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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported) July 26, 1997
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DISCOUNT AUTO PARTS, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 1-11276 59-1447420
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(State or other Jurisdiction (Commission File No.) (I.R.S. Employer
of Incorporation) Identification No.)
4900 Frontage Road South, Lakeland, Florida 33815
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (941) 687-9226
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(Former name or former address, if changed since last report)
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DISCOUNT AUTO PARTS, INC.
CURRENT REPORT ON FORM 8-K PAGE 2
ITEM 5. OTHER EVENTS.
Discount Auto Parts, Inc. issued a news release dated July 28, 1997
which reported concerning the settlement of the lawsuit brought by Airgas, Inc.
and certain other Airgas affiliates against several defendants, including
Discount Auto Parts and one of its employees, and the resolution of certain
related matters.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
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Exhibit Number Description of Exhibit
99.1 Discount Auto Parts, Inc. News Release dated July 28, 1997
reporting on the settlement of the Airgas litigation and
certain related matters.
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DISCOUNT AUTO PARTS, INC.
CURRENT REPORT ON FORM 8-K PAGE 3
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.
DISCOUNT AUTO PARTS, INC.
By: /s/ William C. Perkins
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William C. Perkins, President
Dated: July 29, 1997
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INDEX TO EXHIBITS
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Exhibit Number Description
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99.1 Discount Auto Parts, Inc. News Release dated July 28,
1997 reporting on the settlement of the Airgas
litigation and certain related matters.
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EXHIBIT 99.1
DISCOUNT AUTO PARTS, INC. JULY 28, 1997
5:29 PM
FOR IMMEDIATE RELEASE
SECTION : FINANCIAL NEWS
DISTRIBUTION : TO BUSINESS EDITOR
HEADLINE : DISCOUNT AUTO PARTS, INC. AGREES TO SETTLE LITIGATION
DATELINE : LAKELAND, FLORIDA
BODY:
Discount Auto Parts, Inc. (NYSE-DAP) today announced it has reached an
agreement to settle the lawsuit brought by Airgas, Inc. and certain Airgas
affiliates against several defendants, including Discount Auto Parts and one of
its employees, and to resolve certain related matters.
The Airgas lawsuit filed in February 1997, alleged, among other things, that
Discount Auto Parts took part in a conspiracy with other companies and
individuals unrelated to Discount Auto Parts to defraud Airgas in connection
with commercial sales of refrigerant R-12 (freon) and sought compensatory
damages in excess of $20 million, treble damages and other relief totaling in
excess of $80 million. The trial was scheduled to begin on August 4, 1997.
The settlement, including the impact of legal and other related expenses
incurred since March 4, 1997 in the defense of this litigation and related
matters, is expected to result in an aggregate after tax charge of
approximately $12 million for fiscal 1997 and more specifically for the fourth
quarter of fiscal 1997. The impact of this settlement will be reflected in the
financial results for fiscal 1997 and for the fourth quarter which are expected
to be reported within the next few days. The Company also reported that the
money to fund the settlement will come from a portion of the Company's available
borrowing capacity under its revolving credit facility.
"The decision to settle was a difficult one and was made reluctantly," said
Peter J. Fontaine, Chairman of the Board and Chief Executive Officer. "Had we
proceeded to trial, we strongly believe that the evidence would have shown that
neither Discount Auto Parts nor any of its people was engaged in any conspiracy
to defraud Airgas. Indeed, we believe that Discount Auto Parts was itself a
victim here. However, the outcome of a trial of this nature is never a sure
thing and the aggregate dollars at issue, particularly in light of Airgas
attempt to recover treble damages, were substantially larger than the relatively
large settlement payments. We decided to settle because of the inherent risks in
defending such complex litigation and our desire to avoid the continued
uncertainty, diversion of management efforts and costs to defend associated with
this litigation. We expect that our team members, shareholders, customers and
suppliers will continue to have confidence in Discount Auto Parts commitment to
the highest ethical standards."
