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) December 17, 1997
WHITMAN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 001-04710 36-6076573
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation
3501 Algonquin Road, Rolling Meadows, Illinois 60008
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 818-5000
(Former name or former address, if changed since last report) Not applicable
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Item 5. Other Events.
On December 17, 1997, Whitman Corporation ("Whitman") announced that its
Board of Directors had declared a dividend of the common stock of Hussmann
International, Inc. ("Hussmann") and of Midas, Inc. (formerly Midas Group, Inc.)
("Midas") to Whitman shareholders (the "Distribution"). The Distribution will
occur on or about January 30, 1998, to shareholders of record on January 16,
1998.
As previously announced on December 8, 1997, Whitman received a favorable
ruling from the Internal Revenue Service that the Distribution would be
non-taxable to Whitman and its shareholders.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(b) Pro Forma Financial Information
Page Number
-----------
3 Introduction to Pro Forma Condensed Consolidated Financial
Information.
4 Pro Forma Condensed Consolidated Statement of Income for the
nine months ended September 30, 1997.
5 Pro Forma Condensed Consolidated Statement of Income for the
year ended December 31, 1996.
6 Pro Forma Condensed Consolidated Balance Sheet as of September
30, 1997.
7 Notes to Pro Forma Financial Information.
(c) Exhibits
Exhibit Number
--------------
99 Press Release Issued by Whitman Corporation on December 17,
1997.
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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.
WHITMAN CORPORATION
Date: January 6, 1998 By: /s/ FRANK T. WESTOVER
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Frank T. Westover
Senior Vice President and Controller
(As Chief Accounting Officer and Duly
Authorized Officer of Whitman Corporation)
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WHITMAN CORPORATION AND SUBSIDIARIES
INTRODUCTION TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The accompanying unaudited Pro Forma Condensed Consolidated Statements of
Income of Whitman and its subsidiaries for the nine months ended September 30,
1997 and for the year ended December 31, 1996 have been prepared to present the
pro forma condensed consolidated results of the continuing operations of
Whitman, assuming that the transactions contemplated by the Distribution,
including the borrowings to be incurred by Hussmann Corporation and Midas
International Corporation in connection with the Distribution, had been
completed at January 1, 1996, and include all material adjustments necessary to
restate Whitman's historical results. The adjustments required to reflect such
transactions are set forth in the "Pro Forma Adjustments" column. In addition,
the Pro Forma Condensed Consolidated Statements of Income reflect the
reclassification of Hussmann and Midas to discontinued operations.
The accompanying unaudited Pro Forma Condensed Consolidated Balance Sheet of
Whitman and its subsidiaries as of September 30, 1997, presents the pro forma
condensed consolidated financial position of Whitman, assuming that the
transactions contemplated by the Distribution described in the preceding
paragraph had been completed as of that date. The adjustments required to
reflect such transactions are set forth in the "Pro Forma Adjustments" column.
In addition, the Pro Forma Condensed Consolidated Balance Sheet reflects the
reclassification of Hussmann and Midas to discontinued operations.
The historical amounts are derived from the historical financial statements of
Whitman. The unaudited pro forma condensed consolidated financial information of
Whitman should be read in conjunction with the historical financial statements
and related notes of Whitman included in its 1996 annual report on Form 10-K and
its most recent quarterly report on Form 10-Q, copies of which are available
from Whitman. The pro forma financial information presented is for informational
purposes only and may not necessarily reflect future results of operations or
the financial position of Whitman or what results of operations or the financial
position of Whitman actually would have been had Hussmann and Midas operated as
independent companies during the periods shown.
