**FORM 10-Q**

SECURITIES AND EXCHANGE COMMISSION

 

Washington, DC 20549

(Mark One)

 

x         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

 

For the quarterly period ended April 29, 2006

 

OR

 
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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
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|  
SECURITIES EXCHANGE ACT OF 1934

 
 

For the transition period from ___________________ to _____________________

 

Commission file number  00019774  

 

United Retail Group, Inc.  

(Exact name of registrant as specified in its charter)

 

 
Delaware  

51 0303670  

 
State or other jurisdiction of

(I.R.S. Employer

 
incorporation or organization

Identification No.)

 

365 West Passaic Street, Rochelle Park, NJ  

07662  

 
(Address of principal executive offices)  

(Zip Code)

 

Registrant’s telephone number, including area code  (201)  845-0880

 

_______________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)  

 

 

 

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) 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 _______

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one.)

 

Large accelerated filer _____  

Accelerated filer X  

Non-accelerated filer _____

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

YES ______

NO ___X____

 

**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 Section 12, 13 or 15(d) of the Exchange Act subsequent to the distribution of securities under a plan confirmed by a court.

 

YES _______

NO _______

 

**APPLICABLE ONLY TO CORPORATE ISSUERS:**

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

As of April 29, 2006, there were outstanding 13,492,650 units, each consisting of one share of the registrant’s common stock, $.001 par value per share, and one attached stock purchase right. The units are referred to herein as “shares.”  

 

 

 

 

 

 

 

 

 

 

 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1 - FINANCIAL STATEMENTS

 

UNITED RETAIL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

 

 

**April 29,******

**January 28,******

**April 30,******

 

**2006******

**2006******

**2005******

**ASSETS******

**(Unaudited)******

 ****

**(Unaudited)******

Current assets:

 

 

 

Cash and cash equivalents

$32,954 

$32,268 

$18,591 

Accounts receivable

2,046 

3,899 

1,672 

Inventory

62,413 

62,801 

57,890 

Prepaid rents

4,621 

4,607 

4,655 

Restricted cash

560 

846 

511 

Current deferred taxes

7,490 

9,350 

- 

Other prepaid expenses

1,544 

1,448 

1,700 

Total current assets

111,628 

115,219 

85,019 

 

 

 

 

Property and equipment, net

64,068 

66,791 

75,749 

Deferred compensation plan assets

4,490 

4,086 

3,304 

Long-term deferred taxes

10,394 

9,473 

164 

Other intangible assets, net of accumulated

 

 

 

amortization of $533, $517 and $469

350 

366 

414 

Other assets

1,554 

1,561 

1,298 

Total assets

$192,484 

$197,496 

$165,948 

 

 

 

 

**LIABILITIES******

 

 

 

Current liabilities:

 

 

 

Current portion of distribution center financing

$772 

$756 

$708 

Current portion of capital leases

1,232 

1,695 

1,837 

Accounts payable and other

26,120 

29,466 

27,706 

Disbursement accounts

9,430 

10,240 

10,938 

Accrued expenses

23,402 

26,511 

24,102 

Total current liabilities

60,956 

68,668 

65,291 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term distribution center financing

1,678 

1,877 

2,450 

Long-term capital leases

- 

- 

1,273 

Deferred lease incentives

10,038 

10,636 

12,262 

Deferred compensation plan liabilities

4,490 

4,086 

4,787 

Other long-term liabilities

9,123 

9,066 

8,820 

Total liabilities

86,285 

94,333 

94,883 

 

 

 

 

**STOCKHOLDERS’ EQUITY******

 

 

 

Preferred stock, $.001 par value; authorized

 

 

 

1,000,000 shares; none issued

 

 

 

Series A junior participating preferred stock,

 

 

 

$.001 par value; authorized 150,000 shares;

 

 

 

none issued

 

 

 

Common stock, $.001 par value; authorized

 

 

 

30,000,000 shares; issued 14,810,400 shares, 

 

 

 

14,652,400 shares, and 14,253,900 shares

15 

15 

14 

Additional paid-in capital

88,924 

87,743 

84,868 

Deferred compensation obligation (279,870 shares)

1,353 

1,353 

- 

Retained earnings (accumulated deficit)

23,693 

21,757 

(5,490)

Treasury stock (1,317,750 shares, 1,312,955 shares

 

 

 

and 1,590,766 shares) at cost

(7,786)

(7,705)

(8,327)

Total stockholders’ equity

106,199 

103,163 

71,065 

Total liabilities and stockholders’ equity

$192,484 

$197,496 

$165,948 

 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

 

 

 

 

 

 

 

 

 

UNITED RETAIL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands, except per share amounts)

(Unaudited)

 

 

**Thirteen Weeks Ended******

 

**April 29,******

**April 30,******

 

**2006******

**2005******

 

 

 

Net sales

$109,420 

$106,531 

 

 

 

Cost of goods sold, including

 

 

buying and occupancy costs

80,994 

80,840 

 

 

 

Gross profit

28,426 

25,691 

 

 

 

General, administrative and

 

 

store operating expenses

25,390 

24,827 

 

 

 

Operating income

3,036 

864 

 

 

 

Interest income

226 

55 

Interest expense

(143)

(219)

 

 

 

Income before income taxes

3,119 

700 

 

 

 

Provision for (benefit from) income taxes

1,183 

(304)

 

 

 

Net income

$1,936 

$1,004 

 

 

 

Net income per share

 

 

Basic

$0.14 

$0.08 

Diluted

$0.14 

$0.08 

 

 

 

 

 

 

 

 

 

 

Weighted average number of

 

 

shares outstanding

 

 

Basic

13,391,393 

12,662,190 

Common stock equivalents

 

 

(stock options)

737,562 

207,757 

Diluted

14,128,955 

12,869,947 

 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNITED RETAIL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(Unaudited)

 

 

**Thirteen Weeks Ended******

 

**April 29,******

**April 30,******

 

**2006******

**2005******

Cash Flows From Operating Activities:

 

 

Net income

$1,936 

$1,004 

Adjustments to reconcile net income to net cash provided

 

 

by operating activities:

 

 

Depreciation and amortization of property and equipment

3,119 

3,403 

Amortization of deferred charges and other

 

 

intangible assets

24 

24 

Loss on disposal of assets

42 

7 

Non-cash compensation expense

146 

104 

Tax benefit from exercise of stock options

(174)

- 

Provision for deferred income taxes

1,113 

- 

Changes in operating assets and liabilities:

 

 

Accounts receivable

1,853 

(168)

Income taxes

2 

(37)

Inventory

388 

(3,449)

Accounts payable and accrued expenses

(6,508)

4,466 

Other current assets

176 

187 

Deferred lease incentives

(598)

(646)

Other assets and liabilities

56 

115 

Net Cash Provided by Operating Activities

1,575 

5,010 

 

 

 

Investing Activities:

 

 

Capital expenditures

(438)

(133)

Deferred payment for property and equipment

51 

- 

 

 

 

Net Cash Used in Investing Activities

(387)

(133)

 

 

 

 

 

 

Financing Activities:

 

 

Repayments of long-term debt

(183)

(168)

Payments on capital lease obligations

(463)

(498)

(Decrease) increase in disbursement accounts

(810)

1,872 

Repayments under line-of-credit agreement

- 

(100)

Tax benefit from exercise of stock options

174 

- 

Treasury stock acquired

(81)

- 

Proceeds from exercise of stock options

861 

12 

 

 

 

Net Cash (Used in) Provided by Financing Activities

(502)

1,118 

 

 

 

Net increase in cash and cash equivalents

686 

5,995 

Cash and cash equivalents, beginning of period

32,268 

12,596 

Cash and cash equivalents, end of period

$32,954 

$18,591 

 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

 

 

 

 

 

 

 

 

 

 

 

 

UNITED RETAIL GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 
(Unaudited)

 
 

 

**1.**

**Basis of Presentation**

 

The condensed consolidated financial statements include the accounts of United Retail Group, Inc. and its subsidiaries (the “Company”). All significant intercompany balances and transactions have been eliminated.

 

The condensed consolidated financial statements as of and for the thirteen weeks ended April 29, 2006 and April 30, 2005 are unaudited and are presented pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, the condensed consolidated financial statements do not include all disclosures required by generally accepted accounting principles for a full set of financial statements and should be read in conjunction with the financial statement disclosures contained in the Company’s 2005 Annual Report and 2005 Form 10-K. In the opinion of management, the accompanying condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position and results of operations and cash flows for the interim periods, but are not necessarily indicative of the results of operations for a full fiscal year.               

 

Inventories are stated at the lower of cost or market and include import inventory in-transit under FOB shipping point terms. Import inventory in-transit has been included in the balance sheet and accounts payable on the basis of the FOB shipping point terms. Prior year inventory and accounts payable amounts have been revised to appropriately reflect the FOB shipping point amounts at April 30, 2005 in the amount of $4.9 million. The comparable amount of import inventory in-transit at April 29, 2006 was $4.5 million.

 

Certain prior year balances have been reclassified to conform with the current year presentation.

 

**2.**

**Net Earnings Per Share**

 

Basic per share data has been computed based on the weighted average number of shares of common stock outstanding. Diluted per share data includes the weighted average effect of dilutive options on the weighted average shares outstanding. The computation of earnings per diluted share excludes options whose exercise prices were greater than the average market price of the common shares for the thirteen weeks ended April 29, 2006 and April 30, 2005.

 

Options to purchase shares of common stock which were not included in the computation of diluted per share data were as follows:

 

 

Thirteen Weeks Ended

 

April 29,

2006

April 30,

2005

 

 

 

Options

15,000

1,236,100

Range of option prices per share

$18.73

$5.88 - $15.13

 

 

 

**3.**

**Vendor Discounts**

The Company avails itself of excess cash positions by paying vendors earlier than required by the terms of the purchase order. Such payments resulted in additional discounts in the amount of $0.4 million and $0.2 million for the thirteen weeks ended April 29, 2006 and April 30, 2005, respectively, and were deducted from general, administrative and store operating expenses.

 

**4.**

**Credit Cards**

Charges and credits associated with credit card transactions (MasterCard, Visa, American Express, Discover, Military Star Card and private label credit)are included in general, administrative and store operating expenses and amounted to a net credit of $0.3 million and $0.2 million for the thirteen weeks ended April 29, 2006 and April 30, 2005, respectively.

