<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 2, 1999
IMPAC Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 333-48821 23-2923682
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
1950 North Ruby Street, Melrose Park, Illinois 60160
(Address of principal executive offices including zip code)
Registrant's telephone number, including area code: (708) 344-9100
<PAGE>
The undersigned registrant, IMPAC Group, Inc. (the "Company"), hereby
amends its current report on Form 8-K dated November 2, 1999, solely to add the
financial statements, pro forma financial information and exhibits required by
Item 7 of Form 8-K.
ITEM 2: Acquisition or Disposition of Assets
On November 2, 1999, the Company acquired all of the issued and outstanding
share capital of Thamesdown Colour Limited ("Thamesdown"), a U.K. based printer,
from all of the stockholders thereof, for approximately $10.8 million plus
acquisition costs. The acquisition was initially funded through $6.6 million of
additional revolver borrowings under the Amended and Restated Multicurrency
Credit Facility dated as of March 12, 1998 and amended and restated as of July
7, 1998, as amended, between Bank of America National Trust & Savings
Association, certain other financial institutions and the Company and certain of
its subsidiaries, the issuance of $2.4 million of Series A Common Stock to the
former Thamesdown shareholders and the utilization of $2.0 million of acquired
cash of Thamesdown. The Company also assumed approximately $3.0 million of
capital leases. The purchase price was determined as a result of arms length
negotiations. Thamesdown provides high-end commercial printing services
specializing in the production of promotional materials.
ITEM 7: Financial Statements, Pro Forma Financial Information and Exhibits
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
(a) Financial Statements of Business Acquired.
Report of the Independent Auditors ........................................... 3
Profit and Loss Accounts for the Years Ended September 30, 1999 and 1998 ..... 4
Balance Sheets at September 30, 1999 and 1998 ................................ 5
Cash Flow Statements for the Years Ended September 30, 1999 and 1998 ......... 6
Notes to the Financial Statements............................................. 7-18
(b) Pro Forma Financial Information.
Unaudited Pro Forma Combined Statement of Income for the Year Ended
December 31, 1998 ........................................................... 19
Unaudited Pro Forma Combined Statement of Income for the Nine Months
Ended September 30, 1998 .................................................... 20
Unaudited Pro Forma Combined Balance Sheet as of September 30, 1999 .......... 21
Notes to the Unaudited Pro Forma Combined Financial Statements ............... 22-24
</TABLE>
(c) Exhibits.
*Exhibit 2.5 Agreement dated November 2, 1999 between C.J. Watson
Esq and Others and IMPAC Group, Inc. for the Sale and
Purchase of the Entire Issued Share Capital of
Thamesdown Colour Limited.
__________
* Previously filed
2
<PAGE>
REPORT OF THE INDEPENDENT AUDITORS
To the Board of Directors and the Shareholders of Thamesdown Colour Limited.
We have audited the accompanying balance sheet of Thamesdown Colour Limited (the
"Company") as of September 30, 1998 and 1999, and the related statements of
profit and loss accounts and cash flows for each of the two years in the period
ended September 30, 1999, all expressed in pounds sterling, (together, "the
financial statements") which have been prepared on the basis of accounting
principles generally accepted in the United Kingdom. These financial statements
are the responsibility of the Directors of the Company. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
in the United Kingdom, which are substantially the same as auditing standards
generally accepted in the United States. These standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects the financial position of the Company as of September 30,
1998 and 1999, and the results of its operations and its cash flows for each of
the two years in the period ended September 30, 1999 in conformity with
accounting principles generally accepted in the United Kingdom.
United Kingdom accounting principles vary in certain material respects from
accounting principles generally accepted in the United States. The application
of the latter would have affected the determination of shareholders' equity and
financial position as of September 30, 1999 and the determination of net income
for each of the two years in the period ended September 30, 1999 to the extent
summarised in Note 24 to the financial statements.
Grant Thornton
Chartered Accountants
Oxford
7 January 2000
3
<PAGE>
THAMESDOWN COLOUR LIMITED
PROFIT AND LOSS ACCOUNTS
For the years ended 30 September 1999 and 1998
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
Note 1999 1999 1998 1998
(Pounds) (Pounds) (Pounds) (Pounds)
<S> <C> <C> <C> <C> <C>
Turnover
Continuing operations 1 6,812,754 5,007,116
Acquisitions -- 644,781
--------- ---------
Cost of sales 6,812,754 5,651,897
(4,441,226) (3,686,183)
----------- -----------
Gross profit 2,371,528 1,965,714
Administration expenses (1,021,918) (1,036,786)
----------- -----------
Operating profit
Continuing operations 1,349,610 887,579
Acquisitions -- 41,349
--------- ---------
1,349,610 928,928
Loss on sale of fixed asset investments -- (911)
Net interest 2 (138,015) (186,053)
----------- -----------
Profit on ordinary activities before taxation 1 1,211,595 741,964
Tax on profit on ordinary activities 3 (341,504) (64,000)
----------- -----------
Profit for the financial year 15 870,091 677,964
Dividends 4 (447,000) (234,738)
----------- -----------
Profit transferred to reserves 14 423,091 443,226
=========== ===========
</TABLE>
There were no recognized gains or losses other than the profit for the
financial year.
The accompanying notes form an integral part of these financial statements.
