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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 8-K/A
(Amendment No. 2)
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.
---------------
(Exact name of registrant as specified in its charter)
Oklahoma 1-8140 48-0222760
---------------------------- --------------------- -------------------
(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
------------------------------------------------------
(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. 2 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, 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; (iii) Fleming for the 16 weeks ended
April 20, 2002 and Core-Mark for the three months ended March 31, 2002; and (iv)
Fleming for the 52 weeks ended April 20, 2002 and Core-Mark for the 12 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 (i) on December 31, 2000, with
respect to the pro forma consolidated statement of income for the 52 weeks ended
December 29, 2001; (ii) on December 30, 2001, with respect to the pro forma
consolidated statement of income for the 16 weeks ended April 20, 2002; and
(iii) on April 22, 2001, with respect to the pro forma consolidated statement of
income for the 52 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.
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 inventory reserve - offset to deferred tax $ 20,853
Eliminate Core-Mark LIFO inventory reserve - offset to goodwill 31,280
---------
$ 52,133
=========
(c) Other current assets:
Reclass Core-Mark current deferred tax liability to Fleming current deferred tax asset $ (4,869)
Eliminate Core-Mark LIFO inventory reserve (see note (b)) (20,853)
Eliminate Core-Mark prepaid pension amount (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
---------
$ 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)
---------
$(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:
Payment of existing Core-Mark debt $ (75,000)
Reflect redemption premium on existing Core-Mark debt 2,133
Reflect new financing to fund the transaction 659,027
Repay existing term loan and credit facility (379,010)
Reflect estimated transaction fees:
Debt (see note (e)) 24,875
Equity (see note (k)) 9,007
Merger and acquisition 5,375
---------
$ 246,407
=========
(j) Other liabilities:
Reclass Core-Mark long-term deferred tax liability
to Fleming long-term deferred tax asset (see note (e)) $ (3,005)
Adjust Core-Mark post-retirement liability 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 (61,978)(b) 1,068,303
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 27,062 18,915,611
------------ ---------- ---------- ------------
Income before taxes 62,799 31,778 (27,062) 67,515
Taxes on income(f) 36,022 14,268 (7,905)(e) 42,385
------------ ---------- ---------- ------------
Income before extraordinary charge(g) 26,777 17,510 (19,157) 25,130
Extraordinary charge from early retirement
of debt (net of taxes) (3,469) -- -- (3,469)
------------ ---------- ---------- ------------
Net income(g) $ 23,308 $ 17,510 $ (19,157) $ 21,661
============ ========== ========== ============
Basic income per share:
Income before extraordinary charge(f)(h) $ 0.63 $ 0.49
Extraordinary charge from early retirement
of debt (net of taxes) (0.08) (0.07)
------------ ------------
Net income(f)(h) $ 0.55 $ 0.42
============ ============
Diluted income per share:
Income before extraordinary charge(f)(i) $ 0.60 $ 0.46
Extraordinary charge from early retirement
of debt (net of taxes) (0.08) (0.06)
------------ ------------
Net income(f)(i) $ 0.52 $ 0.40
============ ============
Weighted average shares outstanding:
Basic 42,588 9,200 (j) 51,788
Diluted(i) 44,924 9,200 (k) 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 (j) 53,375
Diluted 50,601 9,200 (k) 59,801
7
PRO FORMA COMBINING INCOME STATEMENT INFORMATION
FOR FLEMING 52 WEEKS ENDED APRIL 20, 2002
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
PRO FORMA
FLEMING CORE-MARK ADJUSTMENTS PRO FORMA
------------ ------------ ------------ ------------
Net sales $ 16,106,882 $ 3,495,911 $ -- $ 19,602,793
Costs and expenses (income):
Cost of sales 14,943,544 3,280,336 77,425 (a) 18,301,305
Selling and administrative 898,289 169,004 (65,000)(b) 1,002,293
Interest expense 158,445 11,841 13,748 (c) 184,034
Interest income and other (22,098) -- (736)(d) (22,834)
Impairment/restructuring charge 3,264 -- -- 3,264
Litigation charge 48,628 -- -- 48,628
------------ ------------ ------------ ------------
Total costs and expenses 16,030,072 3,461,181 25,437 19,516,690
------------ ------------ ------------ ------------
Income before taxes 76,810 34,730 (25,437) 86,103
Taxes on income(f) 40,890 15,467 (8,393)(e) 47,964
------------ ------------ ------------ ------------
Net income(g) $ 35,920 $ 19,263 $ (17,044) $ 38,139
============ ============ ============ ============
Basic income per share(f)(h) $ 0.82 $ 0.72
============ ============
Diluted income per share(f)(i) $ 0.79 $ 0.69
============ ============
Weighted average shares outstanding:
Basic 43,813 9,200 (j) 53,013
Diluted(i) 50,866 4,245 (k) 55,111
8
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 Statement for the 52 weeks ended April 20, 2002,
the Consolidated Income Statement information for Fleming's 16 weeks ended April
20, 2002 was combined with the Consolidated Income Statement information for
Fleming's 52 weeks ended December 29, 2001, and the Consolidated Income
Statement information for Fleming's 16 weeks ended April 21, 2001 was
subtracted. Fleming has presented information for the 52 weeks ended April 20,
2002 because Fleming's first quarter of 2001 includes results related to our
disposition of conventional retail operations.
