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) JUNE 30, 1995
LADD FURNITURE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
North Carolina 0-11577 56-1311320
(STATE OR OTHER JURISDICTION OF
INCORPORATION) (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER IDENTIFICATION NO.)
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.
Not Applicable.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not Applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not Applicable.
ITEM 5. OTHER EVENTS.
(a) DIVESTITURE PLANS: On June 30, 1995, LADD Furniture, Inc. (the
"Registrant") announced plans to sell four of its 12 operating
companies -- Brown Jordan Company, Daystrom Furniture, Fournier Furniture, Inc.
and Lea Lumber & Plywood. As a result of writing these businesses down to their
estimated market value, restructuring the remaining eight operating companies to
improve their collective operating performance, and increasing reserves to
reflect the current softness in the residential furniture industry, the
Registrant will incur an after-tax charge to income of approximately $26 million
in the second quarter of 1995.
It is anticipated that the proceeds from the sales of the companies will be
used to reduce the Registrant's debt. The divestitures, in combination with
other planned strategic actions, will reduce the Registrant's debt by
approximately $50 million, to approximately $105 to $110 million. The
divestiture process will commence immediately, and the Registrant anticipates
completing the sales by the end of 1995.
(b) WAIVER OF DEBT COVENANTS: The Registrant has obtained a waiver through
August 15, 1995 of any violations of financial covenants contained in the
Amended and Restated Credit Agreement with NationsBank of North Carolina, N.A.,
as Agent, dated October 19, 1994 (the "Credit Facility") which would occur as a
result of the costs of the strategic actions described above and the results of
operations for the quarter ended July 1, 1995. Prior to August 15, 1995, the
Registrant anticipates that the Credit Facility will be amended and certain
financial covenants will be revised to reflect the current level of operations
and the divestitures.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not Applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
a) EXHIBITS
10.1 Waiver letter from NationsBank, N.A. (Carolinas), as Agent,
dated June 29, 1995.
99.1 Press Release of LADD Furniture, Inc. dated June 30, 1995.
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: July 7, 1995 By: /s/ William S. Creekmuir
WILLIAM S. CREEKMUIR
TITLE: SENIOR VICE PRESIDENT, CHIEF
FINANCIAL OFFICER,
TREASURER AND SECRETARY
1
June 29, 1995
NationsBank, N.A. (Carolinas), as Agent
NationsBank Corporate Center
100 North Tryon Street
Charlotte, NC 28255
RE: AMENDED AND RESTATED CREDIT AGREEMENT, DATED AS OF OCTOBER 19, 1994,
AS AMENDED, AMONG LADD FURNITURE, INC. ("BORROWER"), NATIONSBANK, N.A.
(CAROLINAS) F/K/A NATIONSBANK OF NORTH CAROLINA, N.A., AS AGENT, THE
GUARANTORS PARTY THERETO AND THE BANKS PARTY THERETO (THE "CREDIT
AGREEMENT"). ALL CAPITALIZED TERMS USED HEREIN AND NOT OTHERWISE
DEFINED SHALL HAVE THE MEANINGS ASCRIBED THERETO IN THE CREDIT
AGREEMENT
Ladies and Gentlemen:
This letter is to inform you that an Event of Default may exist under the
terms of the Credit Agreement due to the Borrower's potential failure to be in
compliance with Section 8.10, 8.11 and/or 8.12 of the Credit Agreement for the
Quarterly Date ending closest to June 30, 1995 (the "June 30 Financial Covenant
Defaults").
The Borrower hereby requests that the Banks waive their right to enforce
any of their rights and remedies under the Credit Agreement with respect to the
June 30 Financial Covenant Defaults until August 15, 1995 and that the Banks
evidence such waiver by executing below.
Sincerely,
LADD FURNITURE, INC.
By:
WILLIAM S. CREEKMUIR,
SENIOR VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER
The Banks hereby agree to the waiver requested by the Borrower as set forth
above. This is a one time waiver and (a) does not modify or amend Section 8.10,
8.11 or 8.12 of the Credit Agreement or (b) allow the Borrower to be in
violation of Section 8.10, 8.11 or 8.12 of the Credit Agreement subsequent to
August 15, 1995. This waiver shall expire on August 15, 1995 and any failure by
the Borrower to be in compliance with Section 8.10, 8.11 or 8.12 of the Credit
Agreement (including, without limitation, for the Quarterly Date ending closest
to June 30, 1995) subsequent to August 15, 1995 shall constitute an Event of
Default and shall enable the Banks to enforce their rights and remedies with
respect thereto. This letter agreement does not constitute a waiver of any
Default or Event of Default that may exist (including, without limitation, the
June 30 Financial Covenant Defaults) and does not constitute a modification or
amendment to the Credit Agreement except as expressly set forth above.
