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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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): September 15, 1999
AKI Holding Corp.
(Exact Name of Registrant as Specified in Charter)
Delaware 333-60991 74-2883163
(State or Other Jurisdiction of (IRS Employer
Incorporation) (Commission File Number) Identification No.)
1815 East Main Street, Chattanooga, Tennessee 37404
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (423) 624-3301
AKI, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware 333-60989 13-3785856
(State or Other Jurisdiction of (IRS Employer
Incorporation) (Commission File Number) Identification No.)
1815 East Main Street, Chattanooga, Tennessee 37404
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (423) 624-3301
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Item 5.
On September 15, 1999, AKI, Inc. (the "AKI"), a wholly owned subsidiary
of AKI Holding Corp. ("Holding" and together with AKI, the "Company") purchased
all of the issued and outstanding shares of common stock, no par value, of
RetCom Holdings Ltd., a Delaware corporation ("RetCom"), and all of the issued
and outstanding options and other rights to purchase capital stock of and all
other equity rights of RetCom and also refinanced the working capital
indebtedness of Retcom and its subsidiaries. The purchase price and refinancing
of indebtedness were initially financed by borrowings under AKI's credit
agreement with Heller Financial, Inc. The Company is exploring options for the
longer-term financing of a portion of the borrowings incurred in connection with
the acquisition. In addition, on August 9, 1999, the Company announced earnings
for the quarter and fiscal year ended June 30, 1999. The Company's press
releases issued September 15, 1999 and August 9, 1999 are attached as exhibits
hereto and incorporated herein by reference as Exhibits 99.1 and 99.2,
respectively. (Certain revisions have been made to the August 9, 1999 press
release to correct typographical errors in the summary income statement data and
summary balance sheet data).
FINANCIAL STATEMENTS AND EXHIBITS.
Exhibits.
Exhibit No. Description
- ----------- -----------
99.1 Press Release, dated September 15, 1999.
99.2 Press Release, dated August 9, 1999.
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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.
AKI Holding Corp.
(Registrant)
Date: September 21, 1999 /S/ WILLIAM J. FOX
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William J. Fox, Chief Executive Officer
AKI, Inc.
(Registrant)
Date: September 21, 1999 /S/ WILLIAM J. FOX
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William J. Fox, Chief Executive Officer
Exhibit 99.1
For Immediate Release
ARCADE MARKETING, INC. ANNOUNCES ACQUISITION
New York, N.Y., September 15, 1999 - Arcade Marketing Inc., the interactive
advertising specialists, widely recognized for cutting-edge sampling
technologies, has consummated its agreement with the shareholders of Retcom
Holdings Ltd. and acquired its businesses; terms not disclosed. William J. Fox,
Chairman & CEO of Arcade stated that "the businesses acquired by Arcade include
a portfolio of sampling systems catering to the fragrance, cosmetics and
personal care industries, as well as microencapsulation activities.
Additionally, a creative service ("Concepts") division that handles marketing
communications, catalogs, database marketing and a multi-media division for
merchandising at point-of-sale are included."
The acquired businesses originated in 1970 and are headquartered in New York
with operations in the U.S. and Europe. The largest division offers proprietary,
patented and patent pending sampling systems that include MicroSilk(TM),
MicroDot(TM), Snap and Powder(TM), ColorDot(TM) and Ascent(TM). The turnaround
of these businesses is largely attributed to the stewardship (as CEO) of Jay
Gartlan. Mr. Gartlan has joined Arcade as Senior Vice President and will also
head up the Concepts Division.
Arcade plans to integrate the acquired products into its diversified product
group. Mr. Fox explained that "this combination will enhance Arcade's
proprietary portfolio, further enabling Arcade to offer its customers the most
sophisticated and diversified range of multi-sensory products available anywhere
in the world."
With out-of-the-box thinking as the watchword, Arcade is firmly established as
the leader in multi-sensory marketing with interactive products that engage
touch, sight, sound and olfactory. With nearly a century of experience in
developing innovative solutions for the marketplace, the company is, at the same
time, the world's foremost producer of sampling systems for the fragrance,
cosmetic, personal care, sun care, household products and food and beverage
industries. Arcade Marketing Inc. is headquartered in New York with sales and
associated manufacturing facilities in Tennessee, California, Paris, London,
Sydney and Rio de Janeiro.
Press Contact Name/Tel #
Laura Condolora
(212) 421-1029
Exhibit 99.2
Contact: Kenneth A. Budde
Chief Financial Officer
AKI, Inc.
(423)624-3301
For Immediate Release
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AKI HOLDING CORP. AND ITS WHOLLY OWNED SUBSIDIARY
AKI, INC.
FOURTH QUARTER EARNINGS ANNOUNCED
New York, August 9 -- AKI today announced fourth quarter results for
the period ended June 30, 1999.
