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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
(Amendment No. 3)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
MAY 20, 2002
FLEMING COMPANIES, INC.
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(Exact name of registrant as specified in its charter)
Oklahoma 1-8140 48-0222760
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1945 Lakepointe Drive, Lewisville, Texas 75057
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(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code: (972) 906-8000
Not Applicable
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(Former name or former address, if changed since last report)
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1
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
This Amendment No. 3 to Form 8-K amends and restates in its entirety
Item 7(b) of the Form 8-K filed with the Securities and Exchange Commission on
May 20, 2002, as amended by Amendment No. 1 on Form 8-K/A filed with the
Securities and Exchange Commission on May 29, 2002 and Amendment No. 2 on Form
8-K/A filed with the Securities and Exchange Commission on June 14, 2002, to
conform the pro forma financial information to the additional disclosure set
forth in the final prospectus supplements of Fleming Companies, Inc. ("Fleming")
relating to its debt and equity offerings.
(b) Pro Forma Financial Information.
The following pro forma consolidated information has been derived by
the application of pro forma adjustments to the consolidated financial
statements of (i) Fleming as of April 20, 2002 and Core-Mark as of March 31,
2002; (ii) Fleming for the 52 weeks ended December 29, 2001 and Core-Mark for
the 12 months ended December 31, 2001; and (iii) Fleming for the 16 weeks ended
April 20, 2002 and Core-Mark for the three months ended March 31, 2002.
The pro forma consolidated balance sheet gives effect to Fleming's
proposed acquisition of Core-Mark (the "Acquisition") for approximately $295
million in cash, plus Fleming's assumption of all of Core-Mark's net debt
outstanding as of the closing of the Acquisition (which we currently expect to
be approximately $95 million, for a total purchase price of approximately $390
million) and the related financing transactions (together with the Acquisition,
the "Transactions") as if they had occurred as of April 20, 2002. The pro forma
consolidated statements of income give effect to the Acquisition and the related
financing transactions as if they had occurred on December 31, 2000, with
respect to the pro forma consolidated statement of income for the 52 weeks ended
December 29, 2001, and carried forward through April 20, 2002, with respect to
the proforma consolidated statement of income for the 16 weeks ended April 20,
2002. The adjustments necessary to fairly present this pro forma consolidated
financial information have been made based on available information and in the
opinion of Fleming's management are reasonable and are described in the
accompanying notes. This pro forma information reflects our assumption that the
Acquisition will be financed by a combination of borrowings under a new credit
facility and public offerings of debt and equity. The pro forma consolidated
financial information should not be considered indicative of actual results that
would have been achieved had the Acquisition and the related financing
transactions been consummated on the respective dates indicated and do not
purport to indicate balance sheet data or income statement data as of any future
date or for any future period. We cannot assure you that the assumptions used in
the preparation of the pro forma consolidated financial information will prove
to be correct.
The pro forma adjustments were applied to the historical consolidated
financial statements to reflect and account for the Acquisition and the related
financing transactions. As a result, these adjustments have no impact on the
historical basis of the assets and liabilities. Our purchase of Core-Mark is not
complete. We expect to complete the Acquisition in June 2002. Our allocation of
the agreed-upon purchase price will depend on the fair values of the assets and
liabilities at the date of the Acquisition. Our final allocation of purchase
price may differ from this presentation due to potential changes in working
capital, our fair value analysis of leases, and the appraisal results
for identifiable intangibles. The following table sets forth our preliminary
allocation of the cash purchase price (dollars in thousands):
Fair value of assets acquired:
Cash ............................................................... $ 79,151
Receivables, net ................................................... 132,572
Inventories ........................................................ 130,665
Other current assets ............................................... 7,899
Property and equipment ............................................. 31,238
Other assets ....................................................... 4,393
