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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported: April 20, 1995)
BRUNO'S, INC.
(Exact name of registrant as specified in its charter)
Alabama
(State or other jurisdiction of incorporation)
0-6544 63-0411801
(Commission File Number) (I.R.S. Employer Identification No.)
800 Lakeshore Parkway
Birmingham, Alabama 35211
(Address of principal executive offices/Zip Code)
(205) 940-9400
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
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<PAGE>
Item 5. Other Events.
------------
As previously reported in the Company's Current Report on Form 8-K, dated April
27, 1995, the Company entered into an Agreement and Plan of Merger, dated as of
April 20, 1995, and amended as of May 18, 1995, pursuant to which Crimson
Acquisition Corp., a subsidiary of BI Associates, L.P., a partnership
organized by Kohlberg Kravis Roberts & Co., will be merged with and into the
Company, with the Company continuing as the surviving corporation (the
"Merger"). Set forth on the following pages are certain unaudited pro forma
financial and other data of the Company, as adjusted to give effect to the
Merger and the transactions contemplated thereby, including the incurrence of
certain borrowings anticipated in connection therewith.
2
<PAGE>
PRO FORMA CAPITALIZATION
The following table sets forth the (i) unaudited consolidated historical
cash and cash equivalents and historical capitalization of the Company as of
April 8, 1995 and (ii) the unaudited consolidated pro forma cash and cash
equivalents and the pro forma capitalization of the Company as of April 8, 1995
as adjusted to give effect to the Merger and the transactions contemplated
thereby, including the raising of capital and application of such proceeds.
<TABLE><CAPTION>
As of
April 8, 1995
-----------------------------
Historical Pro Forma
-------------- --------------
(dollars in millions)
<S> <C> <C>
Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20.8 $ 20.8
======== ========
Long-term debt:
Term Loan Facility (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- $ 555.0
Revolving Credit Facility (b) . . . . . . . . . . . . . . . . . . . . . . . . . -- --
Capitalized lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . 19.3 19.3
6.62% Series A Senior Notes due 2003 . . . . . . . . . . . . . . . . . . . . . 100.0 --
7.09% Series B Senior Notes due 2008 . . . . . . . . . . . . . . . . . . . . . 100.0 --
Debt Securities(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 350.0
Other long term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.8 0.8
-------- --------
Total long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 220.1 $ 925.1
-------- --------
Shareholders' investment:
Common stock ($.01 par value, 100 million shares authorized, 78 million shares
issued) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.8 0.3
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.0 (587.6)
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 379.7 304.8
-------- --------
Total shareholders' investment . . . . . . . . . . . . . . . . . . . . . . . . . $ 422.5 $ (282.5)
-------- --------
Total capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 642.6 $ 642.6
======== ========
</TABLE>
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(a) It is anticipated that the Company will incur $555 million of
indebtedness under a Term Loan Facility in connection with the
Merger.
(b) The Company also expects that a $100 million Revolving Credit
Facility will be available for working capital and general corporate
purposes.
(c) The Company expects to issue debt securities (the "Debt Securities")
in either the public or private markets in connection with the
Merger. While no decisions have been made regarding the terms of any
such Debt Securities, it is anticipated that a portion of such Debt
Securities will be issued at a substantial discount from their face
value. In such event, the face amount of the Debt Securities may be
in excess of $350 million.
3
<PAGE>
PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated condensed financial
statements (the "Pro Forma Financial Statements") have been derived by the
application of pro forma adjustments to the Company's historical financial
statements. The pro forma income statements for the periods presented give
effect to the Merger and related transactions as if such transactions were
consummated as of July 4, 1993 for the year ended July 2, 1994 and as of July
3, 1994 for the forty week period ended April 8, 1995. The pro forma balance
sheet gives effect to the Merger and related transactions as if such
transactions had occurred as of April 8, 1995. The Pro Forma Financial
Statements should not be considered indicative of actual results that would
have been achieved had the Merger and related transactions been consummated on
the date or for the periods indicated and do not purport to indicate balance
sheet data or results of operations as of any future date or for any future
period. The pro forma adjustments were applied to the respective historical
financial statements to reflect and account for the Merger as a
recapitalization. Accordingly, the historical basis of the Company's assets and
liabilities has not been impacted by the transaction.
