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) December 29, 1995
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LADD FURNITURE, INC.
(Exact name of registrant as specified in its charter)
North Carolina 0-11577 56-1311320
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(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of Incorporation)
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One Plaza Center, Box HP-3, High Point, North Carolina 27261-1500
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(Address of principal executive offices) (Zip Code)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (910) 889-0333
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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 29, 1995, LADD Furniture, Inc. ("LADD") sold 100%
of the stock of its wholly-owned subsidiary, Brown Jordan Company ("Brown
Jordan"), to BJCL, Inc. (the "Purchaser") for $14,000,000 in cash and an equity
interest, on a fully diluted basis, of approximately 12% in the Purchaser. The
Purchaser is controlled by Hancock Park Associates, an investment firm based
in California. Prior to the transaction, LADD had no affiliation with the
Purchaser or Hancock Park Associates.
As a condition to the sale of the stock of Brown Jordan,
Cherry Grove, Inc., a subsidiary of LADD, sold intellectual property assets
related to the business of Brown Jordan for $10,000,000 in cash to BJIP, Inc.
The sale of intellectual property assets was consummated on December 29, 1995,
concurrent with the sale of the stock of Brown Jordan. BJIP, Inc. is an
affiliate of the Purchaser and Hancock Park Associates. Prior to the
transaction, LADD and Cherry Grove, Inc. had no affiliation with BJIP, Inc.
On December 29, 1995, LADD sold substantially all of the
assets of its Lea Lumber & Plywood division to Lea Lumber & Plywood, LLC (the
"Purchaser") for approximately $4,000,000 in cash and a $1,000,000 Term Note
(the "Note"). The Note is payable in quarterly installments of interest only
with the remaining unpaid principal and interest due in two years. The Note
bears interest at 12%. The Purchaser is affiliated with The Springfield Group, a
manufacturer of wood products, based in Oregon. Prior to the transaction, LADD
had no affiliation with the Purchaser or The Springfield Group.
See pro forma financial statements reflecting the dispositions
as referenced from Item 7.
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) Pro Forma Financial Information
Unaudited Pro Forma Condensed Financial Information
Unaudited Pro Forma Condensed Statement of
Operations--For The Year Ended December 31, 1994
Unaudited Pro Forma Condensed Statement of
Operations--For The Nine Months Ended
September 30, 1995
Unaudited Pro Forma Condensed Balance Sheet--
September 30, 1995
Notes to Unaudited Pro Forma Condensed Statement of
Operations--For The Year Ended December 31, 1994
Notes to Unaudited Pro Forma Condensed Statement of
Operations--For The Nine Months Ended
September 30, 1995
Notes to Unaudited Pro Forma Condensed Balance
Sheet--September 30, 1995
b) Exhibits
2.1 Stock Purchase Agreement dated November 7,
1995 between LADD Furniture, Inc. and BJCL,
Inc.
2.2 First Amendment to Stock Purchase Agreement
dated December 29, 1995
2.3 Agreement of Sale by and between BJIP, Inc.
and Cherry Grove, Inc. dated December 29,
1995
2.4 Asset Purchase Agreement dated November 6,
1995 between LADD Furniture, Inc. and Lea
Lumber & Plywood, LLC
2.5 First Amendment to Asset Purchase Agreement
dated December 29, 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: January 16, 1996 By: /s/William S. Creekmuir
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William S. Creekmuir
Title: Executive Vice President, Chief Financial
Officer, Treasurer and Secretary
UNAUDITED PRO FORMA CONDENSED
FINANCIAL INFORMATION
The following unaudited pro forma condensed statements of operations for the
year ended December 31, 1994 and the nine months ended September 30, 1995 and
the unaudited pro forma condensed balance sheet as of September 30, 1995 give
effect to the sale of 100% of the stock of Brown Jordan Company (Brown Jordan)
and related intellectual property owned by Cherry Grove, Inc., the sale of
certain assets of Lea Lumber and Plywood, a division of LADD (Lea Lumber)
(together, the "divested companies"), and other adjustments and assumptions
described in the notes to such condensed statements, as if the transactions
had occurred at the beginning of the year ended December 31, 1994, in
the case of the Statements of Operations, and at September 30, 1995, in
the case of the Balance Sheet.
