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) January 31, 1994
LADD FURNITURE, INC.
(Exact name of registrant as specified in its charter)
North Carolina 0-11577 56-1311320
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of Incorporation)
One Plaza Center, Box HP-3, High Point, North Carolina 27261-1500
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (910) 889-0333
N/A
(Former name or former address, if changed since last report.)
ITEM 1. Changes in Control of Registrant.
Not Applicable.
ITEM 2. Acquisition or Disposition of Assets.
On December 15, 1993, LADD Furniture, Inc. ("LADD")
entered into a Stock Purchase Agreement (the "Agreement") with
all of the stockholders of Pilliod Holding Company ("Pilliod")
(the stockholders collectively hereinafter referred to as the
"Stockholders") to purchase all of the outstanding stock of
Pilliod in a transaction valued at approximately $54,000,000.
LADD agreed to retire debt of Pilliod's wholly-owned subsidiary,
The Pilliod Cabinet Company ("Pilliod Cabinet"), of approximately
$30,000,000 and to pay approximately $24,000,000 in cash to the
Stockholders. The Agreement provided that the transaction was
subject to the termination or expiration of the waiting period
required pursuant to the Hart-Scott-Rodino Act. On January 7,
1994, the Federal Trade Commission granted early termination of
the waiting period required under the Hart-Scott-Rodino Act.
On January 28, 1994, LADD entered into a Transfer and
Administration Agreement ("TAA") with Enterprise Funding
Corporation ("EFC") to sell an undivided interest in certain of
LADD's trade accounts receivable. The TAA provides for EFC to
pay to LADD up to $30,000,000 for receivables purchased.
Effective January 31, 1994, LADD sold an interest in a defined
pool of trade accounts receivable which generated $20,000,000 in
cash.
On January 28, 1994, LADD entered into an unsecured one
year revolving line of credit with The Chase Manhattan Bank, N.A.
(the "Chase Line of Credit") in the aggregate principal amount of
$20,000,000.
On January 31, 1994, the Pilliod purchase transaction
was consummated and LADD retired $29,893,000 of debt of Pilliod
Cabinet, assumed $247,000 of debt of Pilliod Cabinet and paid
$23,860,000 in cash to the Stockholders. The purchase price was
financed by the $20,000,000 generated by the sale of trade
accounts receivable pursuant to the TAA and funds from available
short-term and long-term bank lines of credit, including the
Chase Line of Credit.
ITEM 3. Bankruptcy or Receivership.
Not Applicable.
ITEM 4. Changes in Registrant's Certifying Accountant.
Not Applicable.
ITEM 5. Other Events.
Not Applicable.
ITEM 6. Resignations of Registrant's Directors.
Not Applicable.
ITEM 7. Financial Statements and Exhibits.
a) Financial Statements of Pilliod
(i) See the Index to Financial
Statements following the
signature page hereto for the
Financial Statements available
at this time.
(ii) Interim Financial Statements
It is impracticable for the
Company to provide the
required interim financial
statements of Pilliod at this
time. The required interim
financial statements will be
filed under separate cover of
Form 8-K/A as soon as
practicable, but not later
than April 15, 1994.
b) Pro Forma Financial Information
It is impracticable for the Company
to provide the required Pro Forma
Financial Information at this time.
The required Pro Forma Financial
Information will be filed under
separate cover of Form 8-K/A as
soon as practicable, but not later
than April 15, 1994.
c) Exhibits
4.1 Stock Purchase Agreement dated
December 15, 1993 among LADD
Furniture, Inc. and the Stock-
holders of Pilliod Holding
Company.
4.2 Amendment to Stock Purchase
Agreement dated January 31,
1994 among LADD Furniture,
Inc. and the stockholders of
Pilliod Holding Company
23.1 Consent of Ernst & Young
99.1 Transfer and Administration
Agreement dated January 28,
1994 between Enterprise
Funding Corporation and LADD
Furniture, Inc., and Clayton-
Marcus Company, Inc., Barclay
Furniture Co. and LADD
Transportation, Inc., as
designated subsidiaries
99.2 Receivables Purchase Agreement
dated January 28, 1994 between
Clayton-Marcus Company, Inc.,
Barclay Furniture Co. and LADD
Transportation, Inc. and LADD
Furniture, Inc.
99.3 Letter Agreement, dated
January 28, 1994, between LADD
Furniture, Inc. and The Chase
Manhattan Bank, N.A.
99.4 Form of Promissory Note of
LADD Furniture, Inc. dated
January 28, 1994 to The Chase
Manhattan Bank, N.A. in the
aggregate principal amount of
$20,000,000
ITEM 8. Change in Fiscal Year.
