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Fays Inc – ‘8-K’ for 11/30/95

As of:  Friday, 12/15/95   ·   For:  11/30/95   ·   Accession #:  950130-95-2701   ·   File #:  1-07527

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

12/15/95  Fays Inc                          8-K:2,7    11/30/95    1:13K                                    Donnelley R R & S..02/FA

Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                         7     27K 


Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page   -   Filing Submission
2Item 2. Acquisition or Disposition of Assets
3Item 7. Financial Statements and Exhibits
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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): November 30, 1995 FAY'S INCORPORATED (Exact name of registrant as specified in its charter) 0-5179 (Commission File Number) State of New York 16-0919350 (State of Incorporation) (I.R.S. Employer Identification No.) 7245 HENRY CLAY BOULEVARD, LIVERPOOL, NEW YORK 13088 (Address of principal executive offices) Registrant's telephone number, including area code: (315) 451-8000
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On October 20, 1995, the Registrant and its wholly owned subsidiary, Wheels Discount Auto Supply, Inc., entered into a definitive agreement ("Asset Purchase Agreement" or the "Agreement") to sell the inventory and store assets used in the operation of its Wheels Discount Auto Supply Division ("Wheels" or "Wheels Division") to Western Auto Supply Company ("Western Auto"), a wholly owned subsidiary of Sears Roebuck and Co.. The Wheels Division consisted of 81 discount automotive parts and supply stores operating in New York and in Pennsylvania. The transfer of assets of the Wheels Division to Western Auto was completed on November 30, 1995 (the "Closing Date"). The purchase price for Wheels' inventory and stores assets is an amount equal to the book value of such inventory and store assets on the Closing Date plus $4,500,000. Except as specifically provided for in the Asset Purchase Agreement, Registrant will retain the liabilities of Wheels arising from the operations, activities and transactions through the Closing Date. On the Closing Date, Western Auto remitted to Registrant an estimated purchase price of $36,965,165 less $2,000,000 placed in escrow pending final determination of the closing purchase price. In addition, on the Closing Date Western Auto retained $700,000 pending delivery of landlord consents to the assignment of 14 leases ($50,000 per consent) not delivered as of the Closing Date. The closing purchase price will be determined after completion of an audit of Wheels' Closing Date balance sheet. Calculation of the closing purchase price based on the audited closing balance sheet is subject to binding arbitration in the event Western Auto disagrees with such calculation in an amount exceeding $150,000. Under the terms of the Agreement, Registrant made various representations and warranties and has agreed to indemnify Western Auto for any breaches thereof. No indemnification shall be made in favor of Western Auto unless all claims for such indemnification exceed in the aggregate $350,000. Registrant's maximum indemnification obligation for such losses is $17,500,000. On the Closing Date, Registrant also entered into various agreements with Western Auto pursuant to the Asset Purchase Agreement including: (a) subleases for two (2) leases under which Registrant continues to conduct retail operations; (b) assignment of four (4) leases for stores not being operated by Wheels; and, (c) an agreement whereby Registrant will provide certain transitional distribution and office services to Western Auto. There are no material relationships between the Registrant or any of its affliates, officers, directors or any associate of such director or officer and Western Auto or any of its affiliates, directors or offficers or any associates of such directors or officers. 2
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Business Acquired Not applicable (b) Pro Forma Financial Information The following unaudited pro forma condensed consolidated financial statements are filed with this report. Pro Forma Condensed Consolidated Balance Sheet at October 28, 1995 ........................................ Page F-1 Pro Forma Condensed Consolidated Statements of Net Earnings: Year Ended January 28, 1995 .................................... Page F-2 Thirty-Nine Weeks Ended October 28, 1995 ....................... Page F-3 The Pro Forma Condensed Consolidated Balance Sheet of Registrant at October 28, 1995 reflects the financial position of Registrant after giving effect to the disposition of the assets and assumption of liabilities discussed in Item 2 and assumes that the disposition took place on October 28, 1995. The Pro Forma Condensed Consolidated Statements of Net Earnings for the fiscal year ended January 28, 1995 and the thirty-nine weeks ended October 28, 1995 assume that the disposition occurred on January 30, 1994, and are based on the operations of Registrant for the year ended January 28, 1995 and the thirty-nine weeks ended October 28, 1995. These statements are based on preliminary analyses and estimates, and are subject to further adjustment including adjustments in the assumed purchase price as detailed in Item 2. The unaudited pro forma condensed consolidated financial statements have been prepared by Registrant based upon assumptions deemed proper by it. The unaudited pro forma condensed consolidated financial statements presented herein are shown for illustrative purposes only and are not necessarily indicative of the future financial position or future results of operations of Registrant, or of the financial position or results of operations of Registrant that would have actually occurred had the transaction been in effect as of the date or for the periods presented. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the historical financial statements and related notes of Registrant. (c) Exhibits 2. Asset Purchase Agreement by and among Wheels Discount Auto Supply, Inc., Fay's Incorporated and Western Auto Supply Company dated October 20, 1995. 3
