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) August 6, 2003
FARMLAND INDUSTRIES, INC.
Debtor-in-possession as of May 31, 2002
(Exact name of registrant as specified in its charter)
Kansas | 001-11629 | 44-0209330 |
(State of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
12200 North Ambassador Drive | |
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 August 6, 2003, Farmland consummated the sale of our approximate 71% interest in Farmland National Beef Packing Co. ("FNBPC"), to our minority partner, U.S. Premium Beef ("USPB"). FNBPC is the nation's fourth largest beef packer, processing 3.8 billion pounds of beef per year. FNBPC's assets include beef packing plants in Liberal and Dodge City, Kansas, as well as case-ready meat facilities in Hummels Wharf, Pennsylvania and Moultrie, Georgia. The sale of our interest in FNBPC was in conjunction with our reorganization proceedings and was subject to approval by the bankruptcy court. An auction was held for these assets during July 2003 and USPB's bid was approved by the Court on July 21, 2003. This transaction resulted in the purchase of our interest in FNBPC by the buyers for consideration, in aggregate, of approximately $253.8 million in cash, of which $21.8 million is recorded as an accounts receivable. The sales proceeds were used to repay our remaining $0.7 million bank debt as required under the terms of both our DIP Credit Facility and our Pre-petition Credit Facility. All additional funds will be held as cash reserves until such time as our plan of reorganization is confirmed by the bankruptcy court.
ITEM 7. Financial Statements and Exhibits
The following pro forma condensed consolidated financial statements are presented to illustrate the effects of the sale of our beef marketing assets (the "Disposition") on the historical financial position and operating results of Farmland.
The following pro forma condensed consolidated balance sheet of Farmland at May 31, 2003 gives effect to the Disposition as if it had occurred on that date. The pro forma condensed consolidated statements of operations for the nine months ended May 31, 2002 and 2003 and for the years ended August 31, 2000, 2001 and 2002 give effect to the Disposition as if it had occurred as of the beginning of the earliest period presented.
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 nine months ended May 31, 2003 and our Annual Report on Form 10-K for the year ended August 31, 2002.
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 also 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.
Page 2
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
(Debtors-in-Possession)
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
May 31, 2003
(UNAUDITED)
May 31, 2003 | ||||||||||
Farmland | Pro Forma | Farmland | ||||||||
Adjustments | Pro Forma | |||||||||
(a) | (b) | (c) | ||||||||
(Amounts in Thousands) | ||||||||||
Current Assets: | ||||||||||
Cash and cash equivalents | $ | -0- | $ | 218,370(6) | $ | 218,370 | ||||
Accounts receivable - trade (net of |
|
266,144 |
|
(130,856)(1)(2) |
|
135,288 | ||||
Inventories.............................................. | 258,420 | (57,851)(1) | 200,569 | |||||||
Other current assets................................ | 76,345 | (33,232)(1) | 43,113 | |||||||
Current assets from discontinued operations | 49,289 | -0- | 49,289 | |||||||
Total Curent Assets.............................. | $ | 650,198 | $ | (3,569) | $ | 646,629 | ||||
Investments and Long-term Receivables....... | $ | 213,933 | $ | (696)(1) | $ | 213,237 | ||||
Property, Plant & Equipment: | ||||||||||
Property, plant and equipment, at cost...... | $ | 1,152,349 | $ | (292,626)(1) | $ | 859,723 | ||||
Less accumulated depreciation and | ||||||||||
amortization...................................... | 748,244 | (132,628)(1) | 615,616 | |||||||
Net Property, Plant & Equipment................. | $ | 404,105 | $ | (159,998) | $ | 244,107 | ||||
Other Assets: | ||||||||||
Goodwill................................................. | $ | 28,289 | $ | (15,787)(1) | $ | 12,502 | ||||
Intangible assets..................................... | 23,688 | -0- | 23,688 | |||||||
Other long-term assets............................ | 39,769 | (2,114)(1) | 37,655 | |||||||
Long-term assets from discontinued | ||||||||||
operations............................................ | 5,459 | -0- | 5,459 | |||||||
Total Other Assets............................... | $ | 97,205 | $ | (17,901) | $ | 79,304 | ||||
Total Assets.............................................. | $ | 1,365,441 | $ | (182,164) | $ | 1,183,277 | ||||
___________________________
See accompanying Notes to Pro Forma Condensed Consolidated Balance Sheet
Page 3
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
(Debtors-in-Possession)
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
May 31, 2003
(UNAUDITED)
LIABILITIES AND EQUITIES
May 31, 2003 | |||||||||
Pro Forma | Farmland | ||||||||
Farmland | Adjustment | Pro Forma | |||||||
(a) | (b) | (c) | |||||||
(Amounts in Thousands) | |||||||||
Current Liabilities: | |||||||||
Checks and drafts outstanding............... | $ | 22,125 | $ | (22,125)(1) | $ | -0- | |||
