SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 13, 1998
RICHFOOD HOLDINGS, INC.
(Exact name of registrant as specified in charter)
Virginia
(State or other 0-16900 54-1438602
jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
4860 Cox Road, Suite 300
Glen Allen, Virginia 23060
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (804) 915-6000
Not Applicable
(former name or former address if changed since last report)
Page 1 of 11 pages.
Exhibit Index appears on page 11.
<PAGE>
INFORMATION TO BE INCLUDED IN REPORT
EXPLANATORY NOTE: This Current Report on Form 8-K/A1 amends Item 7 of the
Registrant's Current Report on Form 8-K, filed on May 28,
1998, to provide the pro forma financial information required
by Item 7. The remaining Items have not been amended herein.
ITEM 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
a) Financial Statements of Business Acquired.
Previously filed.
b) Pro Forma Financial Information.
Unaudited Pro Forma Combined Condensed Statement of
Earnings for the Fiscal Year Ended May 2, 1998;
Unaudited Pro Forma Combined Condensed Balance Sheet
as of May 2, 1998; and
Notes to Unaudited Pro Forma Combined Condensed
Financial Statements.
c) Exhibits.
Number Exhibit
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<S> <C>
2.1 Agreement and Plan of Merger, dated as of April 9, 1998, by and among the
Registrant, DGC Acquisition, Inc. and Dart Group Corporation (incorporated by
reference to Exhibit (c) to the Tender Offer Statement on Schedule 14D-1 filed with
the Securities and Exchange Commission by the Registrant and DGC Acquisition, Inc. on
April 15, 1998).
4.1 Credit Agreement, dated as of May 12, 1998, by and among the Registrant,
as Borrower, First Union National Bank, as Administrative Agent, Crestar Bank, as
Syndication Agent and The First National Bank of Chicago, as Documentation Agent
(incorporated by reference to Exhibit (b) to the Form 13D filed with the Securities
and Exchange Commission by the Registrant on May 26, 1998, reporting the Registrant's
beneficial ownership of the common stock, par value $.01 per share, of Trak Auto
Corporation).
23.1 Consent of Arthur Andersen LLP (Previously filed).
</TABLE>
Pursuant to Rule 601(b)(2) of Regulation S-K, the Registrant agrees to furnish
supplementally to the Securities and Exchange Commission, upon request, any
omitted schedules or similar attachments to Exhibit 2.1.
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma combined condensed financial
statements give effect to the acquisition (the "Dart Acquisition") by Richfood
Holdings, Inc., a Virginia corporation ("Richfood"), through its wholly-owned
subsidiary DGC Acquisition, Inc., a Delaware corporation ("DGC"), of all of the
outstanding shares of common stock, par value $1.00 per share (the "Shares"), of
Dart Group Corporation ("Dart"). On May 13, 1998, Richfood accepted for purchase
1,180,503 Shares, representing approximately 96% of the outstanding Shares,
pursuant to a tender offer, which was made upon the terms and subject to the
conditions contained in the Offer to Purchase, dated April 15, 1998, and the
related Letter of Transmittal (which together with any amendments or supplements
thereto, constituted the "Offer"). Richfood completed the Dart Acquisition on
May 18, 1998, which was the effective date of the merger of DGC with and into
Dart, with Dart surviving as a wholly-owned subsidiary of Richfood (the
"Merger").
As of the acquisition date, Dart, headquartered in Landover,
Maryland, was comprised of (i) Shoppers Food Warehouse Corporation ("Shoppers"),
which operates a chain of 37 supermarkets in the greater Washington, D.C.
metropolitan area (100% owned by Dart); (ii) Trak Auto Corporation ("Trak"), a
publicly-owned retailer of auto parts (67.1% owned by Dart); (iii) Crown Books
Corporation ("Crown"), a publicly-owned retailer of popular books (52.3% owned
by Dart); and (iv) Total Beverage Corp. ("Total Beverage"), a discount beverage
retailer based in Washington, D.C. (100% owned by Dart). On May 22, 1998, the
stock of Total Beverage was sold to a third party for approximately $8 million.
