UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
____________
FORM 10-Q
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 30, 1996
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-17540
MONTGOMERY WARD HOLDING CORP.
(Exact Name Of Registrant As Specified In Its charter)
Delaware 36-3571585
(State Of Incorporation) (I.R.S.
Employer Identification No.)
Montgomery Ward Plaza, Chicago, Illinois 60671
(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number Including Area Code: 312/467-2000
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
As of April 27, 1996 the Registrant had 18,722,248 shares of
Class A Common Stock and 25,000,000 shares of Class B Common
Stock of the Registrant outstanding.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
INDEX
Page
Montgomery Ward Holding Corp.
Consolidated Statement ofIncome.................... 2
Consolidated Balance Sheet......................... 3
Consolidated Statement of Cash Flows............... 4
Notes to Consolidated Financial Statements........ 6
MONTGOMERY WARD HOLDING CORP.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
For the 13-Week
Period Ended
March 30, April 1,
(Millions) 1996 1995
Revenues
Net sales, including leased and
licensed department sales...................... $1,253 $1,357
Direct response marketing revenues,
including insurance............................ 182 130
Total Revenues.............................. 1,435 1,487
Costs and Expenses
Cost of goods sold, including net
occupancy and buying expense................... 1,038 1,076
Operating, selling, general and
administrative expenses, including
benefits and losses of direct
response operations (Note 3)................... 452 399
Interest expense.................................. 22 19
Total Costs and Expenses..................... 1,512 1,494
Loss Before Income Taxes............................. (77) (7)
Income Tax Benefit................................... (29) (3)
Net Loss............................................. (48) (4)
Preferred Stock Dividend Requirements (Note 4)....... 3 1
Net Loss Applicable to
Common Shareholders............................... $ (51) $ (5)
Net Loss per Common Share (Note 2)
Class A.......................................... $ (1.27) $ (.12)
Class B.......................................... $ (1.07) $ (.10)
Cash dividends per Common Share $ - $ -
See notes to consolidated financial statements.
MONTGOMERY WARD HOLDING CORP.
CONSOLIDATED BALANCE SHEET
(UNAUDITED )
ASSETS
March 30, December 30,
(Millions) 1996 1995
Cash and cash equivalents...........................$ 63 $ 37
Short-term investments.............................. 1 1
Investments of insurance operations................. 330 345
Total Cash and Investments................. 394 383
Trade and other accounts receivable................. 179 166
Accounts and notes receivable from affiliates....... 12 22
Total Receivables.......................... 191 188
Merchandise inventories............................. 1,569 1,770
Prepaid pension cost................................ 339 335
Prepaid federal income taxes........................ 26 -
Properties, plants and equipment, net of
accumulated depreciation and amortization........ 1,348 1,366
Direct response and insurance acquisition costs..... 540 395
Other assets........................................ 528 447
Total Assets........................................ $4,935 $4,884
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term debt.................................... $ 701 $ 160
Trade accounts payable............................. 1,313 1,804
Federal income taxes payable....................... - 6
Accrued liabilities and other obligations.......... 1,219 1,195
Insurance policy claim reserves.................... 242 236
Long-term debt..................................... 422 423
Obligations under capital leases................... 65 66
Deferred income taxes.............................. 163 119
Total Liabilities......................... 4,125 4,009
Commitments and Contingent Liabilities (Note 6)
Redeemable Preferred Stock (Note 4)............... 175 175
Shareholders' Equity
Common stock.................................... 1 1
Capital in excess of par value.................. 46 45
Retained earnings............................... 707 758
Unrealized gain on marketable securities........ 10 10
Less: Treasury stock, at cost.................. (129) (114)
Total Shareholders' Equity............... 635 700
Total Liabilities and Shareholders' Equity......... $4,935 $4,884
See notes to consolidated financial statements.
