FILED PURSUANT TO RULE 424B5
FILE NO. 333-07753
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JULY 24, 1996
$100,000,000
MACSAVER FINANCIAL SERVICES, INC.
7.40% NOTES DUE FEBRUARY 15, 2002
[Heilig-Meyers Logo Here]
GUARANTEED AS TO PAYMENT
OF PRINCIPAL AND INTEREST BY
HEILIG-MEYERS COMPANY
------------------------
The Notes are being offered by MacSaver Financial Services, Inc. Interest
on the Notes is payable on February 15 and August 15 of each year, commencing
August 15, 1997. The Notes are not redeemable prior to maturity and do not
provide for any sinking fund.
The Notes will be issued in fully registered, book-entry form in
denominations of $1,000 and integral multiples thereof. The Notes will be
represented by one or more global notes (the "Global Notes") registered in the
name of a nominee of The Depository Trust Company ("DTC"). Beneficial interests
in the Notes will be shown on, and transfers thereof will be effected only
through, records maintained by DTC and its participants. Except as described
herein, Notes in certificated form will not be issued. See "Description of
Notes."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT(2) COMPANY(1)(3)
-------------------- -------------------- ----------------
Per Note......... 99.832% 0.875% 98.957%
Total............ $99,832,000 $875,000 $98,957,000
- ---------------
(1) Plus accrued interest, if any, from February 15, 1997.
(2) MacSaver Financial Services, Inc. and Heilig-Meyers Company have each agreed
to indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933.
(3) Before deducting estimated expenses of $120,000 payable by MacSaver
Financial Services, Inc.
------------------------
The Notes offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that the Global
Notes will be ready for delivery in New York, New York on or about February 25,
1997, against payment therefor in immediately available funds.
GOLDMAN, SACHS & CO.
NATIONSBANC CAPITAL MARKETS, INC.
SALOMON BROTHERS INC
------------------------
The date of this Prospectus Supplement is February 20, 1997.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT
APPROVED OR DISAPPROVED THIS OFFERING NOR HAS THE COMMISSIONER PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
------------------------
THE ISSUER
MacSaver Financial Services, Inc. ("MacSaver") is a Delaware corporation
and a wholly-owned subsidiary of Heilig-Meyers Company ("Heilig-Meyers"). The
principal business of MacSaver is to obtain financing for the operations of
Heilig-Meyers and its other subsidiaries. In addition, MacSaver generally
acquires and holds the aggregate principal amount of installment credit accounts
generated by Heilig-Meyers' operating subsidiaries. The executive offices of
MacSaver are located at 2 Reads Way, Suite 224, New Castle, Delaware 19720. The
telephone number is (302) 325-3841.
HEILIG-MEYERS COMPANY
Heilig-Meyers is the nation's largest publicly held specialty retailer of
home furnishings, with 795 Heilig-Meyers and 105 Rhodes stores in 32 states as
of January 31, 1997. Heilig-Meyers also operated 32 Berrios retail furniture
stores in Puerto Rico as of January 31, 1997. Heilig-Meyers' executive offices
are located at 2235 Staples Mill Road, Richmond, Virginia 23230. The telephone
number is (804) 359-9171.
USE OF PROCEEDS
MacSaver intends to use the net proceeds from the sale of the Notes to
repay a portion of MacSaver's short-term bank debt having a weighted average
interest rate of 5.77% and a weighted average maturity of 8 days as of February
20, 1997.
RECENT DEVELOPMENTS
On December 31, 1996, Rhodes, Inc. ("Rhodes"), a Georgia corporation, one
of the largest specialty furniture retailers in the United States, became a
wholly-owned subsidiary of Heilig-Meyers. Rhodes will be operated as a separate
division of Heilig-Meyers and approximately 4.6 million shares of Heilig-Meyers
common stock will be issued to former Rhodes' shareholders in connection with
this transaction. As of January 31, 1997, Rhodes operated 105 stores in 15
southern, midwestern and western states and 11 associated regional distribution
centers. While Rhodes' stores are primarily located in metropolitan areas,
Heilig-Meyers plans to continue its strategy of locating stores primarily in
small towns and rural markets. Including the Rhodes stores, approximately 75% of
Heilig-Meyers' stores are located in towns with populations under 50,000 and
more than 25 miles from a metropolitan market as of January 31, 1997.
On February 18, 1997, Heilig-Meyers acquired certain assets relating to 10
stores operating in central Texas under the name "The RoomStore." The RoomStore
operates under a "rooms concept," displaying and selling furniture in complete
room packages. Heilig-Meyers plans to maintain The RoomStore name and continue
to operate these stores under this format.
