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): November
17, 1995
MELVILLE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
New York 1-1011 04-1611460
(State or Other (Commission File Number) (IRS Employer
Jurisdiction Identification
of Incorporation) No.)
One Theall Road
Rye, New York 10580
(Address of Principal Executive (Zip Code)
Offices)
Registrant's telephone number, including area code:
(914) 925-4000
Not Applicable
(Former Name or Former Address, if Changed
Since Last Report)
This is page 1 of ___ pages
Exhibit Index appears on page ___
Item 2. Acquisition or Disposition of Assets.
On November 17, 1995, the Registrant consummated the closing
(the "Closing") of the sale to The TJX Companies, Inc., a Delaware corporation
("TJX"), of all of the capital stock (the "Shares") of Marshalls of Roseville,
Minn., Inc. (the "Company"), the Registrant's holding company for its
Marshalls division, pursuant to the Stock Purchase Agreement (the "Stock
Purchase Agreement") between the Registrant and TJX dated as of October 14,
1995.
The purchase price paid by TJX at the Closing for the Shares
was $375,000,000 in cash plus convertible preferred stock (the "Preferred
Stock") that has an aggregate liquidation preference equal to $175,000,000.
The preferred stock will be issued in two series: (i) $25,000,000 of Series D
Cumulative Convertible Preferred Stock of TJX (the "Series D Preferred
Stock"), which is automatically convertible into shares of TJX's common stock
("Common Stock") on the first anniversary of its issuance if not earlier
redeemed for cash or converted into such Common Stock in accordance with the
terms thereof, and (ii) $150,000,000 of Series E Cumulative Convertible
Preferred Stock of TJX (the "Series E Preferred Stock"), which is
automatically convertible into Common Stock on the third anniversary of its
issuance if not earlier converted into such Common Stock in accordance with
the terms thereof. The Preferred Stock will be convertible, in the aggregate,
into between approximately 9.4 million and 11.7 million shares of Common
Stock, depending on the market price of such Common Stock during the ten
trading days prior to the time of conversion. The cash portion of the
purchase price is subject to adjustment following the Closing in accordance
with the Stock Purchase Agreement.
At the Closing, the Registrant and TJX entered into a
Standstill and Registration Rights Agreement (the "Standstill and Registration
Rights Agreement") pursuant to which the Registrant agreed (i) not to acquire
any voting securities of TJX until such time as voting securities of TJX held
by the Registrant represent less than 3 percent of the total combined voting
power of all of TJX's outstanding voting securities and (ii) to vote all of
TJX's voting securities held by the Registrant in the manner recommended by
TJX's Board of Directors or, if the agreement to so vote shall be prohibited
or invalid, then to vote such voting securities in the same proportion as the
votes cast by or on behalf of the other holders of TJX's voting securities.
The Standstill and Registration Rights Agreement also provides
that TJX will register, under the Securities Act of 1933, the Series E
Preferred Stock held by the Registrant, or the shares of Common Stock received
by the Registrant upon conversion or redemption of Series D Preferred Stock or
Series E Preferred Stock, on not more than two separate occasions on demand
and on not more than three separate occasions in connection with a registration
of Common Stock by TJX.
On November 20, 1995, the Registrant issued a press release
announcing, among other things, the consummation of the Closing. The
information contained in the press release is incorporated herein by
reference. The press release is attached hereto as Exhibit 99.1.
The foregoing description is qualified in its entirety by
reference to the Stock Purchase Agreement, a copy of which is attached hereto
as Exhibit 2.1, as amended by Amendment Number One, a copy of which is
attached hereto as Exhibit 2.2; the Standstill and Registration Rights
Agreement, a copy of which is attached hereto as Exhibit 10.1; the Preferred
Stock Subscription Agreement entered into by the Registrant and TJX at
Closing, a copy of which is attached hereto as Exhibit 10.2; and the
Certificates of Designations, Preferences and Rights for the Series D
Preferred Stock and the Series E Preferred Stock, respectively, copies of
which are attached hereto as Exhibits 99.2 and 99.3, respectively.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(b) Pro Forma Financial Information.
