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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): June 16, 2000
SHOPKO STORES, INC.
(Exact name of registrant as specified in its Charter)
Commission file number 1-10876
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Wisconsin 41-0985054
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
700 Pilgrim Way, Green Bay, Wisconsin 54304
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (920) 429-2211
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Former name, former address and former fiscal year, if changed since last
report:
N/A
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Item 2. Acquisition or Disposition of Assets.
On June 16, 2000, the Company completed the sale of its 11,710,000 shares of
ProVantage Health Services, Inc. ("ProVantage") common stock for approximately
$143.4 million in cash on a pre-tax basis, or $12.25 per share. The sale was
made pursuant to a tender offer to purchase all of the outstanding shares of
common stock of ProVantage at $12.25 per share in cash by Merck & Co., Inc.
("Merck") and PV Acquisition Corp., an indirect wholly-owned subsidiary of
Merck. The purchase price was determined in negotiations with Merck.
Item 5. Other Events
On June 23, 2000, the Company issued a press release (the "June 23, 2000 Press
Release") announcing that the Company's Senior Vice President, Chief Financial
Officer, Paul H. Freischlag, Jr., had resigned. Mr. Freischlag agreed to stay
with the Company through July 28, 2000. The foregoing description of the June
23, 2000 Press Release is qualified in its entirety by reference to the text of
the June 23, 2000 Press Release which is attached as an exhibit hereto and which
is incorporated herein by reference.
On June 28, 2000, the Company issued a press release (the "June 28, 2000 Press
Release") concerning expected future financial results of the Company. The text
of the June 28, 2000 Press Release is attached as an exhibit hereto and is
incorporated herein by reference.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired
Not applicable.
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(b) Pro forma financial information
The following unaudited pro forma condensed consolidated financial
information of the Company are filed as part of this report and
incorporated herein by reference:
Page
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Unaudited Pro Forma Condensed Consolidated Balance 5
Sheet at April 29, 2000
Unaudited Pro Forma Condensed Consolidated Statement 6
of Earnings for the 13 weeks ended April 29, 2000
Unaudited Pro Forma Condensed Consolidated Statement 7
Of Earnings for the fiscal year ended January 29, 2000
Notes to Unaudited Pro Forma Condensed Consolidated 8
Financial Statements
(c) Exhibits:
2.1 Agreement and Plan of Merger among Merck & Co., Inc., PV
Acquisition Corp. and ProVantage Health Services, Inc., dated as of
May 4, 2000 (incorporated by reference to the Company's Current
Report on Form 8-K dated May 4, 2000).
27.1 Restated Financial Data Schedule (fiscal year ended January 29,
2000).
27.2 Restated Financial Data Schedule (third quarter ended October 30,
1999).
27.3 Restated Financial Data Schedule (second quarter ended July 31,
1999).
27.4 Restated Financial Data Schedule (first quarter ended May 2, 1998).
99.1 Restated Statement of Earnings by fiscal quarter for fiscal year
ended January 29, 2000.
99.2 Restated Statement of Earnings by fiscal quarter for fiscal year
ended January 30, 1999.
99.3 Press Release dated June 23, 2000.
99.4 Press Release dated June 28, 2000.
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INTRODUCTION TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
INFORMATION
The following unaudited Pro Forma Condensed Consolidated Balance Sheet of the
Company as of April 29, 2000 gives effect to the sale of 11,710,000 shares of
common stock of ProVantage Health Services, Inc. ("ProVantage") pursuant to a
tender offer by Merck & Co., Inc. and its indirect wholly-owned subsidiary PV
Acquisition Corp. for all of ProVantage's common stock as if it had occurred on
April 29, 2000. The unaudited Pro Forma Condensed Consolidated Statements of
Earnings for the fiscal year ended January 29, 2000 and the 13 weeks ended April
29, 2000 present operating results of the Company as if the sale of ProVantage
had occurred on January 31, 1999. The pro forma adjustments are based upon
available information and certain assumptions that management of the Company
believes are reasonable in the circumstances. The Pro Forma Condensed
Consolidated Financial Statements should be read in conjunction with financial
information pertaining to the Company included in the Annual Report on Form 10-K
for the fiscal year ended January 29, 2000 and the Quarterly Report on Form 10-Q
for the period ended April 29, 2000. The Pro Forma Condensed Consolidated
Financial Statements are not intended to be indicative of the consolidated
results of operations or financial position of the Company that would have been
reported if the sale had occurred at the dates indicated or of the consolidated
results of future operations or of future financial position.