S-2
CAPITALIZATION
The following table sets forth the capitalization of Heilig-Meyers at
November 30, 1996, and as adjusted to give effect to the application of
estimated net proceeds of $100,000,000, prior to deduction of underwriters'
compensation and expenses, from the sale of the Notes offered hereby.
NOVEMBER 30, 1996
------------------------
AS
ACTUAL ADJUSTED
---------- ----------
(UNAUDITED, $ IN THOUSANDS)
Cash........................................................................................... $ 9,858 $ 9,858
---------- ----------
---------- ----------
Short-term debt:
Notes payable................................................................................ $ 153,750 $ 53,750
Long-term debt due within one year........................................................... 99,246 99,246
---------- ----------
Total short-term debt..................................................................... 252,996 152,996
Long-term debt................................................................................. 448,531 548,531
---------- ----------
Total debt................................................................................ 701,527 701,527
---------- ----------
Stockholders' equity:
Preferred stock, $10 par value; authorized shares, 3,000,000; outstanding shares, none.......
Common stock, $2 par value; authorized shares, 250,000,000; outstanding shares, 48,622,771... 97,246 97,246
Capital in excess of par value............................................................... 121,505 121,505
Retained earnings............................................................................ 320,404 320,404
---------- ----------
Total stockholders' equity................................................................ 539,155 539,155
---------- ----------
Total capitalization.................................................................... $1,240,682 $1,240,682
---------- ----------
---------- ----------
S-3
SELECTED CONSOLIDATED FINANCIAL INFORMATION OF HEILIG-MEYERS
The selected consolidated financial information set forth below is
qualified in its entirety by and should be read in conjunction with the audited
consolidated financial statements and notes thereto, and the unaudited
consolidated financial statements and the notes thereto for the nine month
period ending November 30, 1996, in each case included in the documents
incorporated by reference into the Prospectus accompanying this Prospectus
Supplement. The selected financial data for the five years ended February
29(28), 1996 are derived from the consolidated financial statements of
Heilig-Meyers which have been audited by Deloitte & Touche LLP, independent
certified public accountants. See "Experts."
SUMMARY FINANCIAL INFORMATION OF HEILIG-MEYERS
NINE MONTHS
ENDED NOVEMBER
30, (UNAUDITED) YEAR ENDED FEBRUARY 28/29,
---------------- ----------------------------------------------
1996 1995 1996 1995 1994 1993 1992
------ ------ ------ ------ ------ ------ ------
($ IN MILLIONS, EXCEPT PERCENTAGES AND RATIOS)
Consolidated Statement of Earnings Data
Revenues
Sales............................................. $ 939 $ 854 $1,138 $ 956 $ 724 $ 550 $ 437
Other income...................................... 176 165 221 196 140 108 83
------ ------ ------ ------ ------ ------ ------
Total revenues................................. 1,115 1,019 1,359 1,152 864 658 520
Costs and expenses
Costs of sales.................................... 613 559 752 618 460 351 277
S,G&A............................................. 363 324 436 350 260 200 160
Interest.......................................... 33 30 41 33 24 23 21
Provision for doubtful accounts................... 60 47 65 45 32 24 20
------ ------ ------ ------ ------ ------ ------
Total costs and expenses....................... 1,069 960 1,294 1,046 776 598 478
------ ------ ------ ------ ------ ------ ------
Earnings before income taxes........................ 46 60 65 106 88 60 42
Provision for income taxes.......................... 16 21 23 39 33 22 15
------ ------ ------ ------ ------ ------ ------
Net earnings........................................ $ 30 $ 39 $ 42 $ 67 $ 55 $ 38 $ 27
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
Other Data
EBITDA.............................................. $ 103 $ 112 $ 135 $ 163 $ 132 $ 98 $ 76
Depreciation and amortization....................... 24 22 29 24 21 16 14
EBIT................................................ 79 90 106 139 111 82 62
Capital expenditures................................ 53 44 40 49 36 27 24
Acquisitions........................................ 53 12 52 132 75 26 39
Ratio of net debt to prior 12 months EBITDA......... 5.6x 4.0x 4.0x 3.2x 3.4x 3.4x 3.5x
Ratio of EBITDA to interest......................... 3.1 3.7 3.3 4.9 5.5 4.3 3.6
Ratio of earnings to fixed charges.................. 1.8 2.1 1.6 2.3 2.5 2.4 2.1
Total debt to total capitalization.................. 56.5% 53.2% 51.9% 52.3% 51.4% 52.6% 50.4%
Net debt to net capitalization...................... 56.2 52.7 51.2 51.8 51.1 52.3 50.1
Return on assets.................................... 3.6 4.5 5.4 7.8 7.7 7.5 7.1
Return on equity.................................... 5.6 7.6 8.2 14.5 14.9 13.3 12.0
Number of stores.................................... 827 714 716 647 570 425 374
Balance Sheet Data (at end of period)