It is Richfood's intention to cause Dart to divest its ownership of its
remaining non-core assets, including its ownership of Trak and Crown, within one
year of the acquisition date. Accordingly, the unaudited pro forma combined
condensed financial statements include adjustments to reclassify the net
assets of Trak, Crown and Total Beverage to assets held for sale in the
unaudited pro forma combined condensed balance sheet at preliminary estimates
of their respective estimated net realizable values and to eliminate the
historical results of operations of these entities from the unaudited pro
forma combined condensed statement of earnings. Crown filed for protection
under Chapter 11 of the U.S. Bankruptcy Code on July 14, 1998.
The aggregate purchase price for the Shares acquired in the Offer or
converted in the Merger, and for the cash settlement and cancellation of
previously outstanding options to purchase Shares, was approximately $201.1
million. The transaction will be accounted for using the purchase method of
accounting.
The unaudited pro forma combined condensed statement of earnings
also gives effect to the acquisition by Richfood of substantially all of the
assets and assumption of certain liabilities of Farm Fresh, Inc. ("Farm Fresh")
on March 4, 1998 (the "Farm Fresh Acquisition"), as previously reported on
Richfood's Current Report on Form 8-K, which was filed on March 19, 1998. Assets
acquired and liabilities assumed in conjunction with the Farm Fresh Acquisition
are reflected in Richfood's historical condensed consolidated balance sheet as
of May 2, 1998.
The unaudited pro forma combined condensed financial statements are
based upon the respective historical consolidated financial statements of
Richfood, Dart and Farm Fresh and should be read in conjunction with Richfood's
historical financial statements, and the notes thereto, contained in its Annual
Report on Form 10-K for the fiscal year ended May 2, 1998, to be filed on or
about July 31, 1998, the historical financial statements of Dart contained in
Richfood's Current Report on Form 8-K, which was filed on May 28, 1998, and the
historical financial statements of Farm Fresh contained in Richfood's Current
Report on Form 8-K, which was filed on March 19, 1998. Certain items in the
historical financial statements of Dart and Farm Fresh have been reclassified to
conform with Richfood's historical presentation. The unaudited pro forma
combined condensed balance sheet combines Richfood's historical condensed
consolidated balance sheet as of May 2, 1998, with Dart's historical condensed
consolidated balance sheet as of January 31, 1998. The unaudited pro forma
combined condensed statement of earnings combines Richfood's historical
condensed consolidated statement of earnings for the fifty-two week fiscal year
ended May 2, 1998, with Dart's historical condensed consolidated statement of
operations for the fifty-two week fiscal year ended January 31, 1998, and Farm
Fresh's historical condensed consolidated statement of operations for the period
from May 4, 1997 through March 3, 1998 (the portion of Richfood's fiscal year
prior to the effective date of the Farm Fresh Acquisition). The unaudited pro
forma combined condensed balance sheet data are presented as if the Dart
Acquisition occurred on the date thereof. The unaudited pro forma combined
condensed statement of earnings data are presented as if the Dart Acquisition
and the Farm Fresh Acquisition had each occurred at the beginning of Richfood's
fiscal year ended May 2, 1998.
The unaudited pro forma financial information is presented for
illustrative purposes only and is not necessarily indicative of the operating
results or financial position that would have occurred if the Dart Acquisition
and the Farm Fresh Acquisition had each been consummated at the beginning of
Richfood's fiscal year ended May 2, 1998, with respect to the unaudited pro
forma combined condensed statement of earnings, or if the Dart Acquisition had
occurred on May 2, 1998, with respect to the unaudited pro forma combined
condensed balance sheet, nor is it necessarily indicative of the future
operating results or financial position of Richfood. The unaudited pro forma
financial information is presented based on preliminary estimates for values of
net assets acquired in the Dart Acquisition and may change as valuations are
completed and more facts become known. The unaudited pro forma financial
information does not give effect to any synergies that may occur due to the
integration of the operations of Dart and Farm Fresh with Richfood's operations.
