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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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) December 15, 1995
AGWAY INC.
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(Exact name of registrant as specified in its charter)
Delaware 2-22791 15-0277720
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
333 Butternut Drive, DeWitt, New York 13214
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (315) 449-6431
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
1
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
As previously disclosed on Form 8-K Item 5, filed with the Commission on
December 15, 1995, Agway Holdings, Inc., a Delaware corporation and a
wholly-owned subsidiary of Agway Inc. ("Holdings"), sold all of Holdings'
common stock of its majority-owned subsidiary, H. P. Hood Inc. ("Hood"), to
Catamount Dairy Holdings Limited Partnership, a Massachusetts limited
partnership ("Buyer"), as assignee of The Catamount Corporation, a
Massachusetts corporation ("Catamount"), on the terms and subject to the
conditions of the Stock Purchase Agreement between Holdings and Catamount
dated as of December 14, 1995 (the "Stock Purchase Agreement"). Hood, which
was Agway Inc.'s dairy segment, manufactures and distributes various forms of
dairy products including ice cream, fluid milk and manufactured products. The
sale of Hood reduced Agway Inc.'s consolidated assets by approximately $134
million and consolidated liabilities by approximately $136 million. The net
proceeds of the sale, after the assumption of certain liabilities, were
approximately $19,000,000, which resulted in an estimated after-tax gain of
approximately $2,000,000.
In accordance with the Stock Purchase Agreement, the Buyer paid to Holdings
$25,500,000 in the form of $15,900,000 in cash and $9,600,000 in a promissory
note in consideration of the sale of its Hood common stock. Holdings assumed
certain specified obligations of Hood, including the liability for certain
supplemental executive retirement plans and certain management bonuses.
Furthermore, under the Stock Purchase Agreement, Holdings has indemnified the
Buyer with regard to specified representations, warranties and litigation;
federal and state taxes through fiscal 1995; and 50% of all other
indemnification obligations in excess of $1 million identified within two
years of the closing date. The obligations and/or liabilities assumed and
expenses incurred by Holdings in the transaction are currently estimated at
approximately $6,500,000. Immediately after closing, Holdings exchanged the
note of $9,600,000 received as proceeds for certain specified assets of Hood,
including stock of a Farm Credit System cooperative bank, certain accounts
receivable and certain real estate and fixed assets.
2
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
Not Applicable
(b) Pro Forma Financial Information
The following unaudited pro forma condensed consolidated financial statements
are filed with this report:
<TABLE>
<S> <C>
Pro Forma Condensed Consolidated Balance Sheet at September 30, 1995............................. Page F-1
Pro Forma Condensed Consolidated Income Statement as of the three months ended
September 30, 1995...................................................................... Page F-2
Pro Forma Condensed Consolidated Income Statement as of the year ended June 30, 1995............. Page F-3
</TABLE>
The pro forma condensed consolidated balance sheet of Registrant as of
September 30, 1995 reflects the financial position of the Registrant assuming
disposition took place on September 30, 1995 and after giving effect to the
disposition of the majority held common stock of Hood, assumption of certain
liabilities and immediately upon closing, the exchange of notes receivable for
specified assets as discussed in Item 2.
The pro forma condensed consolidated statements of earnings for the three
months ended September 30, 1995 and the fiscal year ended June 30, 1995 give
effect to the disposition as if such disposition occurred on July 1, 1994 and
are based on the operations of the Registrant for the three months ended
September 30, 1995 and the fiscal year ended June 30, 1995.
The unaudited pro forma condensed consolidated financial statements have been
prepared by the Registrant based upon assumptions deemed proper by it. The
unaudited pro forma condensed consolidated financial statements presented
herein are shown for illustrative purposes only and are not necessarily
indicative of the future financial position or future results of operations of
Registrant, or of the financial position or results of operations of
Registrant that would have actually occurred had the transaction been in
effect as of the date or for the period presented. In addition, it should be
noted that Registrant's financial statements will reflect the disposition only
from November 25, 1995, the effective date.
The unaudited pro forma condensed consolidated financial statements should be
read in conjunction with the historical financial statements and related notes
of Registrant.
(c) Exhibit - previously filed with Form 8-K - Item 5 on December 18, 1995.