Set forth hereunder is the pro forma financial information
required to be furnished by the Registrant with respect to the transaction
described in Item 2 above.
UNAUDITED PRO FORMA
STATEMENT OF EARNINGS
FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1994
($ IN 000'S)
Continuing Operations
Historical Pro Forma Adjustments Pro Forma
Before Pro Forma ----------------------- Continuing
The Company Marshalls Adjustments Debit Credit Operations
----------- --------- --------------------- --------- ----------- ----------
Net Sales $11,285,561 $2,774,851 $8,510,710 $8,510,710
Cost of Goods Sold, Buying
and Warehousing Costs 7,252,568 1,827,239 5,425,329 5,425,329
----------- ---------- ---------- -------- ------- ----------
4,032,993 947,612 3,085,381 3,085,381
Store Operating, Selling, General
and Administrative Expenses 3,215,985 745,081 2,470,904 6,000 (a) 2,464,904
Depreciation and Amortization 206,266 51,876 154,390 154,390
----------- ---------- ---------- -------- ------- ----------
Operating Profit 610,742 150,655 460,087 6,000 466,087
Interest Expense, Net 32,636 1,778 30,858 1,166 (b) 26,696 (c) 5,328
----------- ---------- ---------- -------- ------- ----------
Earnings Before Income Taxes
and Minority Interests 578,106 148,877 429,229 (1,166) 32,696 460,759
Income Tax Provision 218,741 56,862 161,879 13,538 (d) 175,417
----------- ---------- ---------- -------- ------- ----------
Earnings Before Minority Interests 359,365 92,015 267,350 (14,704) 32,696 285,342
Minority Interests in Net Earnings 51,895 51,895 51,895
----------- ---------- ---------- -------- ------- ----------
Net Earnings $307,470 $92,015 $215,455 ($14,704) $32,696 $233,447
=========== ========== ========== ======== ======= ==========
Net Earnings per Share of Common Stock $2.75 $2.06
===== =====
See accompanying notes to the unaudited pro forma financial statements.
UNAUDITED PRO FORMA
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1995
($ IN 000'S)
Continuing Operations
Historical Pro Forma Adjustments Pro Forma
Before Pro Forma ----------------------- Continuing
The Company Marshalls Adjustments Debit Credit Operations
----------- --------- --------------------- --------- ----------- ----------
Net Sales $8,076,219 $1,852,244 $6,223,975 $6,223,975
Cost of Goods Sold, Buying
and Warehousing Costs 5,374,255 1,310,400 4,063,855 4,063,855
----------- ---------- ---------- -------- ------- ----------
2,701,964 541,844 2,160,120 2,160,120
Store Operating, Selling, General
and Administrative Expenses 2,456,236 558,202 1,898,034 4,500 (a) 1,893,534
Depreciation and Amortization 179,456 45,430 134,026 134,026
----------- ---------- ---------- -------- ------- ----------
Operating Profit (Loss) 66,272 (61,788) 128,060 4,500 132,560
Interest Expense, Net 38,231 6,030 32,201 1,372 (b) 24,187 (c) 9,386
----------- ---------- ---------- -------- ------- ----------
Earnings (Loss) Before Income
Taxes and Minority Interests 28,041 (67,818) 95,859 (1,372) 28,687 123,174
Income Tax Provision (Benefit) 2,622 (27,053) 29,675 11,601 (d) 41,276
----------- ---------- ---------- -------- ------- ----------
Earnings (Loss) Before Minority
Interests 25,419 (40,765) 66,184 (12,973) 28,687 81,898
Minority Interests in Net Earnings 23,265 23,265 23,265
----------- ---------- ---------- -------- ------- ----------
Net Earnings (Loss) $2,154 ($40,765) $42,919 ($12,973) $28,687 $58,633
=========== ========== ========== ======== ======= ==========
Net (Loss) Earnings per Share of
Common Stock ($0.10) $0.44
====== =====
See accompanying notes to the unaudited pro forma financial statements.