The unaudited pro forma condensed financial information relating to the divested
companies is based on the audited historical consolidated financial statements
of LADD for the year ended December 31, 1994, the unaudited historical financial
statements of the divested companies for the year ended December 31, 1994, the
unaudited historical consolidated financial statements of LADD as of and for the
nine months ended September 30, 1995, and the unaudited historical financial
statements of the divested companies as of and for the nine months ended
September 30, 1995. The unaudited pro forma condensed financial information
gives effect to the sale price of $14,000,000 cash and a 12% interest, on a
fully diluted basis, in BJCL, Inc., the purchaser of Brown Jordan, for the
common stock of Brown Jordan, and $10,000,000 cash for related intellectual
property of Cherry Grove, Inc. licensed to Brown Jordan, less
transaction expenses and cash required to repurchase leased intellectual
property of approximately $2,040,000. BJCL, Inc. also owns Casual Living
Worldwide, an importer and marketer of casual outdoor furniture.
Additionally, the unaudited pro forma condensed financial information gives
effect to the sale of inventories, property, plant and equipment and timber
tracts of Lea Lumber for cash of approximately $4,000,000 and a $1,000,000
subordinated note, less transaction expenses, to Lea Lumber & Plywood, LLC, an
affiliate of The Springfield Group.
The net cash proceeds from the sales of the divested companies has been applied
to reduce LADD's long-term debt. Any gains or losses resulting from the sales of
the divested companies are excluded from the unaudited pro forma condensed
statements of operations.
LADD FURNITURE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
For the year ended December 31, 1994
(Dollar amounts in thousands, except share data)
Historical Pro Forma
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Divested
LADD Furniture, Inc. Companies Sale Pro Forma
and Subsidiaries and Subsidiaries (1) Adjustments Results
------------------ ------------------ ---------- -------------
Net sales $591,575 49,361 542,214
Cost of sales 481,994 35,519 446,475
------------------ ------------------ ---------- -------------
Gross profit 109,581 13,842 0 95,739
------------------ ------------------ ---------- -------------
Selling, general, and administrative expenses 93,911 8,977 84,934
------------------ ------------------ ---------- -------------
Operating income 15,670 4,865 0 10,805
------------------ ------------------ ---------- -------------
Other (income) deductions:
Interest expense 8,939 866 (708) (2) 7,365
Other, net 1,714 (225) (120) (3) 1,819
------------------ ------------------ ---------- -------------
10,653 641 (828) 9,184
------------------ ------------------ ---------- -------------
Earnings before income taxes 5,017 4,224 828 1,621
Income tax expense 709 597 117 (4) 229
------------------ ------------------ ---------- -------------
Net earnings $4,308 3,627 711 1,392
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Net earnings per common share $0.56 0.18
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Weighted average common shares outstanding 7,696,689 7,696,689
================== =============
See notes to unaudited pro forma condensed statement of operations for the year
ended December 31, 1994.
LADD FURNITURE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
For the nine months ended September 30, 1995
(Dollar amounts in thousands, except share data)
Historical Pro Forma
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Divested
LADD Furniture, Inc. Companies Sale Pro Forma
and Subsidiaries and Subsidiaries (1) Adjustments Results
------------------ ------------------ ----------- ------------
Net sales $461,521 41,471 420,050
Cost of sales 390,601 30,726 359,875
------------------ ------------------ ----------- ------------
Gross profit 70,920 10,745 0 60,175
------------------ ------------------ ----------- ------------
Selling, general, and administrative expenses 75,553 7,155 (359) (2) 68,039
Restructuring expense 25,696 (3) 25,696
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Operating income (loss) (30,329) 3,590 359 (33,560)
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Other (income) deductions:
Interest expense 8,646 1,006 (569) (4) 7,071
Other, net 3,024 (238) (90) (5) 3,172
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11,670 768 (659) 10,243
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Earnings (loss) before income taxes (41,999) 2,822 1,018 (43,803)
Income tax expense (benefit) (16,591) 1,115 402 (6) (17,304)
------------------ ------------------ ----------- ------------
Net earnings (loss) ($25,408) 1,707 616 (26,499)
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Net loss per common share ($3.29) (3.43)
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Weighted average common shares outstanding 7,718,722 7,718,722
================== ============
See notes to unaudited pro forma condensed statement of operations for the nine
months ended September 30, 1995.