4
<PAGE>
PRO FORMA CONSOLIDATED BALANCE SHEET
(Unaudited)
(Dollars in millions)
<TABLE><CAPTION>
As of April 8, 1995
-------------------------------------------------------
Pro Forma
Historical Adjustments Pro Forma
------------------ ------------------- ----------------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . $20.8 $ 20.8
Receivables . . . . . . . . . . . . . . . . . . . . . 40.3 40.3
Inventories . . . . . . . . . . . . . . . . . . . . . 250.3 250.3
Prepaid expenses . . . . . . . . . . . . . . . . . . 14.5 14.5
Deferred income taxes . . . . . . . . . . . . . . . . 1.4 1.4
------ ------
327.3 327.3
Property and equipment, net . . . . . . . . . . . . . . 515.4 515.4
Intangibles and other, net . . . . . . . . . . . . . . 55.7 55.7
------ ------
Total Assets . . . . . . . . . . . . . . . . . . . . $898.4 $898.4
====== ======
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Current maturities of debt . . . . . . . . . . . . . $26.9(a) $ 26.9(a)
Accounts payable . . . . . . . . . . . . . . . . . . 107.0 107.0
Accrued income taxes . . . . . . . . . . . . . . . . 0.9 0.9
Other accrued expenses . . . . . . . . . . . . . . . 61.2 61.2
------ ------
196.0 196.0
------ ------
Noncurrent Liabilities:
Long-term debt . . . . . . . . . . . . . . . . . . . 200.8 705.0(b) 905.8
Revolving credit facility(c) . . . . . . . . . . . . - -
Capitalized lease obligations . . . . . . . . . . . . 19.3 19.3
Deferred income taxes . . . . . . . . . . . . . . . . 47.1 47.1
Other noncurrent liabilities . . . . . . . . . . . . 12.7 12.7
------ ------ ------
279.9 705.0 984.9
------ ------ ------
Shareholders' Investment:
Common stock . . . . . . . . . . . . . . . . . . . . 0.8 (0.5)(d) 0.3
Paid-in capital . . . . . . . . . . . . . . . . . . . 42.0 (629.6)(e) (587.6)
Retained earnings . . . . . . . . . . . . . . . . . . 379.7 (74.9)(f) 304.8
------ ------ ------
422.5 (705.0) (282.5)
------ ------ ------
Total Liabilities and Shareholders' Investment . . . $898.4 $ 0.0 $898.4
====== ====== ======
</TABLE>
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The pro forma financial data have been derived by the application of pro
forma adjustments to the Company's historical financial statements for the
period noted. The Merger has been accounted for as a recapitalization which
will have no impact on the historical basis of assets and liabilities. The
pro forma financial data assumes that there are no dissenting shareholders
to the Merger.
(a) This amount consists primarily of a $25.0 million line of credit which
was repaid by the Company on April 14, 1995.
(b) The pro forma adjustment to long term debt reflects the following:
Repayment of historical debt outstanding $(200.0)
New term loan facility 555.0
Debt Securities 350.0
-------
Total adjustment $ 705.0
=======
While no decisions have been made regarding the terms of the Debt
Securities, it is anticipated that a portion of the Debt Securities
will be issued at a substantial discount from their face value. In
such event, the face amount of the Debt Securities may be in excess
of $350 million.
(c) The Company expects that a $100 million Revolving Credit Facility will
be available for working capital and general corporate purposes.
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<PAGE>
(d) The adjustment reflects the effect of the Merger on the number of shares
outstanding. There will be approximately 25 million shares outstanding
subsequent to the Merger.
(e) The adjustment reflects amounts distributed to convert to cash 73.3
million shares of Bruno's Common Stock for total consideration of $880.1
million, net of the purchase of 20.8 million shares by BI Associates,
L.P., a partnership organized by Kohlberg Kravis Roberts & Co., for total
consideration of $250.0 million, and net of the $0.5 million allocated to
par value of the Bruno's Common Stock as a result of the Merger.
(f) The adjustment reflects the fees anticipated to be paid to effect the
Merger.