Not Applicable.
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.
LADD FURNITURE, INC.
Date: February 15, 1994 By: /s/William S. Creekmuir
William S. Creekmuir
Title: Senior Vice President, Chief Financial
Officer, Treasurer and Secretary
INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS
PAGE
Report of Independent Auditors......................................................................................... F-2
Consolidated Balance Sheets at May 2, 1992 and May 1, 1993............................................................. F-3
For the years ended May 2, 1992 and May 1, 1993:
Consolidated Statements of Operations................................................................................ F-4
Consolidated Statements of Shareholders' Equity (Capital Deficiency)............................................... F-5
Consolidated Statements of Cash Flows................................................................................ F-6
Notes to Consolidated Financial Statements........................................................................... F-7
F-1
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Pilliod Holding Company
We have audited the accompanying consolidated balance sheets of Pilliod
Holding Company as of May 2, 1992 and May 1, 1993, and the related consolidated
statements of operations, shareholders' equity (capital deficiency) and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Pilliod Holding
Company at May 2, 1992 and May 1, 1993 and the consolidated results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
ERNST & YOUNG
Toledo, Ohio
July 14, 1993
F-2
PILLIOD HOLDING COMPANY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
MAY 2, MAY 1,
1992 1993
ASSETS (Note 5)
Current assets:
Cash.................................................................................................. $ 9 $ 19
Accounts receivable, less allowance of $360 and $49 for doubtful accounts (Note 3).................... 10,988 11,548
Inventories (Note 2):
Finished products.................................................................................. 4,813 5,214
Work in process.................................................................................... 1,113 2,235
Raw materials...................................................................................... 2,604 4,500
8,530 11,949
Prepaid expenses................................................................................... 461 540
Total current assets.................................................................................... 19,988 24,056
Other assets:
Goodwill, net of accumulated amortization of $1,128 and $1,295........................................ 5,310 5,142
Property and equipment held for sale.................................................................. 1,425 --
Deferred financing costs and other.................................................................... 190 16
Total other assets 6,925 5,158
Property, plant and equipment, at cost less accumulated depreciation and amortization (Note 4).......... 7,980 8,343
$34,893 $37,557
LIABILITIES AND SHAREHOLDERS' EQUITY (CAPITAL DEFICIENCY)...............................................
Current liabilities:
Accounts payable...................................................................................... $ 6,881 $ 8,084
Accrued liabilities:
Compensation.......................................................................................... 1,772 1,952
Commissions and royalties............................................................................. 414 475
Taxes other than income............................................................................... 309 417
Insurance............................................................................................. 104 148
Interest.............................................................................................. 1,851 126
Other 51 --
4,501 3,118
Long-term debt due within one year or which may become due on demand (Note 5)......................... 24,677 4,661
Total current liabilities............................................................................. 36,059 15,863
Long-term debt, less amounts classified as due currently (Note 5)....................................... 2,397 20,256
Commitments
Shareholders' equity (capital deficiency) (Notes 5 and 7):
Class A common stock, $.01 par value; 9,000,000 shares authorized, 6,842,500 shares outstanding....... 68 68
Class B common stock, $.01 par value; 9,000,000 shares authorized, none outstanding................... -- --
Capital in excess of par value 6,622 6,622
Deficit............................................................................................... (10,253) (5,252)
Total shareholders' equity (capital deficiency)......................................................... (3,563) 1,438
$34,893 $37,557
See accompanying notes.
F-3
PILLIOD HOLDING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
YEARS ENDED
MAY 2, 1992 MAY 1, 1993
(53 WEEKS) (52 WEEKS)
Net sales.......................................................................................... $67,823 $77,719
Cost of sales...................................................................................... 53,365 59,144
Gross profit....................................................................................... 14,458 18,575
Selling, general and administrative................................................................ 10,702 11,192
Operating profit................................................................................... 3,756 7,383
Other income (expense):
Interest expense................................................................................. (3,358) (2,555)
Other............................................................................................ 352 270
Income before income taxes and extraordinary credit................................................ 750 5,098
Provision for income taxes (Note 8):
Federal:
Current....................................................................................... 40 97
Deferred...................................................................................... -- --
Charge in lieu of tax......................................................................... 287 1,639
State and local:
Charge in lieu of tax......................................................................... 80 265
407 2,001
Income before extraordinary credits................................................................ 343 3,097
Extraordinary credit -- income tax benefits resulting from realization of operating loss
carryforwards.................................................................................... 367 1,904
Net income......................................................................................... $ 710 $ 5,001
See accompanying notes.