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WHITMAN CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited and in millions, except per share data)
<TABLE>
<CAPTION>
For the nine months ended September 30, 1997
------------------------------------------------------------------------
Reclassify
Hussmann and
Midas to Pro Forma
Discontinued After Pro Forma
Historical Operations Reclassification Adjustments Pro Forma
---------- ------------ ---------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Sales and revenues $ 2,376.1 $(1,197.2) $ 1,178.9 $ -- $ 1,178.9
Cost of goods sold 1,535.3 (801.8) 733.5 -- 733.5
---------- --------- ----------- ---------- ----------
Gross profit 840.8 (395.4) 445.4 -- 445.4
Selling, general and administrative expenses 562.3 (271.2) 291.1 (5.3)(a) 285.8
Amortization expense 15.4 (3.8) 11.6 -- 11.6
Special charges 107.7 (98.3) 9.4 -- 9.4
---------- --------- ----------- ---------- ----------
Operating income 155.4 (22.1) 133.3 5.3 138.6
Interest expense, net (50.4) 18.1 (32.3) (2.3)(b) (34.6)
Other expense, net (15.4) 0.7 (14.7) -- (14.7)
---------- --------- ----------- ---------- ----------
Income before income taxes 89.6 (3.3) 86.3 3.0 89.3
Income tax provisions 57.5 (16.1) 41.4 1.1 (c) 42.5
---------- --------- ----------- ---------- ----------
Income before minority interests 32.1 12.8 44.9 1.9 46.8
Minority interests 13.8 -- 13.8 -- 13.8
---------- --------- ----------- ---------- ----------
Income from continuing operations $ 18.3 $ 12.8 $ 31.1 $ 1.9 $ 33.0
========== ========= =========== ========== ==========
Average number of common shares
outstanding 103.3 103.3 103.3
========== =========== ==========
Net income per common share -
Continuing operations $ 0.18 $ 0.30 $ 0.32
========== =========== ==========
</TABLE>
See accompanying notes to pro forma financial information.
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WHITMAN CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited and in millions, except per share data)
<TABLE>
<CAPTION>
For the year ended December 31, 1996
-----------------------------------------------------------------------
Reclassify
Hussmann and
Midas to Pro Forma
Discontinued After Pro Forma
Historical Operations Reclassification Adjustments Pro Forma
---------- ------------ ---------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Sales and revenues $ 3,111.3 $(1,609.9) $ 1,501.4 $ -- $ 1,501.4
Cost of goods sold 2,008.0 (1,083.6) 924.4 -- 924.4
---------- --------- ----------- ---------- ----------
Gross profit 1,103.3 (526.3) 577.0 -- 577.0
Selling, general and administrative expenses 716.7 (349.9) 366.8 (7.0)(a) 359.8
Amortization expense 20.0 (4.6) 15.4 -- 15.4
---------- --------- ----------- ---------- ----------
Operating income 366.6 (171.8) 194.8 7.0 201.8
Interest expense, net (65.3) 23.8 (41.5) (2.3)(b) (43.8)
Other expense, net (25.6) -- (25.6) -- (25.6)
---------- --------- ----------- ---------- ----------
Income before income taxes 275.7 (148.0) 127.7 4.7 132.4
Income tax provisions 117.2 (56.1) 61.1 1.8 (c) 62.9
---------- --------- ----------- ---------- ----------
Income before minority interests 158.5 (91.9) 66.6 2.9 69.5
Minority interests 19.1 (0.3) 18.8 -- 18.8
---------- ----------- ----------- ---------- ----------
Income from continuing operations $ 139.4 $ (91.6) $ 47.8 $ 2.9 $ 50.7
========== ========= =========== ========== ==========
Average number of common shares
outstanding 106.4 106.4 106.4
========== =========== ==========
Net income per common share -
Continuing operations $ 1.31 $ 0.45 $ 0.48
========== =========== ==========
</TABLE>
See accompanying notes to pro forma financial information.