Cash................................................ $ 10 $ $11 $ 16 $ 10 $ 6 $ 4 $ 3
Accounts receivable, net............................ 617 576 519 538 535 398 316
Inventory........................................... 346 299 293 254 184 132 120
Property, plant and equipment, net.................. 262 223 216 203 168 127 109
Total assets........................................ 1,517 1,343 1,289 1,209 1,050 766 637
Notes payable....................................... 154 220 190 140 173 113 29
Long-term debt (incl. current portion).............. 548 371 370 399 286 226 240
Total debt.......................................... 702 590 560 539 459 339 269
Total stockholders' equity.......................... 539 519 519 490 433 306 264
S-4
PRO FORMA COMBINED FINANCIAL DATA
The following unaudited pro forma combined statements of earnings for the
year ended February 29, 1996 and the nine months ended November 30, 1996 give
effect to (i) acquisitions of certain assets from various entities by
Heilig-Meyers and by Rhodes that have occurred and (ii) the acquisition of
Rhodes (the "Merger"). The pro forma information is based on the historical
financial statements of Heilig-Meyers and Rhodes giving effect to the Merger
under the purchase method of accounting and the assumptions and adjustments
described in the accompanying notes to the unaudited pro forma financial
statements. The following unaudited pro forma combined balance sheet gives
effect to the acquisition of Rhodes as if it had been completed as of November
30, 1996.
The unaudited pro forma statements have been prepared by the management of
Heilig-Meyers and Rhodes based upon the historical information included herein
and other financial information. These pro forma statements do not purport to be
indicative of the results of operations or financial position which would have
occurred had the acquisition been made at the beginning of the periods or as of
the date indicated or of the financial position or results of operations which
may be obtained in the future.
Heilig-Meyers will account for the transaction under the purchase method of
accounting. Accordingly, the cost to acquire Rhodes will be allocated to the
assets acquired and liabilities assumed according to their respective fair
values. The final allocation of the purchase price is dependent upon certain
valuations and other studies that have not progressed to a stage where there is
sufficient information to make such a complete allocation in the accompanying
pro forma statements. Accordingly, the purchase allocation adjustments are
preliminary and have been made solely for the purpose of preparing such pro
forma statements.
HEILIG-MEYERS COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE YEAR ENDED FEBRUARY 29, 1996
HEILIG-MEYERS RHODES
---------------------------------------- -----------------------------------------
OTHER OTHER PRO FORMA
HISTORICAL ACQUISITIONS (A) PRO FORMA HISTORICAL ACQUISITIONS (B) PRO FORMA ADJUSTMENTS (C)
---------- ---------------- ---------- ---------- ---------------- --------- ---------------
(IN THOUSANDS)
REVENUES:
Sales............... $1,138,506 $ 92,750 $1,231,256 $ 430,193 $ 76,015 $ 506,208
Other Income........ 220,843 7,900 228,743 5,822 5,822
---------- ---------------- ---------- ---------- ---------------- ---------
Total Revenues.... 1,359,349 100,650 1,459,999 436,015 76,015 512,030
---------- ---------------- ---------- ---------- ---------------- ---------
COSTS AND EXPENSES:
Costs of sales...... 752,317 62,400 814,717 225,953 46,161 272,114 55,450 (D)
(550)(E)
Selling, general and
administrative.... 436,361 32,400 468,761 190,445 29,678 220,123 (55,450)(D)
(2,325)(F)
2,300 (G)
Interest............ 40,767 4,950 45,717 6,898 1,884 8,782 (1,825)(H)
Non-recurring
charge............ 2,400 2,400
Provision for
doubtful
accounts.......... 65,379 1,600 66,979 167 61 228
---------- ---------------- ---------- ---------- ---------------- --------- ---------------
Total costs and
expenses........ 1,294,824 101,350 1,396,174 425,863 77,784 503,647 (2,400)
---------- ---------------- ---------- ---------- ---------------- --------- ---------------
EARNINGS (LOSS) BEFORE
INCOME TAXES........ 64,525 (700) 63,825 10,152 (1,769) 8,383 2,400
Provision for income
taxes............... 23,021 (250) 22,771 4,162 (726) 3,436 960 (I)
---------- ---------------- ---------- ---------- ---------------- --------- ---------------
NET EARNINGS (LOSS)... $ 41,504 $ (450) $ 41,054 $ 5,990 $ (1,043) $ 4,947 $ 1,440
---------- ---------------- ---------- ---------- ---------------- --------- ---------------
---------- ---------------- ---------- ---------- ---------------- --------- ---------------
PRO FORMA
COMBINED
----------
REVENUES:
Sales............... $1,737,464
Other Income........ 234,565
----------
Total Revenues.... 1,972,029
----------
COSTS AND EXPENSES:
Costs of sales...... 1,141,731
Selling, general and
administrative.... 633,409
Interest............ 52,674
Non-recurring
charge............ 2,400
Provision for
doubtful
accounts.......... 67,207
----------
Total costs and
expenses........ 1,897,421
----------
EARNINGS (LOSS) BEFORE
INCOME TAXES........ 74,608
Provision for income
taxes............... 27,167
----------
NET EARNINGS (LOSS)... $ 47,441
----------
----------
See notes to pro forma condensed consolidated statements of earnings.
