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 April 18, 1997
TOWN & COUNTRY CORPORATION
(Exact name of Registrant as specified in its charter)
Commission File Number: 0-14394
Massachusetts 04-2384321
(State or other jurisdiction of incorporation (I.R.S. Employer Identification
or organization) Number)
25 Union Street, Chelsea, Massachusetts 02150
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 884-8500
Form 8-K
Page 1
ITEM 2. Acquisition or Disposition of Assets
On April 18, 1997, the Company sold certain assets of its Gold Lance subsidiary
to Jostens, Inc.
Prior to or at closing, on April 18, 1997, the Company received cash equal to
the purchase price of approximately $10.8 million, less $2.5 million the payment
of which is contingent on the operating performance of Gold Lance during a
transition period between April 18, 1997 and July 31, 1997.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits
Page(s)
(b) Pro Forma Financial Information 2 - 7
(c) Exhibits
2.1 Asset Purchase Agreement by and among Jostens, Inc.,
Gold Lance, Inc., and Town & Country Corporation dated
as of April 18, 1997.
2.2 Transition Agreement by and among Jostens, Inc.,
Gold Lance, Inc., and Town & Country Corporation dated
as of April 18, 1997.
Form 8-K
Page 2
Pro Forma Condensed Consolidated Financial Statements
The following pro forma condensed consolidated balance sheet and condensed
consolidated statements of operations of the Company present the effects of the
sale, as if, for balance sheet purposes, the transaction had taken place on
November 24, 1996, and for statement of operations purposes, the transaction had
taken place February 27, 1995 for the year ended February 25, 1996 and February
26, 1996 for the nine month period ended November 24, 1996. The pro forma
financial statements do not purport to represent what the Company's financial
position or results of operations would actually have been if such transaction
in fact had occurred on such date or at the beginning of the periods indicated
or to project the Company's financial position or results of operations for any
future date or periods.
The pro forma condensed consolidated balance sheet and statements of operations
and accompanying notes should be read in conjunction with the Company's
Consolidated Financial Statements and related notes thereto for the year ended
February 25, 1996 included in the Company's annual report on Form 10-K and in
conjunction with the Company's Consolidated Financial Statements and related
notes thereto for the nine month period ended November 24, 1996, included in the
Company's quarterly report on Form 10-Q.
Pro forma consolidated results include the results of the Balfour subsidiary the
assets of which were sold on 12/16/96. These pro forma statements make no
adjustment related to the Balfour sale. The Company's Form 10-Q for the period
ended November 24, 1996 includes pro forma condensed consolidated balance sheet
and condensed consolidated statements of operations for the Company and the sale
of the Balfour assets.
In the Pro Forma Condensed Consolidated Statements of Operations, the Gold Lance
subsidiary's results of operations are being deducted from the Company's
consolidated results. In addition, adjustments are included for the benefit
derived from the use of proceeds.
In the Pro Forma Condensed Consolidated Balance Sheet, the Gold Lance column
represents the sale of certain Gold Lance assets while the adjustments represent
the pro forma use of proceeds and the change in the carrying value of the real
estate.
