ccs110508_8k.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
___________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event
reported): October 30, 2008
___________
CIRCUIT
CITY STORES, INC.
(Exact
name of registrant as specified in its charter)
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Virginia
(State
or other jurisdiction
of
incorporation)
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1-5767
(Commission
File Number)
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54-0493875
(I.R.S.
Employer
Identification
No.)
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9950 Mayland
Drive
Richmond, Virginia
(Address
of principal executive offices)
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23233
(Zip
Code)
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Registrant’s
telephone number, including area code: (804) 486-4000
Not
Applicable
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01
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Entry into a Material Definitive
Agreement.
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On
October 31, 2008, Circuit City Stores, Inc. (the “Company”) entered into an
Agency Agreement with a joint venture comprised of Hilco Merchant Resources, LLC
and Gordon Brothers Retail Partners, LLC (the “Joint Venture”) with respect
to 155 domestic segment stores that the Company plans to close, as disclosed in
Item 2.05 below. On November 4, 2008, the Company and the Joint
Venture amended and restated the Agency Agreement (as amended, the “Agreement”)
to add Circuit City Stores West Coast, Inc., the Company’s subsidiary that
covers markets in the western United States (the “Subsidiary”), as a party and
to change the number of closing stores to 154, as the Company will close one
store on its own. Under the Agreement, the Company has appointed the
Joint Venture as the Company’s agent to conduct the sale of the merchandise
located at the closing stores and, to the extent designated by the Company, to
dispose of certain furnishings, trade fixtures, equipment and improvements to
real property with respect to such stores.
The
Agreement sets forth the terms and conditions of the sales at the closing stores
and the corresponding rights and obligations of the Joint
Venture. The Agreement provides that the sales will commence on
November 5, 2008 and will be completed on or before December 31,
2008. The completion date may be extended by mutual agreement of the
parties to the Agreement.
Payments
to the Company and the Joint Venture will be made from the proceeds of the
sales. Pursuant to the Agreement, payments will be made first to each
of the Company and the Joint Venture to reimburse each party for its expenses
with respect to sales. The Company then will be paid a guaranteed
amount equal to 72% of the cost value of the merchandise included in the sales,
subject to certain adjustments, and the Joint Venture will receive an agent’s
fee equal to 3.5% of the cost value of the merchandise. To the extent
that the total proceeds from the sales exceed the sum of expenses, the
guaranteed amount and the agent’s fee, the remaining proceeds will be shared
equally by the Company and the Joint Venture.
The
Agreement contains customary representations, warranties, covenants and
indemnities by the Company and the Joint Venture. Under the
Agreement, the Company and the Subsidiary granted to the Joint Venture a
security interest in the inventory of the Company and the Subsidiary located in
the continental United States, the furnishings, trade fixtures, equipment and
improvements to real property located in the closing stores, and all proceeds of
such inventory and property. The security interest is junior to the
security interests under the Company’s existing credit facility.
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Item
2.05
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Costs
Associated with Exit or Disposal
Activities.
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On
October 30, 2008, the Board of Directors of Circuit City Stores, Inc. (the
“Company”) approved a plan to close up to 155 domestic segment
stores. Specifically, the Company plans to close 155 stores that are
underperforming or are no longer a strategic fit for the Company. The
stores identified for closure are located in 55 media markets in the United
States, of which the Company will exit 12 markets. The Company also
plans to reduce future store openings and aggressively renegotiate certain
leases.
The
determination to approve the plan resulted from the Company’s ongoing asset
productivity assessment and working capital situation. The Company
expects to begin the store closing sales process on November 5, 2008 and to
complete the store closings by December 31, 2008. As disclosed in
Item 8.01 below, the Company issued a press release on November 3, 2008 to
report an update on its liquidity position and its previously announced ongoing
comprehensive business review, which included details on the plan to close
stores. The press release is being filed as Exhibit 99.1 to this
report and is incorporated by reference into this Item 2.05.
The
Company is currently unable in good faith to make a determination of an estimate
of the amount or range of amounts expected to be incurred in connection with the
plan to close stores, both with respect to each major type of cost associated
with the plan and with respect to the total cost of the plan, or an estimate of
the amount or range of amounts that will result in future cash
expenditures. The Company will include such estimates, once they are
determined, in an amendment to this report.
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Item
2.06
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Material
Impairments. |
As
disclosed in Item 2.05 above, the Company’s Board of Directors approved a plan
to close up to 155 domestic segment stores. The plan will result in a
material non-cash charge for impairment to certain of the Company’s fixed
assets with respect to those stores, including leasehold improvements and
furniture, fixtures and equipment. Additional information with
respect to the plan is set forth in Item 2.05 above.
The
Company is currently unable in good faith to make a determination of an estimate
of the amount or range of amounts of the impairment charge or an estimate of the
amount or range of amounts of the impairment charge that will result in future
cash expenditures. The Company will include such estimates, once they
are determined, in an amendment to this report.
On
November 3, 2008, the Company issued a press release reporting an update on its
liquidity position and its previously announced ongoing comprehensive business
review. The press release is being filed as Exhibit 99.1 to this report and
is incorporated by reference into this Item 8.01.
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Item 9.01
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Financial Statements
and Exhibits. |
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(d)
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Exhibits.
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Exhibit
No.
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Description
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99.1
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Press
release issued November 3, 2008
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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CIRCUIT CITY STORES,
INC.
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(Registrant)
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Date: November
5, 2008
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By: /s/
Reginald D. Hedgebeth
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Reginald D.
Hedgebeth
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Senior Vice
President,
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General Counsel and
Secretary
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EXHIBIT
INDEX
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Exhibit
No.
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Description
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99.1
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Press
release issued November 3, 2008
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