Fair value of liabilities assumed:
Accounts payable ................................................... (185,486)
Current maturities of long-term debt ............................... (55,000)
Other current liabilities .......................................... (23,380)
Long-term debt ..................................................... (77,133)
Other liabilities .................................................. (13,242)
Goodwill and other intangibles recognized from the
Acquisition ........................................................ 268,387
---------
Total cash purchase price for Core-Mark equity ...................... $ 300,064
=========
The following table sets forth our preliminary calculation of the cash
purchase price (dollars in thousands):
Cash payment for acquisition of Core-Mark stock ...................... $295,000
Professional fees and other .......................................... 5,064
--------
Total cash purchase price for Core-Mark equity ..................... $300,064
========
2
PRO FORMA COMBINING BALANCE SHEET INFORMATION
FOR FLEMING AS OF APRIL 20, 2002
(IN THOUSANDS)
PRO FORMA
FLEMING CORE-MARK ADJUSTMENTS PRO FORMA
------------ ------------ ------------ ------------
Assets
Current Assets:
Cash and cash equivalents $ 3,974 $ 23,542 $ (23,000)(a) $ 4,516
Cash held by Trustee for refinancing 263,125 263,125
Receivables, net 588,321 130,902 -- 719,223
Inventories 954,174 118,278 52,133(b) 1,124,585
Assets held for sale 28,666 -- -- 28,666
Other current assets 76,169 8,610 (27,804)(c) 56,975
------------ ------------ ------------ ------------
Total current assets 1,914,429 281,332 1,329 2,197,090
Investments and notes receivable, net 102,073 -- -- 102,073
Investment in direct financing leases 76,941 -- -- 76,941
Property and equipment 1,676,372 77,970 (46,555)(d) 1,707,787
Less accumulated depreciation and amortization (734,388) (46,555) 46,555(d) (734,388)
------------ ------------ ------------ ------------
Net property and equipment 941,984 31,415 -- 973,399
Other assets 233,693 6,034 75,385(e) 315,112
Goodwill, net 554,388 57,684 166,122(f) 778,194
------------ ------------ ------------ ------------
Total assets $ 3,823,508 $ 376,465 242,836 $ 4,442,809
============ ============ ============ ============
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 835,205 $ 114,972 $ -- $ 950,177
Current maturities of long-term debt 39,747 76,000 (111,497)(g) 4,250
Current obligations under capital leases 21,751 -- -- 21,751
Debt to be refinanced 263,125 -- -- 263,125
Other current liabilities 183,711 43,622 (4,869)(h) 222,464
------------ ------------ ------------ ------------
Total current liabilities 1,343,539 234,594 (116,366) 1,461,767
Long-term debt 1,527,016 75,000 246,407(i) 1,848,423
Long-term obligations under capital leases 328,295 -- -- 328,295
Other liabilities 106,749 12,527 (2,334)(j) 116,942
Shareholders' equity:
Common stock 111,661 55 22,945(k) 134,661
Capital in excess of par value 562,235 26,121 120,352(k) 708,708
Reinvested earnings (deficit) (96,551) 37,443 (37,443)(k) (96,551)
Accumulated other comprehensive income--
Cumulative currency translation adjustments -- (5,447) 5,447(k) --
Additional minimum pension liability (59,436) (3,828) 3,828(k) (59,436)
------------ ------------ ------------ ------------
Total shareholders' equity 517,909 54,344 115,129 687,382
------------ ------------ ------------ ------------
Total liabilities and shareholders' equity $ 3,823,508 $ 376,465 $ 242,836 $ 4,442,809
============ ============ ============ ============
3
NOTES TO UNAUDITED PRO FORMA COMBINING BALANCE SHEET
(DOLLARS IN THOUSANDS)
For the purpose of determining the pro forma effect of the transactions on
Fleming's Consolidated Balance Sheet as of April 20, 2002, the following pro
forma adjustments have been made:
(a) Cash and cash equivalents -
Reflect Core-Mark cash used to reduce debt $ (23,000)
=========
(b) Inventories:
Eliminate Core-Mark LIFO reserve to reflect inventory at fair value $ 52,133
=========
(c) Other current assets:
Reclass Core-Mark current deferred tax liability to Fleming current
deferred tax asset $ (4,869)
Reflect deferred tax impact of difference in fair value of inventory
and acquired tax basis in inventory (20,853)
Remove Core-Mark prepaid pension amount to reflect acquired pension plan
liability at estimated fair value (2,082)
---------
$ (27,804)
=========
(d) Property and equipment:
Offset Core-Mark accumulated depreciation and amortization against cost
of property and equipment with our initial assumption that net book
value approximates fair value $ (46,555)
Eliminate Core-Mark accumulated depreciation and amortization 46,555
---------
$ --
=========
(e) Other assets:
Reclass Core-Mark long-term deferred tax liability to Fleming long-term deferred tax asset $ (3,005)
Eliminate existing Core-Mark deferred financing costs due to early debt retirement (1,501)
Reflect estimated financing costs from the debt portion of the transaction 24,875