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ShopKo Stores, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheet
(In thousands; unaudited)
<TABLE>
<CAPTION>
April 29, 2000
------------------------------------------------------------
Pro Forma
ASSETS Historical Adjustments Pro Forma
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 12,037 $ $ 12,037
Receivables, less allowance for losses 48,235 48,235
Merchandise inventories 728,375 728,375
Other current assets 18,058 18,058
Net assets of discontinued operations 122,460 (122,460) a -
---------------- ---------------- ---------------
Total current assets 929,165 (122,460) 806,705
Other assets and deferred charges 18,631 18,631
Intangible assets - net 201,986 201,986
Property and equipment at cost:
Land 137,338 137,338
Buildings 625,441 625,441
Equipment 522,763 522,763
Leasehold improvements 97,259 97,259
Property under construction 13,671 13,671
Property under capital leases 118,317 118,317
---------------- ---------------- ---------------
1,514,789 - 1,514,789
Less accumulated depreciation and amortization:
Property and equipment 566,946 566,946
Property under capital leases 30,818 30,818
---------------- ---------------- ---------------
Net property and equipment 917,025 - 917,025
---------------- ---------------- ---------------
Total assets $ 2,066,807 $ (122,460) $ 1,944,347
================ ================ ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
---------------------------------------------------------------------------------------------------------------
Current liabilities:
Short-term debt $ 345,500 $ (111,978) b $ 233,522
Accounts payable - trade 323,375 323,375
Accrued compensation and related taxes 34,331 34,331
Accrued other liabilities 112,790 112,790
Accrued income and other taxes 21,192 21,192
Current portion of long-term obligations 6,016 6,016
---------------- ---------------- ---------------
Total current liabilities 843,204 (111,978) 731,226
Long-term obligations 464,185 464,185
Deferred income taxes 63,075 (18,694) c 44,381
Shareholders' equity:
Common stock 304 304
Additional paid-in capital 381,383 381,383
Retained earnings 334,684 28,435 d 363,119
Less treasury stock (20,028) (20,223) e (40,251)
---------------- ---------------- ---------------
Total shareholders' equity 696,343 8,212 704,555
---------------- ---------------- ---------------
Total liabilities and shareholders' equity $ 2,066,807 $ (122,460) $ 1,944,347
================ ================ ===============
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
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ShopKo Stores, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Earnings
(unaudited)
<TABLE>
<CAPTION>
13 Weeks Ended April 29, 2000
-------------------------------------------------------------
Pro Forma
(In thousands, except per share data) Historical Adjustments Pro Forma
--------------- --------------- ---------------
<S> <C> <C> <C>
Revenues:
Net sales $ 749,591 $ $ 749,591
Licensed department rentals and other income 3,085 3,085
--------------- --------------- ---------------
752,676 - 752,676
Costs and expenses:
Cost of sales 557,783 557,783
Selling, general and administrative expenses 155,276 155,276
Special charges 1,240 1,240
Depreciation and amortization expenses 22,009 22,009
--------------- --------------- ---------------
736,308 - 736,308
Income from operations 16,368 - 16,368
Interest expense - net 14,583 (1,661) f 12,922
--------------- --------------- ---------------
Earnings from continuing operations before income taxes 1,785 1,661 3,446
Provision for income taxes 1,223 652 f 1,875
--------------- --------------- ---------------
Earnings from continuing operations $ 562 $ 1,009 $ 1,571
=============== =============== ===============
Earnings per share of common stock from continuing
operations:
Basic $ 0.02 $ 0.06
Diluted 0.02 0.05
Weighted average number of common
shares outstanding 29,585 (1,088) e 28,497
Adjusted weighted average number of common
shares outstanding 29,685 (1,088) e 28,597
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
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ShopKo Stores, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Earnings
(unaudited)
<TABLE>
<CAPTION>
52 Weeks Ended January 29, 2000
-----------------------------------------------------------
Pro Forma