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SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FAY'S INCORPORATED ------------------ (Registrant) /s/ James F. Poole, Jr. ----------------------- James F. Poole, Jr. Senior Vice President-Finance and Chief Financial Officer Dated: December 15, 1995 4
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FAY'S INCORPORATED AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands of dollars) [Enlarge/Download Table] Pro Forma Adjustments --------------------- Historical WDA (a) Other Pro Forma ---------- ------- ------ --------- Current Assets: Cash $ 1,625 $ 81 $ 39,568 (b) $ 41,112 Accounts receivable 34,267 383 133 (c) 34,017 Merchandise inventories 184,973 22,750 162,223 Prepaid expenses 6,928 871 245 (c) 6,302 Refundable income taxes 1,424 - - 1,424 ------- ------ ------ ------- Total Current Assets 229,217 24,085 39,946 245,078 Deferred Income Taxes 1,572 1,572 Property and Equipment, net 72,179 11,510 2,200 (d) 62,869 Intangible and Other Assets, net 31,130 4,211 - 26,919 ------- ------ ------ ------- Total Assets $ 334,098 $ 39,806 $ 42,146 $ 336,438 ======= ====== ====== ======= Current Liabilities: Notes payable, bank $ 14,855 $ $ $ 14,855 Accounts payable, trade 86,811 9,210 9,210 (e) 86,811 Accrued payroll and related taxes 7,729 321 896 (e) 8,304 Other current liabilities 21,282 2,717 2,200 (e) 20,765 Federal and state income taxes payable - 119 (e) 119 Current portion of long-term debt and obligation under leases 10,147 - - 10,147 ------- ------ ------ ------- Total Current Liabilities 140,824 12,248 12,425 141,001 Long-Term Debt 74,127 74,127 Obligation Under Leases 1,282 1,282 Deferred Gain and Other Liabilities 3,236 2,000 (e) 5,236 Accrued Postretirement Benefit Obligation 7,394 7,394 Total Stockholders' Equity 107,235 27,558 27,721 107,398 ------- ------ ------ ------- $ 334,098 $ 39,806 $ 42,146 $ 336,438 ======= ====== ====== ======= -------------------- (a) To eliminate the assets and liabilities included in the balance sheet of the Company's Wheels Discount Auto Supply Division ("WDA") as of October 28, 1995. (b) To reflect the proceeds from the sale of WDA based on the net book value of assets as of October 28, 1995. The actual purchase price will be based on the net book value of assets at November 30, 1995 and accordingly amounts presented here may not be indicative of the actual proceeds to be realized. (c) To reflect accounts receivable and prepaid expenses retained by the Company. (d) To reflect fixed assets retained by the Company for sale net of adjustments to reduce carrying value of such assets to estimated net realizable value. (e) To reflect liabilities retained by the Company, transaction costs, and the accrual of costs associated with a lease commitment on a vacant distribution facility retained by the Company. F-1
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FAY'S INCORPORATED AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF NET EARNINGS FOR THE YEAR ENDED JANUARY 28, 1995 (Unaudited) (in thousands of dollars except per share data) [Enlarge/Download Table] Pro Forma Adjustments --------------------- Historical WDA (a) Other Pro Forma ---------- ------- ------- --------- Net sales $ 1,038,110 $ 64,142 $ $ 973,968 Costs and Expenses: ------------------- Cost of merchandise sold 735,324 36,924 698,400 Selling, general and administrative 255,976 23,538 175 (b) 232,613 Depreciation and amortization 16,264 1,633 14,631 Interest expense, net 8,493 1,064 (1,125) (c) 6,304 --------- ------ ------ ------- Total cost and expenses 1,016,057 63,159 (950) 951,948 --------- ------ ------ ------- Earnings before income taxes 22,053 983 950 22,020 Provision for income taxes 9,417 414 406 9,409 --------- ------ ------ ------- Net earnings $ 12,636 $ 569 $ 544 $ 12,611 ========= ====== ====== ======= Average shares outstanding including common stock equivalents 20,357 20,357 Earnings per share $ .62 $ .62 ========= ======= --------------------------- (a) To eliminate the profit of WDA for the entire period. (b) To reflect costs that would not have been eliminated due to the sale of WDA. (c) To reflect estimated reduction in interest cost. F-2
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FAY'S INCORPORATED AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF NET EARNINGS FOR THE THIRTY-NINE WEEKS ENDED OCTOBER 28, 1995 (Unaudited) (in thousands of dollars except per share data) [Enlarge/Download Table] Pro Forma Adjustments --------------------- Historical WDA (a) Other Pro Forma ---------- ------- ------ --------- Net sales $ 808,927 $ 64,111 $ $ 744,816 Costs and Expenses: ------------------- Cost of merchandise sold 580,726 37,904 542,822 Selling, general and administrative 203,524 23,943 130 (b) 179,711 Depreciation and amortization 12,884 1,392 11,492 Interest expense, net 6,676 1,009 (927) (c) 4,740 ------- ------ ---- ------- Total cost and expenses 803,810 64,248 (797) 738,765 ------- ------ ---- ------- Earnings before income taxes 5,117 (137) 797 6,051 Provision for income taxes 2,152 (53) 335 2,540 ------- ------ ---- ------- Net earnings $ 2,965 $ (84) $ 462 $ 3,511 ======= ====== ==== ======= Average shares outstanding including common stock equivalents 20,830 20,830 Earnings per share $ .14 $ .17 ======= ======= ---------------------------- (a) To eliminate the profit of WDA for the entire period. (b) To reflect costs that would not have been eliminated due to the sale of WDA. (c) To reflect estimated reduction in interest cost. F-3

Dates Referenced Herein   and   Documents Incorporated by Reference

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This ‘8-K’ Filing    Date First  Last      Other Filings
Filed on:12/15/9548-K/A
For Period End:11/30/9515
10/28/953710-Q
10/20/9523
1/28/953610-K405
1/30/943
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