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) N/A
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Heilig-Meyers Company
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(Exact name of registrant as specified in its charter)
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Virginia 1-8484 54-0558861
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(State or other jurisdiction of incorporation) (Commission (IRS Employer
file number) Identification No.)
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12560 West Creek Parkway, Richmond, Virginia 23238
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (804) 784-7300
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N/A
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(Former name or former address, if changed since last report)
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Item 5. Other Events
On May 29, 1999, Heilig-Meyers Company (the "Company") issued a press
release, which is attached hereto as Exhibit 99.1 and incorporated herein by
reference, announcing the signing of a definitive agreement to transfer a
controlling interest in Mattress Discounters Corporation to an investment
group.
On June 15, 1999, the Company issued a press release, which is attached
hereto as Exhibit 99.2 and incorporated herein by reference, announcing the
signing of a definitive agreement to sell Rhodes, Inc. to an investment
group and reporting results for the first quarter ended May 31, 1999.
Item 7. Financial Statements and Exhibits
(c) Exhibits
The following exhibits are filed as a part of this report:
Exhibit 99.1 - Press Release dated May 29, 1999.
Exhibit 99.2 - Press Release dated June 15, 1999.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HEILIG-MEYERS COMPANY
Date: June 17, 1999 By: /s/ Paige H. Wilson
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Paige H. Wilson
Senior Vice President,
Secretary and Treasurer
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Exhibit Index
Exhibit
No. Description
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99.1 Press Release dated May 29, 1999
99.2 Press Release dated June 15, 1999
EXHIBIT 99.1
FOR IMMEDIATE RELEASE MAY 29, 1999
HEILIG-MEYERS ANNOUNCES THE SALE OF ITS MATTRESS DISCOUNTERS DIVISION
Richmond, VA: Heilig-Meyers Company (NYSE: HMY) today announced the
signing of a definitive agreement to transfer a controlling interest in its
Mattress Discounters division to an investment group, including certain key
managers of Mattress Discounters, led by Bain Capital, a Boston based capital
investment group. Specific terms of the agreement were not disclosed, however,
total value to Heilig-Meyers is expected to exceed $230 million, including $218
million in cash. Heilig-Meyers will retain an approximate 7% equity interest in
Mattress Discounters. The transaction, which is subject to certain closing
conditions, is expected to close in the second fiscal quarter that ends August
31, 1999.
William C. DeRusha, Chairman and Chief Executive Officer of
Heilig-Meyers Company, commented that this transaction resulted from the
Company's strategic review of divestiture of certain non-core operating assets
in an effort to improve shareholder value by refocusing on the core business and
improving the overall financial position of the Company. He added that the net
cash proceeds from this transaction would be used to pay down debt and are
expected to lower the Company's overall debt obligations by over 20%.
Management noted that this transaction is expected to result in a
pre-tax gain in the Company's second fiscal quarter, which may be partially
offset by certain other potential divestitures and strategic operating decisions
currently under review. Mr. DeRusha stated that it was management's intent to
aggressively pursue those strategies which rapidly improve the financial
performance of the Company's core operations and accordingly, shareholder value.
Heilig-Meyers Company is the Nation's largest retailer of furniture,
bedding and related items. As of April 30, 1999, the Company operated 1,253
stores: 813 as Heilig-Meyers, 236 as Mattress Discounters, 97 as Rhodes, 75 as
The RoomStore and 32 in Puerto Rico as Berrios.
Bain Capital, Inc. was formed in 1984 and has invested in over
100 companies since its founding including Brookstone, Staples, Stage
Stores, Sealy, Dominos Pizza and Totes Isotoner, among others.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: EThe forward-looking statements made above and identified by such words as
"EXPECTS," AND "MAY" reflect the Company's reasonable judgments with respect to
future events and is subject to risks and uncertainties that could cause actual
results to differ materially from those in the forward-looking statements. Such
factors include but are not limited to, the customer's willingness, need and
financial ability to purchase home furnishings and related items, the costs and
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effectiveness of promotional activities, the Company's access to, and cost of,
capital, the investment group's ability to obtain satisfactory financing for the
purchase of the controlling interest, as well as valuations at which certain
other potential divestitures may occur. Other factors such as changes in tax
laws, consumer credit and bankruptcy trends, recessionary or expansive trends in
the Company's markets, inflation rates and regulations and laws which affect the
Company's ability to do business in its markets may also impact the outcome of
the forward-looking statements.
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EXHIBIT 99.2
FOR IMMEDIATE RELEASE JUNE 15, 1999
HEILIG-MEYERS ANNOUNCES THE SALE OF ITS RHODES
DIVISION AND REPORTS 1ST QUARTER RESULTS
Richmond, VA: Heilig-Meyers Company (NYSE: HMY) today announced the
signing of a definitive agreement to sell its Rhodes division to an investment
group that includes certain institutional investors and the division's current
management team. The transaction is expected to be valued in excess of $110
million. Under terms of the agreement, Heilig-Meyers expects to receive $60
million in cash, a $40 million note and an option to acquire a 10% equity
interest in the new company. Heilig-Meyers will also have the option to acquire
an incremental 10% equity interest if certain financial goals are achieved by
the new company. Under terms of the agreement, Rhodes will assume approximately
$10 million in capital lease obligations. Heilig-Meyers also noted that in
connection with the transaction it has agreed to provide or guaranty a $20
million standby credit facility to Rhodes, which may only be drawn on in certain
circumstances after utilization of availability under Rhodes' primary credit
facility. In addition, Heilig-Meyers has previously guaranteed certain leases
and other obligations of Rhodes, which may not be released in connection with
this transaction. Rhodes has agreed to indemnify Heilig-Meyers in the event that
payments are made under these guarantees. The transaction, which is subject to
certain customary closing conditions, is expected to close in the second fiscal
quarter that ends August 31, 1999.