S-5
HEILIG-MEYERS COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE NINE MONTHS ENDED NOVEMBER 30, 1996
HEILIG-MEYERS
------------------------------------------
OTHER RHODES PRO FORMA PRO FORMA
HISTORICAL ACQUISITIONS (A) PRO FORMA HISTORICAL ADJUSTMENTS (C) COMBINED
---------- ---------------- ---------- ---------- --------------- ----------
(IN THOUSANDS)
REVENUES:
Sales............................... $ 939,406 $ 44,900 $ 984,306 $ 375,258 $1,359,564
Other Income........................ 175,506 3,650 179,156 4,998 184,154
---------- ---------------- ---------- ---------- ----------
Total Revenues................... 1,114,912 48,550 1,163,462 380,256 1,543,718
---------- ---------------- ---------- ---------- ----------
COSTS AND EXPENSES:
Costs of sales...................... 613,032 30,550 643,582 206,191 55,750 (D) 905,023
(500)(E)
Selling, general and
administrative................... 362,445 15,500 377,945 176,317 (55,750)(D) 498,337
(1,900)(F)
1,725 (G)
Interest............................ 33,415 2,500 35,915 7,170 (1,660)(H) 41,425
Provision for doubtful accounts..... 60,027 700 60,727 330 61,057
---------- ---------------- ---------- ---------- --------------- ----------
Total costs and expenses......... 1,068,919 49,250 1,118,169 390,008 (2,335) 1,505,842
---------- ---------------- ---------- ---------- --------------- ----------
EARNINGS (LOSS) BEFORE INCOME TAXES... 45,993 (700) 45,293 (9,752) 2,335 37,876
Provision for income taxes............ 16,384 (250) 16,134 (3,998) 934(I) 13,070
---------- ---------------- ---------- ---------- --------------- ----------
NET EARNINGS (LOSS)................... $ 29,609 $ (450) $ 29,159 $ (5,754) $ 1,401 $ 24,806
---------- ---------------- ---------- ---------- --------------- ----------
---------- ---------------- ---------- ---------- --------------- ----------
See notes to pro forma condensed consolidated statements of earnings.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(A) Amounts reflect the pro forma results of other Heilig-Meyers
acquisitions that have occurred. These amounts include pro forma
adjustments to reflect the amortization of goodwill and additional
interest expense that would have been incurred had the acquisitions
been completed at the beginning of the period.
(B) Amounts reflect the acquisition of certain assets of Weberg by Rhodes
during fiscal year 1996. These amounts include pro forma adjustments
to reclassify certain revenue and expense amounts to conform to
Rhodes' presentation. Additionally, amounts reflect the amortization
of goodwill and additional interest expense that would have occurred
had the acquisition been completed at the beginning of the period.
(C) Heilig-Meyers expects to achieve certain synergies in relation to the
business combination. Such synergies are not included in the pro forma
adjustments.
(D) Rhodes occupancy, warehouse and delivery expenses have been
reclassified from selling, general and administrative expenses to cost
of sales to be consistent with the Heilig-Meyers presentation.
(E) Elimination of the effect of LIFO inventory on cost of goods sold.
(F) Elimination of amortization of Rhodes' historical goodwill and other
intangible assets.
(G) Amortization of estimated goodwill attributable to the transaction.
(H) To give effect to refinancing of certain Rhodes long term notes
payable.
(I) To tax effect pro forma adjustments at the statutory rate adjusted for
the tax treatment of goodwill.
