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): July 11, 1997
Venture Stores, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 1-10590 43-0914490
(State or Other (Commission (I.R.S.Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
2001 East Terra Lane, O'Fallon, Missouri 63366-0110
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (314) 281-5500
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Item 2. Acquisition or Disposition of Assets
On July 11, 1997 (the "Closing Date"), Venture Stores, Inc. (the
"Company") sold 20 stores to Kmart Corporation ("Kmart") for a
negotiated price of $38 million cash, before closing adjustments
and prepaid rent for the post closing inventory liquidation
period. Kmart also assumed as of the Closing Date certain
specified liabilities of the Company, including obligations under
the leases relating to 17 of the stores. The assets purchased by
Kmart include three stores that were owned by the Company and the
transfer of leases for 17 stores that were held under leases. In
addition, the sale included substantially all personal property,
other than inventory, located in the stores. The stores being
sold include five in the Dallas-Ft. Worth area, ten in Houston,
two in Indianapolis, and one each in Des Moines, Iowa, Waterloo,
Iowa, and Tulsa, Oklahoma. Kmart will assume occupancy of the
stores by September 15, 1997. In connection with the sale, the
Company will take a nonrecurring pre-tax charge of approximately
$64 million in the second quarter of 1997 for costs associated
with selling and closing the stores and liquidating the
inventory.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma Financial Information
The following unaudited pro forma condensed consolidated
financial statements are filed with this report:
Pro Forma Condensed Balance Sheet as of April 26, 1997
Pro Forma Condensed Statement of Earnings:
Year Ended January 25, 1997
13 Weeks Ended April 26, 1997
The Pro Forma Condensed Balance Sheet of the Company as of April
26, 1997 reflects the financial position of the Company after
giving effect to the disposition of the assets discussed in Item
2 and assumes the disposition took place on April 26, 1997. The
Pro Forma Condensed Statement of Earnings for the fiscal year
ended January 25, 1997 and the 13 weeks ended April 26, 1997
assume the disposition occurred on January 28, 1996, and are
based on the pro forma operations of the Company for the year
ended January 25, 1997 and 13 weeks ended April 26, 1997.
The unaudited pro forma condensed financial statements have been
prepared by the Company based upon assumptions deemed
appropriate. The unaudited pro forma condensed financial
statements presented herein are shown for illustrative purposes
only and are not necessarily indicative of the future financial
position or future results of operations of the Company, or of
the financial position or results of operations that would have
actually occurred had the transaction been in effect as of the
date or for the periods presented. In addition, it should be
noted that the Company's financial statements will reflect the
disposition only from July 11, 1997, the Closing Date.
The Company will incur a nonrecurring charge of approximately
$64 million in the second quarter of 1997 for costs associated
with selling and closing the stores and liquidating the
inventory. The unaudited Pro Forma Condensed Statement of
Earnings for the fiscal year ended January 25, 1997 and the 13
weeks ended April 26, 1997 do not reflect the effect of this
charge.
The unaudited pro forma condensed financial statements should be
read in conjunction with the historical financial statements and
related notes of the Company.
(c) Exhibits
2 Asset Purchase Agreement ("Asset Purchase Agreement")
between Kmart Corporation and Venture Stores, Inc.
dated as of July 2, 1997
Exhibits and schedules contained in the Asset Purchase
Agreement are not filed herewith. Such exhibits and
schedules are listed and described in the table of
contents of the Asset Purchase Agreement. The Company
undertakes to furnish supplementally a copy of any
omitted exhibit or schedule to the Commission upon
request.
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, thereto duly authorized.
VENTURE STORES, INC.
(Registrant)
By: /s/ Russell E. Solt
Name: Russell E. Solt
Title: Executive Vice President -
Administration and
Chief Financial Officer
Date: July 25, 1997
Pro Forma Financial Information
Venture Stores, Inc.
Pro Forma Condensed Balance Sheet as of April 26, 1997
(Unaudited)
(thousands)
Pro Forma
Historical Adjustments(a) Pro Forma
ASSETS
Current assets:
Cash and cash equivalents $ 14,487 $ $ 14,487
Accounts receivable, net 12,937 12,937
Merchandise inventories 320,065 (47,772)(b) 272,293
Income taxes receivable 946 946
Other current assets 8,113 2,000 (c) 10,113
Total current assets 356,548 (45,772) 310,776
Property and equipment, net 357,379 (102,139)(d) 255,240
Deferred income taxes 6,992 (2,030)(e) 4,962
Other assets 10,269 10,269
TOTAL ASSETS $ 731,188 $ (149,941) $ 581,247
LIABILITIES AND SHAREHOLDERS'
INVESTMENT
Current liabilities:
Short-term debt $ 167,903 $ (51,983)(f) $ 115,920
Current maturities of long-
term debt 4,341 4,341
Deferred income taxes 4,962 4,962
Accounts payable 129,623 129,623
Accrued expenses 59,882 (3,964)(b) 55,918
Total current liabilities 366,711 (55,947) 310,764
Long-term debt 178,031 (28,064)(g) 149,967
Other liabilities 3,770 3,770
Deferred gain on sale/leaseback 18,710 18,710
Shareholders' investment 163,966 (65,930)(h) 98,036
TOTAL LIABILITIES AND SHAREHOLDERS'
INVESTMENT $ 731,188 $ (149,941) $ 581,247
(a) In the above pro forma adjustments, all closing costs and associated
liabilities paid, resulting from the transaction, were assumed to
reduce the net proceeds received from the sale.