William C. DeRusha, Chairman and Chief Executive Officer of
Heilig-Meyers Company, stated that this would be the Company's second major
transaction resulting from its strategic divestiture review of non-core
operating assets. He added that the proceeds from the pending Mattress
Discounters transaction, in combination with proceeds from this divestiture,
would allow the Company to lower its debt obligations by over 30%, thus
significantly improving the overall financial position of the Company. Mr.
DeRusha reiterated the Company's commitment to aggressively employing those
strategies which improve operating performance and accordingly, shareholder
value. He added that completion of these two transactions would allow management
to reallocate Company resources to expedite initiatives aimed at improving the
profitability in the core Heilig-Meyers Furniture business.
The Company also reported consolidated results for the first quarter
ended May 31, 1999. Total revenues for the quarter increased 3.0% to $689.2
million, compared to $668.9 million for the quarter ended May 31, 1998. Net
earnings prior to a $114 million pre-tax write-down of assets associated with
the Rhodes division were $9.0 million or $0.15 per share, compared to $10.2
million or $0.17 per share in the prior year. Including the write-down
associated with the Rhodes division, the Company incurred a consolidated net
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loss of $70.5 million, or $1.18 per share. Management noted that the pre-tax
gain, relating to the pending Mattress Discounters divestiture, was expected to
offset this loss in the second quarter. Management also noted that it is
continuing to review non-core operations and that certain other strategic
decisions could impact the expected gain from the pending Mattress Discounters
transaction.
Mr. DeRusha commented that during the first quarter the Company made
tremendous progress toward redirecting its strategic focus to its core
Heilig-Meyers Furniture operations. He added that overall operating results were
well ahead of street expectations and that management was pleased with the
positive trends in the core business.
Heilig-Meyers Company is the Nation's largest retailer of furniture,
bedding and related items. As of May 31, 1999 the Company operated 1,257 stores:
814 as Heilig-Meyers, 241 as Mattress Discounters, 93 as Rhodes, 77 as The
RoomStore and 32 in Puerto Rico as Berrios.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: The forward-looking statements made above and identified by such words as
"EXPECTS," AND "MAY" reflect the Company's reasonable judgments with respect to
future events and are subject to risks and uncertainties that could cause actual
results to differ materially from those in the forward-looking statements. Such
factors include but are not limited to, the customer's willingness, need and
financial ability to purchase home furnishings and related items, the costs and
effectiveness of promotional activities, the Company's access to, and cost of,
capital as well as the investment group's ability to obtain satisfactory
financing for the purchase of Rhodes. Also payments under guarantees of Rhodes
leases or other obligations or the standby credit facility as a result of lower
than expected Rhodes operating results or defaults by Rhodes could impact the
outcome of the forward looking statements. Other factors such as changes in tax
laws, consumer credit and bankruptcy trends, recessionary or expansive trends in
the Company's markets, inflation rates and regulations and laws which affect the
Company's ability to do business in its markets may also impact the outcome of
the forward-looking statements.
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HEILIG-MEYERS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands except per share data)
Three Months Ended
May 31,
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1999 1998
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Revenues:
Sales $ 618,492 $ 593,795
Other income 70,711 75,144
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Total revenues 689,203 668,939
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Costs and expenses:
Costs of sales 400,229 393,432
Selling, general and administrative 231,320 217,296
Interest 19,733 19,140
Provision for doubtful accounts 23,872 23,199
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Total costs and expenses 675,154 653,067
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Write-down of assets held for sale (113,690) -
Earnings (loss) before provision for income taxes (99,641) 15,872
Provision (benefit) for income taxes (29,101) 5,678
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Net earnings (loss) $ (70,540) $ 10,194
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Net earnings (loss) per share of common stock:
Basic $ (1.18) $ 0.17
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Diluted $ (1.18) $ 0.17
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Weighted average shares:
Basic 59,861 58,812
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Diluted 59,861 59,670
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Cash dividends per share of common stock $ 0.07 $ 0.07
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HEILIG-MEYERS COMPANY
CONSOLIDATED CONDENSED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
MAY 31, FEBRUARY 28,
1999 1999
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ASSETS
Current assets:
Cash $ 20,649 $ 67,254
Accounts receivable, net 252,205 254,282
Retained interest in securitized
receivables 192,184 190,970
Inventories 396,845 493,463
Other current assets 98,773 124,305
Net assets held for sale 159,857 -
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Total current assets 1,120,513 1,130,274
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Property and equipment, net 320,712 400,686
Other assets 104,995 72,632
Excess costs over net assets acquired, net 196,126 344,160
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$ 1,742,346 $ 1,947,752
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 201,358 $ 210,000
Long-term debt due within one year 131,193 167,486
Accounts payable 147,368 193,799
Accrued expenses 154,875 178,656
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Total current liabilities 634,794 749,941
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Long-term debt 536,766 547,344
Deferred income taxes 40,129 45,365
Total stockholders' equity 530,657 605,102
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$ 1,742,346 $ 1,947,752
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