Reflect deferred tax adjustment on Core-Mark pension liability (936)
Reflect estimate of other intangibles acquired as a result of this transaction 55,952
---------
$ 75,385
=========
(f) Goodwill, net:
Eliminate existing Core-Mark net goodwill $ (57,684)
Reflect goodwill from this transaction 223,806
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$ 166,122
=========
(g) Current maturities of long-term debt:
Reflect payment of existing Core-Mark debt $ (76,000)
Reflect current maturity of new term loan 4,250
Repay existing term loan (39,747)
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$(111,497)
=========
(h) Other current liabilities -
Reclass Core-Mark current deferred tax liability to Fleming current deferred tax asset $ (4,869)
(see note (c)) =========
4
(i) Long-term debt:
Reflect repayment of existing Core-Mark debt $ (75,000)
Reflect proceeds from sale of 9.25% senior notes due 2010 200,000
Reflect revolver borrowings under the new $975 million credit facility 79,667
Reflect term loan borrowings under the new $975 million credit facility 420,750
Reflect repayment of existing term loan (69,010)
Reflect repayment of revolving credit facility (310,000)
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$ 246,407
=========
(j) Other liabilities:
Reclass Core-Mark long-term deferred tax liability
to Fleming long-term deferred tax asset $ (3,005)
Reflect Core-Mark post-retirement liability at estimated fair value
by removing unamortized actuarial gains and losses 671
---------
$ (2,334)
=========
(k) Shareholders' equity:
Eliminate Core-Mark common stock $ (55)
Issue Fleming common stock ($2.50 par value, 9,200 shares) 23,000
---------
22,945
Eliminate Core-Mark common stock - excess capital impact (26,121)
Issue Fleming common stock - excess capital impact ($19.40 per share less par value,
9,200 shares) 155,480
Reflect equity transaction fees (9,007)
---------
120,352
Eliminate Core-Mark retained earnings (37,443)
Eliminate Core-Mark currency translation adjustments 5,447
Eliminate Core-Mark additional minimum pension liability 3,828
---------
$ 115,129
=========
5
PRO FORMA COMBINING INCOME STATEMENT INFORMATION
FOR FLEMING 52 WEEKS ENDED DECEMBER 29, 2001
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
PRO FORMA
FLEMING CORE-MARK ADJUSTMENTS PRO FORMA
------------ ------------ ------------ ------------
Net sales $ 15,558,102 $ 3,425,024 $ -- $ 18,983,126
Costs and expenses (income):
Cost of sales 14,368,199 3,211,160 76,680(a) 17,656,039
Selling and administrative 960,590 169,691 (71,085)(b) 1,059,196
Interest expense 165,534 12,395 13,194(c) 191,123
Interest income and other (24,053) -- (834)(d) (24,887)
Impairment/restructuring credit (23,595) -- -- (23,595)
Litigation charge 48,628 -- -- 48,628
------------ ------------ ------------ ------------
Total costs and expenses 15,495,303 3,393,246 17,955 18,906,504
------------ ------------ ------------ ------------
Income before taxes 62,799 31,778 (17,955) 76,222
Taxes on income(f) 36,022 14,268 (8,739)(e) 41,551
------------ ------------ ------------ ------------
Income before extraordinary charge 26,777 17,510 (9,216) 35,071
============ ============ ============ ============
Basic income per share:
Income before extraordinary charge(f) $ 0.63 $ 0.68
============ ============
Diluted income per share:
Income before extraordinary charge(f) $ 0.60 $ 0.65
============ ============
Weighted average shares outstanding:
Basic 42,588 9,200(g) 51,788
Diluted 44,924 9,200(h) 54,124
6
PRO FORMA COMBINING INCOME STATEMENT INFORMATION
FOR FLEMING 16 WEEKS ENDED APRIL 20, 2002
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
PRO FORMA
FLEMING CORE-MARK ADJUSTMENTS PRO FORMA
------------ ------------ ------------ ------------
Net sales $ 4,686,139 $ 825,153 $ -- $ 5,511,292
Costs and expenses (income):
Cost of sales 4,346,460 774,297 18,711 (a) 5,139,468
Selling and administrative 255,012 41,463 (17,312)(b) 279,163
Interest expense 50,413 2,806 5,068 (c) 58,287
Interest income and other (6,966) -- (141)(d) (7,107)
------------ ------------ ------------ ------------
Total costs and expenses 4,644,919 818,566 6,326 5,469,811
------------ ------------ ------------ ------------
Income before taxes 41,220 6,587 (6,326) 41,481
Taxes on income 16,611 2,832 (2,728)(e) 16,715
------------ ------------ ------------ ------------
Net income $ 24,609 $ 3,755 $ (3,598) $ 24,766
============ ============ ============ ============
Basic income per share $ 0.56 $ 0.46
============ ============
Diluted income per share $ 0.52 $ 0.44
============ ============
Weighted average shares outstanding:
Basic 44,175 9,200(g) 53,375
Diluted 50,601 9,200(h) 59,801
7
NOTES TO UNAUDITED PRO FORMA COMBINING INCOME STATEMENTS
(DOLLARS IN THOUSANDS)
Fleming's Financial Statements for the 52 weeks ended December 29, 2001 reflect
the retroactive reclassification to decrease net sales and cost of sales by
approximately $70 million with no effect on gross margin due to the adoption of
EITF 01-9. Core-Mark early adopted EITF 01-9 in 2001.