F-4
PILLIOD HOLDING COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS'
EQUITY (CAPITAL DEFICIENCY)
(DOLLARS IN THOUSANDS)
CAPITAL
CLASS A IN
COMMON EXCESS OF
STOCK PAR VALUE DEFICIT TOTAL
Balance at April 27, 1991........................................................ $ 68 $ 6,622 $(10,963) $(4,273)
Net income..................................................................... 710 710
Balance at May 2, 1992........................................................... 68 6,622 (10,253) (3,563)
Net income..................................................................... -- -- 5,001 5,001
Balance at May 1, 1993........................................................... $ 68 $ 6,622 $ (5,252) $ 1,438
See accompanying notes.
F-5
PILLIOD HOLDING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
YEARS ENDED
MAY 2, MAY 1,
1992 1993
(53 (52
WEEKS) WEEKS)
OPERATING ACTIVITIES
Net income............................................................................................... $ 710 $ 5,001
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization.......................................................................... 2,313 2,024
Gain on sales of property and equipment................................................................ (8) (15)
Writedown of property held for sale.................................................................... 108 --
Changes in operating assets and liabilities:
Accounts receivable................................................................................. (1,511) (560)
Inventories......................................................................................... 1,136 (3,420)
Prepaid expenses.................................................................................... 310 (79)
Accounts payable.................................................................................... (520) 1,203
Accrued liabilities................................................................................. 1,229 (1,383)
Net cash provided by operating activities................................................................ 3,767 2,771
INVESTING ACTIVITIES
Purchases of property and equipment...................................................................... (494) (1,818)
Proceeds from sale of property and equipment............................................................. 32 1,467
Other.................................................................................................... (63) 64
Net cash used in investing activities.................................................................... (525) (287)
FINANCING ACTIVITIES
Payments on long-term debt............................................................................... (4,076) (6,209)
Proceeds from long-term borrowings....................................................................... 854 3,811
Increase in deferred financing costs..................................................................... (61) (25)
Other.................................................................................................... -- (51)
Net cash used in financing activities.................................................................... (3,283) (2,474)
Net increase (decrease) in cash.......................................................................... (41) 10
Cash at beginning of period.............................................................................. 50 9
Cash at end of period.................................................................................... $ 9 $ 19
Supplemental cash flow information:
Cash paid for interest................................................................................. $ 2,857 $ 4,137
Cash paid for income taxes............................................................................. $ 31 $ 98
Non-cash investing and financing activities:
During fiscal 1993 the Company entered into capital lease obligations of approximately $325,000 for new
equipment.
See accompanying notes.
F-6
PILLIOD HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Pilliod
Holding Company (Company) and the combined accounts of its wholly-owned
subsidiary, The Pilliod Cabinet Company (Cabinet Company). The Company's fiscal
year ends on the Saturday nearest April 30.
INVENTORIES
The Cabinet Company's inventories are valued at the lower of last-in,
first-out (LIFO) cost or market.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization of property, plant and equipment are provided
over the estimated useful lives of the assets using both straight-line and
declining balance methods.
Goodwill, which was generated by the March 19, 1985 acquisition of Cabinet
Company, is being amortized on a straight-line basis over 40 years.
PROFIT SHARING PLAN
Substantially all of the Company's employees are participants in a profit
sharing plan. Contributions to the plan are at the discretion of the Board of
Directors. No contributions were made in fiscal 1992 or 1993.
NEW STANDARD FOR ACCOUNTING FOR INCOME TAXES
The Company has not adopted the provisions of Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes, (SFAS No. 109), which
is required to be adopted in the Company's 1994 fiscal year. Under the liability
method required by the Statement, deferred tax assets and liabilities are
determined based on differences between financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse. The
Company's current accounting policies require that future tax effects related
F-7
PILLIOD HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES -- Continued
to assets and liabilities acquired in a business combination be included in the
recorded amounts of the related assets and liabilities. SFAS No. 109 requires
that such acquired assets be recorded at their full value and that the resulting
differences between book and tax bases be accounted for consistent with the
liability method. It further requires that assets and liabilities acquired in
previous business combinations be restated. Under the Company's current method,
income tax expense is determined using the deferred method. Deferred tax expense
is based on items of income and expense that are reported in different years in
the financial statements and tax returns and are measured at the tax rate in
effect in the year the difference originated.
The Company has not decided whether or not it will restate prior year
financial statements as permitted by SFAS No. 109; therefore the impact of
adoption cannot be quantified. The Company believes, however, that the adoption
of SFAS No. 109 will not have a material adverse effect on financial position or
results of operations.
