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): July 8, 1998
UNITED GROCERS, INC.
(Exact name of registrant as specified in its charter)
Oregon
(State or other jurisdiction of incorporation)
2-60487 93-0301970
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(Commission File Number) (IRS Employer
Identification No.)
6433 S.E. Lake Road, Milwaukie, Oregon 97222
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (503) 833-1000
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Item 2. Acquisition or Disposition of Assets.
In September 1997, United Grocers, Inc., an Oregon corporation (the
"Company") approved a plan whereby its insurance operations would be sold to an
unrelated party. On May 13, 1998, the Company entered into a Stock Purchase
Agreement with Orion Capital Corporation (an unrelated third party) to sell all
of the stock of Grocers Insurance Group, Inc., a Delaware corporation, the
Company's wholly-owned subsidiary which engaged in the business of providing
insurance products to companies in the grocery business, for a negotiated price.
Grocers Insurance Group, Inc.'s wholly-owned subsidiaries were Grocers Insurance
Agency, Inc., Grocers Insurance Company and Grocers Risk Services, Inc. On May
19, 1998, the Company filed a Form 12b-25 containing a press release which
stated that the Company had entered into the definitive purchase agreement with
Orion Capital Corporation. On July 8, 1998, the sale of the stock was completed.
Total proceeds were approximately $36.25 million, resulting in a gain (before
income taxes) of approximately $5.4 million, which was recorded in the fourth
quarter of fiscal 1998. The Company filed its Form 10-Q for the period ended
July 3, 1998 on August 21, 1998 (after filing a Form 12b-25 notification of late
filing) stating that the sale was completed as of July 8, 1998, and providing a
summary of the assets and liabilities of the insurance segment.
A copy of the Stock Purchase Agreement was filed as Exhibit 2.A to the
Company's Form 10-K for the period ended October 2, 1998. The foregoing
description is qualified in its entirety by reference to the full text of the
Stock Purchase Agreement.
A Form 8-K was not filed in July 1998 because it would have involved
unreasonable effort or expense resulting from:
o The Company's lenders were carefully monitoring all operations and
expenditures of the Company. New management was unavailable or unable to
investigate and gather information since it was restructuring debt
agreements and negotiating the sale of several subsidiaries.
o The Company was in the process of determining alternatives for obtaining a
suspension from the duty to file periodic reports with the Securities and
Exchange Commission.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired: Not applicable.
(b) Pro forma financial information: The following pro forma financial
information of the Company is filed on the pages listed below:
Unaudited Pro Forma Condensed Balance Sheet as of April 3, 1998 F-2
Unaudited Pro Forma Condensed Statement of Operations for the year
ended September 30, 1995 F-3
1
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(c) Exhibits:
Exhibit Number Exhibit
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2.A Stock Purchase Agreement dated as of May 13,
1998 between United Grocers, Inc. and Orion
Capital Corporation (filed as Exhibit 2.A to the
Company's Form 10-K for the period ended October
2, 1998).
2
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SIGNATURES
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 hereunto duly authorized.
UNITED GROCERS, INC.
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(Registrant)
Date: August 13, 1999
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Terrance W. Olsen
Chief Executive Officer and President
3
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PRO FORMA FINANCIAL INFORMATION - Item 7(b)
The following unaudited Pro Forma Condensed Balance Sheet as of April
3, 1998 and unaudited Pro Forma Condensed Consolidated Statements of Operations
for the fiscal year ended September 29, 1995 are based on the historical
consolidated financial statements of the Company adjusted to give effect to the
disposition of the Company's insurance operations, and as restated for
adjustments that became known in connection with the audit of the Company's
fiscal 1997 financial statements. The Pro Forma Condensed Consolidated Statement
of Operations was prepared assuming the above disposition occurred as of the
beginning of the period presented and the Pro Forma Condensed Balance Sheet was
prepared assuming that the disposition occurred as of April 3, 1998.
The Pro Forma Condensed Consolidated Statements of Operations for the
fiscal years ended September 27, 1996 and October 3, 1997, are not included as
the results of operations for those years have been presented as "discontinued
operations" in the Company's Consolidated Statements of Operations in the
Company's Amendment No. 1 to its Annual Report on Form 10-K/A for the period
ended October 2, 1998. The Pro Forma Condensed Consolidated Statement of
Operations for the six-month period ended April 3, 1998 is not included as the
results of operations for that period have been presented as "discontinued
operations" in the Company's Quarterly Report on Form 10-Q for the quarter ended
April 3, 1998.
The Pro Forma Financial Information does not purport to present what
the Company's results of operations or financial position would have been had
the disposition occurred as of the beginning of the respective period or April
3, 1998, as the case may be, or to project the Company's results of operations
or financial position for any future period or date, nor does it give effect to
any matters other than those described in the notes thereto.