MONTGOMERY WARD HOLDING CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
For the 13-Week
Period Ended
March 30, April 1,
(Millions) 1996 1995
Cash flows from operating activities:
Net loss.............................................$ (48) $ (4)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Depreciation and amortization.................. 31 30
Amortization of Goodwill....................... 6 1
Amortization of Direct response and
insurance acquisition costs................... 42 33
Deferred income taxes.......................... - 2
Net loss adjusted for non-cash expenses... 31 62
Changes in operating assets and liabilities:
(Increase) decrease in:
Trade and other accounts receivable............... 12 8
Accounts and notes receivable from affiliates.... 10 (12)
Merchandise inventories.......................... 201 (3)
Prepaid pension cost............................. (4) (2)
Federal income taxes receivable, net............. (31) (17)
Direct response insurance acquisition costs...... (64) (49)
Other assets..................................... (10) (9)
Increase (decrease) in:
Trade accounts payable............................. (494) (474)
Accrued liabilities and other obligations......... (57) (104)
Insurance policy claim reserves................... 6 2
Net cash used for operations................. (400) (598)
Cash flows from investing activities:
Investment in Merchant Partners...................... (2) -
Acquisition of Amoco Enterprises..................... (102) -
Purchase of short-term investments................... (9) (28)
Purchase of investments of insurance operations...... (104) (91)
Sale of short-term investments....................... 9 25
Sale of investments of insurance operations.......... 117 94
Capital expenditures................................. (11) (18)
Disposition of properties, plants and
equipment, net...................................... 1 6
Net cash used for investing activities......... $(101) $ (12)
See notes to consolidated financial statements.
MONTGOMERY WARD HOLDING CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
For the 13-Week
Period Ended
March 30, April 1,
(Millions) 1996 1995
Cash flows from financing activities:
Proceeds from short-term borrowings, net........... $ 541 $ 633
Payments of long-term debt......................... (1) (3)
Payments of obligations under capital leases....... (1) (1)
Proceeds from issuance of common stock............. 1 -
Cash dividends paid................................ (3) (1)
Purchase of treasury stock, at cost................ (10) (3)
Net cash provided by financing activities..... 527 625
Increase in cash and cash equivalents.................. 26 15
Cash and cash equivalents at beginning of period....... 37 33
Cash and cash equivalents at end of period............. $ 63 $ 48
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes......................................$ 1 $ 20
Interest..........................................$ 23 $ 16
Non-cash investing activity:
Change in unrealized gain on marketable equity
securities.......................................$ - $ 3
Non-cash financing activity:
Notes issued for purchase of treasury stock..........$ 5 $ -
See notes to consolidated financial statements.
MONTGOMERY WARD HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars, except per share amounts)
1. Accounting Policies
Basis of Presentation:
The Consolidated Balance Sheet as of March 30, 1996 and the
Statements of Income and Cash Flows for the three months ended
March 30, 1996 and April 1, 1995 are unaudited. The interim
financial statements reflect all adjustments (consisting only of
normal recurring accruals) which are, in the opinion of
management, necessary for a fair statement of the results for
the interim periods presented. The interim financial statements
should be read in the context of the financial statements and
notes thereto filed with the Securities and Exchange Commission
in MW Holding's 1995 Annual Report on Form 10-K. Capitalized
terms not otherwise defined herein have the meaning ascribed to
such terms in the 1995 Annual Report on Form 10-K. Certain
prior period amounts have been reclassified to be comparable
with the current period presentation.
Accounting for Long-Lived Assets
Effective December 31, 1995, the Company adopted SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of." The provisions require a
review of long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. If it is determined that an
impairment loss has occurred based on expected undiscounted
future cash flows, the loss will be recognized in the income
statement and certain disclosures will be made regarding the
impairment. There was no financial impact from the adoption of
this statement on the first quarter financial statements.
2. Net Loss Per Common Share
Net Loss per common share is computed as follows:
13-Week Period Ended
March 30, 1996
Class A Class B
Net Loss applicable to Common
Shareholders................................... $(24) $(27)
Weighted average number of common shares
outstanding.................................... 19,155,678 25,000,000
Net Loss per share............................. $(1.27) $(1.07)
MONTGOMERY WARD HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars, except per share amounts)
2. Net Loss Per Common Share (continued)
13-Week Period Ended
April 1, 1995
Class A Class B
Net Loss applicable to Common Shareholders......... $(2) $(3)
Weighted average number of common shares
outstanding........................................ 20,882,543 25,000,000
Net Loss per share................................. $(.13) $(.10)
3. Benefits and Losses
Operating, selling, general and administrative expenses include
benefits and losses related to direct response marketing
operations of $39 and $28 for the 13-week periods ended March
30, 1996 and April 1, 1995, respectively.
4. Preferred Stock
On January 31, 1996, GE Capital exercised the exchange option
contained in the MW Senior Preferred Stock subscription
agreement which allowed an exchange of the MW Senior Preferred
Stock for senior preferred stock of the Company with
substantially the same terms. On March 28, 1996, the Company's
Certificate of Incorporation was amended to authorize the
issuance of a new series of senior preferred stock (New Senior
Preferred Stock). On March 29, 1996, the Company issued all of
the 1,750 shares of New Senior Preferred Stock to GE Capital in
exchange for the 1,750 shares of MW Senior Preferred Stock held
by GE Capital.