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, the 16 weeks ended April 20, 2002 and the 52 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 FLEMING 52
ENDED DECEMBER 29, WEEKS ENDED WEEKS ENDED
2001 APRIL 20, 2002 APRIL 20, 2002
------------------ -------------- ---------------
Reclass Core-Mark distribution and warehouse expense from
selling and administrative (see note (b))............ $ 76,680 $ 18,711 $ 77,425
========== ========== ========
9
(b) The adjustment to selling and administrative reflects the following:
FLEMING 52 WEEKS FLEMING 16 FLEMING 52
ENDED DECEMBER 29, WEEKS ENDED WEEKS ENDED
2001 APRIL 20, 2002 APRIL 20, 2002
------------------ -------------- ---------------
Reclass Core-Mark distribution and warehouse expense to cost
of sales (see note (a)).......................................... $(76,680) $ (18,711) $(77,425)
Eliminate Core-Mark goodwill amortization............................ (2,083) -- (1,562)
Amortize goodwill acquired as a result of the transaction
(estimate of 20 years)........................................... 11,190 -- 8,392
Amortize other intangible assets acquired as a result of the
transaction (estimate of 10 years)............................... 5,595 1,399 5,595
-------- --------- --------
$(61,978) $ (17,312) $(65,000)
======== ========= ========
(c) The adjustment for interest expense reflects the following:
FLEMING 52 WEEKS FLEMING 16 FLEMING 52
ENDED DECEMBER 29, WEEKS ENDED WEEKS ENDED
2001 APRIL 20, 2002 APRIL 20, 2002
------------------ -------------- ---------------
Reclassify Core-Mark interest income from interest
expense (see note (d))............................... $ 834 $ 141 $ 736
Eliminate Core-Mark interest expense to reflect debt
repayment............................................ (13,229) (2,947) (12,577)
Reflect Fleming interest expense on new financing to fund
the transaction...................................... 25,589 7,874 25,589
---------- -------- --------
$ 13,194 $ 5,068 $ 13,748
========== ======== ========
(d) The adjustment for interest income and other reflects the following:
FLEMING 52 WEEKS FLEMING 16 FLEMING 52
ENDED DECEMBER 29, WEEKS ENDED WEEKS ENDED
2001 APRIL 20, 2002 APRIL 20, 2002
------------------ -------------- ---------------
Reclassify Core-Mark interest income from interest expense
(see note (c))....................................... $ (834) $ (141) $ (736)
======= ======= =======
10
(e) The adjustment for taxes on income reflects the following:
FLEMING 52 WEEKS FLEMING 16 FLEMING 52
ENDED DECEMBER 29, WEEKS ENDED WEEKS ENDED
2001 APRIL 20, 2002 APRIL 20, 2002
------------------ -------------- ---------------
Eliminate Core-Mark taxes on income................................ $ (14,268) $ (2,832) $(15,467)
Reflect tax provision on Core-Mark results of operations net
of pro forma adjustments....................................... 6,363 104 7,074
--------- --------- --------
$ (7,905) $ (2,728) $ (8,393)
========= ========= ========
(f) The pro forma combined effective tax rates of 63% for the 52 weeks ended
December 29, 2001 and 56% for the 52 weeks ended April 20, 2002 include the
impact of an unusual tax gain related to our disposition of non-strategic retail
operations and the pro forma amortization of goodwill from our planned
acquisition of Core-Mark, most of which would not have been tax deductible. Our
effective tax rate for both periods would have been approximately 40% absent
these two items since we will not amortize goodwill in accordance with SFAS 142
and 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 $27.3 million, net income before extraordinary
item of $40.2 million, net income of $36.8 million, basic income per share
before extraordinary item of $0.78, basic income per share of $0.71, diluted
income per share before extraordinary item of $0.74 and diluted income per share
of $0.67. For the 52 weeks ended April 20, 2002, our effective tax rate of
approximately 40% would have represented a pro forma combined tax expense of
$34.0 million, net income of $52.1 million, basic income per share of $0.98 and
diluted income per share of $0.95.
