- --------------------------------------------------------------------------------
UNITED STATES
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
----------------------------
August 31, 1998
Date of Report
(Date of earliest event reported)
TANDY CORPORATION
(Exact name of registrant as specified in charter)
Delaware 1-5571 75-1047710
(State or other (Commission (IRS Employer
jurisdiction of File Number) identification No.)
incorporation)
100 Throckmorton Street, Suite 1800, Fort Worth, Texas 76102
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code (817) 415-3700
- -------------------------------------------------------------------------------
<PAGE>
Item 2. Acquisition or Disposition of Assets
On August 31, 1998, the previously reported sale of 100% of the outstanding
common stock of Tandy Corporation's ("Tandy" or the "Company") wholly-owned
subsidiary, Computer City, Inc., to CompUSA Inc. ("CompUSA") was closed. Based
on the premiliary balance sheet at closing, the transaction is valued at
approximately $211.0 million. This transaction value could be adjusted up or
down, depending on the final asset and liability valuations. The Company
received $75.0 million in cash and an unsecured note from CompUSA for $136.0
million as consideration for the sale. The note, which is of equal priority with
CompUSA's existing subordinated debt, bears interest at 9.48% per annum and is
payable over a ten year period. Based on the closing balance sheet, the Company
has recognized an after-tax loss on the sale of Computer City, Inc. of
approximately $63.5 million. Computer City, Inc.'s results of operations through
August 31, 1998 will be included in the financial statements of the Company.
When the sale was originally announced in June 1998, the unsecured note
receivable from CompUSA was originally $150.0 million with a stated interest
rate of 7.50% per annum discounted $14.0 million to bear interest at an
estimated market rate. The Company also recorded an after-tax loss of $45.0
million in the quarter ended June 30, 1998. Subsequent to due diligence and
additional discounts related to the sale, the Company anticipates recording an
additional after-tax loss of approximately $18.5 million in the quarter ended
September 30, 1998. This additional loss has been reflected in the accompanying
pro forma balance sheet at June 30, 1998.
The following unaudited pro forma income statements for the year ended
December 31, 1997, and the six months ended June 30, 1998, reflect the
historical accounts of the Company for those periods, adjusted to give pro forma
effect to the sale of Computer City, Inc. as if the sale had been consummated at
December 31, 1996 and 1997, respectively.
The following unaudited pro forma balance sheet at June 30, 1998, reflects
the historical accounts of the Company to give pro forma effect to the sale of
Computer City, Inc. as if the sale had been completed at June 30, 1998.
The pro forma financial data and accompanying notes reflect the sale of
Computer City, Inc. and should be read in conjunction with the description of
the sale contained elsewhere herein. For further information, please refer to
the consolidated financial statements and related notes included in the
Company's 1997 Annual Report on Form 10-K and the Company's June 30, 1998
Quarterly Report on Form 10-Q previously filed with the Securities and Exchange
Commission. The Company believes that the assumptions used in the following
statements provide a reasonable basis on which to present the pro forma
financial data.
The pro forma adjustments are based upon available information and certain
assumptions that the Company believes are reasonable under the circumstances.
The pro forma financial information is provided for informational purposes only
and should not be construed to be indicative of the Company's financial
condition or results of operations had the sale been consummated on the dates
assumed and are not meant to be indicative of the results of operations which
can be expected for any subsequent period or its financial condition on any
future date.
Item 7. Financial Statements and Exhibits
Listed below are the financial statements, pro forma financial information and
exhibits, if any, filed as a part of this report:
(a) None
(b) Pro Forma Financial Information
1. Pro Forma Consolidated Statement of Income for the year ended
December 31, 1997.
2. Pro Forma Consolidated Statement of Income for the six months
ended June 30, 1998.
3. Pro Forma Consolidated Balance Sheet at June 30, 1998.
4. Notes to the Pro Forma Consolidated Financial Statements.
(c) Exhibits - None
<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 this 14th day of September, 1998.
