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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
FORM 8-K
ON
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): JUNE 2, 1997
DXP ENTERPRISES, INC.
(Exact name of registrant as specified in charter)
TEXAS 0-21513 76-0509661
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
580 WESTLAKE PARK BOULEVARD, SUITE 1100
HOUSTON, TEXAS 77079
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (281) 531-4214
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EXPLANATION
As discussed in the Current Report on Form 8-K dated June 2, 1997 (the
"Current Report") of DXP Enterprises, Inc., a Texas corporation (the
"Registrant"), as filed with the Securities and Exchange Commission (the
"Commission") on June 17, 1997, as amended by Amendment No. 1 to Form 8-K on
Form 8-K/A, as filed with the Commission on July 25, 1997, on June 2, 1997, a
wholly-owned subsidiary of the Registrant acquired substantially all of the
assets ("the Strategic Acquisition") of Strategic Supply, Inc., a Delaware
corporation ("Strategic"), pursuant to an Asset Purchase Agreement dated May 27,
1997 (the "Agreement"), among Strategic, Coulson Technologies, Inc., a Delaware
corporation, Strategic Distribution, Inc., a Delaware corporation, Strategic
Acquisition, Inc., a Nevada corporation and wholly-owned subsidiary of the
Registrant, and the Registrant. The purchase price, which is subject to
adjustment, consisted of approximately $4.1 million in existing cash, assumption
of approximately $4.7 million of trade payables and other accrued expenses, $2.8
million in promissory notes payable to Strategic and earn-out payments based on
the earnings before interest and taxes of Strategic to be paid over a period of
approximately six years, which earn-out payments shall not exceed $3,500,000.
Item 7(b) of the Current Report is hereby amended and restated in its
entirety as follows:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro Forma Financial Information.
Index to Pro Forma Financial Information
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Pro Forma Combined Balance Sheet as of March 31, 1997.......... 4
Pro Forma Combined Statement of Operations..................... 5
Pro Forma Adjustments.......................................... 7
</TABLE>
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UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The unaudited pro forma combined balance sheets as of March 31, 1997 and
unaudited pro forma combined statements of earnings for the three months ended
March 31, 1997 and the year ended December 31, 1996 give effect to the
acquisition by a wholly-owned subsidiary of the Registrant of substantially all
of the assets of Strategic on June 2, 1997. The unaudited pro forma combined
statements of earnings assume all such transactions occurred at the beginning
of the periods presented. The unaudited pro forma combined balance sheets
assume all such transactions occurred at the end of the periods presented.
The unaudited pro forma combined financial statements may not be indicative
of the results that would have occurred if the combination had been in effect
on the dates indicated or which may occur in the future. The unaudited pro
forma condensed combined financial statements should be read in conjunction
with the financial statements of Strategic, which are included elsewhere in
this Current Report.
The pro forma adjustments do not reflect projected cost savings of $414,000
for the three month period ended March 31, 1997 and $1,015,000 for the year
ended December 31, 1996 relating to the elimination of duplicative personnel
and intercompany charges reflected in Strategic's results. Additionally, the
pro forma adjustments do not reflect to the elimination of certain
restructuring charges and other one-time expenses of $1,363,000 for the year
ended December 31, 1996 relating to prior mergers and branch closings.
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DXP ENTERPRISES, INC.
PRO FORMA COMBINED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, 1997
-------------------------------------------------------------
Strategic
DXP Supply Pro Forma Pro Forma
Historical Historical Adjustments Combined
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash $ 979 $ 131 $ (131)(1) $ 979
Trade accounts receivable, net 19,899 6,121 (6,121)(1) 19,899
Inventories 16,665 9,300 -- 25,965
Prepaid Expenses and other current assets 266 79 -- 345
Deferred income taxes 569 -- -- 569
----------- ----------- ----------- -----------
Total current assets 38,378 15,631 (6,252) 47,757
Property, plant and equipment, net 7,792 2,328 -- 10,120
Other assets 953 404 (336)(1) 1,021
----------- ----------- ----------- -----------
Total assets $ 47,123 $ 18,363 $ (6,588) $ 58,898
=========== =========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable $ 8,944 $ 4,334 $ -- $ 13,278
Employee compensation 884 -- -- 884
Other accrued liabilities 965 -- -- 965
Current portion of long-term debt 623 81 (52)(2) 652
Current portion of subordinated debt -- -- 125 (2) 125
Due to parent -- 12,794 (12,794)(1) --
----------- ----------- ----------- -----------
Total current liabilities 11,416 17,207 (12,721) 15,904
Suspense -- -- 6,598 (1) --
-- -- (6,598)(2) --
Long term debt, less current portion 22,792 762 4,150 (2) 27,704
Subordinated debt -- -- 2,375 (2) 2,375
Deferred compensation 739 -- -- 739
Deferred income taxes 364 -- -- 364
----------- ----------- ----------- -----------
Total liabilities 35,311 17,971 (6,196) 47,086
Equity Subject to Redemption:
Series A Preferred Stock 150 -- -- 150
Series B Convertible Preferred Stock 450 -- -- 450
Shareholders' Equity:
Series A Preferred Stock 2 -- -- 2
Series B Preferred Stock 15 -- -- 15
Common Stock 160 1 (1)(1) 160
Paid-in capital 288 2,614 (2,614)(1) 288
Retained earnings 10,747 (2,222) 2,222 (1) 10,747
----------- ----------- ----------- -----------
Total shareholders' equity 11,212 393 (393) 11,212
----------- ----------- ----------- -----------
Total liabilities and shareholders' equity $ 47,123 $ 18,363 $ (6,588) $ 58,898
=========== =========== =========== ===========
</TABLE>
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DXP Enterprises, Inc.