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<PAGE>
PRO FORMA CONSOLIDATED
INCOME STATEMENT
(Unaudited)
(Dollars in millions, except per share amounts)
<TABLE><CAPTION>
For the Forty Weeks Ended April 8, 1995
-------------------------------------------------------
Pro Forma Pro Forma
Historical Adjustments
------------------ ------------------- ----------------
<S> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . $2,201.0 $2,201.0
Cost of products sold . . . . . . . . . . . . . . . . . 1,684.8 1,684.8
-------- --------
Gross profit . . . . . . . . . . . . . . . . . . . . . 516.2 516.2
Store operating, selling and administrative expenses . 424.8 424.8
Depreciation and amortization . . . . . . . . . . . . . 41.5 41.5
Interest expense . . . . . . . . . . . . . . . . . . . 20.7 $ 47.8(a) 68.5
Interest income . . . . . . . . . . . . . . . . . . . . (4.7) 3.7(b) (1.0)
-------- ------ --------
Income (loss) before income taxes . . . . . . . . . . . 33.9 (51.5) (17.6)
Income taxes . . . . . . . . . . . . . . . . . . . . . 12.9 (19.6)(c) (6.7)
-------- ------ --------
Net income (loss) . . . . . . . . . . . . . . . . . . . $ 21.0 $(31.9) $ (10.9)
======== ====== ========
Weighted average shares outstanding . . . . . . . 77.6 25.0
Primary earnings per share . . . . . . . . . . . . $ 0.27 $ (0.44)
</TABLE>
-----------------
The pro forma financial data have been derived by the application of pro
forma adjustments to the historical financial statements for the period
noted. The Merger has been accounted for as a recapitalization which will
have no impact on historical basis of assets and liabilities. The pro forma
financial data assumes that there are no dissenting shareholders to the
Merger.
(a) The pro forma adjustment to interest expense reflects the following:
Interest expense on historical debt $(18.9)
Interest expense on the term loan facility
(assumed 9.0% average rate) 38.4
Interest expense on the Debt Securities
(assumed 10.5% average rate) 28.3
------
Total adjustment $ 47.8
======
(b) The adjustment reverses historical income recognized on the Company's
interest rate swap (assumed to be settled upon consummation of the
Merger).
(c) The adjustment reflects the tax effect of the pro forma adjustments at
a 38% effective rate.
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<PAGE>
<TABLE><CAPTION>
PRO FORMA CONSOLIDATED
INCOME STATEMENT
(Unaudited)
(Dollars in millions, except per share amounts)
For the Fiscal Year Ended July 2, 1994
-------------------------------------------------------
Pro Forma
Historical Adjustments Pro Forma
------------------ ------------------- ----------------
<S> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . $2,834.7 $2,834.7
Cost of products sold . . . . . . . . . . . . . . . . . 2,185.6 2,185.6
-------- --------
Gross profit . . . . . . . . . . . . . . . . . . . . . 649.1 649.1
Store operating, selling and administrative . . . . . . 512.1 512.1
Depreciation and amortization . . . . . . . . . . . . . 52.3 52.3
Interest expense . . . . . . . . . . . . . . . . . . . 20.5 $ 68.3(a) 88.8
Interest income . . . . . . . . . . . . . . . . . . . . (4.6) 4.0(b) (0.6)
-------- ------ --------
Income (loss) before income taxes . . . . . . . . . . . 68.8 (72.3) (3.5)
Income taxes . . . . . . . . . . . . . . . . . . . . . 28.2 (27.5)(c) 0.7
-------- ------ --------
Net income (loss) $ 40.6 $(44.8) $ (4.2)
======== ====== ========
Weighted average shares outstanding . . . . . . . 78.1 25.0
Primary earnings (loss) per share . . . . . . . . $ 0.52 $ (0.17)
</TABLE>
-----------------
The pro forma financial data have been derived by the application of pro
forma adjustments to the historical financial statements for the period
noted. The Merger has been accounted for as a recapitalization which will
have no impact on historical basis of assets and liabilities. The pro forma
financial data assumes that there are no dissenting shareholders to the
Merger.
(a) The pro forma adjustment to interest expense reflects the following:
Interest expense on historical debt $(18.5)
Interest expense on the term loan facility
(assumed 9.0% average rate) 50.0
Interest expense on the Debt Securities
(assumed 10.5% average rate) 36.8
------
Total adjustment $ 68.3
======
(b) The adjustment reverses historical income recognized by the Company's
interest rate swap (assumed to be settled upon consummation of the
Merger).
(c) The adjustment reflects the tax effect of the pro forma adjustments at
a 38% effective rate. The historical effective tax rate of 41%
includes the impact of a $2.2 million retroactive adjustment due
to a change in federal tax rates.
8
<PAGE>
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.
Date: June 12, 1995
BRUNO'S, INC.
By: /s/ Ronald G. Bruno
Ronald G. Bruno, Chief
Executive officer and
Chairman of the Board
9