TANDY CORPORATION
(Registrant)
Date: September 14, 1998 By:/s/ Dwain H. Hughes
---------------------------------
Dwain H. Hughes
Senior Vice President and
Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
Sequential
Exhibit Description of Exhibit Page Number
- ------- ---------------------- -----------
(a) None
(b) Pro Forma Financial Information
(b) 1 Pro Forma Consolidated Statement of
Income for the year ended December 31, 1997 5
(b) 2 Pro Forma Consolidated Statement of
Income for the six months ended June 30, 1998 6
(b) 3 Pro Forma Consolidated Balance Sheet at
June 30, 1998 7
(b) 4 Notes to the Pro Forma Consolidated
Financial Statements 8
<PAGE>
Exhibit (b) 1
Tandy Corporation and Subsidiaries
Pro Forma Consolidated Statement of Income
For the Year Ended December 31, 1997
(Unaudited) Pro Forma
In millions, except Historical Adjustments
per share amounts) As Reported (Note 1) Pro Forma
- ------------------ ----------- --------- ---------
Net sales and operating revenues $ 5,372.2 $(1,844.4) $ 3,527.8
Cost of products sold 3,357.9 (1,593.4) 1,764.5
--------- --------- ---------
Gross profit 2,014.3 (251.0) 1,763.3
--------- --------- ---------
Expenses/(income):
Selling, general and administrative 1,580.3 (244.5) 1,335.8
Depreciation and amortization 97.2 (20.0) 77.2
Interest income (13.2) (12.8) (26.0)
Interest expense 46.1 (21.0) 25.1
--------- --------- ---------
1,710.4 (298.3) 1,412.1
--------- --------- ---------
Income before income taxes 303.9 47.3 351.2
Provision for income taxes 117.0 18.2 135.2
--------- --------- ---------
Net income 186.9 29.1 216.0
Preferred dividends 6.1 -- 6.1
--------- --------- ---------
Net income available to common
shareholders $ 180.8 $ 29.1 $ 209.9
========= ========= =========
Net income available per common share:
Basic $ 1.69 $ 1.96
========= =========
Diluted $ 1.63 $ 1.89
========= =========
Shares used in computing earnings
per common share:
Basic 107.2 107.2
========= =========
Diluted 112.2 112.2
========= =========
Dividends declared per common share $ 0.40 $ 0.40
========= =========
See accompanying Notes to the Pro Forma Consolidated Financial Statements.
<PAGE>
Exhibit (b) 2
Tandy Corporation and Subsidiaries
Pro Forma Consolidated Statement of Income
For the Six Months Ended June 30, 1998
(Unaudited) Pro Forma
(In millions, except Historical Adjustments
per share amounts) As Reported (Note 1) Pro Forma
- ------------------- ----------- --------- ---------
Net sales and operating revenues $ 2,451.1 $ (911.0) $ 1,540.1
Cost of products sold 1,511.1 (791.6) 719.5
--------- --------- ---------
Gross profit 940.0 (119.4) 820.6
--------- --------- ---------
Expenses/(income):
Selling, general and administrative 768.0 (153.5) 614.5
Depreciation and amortization 52.3 (12.2) 40.1
Interest income (3.2) (6.3) (9.5)
Interest expense 22.1 (10.4) 11.7
Provision for loss on sale of
Computer City, Inc. 73.2 (73.2) --
--------- --------- ---------
912.4 (255.6) 656.8
--------- --------- ---------
Income before income taxes 27.6 136.2 163.8
Provision for income taxes 10.6 52.4 63.0
--------- --------- ---------
Net income 17.0 83.8 100.8
Preferred dividends 2.9 -- 2.9
--------- --------- ---------
Net income available to common shareholders $ 14.1 $ 83.8 $ 97.9
========= ========= =========
Net income available per common share:
Basic $ 0.14 $ 0.97
========= =========
Diluted $ 0.14 $ 0.93
========= =========
Shares used in computing earnings
per common share:
Basic 101.4 101.4
========= =========
Diluted 103.2 106.6
========= =========
Dividends declared per common share $ 0.20 $ 0.20
========= =========
See accompanying Notes to the Pro Forma Consolidated Financial Statements.