Dividends on the New Senior Preferred Stock are payable
quarterly at an annual rate of $7,010 per share. The Company is
required to redeem the New Senior Preferred Stock on June 30,
2002, with the option of redeeming all or any portion prior to
June 30, 2002.
5. Acquisition of Amoco Enterprises, Inc.
On December 31, 1995, Montgomery Ward acquired all of the
outstanding capital stock of Amoco Enterprises, Inc.
(Enterprises), operator of the Amoco Motor Club and a wholly-
owned subsidiary of Amoco Oil Holding Company. The purchase
price was $102. The acquisition was financed through the use of
the majority of the proceeds generated from the issuance of the
MW Senior Preferred Stock. On January 2, 1996, Montgomery
Ward's wholly-owned subsidiary, Signature, purchased Enterprises
from Montgomery Ward for $102.
MONTGOMERY WARD HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars, except per share amounts)
5. Acquisition of Amoco Enterprises, Inc. (continued)
The acquisition was accounted for as a purchase. The purchase
price has been allocated to Enterprises' net assets based upon
preliminary results of asset valuations and liability and
contingency assessments. Actual adjustments may differ based on
the results of further evaluations of the fair value of the
acquired assets and liabilities. Any differences between
preliminary and actual adjustments are not expected to have a
material impact on the Consolidated Financial Statements.
The preliminary allocation is summarized as follows:
Accounts receivable.......................... $ 25
Federal income tax receivable................ 1
Properties, plant & equipment................ 3
Direct response and insurance
acquisition costs......................... 123
Goodwill..................................... 67
Other assets................................. 6
Trade accounts payable....................... (3)
Accrued liabilities and other obligations.... (76)
Deferred income taxes........................ (44)
$102
6. Commitments and Contingent Liabilities
MW Holding, Montgomery Ward and its subsidiaries are engaged in
various litigation and have a number of unresolved claims.
While the amounts claimed are substantial and the ultimate
liability with respect to such litigation and claims cannot be
determined at this time, management is of the opinion that such
liability, to the extent not provided for through insurance or
otherwise, is not likely to have a material impact on the
financial condition and the results of operations of the
Company.
MONTGOMERY WARD HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars, except per share amounts)
7. Customer Credit Agreement
A. Effective April 1, 1996, Montgomery Ward entered into
interim agreements with GE Capital and its wholly-owned
subsidiaries Montgomery Ward Credit Corporation ("Montgomery
Ward Credit") and Monogram Credit Card Bank of Georgia
("Monogram") reflecting a prior memorandum of understanding
with GE Capital pursuant to which Monogram is extending
credit to retail customers of Montgomery Ward under open-end
revolving credit plans on a non recourse basis.
For the Montgomery Ward memorandum of understanding
interim agreements provide for the sharing of certain
additional revenues generated by increases in interest rates
and late fee charges to customers with the extension of
credit to the customers made directly by Monogram. Certain
of these additional revenues will be applied to reduce the
obligations of Montgomery Ward for prior losses incurred
under the original Account Purchase Agreement with Montgomery
Ward Credit and Montgomery Ward's obligation to pay Credit
losses in excess of 3.9% of the average receivable balance up
to 5%, and 50% of the losses in excess of 5% up to 8%,
incurred by Monogram under the new agreements. Except as
noted above, the new agreements together generally impose
obligations upon and provide benefits to Montgomery Ward and
GE Capital and its subsidiaries, Montgomery Ward Credit and
Monogram similar to the prior arrangements under the Account
Purchase Agreement.
If definitive agreements are not entered into by July
31, 1996 by Montgomery Ward, Monogram, Montgomery Ward Credit
and GE Capital permanently implementing the changes
contemplated by the memorandum of understanding and interim
agreements for the Montgomery Ward credit customers,
Montgomery Ward credit transactions will revert to the
original Account Purchase Agreement.
B. Effective March 13, 1996, Lechmere, Inc., a subsidiary
of Montgomery Ward, entered into interim agreements with GE
Capital and its wholly-owned subsidiaries Montgomery Ward
Credit and Monogram reflecting a prior memorandum of
understanding with GE Capital pursuant to which Monogram is
extending credit to retail customers of Lechmere under open-
end revolving credit plans on a non recourse basis.