 

 

**5.**

**Stock Based Compensation**

Effective January 29, 2006, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123R, “Share-Based Payment” (“SFAS 123R”), a revision of SFAS No. 123, “Accounting for Stock-Based Compensation,” using the modified prospective transition method. Under the modified prospective transition method of SFAS 123R, the value of stock-based compensation is measured at fair value on the grant date of the award based on the estimated number of awards that are expected to vest. Compensation cost for awards that vest would not be reversed if the awards expire without being exercised. SFAS 123R applies to all outstanding and unvested share-based payment awards at the adoption date. Prior to adoption of SFAS 123R, the Company accounted for its stock-based awards using the intrinsic value method under APBOpinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”). Under the provisions of APB No. 25, no stock-based compensation cost was reflected in the consolidated financial statements unless options were granted that had an exercise price less than the market value of the underlying stock on the date of grant. In adopting SFAS 123R using the modified prospective transition method, the Company was not required to restate the results of prior periods. 

As a result of adopting SFAS 123R our stock-based compensation expense related to stock options recognized for the thirteen weeks ended April 29, 2006 was $0.1 million. The income tax benefit recognized for stock option expense was less than $0.1 million, cash received from the exercise of stock options was $0.8 million and there was no impact on earnings per share. 

Prior to the adoption of FASB Statement No. 123(R), the Company presented all benefits of tax deductions resulting from the exercise of share-based compensation as operating cash flows in the condensed Statements of Cash Flows. FASB Statement No. 123(R) requires the benefits of tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) to be classified as financing cash flows. For the thirteen weeks ended April 29, 2006, the Company reported $0.2 million of excess tax benefits as a financing cash inflow.

 

Under APB No. 25, the Company did not expense stock-based compensation costs during the thirteen weeks ended April 30, 2005. The Company’s pro forma net income and pro forma earnings per share for the thirteen weeks ended April 30, 2005, had compensation costs for the Company’s stock option plans been determined under the fair value based method and recognition provisions of SFAS 123 at the grant date, would have been as follows (in thousands, except per share amounts): 

 

 

13 Weeks Ended

April 30, 2005****

Net Income, as reported

$ 1,004

Deduct:

 

Stock based compensation

(106)

Pro forma net income

$ 898

Net income per share:

 

Basic, as reported

$ .08

Basic, pro forma

$ .07

Diluted, as reported

$ .08

Diluted, pro forma

$ .07

 

 

 

The weighted average grant date fair value of options granted during the thirteen weeks ended April 29, 2006 were estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions: expected volatility of 45%, expected term of 5 years, risk-free interest rate of 4.92%, and expected dividend yield of 0%. Expected volatility is based on an average of the historical volatility of the Company’s stock, the implied volatility of market options, peer company volatility, and other factors. The average expected life represents the period of time that option grants are expected to be outstanding and is derived from historical terms and other factors. The risk-free rate is based on the rate of U.S. Treasury securities at a constant maturity equal to the expected life of option grants. The Company uses historical data to estimate pre-vesting forfeiture rates. 

A summary of stock option activity under the Company’s stock-based compensation plans for the thirteen weeks ended April 29, 2006 is summarized below: 

 

 

 

 

Number

Outstanding

 

 

Weighted

Average

Exercise Price

 

Weighted

Average

Remaining

Contractual Term

 

 

Aggregate

Intrinsic

Value

 

 

 

(in years)

(in thousands)

 

Outstanding at January 28, 2006

 

1,502,300

 

$         6.86

 

 

Granted

15,000

18.73

 

 

Exercised

(158,000)

5.45

 

 

Forfeited or expired

(3,800)

4.81

 

 

Outstanding at April 29, 2006

1,355,500

$        7.17

4.62

$     16,867

 

Exercisable at April 29, 2006

 

987,700

 

$         7.54

 

3.51

 

$     11,920

 

 

 

 

The weighted-average grant-date fair value of options granted during the thirteen weeks ended April 29, 2006 was $ 7.29 and the total intrinsic value of options exercised during the same quarter was $2.0 million. As of April 29, 2006, the total unrecognized compensation cost related to outstanding non-vested options was $0.6 million, which is expected to be recognized over a weighted average period of approximately 1.5 years.

 

**6.**

**Financing Arrangements**

 

In 1994, the Company executed a fifteen-year $8.0 million loan bearing interest at 8.64%. Interest and principal are payable in equal monthly installments beginning May 1994. The loan is collateralized by a mortgage on the national distribution center owned by the Company in Troy, Ohio.

 

The Company and certain of its subsidiaries (collectively, the “Companies”) are parties to a Financing Agreement, dated August 15, 1997 (the “Financing Agreement”), with The CIT Group/Business Credit, Inc.(“CIT”). The Financing Agreement was amended in December 2003 to increase the revolving line of credit from $40 million to $50 million and to extend the maturity date from August 15, 2005 to August 15, 2008. The revolving line of credit is used by the Companies to support trade letters of credit and standby letters of credit and to finance loans, which could be used for working capital and general corporate purposes.

 

The Companies are required to maintain unused at all times combined asset availability of at least $5 million. Except for the maintenance of a minimum availability of $5 million and a limit on capital expenditures, the Financing Agreement does not contain any significant financial covenants.

 

 

The Financing Agreement also includes certain restrictive covenants that impose limitations (subject to certain exceptions) on the Companies with respect to, among other things, making certain investments, declaring or paying dividends, making loans, engaging in certain transactions with affiliates, or consolidating, merging or making acquisitions outside the ordinary course of business.

 

In the event a loan is made to one of the Companies, interest is payable monthly based on a 360-day year at the Chase Manhattan Bank prime rate plus incremental percentages ranging from 0.00% to 0.75% or the LIBOR rate plus incremental percentages ranging from 1.75% to 2.50% as determined by the average excess availability each month per the Financing Agreement on a per annum basis. The borrower can select either the prime rate or the LIBOR rate as the basis for determining the interest rate. Payments of revolving loans are not required until termination of the agreement unless either 1) the outstanding balance of revolving loans and outstanding letters of credit exceeds the availability under the agreement, in which case the excess would be payable upon demand from CIT or 2) the Company is in default under the Financing Agreement.

 

The line of credit is collateralized by a security interest in i) inventory and its proceeds ii) bank credit card receivables and iii) the balance on deposit from time to time in a bank account that has been pledged to the lenders.

 

At April 29, 2006, the borrowing capacity of the Companies under the Financing Agreement with CIT, after satisfying the $5 million minimum availability requirement, was $19.8 million, trade letters of credit for the account of the Companies were outstanding in the amount of $23.9 million, standby letters of credit were outstanding in the amount of $6.1 million and no loan from CIT was outstanding. The Company’s balance sheet cash and cash equivalents of $33.0 million were unrestricted.

 

As of January 25, 2005, the Company is required by CIT to maintain at all times balances in a designated account in an amount not less than 25% of the amount of gift cards and merchandise credits issued and not redeemed during the prior six month period. The balance in this account as of April 29, 2006 was $0.6 million and was classified as restricted cash on the balance sheet.

 

In January 2002, the Company executed a five-year $8.2 million sale and lease back agreement for certain fixtures in new and remodeled stores. The lease bears an interest rate of 7.0% per annum. The Company was required to pay sales tax as part of the agreement. The agreement provides for equal monthly rent payments of $163,344 beginning February 2002 and gives the Company the option of buying back the fixtures at the end of the term for a nominal price.

 

**7.**

**Income Taxes**

 

In March 2005, the Company received $0.3 million to settle state income tax refund claims which was recorded as a benefit during the first quarter of fiscal 2005.

 

In the fourth quarter of fiscal 2005, due to a number of factors, primarily that the Company recorded income before taxes of $11.4 million for fiscal 2005 (and taxable income exceeded that amount), management increased its projection of future taxable income. As a result of these increased projections, management concluded the future utilization of its deferred tax assets (with the exception of charitable contributions carryforward) was more likely than not. In the fourth quarter of fiscal 2005, the Company reduced its valuation allowance by $22.6 million.

 

 

**8.**

**Stock Appreciation Rights Plan**

 

Commencing in May 2000 and annually thereafter, each non-management Director received an award under the Company’s Stock Appreciation Rights Plan that provides for a cash payment by the Company when the Director exercises the stock option granted to him contemporaneously under the Company’s Stock Option Plans. The payment will be an amount equivalent to the after tax equity in the option that is being exercised, that is, the excess of the then current market price of the shares issued over the sum of 1) the exercise price of the corresponding option plus 2) any personal income tax withholding on the gain arising from the exercise. The payment for the options granted in June 2005 will be an amount equivalent to twice the above calculation. No such payments have been made to date. The amount accrued at April 29, 2006 was $1.4 million for future potential payments.

 

**9.**

**Supplemental Cash Flow Information**

 

Net cash flow from operating activities reflects cash payments for interest and income taxes as follows (dollars in thousands):

 

 

 

Thirteen Weeks Ended

 

April 29, 2006

April 30, 2005

 

 

 

Cash interest paid

$ 164

$ 225

Cash interest received

(314)

(55)

Net cash interest (received) paid

($150)

$ 170

 

 

 

Income taxes paid

$  86

$  23

Income taxes refunded

(18)

(291)

Net income taxes paid (refunded)

$  68

($268)

 

 

 

 

The Company, in certain stock option plans, allows its participants to tender shares of common stock instead of cash when exercising their stock options. Non-cash financing activities include the receipt of 4,795 shares of Company stock with a market value equal to the exercise price of the options  exercised in the amount of approximately $81,000 in the thirteen weeks ended April 29, 2006.

 

**10.**

**Contingencies**

 

The Company is involved in legal actions and claims arising in the ordinary course of business. Management believes that such litigation and claims, net of reserves, will not have a material adverse effect on the Company’s financial position, annual results of operations or cash flows. Legal fees are typically expensed as incurred.

 

On May 1, 2003, a suit in California Superior Court, Los Angeles County, styled *Erik Stanford vs. United Retail Incorporated* was served on the Company by a former store manager in California. On March 3, 2004, an amended complaint was served that added another plaintiff. The suit was purportedly a class action on behalf of certain current and former associates in California in the previous four years. 

 

The plaintiffs in the *Stanford* case asserted federal and state wage and hour claims and related claims against the Company.

 

Total expense related to this matter was $0.7 million in fiscal 2003 and $1.6 million in fiscal 2004, of which $0.8 million was recorded in the fourth quarter.

