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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 AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 29, 2000
Waxman Industries, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-5888 34-0899894
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
24460 Aurora Road, Bedford Heights, Ohio 44146
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (440) 439-1830
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Not Applicable
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(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
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On October 2, 2000, Waxman Industries, Inc. (the "Company") announced
that it had completed the disposition of all the remaining shares of common
stock of Barnett Inc. ("Barnett") owned by Waxman USA Inc. ("Waxman USA"), a
Delaware corporation and a wholly-owned subsidiary of the Company (together with
the 160,723 shares described below the "Barnett Shares"). The Barnett Shares
constituted approximately 44.2% of the outstanding common stock, $.01 par value
per share, of Barnett (the "Barnett Common Stock"), a formerly wholly-owned
subsidiary of the Company. On September 29, 2000, all of the outstanding shares
of Barnett Common Stock were purchased by Wilmar Industries, Inc. ("Wilmar") for
$13.15 per share (the "Merger Consideration"), pursuant to that certain
Agreement and Plan of Merger, dated as of July 10, 2000 (the "Merger
Agreement"), by and among Barnett, Wilmar and BW Acquisition, Inc., a Delaware
corporation and a wholly-owned subsidiary of Wilmar ("Merger Sub" and together
with Wilmar, the "Purchaser"), pursuant to a merger of Merger Sub with and into
Barnett (the "Merger"), and a Certificate of Merger was filed with the Secretary
of State of the State of Delaware. On September 1, 2000, Barnett had repurchased
from Waxman USA 160,723 shares of Barnett Common Stock for a total consideration
of $2,000,000. On October 11, 2000, the Purchaser made a payment to Waxman USA
in the amount of $113,507.45, equal to the difference between (a) the Merger
Consideration times 160,723 shares and (b) $2,000,000.
The aggregate proceeds from the sale of the Barnett Shares have been
used to pay taxes, to reduce the Company's credit facility with Congress
Financial Corporation by approximately $11.0 million, to pay interest on and
redeem the remaining approximately $35.9 million of Waxman USA's 11 1/8% Senior
Notes due 2001 (the "Senior Notes") in full and complete satisfaction of such
notes and to pay interest due on the Company's 12 3/4% Senior Secured Deferred
Coupon Notes due 2004 (the "Deferred Coupon Notes"). The remaining net proceeds
have been placed in a segregated account, which will be used to fully satisfy
all of the Deferred Coupon Notes.
A copy of the agreements referred to above are incorporated herein by
reference. A copy of the press release issued by the Company with respect to the
foregoing transactions is attached hereto as Exhibit 99.1 and is incorporated
herein by reference.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
---------------------------
On October 2, 2000, the Company filed a voluntary petition for relief
(the "Joint Plan of Reorganization") under Chapter 11 of title 11 of the United
States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for
the District of Delaware. Prior to its filing, the Joint Plan of Reorganization
had received the approval of the holders of 97% of the Deferred Coupon Notes.
The only class of security holders to be affected under the Joint Plan of
Reorganization will be the holders of the Deferred Coupon Notes. Pursuant to
sections 1107 and 1108 of the Bankruptcy Code, the Company is continuing in the
management and possession of its properties as debtor in possession, and thus no
trustee has been appointed in the bankruptcy case. The bankruptcy case has been
assigned number 00-3815.
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ITEM 7. RELATED FINANCIAL INFORMATION AND EXHIBITS.
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(b) Pro Forma Financial Information
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UNAUDITED PROFORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The accompanying unaudited proforma condensed financial information gives
effect to two separate transactions. The accompanying proforma condensed
consolidated balance sheets reflect the transactions as if they occurred on
June 30, 2000 and utilizes the audited June 30, 2000 consolidated balance
sheet contained in the Annual Report on Form 10-K filed by the Company with
the Securities and Exchange Commission on August 29, 2000 (the "Form
10-K"). The accompanying proforma statement of operations reflects the
transactions as if they occurred on July 1, 1999 and utilizes the audited
fiscal 2000 statement of operations contained in the Form 10-K. The
accompanying unaudited proforma condensed financial information
incorporates by reference the Report of Independent Public Accountants,
dated August 28, 2000, which includes an explanatory paragraph with respect
to conditions that raise substantial doubt about the Company's ability to
continue as a going concern.
