SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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): December 20, 1996
Commission file number 0-6237
THE ZIEGLER COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1148883
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
215 North Main Street, West Bend, Wisconsin 53095
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (414) 334-5521
<PAGE>
Item 2.Disposition of Assets.
On December 20, 1996, The Ziegler Companies, Inc.
("registrant") (AMEX Symbol ZCO) closed on the sale of its wholly-owned
subsidiary, Ziegler Leasing Corporation. Ziegler Leasing Corporation
leases diagnostic, laboratory and operating equipment to hospitals, clinics
and other healthcare providers, and leases a variety of commercial
equipment to financial institutions, insurance companies and manufacturing
concerns. The registrant previously announced its intention to enter into
this transaction in its Form 8-K filing dated November 1, 1996. The
registrant received $17,070,202 as the purchase price in cash at closing,
which amount is subject to post-closing adjustments. The purchaser was
General Electric Capital Corporation.
The amount of consideration was determined by arms-length negotiation
between unrelated parties, and was based, among other things, on the
balance sheet of Ziegler Leasing Corporation on the day of closing.
Certain changes to the balance sheet of Ziegler Leasing Corporation made as
the result of the post-closing audit procedure described in the Stock
Purchase Agreement ("Agreement") can result in adjustments to the purchase
price paid at closing. The description of the sale transaction in this
Form 8-K is qualified in its entirety by reference to the Agreement, dated
December 20, 1996, which is attached hereto as Exhibit 2.
Item 7.Financial Statements and Information.
The following pro forma condensed consolidated financial statements
of the registrant are filed with this report:
Pro forma consolidated balance sheet
as of September 30, 1996
Pro forma consolidated condensed
income statement
Year ended December 31, 1995
Nine months ended September 30, 1996
The pro forma consolidated balance sheet of registrant as of
September 30, 1996 reflects the financial position of the registrant, after
giving effect to the disposition of the stock of Ziegler Leasing
Corporation described in Item 2, and assumes that the disposition took
place on September 30, 1996. The pro forma consolidated condensed income
statement for the year ended December 31, 1995, and for the nine months
ended September 30, 1996, assume that the disposition of the stock occurred
as of the beginning of each of those respective periods, and are based on
the operations of the registrant for the year ended December 31, 1995 and
the nine months ended September 30, 1996.
The unaudited pro forma condensed consolidated financial statements
have been prepared by registrant based upon assumptions deemed by it to be
proper, are shown for illustrative purposes only, and are not necessarily
indicative of the future financial position or future results of operations
of the registrant, or of the financial position or results of operations of
the registrant which would have actually occurred had the sale of stock
described in Item 2 been in effect as of the date or for the periods
presented. In addition, it should be noted that the registrant's financial
statements will reflect the disposition only from December 20, 1996, the
closing date of the sale. The unaudited pro forma condensed consolidated
financial statements should be read in conjunction with the historical
financial statements and related notes of the registrant.
<PAGE>
Exhibit No.
2. Stock Purchase Agreement ("Agreement"), dated as of December
20, 1996, by and between the registrant and General Electric
Capital Corporation. The Agreement is incorporated by
reference from Exhibit 10.1 to the Form 8-K filed by Ziegler
Leasing Corporation on December 31, 1996, Commission File No.
033-43082.
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.
THE ZIEGLER COMPANIES, INC.