 

 

The *Stanford* case was settled in the second quarter of fiscal 2005 at a cost of $1.8 million, at which time the underlying accruals were adjusted resulting in $0.5 million of income. During the third quarter of fiscal 2005, $1.1 million of this liability was paid. The final payment of $0.7 million was paid during the first quarter of fiscal 2006. In anticipation of the settlement, compensation of store managers employed by the Company in California had been converted from salaried to hourly wages in January 2005.

 

 

 

 

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND    RESULTS OF OPERATIONS.

 

EXECUTIVE SUMMARY

 

***Introduction***

 

The Executive Summary section of Management’s Discussion and Analysis of Financial Condition and Results of Operations provides a high level summary of the more detailed information elsewhere in this Report and an overview to put this information in context. This section is also an introduction to the discussion and analysis that follows.   Accordingly, it necessarily omits details that appear elsewhere in this Report. It should be read together with the balance of this Report and the Company’s Annual Report on Form 10-K for the year ended January 28, 2006 (the “Form 10-K”) filed with the Securities and Exchange Commission (the “Commission”), which is available online at www.sec.gov.

***Products and Purchasing***

 

The Company is a leading specialty retailer of women’s fashions featuring its proprietary AVENUE® brand. Its product line features AVENUE® brand large size (14 or larger) women’s wearing apparel, AVENUE BODY® brand large size women’s undergarments and lingerie and CLOUDWALKERS® brand women’s footwear, as well as AVENUE® brand accessories and gifts.

 

Most of the Company’s products are made for the Company by contract manufacturing abroad.

***Customer Base***

 

The Company serves the mass market in the United States and targets fashion conscious women between 25 and 55 years of age who wear size 14 or larger apparel. Management believes that the number of women in this age range who wear large size apparel has increased in recent years.

***Merchandising and Marketing***

 

Design is an important aspect of the Company’s products. Many AVENUE® and AVENUE BODY® products are custom designed. The Company emphasizes a contemporary brand image and consistency of merchandise quality and fit.

 

The Company has used direct mail, print media advertising, credit card statement inserts, in-store signage, and e-mail messages in its marketing activities.

***Channel of Distribution***

 

The Company’s channel of distribution is retail stores using its AVENUE® trade name. At April 29, 2006, it leased 496 stores in 37 states. See, “Stores.”  The Company also has operated a website at www.avenue.com that sells a selection of the merchandise that is also on sale in the stores. 

 

Until March 2003, the Company also mailed catalogs that featured a merchandise selection that included both items in the stores and similar products. (The website and the catalog, while it was in existence, are referred to as “shop @ home” activities.)  The Company licensed its AVENUE trade name to a leading catalog publisher to conduct a market test of an AVENUE catalog earlier in fiscal 2006. The Company was not responsible for the costs of the market test, did not supply the merchandise featured and did not include sales to catalog customers in its reported sales. The results of the market test have been analyzed and the Company and the catalog publisher will not go forward with further mailings.

 

 

***Increased Competition***

 

The women’s retail apparel and shoe industries are highly competitive. Operating results of businesses in these industries, especially businesses that emphasize fashionable merchandise, can vary materially from year to year. The Company’s competition includes other specialty retailers, mass merchants, department stores, discount stores, mail order companies, television shopping channels and Internet websites. Management believes that total sales of large size women’s apparel from these sources of supply increased in recent years. Among specialty retailers for large size women like the Company, the competition includes large store chains that have announced long-term store growth plans to aggressively expand into additional strip shopping center locations.

***Deflationary Price Trend in Apparel Industry***

 

The Consumer Price Index published by the U.S. Dept. of Labor, Bureau of Labor Statistics, city average for women’s and girls’ apparel (the “CPI”) declined 1.5% in fiscal 2003, 0.5% in fiscal 2004 and 2.0% in fiscal 2005, comparing January 31st each year with that date in the previous year. During the 10 years ended January 31, 2006, the CPI declined 14.3%. Price deflation in the industry has limited the extent to which the Company’s is able to increase prices. There is no assurance that this general deflationary trend will not continue. 

***Company Sales Fluctuations***

 

The Company conducts a weekly interdisciplinary review of sales and merchandise margins and prepares budgets for two six-month seasons each year, the Spring season and the Fall season. Management uses comparable store sales (for stores open at least 12 months at the time) to measure business trends. 

 

Seasonal store sales data (with sales improvements versus the previous comparable period in bold type) follow:

 

 

2003

2004

2005

 

Spring

Fall

Spring

Fall

Spring

Fall

Total store sales

($ millions)*

 

$203.5

 

$187.7

 

$196.0

 

**$196.9******

 

**$215.6******

 

**$209.0******

Sales per average store ($000’s)

 

 

$371

 

 

$344

 

 

$368

 

 

**$372******

 

 

**$422******

 

 

**$412******

Average number of stores

 

548

 

545

 

532

 

529

 

511

 

507

Comparable store sales**

 

-9.3%

 

-4.2%

 

-2.2%

 

**+6.8%******

 

**+12.8%******

 

**+10.2%******

_______

*Excludes sales on the Internet and through a catalog that was distributed until March 2003.

**A store that is relocated within the same shopping center or mall is considered comparable. However, if the store is relocated elsewhere, it is considered a new store and not comparable. A store that is expanded or contracted is still comparable, i.e., the sales from the remodeled store are considered comparable. Stores that are closed are not considered comparable. The comparable store sales calculation is not adjusted for changes in the store sales return reserve and excludes sales on the Internet and through a catalog that was distributed until March 2003.

 

 

***Store Count***

 

Store counts averaged 546 stores, 531 stores and 509 stores, respectively, for fiscal 2003, 2004 and 2005.  The decline in store counts resulted from the Company's normal ongoing lease maintenance store closings combined with a business decision not toopen significant numbers of new stores until there was a clear indication of customer acceptance of the Company's new merchandise assortment.

 

The Company estimates that in fiscal 2006 it will close approximately 15-20 stores as part of its normal lease maintenance program and open approximately 15-20  new stores, generally in strip shopping centers. This paragraph contains forward-looking information under the Private Securities Litigation Reform Act (the “Reform Act”), which is subject to the variables, uncertainties and other risk factors referred to under the caption “Future Results.”

 

***Liquidity***

 

United Retail Group, Inc. and certain of its subsidiaries (collectively, the “Companies”) are parties to a Financing Agreement, dated August 15, 1997, as amended (the “Financing Agreement”), with The CIT Group/Business Credit, Inc. (“CIT”). The Financing Agreement provides credit to the Companies on a revolving basis.

 

The Company plans to use the Financing Agreement for its immediate and future working capital needs. Management believes that the borrowing capacity under the Financing Agreement, together with cash on hand and current and anticipated cash flow from operations, will be adequate to meet the Company’s cash requirements for at least the next 12 months. This paragraph constitutes forward-looking information under the Reform Act and is subject to the variables, uncertainties and other risk factors referred to under the caption “Future Results.”

 

***Growth***

 

The Company plans to continue its internal growth by increasing sales per square foot in its existing store base. Also, the Company from time to time conducts “due diligence” reviews of businesses that are either for sale as a going concern or are in liquidation. The Company would consider making a bid on a suitable corporate acquisition at an opportune price if adequate financing at acceptable rates were available.

 

DISCUSSION AND ANALYSIS

 

(This section and the following one provide details about the material line items in the Company’s statements of operations and more recent sales and comparable store sales data.)

 

***First quarter of fiscal 2006 versus first quarter of fiscal 2005***

 

Net sales for first quarter of fiscal 2006 increased 2.7% from first quarter of fiscal 2005, to $109.4 million from $106.5 million.

 

The sources of net sales growth were as follows:

 

Amount

Attributable to

$3.3 million

3.3% increase in comparable store sales

0.2 million

new store

(2.5) million

closed stores

1.9 million

other

$2.9 million

Total

 

 

 

In the first quarter of fiscal 2006, average price per unit sold increased 3.5%, units sold per average store increased 0.3% and transactions per average store increased 2.9%.

 

There was better customer acceptance of knit tops, which increased sales by $3.6 million in comparison to the first quarter of fiscal 2005.

 

The average number of stores decreased from 513 to 498. See, “Stores.”  

 

Gross profit increased to $28.4 million in first quarter of fiscal 2006 from $25.7 million in first quarter of fiscal 2005, increasing as a percentage of net sales to 26.0% from 24.1%. Gross profit as a percentage of net sales increased principally because merchandise margins increased (130 basis points as a percentage of net sales), as a result of higher retail prices and lower costs. Rent and occupancy costs declined as a percentage of net sales (60 basis points) because net sales increased and rent and occupancy costs declined. Future gross profit levels will be subject to the variables, uncertainties and other risk factors referred to under the caption “Future Results.”  

 

General, administrative and store operating expenses increased to $25.4 million in the first quarter of fiscal 2006 from $24.8 million in the first quarter of fiscal 2005 but decreased as a percentage of net sales to 23.2% from 23.3%. A reduction in store payroll (50 basis points) was offset by an equal increase in benefits costs. In addition to general cost inflation, the Company expects its Finance Department payroll to increase to support new regulatory compliance.

 

Operating income increased 251% to $3.0 million in the first quarter of fiscal 2006 from $0.9 million in the first quarter of fiscal 2005. 

 

Interest income was $0.2 million in the first quarter of fiscal 2006 and $0.1 million in the first quarter of fiscal 2005.

 

Interest expense was $0.1 million in the first quarter of fiscal 2006 and $0.2 million in the first quarter of fiscal 2005.

 

The provision for income taxes was $1.2 million in the first quarter of fiscal 2006. The benefit from income taxes was $0.3 million in the first quarter of fiscal 2005. (At April 29, 2006, the Company had federal NOL’s of $13.1 million and state NOL’s of approximately $62.0 million.)  The Company’s effective tax rate was positive 37.9% for the first quarter of fiscal 2006 and negative 43.4% for the first quarter of fiscal 2005.

 

Net income increased 93% to $1.9 million in the first quarter of fiscal 2006 from $1.0 million in the first quarter of fiscal 2005.  

 

***May 2006 Sales***

 

Net sales for May 2006 increased 7.5% from May 2005 to $42.1 million from $39.1 million. Comparable store sales for the month increased 9%. The average number of stores decreased from 512 to 496.