<PAGE>
Exhibit (b) 3
Tandy Corporation and Subsidiaries
Pro Forma Consolidated Balance Sheet
June 30, 1998
Pro Forma
(Unaudited) Historical Adjustments
(In millions) As Reported (Note 2) Pro Forma
- ------------- ----------- --------- ---------
Assets
Current assets:
Cash and cash equivalents $ 61.9 $ (37.1) $ 24.8
Accounts and notes receivable, less
allowance for doubtful accounts 231.6 (71.0) 160.6
Inventories, at lower of cost or market 1,187.3 (294.6) 892.7
Other current assets 132.7 (2.0) 130.7
--------- --------- ---------
Total current assets 1,613.5 (404.7) 1,208.8
Property, plant and equipment, at cost,
less accumulated depreciation 526.0 (104.0) 422.0
Other assets, net of accumulated
amortization 81.8 131.9 213.7
--------- --------- ---------
$ 2,221.3 $ (376.8) $ 1,844.5
========= ========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Short-term debt, including current
maturities of long-term debt $ 313.2 $ (110.5) $ 202.7
Accounts payable 309.9 (121.7) 188.2
Accrued expenses 301.5 (86.9) 214.6
Income taxes payable 10.7 (10.7) --
--------- --------- ---------
Total current liabilities 935.3 (329.8) 605.5
--------- --------- ---------
Long-term debt, excluding current
maturities 270.3 (28.5) 241.8
Other non-current liabilities 50.9 -- 50.9
--------- --------- ---------
Total other liabilities 321.2 (28.5) 292.7
--------- --------- ---------
Stockholders' equity:
Preferred stock 100.0 -- 100.0
Common stock 138.3 -- 138.3
Additional paid-in capital 32.4 -- 32.4
Retained earnings 1,670.9 (18.5) 1,652.4
Common stock in treasury, at cost (942.6) -- (942.6)
Unearned deferred compensation (32.3) -- (32.3)
Accumulated other comprehensive loss (1.9) -- (1.9)
--------- --------- ---------
Total stockholders' equity 964.8 (18.5) 946.3
--------- --------- ---------
$ 2,221.3 $ (376.8) $ 1,844.5
========= ========= =========
See accompanying Notes to the Pro Forma Consolidated Financial Statements.
<PAGE>
Exhibit (b) 4
Notes to the Pro Forma Consolidated Financial Statements
Note 1:
The pro forma income statements for the year ended December 31, 1997 and the
six month period ended June 30, 1998 have been prepared to eliminate
historical operating results associated with Computer City, Inc., which was sold
to CompUSA Inc. ("CompUSA"), as if the sale had been consummated at December 31,
1996 and 1997, respectively. Pro forma adjustments have also been made that
relate to the allocation of interest expense paid by the Company on Computer
City, Inc.'s debt, as well as interest income on the note received from CompUSA
at closing and related tax effects of these adjustments.
Note 2:
Pro forma adjustments to the balance sheet represent the sale of 100% of the
oustanding common stock of Computer City, Inc. to CompUSA and the related
removal of the assets and liabilities of Computer City, Inc. from those of the
Company, as if the sale had been consummated on June 30, 1998. In addition to
the removal from the balance sheet of the assets and liabilities of Computer
City, Inc., pro forma entries relating to the sale were made, as discussed
below.
Cash and short-term investments. Includes the payoff of the Computer City, Inc.
- -------------------------------
line of credit as of June 30, 1998 in the amount of $110.0 million. Also
included is $75.0 million received in the closing.
Other assets, net of accumulated amortization. Includes the $136.0 million
- ----------------------------------------------
note received in the closing. The note is due in fourteen equal semiannual
installments beginning December 31, 2001 at an interest rate of 9.48% per
annum, paid semiannually commencing on December 31, 1998.
Short-term debt. Includes the payoff of the Computer City, Inc. line of credit
- ----------------
as of June 30, 1998 in the amount of $110.0 million.
Accrued expenses. Includes the adjustment of the provision for loss on sale of
- -----------------
Computer City, Inc. to CompUSA recorded at June 30, 1998 in the amount of $42.9
million.
Income taxes payable. Represents the estimated tax effect of the additional
- ---------------------
$30.0 million pre-tax charge to earnings relating to the sale and the
reclassification of the residual balance in income taxes payable to other
current assets.
Retained earnings. Represents the estimated net of tax effect of the additional
- -----------------
charge to earnings relating to the sale.