In June 1998, AKI, Inc., issued $115 million of 10 1/2% Senior Notes
due 2008 and AKI Holding Corp. issued $50 million of 13 1/2% Senior Discount
Debentures due 2009. These issues were completed under Rule 144A of the
Securities Act of 1933 and the company has completed an exchange offer for these
securities as prescribed by the terms of the offerings.
Net sales for the fourth quarter ended June 30, 1999, increased $2.9
million, or 20.6 percent, to $17.0 million compared with $14.1 million in the
1998 period. The net sales increase resulted from increases in the sales of
cosmetic sampling system products offset partially by the strength of the U.S.
dollar. Earnings before interest, taxes, depreciation and amortization
("EBITDA") increased $0.3 million or 15.0 percent to $2.3 million compared with
$2.0 million for 1998. The increase in EBITDA resulted primarily from the gross
profit associated with the increased sales and decreases in raw material costs,
partially offset by increased costs associated with the outsourcing of European
production and increased selling, general and administrative costs reflecting
increases in sales staffing and commissions and net increases in executive
compensation following the acquisition of the company and the strength of the
U.S. dollar.
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Net sales for the year ended June 30, 1999, increased $14.7 million, or
20.6 percent, to $86.0 million compared with $71.3 million in the 1998 period.
The net sales increase resulted from increases in the sales of cosmetic sampling
system products and sales to the consumer products industry offset partially by
the strength of the U.S. dollar. EBITDA increased $3.7 million or 22.6 percent
to $20.1 million compared with $16.4 million for 1998. The increase in EBITDA
resulted primarily from the gross profit associated with the increased sales and
decreases in raw material costs, partially offset by increased costs associated
with the outsourcing of European production, and increased selling, general and
administrative costs reflecting increases in sales staffing and commissions and
net increases in executive compensation following the acquisition of the company
and the strength of the U.S. dollar.
Statements made in this press release that state the company's or
management intentions, beliefs, expectations of predictions for the future are
forward-looking statements. It is important to note that the company's actual
results could differ materially from those projected in such forward-looking
statements. In addition to the factors set forth above, other important factors
that could cause actual results to differ materially include, but are not
limited to general economic and business conditions, industry trends, the loss
of major customers or suppliers, the timing of orders received from customers,
cost and availability of raw materials, changes in business strategy or
development plans, availability and quality of management, and availability,
terms and deployment of capital. Additional information concerning factors that
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could cause actual results to differ materially from those in the
forward-looking statements is contained from time to time in the company's SEC
filings. Copies of these filings may be obtained by contacting the company or
SEC. The company disclaims any intention or obligation to update or review any
forward-looking statements, whether as a result of new information, future
events or otherwise.
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AKI, INC.
JUNE 30, 1999
(In thousands)
<TABLE>
<CAPTION>
Three months Year
I. ended June 30 II. Ended June 30
1998 1999 1998 1999
<S> <C> <C> <C> <C>
Summary Income
Statement Data
Net Sales 14,084 16,988 71,252 85,967
Gross profit 3,479 5,697 23,925 30,768
Selling, general & administrative
expenses
2,405 4,167 11,290 14,500
Income from operations
104 378 9,966 11,662
Interest expense 6,106 3,276 13,915 13,028
Net (loss) (4,124) (2,175) (3,661) (2,591)
Other data
Depreciation & amortization
1,947 1,926 6,410 8,487
Capital expenditures
259 426 1,321 2,856
EBITDA 2,051 2,304 16,376 20,149
Summary Balance
Sheet Data:
Cash 1,641 7,015
Current assets 23,630 29,295
Total assets 211,038 210,853
Current liabilities 10,785 14,442
Long-term debt,
excluding current portion 116,489 116,349
Total liabilities 131,417 134,131
Stockholders equity 79,621 76,722
A full report will be available in the Form 10-K to be filed with the securities
and Exchange Commission.
August 9, 1999
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AKI Holding Corp.
JUNE 30, 1999
(In thousands)
Three months Year
III. Ended June 30 IV. Ended June 30
1998 1999 1998 1999
<S> <C> <C> <C> <C>
Summary Income
Statement Data
Net Sales 14,084 16,988 71,252 85,967
Gross profit 3,479 5,697 23,925 30,768
Selling, general & administrative
expenses
2,405 4,167 11,290 14,500
Income from operations
104 378 9,966 11,662
Interest expense 6,164 4,237 13,973 16,740
Net (loss) (4,163) (2,849) (3,700) (5,116)
Other data
Depreciation & amortization
1,947 1,926 6,410 8,487
Capital expenditures
259 426 1,321 2,856
EBITDA 2,051 2,304 16,376 20,149
Summary Balance
Sheet Data:
Cash 3,842 7,015
Current assets 25,831 29,295
Total assets 214,521 213,579
Current liabilities 10,785 14,442
Long-term debt,
excluding current portion 142,509 146,000
Total liabilities 157,437 163,782
Stockholders equity 57,084 49,797
A full report will be available in the Form 10-K to be filed with the securities
and Exchange Commission.
August 9, 1999
</TABLE>
