-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, sUueLjdrLhNNkTD1EOJXBiQZdY8ZO+bBdKlDs4UxpvhE0c6pIM4afEIUaA5tjY+w ulnSlq2rK45zlwhKAkspnA== 0000950130-94-000986.txt : 19940718 0000950130-94-000986.hdr.sgml : 19940718 ACCESSION NUMBER: 0000950130-94-000986 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940713 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19940713 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VARITY CORP CENTRAL INDEX KEY: 0000063118 STANDARD INDUSTRIAL CLASSIFICATION: 3523 IRS NUMBER: 223091314 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05190 FILM NUMBER: 94538674 BUSINESS ADDRESS: STREET 1: 672 DELAWARE AVE CITY: BUFFALO STATE: NY ZIP: 14209 BUSINESS PHONE: 7168888000 FORMER COMPANY: FORMER CONFORMED NAME: MASSEY FERGUSON LTD DATE OF NAME CHANGE: 19600201 8-K 1 FORM 8-K 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: July 13, 1994 VARITY CORPORATION ---------------------------------------------------- (Exact name of registrant as specified in charter) Delaware 1-5190 22-3091314 - - ---------------------------- ------------ ------------------ (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 672 Delaware Avenue, Buffalo, New York 14209 ---------------------------------------- ---------- (Address of Principal executive offices) (Zip Code) Registrant's telephone number: (716) 888-8000 This document consists of 11 pages Item: 2. Disposition of Assets --------------------- (a) On June 29, 1994, Varity Corporation (the Company) completed the previously announced sale of the stock of Massey Ferguson Group Limited and certain assets which collectively comprise its worldwide Massey Ferguson (MF) farm equipment business to AGCO Corporation (AGCO) for $310 million in cash and 500,000 shares of AGCO common stock. The transaction excluded cash and indebtedness as well as certain liabilities primarily pertaining to pension and retiree medical benefits for all former North American MF employees, for which the Company will continue to be responsible. The nature and amount of consideration was determined by arms-length negotiations between representatives of the Company and AGCO. The Company has had an ongoing relationship with AGCO. In 1993, the Company appointed AGCO exclusive distributor of farm equipment in North America for MF and sold to AGCO substantially all of the net assets, primarily dealer accounts receivable and inventories, of MF's North American operations as well as a 50% interest in Agricredit Acceptance Corporation (Agricredit), MF's North American retail finance business. In 1994, AGCO purchased the remaining 50% of Agricredit. In connection with the current sale, the Perkins Group, a wholly- owned subsidiary of the Company, entered into a long-term supply agreement with AGCO for the continued use of Perkins diesel engines in MF products. Item: 7. Financial Statements -------------------- (b) Pro forma financial information. (c) Exhibit ------- Supplemental Agreement between and among AGCO Corporation and Varity Holdings Limited, Varity GmbH, Massey Ferguson GmbH, Massey Ferguson Industries Limited, Massey Ferguson (Delaware), Inc. and Varity Corporation as of June 28, 1994. 2 PRO FORMA CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED) On June 29, 1994, the Company completed the previously announced sale of the stock of Massey Ferguson Group Limited and certain assets which collectively comprise its worldwide Massey Ferguson farm equipment business to AGCO for $310 million in cash and 500,000 shares of AGCO common stock. The transaction excluded cash and indebtedness as well as certain liabilities primarily pertaining to pension and retiree medical benefits for all former North American Massey Ferguson employees, for which the Company will continue to be responsible. The following unaudited pro forma consolidated financial information has been presented assuming that the divestiture had been completed as of February 1, 1993 for the consolidated statements of operations information, and as of April 30, 1994 for the consolidated balance sheet information. The pro forma consolidated financial information is provided for informational purposes only and may not be indicative of the results that would have occurred if the transaction had been effected on the dates indicated or which may be obtained in the future. The pro forma consolidated financial information and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Form 10-Q for the fiscal quarter ended April 30, 1994. 3 VARITY CORPORATION PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS THREE MONTHS ENDED APRIL 30, 1994 (Unaudited) (Dollars in millions except per share amounts)