Additionally, the unaudited pro forma financial information includes the
transaction costs of the Dart Acquisition, estimated to be approximately $6.1
million for the financial advisors and regulatory filing fees plus $4.4 million
for legal and accounting fees, printing expenses and other miscellaneous
expenses, and excludes nonrecurring costs and expenses associated with
integrating the operations of Dart and Richfood.
<PAGE>
RICHFOOD HOLDINGS, INC.
UNAUDITED PRO FORMA
COMBINED CONDENSED STATEMENT OF EARNINGS (NOTE 24)
FOR THE FISCAL YEAR ENDED MAY 2, 1998
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
RICHFOOD DART GROUP FARM FRESH, INC.
HOLDINGS, INC. FARM FRESH, INC. CORPORATION PRO FORMA
HISTORICAL HISTORICAL HISTORICAL ADJUSTMENTS
---------------- ------------------- ------------------ ----------------------
<S> <C>
Sales $3,203,731 $ 545,908 $1,505,532 $ (239,797)
(11,992)
--
Cost and expenses:
Cost of goods sold 2,832,505 416,805 1,087,588 (239,797)
(9,256)
--
Operating and administrative
expenses 256,660 115,546 453,747 3,663
(3,387)
(2,971)
--
--
Restructuring and asset impairment
charges and losses on disposal
of assets 24,179 6,593 12,380 (354)
Interest expense 6,013 24,469 22,564 (21,934)
8,999
--
Interest income (3,811) -- -- --
---------------- ---------------- --------------- -------------------
Earnings (loss) before income taxes,
minority interest, extraordinary
item and cumulative effective of
accounting change 88,185 (17,505) (70,747) 13,248
Income tax expense (benefit) 33,479 - (1,523) (1,620)
-
---------------- ---------------- --------------- -------------------
Earnings (loss) from continuing
operations before
minority interest, extraordinary
item and cumulative effect of
accounting change 54,706 (17,505) (69,224) 14,868
Minority interest - - 29,019 -
---------------- ---------------- --------------- -------------------
Earnings (loss) from continuing
operations before
extraordinary item and cumulative
effect of accounting change $ 54,706 $ (17,505) $ (40,205) $ 14,868
================ ================ =============== ===================
Earnings per common share:
Earnings from continuing operations
before extraordinary item and
cumulative effect of
accounting change $ 1.15
================
Earnings per common share -
assuming dilution:
Earnings from continuing operations
before extraordinary item and
cumulative effect of
accounting change $ 1.15
================
Weighted average common shares:
Basic 47,528,161
================
Diluted 47,742,554
================
</TABLE>
<TABLE>
<CAPTION>
DART GROUP
CORPORATION
PRO FORMA NOTE COMBINED
ADJUSTMENTS NUMBER PRO FORMA
----------------- -------------- ---------------
<S> <C>
Sales $ (312,537) 1 $ 4,041,082
- 2
(649,763) 24
Cost and expenses:
Cost of goods sold (312,537) 1 3,346,031
- 2
(429,277) 24
Operating and administrative
expenses 8,725 3 553,025
- 2
(4,565) 4
(646) 6
(273,747) 24
Restructuring and asset impairment
charges and losses on disposal
of assets - 2 30,418
(12,380) 24
Interest expense - 5 48,804
13,257 7
(4,564) 24
Interest income - (3,811)
---------------- ---------------
Earnings (loss) before income taxes,
minority interest, extraordinary
item and cumulative effective of
accounting change 53,434 66,615
Income tax expense (benefit) - 8 26,479
(6,458) 9
2,601 24
---------------- ---------------
Earnings (loss) from continuing
operations before
minority interest, extraordinary
item and cumulative effect of
accounting change 57,291 40,136
Minority interest (29,019) 24 --
---------------- ---------------
Earnings (loss) from continuing
operations before
extraordinary item and cumulative
effect of accounting change $ 28,272 $ 40,136
================ ===============
Earnings per common share:
Earnings from continuing operations
before extraordinary item and
cumulative effect of
accounting change $ 0.84
===============
Earnings per common share -
assuming dilution:
Earnings from continuing operations
before extraordinary item and
cumulative effect of
accounting change $ 0.84
===============
Weighted average common shares:
Basic 47,528,161
===============
Diluted 47,742,554
===============
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
<PAGE>
RICHFOOD HOLDINGS, INC.