TOWN & COUNTRY CORPORATION Form 8-K
Page 3
Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended November 24, 1996 (1)(3)
Total Consolidated
Total Consolidated Gold Lance Adjustments Excluding Gold Lance
-------------- ----------- ----------- -------------
NET SALES 181,984,187 (10,342,943) -- 171,641,244
COST OF SALES 123,536,397 (6,856,837) 116,679,560
INVENTORY CHARGE 35,521,000 -- -- 35,521,000
-------------- ----------- ----------- -------------
Gross Profit 22,926,790 (3,486,106) -- 19,440,684
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 61,330,299 (4,200,242) -- 57,130,057
-------------- ----------- ----------- -------------
Income (loss) from operations (38,403,509) 714,136 -- (37,689,373)
INTEREST EXPENSE, net (9,168,769) (15,205) 558,000 (2) (8,625,974)
GAIN (LOSS) ON SALE OF REAL ESTATE (742,330) -- -- (742,330)
MINORITY INTEREST 49,311 -- -- 49,311
-------------- ----------- ----------- -------------
Income (loss) before provision for (48,265,297) 698,931 558,000 (47,008,366)
income taxes
PROVISION FOR INCOME TAXES 200,025 -- -- 200,025
-------------- ----------- ----------- -------------
Net income (loss) (48,465,322) 698,931 558,000 (47,208,391)
ACCRETION OF DISCOUNT AND DIVIDENDS
ON PREFERRED STOCKS 575,050 -- -- 575,050
-------------- ----------- ----------- -------------
Income (loss) attributable to (49,040,372) 698,931 558,000 (47,783,441)
common stockholders ============== =========== =========== =============
INCOME (LOSS) PER COMMON SHARE (1.94) (1.89)
============== =============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 25,330,088 25,330,088
============== =============
TOWN & COUNTRY CORPORATION Form 8-K
Page 4
Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended February 25, 1996 (1)(3)
Total Consolidated
Total Consolidated Gold Lance Adjustments Excluding Gold Lance
------------- ----------- ------------ -----------
NET SALES 250,577,816 (14,352,950) -- 236,224,866
COST OF SALES 173,141,311 (9,778,055) -- 163,363,256
------------- ----------- ---------- -----------
Gross Profit 77,436,505 (4,574,895) -- 72,861,610
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 66,407,484 (5,506,073) -- 60,901,411
------------- ----------- ---------- -----------
Income (loss) from operations 11,029,021 931,178 -- 11,960,199
INTEREST EXPENSE, net (12,475,409) (29,225) 752,000 (2) (11,752,634)
GAIN (LOSS) ON SALE OF REAL ESTATE 417,220 -- 417,220
MINORITY INTEREST (673,079) -- -- (673,079)
------------- ----------- ---------- -----------
Income (loss) before provision for (1,702,247) 901,953 752,000 (48,294)
income taxes
PROVISION FOR INCOME TAXES 163,867 -- -- 163,867
------------- ----------- ---------- -----------
Net income (loss) (1,866,114) 901,953 752,000 (212,161)
ACCRETION OF DISCOUNT AND DIVIDENDS
ON PREFERRED STOCKS 1,039,802 -- -- 1,039,802
------------- ----------- ---------- -----------
Income (loss) attributable (2,905,916) 901,953 752,000 (1,251,963)
to common stockholders ============= =========== ========== ===========
INCOME (LOSS) PER COMMON SHARE (0.12) (0.05)
============= ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 23,769,323 23,769,323
============= ===========
TOWN & COUNTRY CORPORATION Form 8-K
Page 5
Notes to Pro Forma Condensed Consolidated Statements of Operations
(1) The Statements of Operations assume that $8.3 million was received on
the closing date and excludes any benefit of the contingent additional
payment of $2.5 million subject to certain operating performance
measures of Gold Lance during a transition period between April 18,
1997 and July 31, 1997.
(2) For the purpose of determining pro forma interest savings, the
effective rate of the debt being reduced, is applied for the period
being presented. ($ in 000's)
Twelve Months
Effective Debt Ended
Interest Rate Reduction February 25,
1996
Notes payable to banks
(working capital facility) 11.67% $6,444 $752
Nine Months
Effective Debt Ended
Interest Rate Reduction November 24,
1996
Notes payable to banks
(working capital facility) 11.67% $6,374 $558
Debt reduction assumptions are based on a closing as of February 27, 1995 and
February 26, 1996 for the twelve month and nine month pro forma statements of
operations, respectively, which approximate the seasonal low point in the
balance of the working capital facility, and on the application of all available
proceeds to first reduce the working capital facility. The actual close took
place at a time when, due to the previous sale of another subsidiary, there was
no outstanding balance on the working capital facility and the proceeds were
used to reduce the gold consignment facility.
(3) The sale did not include any real property. The prime component of
real property is a facility in Houston, Texas with a net book value of
approximately $1.5 million and a fair value of approximately $0.7
million as of February 23, 1997. A $0.8 million impairment of the
carrying value of the facility has been recognized in association with
this transaction. Such amount is reflected as an adjustment to the Pro
Forma Condensed Consolidated Balance Sheet and excluded from the Pro
Forma Condensed Consolidated Statements of Operations due to its
nonrecurring nature. The Company will continue to operate the property
on a temporary basis for approximately four months. It is possible
that the Company will be required to hold the facility for an
unspecified amount of time before being able to complete a sale.