***Increased Competition***

 

The women’s retail apparel and shoe industries are highly competitive. Operating results of businesses in these industries, especially businesses that emphasize fashionable merchandise, can vary materially from year to year. The Company’s competition includes other specialty retailers, mass merchants, department stores, discount stores, mail order companies, television shopping channels and Internet websites. Management believes that total sales of large size women’s apparel from these sources of supply increased in recent years. Among specialty retailers for large size women like the Company, the competition includes large store chains that have announced long-term store growth plans to aggressively expand into additional strip shopping center locations.

 

 

 

***Liquidity and Capital Resources***

 

(This section provides details about the Company’s sources of liquidity.)

 

*Cash Flow*

 

Net cash provided from operating activities decreased to $1.6 million in the first quarter of fiscal 2006 from $5.0 million in the first quarter of fiscal 2005, principally because accounts payable and accrued expenses decreased by $6.5 million in the first quarter of fiscal 2006 and increased by $4.5 million in first quarter of fiscal 2005.   

 

*Balance Sheet Sources of Liquidity*

 

The Company’s cash and cash equivalents increased to $33.0 million at April 29, 2006 from $18.6 million at April 30, 2005 and $32.3 million at January 28, 2006.   

 

Inventories were stated at $62.4 million at April 29, 2006 compared with $57.9 million at April 30, 2005, and $62.8 million at January 28, 2006. (Inventories at April 30, 2005 have been revised to include import in-transit inventories on a basis consistent with that used at April 29, 2006 and fiscal 2005 year end. See, Note 1 to the consolidated financial statements.)  Inventory, excluding Shop @ Home inventory and import in-transit inventory, on a cost per square foot basis increased 11.7% from April 30, 2005 to April 29, 2006. The increase in inventory was principally the result of early deliveries of merchandise scheduled for May delivery. Also, inventory was increased in anticipation of higher demand. See, “May 2006 Sales”. 

 

Inventory levels are seasonal. (See, “Critical Accounting Policies – Inventory” for a discussion of estimates made by management in stating inventories in financial statements prepared in accordance with generally accepted accounting principles.)

 

Property and equipment decreased to $64.1 million at April 29, 2006 from $75.7 million at April 30, 2005 and $66.8 million at January 28, 2006, principally from depreciation. 

 

*Other Liquidity Sources*

 

Purchases of merchandise directly imported by the Company are made in U.S. dollars and generally financed by trade letters of credit. The Company was the importer of record for 54% of its total purchases in fiscal 2005.     

 

The Financing Agreement has a term expiring on August 15, 2008. The line of credit is $50 million for the Companies, subject to availability of credit as described in the following paragraphs. The line of credit may be used on a revolving basis by any of the Companies to support trade letters of credit and standby letters of credit and to finance loans. At April 29, 2006, trade letters of credit for the account of the Companies and supported by CIT were outstanding in the amount of $23.9 million and standby letters of credit were outstanding in the amount of $6.1 million. Standby letters of credit were used principally in connection with insurance policies issued to the Company. 

 

Subject to the following paragraph, the availability of credit (within the aggregate $50 million line of credit) to any of the Companies at any time is the excess of its borrowing base over the aggregate outstanding amount of its letters of credit and its revolving loans, if any. The borrowing base, as to any of the Companies is (i) the sum of (x) a percentage of the book value of its eligible inventory (both on hand and unfilled purchase orders financed with letters of credit), ranging from 65% to 75% depending on the time of year, (y) the balance from time to time in a bank account in its name that has been pledged to the lenders (a “Pledged Account”) and (z) 85% of certain receivables from credit card companies less (ii) reserves for rent for 137 stores located in certain states and liens other than permitted liens and, at CIT’s option, a reserve for sales taxes collected but not yet paid. 

 

 

The provisions of the preceding paragraph to the contrary notwithstanding, the Companies are required to maintain unused at all times combined availability of at least $5 million. Except for the maintenance of a minimum availability of $5 million and a limit on capital expenditures, the Financing Agreement does not contain any significant financial covenants. 

 

The combined borrowing capacity of the Companies is cyclical due to the seasonality of the retail industry. At April 29, 2006, the combined borrowing capacity of the Companies, after satisfying the $5 million minimum availability requirement, was $19.8 million; the Pledged Account had a zero balance; no loan was outstanding; and the Companies’ balance sheet cash and cash equivalents of $33.0 million were unrestricted. The Company has agreed with CIT to have its subsidiary, Avenue Giftcards, Inc. (which issues AVENUE® giftcards), maintain a minimum level of high-grade liquid investments. These investments, which amounted to $0.6 million, were classified as restricted cash on the balance sheet at April 29, 2006 and will fluctuate each quarter in relation to the volume of net issuances of AVENUE® giftcards and merchandise credits during the previous six months. (The volume of net issuances is seasonal.)  

 

The line of credit is collateralized by (i) inventory and its proceeds,  (ii) receivables from credit card companies and (iii) the balance, if any, from time to time in the Pledged Account.  

 

The Financing Agreement includes certain restrictive covenants that impose limitations (subject to certain exceptions) on the Companies with respect to making certain investments, declaring or paying dividends, making loans, engaging in certain transactions with affiliates, or consolidating, merging or making acquisitions outside the ordinary course of business. 

 

The Company has drawn on the revolving loan facility under the Financing Agreement from time to time to meet its peak working capital requirements. Interest is payable monthly based on a 360-day year either at the prime rate plus an incremental percentage up to 0.75% per annum or at the LIBOR rate plus an incremental percentage ranging from 1.75% to 2.50% per annum. The borrower can select either the prime rate or the LIBOR rate as the basis for determining the interest rate. In either case, the incremental percentage is determined by the average excess availability. Payment of revolving loans is not required until termination of the Financing Agreement unless either (1) the outstanding balance of revolving loans and outstanding letters of credit exceeds the combined borrowing capacity of the Companies, in which case the excess would be payable upon demand from CIT or (2) a default under the Financing Agreement arises. 

 

Short-term trade credit represents a significant source of financing for purchases of merchandise by the Company. Trade credit arises from the willingness of the Company’s vendors of these products to grant extended payment terms for inventory purchases and is generally financed either by the vendor or a third-party factor. The availability of trade credit depends on the Company’s having other sources of liquidity, as well. In particular, credit authorizations by trade creditors focus on the amount of the Company’s cash and cash equivalents and its borrowing capacity under the Financing Agreement.

 

***Capital Expenditures***

 

(This section and the following one provide details about certain uses of cash by the Company.)

 

Capital expenditures were $0.4 million in the first quarter of fiscal 2006 and $0.1 million in the first quarter of fiscal 2005.

 

Capital expenditures are budgeted to be $12 million for fiscal 2006, including costs of refurbishing certain stores and building new stores. See, “Stores.”  This paragraph constitutes forward-looking information under the Reform Act and is subject to the variables, uncertainties and other risk factors referred to under the caption “Future Results.”

 

 

 

***Principal Contractual Obligations***

 

The principal contractual obligations of the Company at January 28, 2006 were summarized in the Form 10-K.

 

During the first quarter of fiscal 2006, there was no material change outside the ordinary course of the Company’s business in the principal contractual obligations of the Company, taken as a whole.

 

***Pending Litigation***

 

The Company is involved in legal actions and claims arising in the ordinary course of business. Management believes that pending litigation and claims, net of reserves, will not have a material adverse effect on the Company’s financial position, annual results of operations or cash flows. See, also, “Critical Accounting Policies-Incurred But Not Reported Claims For Personal Injuries and Medical Benefits.”  This paragraph constitutes forward-looking information under the Reform Act.

 

***Meeting Cash Requirements***

 

The Company’s cash requirements include (i) anticipated working capital needs, including seasonal inventory financing, (ii) financing activities, including payments due on its principal contractual obligations and (iii) investing activities, including costs for refurbishing and building stores and replacing fixtures where appropriate. During the first quarter of fiscal 2006, the Company funded its cash requirements from net cash provided from operating activities. The Company’s historical sources of liquidity have been the availability of credit under the Financing Agreement on a revolving basis and short-term trade credit, as well as its cash on hand and net cash provided by operating activities. 

 

The Company plans to use the Financing Agreement for its immediate and future working capital needs. Management believes that the borrowing capacity under the Financing Agreement, together with cash on hand and current and anticipated cash flow from operations, will be adequate to meet the Company’s cash requirements for at least the next 12 months.  

 

This section constitutes forward-looking information under the Reform Act and is subject to the variables, uncertainties and other risk factors referred to under the caption “Future Results.”

 

***Critical Accounting Policies***

 

(This section discusses the Company’s critical accounting policies.)

 

*Introduction*

 

Financial statements in accordance with generally accepted accounting principles are affected by the policies followed by management in preparing them. Some accounting policies require difficult, subjective or complex judgments by management, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Among the most important accounting policies of the Company that involve such managerial judgments are the use of the retail method of accounting for inventory and the use of estimates of incurred but not reported claims for uninsured damages for personal injuries and workers’ compensation benefits and for benefits under the Company’s self-insured medical, dental and prescription plans for its associates, as well as future development costs of reported claims (collectively, “IBNR Claims”).

 

 

 

*Inventory*

 

In accordance with generally accepted accounting principles, inventories are stated at the lower of cost or market. The Company utilizes the retail method, under which a cost-to-price relationship is developed on the basis of original cost as compared to initial retail selling price. The valuation of inventories at cost and the resulting margins are calculated by applying this cost-to-price relationship to the retail value of inventories. Consequently, the use of the retail inventory method results in valuing inventories at lower of cost or market.

 

Inherent in the retail inventory method are estimates by management on current and future selling value of the inventory. These estimates, which are described in the following paragraph, can significantly impact the ending inventory valuation at cost, as well as resulting margins. In the women’s retail specialty apparel industry, sales, especially in businesses that emphasize fashionable merchandise, can vary significantly over time. Sales are volatile because of shifts in consumer spending patterns, consumer preferences and overall economic conditions; the impact of increased competition; variations in weather patterns; fluctuations in consumer acceptance of products; changes in the ability to develop new merchandise; differences in promotional strategies; and movements in consumer confidence levels. The necessity for managerial estimates based on these variables, coupled with the fact that the retailinventory method is an averaging process, can produce inventory valuations at any point in time that are inexact.   

