-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BMJdCq5A2/ja7tYwkPKyxcXPxD1iDUD3FgxZpvgzU7UlKABa73Gu9Ue6RccPZ6qP 8LPbQY3MN8PSlkwIzGZ5jw== 0000850309-96-000004.txt : 19960221 0000850309-96-000004.hdr.sgml : 19960221 ACCESSION NUMBER: 0000850309-96-000004 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960219 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960220 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SMITHS FOOD & DRUG CENTERS INC CENTRAL INDEX KEY: 0000850309 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 870258768 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10252 FILM NUMBER: 96523155 BUSINESS ADDRESS: STREET 1: 1550 S REDWOOD RD CITY: SALT LAKE CITY STATE: UT ZIP: 84104 BUSINESS PHONE: 8019741400 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549-1004 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) February 19, 1996 SMITH'S FOOD & DRUG CENTERS, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 001-10252 87-0258768 (State or Other (Commission File Number) (I.R.S. Employer Jurisdiction Identification No.) of Incorporation) 1550 South Redwood Road Salt Lake City, Utah 84104 (801) 974-1400 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) Item 5. Other Events On January 29, 1996, Smith's Food & Drug Centers, Inc., a Delaware corporation ("Smith's") entered into a definitive Recapitalization Agreement and Plan of Merger (the "Recapitalization Agreement"), among Smith's, Cactus Acquisition, Inc., a Delaware Corporation and a wholly owned subsidiary of Smith's, ("Acquisition"), Smitty's Supermarket, Inc., a Delaware Corporation ("Smitty's"), and The Yucaipa Companies, a California general partnership ("Yucaipa"). Pursuant to the Recapitalization Agreement, Smith's has agreed to recapitalize Smith's, subject to certain terms and conditions, by (i) a self tender offer (the "Offer") to purchase 50% of Smith's outstanding common stock for $36.00 per share, and (ii) the merger of Smitty's with Acquisition, pursuant to which Smitty's will become a wholly owned subsidiary of Smith's and the stockholders of Smitty's will receive 3,038,888 shares of Class B Common Stock of Smith's. It is anticipated that the Offer and the Merger will close simultaneously, except in certain limited circumstances. The terms and conditions of the Recapitalization Agreement and related transactions are set forth in the January 29, 1996 press release issued by Smith's which is filed as an exhibit to this Form 8-K and is hereby incorporated by reference. The information set forth above shall not be deemed to constitute either an offer to sell, or the offer to purchase, any security. Any such offer to sell or offer to purchase will be made only by means of a prospectus or an offer to purchase. Item 7. Financial Statements and Exhibits (a) Financial Statements of the business acquired. Not applicable. (b) Pro forma financial information. Not applicable. (c) Exhibits. 99.1 press release dated January 29, 1996. 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 hereunto duly authorized. SMITH'S FOOD & DRUG CENTERS, INC. February 19, 1996 By: /s/ Michael C. Frei Name: Michael C. Frei Title: Senior Vice President and General Council EX-99.1 2 January 29, 1996 SMITH'S FOOD & DRUG CENTERS, INC. ANNOUNCES MERGER AGREEMENT WITH SMITTY'S SUPERMARKETS, INC., SELF TENDER OFFER TO PURCHASE 50% OF ITS COMMON STOCK AND FINANCIAL RESULTS FOR 1995 (Salt Lake City, UT) -- Smith's Food & Drug Centers, Inc. (NYSE: SFD) made the following announcements today: MERGER OF SMITTY'S SUPERMARKETS, INC. Smith's has entered into a definitive merger agreement with Smitty's Supermarkets, Inc. Smitty's, which operates 28 supermarkets in the Phoenix and Tucson areas, is controlled by The Yucaipa Companies, a private investment company. Smitty's sales totaled approximately $590 million in 1995. Under the merger agreement, Smith's will issue 3,038,888 shares of its Class B Common Stock in exchange for all of Smitty's outstanding common stock and it will assume or refinance approximately $148 million of Smitty's debt. REPURCHASE OF STOCK Smith's also said it will commence a self tender offer to purchase 50% of its Class A and Class B Common Stock for $36 per share, excluding shares to be issued in connection with the Smitty's merger. Consummation of the tender offer will be subject to the tender of at least 50% of Smith's outstanding common stock, the receipt of financing and various other conditions. Consummation of the Smitty's merger will be conditioned on Smith's purchase of shares pursuant to the self tender offer, receipt of financing, regulatory approvals, approval by Smith's stockholders and various other conditions. Smith's has received commitment letters and highly confident letters from several financial institutions with respect to all of the financing necessary to consummate the Smitty's merger and the self tender offer. The tender offer is expected to commence around April 1, 1996 and be consummated around May 1, 1996. The Smitty's merger is expected to be consummated concurrently with the