The Lechmere memorandum of understanding and interim
agreements provide for a guaranteed Monogram Bank/GE Capital
annual return on its equity of 17.50%. For any shortfalls,
an annual payment would be made by Lechmere. Any return
above 17.50% will be shared equally by Lechmere and
Monogram/GE Capital. For any annual credit losses over 4.25%
and less than 8% of the average receivable balance, Lechmere
is responsible for 50% of said losses. It is envisioned that
a similar relationship will be established for Montgomery
Ward's "Electric Ave. & More" credit card customer
receivables. If definitive agreements are not executed by
August 31, 1996, the Lechmere interim agreements will expire.
MONTGOMERY WARD HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars, except per share amounts)
7. Customer Credit Agreements (continued)
C. In addition, pursuant to an agreement dated April 3,
1996, Montgomery Ward and Lechmere agreed to sell to
Montgomery Ward Credit receivables from certain commercial
customers of Montgomery Ward and Lechmere.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion and analysis of results of operations
for MW Holding compares the first quarter of 1996 to the first
quarter of 1995. All dollar amounts referred to in this
discussion are in millions, and all income and expense items are
shown before income taxes, unless specifically stated otherwise.
MW Holding's business is seasonal, with one-third of the sales
traditionally occurring in the fourth quarter; accordingly, the
results of operations for the first three months are not
necessarily indicative of the results for the entire year.
Results of Operations
First Quarter 1996 Compared with First Quarter 1995
Consolidated total revenues (net sales and direct response
marketing revenues, including insurance) were $1,435 compared
with $1,487 in 1995, a decrease of $52. The decrease reflects a
$104 decrease in net sales and a $52 increase in direct response
marketing revenues.
Net sales of $1,253 in the quarter reflected a decline of 12% in
apparel and domestics sales and a decline of 6% in hardlines
sales. Comparable store sales decreased 8%.
Credit sales in the first quarter at Montgomery Ward declined
$70 in the quarter. The decline was attributable to a decline
in the number of "new accounts" which started in the Fourth
Quarter of 1995 and the confusion created from a March, 1996
notification to the credit card customer base. New programs for
acquisition of credit card customers were established at the end
of the first quarter which are expected to provide a double
digit increase in new accounts for the entire year and which
have early results reflecting increases of over 20 percent
compared to the prior year.
MONTGOMERY WARD HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars, except per share amounts)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Results of Operations (continued)
First Quarter 1996 Compared with First Quarter 1995 (continued)
Sales at Lechmere declined $41 million from the prior year,
being negatively impacted by two major transitions. First, was
the integration of Lechmere systems into those of Montgomery
Ward which required major changes to the older, marginal systems
of Lechmere. Unfortunately, the changes resulted in data
integrity problems which created inventory imbalances and
significant out-of-stock problems in key items. The problems
have been identified and are being corrected. Further, the
entire Lechmere merchandising function has been relocated to
Chicago which will provide additional leverage through one
common buying organization. The second transition was related
to the transfer of the credit portfolio from the previous
provider to GE Capital who services the Montgomery Ward credit
card. Lechmere had been in a dispute with the previous provider
which was settled in Lechmere's favor in late 1995 with the transfer
of the credit portfolio to GE Capital in April, 1996.
Also impacting sales in the first quarter was the reduction in
advertising pages and events which was done in response to the
significant increase in paper and printing costs which occurred in
the Fall of 1995. Pages will be added and events re-established
late in the second quarter. As paper costs have started to moderate,
the Fall season should reflect some favorable comparisons over the
prior year.
Direct response marketing revenues in the quarter were $182.
Versus the prior year quarter, club revenues increased by $49,
with approximately one-half of this increase due to the
acquisition of Amoco Enterprises (See Note 5 to Consolidated
Financial Statements) and the majority of the remainder
resulting from growth in continuing businesses, and insurance
revenues increased by $3.
Gross margin (net sales less cost goods sold) dollars were $215,
a decrease of $66, or 23%. The decrease in gross margin was due
to a decrease in the gross margin rate of $38 and decreased
volume of $28. Gross margin performance was impacted by intense
retail competition and consumers' hesitancy to spend. The growth in
inventories, in concert with the slowdown in sales in 1995, required
significant action to be taken to impact the size and composition of the
inventory. These aggressive actions, while necessary to liquidate goods
in a competitive enviroment, also created some dislodgements of product
and best selling merchandise. The Company has embarked on a program with
a focus on narrowing the assortments and obtaining significant volume
through key items and categories.