No. Description
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1 Stock Purchase Agreement, dated as of December 14, 1995, between
Holdings and Catamount.
3
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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.
AGWAY INC.
(Registrant)
Date December 22, 1995 By /s/PETER J. O'NEILL
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Peter J. O'Neill
Senior Vice President,
Finance and Control, Treasurer and Controller
(Principal Financial Officer and
Chief Accounting Officer)
4
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PRO FORMA FINANCIAL INFORMATION
AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1995
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Adjustments
-------------------------
As Reported Hood<F1> Other Pro Forma
----------- -------- ----- ---------
ASSETS
------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Trade accounts receivable (including notes
receivable of $29,784), less allowance for doubtful
accounts of $10,110 ....................................... $ 205,710 $ (40,017) $ 3,970 <F2> $ 169,663
Leases receivable, less unearned income of $42,640 .......... 94,926 94,926
Uncollected insurance premiums .............................. 9,888 9,888
Advances and other receivables .............................. 25,456 (3,658) 6,731 <F2> 28,529
Inventories
Raw materials ............................................. 16,879 (637) 16,242
Finished goods ............................................ 137,275 (8,834) 128,442
Goods in transit and supplies ............................. 13,795 (8,331) 5,463
---------- ---------- ---------- ----------
Total inventories ......................................... 167,949 (17,802) 150,147
Prepaid expenses ............................................ 67,199 (2,206) (11,295)<F3> 53,698
---------- ---------- ---------- ----------
TOTAL CURRENT ASSETS .................................. 571,128 (63,683) (594) 506,851
Marketable securities available for sale ....................... 33,075 33,075
Other security investments ..................................... 41,273 (3,247) 3,172 <F2> 41,198
Properties and equipment, net .................................. 305,251 (61,663) 243,588
Long-term leases receivable, less unearned
income of $68,517 ........................................... 249,705 249,705
Investment in discontinued operations .......................... 16,124 (16,124)<F4>
Other assets ................................................... 97,777 (10,251) 1,200 <F2> 88,726
---------- ---------- ---------- ----------
TOTAL ASSETS .......................................... $1,298,209 $ (122,720) $ (12,346) $1,163,143
========== ========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Notes payable ............................................... $ 84,500 $ (15,900)<F5> $ 68,600
Current installments of long-term debt and
subordinated debt ........................................ 94,094 $ (10,762) 83,332
Accounts payable ............................................ 116,967 (33,093) 1,360 <F6> 85,234
Unearned insurance premiums ................................. 16,674 16,674
Other current liabilities ................................... 128,554 (19,780) 2,920 <F6> 111,694
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TOTAL CURRENT LIABILITIES ............................. 440,789 (63,635) (11,620) 365,534
Long-term debt ................................................. 238,146 (31,905) 206,241
Subordinated debt .............................................. 380,971 (6,732) 374,239
Other liabilities .............................................. 73,222 (14,231) (2,047)<F6> 56,944
Interest of others in consolidated subsidiaries ................ 6,217 (6,217)
Commitments and contingencies
Preferred stock, net ........................................... 62,892 62,892
Common stock, net .............................................. 2,712 2,712
Paid-in capital ................................................ 1,470 (1,470)<F7>
Retained margin ................................................ 91,790 2,791 <F8> 94,581
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TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY ............................................ $1,298,209 $ (122,720) $ (12,346) $1,163,143
========== ========== ========== ==========
<FN>
<F1> To eliminate the assets and liabilities included in the balance sheet of the Registrant's majority-owned subsidiary, H. P.
Hood Inc., as of September 30, 1995.
<F2> To reflect assets purchased by Agway from H. P. Hood Inc. subsequent to the sale.
<F3> To reclassify to the deferred tax asset retained by Holdings.
<F4> To eliminate the net investment in H. P. Hood Inc.
<F5> To reflect the $15,900 cash proceeds from the sale of H. P. Hood Inc. and the related reduction in notes payable.
<F6> To reflect liabilities and other obligations assumed.
<F7> To eliminate Paid-in capital associated with H. P. Hood Inc.
<F8> Net income statement impact from transaction.