S-6
HEILIG-MEYERS COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF NOVEMBER 30, 1996
HEILIG-MEYERS RHODES PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS (A) COMBINED
------------- ---------- --------------- ----------
(AMOUNTS IN THOUSANDS)
ASSETS:
Current assets:
Cash............................................................ $ 9,858 $ 508 $ 10,366
Accounts receivable, net........................................ 617,431 8,380 625,811
Inventories..................................................... 345,953 82,029 (12,168)(B) 415,814
Other........................................................... 69,316 11,983 14,383 (C) 95,682
------------- ---------- --------------- ----------
Total Current Assets......................................... 1,042,558 102,900 2,215 1,147,673
------------- ---------- --------------- ----------
Property, plant & equipment, net.................................. 261,843 83,862 345,705
Excess cost over net assets acquired
and other, net.................................................. 212,857 71,594 (61,373)(D) 306,550
92,111 (D)
(8,639)(E)
------------- ---------- --------------- ----------
$ 1,517,258 $ 258,356 $ 24,314 $1,799,928
------------- ---------- --------------- ----------
------------- ---------- --------------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Notes payable................................................... $ 153,750 $ 15,219 $ 168,969
Long-term debt due within one year.............................. 99,246 99,246
Accounts payable................................................ 121,598 51,753 173,351
Accrued expenses and other...................................... 103,373 42,997 18,000 (F) 166,020
1,650 (G)
------------- ---------- --------------- ----------
Total Current Liabilities.................................... 477,967 109,969 19,650 607,586
------------- ---------- --------------- ----------
Long-term debt/capital leases..................................... 448,531 76,992 525,523
Deferred income taxes............................................. 51,605 6,862 58,467
Stockholders' equity:
Common stock, at par............................................ 97,246 9,150 (H) 106,396
Capital in excess of par value.................................. 121,505 99,976 60,047 (H) 181,552
(99,976)(H)
Retained earnings (accumulated deficit)......................... 320,404 (35,443) 35,443 (H) 320,404
------------- ---------- --------------- ----------
Total stockholders' equity................................... 539,155 64,533 4,664 608,352
------------- ---------- --------------- ----------
$ 1,517,258 $ 258,356 $ 24,314 $1,799,928
------------- ---------- --------------- ----------
------------- ---------- --------------- ----------
See notes to pro forma condensed consolidated balance sheet.
S-7
HEILIG-MEYERS COMPANY
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(A) The final allocation of the purchase price is dependent upon certain
valuations and other studies that have not progressed to a stage where
there is sufficient information to make such a complete allocation in
the condensed consolidated pro forma balance sheet. Accordingly, the
purchase price allocation adjustments are preliminary and have been
made solely for the purpose of preparing such pro forma balance sheet.
(B) To adjust Rhodes' LIFO inventory to a FIFO average cost basis net of
allowances for obsolescence, shrinkage and damaged goods.
(C) To record the estimated deferred income tax effects of adjustments
described in (B) and (D) through (G) herein.
(D) To remove Rhodes' net goodwill balance of $61,373 and to reflect the
net effect of pro forma adjustments that impact the excess purchase
price and other direct expenses of the Merger over the fair value of
net assets acquired which is an estimated $92,111.
(E) To adjust certain Rhodes' intangibles and other assets to estimated
fair value.
(F) To record liability for direct out-of-pocket costs and contractual
obligations arising due to the change in control of Rhodes and
estimated incremental costs associated with severance and relocation.
(G) To accrue prepayment penalities related to long term debt obligations
of Rhodes.
(H) To record consideration for the Merger and remove Rhodes stockholders'
equity balances:
Heilig-Meyers shares to be issued in exchange for Rhodes common stock....................... 4,575
Market value per share of Heilig-Meyers Common Stock on announcement date................... $15.125
-------
Total value of stock exchange............................................................. $69,197
-------
-------
S-8
DESCRIPTION OF NOTES
THE FOLLOWING DESCRIPTION OF THE PARTICULAR TERMS OF THE NOTES OFFERED
HEREBY SUPPLEMENTS, AND TO THE EXTENT INCONSISTENT THEREWITH REPLACES, THE
DESCRIPTION OF THE GENERAL TERMS AND PROVISIONS OF DEBT SECURITIES SET FORTH IN
THE PROSPECTUS, TO WHICH DESCRIPTION REFERENCE IS HEREBY MADE. CAPITALIZED TERMS
NOT DEFINED IN THIS PROSPECTUS SUPPLEMENT HAVE THE MEANINGS ASSIGNED TO SUCH
TERMS IN THE PROSPECTUS.
The Notes are to be issued under an Indenture, dated as of August 1, 1996
(the "Indenture"), among MacSaver, Heilig-Meyers and First Union National Bank
of Virginia, as Trustee (the "Trustee"), which is more fully described in the
accompanying Prospectus under "Description of Debt Securities."
GENERAL
The Notes are a separate series of Debt Securities under the Indenture
described in the Prospectus and will be limited to $100,000,000 aggregate
principal amount. The Notes will be issued only in book-entry form in
denominations of $1,000 and integral multiples of $1,000, will bear interest
from February 15, 1997 at the annual rate set forth on the cover page of this
Prospectus Supplement, and will mature on February 15, 2002. Interest will be
payable semi-annually on February 15 and August 15 of each year, commencing
August 15, 1997, to the persons in whose names the Notes are registered at the
close of business on the February 1 or August 1 next preceding such interest
payment date. The Notes will not be redeemable prior to their stated maturity
date and will not be entitled to any sinking fund.