2. INVENTORIES
Under the LIFO method, inventories have been reduced by approximately $718
and $118 at May 2, 1992 and May 1, 1993, respectively, from amounts which would
have been reported under the first-in, first-out (FIFO) method.
3. CONCENTRATION OF CREDIT RISK
Cabinet Company is principally engaged in the business of furniture
manufacturing. Substantially all accounts receivable are from department stores
and furniture retailers. Credit is extended to customers based on an evaluation
of credit reports, payment practices and, in most cases, financial condition.
Collateral or letters of credit are generally not required. Credit losses are
provided for in the financial statements and consistently have been within
management's expectations.
F-8
PILLIOD HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
MAY 2, MAY 1,
1992 1993
Land and improvements................................................................................... $ 782 $ 789
Buildings............................................................................................... 7,184 7,578
Machinery and equipment................................................................................. 16,515 17,783
Office and show space equipment......................................................................... 2,275 1,607
Automotive equipment.................................................................................... 170 151
26,926 27,908
Less accumulated depreciation and amortization.......................................................... 18,946 19,565
$ 7,980 $ 8,343
5. NOTES PAYABLE AND LONG-TERM DEBT
Long-term debt consists of the following:
MAY 2, MAY 1,
1992 1993
Revolving line of credit with banks, interest at prime plus 2% (8% aggregate rate at May 1, 1993)....... $ 9,484 $ 9,388
Term loans from banks, monthly principal installments of $205, interest at prime plus 2% (8% aggregate
rate at May 1, 1993) payable monthly.................................................................. 8,906 6,903
Subordinated notes (see below).......................................................................... 5,000 4,675
Notes payable to banks, effectively guaranteed by the Company's principal shareholders, due July 1,
1995, interest at prime plus 1.5% (7.5% aggregate rate at May 1, 1993) payable monthly................ 3,000 3,000
F-9
PILLIOD HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. NOTES PAYABLE AND LONG-TERM DEBT -- Continued
MAY 2, MAY 1,
1992 1993
Note payable to former shareholder, payable in monthly installments of $20, including interest at prime
(6% at May 1, 1993)................................................................................... 556 363
Various equipment lease obligations, payable monthly to August 1995 (see Note 6)........................ 128 348
Commitment fees payable to bank, non-interest bearing, payable $10 monthly.............................. -- 240
27,074 24,917
Amounts due within one year............................................................................. 24,677 4,661
$ 2,397 $20,256
The agreement for the revolving line of credit and term loans limits total
borrowings outstanding for the term of the agreement to $27,900. Borrowings
under the revolving line of credit are based on 85% of eligible trade accounts
receivable and 50% of eligible FIFO inventory, not to exceed $18,000 ($14,703
was available under the formula at May 1, 1993 of which $9,388 was outstanding).
The agreement runs through May 1995 and is automatically renewed for successive
one-year periods unless the agreement is terminated by the Company or the banks.
The entire amount outstanding under the revolving line of credit has been
excluded from current liabilities in the May 1, 1993 balance sheet because the
Company intends that at least that amount would remain outstanding under the
agreement for an uninterrupted period extending beyond one year from the balance
sheet date.
Borrowings under the agreement are secured by substantially all of the
assets of Cabinet Company. The agreement contains certain financial covenants,
the most restrictive of which 1) require maintenance of certain liquidity
ratios, yearly income levels and net worth levels, 2) limit future borrowings
and 3) limit declaration of dividends. Notes payable to banks are secured under
the agreement and are generally subject to the same conditions and covenants. At
May 1, 1993, the Company was in compliance with the covenant requirements of the
agreement as amended on April 28, 1993. At May 2, 1992, the Company violated
certain of the covenant requirements. The banks did not grant
F-10
PILLIOD HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. NOTES PAYABLE AND LONG-TERM DEBT -- Continued
waivers of the covenant violations and could have declared the Company in
default and the debt due; therefore, all borrowings under the agreement were
classified as current in the May 2, 1992 balance sheet.
On April 28, 1993, the Company amended the revolving line of credit and
term loan agreement. The amendment revised financial covenants, extended the
termination date of the agreement and permitted additional term borrowings of
$2,000 (all of which were outstanding at May 1, 1993). The borrowings were used
to pay a portion of the interest due on the subordinated notes. In connection
with the amendment, the Company incurred a commitment fee of $240.
On April 28, 1993 the Company entered into an agreement with the holders of
its subordinated notes to amend the notes. The agreement required the payment of
all accrued and unpaid interest through February 18, 1993 and the forgiveness of
$2,175 of principal. The principal balance of $2,825 of the amended subordinated
notes is payable $565 annually beginning April 1994 through April 1998, with
interest at 12.186% per annum payable semi-annually beginning October 28, 1993.