The first transaction, detailed as Group 1 proforma adjustments, gives
effect to the sale of all of the remaining Barnett Common Stock owned by
Waxman USA Inc. and the application of the proceeds to repay Waxman USA's
11 1/8% Senior Notes due 2001, reduce working capital borrowings from
Congress Financial Corporation and to pay taxes and other expenses
associated with the transaction. With the September 29, 2000 sale of the
Barnett Common Stock, substantially all of the Group 1 adjustments occurred
in the first fiscal quarter ended September 30, 2000.
The second transaction, detailed as Group 2 proforma adjustments, gives
effect to the Company's completion of its financial restructuring plan,
which included the sale of the Barnett Common Stock as an integral element
for the jointly sponsored, prepackaged plan of reorganization with the
United States Bankruptcy Court (the "Joint Plan"). In order to more
effectively complete the restructuring plan, and to cause the remaining
Deferred Coupon Note holders to accept the same discount as the committee
members, Waxman Industries Inc. filed this Joint Plan on October 2, 2000
with the committee of Deferred Coupon Note holders, the only impaired class
of creditors. The vote resulted in 97 percent of the Deferred Coupon Note
holders voting, all in favor to accept the Joint Plan. The Company has a
confirmation hearing scheduled for November 14, 2000.
This information is not necessarily indicative of future consolidated
results of operations or financial position and it should be read in
conjunction with the separate historic financial statements and related
notes of Waxman, incorporated herein by reference.
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WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PROFORMA CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
Proforma Proforma
As Reported Adjustments Adjustments Proforma
June 30, 2000 Group 1 Subtotal Group 2 June 30, 2000
------------- ------- -------- ------- -------------
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 811 $37,610 (1) $38,421 $(38,938) (A) $ (517)
Trade receivables, net 12,068 -- 12,068 -- 12,068
Other receivables 3,656 -- 3,656 -- 3,656
Inventories 15,351 -- 15,351 -- 15,351
Prepaid expenses 1,853 -- 1,853 -- 1,853
-------- -------- ------- --------- --------
Total current assets 33,739 37,610 71,349 (38,938) 32,411
-------- -------- ------- --------- --------
INVESTMENT IN BARNETT 42,896 (42,896) (2) -- -- --
-------- -------- ------- --------- --------
PROPERTY AND EQUIPMENT:
Land 585 -- 585 -- 585
Buildings 4,545 -- 4,545 -- 4,545
Equipment 11,061 -- 11,061 -- 11,061
-------- -------- ------- --------- --------
16,191 -- 16,191 -- 16,191
Less accumulated depreciation and
amortization (7,137) -- (7,137) -- (7,137)
-------- -------- ------- --------- --------
Property and equipment, net 9,054 -- 9,054 -- 9,054
-------- -------- ------- --------- --------
UNAMORTIZED DEBT ISSUANCE COSTS, NET
2,444 (132) (3) 2,312 (2,014) (B) 298
DEFERRED TAX ASSET 367 (367) (4) -- -- --
OTHER ASSETS 5,746 (2,996) (5) 2,750 -- 2,750
-------- -------- ------- --------- --------
$ 94,246 $(8,781) $85,465 $(40,952) $ 44,513
======== ======== ======= ========= ========
</TABLE>
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WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PROFORMA CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Proforma Proforma
As Reported Adjustments Adjustments Proforma
June 30, 2000 Group 1 Subtotal Group 2 June 30, 2000
------------- ------- -------- ------- -------------
<S> <C> <C> <C> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt $ 20,366 $(10,048) (6) $10,318 -- $ 10,318
Accounts payable 6,512 -- 6,512 -- 6,512
Accrued liabilities 3,018 -- 3,018 -- 3,018
Accrued income taxes payable 394 14,000 (7) 14,394 (12,000) (C) 2,394
Accrued interest 8,231 (7,324) (8) 907 -- 907
-------- ------- ------- -------- -------
Total current liabilities 38,521 (3,372) 35,149 (12,000) 23,149
-------- ------- ------- -------- -------
OTHER LONG-TERM DEBT, NET OF CURRENT PORTION
780 -- 780 -- 780
SENIOR SECURED DEFERRED COUPON NOTES, NET
91,818 -- 91,818 (91,818) (D) --