4
<PAGE>
THAMESDOWN COLOUR LIMITED
BALANCE SHEETS AT 30 SEPTEMBER 1999 AND 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Note 1999 1998
(Pounds) (Pounds)
<S> <C> <C> <C>
Fixed assets
Tangible assets 6 2,457,031 2,543,322
Current assets
Stocks 7 91,483 110,008
Debtors 8 1,525,975 1,111,903
Cash at bank and in hand 1,203,054 1,035,963
---------- ----------
2,820,512 2,257,874
Creditors: amounts falling due within one year 9 (2,512,720) (2,151,273)
---------- ----------
Net current assets 307,792 106,601
---------- ----------
Total assets less current liabilities 2,764,823 2,649,923
Creditors: amounts falling due after more than one year 10 (1,348,203) (1,656,394)
---------- ----------
1,416,620 993,529
========== ==========
Capital and reserves
Called up share capital 12 299,620 211,000
Profit and loss account 14 1,117,000 782,529
---------- ----------
Shareholders' funds 15 1,416,620 993,529
========== ==========
</TABLE>
The accompanying notes form an integral part of these financial statements.
5
<PAGE>
THAMESDOWN COLOUR LIMITED
CASH FLOW STATEMENTS
For the years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Note 1999 1998
(Pounds) (Pounds)
<S> <C> <C> <C>
Net cash inflow from operating activities 16 1,505,699 1,268,021
Returns on investments and servicing of finance
Interest received 45,076 37,617
Finance lease interest paid (182,585) (223,670)
-------- ---------
Net cash outflow from returns on investments and
servicing of finance (137,509) (186,053)
-------- ---------
Taxation (49,531) (13,847)
Capital expenditure and financial investment
Purchase of intangible fixed assets - (160,000)
Purchase of tangible fixed assets (103,436) (117,755)
Sale of tangible fixed assets 51,600 1,420
-------- ---------
Net cash outflow from capital expenditure and financial
investment (51,836) (276,335)
-------- ---------
Acquisitions and disposals
Sale of investments - 3,589
-------- ---------
Net cash inflow from acquisitions and disposals - 3,589
-------- ---------
Equity dividends paid (633,000) (55,388)
-------- ---------
Financing
Repayment of borrowings (6,000) 6,000
Capital element of finance lease rentals (460,732) (514,095)
-------- ---------
Net cash outflow from financing (466,732) (508,095)
-------- ---------
Increase in cash 17 167,091 231,892
======== =========
</TABLE>
The accompanying notes form an integral part of these financial statements.
6
<PAGE>
THAMESDOWN COLOUR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
1 BASIS OF PREPARATION
The financial statements are prepared in accordance with the applicable
accounting standards and under the historical cost convention.
The principal accounting policies of the company, which have remained
unchanged, are set out below.
TURNOVER
Turnover is the total amount receivable by the company for goods supplied
and services provided, excluding VAT and trade discounts.
DEPRECIATION
Depreciation is calculated to write down the cost or valuation less
estimated residual value of all tangible fixed assets by equal installments
over their expected useful lives. The periods generally applicable are:
Leasehold buildings Period of the lease
Plant and machinery 2 to 10 years
Motor vehicles 4 years
Fixtures and fittings 2 to 5 years
INTANGIBLE FIXED ASSETS
Purchased goodwill is eliminated from the financial statements by immediate
write-off on acquisition against reserves.
STOCKS
Stocks and work in progress are stated at the lower of cost and net
realisable value.
DEFERRED TAXATION
Deferred tax is provided for using the tax rates estimated to arise when
the timing differences reverse and is accounted for to the extent that it
is probable that a liability or asset will crystallise. Unprovided deferred
tax is disclosed as a contingent liability.
Debit balances arising in respect of advance corporation tax on dividends
payable or proposed are carried forward to the extent that they are
expected to be recoverable.
CONTRIBUTIONS TO PENSION FUNDS
Defined contribution scheme
The pension costs charged against profits represent the amount of the
contributions payable to the scheme in respect of the accounting period.
7
<PAGE>
THAMESDOWN COLOUR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
LEASED ASSETS
Assets held under finance leases and hire purchase contracts are
capitalised in the balance sheet and depreciated over their expected useful
lives. The interest element of leasing payments represents a constant
proportion of the capital balance outstanding and is charged to the profit
and loss account over the period of the lease.
All other leases are regarded as operating leases and the payments made
under them are charged to the profit and loss account on a straight-line
basis over the lease term.
TURNOVER AND PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
The profit on ordinary activities is stated after:
<TABLE>
<CAPTION>
1999 1998
(Pounds) (Pounds)
<S> <C> <C>
Auditors' remuneration:
Non-audit services 2,250 1,000
Audit services 6,750 5,500
Depreciation and amortisation:
Tangible fixed assets, owned 83,499 54,898
Tangible fixed assets, held under finance leases and hire
purchase contracts 289,841 283,905
Hire of plant and machinery 1,179 4,504
Other operating lease rentals 65,423 58,984
======== =======
</TABLE>
2 NET INTEREST
<TABLE>
<CAPTION>
1999 1998
(Pounds) (Pounds)
<S> <C> <C>
Finance charges in respect of finance leases 182,585 223,670
Other interest receivable and similar income (44,570) (37,617)
--------- ----------
138,015 186,053
========= ==========
</TABLE>
3 TAX ON PROFIT ON ORDINARY ACTIVITIES
<TABLE>
<CAPTION>
1999 1998
(Pounds) (Pounds)
<S> <C> <C>
UK Corporation tax at 30%/31% (1998: 31%) 342,126 64,000
Adjustments in respect of prior periods (622) -
--------- ----------
341,504 64,000
========= ==========
In 1998 net operating losses of (pounds) 300,000 were offset against taxable income.