The Company is required to redeem the subordinated notes at par upon a Change of
Control Event (as defined in the amended notes) and, if certain types of Change
of Control Event occur on or prior to April 28, 1994, the Company will be
required to pay an additional $1,000 upon such redemption; as such, recognition
of gains has been deferred until the expiration of the contingency.
The May 1, 1993 carrying value of the subordinated debt consists of
remaining principal balance, expected interest over the life of the notes and
net contingent amounts payable. In the event a Change of Control Event does not
occur prior to April 28, 1994, the carrying value of the subordinated notes
would be reduced to future principal and interest requirements.
The required minimum annual maturities of long-term debt, including the
principal portion of capital lease obligations, for the fiscal years subsequent
to May 1, 1993 are as follows: 1994 - $4,661; 1995 - $3,708; 1996 - $15,211;
1997 - $703; 1998 - $634.
F-11
PILLIOD HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. LONG-TERM LEASES
CAPITAL LEASES
The Cabinet Company leases certain equipment under agreements classified as
capital leases. The cost and accumulated amortization of such equipment are as
follows:
MAY 2, MAY 1,
1992 1993
Cost.................................................................................................... $ 744 $ 662
Less accumulated amortization........................................................................... 580 168
$ 164 $ 494
Future minimum payments and their present value at May 1, 1993 are as
follows:
1994.................................................................................................................. $161
1995.................................................................................................................. 161
1996.................................................................................................................. 64
Total minimum lease payments.......................................................................................... 386
Less amounts representing interest.................................................................................... 38
Present value of minimum lease payments - included in long-term debt (see Note 5)..................................... $348
OPERATING LEASES
The Cabinet Company leases equipment and office and show space under
agreements classified as operating leases. Total rent expense charged to
operations for fiscal years 1992 and 1993 was $838 and $702, respectively.
Minimum rental commitments under noncancellable operating leases at May 1,
1993 aggregate $874 and are payable as follows:
1994.................................................................................................................. $421
1995.................................................................................................................. 344
1996.................................................................................................................. 106
1997.................................................................................................................. 3
F-12
PILLIOD HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. COMMON STOCK
In addition to the 9,000,000 shares of authorized Class A common stock, the
Company is authorized to issue 9,000,000 shares of Class B common stock, of
which none have been issued. The two classes of common stock entitle the holders
to the same rights and privileges except that Class A common stock entitles the
holder to voting rights while Class B common stock has no voting rights.
Shareholders of Class A common stock are permitted to exchange any or all
shares for the same number of Class B shares and Class B holders are entitled to
convert any or all shares into the same number of Class A shares within certain
limitations.
Information on stock options is as follows:
CLASS A SHARES EXERCISE
UNDER OPTION PRICE
Outstanding at April 27, 1991................................................................. 1,020,000 $.50 to $1.17
Granted in 1992............................................................................... 795,000 $ .25
Cancelled in 1992............................................................................. (725,000) $.85 to $1.17
Outstanding at May 2, 1992 and May 1, 1993.................................................... 1,090,000 $ .25 to $.85
Options outstanding at May 1, 1993 expire at various dates ranging from
October 26, 1994 through May 29, 1996. All options granted are exercisable at
the date of grant.
8. INCOME TAXES
At May 1, 1993, the Company has operating loss carryforwards for both tax
and financial reporting purposes of approximately $2,800. Such carryforwards may
be used to reduce otherwise taxable income until they expire in fiscal 2005 and
2006. The fiscal 1992 and 1993 provisions for current Federal income tax
consists of alternative minimum tax, which can be used to offset future regular
Federal income tax.
F-13
PILLIOD HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. INCOME TAXES -- Continued
The consolidated effective tax rate differs from the statutory U. S.
federal tax rate for the following reasons and by the following percentages:
MAY 2, MAY 1,
1992 1993
Statutory U. S. Federal tax (benefit) rate.................................................................. 34.0% 34.0%
Amortization of asset basis differences..................................................................... 5.0 .6
Amortization of goodwill.................................................................................... 7.6 1.1
State and local taxes....................................................................................... 7.1 3.4
Other....................................................................................................... .6 .1
Effective tax rate.......................................................................................... 54.3% 39.2%
The provision for deferred income taxes consists of the following:
MAY 2, MAY 1,
1992 1993
Effect of operating loss carryforwards...................................................................... $ 308 $ 32
Property, plant and equipment............................................................................... (253 ) (223 )
Inventories................................................................................................. (54 ) 31
Accrued liabilities......................................................................................... 67 57
Other....................................................................................................... (68 ) 103
$ -- $ --
F-14