 

Permanent markdowns, when taken, reduce both the price and cost components of inventory on hand, which maintains the established cost-to-price relationship. Deferred markdowns can result in an overstatement of inventories under the lower of cost or market principle. Accordingly, at the end of each six-month merchandising season, management conducts a thorough review of inventory on hand and, based on management’s business judgment, estimates what quantities of current merchandise are in excess of the amounts saleable at historical margin rates. A markdown reserve is established to reduce to estimated net realizable value the carrying value of excess current merchandise and obsolete categories of merchandise. 

 

The markdown reserve was $1.0 million at the end of the first quarter in fiscal 2006 and 2005, respectively. 

 

Recording a reserve reduces the inventory on the Company’s balance sheet and is charged to the Company’s cost of sales. If reserves were overestimated at the end of a period, income for that period would be understated and margins for the beginning of the next period would be higher. (The opposite would be true if reserves were underestimated.)    

 

Markdown reserves may fluctuate because the market environment is dynamic for the reasons set forth in the second paragraph in this section. However, a consistent methodology for markdown reserves is one of the Company’s important accounting objectives.

 

*Incurred But Not Reported Claims For Personal Injuries and Medical Benefits*

 

The Company records a liability for IBNR Claims, which is based on (i) the number and size of outstanding claims, (ii) a comparison between the dates paid claims were incurred and the dates they were paid, (iii) an analysis of the amounts previously paid, (iv) projections of inflation in medical costs and (v) advice from time to time from its insurance broker. The Company has insurance policies with coverage for auto, general liability and workers’ compensation claims but it remains liable for a self-insured retention of    $0.1 million for each auto claim and $0.3 million for each general liability and workers’ compensation claim. The Company is self-insured for its medical, dental and prescription plans for associates. The Company has stop loss insurance coverage for employee medical claims over $0.2 million each. Also, there is an aggregate limit for these plans which, at January 28, 2006, was$6.7 million based on the number of associates participating at that time.     

 

 

 

 

The Company’s methodologies for estimating liabilities for IBNR claims are discussed in the Form 10-K. 

 

***Private Label Credit Cards Issued By The Bank***

 

In first quarter of fiscal 2005, the Company and World Financial Network National Bank (the “Bank”) were parties to a Private Label Credit Card Program Agreement, dated January 27, 1998 (the “1998 Credit Card Program Agreement”).

 

Under the 1998 Credit Card Program Agreement, the Bank issued credit cards to eligible Company customers who applied to the Bank. Customers met standards for creditworthiness set by the Bank with the approval of the Company. The credit cards issued by the Bank were co-branded with both the Company’s AVENUE service mark and the Bank’s name. The credit cards were used only for merchandise and services offered by the Company. Credit card holders remitted payments to the Bank, generally by mailing personal checks. The Bank also handled all statement processing, payment processing, cardholder customer service and collections from delinquent cardholders.

 

In accordance with generally accepted accounting principles, the Company did not include the receivable asset created under the 1998 Credit Card Program Agreement in the Company’s accounts receivable on its balance sheets because the Company had no interest in the customer accounts or receivables. In this connection, it should be noted that the 1998 Credit Card Program Agreement stated that (i) the Bank is the sole and exclusive owner of all customer accounts, (ii) the Company has no interest in the customer accounts and (iii) the Bank is the creditor in respect of receivables (defined in the 1998 Credit Card Program Agreement as amounts owed with respect to retail purchases, finance charges, deferred finance charges, other fees and charges for sales tax). Also, depending on the circumstances, the Company might not purchase the accounts from the Bank upon the expiration of the contractual term.   

 

The credit card program premium reflected in general, administrative and store operating expenses was an amount equal to royalties paid to the Company by the Bank minus costs charged by the Bank. Costs were based on the volume of credit card program processing activities performed by the Bank. 

 

Royalties were based on program revenues minus receivables written off by the Bank and the cost of funds for the program.   

 

On November 28, 2005, the 1998 Credit Card Program Agreement was restated (as restated, the “Amended Agreement”). Under the Amended Agreement, the Bank will continue the private label credit card program and will issue Avenue credit cards that may be used to purchase merchandise and services from United Retail Incorporated and its designees. The Bank also will continue to administer the credit card program, handling remittances and processing services. The Bank will continue to be the sole and exclusive owner of all customer accounts and the creditor in respect of receivables generated. However, the Company must approve any changes to consumer charges, credit terms and credit criteria related to the accounts from those in effect on the date of the Amended Agreement.

 

Under the Amended Agreement, the Bank pays the Company specified percentages of net credit sales and outstanding receivables, respectively, less chargebacks and “pass through” expenses. Bank payments reduce general, administrative and store operating expenses.

 

Net credit sales volume with the Bank was $31.1 million in the first quarter of fiscal 2006 and $31.7 million in the first quarter of fiscal 2005.

 

The Amended Agreement became effective January 29, 2006, and shall expire on February 29, 2012 (as may be extended, the “Term”) unless earlier terminated. Additionally, the Term shall automatically extend for successive three-year terms unless one party notifies the other at least six months prior to any such extension that it does not wish to extend the Amended Agreement.

 

 

During the Term of the Amended Agreement, United Retail Incorporated may not, directly or indirectly, make available to customers any credit program or facility that is similar in purpose to the program established under the Amended Agreement except multi-purpose credit, charge, debit or secured cards.

 

At the expiration of the Term, the Company shall have the right to purchase the customer accounts from the Bank for a price equal to the receivables. Also, the Bank shall then have the right to sell the customer accounts to the Company at that price if the Company commences a private label credit card program either on its own or through another issuer of credit cards. When the Amended Agreement is about to expire without being renewed, the Company is likely to submit requests for proposals to other banks that issue private label credit cards to retailers’ customers and to use the banks’ proposals to evaluate a continuation of the private label credit card program. There is no assurance, however, that other banks would make proposals to continue the program on terms satisfactory to the Company or that the Company could finance a program on its own without involving a bank. The penultimate sentenceconstitutes forward-looking information under the Reform Act and is subject to possible changes in the sector of the banking industry that issues co-branded credit cards to customers of retail chains and in governmental regulations affecting that sector.

 

**Stock Options**

 

Financial Accounting Standards Board SFAS No. 123R, “Share-Based Payment” (“SFAS No. 123R”) requires all share-based payments to employees, including grants of employee stock options, to be measured at their fair values at the date of grant and recognized as expense over the service period, which is generally the vesting period. The Company adopted SFAS No. 123R in the first quarter of fiscal 2006, using the modified prospective method. The adoption of SFAS No. 123R increased compensation expense for the quarter $0.1 million.

 

***Stores***

 

The Company’s channel of distribution is retail stores using its AVENUE® trade name. The Company leased 496 stores in 37 states at April 29, 2006.  

 

Store counts averaged 546 stores, 531 stores and 509 stores, respectively, for fiscal 2003, 2004 and 2005.  The decline in store counts resulted from the Company's normal ongoing lease maintenance store closings combined with a business decision not to open significantnumbers of new stores until there was a clear indication of customer acceptance of the Company's new merchandise assortment.   

 

The Company estimates that it will close approximately 15-20 stores in fiscal 2006 as part of its normal lease maintenance program and open approximately 15-20 new stores, generally in strip shopping centers, in fiscal 2006. This paragraph contains forward-looking information under the Reform Act, which is subject to the variables, uncertainties and other risk factors referred to under the caption “Future Results.”      

 

Retail selling space was approximately 2.2 million square feet both at April 29, 2006 and April 30, 2005. 

 

Depreciation and amortization of property and equipment relate principally to assets in stores and declined to $3.1 million in the first quarter of fiscal 2006 from $3.4 million in the first quarter of fiscal 2005. 

 

***E-Commerce***

 

The Company has an Internet site (www.avenue.com) that sells a selection of the merchandise that is also for sale in the Company’s stores. The Company ships its avenue.com orders from its national distribution center in Troy, Ohio.

 

***Suspension of Catalog Operations***

 

The Company mailed catalogs until March 2003, when the Company suspended catalog mailings indefinitely.

 

 

The Company licensed its AVENUE trade name to a leading catalog publisher to conduct a market test of an AVENUE catalog earlier in fiscal 2006. The Company was not responsible for the costs of the market test, did not supply the merchandise featured and did not include sales to catalog customers in its reported sales. The results of the market test have been analyzed and the Company and the catalog publisher will not go forward with further mailings.

 

***Supplemental Retirement Savings Plan***

 

Prior to fiscal 2005, the trust under the Company’s Supplemental Retirement Savings Plan (“SRSP”) had purchased 279,870 shares using a portion of the funds accumulated in the deferred compensation account of Raphael Benaroya, the Company’s Chairman, President and Chief Executive Officer. (56.2% of the account balance at the time represented amounts withheld from Mr. Benaroya’s salary and earnings thereon and the remainder represented contributions by the Company pursuant to the general terms of the SRSP and earnings thereon.)

 

In the first quarter of fiscal 2005, the shares held in Mr. Benaroya’s SRSP account were classified as treasury shares and had no voting rights. With respect to the deferred compensation obligations of the SRSP, the liability was marked to market and this liability adjustment flowed through the statement of operations as either an increase or a decrease in compensation expense. With respect to the SRSP assets, marketable securities were also marked to market except shares of Company stock, which were recorded permanently at cost. This asset adjustment also flowed through the statement of operations.  The liability adjustment and the asset adjustment were not necessarily equal in amount because of the disparate treatment of Company stock. In the first quarter of fiscal 2005, the market price of Company stock rose and compensation expense was increased $0.1 million as a result of the foregoing accounting treatment.

 

The SRSP was subsequently amended to change the status of the shares held in Mr. Benaroya’s SRSP account and to accord voting rights to the shares, which are now classified as outstanding shares. (The shares are voted by the Administrative Committee of the SRSP, composed of Company officers other than Mr. Benaroya, in the exercise of its fiduciary duties.)  The change in the classification of the shares eliminated the disparate adjustments of SRSP liabilities and assets described in the preceding paragraph and the related effect on compensation expense.

 

***Growth***

 

The Company plans to continue its internal growth by increasing sales per square foot in its existing store base. Also, the Company from time to time conducts “due diligence” reviews of businesses that are either for sale as a going concern or are in liquidation. The Company would consider making a bid on a suitable corporate acquisition at an opportune price if adequate financing at acceptable rates were available.

 

***Off-Balance Sheet Arrangements***

 

The Company does not have material off-balance sheet arrangements.