</TABLE>
4 DIVIDENDS
<TABLE>
<CAPTION>
1999 1998
(Pounds) (Pounds)
<S> <C> <C>
Ordinary shares - interim dividend of
(Pounds)2 (1998: 11.25p) per share 422,000 23,738
Ordinary shares - final dividend of
11.5p (1998: (Pounds)1) per share 25,000 211,000
-------- ---------
447,000 234,738
======== =========
</TABLE>
8
<PAGE>
THAMESDOWN COLOUR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
5 DIRECTORS AND EMPLOYEES
Staff costs during the year were as follows:
<TABLE>
<CAPTION>
1999 1998
(Pounds) (Pounds)
<S> <C> <C>
Wages and salaries 1,338,293 1,179,406
Social security costs 138,925 94,137
Other pension costs 30,600 31,444
--------- ---------
1,507,818 1,304,987
========= =========
The average number of employees of the company during the year were as follows:
1999 1998
Production 30 26
Selling and distribution 2 2
Administration 2 2
Management 7 6
--------- --------
41 36
========= ========
Remuneration in respect of directories was as follows:
1999 1998
(Pounds) (Pounds)
Management remuneration 316,350 384,335
Pension contributions to money purchase pension schemes 28,700 28,644
------- -------
345,050 412,979
======= =======
During the year 6 directors (1998:6) participated in money purchase pension schemes.
The amounts set out above include remuneration in respect of the highest paid director as follows:
1999 1998
(Pounds) (Pounds)
Management remuneration 70,380 72,548
Pension contributions to money purchase pension schemes 6,000 5,099
====== ======
</TABLE>
9
<PAGE>
THAMESDOWN COLOUR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
6 TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
Leasehold
land and Plant and Motor Fixtures
buildings machinery vehicles and fittings Total
(Pounds) (Pounds) (Pounds) (Pounds) (Pounds)
<S> <C> <C> <C> <C> <C>
Cost
At 1 October 1998 60,397 2,843,511 125,223 61,684 3,090,815
Additions 856 282,738 46,940 17,852 348,386
Disposals - (84,050) (22,367) (264) (106,681)
-------- ---------- --------- -------- ----------
At 30 September 1999 61,253 3,042,199 149,796 79,272 3,332,520
-------- ---------- --------- -------- ----------
Depreciation
At 1 October 1998 12,799 499,946 14,532 20,216 547,493
Provided in the year 8,749 312,724 36,504 15,363 373,340
Eliminated on disposals - (34,537) (10,714) (93) (45,344)
-------- ---------- --------- -------- ----------
At 30 September 1999 21,548 778,133 40,322 35,486 875,489
-------- ---------- --------- -------- ----------
Net book amount at 30 September 1999 39,705 2,264,066 109,474 43,786 2,457,031
======== ========== ========= ======== ==========
Net book amount at 30 September 1998 47,598 2,343,565 110,691 41,468 2,543,322
======== ========== ========= ======== ==========
</TABLE>
The figures stated above include assets held under finance leases and
similar hire purchase contracts, as follows:
1999 1998
(Pounds) (Pounds)
Net book amount at 30 September 2,081,721 33,348
========== =======
Depreciation provided during year 280,802 9,039
========== =======
7 STOCKS
1999 1998
(Pounds) (Pounds)
Raw materials 13,636 19,066
Short-term work in progress 77,847 90,942
---------- -------
91,483 110,008
========== =======
10
<PAGE>
THAMESDOWN COLOUR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
8 DEBTORS
1999 1998
(Pounds) (Pounds)
Trade debtors 1,445,940 1,034,989
VAT recoverable 29,620 20,996
Other debtors 1,768 5,009
Prepayments and accrued income 48,647 50,909
---------- ----------
1,525,975 1,111,903
========== ==========
9 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
1999 1998
(Pounds) (Pounds)
Trade creditors 1,319,170 1,085,633
Corporation tax 342,126 50,153
Social security and other taxes 30,802 67,145
Proposed dividends 25,000 211,000
Other creditors 469 1,700
Loans from directors - 6,000
Accruals and deferred income 317,915 344,813
Amounts due under finance leases 477,238 384,829
---------- ----------
2,512,720 2,151,273
========== ==========
10 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
1999 1998
(Pounds) (Pounds)
Amounts due under finance leases 1,348,203 1,656,394
========== ==========
11
<PAGE>
THAMESDOWN COLOUR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
Borrowings are repayable as follows:
1999 1998
(Pounds) (Pounds)
Within one year
Bank and other borrowings - 6,000
Finance leases 477,238 384,829
After one and within two years
Finance leases 519,377 421,575
After two and within five years
Finance leases 828,826 1,234,819
--------- ---------
1,825,441 2,047,223
========= =========
11 DEFERRED TAXATION
Deferred taxation not provided for in the financial statements is set out
below. The amount unprovided represents a contingent liability at the
balance sheet date and is calculated using a tax rate of 30%.
