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
Date of Report (Date of earliest event reported) May 4, 2001
FARMLAND INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Kansas 2-60372 44-0209330 (State of Incorporation) (Commission File Number) (I.R.S. Employer Identification No.) 12200 N. Ambassador Dr. Kansas City, Missouri 64163-1244 (Address of principal executive offices) (Zip Code) 816-713-7000 (Registrant's telephone number, including area code) Not Changed (Former name or former address, if changed since last report)
ITEM 2. Acquisition or Disposition of Assets
Effective May 4, 2001, Farmland Industries and Archer Daniels Midland Co. (ADM) consummated the formation of a grain marketing relationship. Based on arms-length negotiations, ADM/Farmland Inc., a wholly-owned subsidiary of ADM, purchased grain inventories and Farmland Atwood, our wholly-owned grain trading subsidiary, from Farmland for approximately $154 million in cash and short-term receivables. ADM/Farmland will lease and operate Farmland’s grain elevators throughout the United States. The initial lease period is for five years, with options to continue the lease for up to an additional twenty years. ADM/Farmland’s annual rental payment will equal Farmland’s fixed cost of owning the elevators plus a 50% share of the earnings of ADM/Farmland.
ITEM 7. Financial Statements and Exhibits
The following pro forma condensed consolidated financial statements are presented to illustrate the effects of the sale of Farmland Atwood, a wholly-owned grain brokerage subsidiary, and the sale of certain grain inventories to ADM/Farmland (the “Disposition”) on the historical financial position and operating results of Farmland.
The following pro forma condensed consolidated balance sheet of Farmland at February 28, 2001 gives effect to the Disposition as if it had occurred on that date. The pro forma condensed consolidated statements of operations for the six months ended February 28, 2001 and for the year ended August 31, 2000 give effect to the Disposition as if it had occurred on September 1, 1999.
The pro forma condensed consolidated financial statements have been derived from, and should be read in conjunction with, Farmland’s historical consolidated financial statements, including the accompanying notes. Those financial statements are included in our Quarterly Report on Form 10-Q for the six months ended February 28, 2001 and our Annual Report on Form 10-K for the year ended August 31, 2000.
The pro forma condensed consolidated financial statements are presented only for informational purposes. As a result, the accompanying pro forma condensed consolidated financial statements are not necessarily indicative of the financial position or results of operations of Farmland that would have occurred had the Disposition been consummated as of the dates indicated. For the reasons stated above, the pro forma condensed consolidated financial statements are not necessarily indicative of the future financial condition or operating results of Farmland.
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET February 28, 2001 (unaudited) ASSETS February 28, 2001 ------------------------------------------------------------------ ------------------------------------------------------------------ Pro Forma Farmland Farmland Adjustment Pro Forma (a) (b) --------------------- -------------------- ------------------- (Amounts in Thousands) Current assets: Accounts receivable-trade.............. $ 689,403 $ (13,413)(1) (3) $ 675,990 Inventories............................ 1,058,343 (178,945)(1) (3) 879,398 Other current assets................... 342,016 (24,143)(3) 317,873 --------------------- ---------------------- ------------------- Total current assets...................... $ 2,089,762 $ (216,501) $ 1,873,261 --------------------- ---------------------- ------------------- Investments & long-term receivables....... $ 357,386 $ (181)(3) $ 357,205 --------------------- ---------------------- ------------------- Property, plant & equipment: Cost................................... $ 1,704,327 $ (797)(3) $ 1,703,530 Accumulated depreciation............... (920,396) 163(3) (920,233) --------------------- ---------------------- ------------------- Net property, plant& equipment........... $ 783,931 $ (634) $ 783,297 --------------------- ---------------------- ------------------- Other assets.............................. $ 248,460 $ (17,150)(4) $ 231,310 --------------------- ---------------------- ------------------- Total assets.............................. $ 3,479,539 $ (234,466) $ 3,245,073 ===================== ====================== =================== See accompanying Notes to Pro Forma Condensed Consolidated Balance Sheet
LIABILITIES AND EQUITIES February 28, 2001 --------------------------------------------------------------- Pro Forma Farmland Farmland Adjustment Pro Forma (a) (b) ---------------- ------------------------ --------------- (Amounts in Thousands) Current liabilities: Short-term notes payable......... $ 752,035 $ (146,582)(1) (2) ($) 605,453 Accounts payable-trade........... 389,531 (58,017)(3) 331,514 Other current liabilities........ 612,704 (18,055)(2) (3) (5) 594,649 --------------------- ------------------------ ----------------- Total current liabilities........... $ 1,754,270 $ (222,654) $ 1,531,616 --------------------- ------------------------ ----------------- Long-term liabilities............... $ 803,076 $ (227)(3) $ 802,849 --------------------- ------------------------ ----------------- Total capital stock & equity........ $ 922,193 $ (11,585)(3) (4).($) 910,608 --------------------- ------------------------ ----------------- Total liabilities and equity........ $ 3,479,539 $ (234,466) $ 3,245,073 ===================== ======================== ================= See accompanying Notes to Pro Forma Condensed Consolidated Balance Sheet
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(a) Reflects Farmland's historical financial position at February 28, 2001. (b) Pro forma adjustments to record the Disposition as of February 28, 2001 reflect: 1) The sale of certain inventories to ADM, primarily for cash; 2) Prepaid rental income received in connection with the lease of our grain elevators; 3) The sale of Farmland Atwood Inc., primarily for cash; 4) Derecognition of certain intangible assets associated with our grain business; 5) Accrued severance costs.
