SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
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Date of Report
(Date of earliest
event reported): April 18, 2001
SCHULTZ SAV-O STORES, INC.
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(Exact name of registrant as specified in its charter)
Wisconsin 0-549 39-0600405
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
2215 Union Avenue, Sheboygan, Wisconsin 53081
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(Address of principal executive offices, including zip code)
(920) 457-4433
(Registrant's telephone number)
Item 9. Regulation FD Disclosure.
Summary of certain terms and conditions of the acquisition of the stock of
Brodbeck Enterprises Inc. by Schultz Acquisition Corp.
On April 17, 2001, Schultz Acquisition Corp., an affiliate of Schultz
Sav-O Stores, Inc. ("Schultz"), entered into a definitive purchase agreement to
acquire all of the outstanding stock of Brodbeck Enterprises, Inc. ("Brodbeck").
Brodbeck is a privately held company that operates eight supermarkets in
Southwestern Wisconsin and Northeastern Illinois under the "Dick's Supermarket"
brand name, as well as a bakery and deli manufacturing operation. The cash
purchase price for the stock of Brodbeck will be $30 million, less the
assumption of approximately $5.2 million of funded debt, and subject to
potential adjustment based on the relative level of Brodbeck's net working
capital at closing. For the year ended December 31, 2000, Brodbeck recognized
net sales of nearly $107 million, pre-tax net income of over $2.8 million and
earnings before interest, taxes and depreciation of approximately $5.0 million.
Schultz currently believes that it can potentially realize significantly higher
earnings before interest, taxes and depreciation results from the acquisition of
Brodbeck.
The closing of the acquisition is subject to Schultz's satisfactory
completion of certain due diligence matters, shareholder approval of Schultz's
proposed new holding company structure and other typical closing conditions.
Subject to satisfactory completion or waiver of all closing conditions, the
closing is expected to occur within the next 60 to 90 days. Schultz intends to
fund its affiliate's payment of the purchase price using $18 million of its
available cash and by borrowing up to approximately $12 million under its new
expanded $35 million credit facility with M&I Marshall & Ilsley Bank and Firstar
Bank, N.A. Schultz's borrowings under its new expanded credit facility will bear
interest at approximately 6% per annum.
Schultz expects that the acquisition of Brodbeck will have no impact
on its 2001 earnings per share because of expected integration and related costs
and expenses. However, in 2002, the acquisition is expected to be approximately
$0.04 to $0.08 accretive to Schultz's earnings per share, assuming that Schultz
can successfully integrate the Dick's organization and achieve on a timely basis
the expected benefits, cost savings and other synergies of the acquisition. Of
course, the results of Dick's Supermarkets, as well as of Schultz's existing
Piggly Wiggly supermarkets, are always subject to the impact of competitive
pressures and potential new market entrants. The earnings per share accretion
projection assumes that goodwill will be amortized over a 20-year period.
Currently, a financial accounting standards board exposure draft, "Business
Combination and Intangible Assets," exists that will eliminate the amortization
of goodwill effective July 1, 2001. If the exposure draft is approved and takes
effect on July 1, 2001, the projected earnings per share accretion will increase
by an additional $0.10 on an annualized basis.
On April 18, 2001, Schultz issued the following press release
announcing the acquisition of Brodbeck, which it is hereby furnishing in this
Form 8-K.
Contact:
Elwood F. Winn, President/CEO
(920) 208-4100
Attn: Joan Loersch (920) 208-4105
Michael R. Houser, Vice Chairman, Exec. VP/CMO
(920) 208-4104
Attn: Zina Marty (920) 208-4165
FOR IMMEDIATE RELEASE
SCHULTZ AFFILIATE TO ACQUIRE REGIONAL CHAIN WITH OVER $100 MILLION IN SALES
Dick's Supermarkets will become one of Schultz Sav-O Brands along with
Piggly Wiggly(R)
Sheboygan, Wis, April 18, 2001.... Schultz Sav-O Stores, Inc. (Nasdaq: SAVO)
today announced that its affiliate, Schultz Acquisition Corp., has signed a
definitive purchase agreement to acquire Brodbeck Enterprises, Inc., the
Platteville, Wisconsin-based operator of Dick's Supermarkets. Dick's
Supermarkets operates eight stores in Southwestern Wisconsin and Northwestern
Illinois. The financial terms and conditions of the acquisition were separately
announced by Schultz in its Form 8-K filing with the Securities & Exchange
Commission.
Schultz Sav-O Stores recently announced several strategies for long-term growth
and profitability including its intention to acquire multiple successful
supermarket brands, to broaden its geographical territory and to significantly
increase its retail segment. "This acquisition is directly in line with our key
strategies and will allow us to aggressively pursue additional shareholder
value," said Elwood F. Winn, president and chief executive officer. "After the
acquisition is complete, we will market supermarkets under both the Piggly
Wiggly and Dick's Supermarkets brand names.
"Dick's Supermarkets is a perfect fit for expansion for Schultz Sav-O Stores.
The company has an excellent reputation for quality and is a premier performer.
