Exhibit 99.1
Heilig-Meyers Announces Merger With Rhodes, Inc.
and Quarterly Earnings Results
RICHMOND, Va., Sept. 17 /PRNewswire/ -- Heilig-Meyers Company (NYSE:
HMY), the Richmond-based home furnishings retailer, today announced revenues and
earnings for the second quarter ended August 31, 1996. Net earnings were $7.7
million compared to $11.3 million in the prior year. Earnings per share were
$0.16 compared to $0.23 during the same period in the prior year. Total revenues
for the quarter were $343.5 million compared to $324.9 million for the quarter
ended August 31, 1995.
For the six months ended August 31, 1996, net earnings were $20.1
million compared to $29.8 million in the prior year. Earnings per share were
$0.41 compared to $0.60 for the six months ended August 31, 1995. Revenues for
the six months rose to $701.4 million from $643.8 million in the prior year.
Troy A. Peery, Jr., President and Chief Operating Officer, commented
that the results for the quarter were primarily the result of lackluster sales
from a continued soft retail furniture environment. He noted that the Company
continues to focus on improving merchandise selling margins and controlling
costs. He added that management is pleased with the progress made in these two
areas during the first two quarters of the current fiscal year.
Heilig-Meyers Company also announced today that it has entered into a
merger agreement with Rhodes, Inc. (NYSE: RHD) based in Atlanta, Georgia. Rhodes
is a publicly traded specialty furniture retailer with 106 stores in 15 states
located in the southern, midwestern and western portion of the United States.
Under the terms of the agreement, Rhodes shareholders will receive one share of
Heilig-Meyers stock for every two shares of Rhodes stock. Heilig-Myers will
issue approximately 4.6 million common shares in the transaction. The
transaction is currently structured to be a tax-free exchange of shares and
accounted for under purchase accounting rules. The merger is subject to certain
closing conditions, including the approval of the stockholders of Rhodes, Inc.
Mr. Peery noted that Heilig-Meyers and Rhodes are natural merger
partners. Heilig-Meyers serves credit-oriented customers primarily in small
towns while Rhodes targets credit-oriented customers in medium to mid-size
markets. Mr. Peery also added that the synergies and efficiencies created from
the combination will create opportunities that the two respective companies do
not have as separate operating entities. It is anticipated that the merger will
become effective late in Heilig-Meyers' fiscal year and thus have little, if
any, impact on current year results. Mr. Peery commented that the transaction is
expected to be accretive to earnings in the upcoming fiscal year, and added that
the Company plans to operate Rhodes as a separate division of Heilig-Meyers with
minimal interruption to Heilig-Meyers' current operations.
William C. DeRusha, Chairman and Chief Executive Officer, commented
that the Rhodes merger presents Heilig-Meyers with substantial opportunity. He
noted that Rhodes' format for larger markets broadens Heilig-Meyers' avenues for
growth utilizing its national presence and current infrastructure. Mr. DeRusha
also noted that the Company has recently signed a letter of intent to purchase
certain assets relating to 23 stores of Self Service Furniture Company,
headquartered in Spokane, Washington. Eight of these stores are in Washington,
six are in Oregon, four are in Idaho, three are in California and two are in
Montana. He added that these stores, along with the stores the Company has
announced it intends to purchase from McMahan's Furniture Company of Santa
Monica, California, are an excellent fit with the Company's current West Coast
operations. Closing on the Self Service Furniture Company purchase is
anticipated to take place in October.
Information contained in this release with respect to the expected
financial impact and other aspects of the proposed merger is forward-looking.
These statements reflect the Company's reasonable judgments with respect to
future events and are subject to risks and certainties that could cause actual
results to differ materially from those in the forward-looking statements. Such
factors include, but are not limited to, the customer's willingness, need and
financial ability to purchase home furnishings and related items, the Company's
ability to extend credit to its customers, the costs and effectiveness of
promotional activities as well as the Company's access to, and cost of, capital.
Other factors such as changes in tax laws, recessionary or expansive trends in
the Company's markets, inflation rates and regulations and laws which affect the
Company's ability to do business in its markets may also impact the outcome of
forward-looking statements.
As of August 31, 1996, Heilig-Meyers operated 755 stores in 26 states
and Puerto Rico.
HEILIG-MEYERS COMPANY
Consolidated Statements of Earnings
(Amounts in thousands except per share data)
Three Months Ended Six Months Ended
August 31 August 31
1996 1995 1996 1995
Revenues:
Sales $286,989 $270,356 $587,680 $536,324
Other income 56,534 54,505 113,757 107,508
Total revenues 343,523 324,861 701,437 643,832
Costs and expenses:
Costs of sales 191,205 179,853 384,920 349,458
Selling, general and
administrative 111,179 103,018 226,637 201,143
Interest 10,974 10,453 21,565 19,970
Provision for doubtful
accounts 18,080 13,859 37,023 26,373
Total costs and expenses 331,438 307,183 670,145 596,944
Earnings before provision
for income taxes 12,085 17,678 31,292 46,888
Provision for income taxes 4,338 6,362 11,175 17,107
Net earnings $7,747 $11,316 $20,117 $29,781
Net earnings per share of common stock:
Primary and fully diluted $0.16 $0.23 $0.41 $0.60
Weighted average shares:
Primary 49,675 49,850 49,289 49,742
Fully diluted 49,675 49,850 49,304 49,824
Cash dividends per share
of common stock $0.07 $0.07 $0.14 $0.14
Heilig-Meyers Company
Consolidated Balance Sheets
(Amounts in thousands except par value data)
August 31, February 29,
1996 1996
ASSETS
Current assets:
Cash $ 14,080 $ 16,017
Accounts receivable, net 558,195 518,969
Other receivables 16,042 13,638
Inventories 310,067 293,191
Other 54,590 53,501
Total current assets 952,974 895,316
Property and equipment, net 240,226 216,059
Excess costs over net assets acquired, net 187,008 177,585
$1,380,208 $1,288,960
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 75,000 $190,000
Long-term debt due within one year 99,245 17,812
Accounts payable 82,022 87,739
Accrued expenses 85,333 71,916
Total current liabilities 341,600 367,467
Long-term debt 454,761 352,631
Deferred income taxes 50,741 49,879
Stockholders' equity:
Preferred stock, $10 par value --- ---
Common stock, $2 par value 97,245 97,143
Capital in excess of par value 121,478 120,769
Retained earnings 314,383 301,071
Total stockholders' equity 533,106 518,983
$1,380,208 $1,288,960