1999 1998
(Pounds) (Pounds)
Accelerated capital allowances 320,000 313,000
======= =======
12 SHARE CAPITAL
1999 1998
(Pounds) (Pounds)
Authorised 331,270 250,000
======= =======
During the year the company increased its ordinary share capital from
(Pounds) 250,000 to (Pounds) 331,270. The analysis of authorised share
capital is disclosed in note 13.
Allotted, called up and fully paid 299,620 211,000
======= =======
Allotments during the year
The company made an allotment of 88,620 (Pound) 1 ordinary shares at
nominal value by way of a bonus issue to existing members. An analysis of
the shares issued is disclosed in note 13.
The analysis of the allotted, called up and fully paid shares is disclosed
in note 13.
12
<PAGE>
THAMESDOWN COLOUR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
13 SHARE CAPITAL
<TABLE>
<CAPTION>
Allotted, Authorized Authorized Allotted, Allotted,
issued and 1999 1998 called up called up
fully paid and fully and fully
on 9 paid 1999 paid 1998
September
1999
(Pounds) (Pounds) (Pounds) (Pounds) (Pounds)
<S> <C> <C> <C> <C> <C>
250,000 (Pounds)1 ordinary shares - 250,000 211,000
79,450 (Pounds)1 ordinary 'A' shares - 79,450 - 79,450 -
40,000 (Pounds)1 ordinary 'B' shares - 40,000 - 40,000 -
30,000 (Pounds)1 ordinary 'C' shares - 30,000 - 30,000 -
25,000 (Pounds)1 ordinary 'D' shares - 25,000 - 25,000 -
10,550 (Pounds)1 ordinary 'E' shares - 10,550 - 10,550 -
25,000 (Pounds)1 ordinary 'F' shares - 25,000 - 25,000 -
1,000 (Pounds)1 ordinary 'G' shares - 1,000 - 1,000 -
1,191,750 1p ordinary 'A' shares - 11,918 - - -
600,000 1p ordinary 'B' shares - 6,000 - - -
450,000 1p ordinary 'C' shares - 4,500 - - -
375,000 1p ordinary 'D' shares - 3,750 - - -
158,250 1p ordinary 'E' shares - 1,582 - - -
375,000 1p ordinary 'F' shares - 3,750 - - -
15,000 1p ordinary 'G' shares - 150 - - -
33,369 (Pounds)1 ordinary 'A1' shares 33,369 33,369 - 33,369 -
16,800 (Pounds)1 ordinary 'B1' shares 16,800 16,800 - 16,800 -
12,600 (Pounds)1 ordinary 'C1' shares 12,600 12,600 - 12,600 -
10,500 (Pounds)1 ordinary 'D1' shares 10,500 10,500 - 10,500 -
4,431 (Pounds)1 ordinary 'E1' shares 4,431 4,431 - 4,431 -
10,500 (Pounds)1 ordinary 'F1' shares 10,500 10,500 - 10,500 -
420 (Pounds)1 ordinary 'G1' shares 420 420 - 420 -
---------- ---------- -------- --------- ---------
88,620 331,270 250,000 299,620 211,000
========== ========== ======== ========= =========
</TABLE>
The above shares rank pari passu.
14 PROFIT AND LOSS ACCOUNT
(Pound)
At 1 October 1998 782,529
Retained profit for the year 423,091
Bonus issue of shares (88,620)
----------
At 30 September 1999 1,117,000
==========
13
<PAGE>
THAMESDOWN COLOUR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
15 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
<TABLE>
<CAPTION>
1999 1998
(Pounds) (Pounds)
<S> <C> <C>
Profit for the financial year 870,091 677,964
Dividends (447,000) (234,738)
---------- ----------
Goodwill written off to reserves 423,091 443,226
- (160,000)
---------- ----------
Net increase in shareholders' funds 423,091 283,226
Shareholders' funds at 1 October 1998 993,529 710,303
---------- ----------
Shareholders' funds at 30 September 1999 1,416,620 993,529
========== ==========
16 NET CASH INFLOW FROM OPERATING ACTIVITIES
1999 1998
(Pounds) (Pounds)
Operating Profit 1,349,610 928,928
Depreciation 373,340 338,803
Loss on sale of tangible fixed assets 9,737 102
Decrease in stocks 18,525 (41,151)
Increase in debtors (414,578) (404,750)
Increase in creditors 169,065 446,089
---------- -----------
1,505,699 1,268,021
========== ===========
17 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
1999 1998
(Pounds) (Pounds)
Increase in cash in the year 167,091 231,892
Cash outflow from financing in the year 6,000 (6,000)
Cash outflow from finance leases in the year 460,732 514,095
---------- -----------
Change in net debt resulting from cashflows 633,823 739,897
Inception of finance leases (244,950) (27,437)
---------- -----------
Movement in net debt in the year 388,873 712,550
Net debt at 1 October 1998 (1,011,260) (1,723,810)
---------- -----------
Net debt at 30 September 1999 (622,387) (1,011,260)
========== ===========
</TABLE>
14
<PAGE>
THAMESDOWN COLOUR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
18 ANALYSIS OF CHANGES IN NET DEBT
At 1 Cash flow Non-cash At 30
October items September
1998 1999
(Pounds) (Pounds) (Pounds) (Pounds)
Cash in hand and at bank 1,035,963 167,091 - 1,203,054
Debt (6,000) 6,000 - -
Finance leases (2,041,223) 460,732 (244,950) (1,825,441)
---------- ------- -------- ----------
(1,011,260) 633,823 (244,950) (622,387)