F-1
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<TABLE>
United Grocers, Inc.
Unaudited Pro Forma Condensed Balance Sheet
April 3, 1998
(in thousands)
Pro Forma
Historical Adjustments (A) Pro Forma
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Current:
Cash and cash equivalents $ 12,326 $ (6,045) $ 6,281
Investments maintained for insurance reserves 48,265 (48,265) -
Accounts and notes receivable, net 72,019 (13,004) 59,015
Inventories 84,451 84,451
Other current assets 6,677 (1,835) 4,842
Deferred income taxes 10,123 (1,566) 8,557
----------- ----------- -----------
Total current assets 233,861 (70,715) 163,146
----------- ----------- -----------
Non-current assets:
Notes receivable 15,513 15,513
Investment in affiliated companies 6,971 6,971
Other receivables and investments 4,059 4,000 8,059
Deferred income taxes 553 553
Property, plant and equipment, net 53,987 (1,058) 52,929
Other assets, net 15,814 (143) 15,671
----------- ----------- -----------
Total non-current assets 96,897 2,799 99,696
----------- ----------- -----------
TOTAL $ 330,758 $ (67,916) $ 262,842
=========== =========== ===========
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Notes payable, current portion $ 50,265 $ (30,750) $ 19,515
Accounts payable 77,192 (15,307) 61,885
Insurance reserves supported by investments 26,611 (26,611) -
Compensation and taxes payable 8,151 2,187 10,338
Other accrued expenses 7,328 (715) 6,613
Other current liabilities 1,805 1,805
----------- ----------- -----------
Total current liabilities 171,352 (71,196) 100,156
Notes payable, net of current portion 135,868 135,868
Other liabilities 10,611 10,611
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Total liabilities 317,831 (71,196) 246,635
Redeemable members' equity 1,120 1,120
Members' equity 11,807 3,280 15,087
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TOTAL $ 330,758 $ (67,916) $ 262,842
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F-2a
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<FN>
United Grocers, Inc. (United) sold its insurance operations on July 8, 1998.
Total proceeds were approximately $36.25 million, resulting in a pre-tax gain of
approximately $5.4 million. The pro forma condensed balance sheet reflects the
sale as if it had occurred on April 3, 1998. The pro forma adjustments are as
follows:
(A) Removal of the historical assets and liabilities of the insurance segment
from the consolidated balance sheet of United, receipt of cash proceeds
and recording of gain, as follows (in thousands):
Gross cash proceeds $ 32,450
Less estimated selling costs (1,700)
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Net cash proceeds 30,750
Note from seller 4,000
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Net sales proceeds 34,750
Net assets and liabilities of insurance segment (30,572)
add back intercompany receivable 1,289
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Gain on sale, before income taxes 5,467
Approximate income tax effect of gain (at 40%) (2,187)
------------
============
Gain on sale, net of income taxes $ 3,280
============
</FN>
</TABLE>
F-2b
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<TABLE>
United Grocers, Inc.
Unaudited Pro Forma Condensed Statement of Operations For the year ended
September 29, 1995 (in thousands)
Pro Forma
Historical(A) Adjustments Pro Forma
----------- ----------- -----------
<S> <C> <C> <C>
Net sales and operations $1,018,248 $ (22,795) $ 995,453
----------- ----------- -----------
Costs and expenses:
Cost of sales 870,356 (15,316) 855,040
Operating expenses 99,238 (7,321) 91,917
Selling and administrative expenses 10,872 10,872
Depreciation and amortization 5,953 (182) 5,771
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986,419 (22,819) 963,600
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Other income (expense):
Interest expense (12,774) 7 (12,767)
Interest income 4,494 (3,159) 1,335
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(8,280) (3,152) (11,432)
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Income before members' allowances, patronage
dividends and income taxes 23,549 (3,128) 20,421
-
Members' allowances (11,514) (11,514)
Members' patronage dividends (8,350) (8,350)
----------- ----------- -----------
Income before income taxes 3,685 (3,128) 557
-
Provision for income taxes - - -
----------- ----------- -----------
Net income $ 3,685 $ (3,128) $ 557
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<FN>
United Grocers, Inc. (United) sold its insurance operations on July 8, 1998.
Total proceeds were approximately $36.25 million, resulting in a pre-tax gain of
approximately $5.4 million. The pro forma condensed statement of operations
reflects the sale as if it had occurred at September 30, 1994. The pro forma
adjustments remove the accounts of the discontinued insurance segment.
(A) The historical amounts reflect the audited statement of operations as
previously filed in United's form 10-K for the year ended September 29,
1995, as restated for adjustments that became known in connection with
the audit of United's fiscal 1997 financial statements.
</FN>
</TABLE>
F-3