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WHITMAN CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited and in millions)
<TABLE>
<CAPTION>
September 30, 1997
------------------------------------------------------------------------
Reclassify
Hussmann and
Midas to Pro Forma
Discontinued After Pro Forma
Historical Operations Reclassification Adjustments Pro Forma
---------- ------------ ---------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 79.3 $ (45.5) $ 33.8 $ -- $ 33.8
Short-term investments -- -- -- 175.0(d) 175.0
Receivables, net 469.4 (269.5) 199.9 -- 199.9
Inventories, net 335.1 (253.7) 81.4 -- 81.4
Other current assets 78.8 (26.3) 52.5 -- 52.5
Net current assets of companies held
for disposition -- 324.1 324.1 (324.1)(e) --
---------- --------- ----------- ---------- ----------
Total current assets 962.6 (270.9) 691.7 (149.1) 542.6
---------- --------- ----------- ---------- ----------
Property and equipment, net 751.0 (352.8) 398.2 -- 398.2
Intangible assets, net 497.6 (32.9) 464.7 -- 464.7
Net non-current assets of companies held
for disposition -- 367.3 367.3 (367.3)(e) --
Investments and other assets 282.3 (68.2) 214.1 -- 214.1
---------- --------- ----------- ---------- ----------
Total assets $ 2,493.5 $ (357.5) $ 2,136.0 $ (516.4) $ 1,619.6
========== ========= =========== ========== ==========
LIABILITIES:
Current liabilities:
Short-term debt, including current
portion of long-term debt $ 143.8 $ (8.8) $ 135.0 $ (135.0)(d) $ --
Accounts and dividends payable 293.9 (155.8) 138.1 -- 138.1
Other current liabilities 227.1 (106.3) 120.8 -- 120.8
---------- --------- ----------- ---------- ----------
Total current liabilities 664.8 (270.9) 393.9 (135.0) 258.9
---------- --------- ----------- ---------- ----------
Long-term debt 797.8 (20.7) 777.1 (165.0)(d) 612.1
Deferred income taxes and other liabilities 209.5 (57.1) 152.4 -- 152.4
Minority interest 249.2 (8.8) 240.4 (20.3)(f) 220.1
Shareholders' equity 572.2 -- 572.2 (196.1)(g) 376.1
---------- --------- ----------- ---------- ----------
Total liabilities and shareholders' equity $ 2,493.5 $ (357.5) $ 2,136.0 $ (516.4) $ 1,619.6
========== ========= =========== ========== ==========
</TABLE>
See accompanying notes to pro forma financial information.
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WHITMAN CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA FINANCIAL INFORMATION
(a) To record the estimated reduction in general and administrative expenses
that would have been realized by Whitman subsequent to the Distribution.
This reduction in general and administrative expenses assumes that all
executive officers and a substantial portion of the staff of Whitman
ultimately leave the Company to be replaced by existing personnel at Pepsi
General or by recruitment. Because of the need for an orderly transition,
the estimated cost reductions are not expected to be fully realized in the
first year after the Distribution, but do represent the estimated full year
cost reductions once the transition period is completed.
(b) To record the assumed net decrease in interest expense resulting from the
repayment of indebtedness by Whitman using the funds received from Hussmann
and Midas compared to interest earned on loans and advances to those
subsidiaries. It is assumed the indebtedness repaid by Whitman had an
average interest rate of 7.25%. No earnings were assumed on $175 million of
excess cash classified as short-term investments.
(c) To record income tax benefits attributable to adjustments (a) and (b) at a
combined Federal and state income tax rate of 38%.
(d) To record the assumed reduction in indebtedness and increase in short-term
investments arising from the receipt of $475 million resulting from the
settlement of loans and advances payable to Whitman by Hussmann and Midas
and the receipt of cash dividends from Hussmann and Midas in conjunction
with the Distribution.
(e) To record the distribution of the assets and the liabilities of Hussmann
and Midas.
(f) To record the acquisition of the outstanding non-voting preferred stock of
Pepsi-Cola General Bottlers, Inc. from the holder of the minority interest
in exchange for Whitman Common Stock. This exchange of shares is an
integral part of the transactions involved in effecting the Distribution.
(g) To record the effects of adjustments (d), (e) and (f) on shareholders'
equity.
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Exhibit Index
Exhibit
No. Description of Exhibit
- ------- ----------------------
99 Press Release Issued by Whitman Corporation on December 17, 1997.
EXHIBIT 99
PRESS RELEASE ISSUED BY WHITMAN CORPORATION ON DECEMBER 17, 1997
CHICAGO (December 17, 1997) -- Whitman Corporation announced today that its
Board of Directors has declared a dividend of Hussmann and Midas common stock to
Whitman shareholders of record on January 16, 1998. Each Whitman shareholder
will receive one share of Hussmann stock for every two shares of Whitman stock
held and one share of Midas stock for every six shares of Whitman stock held.
The distribution of the dividend is scheduled for January 30, 1998.
The Board of Directors approved the plan to spin-off Midas and Hussmann
last June, subject to a favorable tax ruling from the Internal Revenue Service
and market conditions. In December, the IRS ruled that the spin-offs would be
non-taxable to the corporation and its shareholders.
Bruce S. Chelberg, Chairman and Chief Executive Officer said, "As stand
alone companies, each of our businesses has a very bright future. Shareholders
are well served by this action of the Board."
Midas and Hussmann will trade on the New York Stock Exchange. The Midas
symbol will be MDS, and the Hussmann symbol will be HSM. It is not necessary for
shareholders to take any action with respect to the dividend.
