Item 7.01. Regulation FD Disclosure
On February 4, 2020, the Company and certain of its subsidiaries (collectively
with the Company, the "Debtors") filed with the United States Bankruptcy Court
for the District of Delaware (the "Bankruptcy Court") their monthly operating
report for the period beginning December 1, 2019 and ending January 4, 2020 (the
"Monthly Operating Report"). The Monthly Operating Report is attached hereto as
Exhibit 99.1, and is incorporated herein by reference. This Current Report on
Form 8-K (including the exhibits hereto) (this "Form 8-K") will not be deemed an
admission as to the materiality of any information disclosed in this Item 7.01.
The Monthly Operating Report and other filings with the Bankruptcy Court related
to the voluntary petitions under Chapter 11 of Title 11 of the United States
Code (the "Chapter 11 Cases") may be available electronically at
https://dm.epiq11.com/Freds. Documents and other information available on such
website are not part of this Form 8-K and shall not be deemed incorporated by
reference in this Form 8-K.
The information contained in this Item 7.01, including Exhibit 99.1, shall not
be deemed to be "filed" for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the
liabilities of that section, and shall not be deemed to be incorporated by
reference into any of the Company's filings under the Securities Act of 1933, as
amended, or the Exchange Act, whether made before or after the date hereof and
regardless of any general incorporation language in such filings, except to the
extent expressly set forth by specific reference in such a filing.
Cautionary Statement Regarding the Monthly Operating Report
The Company cautions investors and potential investors not to place undue
reliance upon the information contained in the Monthly Operating Report, which
was not prepared for the purpose of providing the basis for an investment
decision relating to any of the securities of the Company. The Monthly Operating
Report is limited in scope, covers a limited time period and has been prepared
solely for the purpose of complying with the monthly reporting requirements of
the Bankruptcy Court. The Monthly Operating Report was not audited or reviewed
by independent accountants, was not prepared in accordance with generally
accepted accounting principles in the United States, is in a format prescribed
by applicable bankruptcy laws or rules, and is subject to future adjustment and
reconciliation. There can be no assurance that, from the perspective of an
investor or potential investor in the Company's securities, the Monthly
Operating Report is complete. Results set forth in the Monthly Operating Report
should not be viewed as indicative of future results.
As previously reported in a Form 12b-25 filed on September 13, 2019 and a Form
12b-25 filed on December 12, 2019, the Company does not currently intend to file
a Quarterly Report on Form 10-Q for the quarters ended August 3, 2019 and
November 2, 2019 or any other reports on Forms 10-Q or 10-K for subsequent
periods. Instead, the Company will file Current Reports on Form 8-K containing
(i) disclosure of all material events in the Chapter 11 Cases and any other
information required by the instructions to Form 8-K and (ii) as exhibits, the
operating reports and any other documents that include unaudited financial
information that are filed by the Company with the Bankruptcy Court.
Forward Looking Statements
Comments in this Current Report on Form 8-K and the Monthly Operating Report
that are not historical facts are forward-looking statements within the meaning
of the safe harbor provisions of the U.S. Private Securities Litigation Reform
Act of 1995 that involve risks and uncertainties that could cause actual results
to differ materially from those projected in the forward-looking statements. A
reader can identify forward-looking statements because they are not limited to
historical facts or they use such words as "outlook," "guidance," "may,"
"should," "could," "believe," "anticipate," "project," "plan," "expect,"
"estimate," "objective," "forecast," "goal," "intend," "committed," "continue,"
or "will" and similar expressions that concern the Company's strategy, plans,
intentions or beliefs about future occurrences or results. Forward-looking
statements involve estimates, expectations, projections, goals, forecasts,
assumptions, risks and uncertainties. Forward-looking statements include, but
are not limited to, statements about future financial and operating results, the
Company's plans, objectives, business outlook, priorities, expectations and
intentions, expectations for sales growth, comparable sales, earnings and
performance, shareholder value, capital expenditures, cash flows, demand for
products, strategic initiatives, including those relating
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to store closures and dispositions by the Company and the expected impact of
such transactions on our strategic and operational plans and financial results,
and any statement of an assumption underlying any of the foregoing and other
statements that are not historical facts. Although we believe that the
expectations, opinions, projections and comments reflected in these
forward-looking statements are reasonable, such statements involve risks and
uncertainties and we can give no assurance that such statements will prove to be
correct. A wide variety of potential risks, uncertainties and other factors
could materially affect our ability to achieve the results either expressed or
implied by these forward-looking statements including, but not limited to risks
and uncertainties associated with: (i) the competitive nature of the industries
in which we operate; (ii) our store closures and the related sales of inventory
and real estate issues; (iii) our divestitures; (iv) utilizing our stores and
the extent of our pharmacy department presence in stores; (v) conditions
affecting the retail sector as a whole; (vi) our reliance on a single supplier
of pharmaceutical products; (vii) our pharmaceutical drug pricing;
(viii) reimbursement rates and the terms of our agreements with pharmacy benefit
management companies; (ix) consolidation in the healthcare industry; (x) our
private brands; (xi) the seasonality of our business and the impact of adverse
weather conditions; (xii) operational, supply chain and distribution
difficulties; (xiii) merchandise supply and pricing; (xiv) consumer demand and
product mix; (xv) our employees; (xvi) risks relating to payment processing;
(xvii) our computer systems, and the processes supported by our information
technology infrastructure; (xviii) our ability to protect the personal
information of our customers and employees; (xix) cyber-attacks; (xx) changes in
governmental regulations; (xxi) the outcome of legal proceedings, including
claims of product liability; (xxii) insurance costs; (xxiii) tax assessments and
unclaimed property audits; (xxiv) current economic conditions; (xxv) the terms
of our existing and future indebtedness, including the covenants set forth in
the documents governing such indebtedness; (xxvi) our ability to remediate the
material weaknesses in our internal controls over financial reporting and
otherwise maintain effective internal controls over financial reporting;
(xxvii) our largest stockholder holding a significant percentage of our
outstanding equity; (xxviii) our ability to attract and retain talented
executives; (xxix) any strategic alternatives that we decide to pursue, if any;
(xxx) risks related to the trading of the Company's common stock on the OTC Pink
Market; (xxxi) the risks and uncertainties relating to the Company's Chapter 11
Cases, including but not limited to, our ability to obtain Bankruptcy Court
approval with respect to motions in the Chapter 11 Cases, the effects of the
Chapter 11 Cases on our Company and on the interests of various constituents,
Bankruptcy Court rulings in the Chapter 11 Cases and the outcome of the Chapter
11 Cases in general, the length of time we will operate under the Chapter 11
Cases, risks associated with third-party motions in the Chapter 11 Cases, the
potential adverse effects of the Chapter 11 Cases on our liquidity or results of
operations and increased legal and other professional costs in connection with
the Chapter 11 Cases; (xxxii) the conditions to which our debtor-in-possession
financing is subject and the risk that these conditions may not be satisfied for
various reasons, including for reasons outside our control; and (xxxiii) the
factors listed under Item 1A: "Risk Factors" in our Annual Report on Form 10-K,
filed on May 3, 2019, with the Securities and Exchange Commission, under Part
II, Item 1A: "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter
ended May 4, 2019 and in any subsequent quarterly filings on Form 10-Q filed
with the Securities and Exchange Commission. Forward-looking statements speak
only as of the date made. The Company undertakes no obligation to release
revisions to these forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unforeseen events, except
as required to be reported under the rules and regulations of the Securities and
Exchange Commission.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
99.1 Monthly Operating Report for the period ended January 4, 2020, filed
with the United States Bankruptcy Court for the District of Delaware.
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