========== ======= ======== ==========
19 CAPITAL COMMITMENTS
The Company had no capital commitments at 30 September 1999 or
30 September 1998.
20 CONTINGENT LIABILITIES
There were no contingent liabilities at 30 September 1999 or
30 September 1998, except in respect of deferred taxation.
21 LEASING COMMITMENTS
Operating lease payments amounting to (Pounds)49,471 are due within one
year. The leases to which these amounts relate expire as follows:
1999 1998
Land and Land and
buildings Other buildings Other
(Pounds) (Pounds) (Pounds) (Pounds)
In one year or less - 951 - 6,155
Between one and five years 32,000 16,520 - 3,804
In five years or more - - 32,000 -
--------- ------- --------- -------
32,000 17,471 32,000 9,959
========= ======= ========= =======
22 PENSIONS
Defined Contribution Scheme
The Company operates a defined contribution pension scheme for the benefit
of the directors. The assets of the scheme are administered by trustees in
a fund independent from those of the company.
The pension cost charge for the year was (Pounds)28,700 (1998:(Pounds)
28,644).
15
<PAGE>
THAMESDOWN COLOUR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the years ended 30 September 1999 and 1998
- ---------------------------------------------------------------------------
23 POST BALANCE SHEET EVENTS
With effect from 2 November 1999 the company became a wholly owned
subsidiary of IMPAC Group, Inc.
24 DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
The accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in the United Kingdom ("UK GAAP"),
which differs in certain material respects from those generally accepted in
the United States ("US GAAP"). Such differences involve the amounts shown
in the financial statements, as well as additional disclosures required by
US GAAP.
Reconciliation of differences between UK GAAP and US GAAP
The effect on the company's net income and shareholders' equity of applying
the significant differences between UK GAAP and US GAAP is summarised in
the reconciliation statements set out below:
(a) Reconciliation of profit and loss accounts for the years ended 30
September.
<TABLE>
<CAPTION>
1999 1998
(Pounds) (Pounds)
<S> <C> <C>
Profit for the financial year reported under UK GAAP 870,091 677,964
US GAAP adjustments:
Goodwill amortisation (1) (8,000) (5,333)
Deferred taxation:
Application of full liability method (2) (7,000) (224,140)
---------- ----------
Net income and comprehensive income in accordance with US GAAP 855,091 448,491
========== ==========
(b) Reconciliation of Shareholders' equity for the years ending 30 September.
1999 1998
(Pounds) (Pounds)
Total Shareholders' fund under UK GAAP 1,416,620 993,529
US GAAP adjustments:
Goodwill written back 160,000 160,000
Goodwill amortisation (1) (13,333) (5,333)
---------- ---------
146,667 154,667
---------- ---------
Deferred tax full provision (313,000) (88,860)
Deferred tax application of full liability method (2) (7,000) (224,140)
---------- ---------
(320,000) (313,000)
---------- ---------
Ordinary dividend (3) 25,000 211,000
---------- ----------
Shareholders' equity in accordance with US GAAP 1,268,287 1,046,196
========== ==========
</TABLE>
16
<PAGE>
THAMESDOWN COLOUR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
(c) Changes in shareholders' equity on a US GAAP basis for the years
ending 30 September:
<TABLE>
<CAPTION>
1999 1998
(Pounds) (Pounds)
<S> <C> <C>
Shareholders' equity at the beginning of the year 1,046,196 653,093
Net income 855,091 448,491
Dividends (3) (633,000) (55,388)
---------- ---------
Shareholders' equity at the end of the year 1,268,287 1,046,196
========== =========
</TABLE>
The following are descriptions of US GAAP reconciling items:
(1) Under applicable UK GAAP for the periods being reported on, goodwill was
written off directly against reserves. Under US GAAP, such goodwill would be
capitalised and amortized to the income statement over the estimated useful
lives not exceeding 40 years. For the purpose of the US GAAP reconciliation,
goodwill has been amortised over 20 years.
(2) Under UK GAAP, the deferred tax effects of timing differences existing at
the balance sheet date are calculated under the liability method (using tax
rates likely to apply in the future when the timing differences reverse).
However, the company is not required to record the full liability, and may elect
to utilise the partial provision approach. Under the partial provision approach,
the amount of deferred tax to be provided is the liability that is expected to
arise in the future based on a projection of the extent to which the timing
differences existing at the balance sheet date are expected to reverse. Under US
GAAP deferred taxes are recorded under the full provision method.
(3) Under UK GAAP dividends are linked to the year's profit. The final
dividends are proposed and have to be approved by the shareholders. The proposed
dividend is nevertheless required to be recorded in the year's results. Under
US GAAP dividends are not attributable to any period's earnings and are recorded
at the point in time when they are formally declared by the board of directors.
Statement of cash flows
Under UK GAAP the Cash Flow statement is presented in accordance with Financial
Reporting Statement No. 1 as revised ("FRS 1"). The Statement prepared under FRS
1 presents substantially the same information as that required under US GAAP as
interpreted by SFAS No. 95. Under UK GAAP cash comprises cash in hand and at
bank (including overnight deposits), net of bank overdrafts. Under US GAAP cash
and cash equivalents include cash and short-term investments with original
maturities of three months and less.
