Filed On 6/4/04 2:35pm ET · SEC File 1-05767 · Accession Number 104599-4-55
As Of Filer Filing As/For/On Docs:Pgs
6/04/04 Circuit City Stores Inc 8-K{2,7} 6/04/04 3:111
Current Report · Form 8-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 8-K Sale of Private-Label Finance Operation 6± 31K
2: EX-2 Purchase and Sale Agreement 103± 446K
3: EX-99 Press Release Dated May 26,2004 2± 14K
EX-99 · Press Release Dated May 26,2004
Circuit City Completes Sale of Private-Label Credit Card Operation to Bank One
RICHMOND, Va. and CHICAGO, May 26, 2004 - Circuit City Stores, Inc. (NYSE:CC)
today announced that it has completed the sale of its private-label credit card
operation, which included both its private-label Circuit City credit card
accounts and its co-branded Circuit City Plus Visa credit card accounts, to Bank
One Corporation (NYSE:ONE).
Circuit City anticipates that the net cash proceeds from the sale, which was
completed May 25, 2004, will total approximately $400 million and that the
after-tax loss on the sale will total approximately $9 million, primarily driven
by transition- and transaction-related expenses. Approximately $4 million of the
loss was incurred in the fiscal year ended February 29, 2004. The company
expects the remainder of the loss to be incurred in the company's first fiscal
quarter ending May 31, 2004. On the date of the sale, the private-label
operation included receivables and related cash reserves of approximately $1.8
billion and approximately 1.5 million active accounts.
"Circuit City's relationship with Bank One recognizes the strategic importance
of effective credit programs and superior customer service to our business,"
said W. Alan McCollough, chairman, president and chief executive officer of
Circuit City Stores, Inc. "We are excited about the opportunity to work with
Bank One to jointly develop and introduce new features, products and services
for our customers."
"Bank One is pleased to partner with a prominent retailer like Circuit City,"
said William I. Campbell, chief executive officer of Bank One's Card Services
unit. "This transaction has allowed Bank One to efficiently acquire the
expertise and operating systems associated with private-label credit card
lending. We look forward to offering good value and excellent service to Circuit
City customers."
The two companies entered into a relationship in which Bank One purchased the
portfolio, will offer new private-label and co-branded credit cards, and will
provide credit card services to existing cardholders. Bank One will compensate
Circuit City for each new account opened and provide special financing terms to
Circuit City customers. Bank One retained nearly all of Circuit City's
private-label operation personnel, including most of the senior management,
which should provide for a seamless transition for customers. The operation is
managed by Senior Director Daniel P. Tierney, who has more than 15 years of
experience with Circuit City.
Circuit City anticipates that the ongoing relationship with Bank One will
generate an annual pretax earnings contribution of approximately $30 million,
which is similar to the finance income Circuit City would have expected to
generate if it had maintained ownership of the private-label operation. The
earnings contribution subsequent to the sale date will be included in net sales
and operating revenues on the company's consolidated statements of operations.
The historical statements of operations will present results from the
private-label finance operation through the sale date as finance income.
Circuit City's first quarter finance income will include the remainder of the
loss on the sale and income generated by the private-label finance operation
from the beginning of the quarter until the sale date. The company does not
expect income earned under the ongoing relationship with Bank One from the May
25th sale date to the May 31st quarter-end date to be material.
First Annapolis Capital, Inc. acted as an advisor to Circuit City in connection
with the transaction.
About Circuit City Stores, Inc.
Richmond, Va.-based Circuit City Stores, Inc. (NYSE:CC) is a leading specialty
retailer of consumer electronics. Circuit City operates 602 Superstores and five
mall-based stores in 158 U.S. markets and through approximately 990 retail
stores and dealer outlets in Canada through its subsidiary, InterTAN, Inc. The
company also operates a Web site at www.circuitcity.com.
About Bank One Corporation
Bank One Corporation is the nation's sixth-largest bank holding company, with
assets of more than $320 billion. Bank One currently has more than 51 million
credit cards issued, making it the largest Visa credit card issuer in the world.
Bank One offers a full range of financial services to large corporate and middle
market commercial customers and retail consumers. This press release and
additional information can be found on the Web at www.bankone.com.
Forward-Looking Statements
This release contains forward-looking statements, which are subject to risks and
uncertainties, including without limitation (1) the timing and amount of any
adjustments affecting the proceeds from the sale of the private-label operation
and transition- and transaction-related costs, including severance costs or
post-closing adjustments; (2) the ability of Circuit City and Bank One to
successfully integrate Circuit City's retail business with the third-party
credit card program to be offered by Bank One; and (3) future levels of sales
activity and the acceptance of the third-party credit program by consumers on an
ongoing basis.
For more information:
Bank One Card Services Circuit City
David Webster (Media) Bill Cimino (Media and Investor)
302-282-6805 804-418-8163
Bank One Corporation Circuit City
Thomas Kelly (Media) Jessica Simmons (Investor)
312-732-7007 804-527-4038
Bank One Corporation Circuit City
Amy Fahey (Investor) Virginia Watson (Investor)
312-732-5771 804-527-4033
-end-
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