Under the specific terms of the settlement, Discount Auto Parts will purchase
from Airgas Specialty Gases, on an "as is, where is" basis, approximately 6,500
cylinders believed to contain an alternative to R-12 refrigerant for an
aggregate price of $4.0 million, which represents a price that is believed by
the Company to be approximately $3.6 million in excess of the current market
value of such product. In addition, Discount Auto Parts will pay an additional
$13.0 million to Airgas Specialty Gases.
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As a separate but related part of the settlement, Discount Auto Parts will pay
$500,000 to the bankruptcy estate of Refrigeration Station to settle any
claims, including claims of preference, that the bankruptcy estate might have
asserted against Discount Auto Parts and will purchase from the bankruptcy
estate approximately 7,200 cylinders of merchantable Freeze 12 refrigerant (an
R-12 alternative) for an additional $1.0 million (believed to have a bulk sale
value of approximately $600,000). If Airgas does not recover at least $1.5
million from the Refrigeration Station bankruptcy by January 2, 1998, Discount
Auto Parts will also pay to Airgas any shortfall but will be entitled to be
reimbursed for such payments if Airgas subsequently recovers such amounts from
the bankruptcy estate. As a result of certain matters which are the subject of
the lawsuit, Discount Auto Parts was aware of the possibility that certain
claims might have been asserted against it by the bankruptcy estate of
Refrigeration Station. Although Discount Auto Parts did not believe that any
such claims, if asserted, would have necessarily proved to have been
successful, it is willing to make these payments (including the payments to the
bankruptcy estate) to resolve both the Airgas litigation and the potential
claims from the bankruptcy estate. Because of the involvement of the bankruptcy
estate, the entire settlement is contingent upon bankruptcy court approval,
which is expected to be addressed by the bankruptcy court at proceedings to be
held in September of this year.
Discount Auto Parts, Airgas, William Morris, Jerral Mayes, the Refrigeration
Station bankruptcy estate, the JLM Enterprises bankruptcy estate and certain
other parties will exchange mutual releases of all claims and issues between
them. In the settlement, there is no finding or admission of wrongdoing on the
part of Discount Auto Parts.
Commenting further with respect to the settlement of the Airgas dispute, Peter
Fontaine stated, "While the settlement should lay to rest the concerns and
uncertainties presented by the Airgas litigation, it is important to note that
certain matters which are the subject matter of the litigation may still need
to be dealt with. Certain federal investigations into the subject matter of
this litigation are ongoing. In particular, federal grand jury proceedings in
Savannah, Georgia in which the Company had been called upon to respond to
subpoenas are believed to be continuing and the Company is aware that the SEC
has commenced its own informal investigation. In connection with these
proceedings, Discount Auto Parts intends to continue its cooperation with the
federal agencies."
Discount Auto Parts, Inc. is one of the Southeast's leading specialty
retailers of automotive replacement parts, maintenance items and accessories
for the Do-It-Yourself ("DIY") consumer. The Company currently operates 406
stores located throughout Florida, Georgia, Alabama, South Carolina and
Mississippi.
Forward Looking Statements
This release may contain forward looking statements which reflect the current
views of the Company with respect to certain events that could have an effect
on the Company's future financial performance. These statements include the
words "expect", "believed", and similar expressions. Any such forward looking
statements are subject to various risks and uncertainties that could cause
actual results to differ materially from historical results or those currently
anticipated.
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These risks and uncertainties include increased competition, extent of the
market demand for auto parts, availability of inventory supply, propriety of
inventory mix, adequacy and perception of customer service, product quality and
defect experience, availability of and ability to take advantage of vendor
pricing programs and incentives, sourcing availability, rate of new store
openings, cannibalization of store sites, mix of types of merchandise sold,
governmental regulation of products, new store development and the like,
performance of information systems, effectiveness of deliveries from the
distribution center, ability to hire, train and retain qualified team members,
availability of quality store sites, environmental risks, availability of
expanded and extended credit facilities, legal expenses associated with
disputes and investigations concerning freon matters, potential for liability
with respect to these matters and other risks.
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CONTACT : PETER J. FONTAINE, CHAIRMAN & CEO
C. MICHAEL MOORE, CFO 941/284-2010