LADD FURNITURE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
September 30, 1995
(In thousands)
Historical Pro Forma
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Divested
LADD Furniture, Inc. Companies Sale Pro Forma
and Subsidiaries and Subsidiaries (1) Adjustments Results
--------------- ---------------- -------------- ------------
Current assets:
Cash $2,913 2,913
Trade accounts receivable, net 45,337 45,337
Inventories 86,313 86,313
Prepaid expenses and other current assets 10,520 (177)(5) 10,343
--------------- ---------------- -------------- ------------
Total current assets 145,083 0 (177) 144,906
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Property, plant, and equipment, net 82,567 82,567
Businesses held for sale, net 32,587 21,123 690 (3) 12,154
Intangible and other assets, net 76,631 3,200 (2) 79,831
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Total assets $336,868 21,123 3,713 319,458
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Current liabilities:
Current installments of long-term debt $558 558
Short-term bank note 2,450 2,450
Trade accounts payable 26,517 250 (3) 26,767
Accrued expenses and other current liabilities 30,629 2,395 (3) 33,024
--------------- ---------------- -------------- ------------
Total current liabilities 60,154 0 2,645 62,799
--------------- ---------------- -------------- ------------
Long-term debt, excluding current installments 140,182 21,123 (6,877)(4) 112,182
Deferred items and other liabilities 11,308 1,179 (5) 11,944
(543)(6)
--------------- ---------------- -------------- ------------
Total liabilities 211,644 21,123 (3,596) 186,925
--------------- ---------------- -------------- ------------
Shareholders' equity 125,224 7,309 (7) 132,533
--------------- ---------------- -------------- ------------
Total liabilities and shareholders' equity $336,868 21,123 3,713 319,458
=============== ================ ============== ============
See notes to unaudited pro forma condensed balance sheet at September 30, 1995.
NOTES TO UNAUDITED PRO FORMA CONDENSED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
(1) Divested companies include Brown Jordan Company and subsidiaries,
intellectual property owned by Cherry Grove, Inc. and licensed to Brown
Jordan, and Lea Lumber & Plywood, a division of LADD Furniture, Inc.
(2) To adjust interest expense to reflect the repayment of long-term debt
utilizing the net cash proceeds from the sales of the divested companies,
less interest assessed to the divested companies.
(3) To record interest income on the note receivable recorded in connection
with the sales of the divested companies.
(4) To record the income tax effect of pro forma sale adjustments based on
LADD's effective income tax rate.
(5) Any gain (loss) resulting from the sales of the divested companies is not
included in the unaudited pro forma condensed statement of operations.
NOTES TO UNAUDITED PRO FORMA CONDENSED
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(1) Divested companies include Brown Jordan Company and subsidiaries,
intellectual property owned by Cherry Grove, Inc. and licensed to Brown
Jordan, and Lea Lumber & Plywood, a division of LADD Furniture, Inc.
(2) To reverse the lease expense related to patents licensed to Brown Jordan
Company by Cherry Grove, Inc. and sold by Cherry Grove, Inc. on December
28, 1994 and leased back.
(3) The provision for restructuring expense relating to the divested
companies that were recorded in LADD's historical consolidated financial
statements are considered to be nonrecurring and therefore not reflected
as a pro forma sale adjustment.
(4) To adjust interest expense to reflect the repayment of long-term debt
utilizing the net cash proceeds from the sales of the divested companies,
less interest assessed to the divested companies.
(5) To record interest income on the note receivable recorded in connection
with the sales of the divested companies.
(6) To record the income tax effect of pro forma sale adjustments based on
LADD's effective income tax rate.
(7) Any gain (loss) resulting from the sales of the divested companies is not
included in the unaudited pro forma condensed statement of operations.
NOTES TO UNAUDITED PRO FORMA CONDENSED
BALANCE SHEET
SEPTEMBER 30, 1995
(1) Divested companies include Brown Jordan Company and subsidiaries,
intellectual property owned by Cherry Grove, Inc. and licensed to Brown
Jordan, and Lea Lumber & Plywood, a division of LADD Furniture, Inc.
(2) To record the investment in BJCL, Inc. and the note receivable resulting
from the sales of the divested companies.
(3) To provide for current and future costs associated with the sales of the
divested companies including transaction expenses, environmental costs,
pension benefits, and other miscellaneous expenses; and to reclassify
accounts payable and accrued liabilities retained in connection with the
sales of divested companies included on LADD's historical balance sheet
in businesses held for sale, net.
(4) To repay long-term debt from the net cash proceeds from the sales of the
divested companies.
(5) To adjust deferred tax balances as a result of the sales of the divested
companies.
(6) To reverse the deferred gain related to patents licensed to Brown Jordan
Company by Cherry Grove, Inc. and sold by Cherry Grove, Inc. on December
28, 1994 and leased back.
(7) To adjust retained earnings as a result of the sales of the divested
companies.