Pro Forma Pro Forma Adjustments Adjusted for Farm for Farm Equipment Equipment Actual Divestiture Divestiture ------------ ------------- ----------- TOTAL SALES AND REVENUES $ 505.8 $ 20.2 (a) $ 526.0 ------------ ------------- ----------- EXPENSES: Cost of goods sold 417.0 17.9 (a) 434.2 (0.7)(b) Marketing, general and administration 38.6 38.6 Engineering and product development 20.5 20.5 Interest, net 5.9 (2.8)(c) 4.4 1.3 (d) Exchange gains (1.6) (1.6) Other income, net (0.8) (0.8) ------------ ------------- ----------- 479.6 15.7 495.3 ------------ ------------- ----------- INCOME BEFORE INCOME TAXES, EARNINGS OF ASSOCIATED COMPANIES AND DISCONTINUED OPERATION 26.2 4.5 30.7 Income tax provision (4.6) (4.6) ------------ ------------- ----------- INCOME BEFORE EARNINGS OF ASSOCIATED COMPANIES AND DISCONTINUED OPERATION 21.6 4.5 26.1 Equity in earnings of associated companies 3.4 3.4 ------------ ------------- ----------- INCOME BEFORE DISCONTINUED OPERATION 25.0 4.5 29.5 Earnings from discontinued operation 4.4 4.4 ------------ ------------- ----------- NET INCOME $ 29.4 $ 4.5 $ 33.9 ============ ============ =========== Income attributable to common stockholders $ 28.8 $ 33.3 Earnings per common share: Before discontinued operation $ 0.55 $ 0.65 Discontinued operation 0.10 0.10 ------------ ----------- Net income $ 0.65 $ 0.75 ============ ===========
See Notes to Pro Forma Consolidated Financial Information. 4 VARITY CORPORATION PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED JANUARY 31, 1994 (Unaudited) (Dollars in millions except per share amounts)
Pro Forma Pro Forma Discontinue Adjustments Adjusted Farm for Farm for Farm Equipment Restated Equipment Equipment Actual Segment Actual Divestiture Divestiture ---------------- --------- ---------------- ----------- ----------- TOTAL SALES AND REVENUES $ 2,725.8 $ (898.4) $ 1,827.4 $ 71.0 (a) $ 1,898.4 ---------------- --------- ---------------- ----------- ----------- EXPENSES: Cost of goods sold 2,261.3 (746.4) 1,514.9 63.2 (a) 1,575.2 (2.9)(b) Marketing, general and administration 277.2 (126.9) 150.3 150.3 Engineering and product development 81.4 (15.9) 65.5 65.5 Interest, net 35.8 (3.8) 32.0 (12.5)(c) 24.5 5.0 (d) Exchange (gains) losses 0.3 (1.9) (1.6) (1.6) Other income, net (2.7) (0.2) (2.9) (2.9) ---------------- --------- ---------------- ----------- ----------- 2,653.3 (895.1) 1,758.2 52.8 1,811.0 ---------------- --------- ---------------- ----------- ----------- INCOME BEFORE INCOME TAXES, EARNINGS OF ASSOCIATED COMPANIES, DISCONTINUED OPERATION, EXTRAORDINARY LOSS AND CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 72.5 (3.3) 69.2 18.2 87.4 Income tax provision (12.6) 1.0 (11.6) (11.6) ---------------- --------- ---------------- ----------- ----------- INCOME BEFORE EARNINGS OF ASSOCIATED COMPANIES, DISCONTINUED OPERATION, EXTRAORDINARY LOSS AND CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 59.9 (2.3) 57.6 18.2 75.8 Equity in earnings of associated companies 16.4 (4.9) 11.5 11.5 ---------------- --------- ---------------- ----------- ----------- INCOME BEFORE DISCONTINUED OPERATION, EXTRAORDINARY LOSS AND CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 76.3 (7.2) 69.1 18.2 87.3 Earnings from discontinued operation 7.2 7.2 7.2 ---------------- --------- ---------------- ----------- ----------- INCOME BEFORE EXTRAORDINARY LOSS AND CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 76.3 76.3 18.2 94.5 Extraordinary loss (1.7) (1.7) (1.7) Cumulative effect of changes in accounting principles (146.1) (146.1) (146.1) ---------------- --------- ---------------- ----------- ----------- NET LOSS $ (71.5) $ - $ (71.5) $ 18.2 $ (53.3) ================ ========= ================ =========== =========== Loss attributable to common stockholders $ (81.9) $ (81.9) $ (63.7) Per share data: Before discontinued operation, extraordinary loss and cumulative effect of changes in accounting principles: Primary $ 1.80 $ 1.60 $ 2.09 Fully diluted $ 1.73 $ 1.56 $ 1.98 Discontinued operation: Primary $ - $ 0.20 $ 0.20 Fully diluted $ - $ 0.17 $ 0.17 Extraordinary loss: Primary $ (0.05) $ (0.05) $ (0.05) Fully diluted $ (0.05)* $ (0.05)* $ (0.05)* Cumulative effect of changes in accounting principles: Primary $ (3.98) $ (3.98) $ (3.98) Fully diluted $ (3.98)* $ (3.98)* $ (3.98)* Net loss: Primary $ (2.23) $ (2.23) $ (1.74) Fully diluted $ (2.23)* $ (2.23)* $ (1.74)* * Anti-dilutive
See Notes to Pro Forma Consolidated Financial Information. 5 VARITY CORPORATION PRO FORMA CONSOLIDATED BALANCE SHEET APRIL 30, 1994 (Unaudited) (Dollars in millions)