closing of the tender offer. Upon consummation of the Smitty's merger and the self tender offer, the Smith family will continue to be Smith's largest stockholder with approximately 24% of the outstanding common stock and over 40% of the vote. The Yucaipa Companies and its affiliates will own approximately 14% of Smith's outstanding common stock and the other Smitty's stockholders will own approximately 6%. The Yucaipa Companies will enter into a 10 year standstill agreement with Smith's. MANAGEMENT CHANGES Upon consummation of the Smitty's merger and the self tender offer, Smith's will enter into a five year management services agreement with The Yucaipa Companies under which Yucaipa will provide various management services to Smith's. As part of that arrangement, Ronald W. Burkle, managing partner of The Yucaipa Companies, will be appointed as Chief Executive Officer of Smith's upon consummation of the Smitty's merger and the self tender offer. In addition, at that time Smith's board of directors will be reconstituted to consist of two representatives of Yucaipa, two representatives of the Smith family, one senior member of management, and two independent directors. The Yucaipa Companies is a private investment company which in addition to Smitty's also controls Ralphs Grocery Company, the largest supermarket company in Southern California, operating stores under the Ralphs and Food 4 Less names, which also operates stores in Northern California under the Cala and Bell names and in the midwest under the Falley's and Food 4 Less names; and Dominick's Finer Foods, Inc., a leading Chicago area supermarket company, operating stores under the Dominick's and Omni names. In addition, Smith's announced that it has hired Allen R. Rowland as President and Chief Operating Officer of Smith's. Mr. Rowland spent 25 years at Albertson's Inc., holding various senior executive positions at that company. Jeffrey P. Smith, Chairman and CEO of Smith's, said: "I am very excited about the transactions we are announcing today. The Smitty's merger will significantly enhance the combined companies' position in the Arizona market. The self tender offer will give all of Smith's stockholders the opportunity to receive substantial cash proceeds while permitting them at the same time to participate in Smith's future growth. Additionally, our management arrangements with Yucaipa will permit Smith's to benefit from Yucaipa's extensive management experience in the supermarket industry. I am particularly pleased about our good fortune in hiring Rowland. He is one of the most accomplished senior executives in the supermarket industry and I believe Smith's will benefit greatly from his experience." Ron Burkle said: "We look forward to consummating this exciting merger. I have admired Jeff Smith and his company and we are delighted at the prospect of the combination of Smitty's and Smith's. I am committed to continuing the expansion of the combined company to benefit its shareholders, employees and customers." FISCAL 1995 RESULTS Smith's sales for the year ended December 30, 1995 of $3.08 billion were up 3% over the $2.98 billion reported a year ago. Income before restructuring charges was $43.5 million compared to last year's $48.8 million, a decrease of 11%. Income per common share before restructuring charges decreased from $1.73 to $1.72, down 1% over last year. In January, the Company announced the sale and closure of its Southern California Region. Consequently, restructuring charges of $84 million ($3.34 per common share) after tax were recorded which resulted in a net loss of $40.5 million for 1995 compared to net income of $48.8 million last year. The pretax LIFO charge was $4.0 million for 1995 compared to $2.5 million last year. Sales in comparable stores decreased 3.4% for the year. FOURTH QUARTER RESULTS Smith's sales for the fourth quarter ended December 30, 1995, totaled $798 million compared to $754 million for the same quarter last year, an increase of 6%. Income per common share before restructuring charges totaled $.55 compared to $.53 earned last year, an increase of 4%. Income before restructuring charges was $13.9 million compared to $14.2 million reported last year, a decrease of 2%. The pretax LIFO charge was $1.0 million for the fourth quarter compared to a credit of $1.25 million last year. Sales in comparable stores decreased 2.9% for the quarter. The weakness in sales can be attributed to a significant number of competitive store openings in most marketing areas, in addition to aggressive price competition in the Company's Southern California Region. Earnings were affected by the weakness in sales, putting pressure on expense ratios. CLOSURE OF CALIFORNIA In January, the Company announced the sale and anticipated closure of its Southern California Region. Smith's has entered into agreements to sell or lease 18 stores to various supermarket companies. The remaining 16 stores will be closed in the near future and it is anticipated they will be sold or leased to other retail companies. A large distribution center