Conformed Copy
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO.1
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:
This Amendment No. 1 to the Form 8-K/A is being filed
due to errors in the Unaudited Pro Forma Condensed
Consolidated Balance Sheet as of December 31, 1994.
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: /s/ Larry W. Kordisch
Larry W. Kordisch, Executive
Vice President/Finance,
Treasurer, Chief Financial
Officer and Secretary
Dated: May 9, 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 makes 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) $ 30
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 (33,788) 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 costs 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 Other noncurrent liabilities - Reflects the removal of
certain amounts included in the restructuring reserve except
for the expenses associated with the planned store closings
(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
Noteholder fees and premium for early
extinguishment of debt 925
Estimated closed store severance costs 986
Other adjustments, 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.
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.