Pro Forma Pro Forma Adjustments Adjusted for Farm for Farm Equipment Equipment Actual Divestiture Divestiture ------------ --------------- ------------ Assets Current assets: Cash and cash equivalents $ 58.7 $ 144.5 (e) $ 203.2 Marketable securities 54.2 18.5 (f) 72.7 Receivables 342.9 10.0 (g) 352.9 Inventories 140.6 140.6 Prepaid expenses and other 18.3 18.3 Net assets of discontinued operation 175.5 (165.5)(h) 0.0 (10.0)(g) ------------ ------------ ------------ Total current assets 790.2 (2.5) 787.7 Investments in associated and other companies 97.7 97.7 Fixed assets, net 560.6 560.6 Other assets and intangibles 336.6 336.6 ------------ ------------ ------------ $ 1,785.1 $ (2.5) $ 1,782.6 ============ ============ ============ Liabilities Current liabilities: Notes payable $ 57.5 $ (57.5)(e) $ 0.0 Current portion of long-term debt 5.4 (5.4)(e) 0.0 Accounts payable and accrued liabilities 507.8 507.8 ------------ ------------ ------------ Total current liabilities 570.7 (62.9) 507.8 ------------ ------------ ------------ Non-current liabilities: Long-term debt 178.3 (30.2)(e) 148.1 Other long-term liabilities 371.3 (60.0)(e) 357.6 55.0 (i) (8.7)(j) ------------ ------------ ------------ Total non-current liabilities 549.6 (43.9) 505.7 ------------ ------------ ------------ Stockholders' equity: Preferred stock 6.8 6.8 Common stock 637.6 637.6 Contributed surplus 656.3 656.3 Deficit (532.5) 23.2 (k) (509.3) Foreign currency translation adjustment (73.7) 57.4 (l) (16.3) Pension liability adjustment (28.5) 15.0 (i) (4.8) 8.7 (j) Unrealized gains (losses) on marketable securities (1.2) (1.2) ------------ ------------ ------------ Total stockholders' equity 664.8 104.3 769.1 ------------ ------------ ------------ $ 1,785.1 $ (2.5) $ 1,782.6 ============ ============ ============
See Notes to Pro Forma Consolidated Financial Information. 6 NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED) (a) To reflect sales of Perkins' diesel engines to MF as third party under the long-term supply agreement with AGCO. Such sales were previously accounted for as intercompany and accordingly were eliminated in consolidation. It is impractical to determine the precise gross margin on such sales and as a result, the actual gross margin realized in future periods in all likelihood will be different than that used for pro forma purposes. (b) To record the benefit of reduced pension expense resulting from planned contributions to underfunded pension plans, principally in the Company's automotive products segment. A portion of the proceeds from the sale is intended to fund such contributions. (See adjustment (e)). (c) To reflect the reduction in interest expense associated with the debt that would have been repaid based on the intended use of proceeds of $310 million and to reflect interest income earned on residual cash proceeds. For pro forma purposes the debt paydown was made on subordinated debt with interest rates ranging from 4.75% to 13.75% and senior debt with interest rates ranging from 5.0% to 9.75%. In addition, a portion of the remaining proceeds would have been used to repay short-term borrowings. Residual proceeds, after planned contributions to underfunded pension plans and the planned purchase of annuity contracts for MF pension plans, are reported as interest earning cash. No tax effect is recorded as any net increase in pretax income would have been offset through the use of tax loss carryforwards. (d) To recognize interest accretion on residual postretirement benefits retained by the Company. (e) Represents the application of $310 million of proceeds arising from the sale, including $60 million to be contributed to underfunded pension plans and $13 million to be used to purchase insurance contracts to annuitize vested benefits under retained MF pension plans. In accordance with certain provisions in the purchase and sale agreement, approximately $78 million in cash is to be received from AGCO within 49 days from closing, which for pro forma purposes has been assumed to have been received. 7 (f) To record the AGCO common stock consideration received in connection with the sale. These securities are available-for-sale as defined in Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." For pro forma purposes, it has been assumed that there has not been any change in the underlying share price of AGCO's common stock, and the price as of June 29, 1994 has been used as a surrogate in the balance sheet as of April 30, 1994. (g) To record receivables arising from the sale of Perkins' diesel engines to MF as third party under the long-term supply agreement with AGCO. Such receivables were previously accounted for as intercompany and accordingly were eliminated in consolidation. (h) To eliminate the net MF assets sold to AGCO. (i) To record the accrual of additional expenses and liabilities relating to the sale, including previously unrecognized actuarial losses in connection with retained postretirement benefits, professional fees and other liabilities for retained obligations. (See (k) below). (j) To reduce the additional minimum pension liability and corresponding stockholders' equity reduction, relating primarily to the automotive products segment, due to planned contributions to underfunded pension plans. (See adjustment (e)). (k) To record the gain from the sale of the farm equipment business. The pro forma consolidated statements of operations exclude the $23.2 million gain arising from the sale. (l) To eliminate previously deferred foreign currency translation losses in connection with the sale of MF. (See (k) above). 