Agreed to as of June 29, 1995
NATIONSBANK, N.A. (CAROLINAS)
f/k/a NationsBank of North Carolina,
N.A., in its capacity as Agent and as a
Bank
By:
GREGORY W. POWELL
SENIOR VICE PRESIDENT
CIBC, INC.
By:
Name:
Title:
CREDITANSTALT CORPORATE FINANCE, INC.
By:
Name:
Title:
WACHOVIA BANK OF NORTH CAROLINA, N.A.
By:
Name:
Title:
ABN AMRO BANK N.V.
By:
Name:
Title:
BRANCH BANKING AND TRUST COMPANY
By:
Name:
Title:
COMMONWEALTH BANK, A DIVISION OF
MERIDIAN BANK
By:
Name:
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By:
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION
By:
Name:
Title:
NBD BANK F/K/A NBD BANK, N.A.
By:
Name:
Title:
NEWS RELEASE
FOR IMMEDIATE RELEASE
June 30, 1995
Contact: John J. Ong
(910) 888-6353
LADD PLANS TO DIVEST FOUR COMPANIES
TAKE SECOND QUARTER EARNINGS CHARGE
HIGH POINT, NC -- LADD Furniture, Inc. chairman Richard R. Allen announced
today that the company is planning to sell four of its 12 operating
companies -- Brown Jordan, Daystrom Furniture, Fournier Furniture and Lea Lumber
& Plywood. As a result of writing these four businesses down to their estimated
market value, restructuring the remaining eight LADD operating companies to
improve their collective operating performance, and increasing the company's
reserves to reflect the current softness in the residential furniture industry,
LADD will incur a non-cash after-tax charge of approximately $26 million in the
second quarter.
Allen said the four companies were identified for divestiture following an
extensive strategic analysis of all 12 of LADD's operating units. He said the
companies to be sold had either not met LADD's performance objectives or were
not considered strategically important to LADD's future growth prospects. "Brown
Jordan and Lea Lumber & Plywood have each been very successful and have
established leadership positions within their respective market segments," Allen
said, "However, these businesses do not possess natural synergies with LADD's
other operating companies." Neither Daystrom nor Fournier have achieved
acceptable levels of profitability, according to Allen.
Allen continued, "The divestiture of these four businesses will allow
LADD's management team to focus its efforts on improving the profitability of
the remaining eight companies, which enjoy a strong collective presence in the
casegoods and upholstery categories of the U.S. residential furniture industry."
After the companies are divested, Allen noted, LADD will have annual sales of
approximately $520 million, compared to more than $600 million currently. He
stated that the divestiture process will commence immediately and that LADD
anticipates completing the sales by the end of 1995.
Allen said that the second quarter after-tax earnings charge of
approximately $26 million will include provisions for expected losses on the
planned divestitures, the discontinuation of certain unprofitable products, the
closing of four free-standing company-owned retail stores, and the disposition
of selected equipment being removed from service. Further, given current
indications of economic weakness, LADD will increase its reserves for bad debts
and slow-moving inventories where appropriate, he noted.
Allen said he expects that the divestitures, in combination with other
planned strategic actions, will reduce LADD's debt by nearly $50 million. After
completion of the divestitures, the company's debt is expected to be
approximately $105-$110 million.
Allen added that, aside from the one-time earnings charge, LADD's second
quarter operating results, to be released in late July, will be negatively
impacted by recent weakness in U.S. retail furniture sales. He said, "Although
we remain encouraged by our success at the April international home furnishings
market, some of our operating companies have taken a significant amount of plant
downtime during the second quarter as a result of the sales declines which have
been experienced by many furniture retailers in recent months." Reflecting this
retail softness and plant downtime, Allen noted, LADD will report a second
quarter operating loss. He added, "We remain hopeful that consumers will resume
their purchases of durable goods, including furniture, later this year."
In addition to the strategic divestitures and the earnings charge, Allen
said LADD's Board of Directors intends to reduce LADD's dividend payment rate by
approximately 50 percent effective with the September quarterly dividend. He
noted that the board will meet in late August to establish the company's new
quarterly cash dividend rate. The current quarterly rate is $.09 per LADD common
share.
Headquartered in High Point, NC LADD is one of the largest North American
manufacturers of residential furniture and a leading supplier of contract
furniture both domestically and abroad. After the divestitures mentioned above,
LADD will continue to market its wide range of wood and upholstered furniture
products under the major brand names of American Drew, American of Martinsville,
Barclay, Clayton Marcus, Design Horizons, Kenbridge, Lea, Pennsylvania House and
Pilliod, and market these products worldwide through LADD International. LADD
will also continue to own and operate one support company, LADD Transportation.
LADD's stock is traded on the Nasdaq National Market under the symbol LADF.