Material Contracts -- Agreement Regarding Dan Gordman Fund, between the Estate of Esther Gordman, the Dan Gordman Fund and Richman Gordman 1/2 Price Stores, Inc., dated as of December 13, 1996 (incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 1997).
(11) Statement re computation of share earnings -- not applicable.
(12) Statements re computations of ratios -- not applicable.
(13) 1997 Annual Report.
(16) Letter re change in certifying accountant -- not applicable.
(18) Letter re change in accounting principles -- not applicable.
(21) Subsidiaries of the Registrant -- not applicable.
(22) Published report regarding matters submitted to vote of security holders -- not applicable.
(23) Consents of Deloitte & Touche L.L.P.
(24) Power of attorney -- not applicable.
(27) Financial data schedule.
(28) Information from reports furnished to state regulatory authorities -- not applicable.
(99)(i) Additional Exhibit -- First Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code for Richman Gordman Stores, Inc., Richman Gordman Department Stores, Inc., and 1/2 Price Stores, Inc. (incorporated by reference to the Company's Registration Statement on Form S-1 (Commission File No. 33- 79382) filed with the Commission on May 26, 1994).
(99)(ii) Additional Exhibit -- First Amended Disclosure Statement Pursuant to Section 1125 of the Bankruptcy Code with Respect to the First Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code for Richman Gordman Stores, Inc., Richman Gordman Department Stores, Inc., and 1/2 Price Stores, Inc. (incorporated by reference to the Company's Registration Statement on Form S-1 (Commission File No. 33-79382) filed with the Commission on May 26, 1994).
(b) Reports on Form 8-K. - The Company filed no Reports on Form 8-K during the fourth quarter of fiscal year 1997.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: April 16, 1998 By: /s/ Jeffrey J. Gordman --------------- --------------------------------- Jeffrey J. Gordman President and Chief Executive Officer
Date: April 16, 1998 By: /s/ Michael A. Mallaro -------------- --------------------------------- Michael A. Mallaro Vice President Finance and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/Jeffery J. Gordman April 16, 1998 ---------------------- Jeffery J. Gordman President and Chief Executive Officer, Director
/s/ Paul M. Bass, Jr. April 16, 1998 --------------------- Paul M. Bass, Jr. Chairman, Board of Directors
April , 1998 ------------------- Paul M. Buxbaum Director
/s/ Jerome P. Gordman April 16, 1998 --------------------- Jerome P. Gordman Director
/s/ Nelson T. Gordman April 16, 1998 --------------------- Nelson T. Gordman Director
/s/ Thomas J. Noonan, Jr. April 16, 1998 ------------------------- Thomas J. Noonan, Jr. Director
/s/ Philip Scheipe April 16, 1998 ------------------ Philip Scheipe Director
/s/ Seth J. Lehr April 16, 1998 ---------------- Seth J. Lehr Director
FINANCIAL STATEMENT SCHEDULE INDEX
Item Page ---- ----
Schedule II -- Valuation and Qualifying Accounts 33
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
SCHEDULE II
RICHMAN GORDMAN 1/2 PRICE STORES, INC.
VALUATION AND QUALIFYING ACCOUNTS - --------------------------------------------------------------------------------
(1) Additions charged to expense is net of recoveries of amounts previously written off.
(2) The deduction in this column are amounts written off against the respective reserve.
EXHIBIT INDEX