UNAUDITED PRO FORMA
COMBINED CONDENSED BALANCE SHEET
MAY 2, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
RICHFOOD DART GROUP
HOLDINGS, INC. CORPORATION
HISTORICAL HISTORICAL
-------------------- --------------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 39,968 $ 13,214
Short-term instruments (includes $38.5 million
for Haft Settlements) - 73,126
Marketable debt securities - 5,126
Receivables, less allowance for
doubtful accounts 101,454 22,899
Inventories 194,875 181,840
Assets held for sale - -
Other current assets 20,675 28,781
-------------------- --------------------
Total current assets 356,972 324,986
-------------------- --------------------
Notes receivable, less allowance for
doubtful accounts 22,767 -
Assets held for sale 26,342 -
Property and equipment, net 187,288 112,819
Goodwill, net 263,369 146,781
Other assets 52,113 21,249
-------------------- --------------------
Total assets $ 908,851 $ 605,835
==================== ====================
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA NOTE COMBINED
ADJUSTMENTS NUMBER PRO FORMA
-------------------- ------------ -------------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ (11,077) 10 $ 42,105
Short-term instruments (includes $38.5 million
for Haft Settlements) (21,531) 10 40,458
(11,137) 11
Marketable debt securities (666) 10 4,460
Receivables, less allowance for
doubtful accounts (14,658) 10 96,925
(12,770) 13
Inventories (151,045) 10 229,014
(1,400) 12
4,744 17
Assets held for sale 24,921 10 24,921
Other current assets (20,886) 10 26,151
(2,419) 18
-------------------- -------------------
Total current assets (217,924) 464,034
-------------------- -------------------
Notes receivable, less allowance for
doubtful accounts 60,561 10 83,328
Assets held for sale - 26,342
Property and equipment, net (72,846) 10 229,762
2,501 20
Goodwill, net 349,016 14 612,385
(146,781) 19
-
Other assets (8,394) 10 68,859
3,891 21
-------------------- -------------------
Total assets $ (29,976) $ 1,484,710
==================== ===================
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
<PAGE>
RICHFOOD HOLDINGS, INC.
