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Previous: GLICKENHAUS VALUE PORTFOLIOS 1996 EQUITY COLLECTION SERIES 2, 24F-2NT, 1998-08-26 |
Next: ARDEN REALTY INC, 8-K, 1998-08-26 |
<PAGE>
FORM 8-K/A
(AMENDMENT NO. 2)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: August 26, 1998
CHANNELL COMMERCIAL CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
DELAWARE 0-28582 95-2453261
- -------- --------------- ----------
<S> <C> <C>
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
26040 Ynez Road, Temecula, California
(Address of principal executive offices)
92591
(Zip Code)
(909) 694-9160
(Registrant's telephone number, including area code)
<PAGE>
Item 7 (b) of the Registrant's Current Report on Form 8-K (filed on May 18, 1998
and amended on July 17, 1998), event date May 1, 1998, is amended to read in its
entirety as follows:
Item 7 (b). Pro Forma Financial Information
Pro forma financial information that would be required pursuant to
Article 11 of Regulation S-X
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed balance sheet at March 31,
1998, gives effect to Channell Commercial Corporation's ("Channell") acquisition
on May 1, 1998 of all of the outstanding share capital of A.C. Egerton
(Holdings) PLC ("Egerton"), a public limited company incorporated in England and
Wales, in a transaction accounted for as a purchase business combination
("Egerton acquisition"). Under this method of accounting, the assets and
liabilities of the acquired company are recorded at fair value as of the date of
the acquisition.
The following unaudited pro forma condensed combined statements of income
for the year ended December 31, 1997, and the three months ended March 31, 1998,
have been prepared as if the acquisition had occurred on January 1, 1997.
The unaudited pro forma condensed combined financial information is based
on the consolidated financial statements of Channell giving effect to the
Egerton acquisition under the assumptions and adjustments outlined in the
accompanying notes to unaudited pro forma condensed combined balance sheet and
statements of income. Such pro forma adjustments are based upon available
information and upon certain assumptions that the Company's management believes
are reasonable under the circumstances. The unaudited pro forma condensed
combined balance sheet and statements of income are provided for comparative
purposes only and do not purport to represent the results that would have been
obtained had the Egerton acquisition occurred on the date indicated or that may
be achieved in the future.
The unaudited pro forma condensed combined balance sheet and statements of
income and accompanying notes should be read in conjunction with the
consolidated financial statements of Channell contained in Channell's Annual
Report on Form 10-K for the year ended December 31, 1997, and Channell's Form
10-Q for the three months ended March 31, 1998, and Egerton's audited
consolidated financial statements for the years ended December 31, 1997, 1996
and 1995, for the three months ended March 31, 1998 and 1997 (unaudited),
included in the Form 8-K/A. For purposes of the pro forma condensed combined
financial statements the accounts of Egerton have been adjusted to reflect the
items necessary to reconcile United Kingdom Generally Accepted Accounting
Principles ("UK GAAP") to United States Generally Accepted Accounting Principles
("US GAAP") as set forth in Egerton's audited historical financial statements
referred to above, and currency amounts in Pounds Sterling have been translated
to US Dollars based upon average exchange rates in effect during the respective
periods for the unaudited pro forma condensed combined statements of income and
the exchange rate in effect as of the date of the unaudited pro forma condensed
combined balance sheet.
Page 34 of 41
<PAGE>
Channell Commercial Corporation
Pro Forma Condensed Combined
Balance Sheet
March 31, 1998
(Unaudited)
(amounts in thousands)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
Channell Egerton Adjustments Combined
---------- ---------- ------------ ---------
<S> <C> <C> <C> <C>
ASSETS
Cash $ 3,354 $ 4,142 $ - $ 7,496
Investments 11,708 - (10,200) 1,508
Accounts Receivable, Net 10,345 4,630 - 14,975
Inventory 8,593 4,903 - 13,496
Deferred Income Taxes 868 - - 868
Prepaid Expenses 177 3 - 180
------- ------- --------- -------
CURRENT ASSETS 35,045 13,678 (10,200) 38,523
Goodwill 1,615 4 18,872 20,491
Property, Plant and Equipment 15,752 7,539 1,360 24,651
Deferred Income Taxes 483 - - 483
Other Assets 371 - - 371
------- ------- --------- -------
$53,266 $21,221 $ 10,032 $84,519
======= ======= ========= =======
LIABILITIES AND CAPITAL
Bank Overdraft $ - $ 9,350 $ - $ 9,350
Accounts Payable 2,767 2,399 - 5,166
Current Portion of Term Debt 133 - - 133
Lease Obligations 226 231 - 457
Accrued Expenses 1,025 1,062 1,275 3,362
Current Taxes Payable 1,138 322 - 1,460
------- ------- --------- -------
CURRENT LIABILITIES 5,289 13,364 1,275 19,928
Long-Term Debt 267 57 16,361 16,685
Lease Obligations 271 - - 271
Deferred Income Tax - 853 - 853
Capital:
Common Stock 92 86 (86) 92
Paid-in-Capital 27,991 2,057 (2,057) 27,991
Retained Earnings 19,356 4,804 (5,461) 18,699
------- ------- --------- -------
47,439 6,947 (7,604) 46,782
------- ------- --------- -------
$53,266 $21,221 $ 10,032 $84,519
======= ======= ========= =======
</TABLE>
Page 35 of 41
<PAGE>
CHANNELL COMMERCIAL CORPORATION
Notes to Unaudited Pro Forma Condensed Combined Balance Sheet
March 31, 1998
(amounts in thousands)
NOTE A. SOURCES AND USES OF FUNDS
<TABLE>
<S> <C>
Sources:
--------
Bank borrowings $16,361
Decrease in Channell investments 10,200
Increase in Channell accrued expenses 1,275
-------
$27,836
=======
Uses:
-----
Purchase of Egerton shares $26,561
Egerton acquisition costs 1,275
-------
$27,836
=======
</TABLE>
NOTE B. ALLOCATION OF PURCHASE PRICE AND CALCULATION OF GOODWILL
<TABLE>
<S> <C>
Purchase of Egerton shares $ 26,561
Egerton acquisition costs 1,275
Adjustment of property, plant and
equipment to fair value (1,360)
Egerton book equity (7,604)
--------
Calculated goodwill $ 18,872
========
</TABLE>
The above allocation of the Egerton purchase price is tentative pending
completion of fair value determinations for the net assets acquired. The
allocation may change with the completion of these determinations.