 

***Future Results***

 

The Company cautions that any forward-looking statements (as such term is defined in the Reform Act) contained in this Report or otherwise made by management of the Company involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond the Company’s control. Accordingly, the Company’s future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements.

 

 

The Company historically experienced fluctuations in customer response to its merchandise assortments. Future success depends on the Company’s ability to consistently anticipate, assess and react to the changing demands of its customer-base. As a private label merchandiser, the Company assumes certain risks, including long product lead times and high initial purchase commitments, that amplify the consequences of any miscalculation that it might make in anticipating fashion trends or interpreting them for customers. There is no assurance that the Company will be able to identify and offer merchandise that appeals to its customer-base or that the introduction of new merchandise will be successful or profitable.

 

Future success also depends upon the Company’s ability to effectively define, evolve and promote its brand. In order to achieve and maintain significant brand name recognition, it may become necessary to increase investments in the development of the brand through various means, including customer research, advertising, direct mail marketing and Internet marketing. There is no assurance that, if such funding becomes necessary, it will be available.

 

The following additional factors, among others, could also affect the Company’s actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements included in this Report or otherwise made by management: threats of terrorism; war risk; shifts in consumer spending patterns, overall economic conditions; the impact of increased competition; variations in weather patterns; increases in interest rates; the ability to retain, hire and train key personnel; risks associated with the ability of the Company’s manufacturers to deliver products in a timely manner; political instability and other risks associated with foreign sources of production and increases in fuel costs. 

 

As a result of the variables, risks and uncertainties referred to in this section, the estimates and projections made in this Report, and the expectations referred to herein, may not be reliable.

 

The Company assumes no obligation to update any forward-looking statement.

 

**Stockholder Rights Plan**

 

Any action by the Company’s stockholders with respect to any proposed merger or business combination with another corporation shall be taken by a majority of the votes cast at a meeting at which a quorum is present except as may be otherwise prescribed by the General Corporation Law of Delaware (the “GCL”) at the time. However, the Company’s stockholder rights plan (filed with the Commission as the exhibit to the Company’s Registration Statement on Form 8-A, dated September 15, 1999 and available online at www.sec.gov) and certain provisions of the By-Laws (filed with the Commission as Exhibit No. 3 to the Company’s Current Report on Form 8-K, dated March 2, 2006, and available online at www.sec.gov) impose restrictions on mergers and business combinations in addition to the requirements of the GCL. These rights and By-Law provisions may make it more difficult for a third party toacquire the Company even if doing so would allow the stockholders to receive a premium over the prevailing market price of the Common Stock. These rights and By-Law provisions are intended to encourage potential acquirers to negotiate and allow the Board of Directors the opportunity to consider alternative proposals in the interest of maximizing stockholder value. However, these rights and provisions may also discourage acquisition proposals or delay or prevent a change in control, which could negatively affect the price of the Common Stock.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

The Company does not hold or issue financial instruments for trading purposes. 

 

Management of the Company believes that its exposure to interest rate risk is not material. See, however, in Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” the penultimate paragraph under the caption “Other Liquidity Sources” regarding the variable interest rate payable on revolving loans to the Companies. The pertinent paragraph is incorporated herein by reference.

 

 

In the first quarter of fiscal 2006, expenses arising from stock appreciation rights to be settled in cash held by nonmanagement Directors were $0.5 million as a result of an increase in the market price of shares. Management of the Company believes that its exposure to market risk is not material.

 

The Company is not exposed to foreign currency exchange rate risk under its existing contracts, such as purchase orders for imported merchandise, which are payable in U.S. dollars. However, U.S. dollar denominated prices quoted by merchandise vendors abroad for new orders reflect, among other things, the foreign exchange rate of the U.S. dollar.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

**Disclosure Controls**

 

A committee of senior managers in the Company’s Finance Department (the “Disclosure Committee”), chaired by the Chief Financial Officer (the “CFO”), coordinates disclosure controls and procedures (as defined by Exchange Act Rule 13a-15(e)) with respect to information required to be disclosed by the Company (“Disclosures”) in filings with the Commission. The Company’s disclosure controls and procedures are intended to provide reasonable assurance that the disclosure controls and procedures will meet their objectives. 

 

Each fiscal quarter, the Company performs a formal evaluation of both the effectiveness and the design and operation of the Company’s disclosure controls and procedures. The evaluation includes, among other things, consideration of the processes carried out under the direction of the Disclosure Committee in order to ensure that Disclosures are recorded, processed, summarized and reported within the time periods specified by the Commission’s rules and forms, and that Disclosures are accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer (the “CEO”) and CFO, as appropriate, to allow timely discussion regarding required financial disclosure. 

 

 

As of the end of first quarter of fiscal 2006, such an evaluation was carried out under the supervision and with the participation of the CEO and CFO. Based on this evaluation, the CEO and CFO each concluded that, at April 29, 2006, the Company’s disclosure controls and procedures were effective to ensure that the information required to be disclosed in Commission reports is recorded, processed, summarized and reported within the requisite time periods. 

 

**Internal Control Over Financial Reporting**

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the Company. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of Company assets, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures are madeonly in accordance with authorizations of management and the Board of Directors and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on financial statements.

 

Each fiscal quarter, the Company performs a formal evaluation, in which the Company’s CEO and CFO participate, of changes in the Company’s internal control over financial reporting. Based on this evaluation, management concluded that there was no change in the Company’s internal control over financial reporting during the fiscal quarter ended April 29, 2006 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 

 

**PART II – OTHER INFORMATION**

 

ITEM 1. LEGAL PROCEEDINGS.

 

The subsection in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” captioned “Pending Litigation” is incorporated herein by reference.

 

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

In the last month of the first quarter of fiscal 2006, the Company repurchased a total of 4,795 shares at an average price of $16.99 per share from associates of the Company in connection with net issuances of shares upon the exercise of employee stock options. (A net issuance of shares upon option exercise involves withholding a portion of the shares that otherwise would have been issued.)  The Company has no present intention of repurchasing shares other than in connection with exercises of employee stock options.

 

The Financing Agreement does not permit the Company to pay dividends.

 

ITEM 5.

OTHER INFORMATION.

 

**Bonus Agreement**

 

On June 1, 2006, United Retail Incorporated, a subsidiary of the Company, entered into a bonus agreement with Ellen Demaio, its Senior Vice President-Merchandise (the “Bonus Agreement”). The Bonus Agreement provides for two consecutive bonus payments contingent on continued employment and achievement of goals for consolidated operating income and consolidated net sales of the Company.

 

The Bonus Agreement was recommended by the Compensation Committee of the Board of Directors and unanimously approved by the Board in advance.

 

An initial bonus payment of approximately $667,000 shall be due if three conditions are each satisfied:

 

(i)

the Company’s consolidated operating income shall be at least a specified amount* in any fiscal year (the “First Measurement Period”) prior to fiscal 2010;

(ii)

the Company’s consolidated operating income shall be a specified higher amount* in the fiscal year that follows the First Measurement Period; and

(iii)

the Company’s consolidated net sales shall be a specified percentage higher* in the year that follows the First Measurement Period.

 

A second bonus payment of approximately $333,000 shall be due if three conditions are each satisfied:

 

(i)

the initial bonus in the amount of approximately $667,000 shall have been earned;

 
(ii)

the Company’s consolidated operating income shall be a specified higher amount* in the fiscal year that follows the consecutive fiscal years referred to above; and

(iii)

the Company’s consolidated net sales in that fiscal year shall be a specified percentage higher* than in the previous year.

 

____*The Company believes that the operating income amounts and net sales increase percentages included in the Bonus Agreement as performance criteria are confidential commercial or business information, the disclosure of which would have an adverse effect on the Company and put it at a competitive disadvantage.

 

 

 

 

ITEM 6. EXHIBITS.

 

(a)     Consolidated Financial Statements of the Corporation for first quarter of fiscal 2006 are included herein.

 

(b)

 

(1)

The following additional exhibits are filed herewith:

 

Number

Description

10*

Bonus Agreement dated June 1, 2006, between the Corporation and Ellen Demaio (Confidential portions filed separately with the Secretary of the Commission)

31

Certifications pursuant to Section 302

 

(2)

Certifications pursuant to Section 906 are furnished as Exhibit 32 hereto.

 

(3)

The following additional documents available online at www.sec.gov are incorporated herein by

reference:

 

The following exhibits to the Corporation’s Current Report on Form 8-K filed on June 2, 2006 are incorporated herein by reference:

 

Number in Filing

Description

10.1*

Standard form of Nonqualified Stock Option award agreement under the Corporation’s 2006 Equity-Based Compensation and Performance Incentive Plan (“2006 Plan”)

10.2*

Standard form of Stock Appreciation Right settled in cash under the 2006 Plan

10.3*

Standard form of Stock Appreciation Right settled in cash granted to nonmanagement Directors under the Corporation’s former Stock Appreciation Rights Plan

10.4*

Tax Accounting Fee Reimbursement Plan

 

 

The 2006 Plan set forth as the appendix to the Corporation’s proxy statement on Schedule 14A for its 2006 annual meeting of stockholders is incorporated herein by reference.*

 

The following exhibit to the Corporation’s Annual Report on Form 10-K for the year ended January 28, 2006 is incorporated herein by reference:

 

Number in Filing

Description

10

Private Label Credit Card Program Agreement between the Corporation and United Retail Incorporated and World Financial Network National Bank (Confidential portions filed separately with the Secretary of the Commission)

 

The following exhibits to the Corporation’s Current Report on Form 8-K filed on March 2, 2006 are incorporated herein by reference:

 

Number in Filing

Description

3

Amended By-laws of the Corporation

10.1*

Spring 2006 Incentive Compensation Plan Agreement

 

The following exhibit to the Corporation’s Current Report on Form 8-K filed on November 29, 2005 is incorporated herein by reference:

                    

Number in Filing

Description

10

Form of Severance Pay Agreements between United Retail Incorporated and its officers hired after August 21, 2005

 

 

 

 

 

The following exhibits to the Corporation’s Current Report on Form 8-K filed on September 1, 2005 are incorporated herein by reference:

 

Number in Filing

Description

10.2*

Amendment to Supplemental Retirement Savings Plan 

10.3*

Amendment, dated August 29, 2005, to Employment Agreement, dated as of September 3, 2004, between the Corporation and Raphael Benaroya (“Benaroya Employment Agreement”)