UNAUDITED PRO FORMA
COMBINED CONDENSED BALANCE SHEET
MAY 2, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
RICHFOOD DART GROUP
HOLDINGS, INC. CORPORATION
HISTORICAL HISTORICAL
-------------------- --------------------
<S> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt and
capital lease obligations $ 16,684 $ 962
Accounts payable 209,009 136,317
Accrued expenses and other current liabilities 76,942 114,173
-------------------- --------------------
Total current liabilities 302,635 251,452
-------------------- --------------------
Long-term debt and capital lease obligations 253,087 239,244
Deferred credits and other 28,915 32,783
<PAGE>
Minority interests - 38,727
Shareholders' equity (deficit):
Preferred stock, without par value - -
Common stock, without par value 90,729 -
Class A common stock, non-voting, par value
$1.00 per share - 1,980
Class B common stock, voting, par value
$1.00 per share - 500
Paid-in capital - 80,259
Notes receivable - shareholder - (65,130)
Unrealized gain on short-term investments - 6
Retained earnings 233,485 62,407
Treasury stock Class A common stock, at cost - (21,408)
Treasury stock Class B common stock, at cost - (14,985)
-------------------- --------------------
Total shareholders' equity 324,214 43,629
-------------------- --------------------
Total liabilities and shareholders' equity $ 908,851 $ 605,835
==================== ====================
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA NOTE COMBINED
ADJUSTMENTS NUMBER PRO FORMA
------------------- ------------ -------------------
<S> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt and
capital lease obligations $ 290 10 $ 18,922
986 23
Accounts payable (96,311) 10 236,245
(12,770) 13
Accrued expenses and other current liabilities (60,709) 10 142,320
11,914 22
------------------- -------------------
Total current liabilities (156,600) 397,487
------------------- -------------------
Long-term debt and capital lease obligations (29,701) 10 675,750
201,116 15
(11,137) 11
23,141 23
Deferred credits and other (14,610) 10 87,259
(6,227) 22
50,019 10
(3,621) 18
<PAGE>
Minority interests (38,727) 10 -
Shareholders' equity (deficit):
Preferred stock, without par value - -
Common stock, without par value - 90,729
Class A common stock, non-voting, par value
$1.00 per share (1,980) 16 -
Class B common stock, voting, par value
$1.00 per share (500) 16 -
Paid-in capital (80,259) 16 -
Notes receivable - shareholder 65,130 16 -
Unrealized gain on short-term investments (6) 16 -
Retained earnings (62,407) 10,16 233,485
Treasury stock Class A common stock, at cost 21,408 16 -
Treasury stock Class B common stock, at cost 14,985 16 -
------------------- -------------------
Total shareholders' equity (43,629) 324,214
------------------- -------------------
Total liabilities and shareholders' equity $ (29,976) $ 1,484,710
=================== ===================
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS)
1. Elimination of sales by Richfood to Farm Fresh and Shoppers and related
cost of goods sold.
2. Elimination of sales and related cost of goods sold, operating and
administrative expenses and losses on the disposal of assets associated
with certain Farm Fresh stores not purchased by Richfood.
3. Adjustment to record amortization of goodwill. Goodwill arising from the
acquisition of Farm Fresh is amortized over 40 years. Goodwill arising
from the acquisition of Dart is based on a preliminary allocation of the
purchase price (note 14) and is expected to be amortized over periods not
to exceed 40 years.
4. Elimination of historical amortization of Farm Fresh's and Dart's
intangible assets for which no value was assigned in the allocation of the
respective purchase prices.
5. Elimination of Farm Fresh's historical interest expense on indebtedness
for borrowed money.
6. Elimination of the net amortization of the historical supply agreement
between Richfood and Shoppers.
7. Adjustment to record interest expense associated with net borrowings to
finance the cash portion of the purchase prices of both Farm Fresh and
Dart (note 15) and elimination of interest income of $739 earned on
short-term investments assumed to be used to fund a portion of the Dart
purchase price (note 11).
8. Adjustment reflects income taxes on the net combined pro forma earnings of
Richfood and Farm Fresh (excluding Dart) at an assumed pro forma effective
tax rate of 37.96%. This assumed effective tax rate is based on the
historical income taxes of Farm Fresh and Richfood, adjusted for the
impact of pro forma adjustments and estimates concerning the realizability
of deferred taxes.
9. Adjustment reflects income taxes on the net combined pro forma earnings at
an assumed consolidated pro forma effective tax rate of 39.75%. This
assumed effective tax rate is based on the historical income taxes of
Dart, Farm Fresh and Richfood, adjusted for the impact of pro forma
adjustments, non-deductible goodwill and estimates concerning the
realizability of deferred taxes.
10. Reflects the reclassification of assets acquired and liabilities assumed
relating to Trak, Crown and Total Beverage to Assets held for sale, based
on preliminary estimates of their respective fair values, as a result of
Richfood's decision to sell these operating units within one year from the
date of acquisition.