Under UK GAAP cash flows are presented for operating activities; returns on
investments and servicing of finance; taxation; capital expenditure and
financial investment; acquisitions and disposals; equity dividends paid;
investing and financing activities.
Cash flows under UK GAAP in respect of interest received, interest paid,
investment income and taxation would be included within operating activities.
Capital expenditure and financial investment and cash flows from acquisitions
and disposals would be included within investing activities under US GAAP.
Dividends paid by subsidiary undertakings, minority interests, equity dividends
paid, management of liquid resources and returns on investment and servicing of
finance would be included within financing activities under US GAAP.
17
<PAGE>
THAMESDOWN COLOUR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
A summary of the company's operating, investing and financing activities,
classified in accordance with US GAAP is presented below. For the purposes of
this summary cash and cash equivalents consist of cash at bank and in hand and
short term deposits.
<TABLE>
<CAPTION>
1999 1998
(Pounds) (Pounds)
<S> <C> <C>
Cash provided by operating activities 1,318,659 1,068,121
Cash used in investing activities (51,836) (272,746)
Cash used in financing activities (1,099,732) (563,483)
---------- ---------
Net increase in cash and cash equivalents 167,091 231,892
Cash and cash equivalents under US GAAP at the beginning of the year 1,035,963 804,071
---------- ---------
Cash and cash equivalents under US GAAP at the end of the year 1,203,054 1,035,963
========== =========
</TABLE>
18
<PAGE>
Unaudited Pro Forma Combined Financial Information
The following Unaudited Pro Forma Combined Statements of Income assume that
the acquisition of Thamesdown Colour Limited ("Thamesdown") had occurred on
January 1, 1998. The following Unaudited Pro Forma Combined Statement of Income
for the Year Ended December 31, 1998 is based on the historical consolidated
financial statements of IMPAC Group, Inc. and Subsidiaries ("IMPAC") for the
year ended December 31, 1998 and the historical financial statements of
Thamesdown for the year ended September 30, 1999, adjusted to give effect to the
pro forma adjustments described in the notes thereto. The following Unaudited
Pro Forma Combined Statement of Income for the Nine Months Ended September 30,
1999 is based on the historical consolidated financial statements of IMPAC for
the nine months ended September 30, 1999 and the historical financial statements
of Thamesdown for the nine months ended June 30, 1999, adjusted to give effect
to the pro forma adjustments described in the notes thereto. The following
Unaudited Pro Forma Combined Balance Sheet as of September 30, 1999 is based on
the historical consolidated financial statements of IMPAC as of September 30,
1999 and the historical financial statements of Thamesdown as of September 30,
1999, adjusted to reflect the acquisition of Thamesdown as of such date and to
give effect to the pro forma adjustments described in the notes thereto.
The pro forma adjustments are based upon available data and certain
assumptions that IMPAC management believes are reasonable. The Unaudited Pro
Forma Combined Financial Information are not necessarily indicative of IMPAC's
results of operations that might have occurred had the aforementioned
acquisition been completed as of the date indicated above and do not purport to
represent what the Company's results of operations might be for any future
period or date. The Unaudited Pro Forma Combined Financial Information should be
read in conjunction with the historical financial statements of IMPAC and
Thamesdown. The historical financial statements of Thamesdown as of September
30, 1999 and 1998 and for each of the years in the two year period ending
September 30, 1999 and the related notes thereto are included herein. The
historical consolidated financial statements of IMPAC as of December 31, 1998
and 1997 and for each of the years in the three year period ended December 31,
1998 and the related notes thereto and the historical consolidated financial
statements of IMPAC as of September 30, 1999 and for the nine month periods
ended September 30, 1999 and 1998 and the related notes thereto, have been
previously filed with the Securities and Exchange Commission.