By: /s/ Peter D. Ziegler
Peter D. Ziegler
President and CEO
By: /s/ Lynn R. Van Horn
Lynn R. Van Horn
Senior Vice President - Finance
Dated: January 6, 1997
<PAGE>
THE ZIEGLER COMPANIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
(Note A)
<S> <C> <C> <C>
ASSETS
Cash (Note B) $ 3,366,691 $ 19,179,943 $ 22,546,634
Short-term investments 4,854,831 (1,373,516) 3,481,315
Bonds due and called as of
October 1, 1996 7,306,361 - 7,306,361
Total cash and
cash equivalents 15,527,883 17,806,427 33,334,310
Securities inventory 15,407,034 - 15,407,034
Accounts receivable --
securities sales 5,165,231 - 5,165,231
Accounts receivable -- other 6,409,726 (1,365,444) 5,044,282
Investment in and receivables
from affiliates 2,666,159 (131,755) 2,534,404
Investment in leases 46,393,953 (38,046,935) 8,347,018
Receivable for purchase
of leveraged lease equipment 589,342 (589,342) -
Notes receivable (Note C) 24,867,167 (696,208) 24,170,959
Land, buildings and equipment,
at cost, net of accumulated
depreciation of $15,125,789 7,235,054 (67,305) 7,167,749
Deferred income tax benefit
(Note D) - 1,065,000 1,065,000
Other assets 8,631,067 (445,264) 8,185,803
Total assets $132,892,616 $(22,470,826) $110,421,790
LIABILITIES AND
STOCKHOLDERS' EQUITY
Short-term notes payable $ 14,900,384 - 14,900,384
Payable to customers 3,917,397 - 3,917,397
Payable to broker-dealers 363,268 - 363,268
Accounts payable 1,544,228 (481,774) (1,062,454)
Dividends payable 316,624 - 316,624
Accrued income taxes 647,737 (162,534) 485,203
Deferred income taxes (Note D) 5,035,000 (5,035,000) -
Notes payable 9,187,490 (5,787,625) 3,399,865
Bonds payable 36,197,886 (10,000,000) 26,197,886
Other liabilities and
deferred items 7,663,314 (1,003,893) 6,659,421
Total liabilities 79,773,328 (22,470,826) 57,302,502
Commitments
Stockholders' equity
Common stock, $1.00 par,
authorized 7,500,000 shares,
issued 3,544,030 shares 3,544,030 - 3,544,030
Additional paid-in capital 5,968,684 - 5,968,684
Retained earnings 61,340,036 - 61,340,036
Treasury stock, at cost,
1,108,458 shares (17,161,828) - (17,161,828)
Unearned compensation (571,634) - (571,634)
Total stockholders' equity 53,119,288 - 53,119,288
Total liabilities and
stockholders' equity $132,892,616 $(22,470,826) $110,421,790
</TABLE>
The accompanying notes to the pro forma financial statements are an integral
part of this balance sheet.
<PAGE>
THE ZIEGLER COMPANIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED INCOME STATEMENT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
(Note A)
<S> <C> <C> <C>
Revenues:
Investment banking and
commission income $21,232,183 $ - $21,232,183
Interest and dividends
(Notes B and C) 3,456,551 447,192 3,903,743
Lease income 6,369,672 (5,743,018) 626,654
Gross profit on
chemical products 3,032,692 - 3,032,692
Insurance agency 787,048 - 787,048
Other 5,024,557 (778,345) 4,246,212
Total revenues 39,902,703 (6,074,171) 33,828,532
Expenses:
Employee compensation and
benefits 17,417,138 (526,890) 16,890,248
Commission and clearing fees 722,851 - 722,851
Communications 2,084,599 (88,671) 1,995,928
Occupancy and equipment 6,344,745 (2,921,076) 3,423,669
Promotional 1,777,694 (194,636) 1,583,058
Professional and regulatory 531,893 (70,356) 461,537
Interest (Note E) 3,849,814 (1,513,656) 2,336,158
Other operating expenses 4,692,383 (431,969) 4,260,414
Total expenses 37,421,117 (5,747,254) 31,673,863
Income before income taxes 2,481,586 (326,917) 2,154,669
Provision for income taxes
(Note F) 852,000 (112,000) 740,000
Net income $ 1,629,586 $ (214,917) $ 1,414,669
Net income per share of common stock $ .68 $(.09) $ .59
Weighted average number of common
shares outstanding 2,397,439 2,397,439 2,397,439
</TABLE>
The accompanying notes to the pro forma financial statements are an integral
part of this statement.