MONTGOMERY WARD HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars, except per share amounts)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Results of Operations (continued)
First Quarter 1996 Compared with First Quarter 1995 (continued)
Operating, selling, general and administrative expenses
increased $53 from the prior year, primarily due to added
expenses related to the acquisition of the Amoco Motor Club of
$26 (See Note 5 to the Consolidated Financial Statements).
Other factors included increased payroll and other
administrative expenses of Signature of $22, primarily due to
Signature's continued growth of business; decreased income from
the sale of product service contracts of $5; the impact of new
store openings of $5; and increased advertising and promotional
costs of $4; partially offset by decreased operating and other
administrative expenses of Montgomery Ward and Lechmere of $9.
Net interest expense increased $3 from the prior year to $22,
primarily due to increased borrowings (as more fully described
in the discussion of Financial Condition), and higher average
borrowing rates related to longer term borrowings placed in 1995
to extend the maturity and fix the interest rate on a
significant portion of the Company's debt.
Net loss for the first quarter of 1996 was $48, which was $44
greater than the $4 loss experienced in the prior year period.
Discussion of Financial Condition
Montgomery Ward is the only direct subsidiary of MW Holding and,
therefore, Montgomery Ward and its subsidiaries are MW Holding's
sole source of funds.
Montgomery Ward has entered into interest rate exchange and cap
agreements with various banks to offset the market risk
associated with an increase in interest rates under both the
Long Term Agreement and Short Term Agreement. The aggregate
notional principal amounts under the interest rate exchange
agreement is $175 in 1996. Under the terms of the interest rate
exchange agreements, Montgomery Ward pays the banks a weighted
average fixed rate of 7.4% multiplied by the notional principal
amount in 1996 and will receive the one-month daily average
London Interbank Offered (LIBO) rate multiplied by the notional
principal amount. The average aggregate notional principal
amount under the various cap agreements is $158 in 1996. Under
the terms of the cap agreements, Montgomery Ward receives
payments from the banks when the one-month daily average LIBO
rate exceeds the 6.0% cap strike rate in 1996. Such payments
will equal the amount determined by multiplying the notional
principal amount by the excess of the percentage rate, if any,
of the one-month daily average LIBO rate over the cap strike
strike rate. The interest rate exchange and cap agreements
increased the effective borrowing rate under the Agreements by
.93% for the 13-week period ended March 30, 1996.
MONTGOMERY WARD HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars, except per share amounts)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Discussion of Financial Condition (continued)
Montgomery Ward is exposed to credit risk in the event of
nonperformance by the other parties to the interest rate
exchange and cap agreements; however, Montgomery Ward
anticipates full performance by the counterparties.
The Company's cash flows are seasonal with negative cash flows
historically experienced in the first quarter due to working
capital levels.
Net cash used in the Company's operating activities totaled $402
for first quarter 1996, which was $196 favorable to the cash
used in operating activities in first quarter 1995. The
improvement in cash flow primarily resulted from a $201 cash
source from inventory reduction, which was a result of inventory
management initiatives implemented in the third quarter of 1995,
compared to a $3 cash use for inventory in first quarter 1995.
Net cash provided by financing activities totaled $527 for the
first three months of 1996, compared to $625 for the same period
in 1995. The decrease was primarily due to decreased borrowings
under the Agreements. Borrowings decreased as inventory
purchases decreased in conjunction with inventory management
initiatives.
Future cash needs are expected to be provided by ongoing
operations, the sale of customer receivables to Montgomery Ward
Credit and borrowings under the Agreements
Capital expenditures during the first three months of 1996 or
$11 were primarily related to expenditures for the opening of
one full-line store. Capital expenditures for the comparable
1995 period were $18.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
On March 29, 1996, the Company's Certificate of Incorporation
was amended to authorize the issuance of a new series of senior
preferred stock ("New Senior Preferred Stock"). On that date,
the Company issued all of the 1,750 shares of New Senior
Preferred Stock authorized by the Certificate of Incorporation
to GE Capital in exchange for the 1,750 shares of MW Senior
Preferred Stock held by GE Capital.
Except as required by law, holders of New Senior Preferred Stock
will not have any voting rights, other than the right to elect
one director to be an additional member of the Company's Board
of Directors (a) during the period following a default in the
payment of accrued dividends on the New Senior Preferred Stock
for four consecutive quarters until such accrued dividends shall
have been paid in full and (b) during the period following any
failure to make a mandatory redemption of New Senior Preferred
Stock (as described below) until such failure shall have been
cured.