(g) On December 30, 2001 we adopted SFAS 142, Accounting for Goodwill and
Other Intangible Assets. If we had applied the nonamortization provisions of
SFAS 142 to all periods presented, our pro forma combined income before
extraordinary charge for the 52 weeks ended December 29, 2001, would have been
$56 million and our pro forma combined net income would have been $52 million
for the 52 weeks ended December 29, 2001, and $60 million for the 52 weeks ended
April 20, 2002. Our historical numbers include goodwill amortization of $21
million for the year ended December 29, 2001 and $15 million for the 52 weeks
ended April 20, 2002. If we had applied the nonamortization provisions of SFAS
142 to our historical amounts, our income before extraordinary item for the year
ended December 29, 2001 would have been $46 million ($1.01 per diluted share)
and our net income would have been $42 million ($0.94 per diluted share) for the
year ended December 29, 2001 and $49 million ($1.06 per diluted share) for the
52 weeks ended April 20, 2002.
(h) See note (g). If we had applied the nonamortization provisions of SFAS
142 to all periods presented, our pro forma combined basic earnings per share
before extraordinary charge for the 52 weeks ended December 29, 2001, would have
been $1.07 per share, our pro forma combined basic earnings per share would have
been $1.00 for the 52 weeks ended December 29, 2001 and $1.13 for the 52 weeks
ended April 20, 2002.
(i) See note (g). If we had applied the nonamortization provisions of SFAS
142 to all periods presented, our pro forma combined diluted earnings per share
before extraordinary charge for the 52 weeks ended December 29, 2001, would have
been $1.02 and our pro forma combined diluted earnings per share would have been
$0.96 for the 52 weeks ended December 29, 2001, and $1.08 for the 52 weeks ended
April 20, 2002. Our 5 1/4% convertible notes would be dilutive for all periods
presented. The diluted weighted average shares would have been 58,072,000 shares
for the 52 weeks ended December 29, 2001 and 60,066,000 shares for the 52 weeks
ended April 20, 2002.
(j) The adjustment for basic weighted average shares outstanding reflects
the following:
FLEMING 52 WEEKS FLEMING 16 FLEMING 52
ENDED DECEMBER 29, WEEKS ENDED WEEKS ENDED
2001 APRIL 20, 2002 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 9,200
===== ===== =====
(k) The adjustment for diluted weighted average shares outstanding reflects
the following:
FLEMING 52 WEEKS FLEMING 16 FLEMING 52
ENDED DECEMBER 29, WEEKS ENDED WEEKS ENDED
2001 APRIL 20, 2002 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 9,200
Reflect adjustment to Fleming's diluted weighted average
shares outstanding due to the impact of Fleming's 5 1/4%
convertible notes (anti-dilutive for the 52 weeks ended
April 20, 2002)................................................. -- -- (4,955)
----- ----- ------
9,200 9,200 4,245
===== ===== ======
11
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/ MATTHEW H. HILDRETH
---------------------------------------
Matthew H. Hildreth
Senior Vice President -- Finance
and Treasurer
Dated: June 14, 2002