TOWN & COUNTRY CORPORATION Form 8-K
Page 6
Pro Forma Condensed Consolidated Balance Sheet
As of November 24, 1996
Total Consolidated
Total Consolidated Gold Lance Adjustments Excluding Gold Lance
----------- ---------- ---------- -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 739,773 8,315,000 (8,315,000)(2) 739,773
Restricted cash 105,305 -- -- 105,305
Accounts receivable, less allowances for
doubtful accounts 69,533,940 (3,466,143) -- 66,067,797
Inventories 45,929,148 -- -- 45,929,148
Prepaid expenses and other current assets 6,857,776 (128,895) -- 6,728,881
----------- ---------- ---------- -----------
Total current assets 123,165,942 4,719,962 (8,315,000) 119,570,904
----------- ---------- ---------- -----------
PROPERTY, PLANT AND EQUIPMENT, net 31,470,653 (6,234,982) (800,000)(1) 24,435,671
----------- ---------- ---------- -----------
INVESTMENT IN AFFILIATES 17,246,585 -- -- 17,246,585
----------- ---------- ---------- -----------
OTHER ASSETS 5,873,035 (2,252,549) -- 3,620,486
----------- ---------- ---------- -----------
177,756,215 (3,767,569) (9,115,000) 164,873,646
=========== ========== ========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable to banks 31,547,641 -- (5,855,444)(2) 25,692,197
Current portion of long-term debt 13,441,325 -- -- 13,441,325
Accounts payable 22,710,933 -- (846,473)(2) 21,864,460
Accrued expenses 13,004,900 -- (358,083)(2) 12,646,817
Accrued taxes 646,098 -- -- 646,098
----------- ---------- ---------- -----------
Total current liabilities 81,350,897 -- (7,060,000) 74,290,897
----------- ---------- ---------- -----------
LONG-TERM DEBT, less current portion 78,528,150 -- -- 78,528,150
----------- ---------- ---------- -----------
OTHER LONG-TERM LIABILITIES 1,063,094 -- -- 1,063,094
----------- ---------- ---------- -----------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 5,114,636 -- -- 5,114,636
----------- ---------- ---------- -----------
EXCHANGEABLE PREFERRED STOCK 2,343,534 -- -- 2,343,534
----------- ---------- ---------- -----------
STOCKHOLDERS' EQUITY
Preferred Stock, $1.00 par value - -- -- -- --
Convertible Preferred Stock,
$1.00 par value 1,407,361 -- -- 1,407,361
Class A Common Stock, $.01 par value - 259,661 -- -- 259,661
Class B Common Stock, $.01 par value - -- -- -- --
Additional paid-in capital 75,561,343 -- -- 75,561,343
Retained deficit (67,872,461) (3,767,569) (800,000)(1)
(1,255,000)(2) (73,695,030)
----------- ---------- ---------- -----------
Total stockholders' equity 9,355,904 (3,767,569) (2,055,000) 3,533,335
----------- ---------- ---------- -----------
177,756,215 (3,767,569) (9,115,000) 164,873,646
=========== ========== ========== ===========
TOWN & COUNTRY CORPORATION Form 8-K
Page 7
Notes to Pro Forma Condensed Consolidated Balance Sheet
(1) The sale did not include any real property. The prime component of
real property is a facility in Houston, Texas, with a net book value
of approximately $1.5 million and a fair value of approximately $0.7
million. A $0.8 million impairment of the carrying value of the
facility has been recognized in association with this transaction.
(2) Use of proceeds as of November 24, 1996:
Gross proceeds (a) $8,315,000
Less: Transaction costs(b) 1,255,000
Less: Liabilities not assumed in the sale (c) 1,204,556
----------
Proceeds available for debt repayment $5,855,444
Notes payable to banks (working capital
facility) 5,855,444
----------
$ --
==========
(a) Assumes that $8.3 million was received on the closing date and
excludes any benefit of the contingent additional payment of $2.5
million, subject to certain operating performance measures of
Gold Lance during a transition period between April 18, 1997 and
July 31, 1997.
(b) Expenses:
Financial advisor fees $250,000
Legal and other fees 840,000
Executive bonuses 165,000
----------
$1,255,000
==========
(c) Trade payables and short-term accruals primarily related to
payroll.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TOWN & COUNTRY CORPORATION
Dates: May 2, 1997 By: /s/ Veronica Zsolcsak
-----------------------
Veronica Zsolcsak
Chief Financial Officer