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) Year Ended August 31, 2000 ------------------------------------------------------------- Pro Forma Farmland Farmland Adjustment Pro Forma (a) (b) ---------------- ------------------- ------------------- (Amounts in Thousands) Sales.................................................. $ 12,238,963 $ (1,888,578) $ 10,350,385 Cost of sales.......................................... 11,767,482 (1,832,372) 9,935,110 ------------------- ------------------- ------------------- Gross income........................................... $ 471,481 $ (56,206) $ 415,275 ------------------- ------------------- ------------------- Selling, general& administrative expenses............. $ 476,808 $ (40,513) $ 436,295 ------------------- ------------------- ------------------- Other income (deductions): Interest expense, net................................ $ (99,991) $ 15,907 $ (84,084) Other, net........................................... 22,691 (320) 22,371 ------------------- ------------------- ------------------- Total other income..................................... (77,300) 15,587 (61,713) Equity in net income of investees...................... 56,891 0 56,891 Minority interest in net (income)...................... loss of subsidiaries................................. (24,996) 0 (24,996) ------------------- ------------------- ------------------- Income (loss) before income taxes...................... $ (50,732) $ (106) $ (50,838) Provision for income taxes............................. 21,482 17 21,499 ------------------- ------------------- ------------------- Income (loss).......................................... $ (29,250) $ (89) $ (29,339) =================== =================== =================== See accompanying Notes to Pro Forma Condensed Consolidated Statement of Operations
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) Six Months Ended February 28, 2001 ------------------------------------------------------------- Pro Forma Farmland Farmland Adjustment Pro Forma (a) (b) ---------------- ------------------- -------------------- (Amounts in Thousands) Sales.................................................. $ 5,952,724 $ (1,056,374) $ 4,896,350 Cost of sales.......................................... 5,730,092 (1,029,887) 4,700,205 ------------------- ------------------- ------------------- Gross income........................................... $ 222,632 $ (26,487) $ 196,145 ------------------- ------------------- ------------------- Selling, general & administrative expenses............. $ 193,500 $ (15,350) $ 178,150 ------------------- ------------------- ------------------- Other income (deductions): Interest expense, net................................ $ (60,865) $ 9,621 $ (51,244) Other, net........................................... 23,209 (896) 22,313 ------------------- ------------------- ------------------- Total other income..................................... (37,656) 8,725 (28,931) Equity in net income of investees...................... 1,144 0 1,144 Minority interest in net (income) loss of subsidiaries................................. (9,090) 0 (9,090) ------------------- ------------------- ------------------- Income (loss) before income taxes...................... $ (16,470) $ (2,412) $ (18,882) Provision for income taxes............................. 2,063 397 2,460 ------------------- ------------------- ------------------- Income (loss) before cumulative effect of accounting change.......................... $ (14,407) $ (2,015) $ (16,422) =================== =================== =================== See accompanying Notes to Pro Forma Condensed Consolidated Statement of Operations
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 28, 2001 AND YEAR ENDED AUGUST 31, 2000
(a) Reflects Farmland's historical operating results for the six months ended February 28, 2001 and for the year ended August 31, 2000. (b) Pro forma adjustments to record the Disposition for the six months ended February 28, 2001, and for the year ended August 31, 2000 reflect the following directly identifiable items: 1) The effect of excluding sales, cost of sales, selling, general and administrative expenses and interest expense associated with the assets being sold or leased to ADM/Farmland; 2) The effect of excluding Farmland Atwood's operations; and 3) The effect of excluding from selling, general and administrative expenses the amortization of intangible assets which will be derecognized from the balance sheet on completion of the disposition. (c) The effect on other income resulting from our contractual interest in 50% of the earnings of ADM/Farmland cannot be determined at this time, and is not presented on the pro forma statements. (d) Based on information currently available, Management estimates that the transactions described in this filing will result in nonrecurring charges to Farmland, net of taxes, of approximately $15 million, consisting primarily of goodwill related to Farmland Atwood, over the next twelve months and have not been considered in these pro forma statements. We anticipate that most of these nonrecurring charges will be recognized during the third quarter of the 2001 fiscal year. Over the next twelve months, we will continue to evaluate the impact of the transaction, and the need for additional charges or credits.
Exhibits
2.A Purchase Agreement between Farmland Industries, Inc. and ADM/Farmland, Inc., dated May 4, 2001.2.B Master Lease between Farmland Industries, Inc. and ADM/Farmland, Inc., and Archer Daniels Midland Company, dated May 4, 2001.
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.
May 21, 2001 FARMLAND INDUSTRIES, INC. (Date) (Registrant) By: /s/ JOHN F. BERARDI ------------------------------------ John F. Berardi Executive Vice President and Chief Financial Officer