located in Riverside, California was recently subleased to Ralphs Grocery Company. These 34 stores had sales of approximately $675 million for the year ended December 30, 1995. Restructuring charges of $84 million after tax were charged against earnings for the year ended December 30, 1995. The continuing recession in Southern California and a very difficult competitive environment made it impossible for Smith's to earn an adequate return on its investment there. Jeff Smith, Chairman and CEO, stated that "Company and shareholder interests would be better served by redeploying assets to further develop Smith's other profitable regions." Smith's has established profitable operating areas in Utah, Arizona, Nevada, New Mexico, Idaho, Wyoming and Texas. EXPANSION PROGRAM During the year, the Company opened 15 combination food and drug centers in Phoenix, Gilbert, Glendale, Peoria, and two in Mesa, Arizona; Vista and Yucca Valley, California; Albuquerque, Gallup and Hobbs, New Mexico; Gardnerville, Elko and Las Vegas, Nevada; and Kimball Junction, Utah. Two smaller superstores were closed in Las Vegas. The Company also opened four retail warehouse stores in Las Vegas. These new "price-impact" stores operate under the PriceRite Grocery Warehouse name. Smith's is a leading regional supermarket chain operating 154 stores at the end of the year (including the 34 stores in California) in eight western states. Of these stores, 138 are large combination food and drug centers. CONTACT: Robert D. Bolinder or Matthew G. Tezak both of Smith's Food & Drug Centers, Inc., (801) 974-1400 Darius Anderson of Smitty's at (602) 801-1000 SMITH'S FOOD & DRUG CENTERS, INC. Condensed Consolidated Statements of Income (Unaudited) (Amounts in thousands, except per share data) 13 Weeks Ended 52 Weeks Ended Dec 30, Dec 31, Dec 30, Dec 31, 1995 1994 1995 1994 Net sales $798,324 $753,891 $3,083,737 $2,981,359 Cost of goods sold 617,657 581,621 2,392,723 2,318,127 180,667 172,270 691,014 663,232 Expenses: Operating, selling and administrative 117,604 111,781 461,401 440,844 Depreciation and amortization 26,253 23,385 98,947 88,592 Interest 15,194 14,305 60,478 53,715 Restructuring charges 140,000 140,000 299,051 149,471 760,826 583,151 INCOME (LOSS) BEFORE INCOME TAXES (118,384) 22,799 (69,812) 80,081 Income taxes (48,300) 8,600 (29,300) 31,300 NET INCOME (LOSS) $(70,084) $ 14,199 $ (40,512) $ 48,781 Per common share: Income before restructuring charges $ .55 $ .53 $ 1.72 $ 1.73 Net income (loss) (2.79) .53 (1.62) 1.73 Average common shares outstanding 25,071 26,407 25,031 28,177 SMITH'S FOOD & DRUG CENTERS, INC. Condensed Consolidated Balance Sheets (Unaudited) (Amounts in thousands) Dec 30, Dec 31, 1995 1994 ASSETS CURRENT ASSETS Cash $ 16,079 $ 14,188 Receivables 23,802 25,596 Inventories 394,982 389,564 Assets held for sale 125,000 Other current assets 45,155 17,258 TOTAL CURRENT ASSETS 605,018 446,606 PROPERTY AND EQUIPMENT Land 276,626 303,701 Buildings 610,049 619,056 Leasehold improvements 55,830 42,369 Fixtures and equipment 509,524 589,480 1,452,029 1,554,606 Less allowances 390,933 364,741 1,061,096 1,189,865 OTHER ASSETS 20,066 16,996 $1,686,180 $1,653,467 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Trade accounts payable $ 214,152 $ 235,843 Accrued taxes 50,749 44,379 Other accrued liabilities 97,455 84,083 Current maturities 21,940 20,028 Restructuring reserves 58,000 TOTAL CURRENT LIABILITIES 442,296 384,333 LONG-TERM DEBT 725,253 699,882 RESTRUCTURING RESERVES 40,000 DEFERRED INCOME TAXES 58,600 89,500 REDEEMABLE PREFERRED STOCK 3,311 4,410 COMMON STOCKHOLDERS' EQUITY 416,720 475,342 $1,686,180 $1,653,467 SMITH'S FOOD & DRUG CENTERS, INC. Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) 52 Weeks 52 Weeks Ended Ended Dec 30, Dec 31, 1995 1994 OPERATING ACTIVITIES: Net income (loss) $(40,512) $ 48,781 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 104,963 94,491 Deferred income taxes (53,400) 10,500 Restructuring charges 140,000 Other 568 635 151,619 154,407 Changes in operating assets and liabilities: Receivables 1,794 (4,758) Inventories (5,418) (11,625) Other current assets (5,397) (1,324) Trade accounts payable (21,691) 50,618 Accrued taxes 6,370 5,616 Other accrued liabilities 13,372 10,616 CASH PROVIDED BY OPERATING ACTIVITIES 140,649 203,550 INVESTING ACTIVITIES: Additions to property and equipment (149,035) (146,676) Sale/leaseback arrangements and other property sales 5,841 20,949 Other (3,070) (1,649) CASH USED IN INVESTING ACTIVITIES (146,264) (127,376) FINANCING ACTIVITIES: Additions to long-term debt 45,978 27,000 Payments on long-term debt (18,686) (33,594) Redemptions of Redeemable Preferred Stock (1,108) (1,042) Purchases of Treasury Stock (9,039) (109,239) Proceeds from sale of Treasury Stock 5,278 7,693 Payment of dividends (14,917) (14,725) CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 7,506 (123,907) NET INCREASE (DECREASE) IN CASH 1,891 (47,733) Cash balance at beginning of year 14,188 61,921 CASH BALANCE AT END OF YEAR $ 16,079 $ 14,188 -----END PRIVACY-ENHANCED MESSAGE-----