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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:
April 1, 1998
DESIGNS, INC.
(Exact Name of registrant as specified in its charter)
Delaware 0-15898 04-2623104
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
66 B Street, Needham, Massachusetts 02194
(Address of principal executive offices) (Zip Code)
(781) 444-7222
(Registrant's telephone number, including area code)
Item 5. Other Events
A. As previously announced, Designs, Inc. (the "Company") entered into
a Credit Agreement dated as of December 10, 1997 (the "Credit Agreement")
between the Company and BankBoston, N.A. ("BankBoston"). Effective January 31,
1998, the Company and BankBoston entered into a First Amendment to Credit
Agreement, a copy of which is attached as Exhibit 10.1 hereto.
B. On March 31, 1998, the Company received a federal income tax refund
in the amount of approximately $12.7 million for the Company's fiscal year
ended January 31, 1998 ("Fiscal 1997") relating to losses incurred during
Fiscal 1997 and which were carried back against federal income taxes paid by
the Company in prior fiscal years.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
Exhibit 10.1 First Amendment to Credit
Agreement, dated as of January 31, 1998,
between Designs, Inc. and BankBoston, N.A.
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.
DESIGNS, INC.
Date: April 1, 1998 By: /s/ Scott N. Semel
--------------------------------
Scott N. Semel,
Executive Vice President,
General Counsel and Secretary
FIRST AMENDMENT TO CREDIT AGREEMENT
This First Amendment to Credit Agreement is made as of the 31st day of
January, 1998 by and among
DESIGNS, INC. (the "Company") a Delaware corporation with its principal
place of business at 66 B Street, Needham, Massachusetts 02194; and
BANKBOSTON, N.A., a national banking association with its principal
place of business at 100 Federal Street, Boston, Massachusetts 02110 (the
"Bank")
in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
WITNESSETH
WHEREAS, the Company and the Bank entered into a Credit Agreement dated
as of December 10, 1997 (the "Credit Agreement"); and
WHEREAS, the Company and the Bank desire to amend certain of the terms
and conditions thereof.
NOW THEREFORE, it is hereby agreed as follows:
1. Definitions: All capitalized terms used herein and not otherwise
defined shall have the same meaning herein as in the Credit Agreement.
2. Amendment to Article 1. The provisions of Article 1 of the Credit
Agreement are hereby amended as follows:
By deleting the words "plus (f) Non-Cash Charges" appearing
in the definition of Cash Flow.
By deleting the definition of "EBITDA" and substituting the
following in its stead:
"EBITDA" shall mean, for any period, the sum (without
duplication) of (a) consolidated net income of the Company
and its Subsidiaries for such period plus (b) to the extent
deducted in determining consolidated net income for such
period, the sum of (i) depreciation and amortization
(including deferred financing costs, organization costs and
non-compete amortization) for such period, (ii) interest
expense for such period, and (iii) the provision for income
taxes for such period, and (iv) for the Current Fiscal Year
only, Non-Cash Charges, all as determined in accordance with
GAAP.
By deleting the definition of "Non-Cash Charges" and
substituting the following in its stead:
"Non-Cash Charges" means charges not involving the
expenditure of cash (x) related to Inventory and store
closings taken in the second fiscal quarter of the Current
Fiscal Year only, but in no event in excess of
$13,900,000.00; and (y) related to the establishment of a
reserve for prepaid Inventory balances taken in the Company's
fiscal year ending January 31, 1998 only, but in no event in
excess of $6,386,000.00; and (z) related to severance and
other costs associated with a reduction in force announced on
January 12, 1998 only, but in no event in excess of
$1,600,000.00.
3. Amendment to Article 3. The provisions of Section 3.2 of the Credit
Agreement are hereby amended by deleting the first proviso appearing therein
and substituting the following in its stead:
provided that for purposes of calculating Cash Flow (which is
a component of the Cash Flow Ratio) under this Section 3.2,
Non-Cash Charges shall be added back to EBITDA only through
the fiscal quarter ending April 30, 1998 and not thereafter;
4. Amendment to Article 6. The provisions of Section 6.3(b) of the Credit
Agreement are hereby amended by deleting the first proviso appearing therein
and substituting the following in its stead:
provided that for purposes of calculating Cash Flow under
this Section 6.3(b), Non-Cash Charges shall not be added back
to EBITDA (which is a component of Cash Flow);
5. Conditions to Effectiveness. This First Amendment to Credit Agreement
shall not be effective until each of the following conditions precedent have
been fulfilled to the satisfaction of the Bank:
a. This First Amendment to Credit Agreement shall have been duly
executed and delivered by the respective parties hereto.
b. All action on the part of the Company necessary for the valid
execution, delivery and performance by the Company of this First
Amendment shall have been duly and effectively taken. The Bank
acknowledges that the execution and delivery of this First
Amendment by the Company will be ratified and confirmed by the
board of directors at a meeting scheduled to be held on April 13,
1998. The Bank waives the requirement that evidence of due
corporate authorization be furnished prior to the effectiveness
of this First Amendment. Nevertheless, the Bank shall receive
from the Company true copies of the resolutions when adopted by
its board of directors ratifying the transactions described
herein, certified by the Company's secretary to be true and
complete.
c. The Company shall have paid to the Bank an amendment fee in the sum
of $7,500.00 (which fee shall be fully earned upon payment and
shall not be subject to refund or rebate under any circumstances)
and all other fees and expenses then due and owing pursuant to the
Credit Agreement, as modified hereby, including, without
limitation, reasonable attorneys' fees incurred by the Bank.
d. No Default or Event of Default shall have occurred and be
continuing.
e. The Company shall have provided such additional instruments and
documents to the Bank as the Bank and its counsel may have
reasonably requested.
6. Miscellaneous.
a. Except as provided herein, all terms and conditions of the Credit
Agreement remain in full force and effect. The Company hereby
ratifies, confirms, and reaffirms all of the representations,
warranties and covenants therein contained and acknowledges that
all Collateral secures all Obligations, as amended hereby. The
Company further acknowledges and agrees that it has no offsets,
defenses, or counterclaims against the Bank under the Credit
Agreement or the other Loan Documents and, to the extent that the
Company has, or ever had, any such offsets, defenses, or
counterclaims, the Company hereby waives and releases the same.
b. The Company shall pay all costs and expenses incurred by the Bank
in connection with this Amendment, including, without limitation,
all reasonable attorneys' fees.
c. This First Amendment may be executed in several counterparts and by
each party on a separate counterpart, each of which when so
executed and delivered, each shall be an original, and all of which
together shall constitute one instrument.
d. This First Amendment expresses the entire understanding of the
parties with respect to the matters set forth herein and supersedes
all prior discussions or negotiations hereon.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed and their seals to be hereto affixed as the date first
above written.
COMPANY
DESIGNS, INC.
By: /s/ Joel H. Reichman
Name: Joel H. Reichman
Title: President
Bank
BANKBOSTON, N.A.
By: /s/ Gisela A. LoPiano
Name: Gisela A. LoPiano
Title: Director