Principal of and interest on the Notes will be payable at the office or
agency of MacSaver to be maintained in the Borough of Manhattan, The City of New
York, initially at First Union National Bank, 40 Broad Street, 5th Floor, Suite
500, New York, New York 10004; provided, however, that at the option of MacSaver
payment of interest may be made by check mailed to the registered Holders of the
Notes.
RANKING
The Notes will be unsecured obligations of MacSaver, will rank equally and
ratably with other unsecured and unsubordinated indebtedness of MacSaver and
will be unconditionally guaranteed as to payment of principal and interest by
Heilig-Meyers. The Guarantees will be unsecured obligations of Heilig-Meyers and
will rank equally and ratably with all other unsecured and unsubordinated
indebtedness of Heilig-Meyers.
BOOK-ENTRY PROCEDURES
Upon issuance, all Notes will be represented by one or more fully
registered global notes (the "Global Notes"). Each such Global Note will be
deposited with, or on behalf of, The Depositary Trust Company, as Depositary
("DTC" or the "Depositary"), registered in the name of the Depositary or a
nominee thereof. Unless and until it is exchanged in whole or in part for Notes
in definitive form, no Global Note may be transferred except as a whole by the
Depositary to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary.
The Depositary has advised MacSaver as follows: the Depositary is a
limited-purpose trust company organized under the Banking Law of the State of
New York, a "banking organization" within the meaning of the Banking Law of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. The Depositary was created to hold securities of its participants
(defined below) and to facilitate the clearance and settlement transactions
among its participants in such securities through electronic book-entry changes
in accounts of the participants, thereby eliminating the need for physical
movement of securities certificates. The Depositary's participants include
securities brokers and dealers (including the Underwriters), banks, trust
companies, clearing corporations, and certain other organizations, some of whom
(and/or their representatives) own the Depositary. Access to the Depositary's
book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly.
Ownership of beneficial interests in the Notes will be limited to persons
that have accounts with the Depositary ("participants") or other persons that
may hold interests through participants. The Depositary has advised MacSaver
that upon the issuance of the Global Notes representing the Notes, the
Depositary will credit, on its book-entry registration and transfer system, the
participants' accounts with the respective principal amounts of the
S-9
Notes. Ownership of beneficial interests in such Global Notes will be shown on,
and the transfer of such ownership interests will be effected only through,
records maintained by the Depositary (with respect to interests of participants)
and on the records of participants (with respect to interests of persons holding
through participants). The laws of some states may require that certain
purchasers of securities take physical delivery of such securities in definitive
form. Such limits and such laws may impair the ability to own, transfer or
pledge beneficial interests in Global Notes.
So long as the Depositary, or its nominee, is the registered owner of a
Global Note, the Depositary or its nominee, as the case may be, will be
considered the sole owner or Holder of the Notes represented by such Global Note
for all purposes under the Indenture. Except as provided below, owners of
beneficial interests in a Global Note will not be entitled to have the Notes
represented by such Global Notes registered in their names, will not receive or
be entitled to receive physical delivery of the Notes in definitive form and
will not be considered the owners or Holders thereof under the Indenture.
Accordingly, each Person owning a beneficial interest in a Global Note must rely
on the procedures of the Depositary and, if such Person is not a participant, on
the procedures of the participant through which such person owns its interest,
to exercise any rights of a Holder under the Indenture. MacSaver understands
that under existing industry practices, in the event that MacSaver requests any
action of Holders or that an owner of a beneficial interest in such a Global
Note desires to give or take any action which a Holder is entitled to give or
take under the Indenture, the Depositary would authorize the participants
holding the relevant beneficial interests to give or take such action, and such
participants would authorize beneficial owners owning through such participants
to give or take such action or would otherwise act upon the instructions of
beneficial owners holding through them.
Payment of principal of, and interest on, Notes registered in the name of
the Depositary or its nominee will be made to the Depositary or its nominee, as
the case may be, as the Holder of the Global Notes representing such Notes. None
of MacSaver, the Trustee or any other agent of MacSaver or agent of the Trustee
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests or for
supervising or reviewing any records relating to such beneficial ownership
interests. The Depositary, upon receipt of any payment of principal or interest
in respect of a Global Note, will credit the accounts of the participants with
payment in amounts proportionate to their respective beneficial interests in
such Global Notes as shown on the records of the Depositary. Payments by
participants to owners of beneficial interests in a Global Note will be governed
by standing customer instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such participants.
