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):
April 21, 1995
HOMELAND HOLDING CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 33-48862 73-1311075
(State or Other Jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
400 N. E. 36th Street
Oklahoma City, OK 73105
(Address of Principal Executive Offices) (Zip Code)
(405) 557-5500
Registrant's Telephone Number, Including Area Code:
Item 2. Acquisition or Disposition of Assets
On April 21, 1995, Homeland Stores, Inc. (the "Company"), a
wholly-owned subsidiary of the registrant, Homeland Holding
Corporation ("Holding" and together with the Company, "Homeland"),
sold 29 of its stores and its warehouse and distribution center to
Associated Wholesale Grocers, Inc. ("AWG"), pursuant to an Asset
Purchase Agreement dated as of February 6, 1995 (the "Purchase
Agreement"), for a cash purchase price of $45 million plus
approximately $27.6 million for the value of the inventory in the
stores and the warehouse, subject to certain purchase price
adjustments. At the closing, the Company and AWG also entered into
a seven-year supply agreement whereby the Company became a retail
member of the AWG cooperative and AWG became the Company's primary
supplier. The transactions between the Company and AWG are
referred to herein as the "AWG Transaction."
In connection with the AWG Transaction, the Company has
developed a plan to close certain marginal and unprofitable stores.
Such a plan is now financially feasible due to the sale of the
warehouse and distribution center and the elimination of the high
fixed costs associated with the warehouse operations. The Company
closed seven stores during the first quarter of 1995 and plans to
close an additional eight stores by the end of 1995.
On April 24, 1995, the Company issued a press release announcing
the AWG Transaction, entry into a new credit facility with National
Bank of Canada, the resignation of Mr. Mark S. Sellers as the
Executive Vice President-Finance and Chief Financial Officer,
effective May 7, 1995, and the appointment of Mr. Larry W. Kordisch
as Executive Vice President-Finance and Chief Financial Officer,
effective May 7, 1995.
Item 7. Financial Statements and Exhibits
(b) Pro forma and forecasted financial information:
Filed as part of this Report are the unaudited Pro Forma
Condensed Consolidated Balance Sheet as of December 31,
1994 and the unaudited Forecasted Condensed Consolidated
Statements of Operations for the 52 weeks ending
December 30, 1995 and December 28, 1996.
(c) Exhibits filed as a part of this Report:
Exhibit No. Description
99c Press Release issued by Homeland
Stores, Inc. on April 13, 1995
99d Press Release issued by Homeland Stores, Inc. on April 24, 1995
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.
HOMELAND HOLDING CORPORATION
By: Larry W. Kordisch
Larry W. Kordisch, Executive
Vice President/Finance,
Treasurer, Chief Financial
Officer and Secretary
Dated: May 8, 1995
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
Introduction to Pro Forma Condensed
Consolidated Balance Sheet and Forecasted Condensed
Consolidated Statements of Operations
(Unaudited)
Set forth below is certain pro forma and forecasted financial
data of the Company which was prepared by the Company's management
and has not been examined, reviewed or compiled by the Company's
independent accountants. The information includes (i) the
Company's unaudited Pro Forma Condensed Consolidated Balance Sheet
as of December 31, 1994 and (ii) the Company's unaudited Forecasted
Condensed Consolidated Statements of Operations for the 52 weeks
ending December 30, 1995 and December 28, 1996 (the "Forecast").
The Company as a matter of course does not prepare projections or
financial forecasts as to anticipated future revenues or earnings
that are publicly disclosed.
The Pro Forma Condensed Consolidated Balance Sheet as of
December 31, 1994 presents the financial position of the Company
assuming the AWG Transaction occurred as of such balance sheet
date, after giving effect to the adjustments described in the
accompanying notes. The pro forma information does not purport to
be indicative of the financial position which would have actually
been obtained if the AWG Transaction had occurred on the date
indicated. In addition, the pro forma financial information does
not purport to be indicative of financial positions which may be
obtained in the future.
The Forecast presents, to the best of the Company's knowledge
and belief, the estimated results of operations for the forecast
period, after giving effect to the AWG Transaction and the store
closing plan as described above (see Item 2 - "Acquisition or
Disposition of Assets"). However, the Forecast necessarily make
numerous assumptions with respect to industry performance, general
business and economic conditions and other matters that are beyond
the Company's control. Additionally, the Forecast was prepared as
of April 21, 1995 and has not been revised to reflect, among other
things, revised forecasts for the Company's businesses, changes in
general business and economic conditions or any other transactions
or events that have occurred or may occur and that were not
anticipated at the time such Forecast was prepared. Accordingly,
there can be no assurance that the forecasted results will be
realized or that actual results will not be significantly lower
than those forecasted. It is expected that differences between the
forecasted and actual results will occur, because events and
circumstances frequently do not occur as expected, and those
differences may be material and adverse.