(b) Reflects the liquidation of inventory and payment of certain
liabilities as a result of the sale.
(c) Reflects occupancy costs for the post-closing liquidation period which
were prepaid at closing.
(d) Represents the net book value of property and equipment sold in the
transaction.
(e) Reflects the establishment of a valuation allowance to reduce deferred
tax assets to the amount expected to be realized due to the loss
incurred related to this transaction.
(f) Reflects the net cash proceeds received from the sale plus the cash
received from the liquidation of inventories.
(g) Reflects the prepayment of $5,754 of mortgage notes from the proceeds
of the sale and a reduction in the financing obligation from
sale/leaseback transactions as a result of Kmart assuming certain of
these obligations.
(h) Reflects the nonrecurring charge for costs associated with this
transaction.
Pro Forma Financial Information
Venture Stores, Inc.
Pro Forma Condensed Statement of Earnings
For the Year Ended January 25, 1997
(Unaudited)
(thousands, except per share data)
Pro Forma
Historical Adjustments Pro Forma
Net Sales $1,485,759 $ (227,802)(a) $1,257,957
Costs and expenses:
Cost of merchandise sold 1,165,325 (179,601)(a) 985,724
Selling, general,
administrative and
other expenses 387,173 (60,234)(a) 326,939
Net interest expense 27,576 (4,760)(b) 22,816
Earnings (loss) before income
taxes (94,315) 16,793 (77,522)
Income tax provision (benefit) (35,837) 15,509 (c) (20,328)
NET EARNINGS (LOSS) $ (58,478) $ 1,284 $ (57,194)
Dividends on preferred stock 2,500 2,500
NET EARNINGS (LOSS) AVAILABLE
TO COMMON SHAREOWNERS $ (60,978) $ 1,284 $ (59,694)
EARNINGS (LOSS) PER
COMMON SHARE $ (3.38) $ (3.31)
AVERAGE COMMON SHARES
OUTSTANDING 18,025 18,025
(a) To eliminate the store operating results of the 20 stores sold for the
entire period presented.
(b) To adjust interest expense to reflect decreases in short-term debt and
long-term debt utilizing the average interest rates in effect during
the period.
(c) To adjust income taxes for the limit on the benefit that could be
realized based on the valuation allowance that would have been
recorded against the deferred tax asset if the transaction had
occurred on January 28, 1996.
Pro Forma Financial Information
Venture Stores, Inc.
Pro Forma Condensed Statement of Earnings
For the 13 Weeks Ended April 26, 1997
(Unaudited)
(thousands, except per share data)
Pro Forma
Historical Adjustments Pro Forma
Net Sales $ 314,438 $ (51,238)(a) $ 263,200
Costs and expenses:
Cost of merchandise sold 242,416 (39,574)(a) 202,842
Selling, general,
administrative and
other expenses 89,059 (14,097)(a) 74,962
Net interest expense 7,781 (1,239)(b) 6,542
Earnings (loss) before income
taxes and extraordinary item (24,818) 3,672 (21,146)
Income tax provision (benefit) (9,312) 9,513 (c) 201
NET EARNINGS (LOSS) BEFORE
EXTRAORDINARY ITEM (15,506) (5,841) (21,347)
Dividends on preferred stock 625 625
NET EARNINGS (LOSS) AVAILABLE
TO COMMON SHAREOWNERS
BEFORE EXTRAORDINARY ITEM $ (16,131) $ (5,841) $ (21,972)
EARNINGS (LOSS) PER COMMON
SHARE BEFORE EXTRAORDINARY
ITEM $ (0.88) $ (1.20)
AVERAGE COMMON SHARES
OUTSTANDING 18,266 18,266
(a) To eliminate the store operating results of the 20 stores sold for the
entire period presented.
(b) To adjust interest expense to reflect decreases in short-term debt and
long-term debt utilizing the average interest rates in effect during
the period.
(c) To adjust income taxes for the limit on the benefit that could be
realized based on the valuation allowance that would have been
recorded against the deferred tax asset if the transaction had
occurred on January 28, 1996. The remaining income tax provision is
for certain state taxes.