If (x) the Depositary is at any time unwilling or unable to continue as
Depositary with respect to Global Notes or the Depositary ceases to be a
clearing agency registered under the Exchange Act, (y) MacSaver executes and
delivers to the Trustee a Company Order to the effect that the Global Notes
shall be transferable and exchangeable or (z) there shall have occurred and be
continuing an Event of Default or an event which after notice or lapse of time,
or both, would constitute an Event of Default with respect to the Notes, the
Global Notes will be transferable or exchangeable for Notes in definitive form
of like tenor in an equal aggregate principal amount. Such definitive Notes
shall be registered in such name or names as the Depositary shall instruct the
Trustee. It is expected that such instructions may be based upon directions
received by the Depositary from participants with respect to ownership of
beneficial interests in such Global Notes.
ADDITIONAL COVENANTS OF HEILIG-MEYERS
In addition to the covenants set forth in the Prospectus, the following
covenants will be applicable to the Notes.
LEVERAGE RATIO. Heilig-Meyers must maintain, as of the last day of each
fiscal year of Heilig-Meyers, a ratio of Consolidated Debt to Consolidated Total
Capital of not more than 0.65 to 1.00.
"Consolidated Debt" means the aggregate amount of all Debt of
Heilig-Meyers, MacSaver and the other Restricted Subsidiaries determined on a
consolidated basis in accordance with generally accepted accounting principles
consistently applied.
"Debt" means Indebtedness less all accounts payable and expenses incurred
in the ordinary course of business which would otherwise be included as
Indebtedness.
S-10
"Consolidated Total Capital" means the sum of Consolidated Debt plus the
aggregate amount of total stockholders' equity of Heilig-Meyers, MacSaver and
the other Restricted Subsidiaries determined on a consolidated basis in
accordance with generally accepted accounting principles consistently applied.
FIXED CHARGE COVERAGE RATIO. Heilig-Meyers may not, and may not permit any
Restricted Subsidiary to, issue, assume, guarantee, incur, create or otherwise
become liable in respect of any Debt unless the ratio of Cash Flow to Fixed
Charge, calculated for the immediately preceding period of four consecutive
fiscal quarters, after giving effect, on a pro forma basis as if incurred at the
beginning of such period, to such Debt and to any other Debt incurred since the
end of such period, would equal or exceed 1.15 to 1.00, except that
Heilig-Meyers or any Restricted Subsidiary may issue, assume, guarantee, incur,
create or otherwise become liable in respect of (i) Debt of a Restricted
Subsidiary payable to Heilig-Meyers or to a Restricted Subsidiary, (ii) Debt
arising under bank loan facilities existing on the date of the Indenture or
established after such date in accordance with the Indenture (as such facilities
may be increased, extended, renewed or otherwise amended, supplemented or
modified from time to time) (the aggregate principal amount of loans outstanding
or available under such facilities on January 31, 1997 was $495,000,000, which
amount may be increased in the future), (iii) Debt of any corporation or other
entity outstanding at the time such corporation or other entity became a
Restricted Subsidiary (and not incurred in contemplation thereof), (iv) Debt
incurred to finance the purchase, construction or other acquisition of assets if
such Debt could be secured by such assets in accordance with the Indenture (see
"RESTRICTIONS ON LIENS" in the Prospectus), (v) Attributable Debt otherwise
permitted under the Indenture (see "RESTRICTIONS ON SALE AND LEASEBACK
TRANSACTIONS" in the Prospectus), (vi) deferred payment obligations representing
the unpaid purchase price of property, assets or services or Debt arising under
any conditional sale or other title retention agreement, (vii) Debt not
otherwise permitted by clauses (i) through (vi) above in an aggregate
outstanding principal amount not to exceed $50,000,000 and (viii) Debt incurred
in connection with any extension, renewal, refinancing, replacement or refunding
(including successive extensions, renewals, refinancings, replacements or
refundings), in whole or in part, of any Indebtedness of Heilig-Meyers or any
Restricted Subsidiary (other than Indebtedness incurred pursuant to clause (vii)
above), provided that (A) the principal amount of such Debt does not exceed the
sum of the principal amount of the Indebtedness so extended, renewed,
refinanced, replaced or refunded plus all interest accrued thereon and all
related fees and expenses (including, without limitation, any payments made in
connection with the procurement of any required lender or similar consents), and
(B) for purposes of this clause (viii), Debt arising under bank loan facilities
may only be refinanced, replaced or refunded with other bank loan facilities or
with Debt that is subordinated to the Notes.
"Cash Flow" means, for any period, the sum of (i) the consolidated net
income of Heilig-Meyers, MacSaver and the other Restricted Subsidiaries for such
period plus (ii) Lease Expense for such period plus (iii) Interest Expense for
such period plus (iv) the aggregate amount deducted in determining such
consolidated net income in respect of income taxes, depreciation or
amortization.