10.4*

Amendment, dated August 29, 2005, to Employment Agreement, dated as of September 3, 2004, between the Corporation and George R. Remeta (“Remeta Employment Agreement”)

10.5*

Amendment, dated August 29, 2005, to Employment Agreement, dated as of September 3, 2004, between the Corporation and Kenneth P. Carroll (“Carroll Employment Agreement”)

10.6*

Form of Severance Pay Agreements, dated August 26, 2005, between the Corporation and Terence Puffer and Rose Panicali, respectively

10.9*

Bonus Agreement, dated August 22, 2005, between the Corporation and Rose Panicali

 

The following exhibits to the Corporation’s Current Report on Form 8-K filed on June 29, 2005 are incorporated herein by reference:

 

Number in Filing

Description

10.1*

Supplemental Retirement Savings Plan

10.2*

Form of Severance Pay Agreement

10.3*

Amendment to 2003 Stock Option Plan

10.4*

Amendment to 2001 Stock Option Plan

10.5*

Amendment to 1999 Stock Option Plan

10.6*

Amendment to 1996 Stock Option Plan

10.7*

Amendment to 1990 Stock Option Plan

10.8*

Amendment to Stock Option Agreement, dated May 21, 1998, between the Corporation and Raphael Benaroya

10.9*

Amendment to Stock Option Agreement, dated May 21, 1998, between the Corporation and George R. Remeta

10.10*

Amendment to Benaroya Employment Agreement

10.11*

Amendment to Remeta Employment Agreement

10.12*

Amendment to Carroll Employment Agreement

 

The following exhibit to the Corporation’s Current Report on Form 8-K filed on April 22, 2005 is incorporated herein by reference:

                    

Number in Filing

Description

10*

Restated Stock Appreciation Rights Plan

 

The following exhibit to the Corporation’s Quarterly Report on Form 10-Q for the period ended October 30, 2004 is incorporated herein by reference:

 

Number in Filing

Description

21

Subsidiaries of the Corporation

 

 

 

The following exhibits to the Corporation’s Quarterly Report on Form 10-Q for the period ended July 31, 2004 are incorporated herein by reference:

 

Number in Filing

Description

10.1*

Benaroya Employment Agreement

10.2*

Remeta Employment Agreement

10.3*

Carroll Employment Agreement

 

The following exhibit to the Corporation’s Quarterly Report on Form 10-Q for the period ended April 29, 2004 is incorporated herein by reference:

 

Number in Filing

Description

10*

Bonus agreement, dated May 28, 2004, between the Corporation and Joann Fielder

                    

The following exhibits to the Corporation’s Annual Report on Form 10-K for the year ended January 31, 2004 are incorporated herein by reference:

 

Number in Filing

Description

10.2*

Form of Indemnification Agreement between the Corporation and each of its Directors

14

Code of Ethics for Principal Executive and Senior Financial Officers pursuant to Section 406

 

The following exhibit to the Corporation’s Current Report on Form 8-K filed on January 8, 2004 is incorporated herein by reference:

 

Number in Filing

Description

10

Amendment, dated December 23, 2003, to Financing Agreement among the Corporation, United Retail Incorporated, Cloudwalkers, Inc. and The CIT Group/Business Credit, Inc., as Agent and Lender (“CIT”)

 

The 2003 Stock Option Plan set forth as the appendix to the Corporation’s proxy statement on Schedule 14A for its 2003 annual meeting of stockholders is incorporated herein by reference.*

 

The following exhibit to the Corporation’s Annual Report on Form 10-K/A for the year ended February 1, 2003 is incorporated herein by reference:

 

Number in Filing

Description

10.1

Amendment, dated January 31, 2003, to Financing Agreement among the Corporation, United Retail Incorporated, Cloudwalkers, Inc. and CIT

 

The following exhibit to the Corporation’s Quarterly Report on Form 10-Q for the period ended August 3, 2002 is incorporated herein by reference:

 

Number in Filing

Description

10.1

Amendment, dated August 2, 2002, to Financing Agreement among the Corporation, United Retail Incorporated, Cloudwalkers, Inc. and CIT

 

 

The following exhibits to the Corporation’s Annual Report on Form 10-K for the year ended February 2, 2002 are incorporated herein by reference:

 

Number in Filing

Description

10.1

Amendment, dated April 5, 2002, to Private Label Credit Card Program Agreement, dated January 27, 1998, between the Corporation, United Retail Incorporated and World Financial Network National Bank (“Private Label Credit Card Program Agreement”)

10.2

Amendment, dated December 29, 1999, to Private Label Credit Card Program Agreement

10.3

Amendment, dated August 19, 1999, to Private Label Credit Card Program Agreement

 

The following exhibits to the Corporation’s Quarterly Report on Form 10-Q for the period ended November 3, 2001 are incorporated herein by reference:

 

Number in Filing

Description

10.4*

Summary Plan Description for United Retail Group, Inc. Incentive Compensation Program for Executives

10.5

Amendment, dated October 1, 2001, to Private Label Credit Card Program Agreement 

 

The 2001 Stock Option Plan set forth as an appendix to the Corporation’s proxy statement on Schedule 14A for its 2001 annual meeting of stockholders is incorporated herein by reference.*

 

The following exhibit to the Corporation’s Registration Statement on Form S-8 (Registration No. 333-44868) is incorporated herein by reference:

 

Number in Filing

Description

10

Amendment, dated August 21, 2000, to Financing Agreement among the Corporation, United Retail Incorporated, Cloudwalkers, Inc. and CIT

 

The following exhibits to the Corporation’s Annual Report on Form 10-K for the year ended January 29, 2000 are incorporated herein by reference:  

 

Number in Filing

Description

10.2

Amendment, dated December 28, 1999, to Financing Agreement among the Corporation, United Retail Incorporated and CIT (“Financing Agreement”)

10.3

Amendment, dated January 31, 2000, to Financing Agreement among the Corporation, United Retail Incorporated, Cloudwalkers, Inc. and CIT

 

The following exhibit to the Corporation’s Quarterly Report on Form 10-Q for the period ended October 30, 1999 is incorporated herein by reference:

 

Number in Filing

Description

10.1

Amendment, dated October 6, 1999, to Financing Agreement

 

 

 

The following exhibit to the Corporation’s Current Report on Form 8-K, filed September 23, 1999, is incorporated herein by reference:  

 

Number in Filing

Description

3

Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock

                

The stockholders’ rights plan filed as the exhibit to the Corporation’s Registration Statement on Form 8-A, dated September 15, 1999, is incorporated herein by reference. 

 

The following exhibit to the Corporation’s Annual Report on Form 10-K for the year ended January 30, 1999 is incorporated herein by reference:  

 

Number in Filing

Description

10.1

Amendment, dated March 29, 1999, to Financing Agreement

 

The 1999 Stock Option Plan set forth as the Appendix to the Corporation’s proxy 

statement on Schedule 14A for its 1999 annual meeting of stockholders is incorporated herein by 

reference.*

 

The following exhibits to the Corporation’s Quarterly Report on Form 10-Q for the period ended May 2, 1998 are incorporated herein by reference: 

 

Number in Filing

Description

10.1*

1998 Stock Option Agreement, dated May 21, 1998, between the Corporation and Raphael Benaroya

10.2*

1998 Stock Option Agreement, dated May 21, 1998, between the Corporation and George R. Remeta

 

The following exhibits to the Corporation’s Annual Report on Form 10-K for the year ended January 31, 1998 are incorporated herein by reference:  

 

Number in Filing

Description

10.1

Restated Stockholders’ Agreement, dated December 23, 1992, between the Corporation and certain of its stockholders and Amendment No. 1, Amendment No. 2 and Amendment No. 3 thereto

10.2

Private Label Credit Card Program Agreement

10.4*

Restated 1990 Stock Option Plan as of March 6, 1998

10.5*

Restated 1990 Stock Option Plan as of May 28, 1996

10.6*

Restated 1996 Stock Option Plan as of March 6, 1998

 

The following exhibit to the Corporation’s Quarterly Report on Form 10-Q for the period ended November 1, 1997 is incorporated herein by reference: 

 

Number in Filing

Description

10.1

Amendment, dated September 15, 1997, to Financing Agreement

 

The following exhibit to the Corporation’s Quarterly Report on Form 10-Q for the period ended August 2, 1997 is incorporated herein by reference:

 

Number in Filing

Description

10.1

Financing Agreement

 

 

 

The following exhibits to the Corporation’s Registration Statement on Form S-1 (Registration No. 33-44499), as amended, are incorporated herein by reference:

 

Number in Filing

Description

3.1

Amended and Restated Certificate of Incorporation of the Corporation

4.1

Specimen Certificate for Common Stock of the                 Corporation

_______________

*A compensatory plan for the benefit of the Corporation’s management or a management contract.

 

 

 

**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.

 

(Registrant)  

UNITED RETAIL GROUP, INC.  

 

 

Date:  June 5, 2006

 

 

By: /s/ GEORGE R. REMETA

George R. Remeta, Vice Chairman of the Board, Chief

Administrative Officer and Chief Financial Officer – Authorized Signature

 

 

 

By: /s/ JON GROSSMAN

Jon Grossman, Vice President, Finance and Chief Accounting Officer

 

 

 

 

 

**EXHIBIT INDEX**

 

(a)     Consolidated Financial Statements of the Corporation for first quarter of fiscal 2006 are included herein.

 

(b)

 

(1)

The following additional exhibits are filed herewith:

 

Number

Description

10*

Bonus Agreement, dated June 1, 2006, between the Corporation and Ellen Demaio (Confidential portions filed separately with the Secretary of the Commission)

31

Certifications pursuant to Section 302

 

 

 

 

(2)

Certifications pursuant to Section 906 are furnished as Exhibit 32 hereto.