For the purpose of determining the pro forma effect of the transactions on
Fleming's Consolidated Income Statements for the 52 weeks ended December 29,
2001 and the 16 weeks ended April 20, 2002, the following pro forma adjustments
have been made:
(a) The adjustment to cost of sales reflects the following:
FLEMING 52 WEEKS FLEMING 16
ENDED DECEMBER 29, WEEKS ENDED
2001 APRIL 20, 2002
------------------ --------------
Reclass Core-Mark distribution and warehouse expense from
selling and administrative (see note (b))............ $ 76,680 $ 18,711
========== ==========
8
(b) The adjustment to selling and administrative reflects the following:
FLEMING 52 WEEKS FLEMING 16
ENDED DECEMBER 29, WEEKS ENDED
2001 APRIL 20, 2002
------------------ --------------
Reclass Core-Mark distribution and warehouse expense to cost
of sales (see note (a)).......................................... $(76,680) $ (18,711)
Amortize other intangible assets acquired as a result of the
transaction (estimate of 10 years)............................... 5,595 1,399
-------- ---------
$(71,085) $ (17,312)
======== =========
(c) The adjustment for interest expense reflects the following:
FLEMING 52 WEEKS FLEMING 16
ENDED DECEMBER 29, WEEKS ENDED
2001 APRIL 20, 2002
------------------ --------------
Reclassify Core-Mark interest income from interest
expense (see note (d))............................... $ 834 $ 141
Eliminate Core-Mark interest expense to reflect debt
repayment............................................ (13,229) (2,947)
Reflect Fleming interest expense on $86 million of borrowings
under concurrent new $975 million credit agreement
at 5.8%*.............................................. 4,961 1,527
Reflect Fleming interest expense on concurrent sale of
$200 million 9.25% senior notes due 2010............. 18,500 5,692
Debt refinancing amortization............................ 2,128 655
---------- --------
$ 13,194 $ 5,068
========== ========
* Note: Our credit agreement has a variable interest rate structure. A change in
the interest rate by 1/8% would change pro forma interest expense by
approximately $108 for the 52 weeks ended December 29, 2001 and approximately
$33 for the 16 weeks ended April 20, 2002. The 5.8% interest rate represents the
Company's interest rate on its credit agreement on the date of the acquisition.
(d) The adjustment for interest income and other reflects the following:
FLEMING 52 WEEKS FLEMING 16
ENDED DECEMBER 29, WEEKS ENDED
2001 APRIL 20, 2002
------------------ --------------
Reclassify Core-Mark interest income from interest expense
(see note (c))....................................... $ (834) $ (141)
======= =======
9
(e) The adjustment for taxes on income reflects the following:
FLEMING 52 WEEKS FLEMING 16
ENDED DECEMBER 29, WEEKS ENDED
2001 APRIL 20, 2002
------------------ --------------
Eliminate Core-Mark taxes on income................................ $ (14,268) $ (2,832)
Reflect tax provision on Core-Mark results of operations net
of pro forma adjustments....................................... 5,529 104
--------- ---------
$ (8,739) $ (2,728)
========= =========
(f) The pro forma combined effective tax rate of 54% for the 52 weeks ended
December 29, 2001 includes the impact of an unusual tax gain related to our
disposition of non-strategic retail operations. Our effective tax rate would
have been approximately 40% absent this item since we do not anticipate another
similar tax gain. For the 52 weeks ended December 29, 2001, our effective tax
rate of approximately 40% would have represented a pro forma combined tax
expense of $30.6 million, net income before extraordinary item of $45.8 million,
basic income per share before extraordinary item of $0.89 and diluted income per
share before extraordinary item of $0.85.
(g) The adjustment for basic weighted average shares outstanding reflects the
following:
FLEMING 52 WEEKS FLEMING 16
ENDED DECEMBER 29, WEEKS ENDED
2001 APRIL 20, 2002
------------------ --------------
Reflect Fleming common shares issued to partially fund the
transaction (including the exercise of the underwriters'
over-allotment option).......................................... 9,200 9,200
===== =====
(h) The adjustment for diluted weighted average shares outstanding reflects the
following:
FLEMING 52 WEEKS FLEMING 16
ENDED DECEMBER 29, WEEKS ENDED
2001 APRIL 20, 2002
------------------ --------------
Reflect Fleming common shares issued to partially fund the
transaction (including the exercise of the underwriters'
over-allotment option).......................................... 9,200 9,200
===== =====
10
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.
FLEMING COMPANIES, INC.
By: /s/ MARK D. SHAPIRO
------------------------------------------
Mark D. Shapiro
Senior Vice President -- Finance
and Operations Control
Dated: October 11, 2002