"Lease Expense" means, for any period, the consolidated lease expense of
Heilig-Meyers, MacSaver and the other Restricted Subsidiaries for such period
(excluding any portion of lease expense in respect of capitalized leases).
"Interest Expense" means, for any period, the consolidated interest expense
of Heilig-Meyers, MacSaver and the other Restricted Subsidiaries for such period
(including, without limitation, the portion of any obligation under capitalized
leases allocable to interest expense in accordance with generally accepted
accounting principles).
"Fixed Charge" means, for any period, the sum of (i) Lease Expense for such
period plus (ii) Interest Expense for such period.
S-11
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
and the Pricing Agreement, MacSaver has agreed to sell to each of the
Underwriters named below, and each of such Underwriters has severally agreed to
purchase, the respective principal amounts of Notes set forth opposite its name
below:
PRINCIPAL
AMOUNT
UNDERWRITER OF NOTES
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Goldman, Sachs & Co............................................ $ 33,334,000
NationsBanc Capital Markets, Inc............................... 33,333,000
Salomon Brothers Inc........................................... 33,333,000
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Total........................................................ $100,000,000
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Under the terms and conditions of the Underwriting Agreement and the
Pricing Agreement, the Underwriters are committed to take and pay for all of the
Notes, if any are taken.
The Underwriters propose to offer the Notes in part directly to the public
at the initial public offering price set forth on the cover page of this
Prospectus Supplement and in part to certain securities dealers at such price
less a concession of 0.50% of the principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, a concession not to exceed
0.25% of the principal amount of the Notes to certain brokers and dealers. After
the Notes are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the Underwriters.
The Notes are a new issue of securities with no established trading market.
MacSaver and Heilig-Meyers have been advised by the Underwriters that they
intend to make markets in the Notes but are not obligated to do so and may
discontinue market making with respect to the Notes at any time without notice.
No assurance can be given as to the liquidity of the trading market for the
Notes.
Each of Heilig-Meyers and MacSaver has agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
From time to time Heilig-Meyers has retained each of the Underwriters, and
MacSaver has retained certain of the Underwriters, to perform various investment
banking and financial advisory services, for which they have received customary
fees. Charles A. Davis, a director of Heilig-Meyers, is a limited partner of
Goldman, Sachs & Co.
NationsBanc Capital Markets, Inc. is an affiliate of NationsBank, N.A., an
agent and lender under a credit agreement with MacSaver and Heilig-Meyers.
MacSaver intends to use more than 10% of the net proceeds from the sale of the
Notes to repay indebtedness owed by it to NationsBank, N.A. Accordingly, the
offering of the Notes is being made in compliance with the requirements of Rule
2710(c)(8) of the National Association of Securities Dealers, Inc.
VALIDITY OF SECURITIES
The validity of the Notes and related Guarantees offered hereby will be
passed upon for MacSaver and Heilig-Meyers by McGuire, Woods, Battle & Boothe,
L.L.P., One James Center, Richmond, Virginia 23219, and for the Underwriters by
Sullivan & Cromwell, 1701 Pennsylvania Avenue, Washington, D.C. 20006. Sullivan
& Cromwell will rely as to all matters governed by Virginia law on the opinion
of McGuire, Woods, Battle & Boothe, L.L.P.
S-12
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF MACSAVER OR
HEILIG-MEYERS SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
----
The Issuer.......................................... S-2
Heilig-Meyers Company............................... S-2
Use of Proceeds..................................... S-2
Recent Developments................................. S-2
Capitalization...................................... S-3
Selected Consolidated Financial Information of
Heilig-Meyers..................................... S-4
Pro Forma Combined Financial Data................... S-5
Description of Notes................................ S-9
Underwriting........................................ S-12
Validity of Securities.............................. S-12
PROSPECTUS
Available Information............................... 2
Incorporation of Certain Documents by Reference..... 2
Heilig-Meyers Company............................... 3
Use of Proceeds..................................... 5
Ratio of Earnings to Fixed Charges.................. 5
Description of Debt Securities...................... 5
Description of Common Stock......................... 16
Description of Warrants............................. 17
United States Taxation.............................. 19
Plan of Distribution................................ 26
Validity of Securities.............................. 27
Experts............................................. 27
$100,000,000
MACSAVER FINANCIAL
SERVICES, INC.
7.40% NOTES DUE FEBRUARY 15, 2002
GUARANTEED AS TO PAYMENT
OF PRINCIPAL AND INTEREST BY
HEILIG-MEYERS
COMPANY
------------------------
[Heilig-Meyers logo here]
------------------------
GOLDMAN, SACHS & CO.
NATIONSBANC CAPITAL MARKETS, INC.
SALOMON BROTHERS INC
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