UNAUDITED PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1995
($ IN 000'S)
Continuing Operations
Historical Pro Forma Adjustments Pro Forma
Before Pro Forma ----------------------- Continuing
The Company Marshalls Adjustments Debit Credit Operations
----------- --------- --------------------- --------- ----------- ----------
ASSETS
Current Assets:
Cash and Cash Equivalents $80,062 $0 $80,062 $341,000 (a) $382,641 (c) $37,322
4,500 (b) 5,599 (f)
Accounts Receivable, Net 232,623 30,081 202,542 9,187 (e) 211,729
Inventories 2,584,228 606,594 1,977,634 1,977,634
Prepaid Expenses 170,419 9,906 160,513 13,829 (f) 146,684
---------- ---------- ---------- -------- -------- ----------
Total Current Assets 3,067,332 646,581 2,420,751 354,687 402,069 2,373,369
Property, Plant, Equipment, Leasehold
Improvements and Leased Property
Under Capital Leases, Net 1,634,139 444,359 1,189,780 1,189,780
Investment in TJX 0 0 0 175,000 (a) 175,000
Goodwill, Net 438,404 28,652 409,752 409,752
Deferred Charges and Other Assets 114,904 16,646 98,258 98,258
---------- ---------- ---------- -------- -------- ----------
TOTAL ASSETS $5,254,779 $1,136,238 $4,118,541 $529,687 $402,069 $4,246,159
========== ========== ========== ======== ======== ==========
LIABILITIES & EQUITY
Current Liabilities:
Accounts Payable $875,391 $243,688 $631,703 $631,703
Accrued Expenses 542,891 80,643 462,248 11,561 (a) 1,372 (d) 457,944
5,885 (f)
Notes Payable 940,000 101,485 838,515 397,641 (c) 440,874
Other current liabilities 8,945 2,461 6,484 69,523 (a) (76,751)
13,712 (f)
Total Current Liabilities 2,367,227 428,277 1,938,950 492,437 7,257 1,453,770
---------- ---------- ---------- -------- -------- ----------
Long-Term Debt 332,056 0 332,056 332,056
Deferred Income Taxes 87,395 0 87,395 87,395
Other Long-Term Liabilities 136,997 1,875 135,122 8,000 (a) 143,122
Minority Interests in Subsidiaries 79,851 0 79,851 79,851
Redeemable Preferred Stock
Series B, $4.00 Dividend 1,330 0 1,330 1,330
Shareholders' Equity:
Series One ESOP Convertible
Preference Stock, $3.90 Dividend 336,424 0 336,424 18,805 (d) 317,619
Guaranteed ESOP Obligation (321,096) 0 (321,096) (321,096)
Common Stock 111,646 0 111,646 111,646
Capital Surplus 54,708 0 54,708 1,559 (d) 56,267
Retained Earnings 2,376,491 (40,765) 2,417,256 157,767 (a) 4,500 (b) 2,275,203
1,372 (d) 15,000 (c)
11,601 (f) 9,187 (e)
Cumulative Translation Adjustment (2,305) 0 (2,305) (2,305)
Common Stock in Treasury, at Cost (305,945) 0 (305,945) 17,246 (d) (288,699)
Subsidiary Equity 0 746,851 (746,851) 746,851 (a) 0
---------- ---------- ---------- -------- -------- ----------
Total Shareholders' Equity 2,249,923 706,086 1,543,837 189,545 794,343 2,148,635
---------- ---------- ---------- -------- -------- ----------
TOTAL LIABILITIES & EQUITY $5,254,779 $1,136,238 $4,118,541 $681,982 $809,600 $4,246,159
========== ========== ========== ======== ======== ==========
See accompanying notes to the unaudited pro forma financial statements.
Notes to Pro Forma Continuing Operations Financial Statements
Note 1 Background
On November 17, 1995, the Company completed the sale of its
Marshalls division ("Marshalls") to the TJX Companies, Inc. (the
"Purchaser") for total proceeds of $550 million, consisting of
$375 million in cash and $175 million of convertible preferred
stock.