 

(3)

The following additional documents available online at www.sec.gov are incorporated herein by

reference:

 

The following exhibits to the Corporation’s Current Report on Form 8-K filed on June 2, 2006 are incorporated herein by reference:

 

Number in Filing

Description

10.1*

Standard form of Nonqualified Stock Option award agreement under the Corporation’s 2006 Equity-Based Compensation and Performance Incentive Plan (“2006 Plan”)

10.2*

Standard form of Stock Appreciation Right settled in cash under the 2006 Plan

10.3*

Standard form of Stock Appreciation Right settled in cash granted to nonmanagement Directors under the Corporation’s former Stock Appreciation Rights Plan

10.4*

Tax Accounting Fee Reimbursement Plan

 

 

The 2006 Plan set forth as the appendix to the Corporation’s proxy statement on Schedule 14A for its 2006 annual meeting of stockholders is incorporated herein by reference.*

 

The following exhibit to the Corporation’s Annual Report on Form 10-K for the year ended January 28, 2006 is incorporated herein by reference:

 

Number in Filing

Description

10

Private Label Credit Card Program Agreement between the Corporation and United Retail Incorporated and World Financial Network National Bank (Confidential portions filed separately with the Secretary of the Commission)

 

The following exhibits to the Corporation’s Current Report on Form 8-K filed on March 2, 2006 are incorporated herein by reference:

 

Number in Filing

Description

3

Amended By-laws of the Corporation

10.1*

Spring 2006 Incentive Compensation Plan Agreement

 

The following exhibit to the Corporation’s Current Report on Form 8-K filed on November 29, 2005 is incorporated herein by reference:

                    

Number in Filing

Description

10

Form of Severance Pay Agreements between United Retail Incorporated and its officers hired after August 21, 2005

 

 

 

The following exhibits to the Corporation’s Current Report on Form 8-K filed on September 1, 2005 are incorporated herein by reference:

 

Number in Filing

Description

10.2*

Amendment to Supplemental Retirement Savings Plan 

10.3*

Amendment, dated August 29, 2005, to Employment Agreement, dated as of September 3, 2004, between the Corporation and Raphael Benaroya (“Benaroya Employment Agreement”)

10.4*

Amendment, dated August 29, 2005, to Employment Agreement, dated as of September 3, 2004, between the Corporation and George R. Remeta (“Remeta Employment Agreement”)

10.5*

Amendment, dated August 29, 2005, to Employment Agreement, dated as of September 3, 2004, between the Corporation and Kenneth P. Carroll (“Carroll Employment Agreement”)

10.6*

Form of Severance Pay Agreements, dated August 26, 2005, between the Corporation and Terence Puffer and Rose Panicali, respectively

10.9*

Bonus Agreement, dated August 22, 2005, between the Corporation and Rose Panicali

 

The following exhibits to the Corporation’s Current Report on Form 8-K filed on June 29, 2005 are incorporated herein by reference:

 

Number in Filing

Description

10.1*

Supplemental Retirement Savings Plan

10.2*

Form of Severance Pay Agreement 

10.3*

Amendment to 2003 Stock Option Plan

10.4*

Amendment to 2001 Stock Option Plan

10.5*

Amendment to 1999 Stock Option Plan

10.6*

Amendment to 1996 Stock Option Plan

10.7*

Amendment to 1990 Stock Option Plan

10.8*

Amendment to Stock Option Agreement, dated May 21, 1998, between the Corporation and Raphael Benaroya

10.9*

Amendment to Stock Option Agreement, dated May 21, 1998, between the Corporation and George R. Remeta

10.10*

Amendment to Benaroya Employment Agreement

10.11*

Amendment to Remeta Employment Agreement

10.12*

Amendment to Carroll Employment Agreement

 

The following exhibit to the Corporation’s Current Report on Form 8-K filed on April 22, 2005 is incorporated herein by reference:

                    

Number in Filing

Description

10*

Restated Stock Appreciation Rights Plan

 

The following exhibit to the Corporation’s Quarterly Report on Form 10-Q for the period ended October 30, 2004 is incorporated herein by reference:

 

Number in Filing

Description

21

Subsidiaries of the Corporation

 

 

 

The following exhibits to the Corporation’s Quarterly Report on Form 10-Q for the period ended July 31, 2004 are incorporated herein by reference:

 

Number in Filing

Description

10.1*

Benaroya Employment Agreement

10.2*

Remeta Employment Agreement

10.3*

Carroll Employment Agreement

 

The following exhibit to the Corporation’s Quarterly Report on Form 10-Q for the period ended April 29, 2004 is incorporated herein by reference:

 

Number in Filing

Description

10*

Bonus agreement, dated May 28, 2004, between the Corporation and Joann Fielder

                    

The following exhibits to the Corporation’s Annual Report on Form 10-K for the year ended January 31, 2004 are incorporated herein by reference:

 

Number in Filing

Description

10.2*

Form of Indemnification Agreement between the Corporation and each of its Directors

14

Code of Ethics for Principal Executive and Senior Financial Officers pursuant to Section 406

 

The following exhibit to the Corporation’s Current Report on Form 8-K filed on January 8, 2004 is incorporated herein by reference:

 

Number in Filing

Description

10

Amendment, dated December 23, 2003, to Financing Agreement among the Corporation, United Retail Incorporated, Cloudwalkers, Inc. and The CIT Group/Business Credit, Inc., as Agent and Lender (“CIT”)

 

The 2003 Stock Option Plan set forth as the appendix to the Corporation’s proxy statement on Schedule 14A for its 2003 annual meeting of stockholders is incorporated herein by reference.*

 

The following exhibit to the Corporation’s Annual Report on Form 10-K/A for the year ended February 1, 2003 is incorporated herein by reference:

 

Number in Filing

Description

10.1

Amendment, dated January 31, 2003, to Financing Agreement among the Corporation, United Retail Incorporated, Cloudwalkers, Inc. and CIT

 

The following exhibit to the Corporation’s Quarterly Report on Form 10-Q for the period ended August 3, 2002 is incorporated herein by reference:

 

Number in Filing

Description

10.1

Amendment, dated August 2, 2002, to Financing Agreement among the Corporation, United Retail Incorporated, Cloudwalkers, Inc. and CIT

 

 

The following exhibits to the Corporation’s Annual Report on Form 10-K for the year ended February 2, 2002 are incorporated herein by reference:

 

Number in Filing

Description

10.1

Amendment, dated April 5, 2002, to Private Label Credit Card Program Agreement, dated January 27, 1998, between the Corporation, United Retail Incorporated and World Financial Network National Bank (“Private Label Credit Card Program Agreement”)

10.2

Amendment, dated December 29, 1999, to Private Label Credit Card Program Agreement

10.3

Amendment, dated August 19, 1999, to Private Label Credit Card Program Agreement

 

The following exhibits to the Corporation’s Quarterly Report on Form 10-Q for the period ended November 3, 2001 are incorporated herein by reference:

 

Number in Filing

Description

10.4*

Summary Plan Description for United Retail Group, Inc. Incentive Compensation Program for Executives

10.5

Amendment, dated October 1, 2001, to Private Label Credit Card Program Agreement 

 

The 2001 Stock Option Plan set forth as an appendix to the Corporation’s proxy statement on Schedule 14A for its 2001 annual meeting of stockholders is incorporated herein by reference.*

 

The following exhibit to the Corporation’s Registration Statement on Form S-8 (Registration No. 333-44868) is incorporated herein by reference:

 

Number in Filing

Description

10

Amendment, dated August 21, 2000, to Financing Agreement among the Corporation, United Retail Incorporated, Cloudwalkers, Inc. and CIT

 

The following exhibits to the Corporation’s Annual Report on Form 10-K for the year ended January 29, 2000 are incorporated herein by reference:  

 

Number in Filing

Description

10.2

Amendment, dated December 28, 1999, to Financing Agreement among the Corporation, United Retail Incorporated and CIT (“Financing Agreement”)

10.3

Amendment, dated January 31, 2000, to Financing Agreement among the Corporation, United Retail Incorporated, Cloudwalkers, Inc. and CIT

 

The following exhibit to the Corporation’s Quarterly Report on Form 10-Q for the period ended October 30, 1999 is incorporated herein by reference:

 

Number in Filing

Description

10.1

Amendment, dated October 6, 1999, to Financing Agreement

 

 

 

The following exhibit to the Corporation’s Current Report on Form 8-K, filed September 23, 1999, is incorporated herein by reference:  

 

Number in Filing

Description

3

Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock

                

The stockholders’ rights plan filed as the exhibit to the Corporation’s Registration Statement on Form 8-A, dated September 15, 1999, is incorporated herein by reference. 

 

The following exhibit to the Corporation’s Annual Report on Form 10-K for the year ended January 30, 1999 is incorporated herein by reference:  

 

Number in Filing

Description

10.1

Amendment, dated March 29, 1999, to Financing Agreement

 

The 1999 Stock Option Plan set forth as the Appendix to the Corporation’s proxy 

statement on Schedule 14A for its 1999 annual meeting of stockholders is incorporated herein by 

reference.*

 

The following exhibits to the Corporation’s Quarterly Report on Form 10-Q for the period ended May 2, 1998 are incorporated herein by reference: 

 

Number in Filing

Description

10.1*

1998 Stock Option Agreement, dated May 21, 1998, between the Corporation and Raphael Benaroya

10.2*

1998 Stock Option Agreement, dated May 21, 1998, between the Corporation and George R. Remeta

 

The following exhibits to the Corporation’s Annual Report on Form 10-K for the year ended January 31, 1998 are incorporated herein by reference:  

 

Number in Filing

Description

10.1

Restated Stockholders’ Agreement, dated December 23, 1992, between the Corporation and certain of its stockholders and Amendment No. 1, Amendment No. 2 and Amendment No. 3 thereto

10.2

Private Label Credit Card Program Agreement

10.4*

Restated 1990 Stock Option Plan as of March 6, 1998

10.5*

Restated 1990 Stock Option Plan as of May 28, 1996

10.6*

Restated 1996 Stock Option Plan as of March 6, 1998

 

The following exhibit to the Corporation’s Quarterly Report on Form 10-Q for the period ended November 1, 1997 is incorporated herein by reference: 

 

Number in Filing

Description

10.1

Amendment, dated September 15, 1997, to Financing Agreement

The following exhibit to the Corporation’s Quarterly Report on Form 10-Q for the period ended August 2, 1997 is incorporated herein by reference:

 

Number in Filing

Description

10.1

Financing Agreement

 

 

 

The following exhibits to the Corporation’s Registration Statement on Form S-1 (Registration No. 33-44499), as amended, are incorporated herein by reference:

 

 

Number in Filing

Description

3.1

Amended and Restated Certificate of Incorporation of the Corporation

4.1

Specimen Certificate for Common Stock of the                 Corporation

____________________

 *A compensatory plan for the benefit of the Corporation’s management or a management contract.

 

 

 

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