IMPAC GROUP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
Year Ended December 31, 1998
(In thousands)
<TABLE>
<CAPTION>
IMPAC Thames- Pro Forma Pro Forma
Group down (1) Adjustments Combined
-------- ------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales................................................... $184,298 $11,096 $ -- $195,394
Cost of goods sold.......................................... 134,643 7,233 -- 141,876
-------- ------- ----------- --------
Gross profit................................................ 49,655 3,863 -- 53,518
Selling, general and administrative expenses................ 31,762 1,678 215 (2) 33,655
-------- ------- ----------- --------
Operating income............................................ 17,893 2,185 (215) 19,863
Other income (expense):
Interest expense, net..................................... (13,514) (225) (577) (3) (14,316)
Other income (expense), net............................... (457) -- -- (457)
-------- ------- ----------- --------
Income before income taxes and extraordinary item........... 3,922 1,960 (792) 5,090
Income taxes................................................ (1,879) (568) 231 (4) (2,216)
-------- ------- ----------- --------
Income before extraordinary item............................ $ 2,043 $ 1,392 $ (561) $ 2,874
======== ======= =========== ========
</TABLE>
19
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
Nine Months Ended September 30, 1999
(In thousands)
<TABLE>
<CAPTION>
IMPAC Thames- Pro Forma Pro Forma
Group down (1) Adjustments Combined
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales................................................... $ 213,877 $ 8,082 $ -- $ 221,959
Cost of goods sold.......................................... 151,619 5,107 -- 156,726
----------- ---------- ----------- -----------
Gross profit................................................ 62,258 2,975 -- 65,233
Selling, general and administrative expenses................ 43,727 1,323 161 (2) 45,211
----------- ---------- ----------- -----------
Operating income............................................ 18,531 1,652 (161) 20,022
Other income (expense):
Interest expense, net..................................... (16,984) (168) (432)(3) (17,584)
Other income (expense), net............................... (159) -- -- (159)
----------- ---------- ----------- -----------
Income before income taxes and extraordinary item........... 1,388 1,484 (593) 2,279
Income taxes................................................ (1,238) (428) 173 (4) (1,493)
----------- ---------- ----------- -----------
Income before extraordinary item............................ $ 150 $ 1,056 $ (420) $ 786
=========== ========== =========== ===========
</TABLE>
20
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
September 30, 1999
(In thousands)
<TABLE>
<CAPTION>
IMPAC Thames- Pro Forma Pro Forma
Group down(1) Adjustments Combined
----------- --------- ------------- -----------
ASSETS
<S> <C> <C> <C> <C>
Current assets:
Cash....................................................... $ 3,700 $ 1,982 $(1,982)(5) $ 3,700
Accounts receivable, net............................. 56,307 2,382 -- 58,689
Inventories................................................ 25,002 152 -- 25,154
Other current assets....................................... 9,834 132 -- 9,966
-------- ------ ------- ---------
Total current assets.................................... 94,843 4,648 (1,982) 97,509
-------- ------ ------- ---------
Long-term assets:
Property, plant and equipment, net......................... 115,023 4,048 -- 119,071
Goodwill, net.............................................. 160,306 242 8,854 (6) 169,402
Other assets............................................... 13,265 -- -- 13,265
-------- ------ ------- ---------
Total assets............................................ $ 383,437 $ 8,938 $ 6,872 $ 399,247
======== ====== ======= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt....................... $ 8,149 $ 786 $ -- $ 8,935
Trade payables and bank overdraft.......................... 30,523 2,173 -- 32,696
Accrued expenses........................................... 23,780 1,668 -- 25,448
-------- ------ ------- ---------
Total current liabilities............................... 62,452 4,627 -- 67,079
-------- ------ ------- ---------
Long-term debt............................................... 247,539 2,221 6,590 (5) 256,350
Other noncurrent liabilities................................. 10,867 -- -- 10,867
-------- ------ ------- ---------
Total liabilities....................................... 320,858 6,848 6,590 334,296
-------- ------ ------- ---------
Mandatorily redeemable preferred stock....................... 16,619 -- -- 16,619
-------- ------ ------- ---------
Shareholders' equity:
Common stock............................................... 0 494 (494) (7) 0
Paid in capital............................................ 79,785 -- 2,372 (5) 82,157
Warrants outstanding....................................... 4,207 -- -- 4,207
Carryover basis adjustment................................. (37,143) -- -- (37,143)
Accumulated other comprehensive income..................... (3,837) -- -- (3,837)
Retained earnings.......................................... 2,948 1,596 (1,596) (7) 2,948
-------- ------ ------- ---------
Total shareholders' equity.............................. 45,960 2,090 282 48,332
-------- ------ ------- ---------
Total liabilities & shareholders' equity................ $ 383,437 $ 8,938 $ 6,872 $ 399,247
========= ======= ======= =========
</TABLE>
21
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(In thousands)
(1) Represents the historical financial information of Thamesdown Colour
Limited. The historical financial information was derived from the audited
financial statements of Thamesdown Colour Limited as of and for the year
ended September 30, 1999 and from the unaudited financial statements for
the nine months ended June 30, 1999, adjusted to U.S. GAAP and converted to
U.S. dollars as follows:
<TABLE>
<CAPTION>
For the Twelve Months Ended December 31, 1998
-----------------------------------------------------------------------
U.K. GAAP Adjustments U.S. GAAP (Pounds)/$ U.S. GAAP
Historical to U.S. GAAP Adjusted Rate Adjusted
---------- ------------ --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Net sales....................................... (Pounds) (Pounds) (Pounds)
6,813 -- 6,813 0.614 $11,096
Cost of goods sold.............................. 4,441 -- 4,441 0.614 7,233
----- -- ----- -------
Gross profit.................................... 2,372 -- 2,372 3,863
Selling, general and administrative expenses.... 1,022 8 (a) 1,030 0.614 1,678
----- -- ----- -------
Operating income................................ 1,350 (8) 1,342 2,185
Interest expense, net........................... (138) -- (138) 0.614 (225)
----- -- ----- -------
Income before income taxes...................... 1,212 (8) 1,204 1,960
Income taxes.................................... (342) (7) (b) (349) 0.614 (568)
----- -- ----- -------
Net income...................................... (Pounds) (Pounds) (Pounds)
870 (15) 855 $ 1,392
===== === ===== =======
</TABLE>
<TABLE>
<CAPTION>
For the Nine Months Ended September 30, 1999
-----------------------------------------------------------------------
U.K. GAAP Adjustments U.S. GAAP (Pounds)/$ U.S. GAAP
Historical to U.S. GAAP Adjusted Rate Adjusted
---------- ------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales....................................... (Pounds) (Pounds) (Pounds)
5,003 -- 5,003 0.619 $ 8,082
Cost of goods sold.............................. 3,161 -- 3,161 0.619 5,107
----- -- ----- ------
Gross profit.................................... 1,842 -- 1,842 2,975
Selling, general and administrative expenses.... 813 6 (a) 819 0.619 1,323
----- -- ----- ------
Operating income................................ 1,029 (6) 1,023 1,652
Interest expense, net........................... (104) -- (104) 0.619 (168)
----- -- ----- ------
Income before income taxes...................... 925 (6) 919 1,484
Income taxes.................................... (260) (5) (b) (265) 0.619 (428)
----- -- ----- ------
Net income...................................... (Pounds) (Pounds) (Pounds)
665 (11) 654 $ 1,056
===== == ===== ======
</TABLE>
(a) Reflects amortization of goodwill for historical Thamesdown
acquisition.