8 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 hereunto duly authorized. VARITY CORPORATION (Registrant) By: /s/ Kevin C. Shanahan --------------------- Kevin C. Shanahan Vice President, Controller (Principal Accounting Officer) Date: July 13, 1994 9 SUPPLEMENTAL AGREEMENT Item: 7. (c) ---------------------- THIS SUPPLEMENTAL AGREEMENT (the "Supplement") is made and entered into as of the 28th day of June, 1994, between and among AGCO CORPORATION ("Buyer") and VARITY HOLDINGS LIMITED ("VHL"), VARITY GmbH ("Varity GmbH"), MASSEY-FERGUSON GmbH ("MF GmbH"), MASSEY FERGUSON INDUSTRIES LIMITED ("MFIL"), MASSEY-FERGUSON (DELAWARE), INC. ("MFDI") and VARITY CORPORATION ("Varity") (VHL, Varity GmbH, MF GmbH, MFIL, MFDI and Varity are sometimes hereinafter referred to individually as a "Seller" and collectively as the "Sellers"). W I T N E S S E T H : ------------------- WHEREAS, Buyer and Sellers are parties to that certain Purchase and Sale Agreement, dated as of April 26, 1994 (the "Purchase Agreement"); WHEREAS, Buyer and Sellers desire to amend the Purchase Agreement in accordance with the terms and conditions contained herein; NOW, THEREFORE, in consideration of the premises and of other good and valuable consideration, Buyer and Sellers hereby agree as follows: 1. The Purchase Agreement is hereby amended by including in the definition of "MFGL Shares" (contained in the second recital thereof) all of the issued and outstanding 'A' Deferred MFGL Shares. 2. The Purchase Agreement is further amended by deleting the last two sentences of Section 5.7(c) thereof in their entirety and inserting in lieu thereof the following: "Any amount paid by Sellers to repay the MF Loans at the Closing shall be paid by Buyer to VHL twenty-eight (28) days after the Closing." 3. The Purchase Agreement is further amended by deleting Section 5.13 thereof (titled "Redemption of 'A' Deferred MFGL Shares") in its entirety. 4. In consideration of VHL not redeeming the 'A' Deferred MFGL Shares prior to the "Closing" (as defined in the Purchase Agreement), and thereby leaving $36,885,042 of additional cash in MFGL, Buyer hereby agrees that: (a) on or before August 17, 1994, Buyer shall pay to VHL the sum of $36,885,042 plus interest (accruing on a daily basis at an annual rate of four and five sixteenths percent); and (b) on the day after the Closing, Buyer shall deliver to VHL a letter of credit substantially in the form attached hereto as Exhibit A --------- and incorporated herein by reference in the amount of $36,885,042 to secure its payment obligations pursuant to subsection (a) above. 10 5. VHL hereby submits to the non-exclusive jurisdiction of any state or federal court located in the State of New York for the purposes of all legal proceedings arising out of or relating to the Purchase Agreement or this Supplement. 6. Except as specifically amended herein, all terms and conditions contained in the Purchase Agreement shall remain in full force and effect. This Supplement shall be governed by the laws of the State of New York. IN WITNESS WHEREOF, the parties hereto have caused their duly authorized representatives to execute this Supplement as of the day and year first above written. AGCO CORPORATION VARITY HOLDINGS LIMITED By: /s/ Allen W. Ritchie By: /s/ Frederick J. Chapman ------------------------- ------------------------- Allen W. Ritchie, Senior Vice President and Chief Title: Treasurer ----------------------- Financial Officer VARITY GMBH MASSEY-FERGUSON GMBH By: /s/ Beat Landis By: /s/ Stephen Lupton ------------------------- ------------------------- Title: Managing Director Title: Geschaeftsfuehrer ---------------------- ---------------------- MASSEY FERGUSON INDUSTRIES MASSEY-FERGUSON (DELAWARE), INC. LIMITED By: /s/ Kenneth L. Walker By: /s/ Kenneth L. Walker ------------------------- ------------------------- Title: Secretary Title: Secretary ---------------------- ---------------------- VARITY CORPORATION By: /s/ Kenneth L. Walker ------------------------- Title: VP & Secretary ---------------------- 11 -----END PRIVACY-ENHANCED MESSAGE-----