Holders of New Senior Preferred Stock are entitled to receive,
before any dividends may be declared and paid upon or set aside
for Common Stock of the Company, cumulative cash dividends of
$7,010 per share per annum, in equal quarterly payments on the
last business day of March, June, September and December.
Dividend payments with respect to the New Senior Preferred Stock
may be made only in cash. No dividends may be declared or paid
on the New Senior Preferred Stock when such declaration or
payment would constitute a default under any debt agreements
governing indebtedness for borrowed money of the Company and its
direct and indirect subsidiaries.
The Company may, upon ten business days notice to the holders
thereof, at any time redeem the whole or any part of the New
Senior Preferred Stock at a price of $100,000 per share plus
unpaid accrued dividends thereon. No such redemption may be
made when such redemption would constitute a default under any
debt agreements.
On June 30, 2002, the Company is required to redeem all of the
New Senior Preferred Stock at a redemption price of $100,000 per
share plus unpaid accrued dividends thereon. No such redemption
may be made when such redemption would constitute a default
under any of the Agreements.
Upon any liquidation, dissolution or winding up of the Company,
the holders of the New Senior Preferred Stock shall be entitled
to be paid, before any distributions or payment is made to any
holder of Common Stock of the Company, an amount in cash equal
to $100,000 per share plus unpaid accrued dividends thereon.
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
Pursuant to a Statement in Support of Solicitation of Written
Consents dated March 28, 1996, the stockholders of the Company
were asked to execute consents in lieu of a special meeting of
the stockholders of the Company. All of the stockholders of
record executed and returned the consents before March 29,
1996. Pursuant to the consent, the stockholders approved the
amendment to the Certificate of Incorporation which revoked the
authorization of the then authorized senior preferred stock of
the Company, none of which was then outstanding, and authorized
a new series of senior preferred stock, as described above (See
Item 2).
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10.(i)(H)(2) Amendment dated March 19, 1996 to the Long Term Credit
Agreement dated as ofSeptember 15, 1994 among
Montgomery Ward & Co., Incorporated, various banks,
The First National Bank of Chicago, as Documentary Agent,
The Bank of Nova Scotia, as Administrative Agent, The Bank of
New York, as Negotiated Loan Agent and Bank of
America National Trust and Savings Association, as
Advisory Agent.
10.(i)(I)(2) Amendment dated March 19, 1996 to the Short Term Credit
Agreement dated as of September 15, 1994 among
Montgomery Ward & Co., Incorporated, various banks,
The First National Bank of Chicago, as Documentary Agent,
The Bank of Nova Scotia, as Administrative Agent, The Bank of
New York, as Negotiated Loan Agent and Bank of
America National Trust and Savings Association, as
Advisory Agent.
10.(i)(K)(1) Amendment dated March 20, 1996 to the Term Loan Agreement
dated as of September 29, 1995 between Montgomery Ward & Co.,
Incorporated and The Industrial Bank of Japan,
Limited, Chicago Branch.
10.(iv)(J) Form of Montgomery Ward Special Retention Plan document
entered into with the following persons: Alan E. DiGangi,
Spencer H. Heine, Carol J. Harms, Robert A. Kasenter,
Frederick E. Meiser, Edwin G. Pohlmann, Robert J.
Stevenish and John Workman.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K (continued)
10.(iv)(K) Letter agreement dated March 1, 1996
between the Company and John L. Workman.
10.(iv)(L) Form of Montgomery Ward Change of Control Security Plan
document entered into with the following persons:
Alan E. DiGangi, Spencer H. Heine, Carol J. Harms,
Robert A. Kasenter, Frederick E. Meiser, Edwin G. Pohlmann,
Robert J. Stevenish and John L. Workman.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
On January 16, 1996, the Company filed a Form 8-K with
respect to the acquisition by Montgomery Ward of all of the
outstanding stock of Amoco Enterprises, Inc. from Amoco Oil
Holding Company on December 31, 1995. The press release issued
by the Company on January 2, 1996 was attached as an exhibit
thereto.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
REGISTRANT MONTGOMERY WARD HOLDING CORP.
BY JOHN L. WORKMAN
NAME AND TITLE John L. Workman, Executive Vice President
and
Chief Financial Officer
DATE: May 14, 1996