<PAGE>
THE ZIEGLER COMPANIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
(Note A)
<S> <C> <C> <C>
Revenues:
Investment banking and
commission income $30,642,641 $ - $30,642,641
Interest and dividends
(Notes B and C) 4,327,412 675,313 5,002,725
Lease income 9,656,436 (8,779,194) 877,242
Gross profit on
chemical products 3,762,466 - 3,762,466
Insurance agency 951,085 - 951,085
Other 5,869,128 (699,555) 5,169,573
Total revenues 55,209,168 (8,803,436) 46,405,732
Expenses:
Employee compensation
and benefits 22,329,471 (554,456) 21,775,015
Commission and clearing fees 820,472 - 820,472
Communications 2,660,151 (97,388) 2,562,763
Occupancy and equipment 8,773,624 (4,522,045) 4,251,579
Promotional 2,115,780 (219,516) 1,896,264
Professional and regulatory 901,396 (103,253) 798,143
Interest (Note E) 5,568,541 (2,229,496) 3,339,045
Other operating expenses 5,703,212 (636,237) 5,066,975
Total expenses 48,872,647 (8,362,391) 40,510,256
Income before income taxes 6,336,521 (441,045) 5,895,476
Provision for income taxes
(Note F) 2,292,200 (153,000) 2,139,200
Net income $ 4,044,321 $ (288,045) $ 3,756,276
Net income per share of
common stock $1.69 $(.12) $1.57
Weighted average number of
common shares outstanding 2,391,968 2,391,968 2,391,968
</TABLE>
The accompanying notes to the pro forma financial statements are an integral
part of this statement.
<PAGE>
THE ZIEGLER COMPANIES, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(Unaudited)
Note A - On December 20, The Ziegler Companies, Inc. (the "Parent") sold
its wholly-owned subsidiary, Ziegler Leasing Corporation ("ZLC"). The pro
forma financial statements included herein have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission.
Except as explained in subsequent Notes, the Pro Forma Adjustments reflect
the removal of ZLC balances from the historical, consolidated balances.
ZLC is a separate corporation, therefore, all its account balances can be
directly identified. Intercompany transactions consist of interest expense
paid to Parent and fee revenues earned by ZLC in connection with managing
and servicing the lease portfolio of an affiliate.
Note B - The pro forma increase in Cash reflects the sales price, net of
income taxes, of approximately $11,000,000, plus reimbursement from the
purchaser of approximately $8,200,000 of intercompany loans due Parent by
ZLC. The cash is assumed to be reinvested in fixed income securities at
5.75% in 1996 and 6.50% in 1995 yielding approximately $827,000 and
$1,247,000, respectively, of interest income which is reflected in the pro
forma consolidated condensed income statements.
Note C - ZLC had approximately $5,191,000 of notes payable to an affiliate
at September 30, 1996. These notes were properly eliminated in the
Historical Consolidated Balance Sheet balances. Effective with the sale of
ZLC, however, the notes payable are no longer intercompany transactions.
As a result, $5,191,000 has been added to Notes Receivable on the Pro Forma
Consolidated Balance Sheet.
During 1995 and during the first nine months of 1996, ZLC incurred interest
expense on the notes payable to affiliates described above of approximately
$82,000 and $263,000, respectively. Consistent with the preceding
paragraph, these amounts were added to the Pro Forma Adjustments to the
Interest and Dividend revenue balances of the pro forma consolidated
condensed income statements.
Note D - The removal of ZLC's net deferred tax liabilities from the
historical balance resulted in a net consolidated deferred tax benefit.
This deferred tax benefit was reclassified as an asset.
Note E - ZLC incurred interest expense of approximately $660,000 in 1995
and $390,000 during the first nine months of 1996 on loans from Parent.
The source of funds for these loans from Parent came from the issuance by
Parent of its short-term commercial paper to unaffiliated investors. It is
Parent's intent to keep this commercial paper outstanding after the sale of
ZLC. As a result, the interest expense was not removed from the historical
expense balances.
Note F - The provision for income taxes was adjusted for the Federal and
state income tax effect of the pro forma adjustments discussed in Notes B,
C and E. An effective rate of 39% was used for these adjustments.