Page 36 of 41
<PAGE>
Channell Commercial Corporation
Pro Forma Condensed Combined
Statement of Income
Year Ended December 31, 1997
(Unaudited)
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
Channell Egerton Combined Adjustments Combined
---------- ------------ -------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Net Sales $ 59,943 $ 34,145 $ 94,088 $ - $ 94,088
Cost of Goods Sold 35,032 22,097 57,129 68 A 57,197
-------- -------- -------- -------- --------
Gross Margin 24,911 12,048 36,959 (68) 36,891
Commission Income 606 - 606 - 606
-------- -------- -------- -------- --------
25,517 12,048 37,565 (68) 37,497
Operating Expenses
General and
Administrative 4,077 7,965 12,042 944 B 12,986
Selling 7,251 1,870 9,121 - 9,121
Research and
Development 1,009 435 1,444 - 1,444
-------- -------- -------- -------- --------
12,337 10,270 22,607 944 23,551
Income from Operations 13,180 1,778 14,958 (1,012) 13,946
Interest Income
(Expense), Net 879 (763) 116 (2,003)C (1,887)
Other Income - 136 136 - 136
-------- -------- -------- -------- --------
Income Before Income Taxes 14,059 1,151 15,210 (3,015) 12,195
Income Tax Expense
(Benefit) 5,589 330 5,919 (801)D 5,118
-------- -------- -------- -------- --------
Net Income $ 8,470 $ 821 $ 9,291 $ (2,214) $ 7,077
======== ======== ======== ======== ========
Net Income Per Share
Basic $ 0.77 E
========
Diluted $ 0.76 E
========
</TABLE>
Page 37 of 41
<PAGE>
Channell Commercial Corporation
Pro Forma Condensed Combined
Statement of Income
Three Months Ended March 31, 1998
(Unaudited)
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
Channell Egerton Combined Adjustments Combined
---------- ------------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C>
Net Sales $ 15,704 $ 6,636 $ 22,340 $ - $ 22,340
Cost of Goods Sold 9,290 4,683 13,973 17 A 13,990
-------- ------- -------- ------ --------
Gross Margin 6,414 1,953 8,367 (17) 8,350
Commission Income 80 54 134 - 134
-------- ------- -------- ------ --------
6,494 2,007 8,501 (17) 8,484
Operating Expenses
General and
Administrative 1,404 1,313 2,717 236 B 2,953
Selling 2,219 442 2,661 - 2,661
Research and
Development 378 124 502 - 502
-------- ------- -------- ------ --------
4,001 1,879 5,880 236 6,116
Income from Operations 2,493 128 2,621 (253) 2,368
Interest Income
(Expense), Net 152 (244) (92) (501)C (593)
-------- ------- -------- ------ --------
Income Before Income Taxes 2,645 (116) 2,529 (754) 1,775
Income Tax Expense
(Benefit) 1,098 - 1,098 (200)D 898
-------- ------- -------- ------ --------
Net Income $ 1,547 $ (116) $ 1,431 $ (554) $ 877
======== ======= ======== ====== ========
Net Income Per Share
Basic $ 0.09 E
========
Diluted $ 0.09 E
========
</TABLE>
Page 38 of 41
<PAGE>
CHANNELL COMMERCIAL CORPORATION
Notes to Unaudited Pro Forma Condensed Combined Statements of Income
Year Ended December 31, 1997, and Three Months Ended March 31, 1998
(amounts in thousands)
NOTE A. DEPRECIATION
Reflects depreciation expense for increase in carrying value of buildings
of $1,360 with an estimated twenty year remaining life.
NOTE B. AMORTIZATION OF GOODWILL
Reflects the amortization of goodwill in the amount of $18,872 over an
estimated twenty-year life.
NOTE C. INTEREST EXPENSE
Reflects interest expense on borrowings in the amount of $16,361 at an
interest rate of 8.5% per annum plus the estimated interest income that
would have been earned on the investments redeemed in the amount of
$10,200, which yielded approximately 6% per annum.
NOTE D. INCOME TAX BENEFIT
Reflects income tax benefit, at an assumed rate of 40%, resulting from pro
forma interest expense.
NOTE E. NET INCOME PER SHARE
Basic net income per share information has been calculated on the basis of
9,237 shares of Channell common stock outstanding throughout both periods.
Diluted earnings per share is applicable to the year ended December 31,
1997 only, and the effect of dilutive stock options have been added to
reflect 9,291 shares outstanding.
Page 39 of 41
<PAGE>
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 thereunto duly authorized.
CHANNELL COMMERCIAL CORPORATION
(Registrant)
Dated: August 26, 1998 By: /s/ Gary W. Baker
_________________________________
Gary W. Baker
Chief Financial Officer
Page 41 of 41
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