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) February 26, 1996
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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 February 26, 1996, LADD Furniture, Inc. ("LADD") sold 100%
of the stock of its wholly-owned subsidiary, Fournier Furniture, Inc.
("Fournier"), to Furniture Acquisition Co. (the "Purchaser") for approximately
$12,000,000 consisting of a combination of approximately $10,049,000 in cash
and a note (with the note portion subject to closing working capital
adjustments) and the assumption of approximately $1,932,000 of industrial bond
indebtedness. The Purchaser is a corporation formed by the Kaizen Breakthrough
Partnership, L.P. ("Kaizen"), a private equity and mezzanine fund managed by
its general partner, Gefinor Acquisition Partners ("Gefinor"). Prior to the
transaction, LADD had no affiliation with the Purchaser, Kaizen or Gefinor.
As previously reported on Form 8-K filed with the Securities
and Exchange Commission on January 16, 1996, on December 29, 1995, LADD sold
100% of the stock of its wholly-owned subsidiary, Brown Jordan Company ("Brown
Jordan") and the intellectual property of Brown Jordan, to BJCL, Inc., for
$24,000,000 in cash and an equity interest, on a fully diluted basis, of
approximately 12% in BJCL, Inc.
As previously reported on Form 8-K filed with the Securities
and Exchange Commission on January 16, 1996, on December 29, 1995, LADD sold
substantially all of the assets of its Lea Lumber & Plywood division to Lea
Lumber & Plywood, LLC for approximately $4,000,000 in cash and a $1,000,000 term
note.
See pro forma financial statements reflecting all of the
above-described 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.
The Company intends to replace both (i) its existing unsecured term
and revolving credit facility and (ii) its existing accounts receivable
securitization program which expires in March 1996 and is not being renewed,
with a new term and revolving credit facility which will be secured by
substantially all of the Company's assets. The Company expects to have
this new facility in place during the second quarter of 1996. During the
interim period between the expiration of the receivables securitization
program and the implementation of the new credit facility, the Company
plans to meet its working capital needs for its accounts receivable by
advances under its existing revolving credit loan. The Company currently
has $44,050,000 available for future borrowings under its revolving credit
loan, and the purchaser's investment in the accounts receivable securitization
program totals $32,600,000.
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
January 5, 1996 among LADD
Furniture, Inc., Fournier Furniture,
Inc. and Fournier Acquisition Co.
2.2 First Amendment to Stock Purchase
Agreement dated February 26, 1996
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: March 12, 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 the stock of Brown Jordan Company (Brown Jordan) and
related intellectual property owned by Cherry Grove, Inc., the sale of the stock
of Fournier Furniture, Inc. (Fournier), and 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 totalling
approximately $2,040,000. BJCL, Inc. also owns Casual Living Worldwide, an
importer and marketer of casual outdoor furniture.
The unaudited pro forma condensed financial information gives effect to the sale
of Furniture for cash and a subordinated note to Furniture Acquisition Co.
totaling approximately $10,049,000 and the purchaser's assumption totalling
approximately $1,932,000 of Industrial Revenue Bonds, less transaction expenses
and cash required to repurchase leased manufacturing equipment totalling
approximately $5,040,000. The amount of the subordinated note, which is
currently estimated to be approximately $1,500,000, is subject to finalization
of a post-closing working capital adjustment.
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 have 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
Divested
LADD Furniture, Inc. Companies Sale Pro Forma
and Subsidiaries and Subsidiaries Adjustments Results
Net sales $591,575 88,129 503,446
Cost of sales 481,994 68,233 413,761
Gross profit 109,581 19,896 0 89,685
Selling, general, and administrative expenses 93,911 16,016 77,895
Operating income 15,670 3,880 0 11,790
Other (income) deductions:
Interest expense 8,939 1,698 (47) (2) 7,194
Other, net 1,714 (240) (270) (3) 1,684
10,653 1,458 (317) 8,878
Earnings before income taxes 5,017 2,422 317 2,912
Income tax expense 709 342 332 (4) 699
Net earnings $4,308 2,080 (15) 2,213
Net earnings per common share $0.56 0.29
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
Divested
LADD Furniture, Inc. Companies Sale Pro Forma
and Subsidiaries and Subsidiaries Adjustments Results
Net sales $461,521 65,616 395,905
Cost of sales 390,601 51,999 338,602
Gross profit 70,920 13,617 0 57,303
Selling, general, and administrative expenses 75,553 12,669 (359) (2) 62,525
Restructuring expense 25,696 (3) 25,696
Operating income (loss) (30,329) 948 359 (30,918)
Other (income) deductions:
Interest expense 8,646 1,183 (563) (4) 6,900
Other, net 3,024 (261) (203) (5) 3,082
11,670 922 (766) 9,982
Earnings (loss) before income taxes (41,999) 26 1,125 (40,900)
Income tax expense (benefit) (16,591) 10 445 (6) (16,156)
Net earnings (loss) ($25,408) 16 680 (24,744)
Net loss per common share ($3.29) (3.21)
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
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 (908)(5) 9,612
Total current assets 145,083 0 (908) 144,175
Property, plant, and equipment, net 82,567 82,567
Businesses held for sale, net 32,587 32,138 720 (3) 1,169
Intangible and other assets, net 76,631 4,700 (2) 81,331
Total assets $336,868 32,138 4,512 309,242
Current liabilities:
Current installments of long-term debt $558 (225)(4) 333
Short-term bank note 2,450 2,450
Trade accounts payable 26,517 280 (3) 26,797
Accrued expenses and other current liabilities 30,629 3,109 (3) 33,738
Total current liabilities 60,154 0 3,164 63,318
Long-term debt, excluding current installments 140,182 32,138 1,316 (4) 109,360
Deferred items and other liabilities 11,308 (547)(5) 9,876
(885)(6)
Total liabilities 211,644 32,138 3,048 182,554
Shareholders' equity 125,224 1,464 (7) 126,688
Total liabilities and shareholders' equity $336,868 32,138 4,512 309,242
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, Fournier Furniture, Inc. and subsidiary, 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 notes 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 form 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, Fournier Furniture, Inc. and subsidiary, 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 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 notes 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, Fournier Furniture, Inc. and subsidiary, and Lea
Lumber & Plywood, a division of LADD Furniture, Inc.
(2) To record the investment in BJCL, Inc. and the notes 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 in LADD's
historical balance sheet in businesses held for sale, net.
(4) To adjust 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.
and the deferred gain related to manufacturing equipment sold by
Fournier on December 28, 1994 and leased back.
(7) To adjust retained earnings as a result of the sales of the divested
companies.