Current maturities of long-term debt........ | 40,676 | (38,139)(1)(4) | 2,537 | ||||||
Accounts payable - trade...................... | 60,068 | (22,539)(1) | 37,529 | ||||||
Other current liabilities.......................... | 125,936 | (51,279)(1)(3) | 74,657 | ||||||
Current liabilities from discontinued | |||||||||
operations......................................... | 12,251 | -0- | 12,251 | ||||||
Total Current Liabilities....................... | $ | 261,056 | $ | (134,082) | $ | 126,974 | |||
Liabilities Subject to Compromise: | |||||||||
Liabilities subject to compromise........... | $ | 814,514 | $ | -0- | $ | 814,514 | |||
Liabilities subject to compromise from | |||||||||
discontinued operations...................... | 57,229 | -0- | 57,229 | ||||||
Total Liabilities Subject to Compromise | $ | 871,743 | $ | -0- | $ | 871,743 | |||
Long-Term Liabilities: | |||||||||
Long-term borrowings (excluding | |||||||||
current maturities)............................. | $ | 146,614 | $ | (126,949)(1) | $ | 19,665 | |||
Other long-term liabilities....................... | 41,821 | (2,230)(1) | 39,591 | ||||||
Total Long-Term Liabilities.................. | $ | 188,435 | $ | (129,179) | $ | 59,256 | |||
Minority Owners' Equity in Subsidiaries..... | $ | 51,028 | $ | (47,506)(1) | $ | 3,522 | |||
Net Loss................................................. | $ | (435,415) | $ | -0- | $ | (435,415) | |||
Capital Shares and Equities: | |||||||||
Preferred shares, authorized 8,000,000 shares, 8% Series A | |||||||||
cumulative redeemable preferred shares, | |||||||||
stated at redemption value, $50 | |||||||||
per share.......................................... | $ | 100,000 | $ | -0- | $ | 100,000 | |||
Common shares authorized | |||||||||
50,000,000 shares, $25 par value........ | 526,075 | -0- | 526,075 | ||||||
Accumulated other comprehensive income | 106 | -0- | 106 | ||||||
Earned surplus and other equities.......... | (197,587) | 128,125(5) | (69,462) | ||||||
Total Capital Shares and Equities....... | $ | 428,594 | $ | 128,125 | $ | 557,197 | |||
Total Liabilities and Equities..................... | $ | 1,365,441 | $ | (182,164) | $ | 1,183,277 | |||
__________________________
See accompanying Notes to Pro Forma Condensed Consolidated Balance Sheet
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
(Debtors-In-Possession)
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(a) | Reflects Farmland's historical financial position at May 31, 2003. | |
(b) | Pro forma adjustments to record the Disposition as of May 31, 2003 reflect: | |
1) | The sale of our interest in FNBPC which is compromised of all the assets and liabilities of FNBPC, to USPB for cash; | |
2) | A receivable for approximately $21.8 million for a post-closing payment that represents our pro-rata share of theFNBPC partners' distribution for the quarter ending August 31, 2003. This amount represents a preliminary estimate and will not be finalized until after the quarter has been completed; | |
3) | Reversal of book/tax timing differences related to assets sold to and liabilities assumed by the buyers, largely offset by an increase in the valuation allowance for our deferred tax assets; | |
4) | Under terms of our DIP and Pre-petition Credit Facilities, we are required to use the net sales proceeds to reduce outstanding borrowings under these facilities, which amounted to $20.4 million at May 31, 2003; | |
5) | The increase in equity represents the gain we recognized on consummation of this transaction; and | |
6) | The proceeds from disposition of $232.0 million, net of $20.4 million paydown of outstanding borrowings under our DIP and Pre-Petition Credit Facilities, and a reclassification of $6.8 million from checks and drafts outstanding. |
Page 5
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
(Debtors-in-Possession)
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.................................................................. | $ | 9,794,575 | $ | (2,818,631)(1) | $ | 6,975,644 | ||||||
Cost of sales....................................................... | 9,332,978 | (2,704,629)(1) | 6,628,349 | |||||||||
Gross income...................................................... | $ | 461,597 | $ | (114,002)(1) | $ | 347,595 | ||||||
Selling, general and administrative expenses.......... | (449,601) | 21,864(1) | (427,737) | |||||||||
Interest expense.................................................. | (107,980) | 3,612(1) | (104,368) | |||||||||
Interest income.................................................... | 9,877 | (496)(1) | 9,381 | |||||||||
Other income (expense)....................................... | 26,695 | (580)(1) | 26,115 | |||||||||
Equity in net income of investees.......................... | 56,891 | -0- | 56,891 | |||||||||
Minority owners' interest in net income | ||||||||||||
of subsidiaries.................................................. | (24,996) | 25,554(2) | 558 | |||||||||
Loss from continuing operations before | ||||||||||||
income tax benefit............................................. | $ | (27,517) | $ | (64,048) | $ | (91,565) | ||||||