The Forecast is presented in conformity with the guidelines
for presentation of a forecast established by the American
Institute of Certified Public Accountants. The Forecast is based
on a number of estimates and assumptions that, though considered
reasonable by the Company, are inherently difficult to predict and
many are beyond the control of the Company and may not have been,
or may no longer be, accurate and based upon assumptions with
respect to future business decisions which are subject to change.
Accordingly, there can be no assurance that the forecasted results
will be realized, and actual results will not be significantly
higher or lower than forecasted.
The Company does not intend to update or otherwise revise the
Forecast to reflect circumstances existing after April 21, 1995 or
to reflect the occurrence of unanticipated events or circumstances
even in the event that any or all of the underlying assumptions are
shown to be in error.
The pro forma and forecasted financial information should be
read in conjunction with the Company's audited Consolidated
Financial Statements and Notes thereto contained in the 1994 Annual
Report on Form 10-K/A.
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 1994
(In thousands, except share and per share amounts)
(Unaudited)
ASSETS
Pro Forma
Adjustments As
Historical (Note 1) Adjusted
Current assets:
Cash and cash equivalents $ 339 $ (309) (2) $ 930
Restricted cash - 5,000 (2) 5,000
Receivables, net of allowance 12,235 - 12,235
Receivable for taxes 2,270 - 2,270
Inventories 89,850 (37,063) (3) 52,787
Prepaid expenses and other
current assets 6,384 (5) 6,379
Total current assets 111,078 (32,377) 78,701
Net property, plant and equipment 117,379 (34,191) (4) 83,188
Excess of purchase price over fair
value of net assets acquired, net
of amortization 2,475 - 2,475
Other assets and deferred charges 8,202 (1,049) (5) 7,153
Total assets $239,134 $(67,617) $171,517
See accompanying notes to Pro Forma Condensed Consolidated
Balance Sheet and Forecasted Condensed Consolidated
Statements of Operations.
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET, Continued
December 31, 1994
(In thousands, except share and per share amounts)
(Unaudited)
Liabilities and Stockholders' Equity
Pro Forma
Adjustments As
Historical (Note 1) Adjusted
Current liabilities:
Accounts payable - trade $ 30,317 $(18,289) (6) $ 12,028
Other current liabilities 26,780 (5,053) (6) 21,727
Current portion of long-term debt 2,250 (1,500) (8) 750
Current portion of obligations under
capital leases 7,828 (4,778) (7) 3,050
Total current liabilities 67,175 (29,620) 37,555
Long-term obligations:
Long-term debt 145,000 (33,700) (8) 111,300
Obligations under capital leases 11,472 (649) (7) 10,823
Other noncurrent liabilities 10,181 561 (9) 10,742
Total long-term obligations 166,653 (33,798) 132,865
Redeemable common stock, Class A,
$.01 par value, 3,864,211 shares
at December 31, 1994 at redemption value 1,235 - 1,235
Stockholders' equity:
Common Stock (Note 9):
Class A, $.01 par value, authorized -
40,500,000 shares, issued - 31,604,989
shares at December 31, 1994,
outstanding - 30,878,989 shares 316 - 316
Additional paid-in capital 53,896 - 53,896
Accumulated deficit (48,398) (4,209) (10) (52,607)
Treasury stock, 726,000 shares at
December 31, 1994, at cost (1,743) - (1,743)
Total stockholders' equity 4,071 (4,209) (138)
Total liabilities and stockholders'
equity $239,134 $(67,617) $171,517
See accompanying notes to Pro Forma Condensed Consolidated
Balance Sheet and Forecasted Condensed Consolidated
Statements of Operations.
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
FORECASTED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
(Note 1) (Note 11)
Historical Forecasted
52 weeks 52 weeks 52 weeks
ended ending ending
December 31, December 30, December 28,
1994 1995 1996
Sales, net $785,121 $634,065 $537,733
Cost of sales 588,405 476,449 399,547
Gross profit 196,716 157,616 138,186
Selling and administrative expenses 193,643 153,009 126,597
Operational restructuring costs 23,205 - -
Operating profit (loss) (20,132) 4,607 11,589
Interest expense (18,067) (16,059) (14,113)
Loss before income tax provision
and extraordinary items (38,199) (11,452) (2,524)
Income tax provision (2,446) - -
Net loss (40,645) (11,452) (2,524)
Extraordinary Items - (2,349) -
Reduction in redemption value -
redeemable common stock 7,284 - -
Net loss available to common
stockholders $(33,361) $(13,801) $(2,524)
Net loss per common share $ (.96) $ (.41) $ (.08)
Weighted average shares outstanding 34,752,527 33,266,177 32,627,017
See accompanying notes to Pro Forma Condensed Consolidated
Balance Sheet and Forecasted Condensed Consolidated
Statements of Operations.