Note 2 Basis of Presentation
The unaudited Pro Forma Continuing Operations financial
information is based upon the historical financial statements of
the Company, adjusted to exclude Marshalls, as of September 30,
1995 and for the year ended December 31, 1994 and for the nine
months ended September 30, 1995, and should be read in conjunction
with the historical consolidated financial statements and notes
related thereto, for the periods indicated.
Note 3 Unaudited Pro Forma Continuing Operations Balance Sheet Adjustments
The following assets and (liabilities) formerly recorded on the
books of Marshalls, were retained by the Company after the date of
disposition:
Miscellaneous accounts receivable $ 17,000
Miscellaneous other assets 3,600
Total Assets $ 20,600
Income tax liabilities $( 39,700)
Self insurance reserves (21,400)
Restructuring reserves (21,100)
Net deferred income tax liabilities (19,200)
Employee benefit accruals (8,400)
Miscellaneous other liabilities (7,800)
Total Liabilities $(117,600)
Pro forma balance sheet adjustments are as follows:
(a) To record the sales proceeds, net of payments for
contractual obligations, and the loss on disposition.
(b) To reflect anticipated reductions in corporate overhead.
(c) To reduce short term borrowings and related interest expense
to reflect the impact of the sale.
(d) To record the conversion of 351,819 shares of Series One
ESOP Preference Stock to common stock and to record the
increase in employer contribution expense caused by the
conversion. the purchaser.
(f) To adjust income tax liabilities to reflect the sale as of
January 1, 1995.
Note 4 Unaudited Pro Forma Continuing Operations Statement of Operations
Adjustments
(a) To record anticipated reductions in corporate overhead.
(b) To record incremental ESOP costs after conversion of 351,819
shares at January 1, 1995 and 299,075 shares at January 1,
1994, respectively, of Series One ESOP Preference Stock.
(c) To adjust interest expense to reflect the reduction in short
term borrowings.
(d) To record the net change in the provision for income taxes
based upon the results of operations as set forth in the pro
forma financial statements.
(c) Exhibits.
2.1 Stock Purchase Agreement, dated as of October 14, 1995,
by and between Melville Corporation and The TJX Companies, Inc.
2.2 Amendment Number One to Stock Purchase Agreement, dated as of
November 17, 1995, by and between Melville Corporation and The
TJX Companies, Inc.
10.1 Standstill and Registration Rights Agreement, dated as of
November 17, 1995, by and between Melville Corporation and the
TJX Companies, Inc.
10.2 Preferred Stock Subscription Agreement, dated as of
November 17, 1995, by and between Melville Corporation and The
TJX Companies, Inc.
99.1 Press Release of Melville Corporation dated November 20, 1995.
99.2 Certificate of Designations, Preferences and Rights of Series D
Cumulative Convertible Preferred Stock of the TJX Companies,
Inc.
99.3 Certificate of Designations, Preferences and Rights of Series E
Cumulative Convertible Preferred Stock of the TJX Companies,
Inc.
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.
MELVILLE CORPORATION
Dated: December 4, 1995 By /s/ Gary Crittenden
Gary Crittenden
Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX
Sequential
Page
Exhibit No. Description of Exhibit No.
- ----------- ---------------------- ----------
2.1 Stock Purchase Agreement, dated as
of October 14, 1995, by and between
Melville Corporation and The TJX
Companies, Inc.
2.2 Amendment Number One to Stock Purchase
Agreement, dated as of November 17,
1995, by and between Melville Corporation
and The TJX Companies, Inc.
10.1 Standstill and Registration Rights
Agreement, dated as of November 17, 1995,
by and between Melville Corporation and
the TJX Companies, Inc.
10.2 Preferred Stock Subscription Agreement,
dated as of November 17, 1995, by and
between Melville Corporation and The
TJX Companies, Inc.
99.1 Press Release of Melville Corporation
dated November 20, 1995.
99.2 Certificate of Designations, Preferences,
and Rights of Series D Cumulative
Convertible Preferred Stock of The TJX
Companies, Inc.
99.3 Certificate of Designations, Preferences
and Rights of Series E Cumulative
Convertible Preferred Stock of the TJX
Companies, Inc.