(b) Reflects additional deferred tax expense as a result of the
application of the full liability method.
22
<PAGE>
<TABLE>
<CAPTION>
As of September 30, 1999
------------------------------------------------------------------
U.K. GAAP Adjustments U.S. GAAP (Pounds)/$ U.S. GAAP
Historical to U.S. GAAP Adjusted Rate Adjusted
---------- ------------ --------- ---------- -----------
(Pounds) (Pounds) (Pounds)
<S> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash.......................................... 1,203 -- 1,203 0.607 $ 1,982
Accounts receivable, net...................... 1,446 -- 1,446 0.607 2,382
Inventories................................... 92 -- 92 0.607 152
Other current assets.......................... 80 -- 80 0.607 132
---------- ------------ --------- -----------
Total current assets............................ 2,821 -- 2,821 4,648
---------- ------------ --------- -----------
Long-term assets:
Property, plant and equipment, net............ 2,457 -- 2,457 0.607 4,048
Goodwill, net................................. -- 147 (a) 147 0.607 242
---------- ------------ --------- -----------
(Pounds) (Pounds) (Pounds)
Total assets.................................... 5,278 147 5,425 $ 8,938
========== ============ ========= ===========
Liabilities and Shareholders' Equity
Current liabilities: (Pounds) (Pounds) (Pounds)
Current maturities of long-term debt.......... 477 -- 477 0.607 $ 786
Trade payables and bank overdraft............. 1,319 -- 1,319 0.607 2,173
Accrued expenses.............................. 717 295 (b-c) 1,012 0.607 1,668
---------- ------------ --------- -----------
Total current liabilities....................... 2,513 295 2,808 4,627
---------- ------------ --------- -----------
Long-term debt.................................. 1,348 -- 1,348 0.607 2,221
---------- ------------ --------- -----------
Total liabilities............................... 3,861 295 4,156 6,848
---------- ------------ --------- -----------
Shareholders' equity:
Common stock.................................. 300 -- 300 0.607 494
Retained earnings............................. 1,117 (148)(a-c) 969 0.607 1,596
---------- ------------ --------- -----------
Total shareholders' equity ..................... 1,417 (148) 1,269 2,090
---------- ------------ --------- -----------
(Pounds) (Pounds) (Pounds)
Total liabilities and shareholders' equity...... 5,278 147 5,425 $ 8,938
========== ============ ========= ===========
</TABLE>
(a) Reflects goodwill as an asset rather than an equity reserve.
(b) Reverses proposed dividend recorded under U.K. GAAP.
(c) Fully recognizes deferred tax liabilities which were only partially
recognized under U.K. GAAP.
(2) Reflects an adjustment of $215 and $161 for the year ended December 31, 1998
and for the nine months ended September 30, 1999, respectively, which
represents the amortization of goodwill acquired in connection with the
acquisition of Thamesdown.
(3) Reflects an adjustment of $577 and $432 for the year ended December 31, 1998
and for the nine months ended September 30, 1999, respectively, which
represents additional interest expense in connection with the issuance of
additional revolver borrowings under IMPAC's Amended and Restated
Multicurrency Credit Facility of $6,590.
(4) Reflects an adjustment of $231 and $173 for the year ended December 31, 1998
and for the nine months ended September 30, 1999, respectively, for the tax
benefit from the pro forma adjustments.
23
<PAGE>
(5) Reflects adjustments for the estimated sources and uses of funds in
connection with the assumed acquisition as of September 30, 1999, computed
as follows:
<TABLE>
<CAPTION>
<S> <C>
Sources of funds:
Issuance of revolver borrowings.......... $ 6,590
Equity contributions..................... 2,372
Acquired cash of Thamesdown.............. 1,982
-------
Total Sources............................ $10,944
=======
Uses of funds:
Purchase of Thamesdown equity............ $10,844
Estimated acquisition expenses........... 100
-------
Total Uses............................... $10,944
=======
</TABLE>
(6) Reflects the excess of the purchase price over the fair value of the net
assets acquired, computed as follows:
<TABLE>
<CAPTION>
<S> <C>
Purchase price:
Purchase of Thamesdown equity............ $10,844
Estimated acquisition expenses........... 100
-------
Total Sources............................ 10,944
Less:
Net assets acquired...................... (2,090)
-------
Goodwill adjustment........................ $ 8,854
=======
</TABLE>
(7) To record the elimination of Thamesdown's historical common stock and
retained earnings accounts in connection with the proposed acquisition.
24
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
IMPAC Group, Inc.
By: /s/ David C. Underwood
__________________________________
David C. Underwood
Chief Financial Officer
Date: January 18, 2000