(In thousands, except per share data) Historical Adjustments Pro Forma
--------------- ------------- --------------
<S> <C> <C> <C>
Revenues:
Net sales $ 3,898,090 $ (850,020) g $ 3,048,070
Licensed department rentals and other income 13,856 (264) g 13,592
--------------- ------------- --------------
3,911,946 (850,284) 3,061,662
Costs and expenses:
Cost of sales 3,047,930 (789,939) g 2,257,991
Selling, general and administrative expenses 601,157 (32,937) g 568,220
Special charges 8,068 8,068
Depreciation and amortization expenses 84,438 (9,024) g 75,414
--------------- ------------- --------------
3,741,593 (831,900) 2,909,693
Income from operations 170,353 (18,384) 151,969
Interest expense - net (46,894) (1,213) g
6,117 f (41,990)
Gain on sale of ProVantage stock 56,760 (56,760) h -
--------------- ------------- --------------
Earnings from continuing operations before income
taxes 180,219 (70,240) 109,979
Provision for income taxes 71,800 (8,335) g
2,403 f
(22,295) h 43,573
--------------- ------------- --------------
Earnings from continuing operations $ 108,419 $ (42,013) $ 66,406
=============== ============= ==============
Earnings per share of common stock from continuing
operations:
Basic $ 3.84 $ 2.45
Diluted 3.79 2.41
Weighted average number of common
shares outstanding 28,237 (1,088) e 27,149
Adjusted weighted average number of common
shares outstanding 28,595 (1,088) e 27,507
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
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ShopKo Stores, Inc. and Subsidiaries
Notes to Pro Forma Condensed Consolidated Financial Statements
(Unaudited)
The accompanying Pro Forma Condensed Consolidated Financial Statements give
effect to the following pro forma adjustments necessary to reflect the sale of
ProVantage as if the transaction occurred at the dates indicated in the
introduction:
(a) Represents the elimination of the net assets of ProVantage.
(b) Represents cash proceeds from sale of ProVantage of $143.4 million, net of
transaction costs of $2.0 million, repayment of intercompany payable to the
Company of $27.9 million, repurchase of ShopKo stock of $20.2 million and
payment of income taxes related to the gain on the sale of ProVantage of
$37.1 million. The net proceeds were used to reduce short-term debt.
(c) Represents payment of deferred taxes resulting from sale of ProVantage
stock in July 1999.
(d) Represents gain on sale of ProVantage, net of taxes.
(e) Represents repurchase of ShopKo stock.
(f) Represents interest savings and related tax expense resulting from the
assumed repayment of debt from available proceeds.
(g) Represents the elimination of revenues and expenses for ProVantage for the
period.
(h) Represents elimination of gain and income taxes on sale of ProVantage stock
in July 1999.
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SIGNATURES
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.
SHOPKO STORES, INC. (Registrant)
Date: June 29, 2000 By: /s/ Richard D. Schepp
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Richard D. Schepp
Senior Vice President General Counsel and
Secretary
(Duly Authorized Officer of Registrant)
Date: June 29, 2000 By: /s/ Jeffery R. Simons
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Jeffery R. Simons
Vice President and Controller
(Chief Accounting Officer and Duly
Authorized Officer of Registrant)
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EXHIBIT INDEX
Exhibit
Number Exhibit
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2.1 Agreement and Plan of Merger among Merck & Co., Inc., PV Acquisition
Corp. and ProVantage Health Services, Inc. dated as of May 4, 2000
(incorporated by reference to the Company's Current Report on Form 8-K
dated May 4, 2000).
27.1 Restated Financial Data Schedule (fiscal year ended January 29, 2000).
27.2 Restated Financial Data Schedule (third quarter ended October 30, 1999).
27.3 Restated Financial Data Schedule (second quarter ended July 31, 1999).
27.4 Restated Financial Data Schedule (first quarter ended May 2, 1998).
99.1 Restated Statement of Earnings by fiscal quarter for fiscal year ended
January 29, 2000.
99.2 Restated Statement of Earnings by fiscal quarter for fiscal year ended
January 30, 1999.
99.3 Press Release dated June 23, 2000.
99.4 Press Release dated June 28, 2000.
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