SENIOR NOTES 35,855 (35,855) (9) -- -- --
DEFERRED GAIN ON SALE OF U.S. LOCK 7,815 (7,815) (10) -- -- --
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value per
share: authorized and unissued 2,000 shares -- -- -- -- --
Common stock, $0.01 par value per share:
22,000 shares authorized; 9,976 shares issued
and outstanding 99 -- 99 -- 99
Class B common stock, $.01 par value per
share: 6,000 shares authorized; 2,142 shares
issued and outstanding 21 -- 21 -- 21
Paid-in capital 21,752 -- 21,752 -- 21,752
Retained deficit (101,756) 38,261 (11) (63,495) 62,866 (E) (629)
-------- ------- ------- -------- -------
(79,884) 38,261 (41,623) 62,866 21,243
Accumulated other comprehensive loss (659) -- (659) -- (659)
-------- ------- ------- -------- -------
Total stockholders' (deficit) equity (80,543) 38,261 (42,282) 62,866 20,584
------- ------ ------- -------- -------
$94,246 $(8,781) $85,465 $(40,952) $44,513
======== ------- ------- -------- =======
</TABLE>
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WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
As Reported Proforma Proforma Proforma
June 30, Adjustments Adjustments June 30,
2000 Group 1 Subtotal Group 2 2000
---- ------- -------- ------- ----
<S> <C> <C> <C> <C> <C>
Net sales $81,360 -- $81,360 -- $81,360
Cost of sales 59,259 -- 59,259 -- 59,259
-------- ------- -------- ------- --------
Gross profit 22,101 -- 22,101 -- 22,101
Selling, general and administrative expenses 27,094 (150) (F) 26,944 (474) (F) 26,470
Restructuring, impairment and procurement charges 10,370 -- 10,370 -- 10,370
-------- ------- -------- ------- --------
Operating income (loss) (15,363) 150 (15,213) 474 (14,739)
Loss on sale of WAMI, net (2,024) -- (2,024) -- (2,024)
Equity earnings of Barnett 6,511 (6,511) (G) -- -- --
Amortization of deferred U.S. Lock gain 202 (202) (H) -- -- --
Interest expense, net of interest income 18,201 (4,959) (I) 13,242 (11,831) (I) 1,411
-------- ------- -------- ------- --------
Loss before income taxes (28,875) (1,604) (30,479) 474 (18,174)
Benefit for income taxes (27) -- (27) -- (27)
-------- ------- -------- ------- --------
Net loss $(28,848) $10.227 $(18,621) $474 $(18,147)
======== ======= ======== ==== ========
Other comprehensive income (loss):
Foreign currency translation adjustment 370 -- 370 -- 370
-------- ------- -------- ------- --------
Comprehensive loss $(28,478) $10,227 $(18,251) $474 $(17,777)
======== ======= ======== ==== ========
Net loss per share:
Basic and diluted net loss per share $ (2.39) $(1.50)
======= =======
Weighted average number of common shares
outstanding 12,066 12,066
======= =======
</TABLE>
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WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
BALANCE SHEETS
PROFORMA ADJUSTMENTS - GROUP 1
(1) Represents the cash proceeds from the sale of 7,186,530 shares of Barnett
at $13.15 per share, net of payments for expenses, taxes, retirement of
Waxman USA's Senior Notes and reduction of working capital bank debt.
Waxman USA has deposited approximately $39.0 million into a segregated
account for the benefit of the Deferred Coupon Note holders, as part of the
financial restructuring plan of the Company.
(2) Represents the write off of the equity investment in Barnett as a result of
the Barnett Sale.
(3) Represents the write off of debt issuance costs associated with the Senior
Notes, which were retired.
(4) Represents the write off of the deferred state tax asset associated with
the deferred gain on the sale of U.S. Lock.
(5) Represents the write off of deferred costs associated with the financial
restructuring that were capitalized in the accompanying balance sheets.
(6) Represents the reduction of working capital debt with Congress Financial
Corporation with a portion of the net proceeds from the Barnett Sale.
(7) Represents the net adjustment to accrued taxes based on the Barnett Sale
and other adjustments.
(8) Represents the payment of accrued interest to the Senior Note holders from
March 1, 2000 until June 30, 2000 and accrued interest for the Deferred
Coupon Note holders for the semi-annual payment that was due on June 1,
2000.