Income tax benefit................................................ | 18,136 | 1,100(1) | 19,236 | |||||||||
Loss from continuing operations............................ | $ | (9,381) | $ | (62,948) | $ | (72,329) | ||||||
___________________________________
See accompanying Notes to Pro Forma Condensed Consolidated Statements of Operations
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
(Debtors-in-Possession)
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Year Ended August 31, 2001 | ||||||||||||
Pro Forma | Farmland | |||||||||||
Farmland | Adjustment | Pro Forma | ||||||||||
(a) | (b) | |||||||||||
(Amounts in Thousands) | ||||||||||||
Sales.................................................................. | $ | 9,197,314 | $ | (3,052,726)(1) | $ | 6,144,588 | ||||||
Cost of sales....................................................... | 8,803,451 | (2,944,519)(1) | 5,858,932 | |||||||||
Gross income...................................................... | $ | 393,863 | $ | (108,207)(1) | $ | 285,656 | ||||||
Selling, general and administrative expenses.......... | (363,210) | 25,210(1) | (338,000) | |||||||||
Restructuring and other charges............................ | (80,325) | -0- | (80,325) | |||||||||
Interest expense.................................................. | (118,237) | 2,742(1) | (115,495) | |||||||||
Interest income.................................................... | 12,535 | (588)(1) | 11,947 | |||||||||
Other income (expense)....................................... | 19,677 | (293)(1) | 19,384 | |||||||||
Equity in net income of investees.......................... | 27,457 | -0- | 27,457 | |||||||||
Minority owners' interest in net income | ||||||||||||
of subsidiaries.................................................. | (23,164) | 23,120(2) | (44) | |||||||||
Loss from continuing operations before | ||||||||||||
income tax benefit............................................. | $ | (131,404) | $ | (58,016) | (189,420) | |||||||
Income tax benefit................................................ | 27,619 | 913(1) | 28,532 | |||||||||
Loss from continuing operations............................ | $ | (103,785) | $ | (57,103) | $ | (160,888) | ||||||
__________________________
See accompanying Notes to Pro Forma Condensed Consolidated Statements of Operations
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
(Debtors-in-Possession)
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Year Ended August 31, 2002 | ||||||||||||
Pro Forma | Farmland | |||||||||||
Farmland | Adjustment | Pro Forma | ||||||||||
(a) | (b) | |||||||||||
(Amounts in Thousands) | ||||||||||||
Sales.................................................................. | $ | 6,574,004 | $ | (3,217,359)(1) | $ | 3,356,645 | ||||||
Cost of sales....................................................... | 6,330,287 | (3,114,062)(1) | 3,216,225 | |||||||||
Gross income...................................................... | $ | 243,717 | $ | (103,297)(1) | $ | 140,420 | ||||||
Selling, general and administrative expenses.......... | (339,599) | 23,506(1) | (316,093) | |||||||||
Restructuring and other charges............................ | (51,876) | -0-(1) | (51,876) | |||||||||
Interest expense.................................................. | (82,886) | 6,332(1) | (76,554) | |||||||||
Interest income.................................................... | 251 | (271)(1) | (20) | |||||||||
Other income (expense)....................................... | (15,804) | (3,693)(1) | (19,497) | |||||||||
Equity in net income of investees.......................... | 34,124 | 943(1) | 35,067 | |||||||||
Minority owners' interest in net income | ||||||||||||
of subsidiaries.................................................. | (22,404) | 22,527(2) | 123 | |||||||||
Reorganization expense....................................... | (69,114) | -0-(1) | (69,114) | |||||||||
Loss from continuing operations before | ||||||||||||
income tax expense.......................................... | $ | (303,591) | $ | (53,953) | $ | (357,544) | ||||||
Income tax expense............................................. | (5,521) | (1,053)(1) | (6,574) | |||||||||
Loss from continuing operations............................ | $ | (309,112) | $ | (55,006) | $ | (364,118) | ||||||
_______________________________________
See accompanying Notes to Pro Forma Condensed Consolidated Statements of Operations
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
(Debtors-in-Possession)
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Nine Months Ended May 31, 2002 | ||||||||||||
Pro Forma | Farmland | |||||||||||
Farmland | Adjustment | Pro Forma | ||||||||||
(a) | (b) | |||||||||||
(Amounts in Thousands) | ||||||||||||
Sales........................................................................ | $ | 4,644,583 | $ | (2,385,948)(1) | $ | 2,258,635 | ||||||
Cost of sales............................................................. | 4,486,546 | (2,326,592)(1) | 2,159,954 | |||||||||
Gross income............................................................ | $ | 158,037 | $ | (59,356)(1) | $ | 98,681 | ||||||