</FN>
</TABLE>
F-1
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PRO FORMA FINANCIAL INFORMATION
AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995
(Unaudited)
(Thousands of Dollars)
<TABLE>
<CAPTION>
Pro Forma Adjustments
------------------------
As Reported Hood<F1> Other Pro Forma
----------- -------- ----- ---------
<S> <C> <C> <C> <C>
NET SALES AND REVENUES FROM:
Product sales ...................................... $ 416,130 $(113,145) $ 302,985
Leasing operations ................................. 11,180 $ 35<F3> 11,215
Insurance operations ............................... 6,887 6,887
Service revenues ................................... 3,392 145<F3> 3,537
--------- --------- --------- ---------
Total net sales and revenues ................... 437,589 (113,145) 180 324,624
COST AND EXPENSES FROM:
Products and plant operations ...................... 391,999 (100,287) 35<F3> 291,747
Leasing operations ................................. 5,257 5,257
Insurance operations ............................... 4,791 4,791
Selling, general and administrative
activities ..................................... 41,994 (10,281) 145<F3> 31,858
--------- --------- --------- ---------
Total costs and expenses ....................... 444,041 (110,568) 180 333,653
OPERATING MARGIN(LOSS) .................................. (6,452) (2,577) (9,029)
Interest income(expense), net ........................... (8,475) 1,306 248<F2> (6,921)
Other income, net ....................................... 710 856 396<F2> 1,962
--------- --------- --------- ---------
MARGIN(LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES ..................... (14,217) (415) 644 (13,988)
Income tax benefit ...................................... (3,488) (25) (14)<F2> (3,527)
--------- --------- --------- ---------
MARGIN(LOSS) FROM CONTINUING OPERATIONS ................. $ (10,729) $ (390) $ 658 $ (10,461)
========= ========= ========= =========
<FN>
<F1> To eliminate the profit and loss of H. P. Hood Inc. for the entire period.
<F2> To reflect costs that would not have been incurred if the sale of H. P. Hood Inc. common stock had been
completed as of July 1, 1994.
<F3> To reflect former intercompany amounts no longer being eliminated.
</FN>
</TABLE>
F-2
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PRO FORMA FINANCIAL INFORMATION
AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1995
(Unaudited)
(Thousands of Dollars)
<TABLE>
<CAPTION>
Pro Forma Adjustments
-----------------------------
As Reported Hood<F1> Other Pro Forma
----------- -------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES AND REVENUES FROM:
Product sales ................................ $ 1,994,387 $ (483,571) $ 1,510,816
Leasing operations ........................... 40,426 $ 187 <F3> 40,613
Insurance operations ......................... 26,623 26,623
Service revenues ............................. 21,425 645 <F3> 22,070
----------- ----------- ----------- -----------
Total net sales and revenues ............. 2,082,861 (483,571) 832 1,600,122
COST AND EXPENSES FROM:
Products and plant operations ................ 1,653,415 (431,651) 177 <F3> 1,221,941
Leasing operations ........................... 17,675 17,675
Insurance operations ......................... 17,321 17,321
Selling, general and administrative
activities ............................... 380,602 (53,308) 645 <F3> 327,939
----------- ----------- ----------- -----------
Total costs and expenses ................. 2,069,013 (484,959) 822 1,584,876
OPERATING MARGIN(LOSS) ............................ 13,848 1,388 10 15,246
Interest income(expense), net ..................... (36,169) 5,166 990 <F2> (30,013)
Other income(expense), net ........................ (4,419) (3,889) 16,724 <F2> 8,416
----------- ----------- ----------- -----------
MARGIN(LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES .......................... (26,740) 2,665 17,724 (6,351)
Income tax benefit ................................ (3,778) (1,270) 6,676 <F2> 1,628
----------- ----------- ----------- -----------
MARGIN(LOSS) FROM CONTINUING OPERATIONS ........... $ (22,962) $ 3,935 $ 11,048 $ (7,979)
=========== =========== =========== ===========
<FN>
<F1> To eliminate the profit and loss of H P. Hood Inc. for the entire period.
<F2> To reflect costs that would not have been incurred if the sale of H. P. Hood Inc. common stock had been
completed as of July 1, 1994.
<F3> To reflect former intercompany amounts no longer being eliminated.
</FN>
</TABLE>
F-3