Dick's is number one in market share in each of its markets. We are impressed
with its state-of-the-art style of supermarket management and customer focus."
Dick's had sales of over $100 million in 2000. The company operates seven stores
in Wisconsin and one in Galena, Illinois. The Wisconsin stores are located in
Platteville, Lancaster, Boscobel, Monroe, Darlington, Dodgeville and Prairie du
Chien. Dick's will operate as a wholly-owned subsidiary of an affiliate of
Schultz Sav-O Stores.
"Dick's was founded by Dick and Helen Brodbeck in 1950 and is currently headed
by their son Robert Brodbeck, president and CEO. Bob, a 35-year company veteran,
will become president of our Dick's Supermarket brand," said Winn. "We are
extremely pleased to have Dick's join the Schultz Sav-O family and to have Bob
and the store management teams and members become part of our organization,"
Winn said.
Winn indicated that Dick's has received several coveted supermarket industry
awards, most recently for its use of e-business technology in merchandising.
"Dick's was the first supermarket in the nation to offer electronic Internet
coupons and is a recognized leader in employing e-marketing and technology,"
Winn said. "Overall, Dick's has a very similar merchandising style to our Piggly
Wiggly brand, with strong promotional programs, targeted marketing, advertising
and a savings club loyalty card program," Winn said.
In addition to the eight stores, Dick's operates a bakery and delicatessen
facility in Platteville. In total, Dick's has approximately 1,000 employees.
Dick's bakery and deli facility in Platteville will continue to supply Dick's
Supermarkets with its trademark fresh signature selections. Schultz Sav-O Stores
will be the grocery wholesaler for Dick's Supermarkets.
"We are very pleased to become part of the Schultz Sav-O organization," said
Robert Brodbeck. "The Schultz operation is very progressive, much like Dick's,
so we feel that our operations will fit well together. Being part of the Schultz
Sav-O operation will allow us to take advantage of superior buying power,
provide access to capital to perpetuate and grow the brand and make us a much
tougher competitor in our markets."
"We strongly believe in our ability to leverage these two strong regional
supermarket brands, Dick's and Piggly Wiggly, combining the strength of each
while maintaining their individual market uniqueness," said Michael R. Houser,
vice chairman, executive vice president and chief marketing officer of Schultz
Sav-O Stores. "We will bring to Dick's Supermarkets all the powerful elements of
our marketing, merchandising and procurement programs, enabling Dick's to
continue to excel with its positive community interaction and customer focus.
Our concentrated efforts will also provide Dick's with a more expansive store
brand program, additional customer affinity enhancements and a host of national
brand promotional and customized event initiatives."
As a follow-up to this release, Schultz Sav-O Stores will host a conference call
tomorrow, April 19, 2001, at 2:00 p.m. Eastern/1:00 p.m. Central Daylight Time
to discuss this acquisition. Interested parties are invited to call
1-888-469-0689 (press 4433 as passcode, call leader is Elwood Winn).
Schultz Sav-O Stores, Inc. is a supermarket retailer and grocery wholesaler
through corporate-owned retail and franchised supermarkets. The franchised and
corporate-owned retail supermarkets currently operate under the Piggly Wiggly
brand. Schultz Sav-O Stores currently has 71 franchised supermarkets, 19
corporate-owned stores and two distribution centers. Stores are located
throughout Wisconsin and Northern Illinois. Sales for Schultz in 2000 were over
$500 million.
For more information, please visit Schultz Sav-O's Web site at
www.shopthepig.com.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain matters discussed in this press release are "forward-looking
statements" intended to qualify for the safe harbors from liability established
by the Private Securities Litigation Reform Act of 1995. These forward-looking
statements can generally be identified as such because the context of the
statement will include words such as the Company "believes," "anticipates,"
"expects" or words of similar import. Similarly, statements that describe the
Company's future plans, objectives, strategies or goals are also forward-looking
statements. Such forward-looking statements are subject to certain risks and
uncertainties including, but not limited, to the following: (1) presence of
intense competitive market activity in the Company's market areas; (2) ability
to identify and develop new market locations for expansion purposes; (3)
continuing ability to obtain reasonable vendor marketing funds for promotional
purposes; (4) ongoing advancing information technology requirements; (5) ongoing
absence of food price inflation; (6) the Company's ability to continue to
recruit, train and retain quality franchise and corporate retail store
operators; (7) the potential recognition of repositioning charges resulting from
potential closures, conversions and consolidations of retail stores due
principally to the competitive nature of the industry and to the quality of the
Company's retail store operators; and (8) the Company's ability to integrate and
assimilate the acquisition of Brodbeck Enterprises, Inc., and to achieve, on a
timely basis, the Company's anticipated benefits and synergies thereof.
Shareholders, potential investors and other readers are urged to consider these
factors carefully in evaluating the forward-looking statements and are cautioned
not to place undue reliance on such forward-looking statements. The
forward-looking statements made herein are only made as of the date of this
release and the Company undertakes no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstances.
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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.
SCHULTZ SAV-O STORES, INC.
Date: April 18, 2001 By: /s/ Armand C. Go
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Armand C. Go
Vice President and Chief
Financial Officer