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AND FORECASTED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
1. Pro Forma adjustments and forecasted financial information - The
Pro Forma Condensed Consolidated Balance Sheet as of December
31, 1994 is derived from the Company's audited Financial
Statements incorporated in the 1994 Annual Report on Form 10-
K/A. The Forecast presents, to the best of the Company's
knowledge and belief, the estimated condensed consolidated
results of operations for the forecast period after giving
effect to the assumptions described hereafter (see Note 11).
2. Cash and cash equivalents - Reflects the application of Net
Proceeds from the AWG Transaction and the closure of certain
stores against current liabilities, extinguishment of debt, as
indicated in the Company's Annual Report on Form 10-K/A, and
other transaction-related costs, offset by approximately $2
million borrowed under the Amended and Restated Revolving
Credit Agreement to fund certain such expenditures.
Restricted cash reflects a portion of the net proceeds which
will be held for future reinvestment in capital expenditures.
In the event such, or any portion of such, net proceeds are
not reinvested or committed for reinvestment within 180 days
of the AWG Transaction, the remaining net proceeds shall be
applied by the Company to an offer to redeem the Notes.
3. Inventories - Reflects the sale of the inventory in the stores
and the warehouse to AWG and the disposition of the inventory
in the 15 stores to be closed. Under the terms of the AWG
Transaction, the proceeds received from the sale of the
inventory in the stores and the warehouse on April 21, 1995,
were based on the actual physical inventory on hand as of that
date.
4. Net property, plant and equipment - Reflects the sale of the net
property, plant and equipment for the 29 stores and the
warehouse to AWG and the sale or disposal of the net property,
plant and equipment in the 15 stores being closed in 1995.
5. Other assets and deferred charges - Reflects the write off of a
portion of the refinancing costs in connection with the debt
that is assumed to be extinguished (see Note 8), net of
deferred financing cost associated with the new credit
facility.
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AND FORECASTED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
6. Payables - Reflects the payment of the payables associated with
the 29 stores and the warehouse sold to AWG and the 15 stores
being closed in 1995.
7. Obligations under capital leases - Reflects the assumption by
AWG of certain building capital leases in certain stores and
the warehouse and the buyout of equipment capital leases in
the 29 stores, and the 15 stores being closed in 1995, from
the lessor.
8. Long-term debt - Reflects the use of the net proceeds available
from the AWG Transaction to reduce the outstanding debt as
indicated in the Company's 1994 Annual Report on Form 10-K/A.
9 Noncurrent restructuring reserve - Reflects the removal of
certain amounts included in the restructuring reserve except
for the expenses associated with the planned store closing
(primarily occupancy costs from closing date to lease
termination or sublease date), as such amounts are contained
in the pro forma adjustments described above.
10. Accumulated deficit - Net impact resulting from the pro
forma adjustments, comprising:
Depreciation on fixed assets sold
for the period from December 31, 1994
to April 21, 1995 $1,414
Write off of deferred financing costs 1,424
Noteholders fees and premium for early
extinguishment of debt 925
Estimated closed store severance costs 986
Other, net (540)
Total net impact $4,209
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AND FORECASTED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
11. Summary of Significant Forecast Assumptions
(a) Significant accounting polices - The accounting polices
used in the Forecast are those that are expected to be
used during the forecast period. The accounting polices
are the same as those used by the Company as described
in the Summary of Significant Accounting Polices in Note
2 to the historical consolidated financial statements of
the Company for the year ended December 31, 1994 as
incorporated in the 1994 Annual Report on Form 10-K/A.
(b) Significant Forecast assumptions - Although the Company
believes the assumptions to be reasonable, there is no
assurance that such forecasted results will be realized.
The principal assumptions taken into consideration in the
preparation of the Forecast are:
(i) The Company has reflected the actual unaudited
results through the first quarter of 1995 in
the 1995 forecasted results. The Company has
also given effect to the AWG Transaction and
the store closure plan relating to certain
stores as described in Item 2 "Acquisition or
Disposition of Assets".
(ii) The Company has forecasted sales growth at 0% for
1995 and approximately 1.1% for 1996. The
forecasted sales take into consideration
currently known competitive activities and the
implementation of a new marketing strategy
following the AWG Transaction. The forecasted
sales also incorporate the impact of the AWG
Transaction and the store closure plan.
(iii) The Company has reflected in the Forecast the impact
on gross profit of changing its method of
purchasing from an owned warehouse facility to
purchasing from AWG, as well as the impact of
management's new marketing strategies.