(9) Represents the retirement of the Waxman USA 11 1/8% Senior Notes with a
portion of the proceeds from the Barnett Sale.
(10) Represents the realization of the deferred gain from the sale of U.S. Lock
to Barnett, which was being amortized ratably over the same length of time
as Barnett amortized its goodwill associated with its acquisition. As a
result of the Barnett Sale, the Company recognizes the remaining
unamortized balance immediately.
(11) Represents the net profit and loss impact of the above adjustments.
PROFORMA ADJUSTMENTS - GROUP 2
(A) Represents the settlement of the obligation to the Deferred Coupon Note
holders with the release of the segregated account upon confirmation of the
Chapter 11 Joint Plan of Reorganization.
(B) Represents the write off of debt issuance costs associated with the
Deferred Coupon Notes.
(C) Represents the utilization of the net operating loss carryforward and other
adjustments associated with the financial restructuring of the Company.
(D) Represents the elimination of the Company's Deferred Coupon Notes.
(E) Represents the net profit and loss impact of the above adjustments.
STATEMENT OF OPERATIONS
PROFORMA ADJUSTMENTS - GROUP 1 AND 2
(F) Represents the elimination of deferred loan cost amortization as follows:
Senior Notes $ 150,000 (Group 1)
Deferred Coupon Notes $ 474,000 (Group 2)
(G) Represents the elimination of the equity earnings in Barnett due to the
Barnett Sale.
(H) Represents the elimination of the amortization of the deferred gain on the
sale of US Lock.
(I) Represents the reduction in interest as follows:
Senior Notes $ 3,989,000 (Group 1)
Congress Financial Corporation $ 970,000 (Group 1)
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Total Group 1 $ 4,959,000
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Deferred Coupon Notes $11,831,000 (Group 2)
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(c) Exhibits
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10.1 Merger Agreement, dated as of July 10, 2000, by and among
Wilmar Industries, Inc. ("Wilmar"), BW Acquisition, Inc. ("BW
Acquisition") and Barnett Inc. ("Barnett"). (Exhibit 10.1 to
the Company's Form 8-K filed July 17, 2000, File No. 0-5888,
incorporated herein by reference).*
10.2 Stockholder Agreement, dated as of July 10, 2000, by and among
the Company, Waxman USA, Wilmar and BW Acquisition. (Exhibit
10.2 to the Company's Form 8-K filed July 17, 2000, File No.
0-5888, incorporated herein by reference).*
10.3 Agreement, dated as of July 7, 2000, by and between Waxman USA
and Barnett. (Exhibit 10.4 to the Company's Form 8-K filed
July 17, 2000, File No. 0-5888, incorporated herein by
reference).*
23.1 Consent of Arthur Andersen LLP.
99.1 Press release issued by the Company on October 2, 2000.
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* Incorporated herein by reference as indicated.
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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.
WAXMAN INDUSTRIES, INC.
(Registrant)
Date: October 12, 2000 By: /s/ Mark W. Wester
-----------------------------------
Name: Mark W. Wester
Title: Vice President - Finance and
Chief Financial Officer
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INDEX TO EXHIBITS
Exhibit No. Page No.
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10.1 Merger Agreement, dated as of July 10, 2000, by and among Wilmar
Industries, Inc. ("Wilmar"), BW Acquisition, Inc. ("BW Acquisition")
and Barnett Inc. ("Barnett"). (Exhibit 10.1 to the Company's Form 8-K
filed July 17, 2000, File No. 0-5888, incorporated herein by
reference).*
10.2 Stockholder Agreement, dated as of July 10, 2000, by and among the
Company, Waxman USA, Wilmar and BW Acquisition. (Exhibit 10.2 to the
Company's Form 8-K filed July 17, 2000, File No. 0-5888, incorporated
herein by reference).*
10.3 Agreement, dated as of July 7, 2000, by and between Waxman USA and
Barnett. (Exhibit 10.4 to the Company's Form 8-K filed July 17, 2000,
File No. 0-5888, incorporated herein by reference).*
23.1 Consent of Arthur Andersen LLP.
99.1 Press release issued by the Company on October 2, 2000.
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* Incorporated herein by reference as indicated.