Selling, general and administrative expenses................ | (236,937) | 17,191(1) | (219,746) | |||||||||
Restructuring and other credits.................................... | (49,237) | -0- | (49,237) | |||||||||
Interest expense........................................................ | (58,997) | 4,895(1) | (54,102) | |||||||||
Interest income.......................................................... | 1,662 | (95) | 1,567 | |||||||||
Other income (expense).............................................. | (1,368) | (4,128)(1) | (5,496) | |||||||||
Equity in net income (loss) of investees........................ | 22,572 | 719(1) | 23,291 | |||||||||
Minority owners' interest in net income of subsidiaries... | (11,870) | 11,859(2) | (11) | |||||||||
Reorganization expense.............................................. | (54,719) | -0- | (54,719) | |||||||||
Loss from continuing operations before | ||||||||||||
income tax benefit................................................... | $ | (230,857) | $ | (28,915) | $ | (259,772) | ||||||
Income tax benefit...................................................... | 54,764 | -0- | 54,764 | |||||||||
Loss from continuing operations.................................. | $ | (176,093) | $ | (28,915) | $ | (205,008) | ||||||
_______________________________
See accompanying Notes to Pro Forma Condensed Consolidated Statements of Operations
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
(Debtors-in-Possession)
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Nine Months Ended May 31, 2003 | |||||||||||
Pro Forma | Farmland | ||||||||||
Farmland | Adjustment | Pro Forma | |||||||||
(a) | (b) | (c) | |||||||||
(Amounts in Thousands) | |||||||||||
Sales........................................................................ | $ | 4,834,785 | $ | (2,621,845)(1) | $ | 2,212,940 | |||||
Cost of sales............................................................. | 4,610,713 | (2,560,021)(1) | 2,050,692 | ||||||||
Gross income............................................................ | $ | 224,072 | $ | (61,824)(1) | $ | 162,248 | |||||
Selling, general and administrative expenses................ | (167,510) | 18,747(1) | (148,763) | ||||||||
Restructuring and other credits.................................... | 557 | -0- | 557 | ||||||||
Interest expense........................................................ | (20,906) | 3,707(1) | (17,199) | ||||||||
Interest income.......................................................... | 1,139 | (437)(1) | 702 | ||||||||
Other income (expense) | 53,473 | (2,778)(1) | 50,695 | ||||||||
Equity in net income (loss) of investees........................ | 17,410 | 978(1) | 18,388 | ||||||||
Minority owners' interest in net income of subsidiaries... | (12,146) | 12,027(2) | (119) | ||||||||
Reorganization expense.............................................. | (453,871) | -0- | (453,871) | ||||||||
Loss from continuing operations before | |||||||||||
income tax benefit (expense).................................... | $ | (357,782) | $ | (29,580) | $ | (387,362) | |||||
Income tax benefit (expense)....................................... | -0- | -0- | -0- | ||||||||
Loss from continuing operations.................................. | $ | (357,782) | $ | (29,580) | $ | (387,362) | |||||
____________________________________________
See accompanying Notes to Pro Forma Condensed Consolidated Statements of Operations
Page 10
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
(Debtors-in-Possession)
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
NINE MONTHS ENDED MAY 31, 2002 AND 2003 AND
YEARS ENDED AUGUST 31, 2000, 2001 AND 2002
(a) | Reflects Farmland's historical operating results for the nine months ended May 31, 2002 and 2003 and for the years ended August 31, 2000, 2001 and 2002. | |
(b) | Pro forma adjustments to record the Disposition for the nine months ended May 31, 2002 and 2003, and for the years ended August 31, 2000, 2001 and 2002 reflect the following directly identifiable items: | |
1) | The effect of excluding sales, cost of sales, selling, general and administrative expenses, interest expense and other expenses associated with the Disposition; and | |
2) | The effect of eliminating the minority owners' interest in net income held by USPB prior to the sale being consumated. | |
(c) | Based on information currently available, Management estimates that the transactions described in this filing will result in a gain, net of taxes, of approximately $128.1 million. This gain is not reflected in these pro forma statements of operations. This gain will be recognized in the quarter ending August 31, 2003. |
Page 11
Exhibits
2.A | Asset Sale and Purchase Agreement between Farmland Industries, Inc. and U.S. Premium Beef dated, June 12, 2003. |
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.
FARMLAND INDUSTRIES, INC. | |
(Registrant) | |
By: | /s/ STEVEN R. RHODES |
Steven R. Rhodes | |
Executive Vice President | |
and Chief Financial Officer |
Date: August 15, 2003
EXHIBIT INDEX
2.A | Asset Sale and Purchase Agreement between Farmland Industries, Inc. and U.S. Premium Beef dated, June 12, 2003. |
Page 12