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AND FORECASTED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
(iv) The Company has reflected in the Forecast selling and
administrative expenses that are generally
based on the Company's historical expenses.
Such amounts have been adjusted for any known
or anticipated contractual increases or
decreases in expenses, the potential estimated
cost impact of senior ranking union employees,
employed in the stores to be sold to AWG or
closed, that replace junior union employees in
the continuing stores as provided for in the
retail union collective bargaining agreement,
and administrative downsizing resulting from
the AWG Transaction and the store closure
plan.
(v) Interest expense is forecasted based on interest
rates set forth in the Amended and Restated
Credit Agreement dated as of April 21, 1995
and the Indenture, as supplemented, dated as
of March 4, 1992.
(vi) As a result of the expected reduction of
outstanding debt discussed in Note 8 above,
the Company expects to incur an extraordinary
loss in 1995 resulting from the write-off of
unamortized financing costs, consent fees and
premium for early extinguishment of the debt.
(vii) The Company has not reflected any inflation or
deflation in the Forecast.
Homeland Stores, Inc.
400 N.E. 36th Street
Oklahoma City, Oklahoma 73125
For Immediate Release
For: Homeland Stores, Inc. Contact:Mark S.
Sellers
(405) 557-5861
Homeland Receives Requisite Consent In
Connection With Consent Solicitation
OKLAHOMA CITY, OK, April 13, 1995 - - Homeland Stores, Inc.
announced today that the consent solicitation relating to its Series
A Senior Secured Floating Rate Notes Due 1997, Series C Senior
Secured Fixed Rate Notes Due 1999 and Series D Senior Secured
Floating Rate Notes Due 1997 has expired pursuant to its terms.
Prior to such expiration, Homeland received consents in an amount
sufficient to approve the proposed amendments described in its
consent solicitation statement, dated April 4, 1995.
Homeland is the leading supermarket chain in Oklahoma,
southern Kansas and the Texas Panhandle region with an estimated
1994 market share of 27 percent in its market areas.
For: Homeland Stores, Inc.
Contact: Homeland Contact: AWG
Robert Mead (212) 484-6701 Beth Danes
Lisa Sykes (405) 557-5549 (913) 321-
1313
ext.
1324
HOMELAND COMPLETES SALE OF 29 STORES AND WAREHOUSE
OPERATIONS TO ASSOCIATED WHOLESALE GROCERS
Announces Appointment of Larry Kordisch as Chief Financial Officer
OKLAHOMA CITY, OK (April 24, 1995) - Homeland Stores, Inc.
announced today that it has completed its previously announced sale
of 29 of its stores and its warehouse complex to Associated
Wholesale Grocers, Kansas City ("AWG").
Under the terms of the sale, AWG paid Homeland $45 million plus
value of inventory in the warehouse and 29 stores. Homeland had
announced an agreement in principle for the transaction with AWG in
November of 1994 as part of its operational restructuring.
Also as part of the agreement, Homeland entered a strategic
partnership with AWG - a long-term supply agreement for its
remaining 75 stores that provides Homeland the lowest prices and
most favorable terms available through the AWG system on the
purchase of products and services.
"This is a positive step in Homeland's operational restructuring,
one which allows us to reduce our debt burden and fixed operating
costs, " said James Demme, President and Chief Executive Officer of
Homeland. "The strategic partnership with AWG makes Homeland more
competitive by increasing our buying power and allowing us to focus
on our core business. We are also able to pass the savings from
our preferred purchasing relationship on to our customers."
Homeland also said that it has refinanced its bank indebtedness
with a $25 million credit facility from a consortium of banks led
by National Bank of Canada.
The Company also announced that Larry Kordisch has been appointed
Executive Vice President-Finance and Chief Financial Officer,
Effective May 7, 1995. The Company said that Mr. Kordisch will
replace Mark Sellers, who is resigning to pursue other interests,
as Chief Financial Officer. Mr Kordisch was most recently
Executive Vice President of Finance and Administration and Chief
Financial Officer of Scrivner, Inc.
Mr. Demme said, "I worked with Larry at Scrivner and am pleased
that he is joining us at Homeland. He brings a great deal of
experience and skill to the Company and I look forward to working
very closely with him."
AWG is the second-largest retailer-owned buying cooperative and the
fifth largest grocery wholesaler in the country with more than $2.6
billion in revenues. AWG has 735 independent retail stores as
members of its supply cooperative. The acquisition of the 29
Homeland stores and Homeland's joining of the AWG cooperative will
bring that total to 839 in ten states. With the addition of
Homeland's sales, AWG's 1995 revenues are expected to exceed $3
billion.
With 75 stores, Homeland is the leading supermarket chain in
Oklahoma, southern Kansas and the Texas Panhandle region.