11. Adjustment to reclassify the portion of short-term investments assumed to
be used to fund a portion of the Dart purchase price.
12. Adjustment to eliminate Richfood profit in Shoppers inventory.
13. Elimination of accounts receivable and payable between Richfood and
Shoppers.
14. Preliminary estimate of the excess of the purchase price over the fair
value of net assets acquired in the Dart Acquisition (goodwill). For
purposes of these Pro Forma Combined Condensed Financial Statements, the
purchase price was allocated as follows:
<TABLE>
<S> <C>
Purchase price $ 201,116
Estimated fair value of assets held for sale (note 10) adjusted for expected cash flows and
allocated interest expense on acquisition debt during the holding period (24,921)
Estimated fair value of working capital acquired 1,574
Estimated fair value of property and equipment (42,474)
Estimated fair value of other assets assumed (77,307)
Estimated fair value of other liabilities assumed 58,344
Estimated fair value of long-term debt and capital lease obligations assumed 232,684
--------
Goodwill $349,016
</TABLE>
15. Borrowings under $450,000 senior unsecured credit facilities to finance
the Dart purchase price at an assumed interest rate of 6.66%. A 1/8%
change in the assumed interest rate on these borrowings would result in a
$143 adjustment to net earnings from continuing operations for the fiscal
year ended May 2, 1998.
16. Elimination of Dart's historical stockholders' equity accounts.
17. Adjustment to record Shoppers' inventory at estimated fair value.
18. Adjustment to record deferred income taxes associated with temporary
differences between the carrying amounts of pro forma assets and
liabilities for financial reporting purposes and amounts used for income
tax purposes and to adjust the deferred tax valuation allowance based on
estimates concerning the realizability of net operating loss carryforwards
and other deferred tax assets.
19. Adjustment to eliminate Dart's historical goodwill.
20. Adjustment to record property and equipment at estimated fair value.
21. Adjustment to record other assets at estimated fair value.
22. Adjustment to record accrued expenses at estimated fair value, accrue
estimated transaction costs and recognize incremental acquisition related
liabilities.
23. Adjustment to record long-term debt and capital lease obligations to
estimated fair value.
24. Adjustment to eliminate the historical results of operations of Trak,
Crown and Total Beverage from the unaudited pro forma combined condensed
statement of earnings. As it is Richfood's intent to sell these operating
units within one year from the date of acquisition (note 10) and since the
unaudited pro forma combined condensed statement of earnings has been
prepared as if the transaction occurred at the beginning of the fiscal
year ended May 2, 1998, the results of operations of these entities are
excluded from the unaudited pro forma combined condensed statement of
earnings in accordance with Emerging Issues Task Force Issue No. 87-11:
Allocation of Purchase Price to Assets to Be Sold.
<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.
RICHFOOD HOLDINGS, INC.
Date: July 27, 1998 By: /s/ John C. Belknap
---------------------------
John C. Belknap
Executive Vice President,
Chief Financial Officer
and Secretary
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Exhibit
<S> <C>
2.1 Agreement and Plan of Merger, dated as of April 9, 1998, by and among
the Registrant, DGC Acquisition, Inc. and Dart Group Corporation
(incorporated by reference to Exhibit (c) to the Tender Offer Statement
on Schedule 14D-1 filed with the Securities and Exchange Commission by
the Registrant and DGC Acquisition, Inc. on April 15, 1998).
4.1 Credit Agreement, dated as of May 12, 1998, by and among the
Registrant, as Borrower, First Union National Bank, as Administrative
Agent, Crestar Bank, as Syndication Agent and The First National Bank
of Chicago, as Documentation Agent (incorporated by reference to
Exhibit (b) to the Form 13D filed with the Securities and Exchange
Commission by the Registrant on May 26, 1998, reporting the
Registrant's beneficial ownership of the common stock, par value $.01
per share, of Trak Auto Corporation).
23.1 Consent of Arthur Andersen LLP (Previously Filed).
</TABLE>