Pro Forma Combined Statement of Operations
(in thousands, except for per share data)
<TABLE>
<CAPTION>
Three Months Ended March 31, 1997
-----------------------------------------------------------
Strategic
DXP Supply Pro Forma Pro Forma
Historical Historical Adjustments Combined
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 30,129 $ 12,372 $ -- $ 42,501
Costs and Expenses:
Cost of Sales 21,756 9,281 -- 31,037
Selling, general and
administrative 7,043 3,163 -- 10,206
----------- ----------- ----------- -----------
Operating income (loss) 1,330 (72) -- 1,258
Other income (expense)
Other income 429 -- -- 429
Interest expense (539) (22) (121)(3) (682)
----------- ----------- ----------- -----------
Earnings (loss) before
income taxes 1,220 (94) (121) 1,005
Provision for income taxes 429 15 -- 444
----------- ----------- ----------- -----------
Net income 791 (109) (121) 561
Preferred stock dividend 38 -- -- 38
----------- ----------- ----------- -----------
Net income attributable to
common shareholders $ 753 $ (109) $ (121) $ 523
=========== =========== =========== ===========
Net income per share $ 0.08 $ 0.05
=========== ===========
Weighted average shares
outstanding 9,892 9,892
=========== ===========
</TABLE>
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DXP Enterprises, Inc.
Pro Forma Combined Statement of Operations
(in thousands, except for per share data)
<TABLE>
<CAPTION>
Year Ended December 31, 1996
-----------------------------------------------------------
Strategic
DXP Supply Pro Forma Pro Forma
Historical Historical Adjustments Combined
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 125,208 $ 50,972 $ -- $ 176,180
Costs and Expenses:
Cost of Sales 93,091 38,907 -- 131,998
Selling, general and
administrative 29,332 13,989 (143)(4) 43,178
Restructuring charge -- 878 -- 878
Special charges -- 2,836 (2,836)(5) 0
----------- ----------- ----------- -----------
Operating income (loss) 2,785 (5,638) 2,979 126
Other income (expense)
Other income 951 -- -- 951
Interest expense (2,101) (131) (439)(3) (2,671)
----------- ----------- ----------- -----------
Earnings (loss) before
income taxes 1,635 (5,769) 2,540 (1,594)
Provision for income taxes 745 (682) -- 63
----------- ----------- ----------- -----------
Net income 890 (5,087) 2,540 (1,657)
Preferred stock dividend 119 -- -- 119
----------- ----------- ----------- -----------
Net income attributable to
common shareholders $ 771 $ (5,087) $ 2,540 $ (1,776)
=========== =========== =========== ===========
Net income per share $ 0.09 $ 0.21
=========== ===========
Weighted average shares
outstanding 8,621 8,621
=========== ===========
</TABLE>
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Pro Forma Adjustments
1. To remove the assets, liabilities and equity not included in the purchase by
the Registrant and place in suspense the net assets purchased by the Registrant
pursuant to the Agreement.
2. To record the debt incurred by the Registrant for the acquisition of the net
assets of the Company.
3. To adjust interest expense of the debt incurred for the acquisition of the
net assets of the Company.
4. To eliminate amortization of goodwill associated with prior acquisitions
completed by the Company that were not purchased by the Registrant ($143,000).
5. To eliminate special charges not expected to be incurred by the combined
entities.
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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.
DXP ENTERPRISES, INC.
Dated: October 17, 1997 By: /s/ DAVID R. LITTLE
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David R. Little
President and Chief Executive Officer
