UNITED STATES
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): October 29, 1999
THE ZIEGLER COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 1-10854 39-1148883
(State of incorporation) (Commission File No.) (I.R.S. Employer Id. No.)
215 North Main Street
West Bend, Wisconsin 53095-3317
(Address of principal executive offices)(Zip Code)
(262) 334-5521
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of assets.
On October 29, 1999, Ziegler Thrift Trading, Inc. sold substantially all
of its assets and liabilities to Strong Investments, Inc. (the "Buyer").
The Buyer is otherwise unaffiliated with Ziegler Thrift Trading, Inc. The
total sale price was $7.4 million plus Ziegler Thrift Trading, Inc.'s 1999
income through closing. Prior to the sale, Ziegler Thrift Trading, Inc.
declared and paid dividends in an amount equal to approximately $1.8 million
to its sole shareholder, The Ziegler Companies, Inc. The sale price amounts
are subject to certain adjustments as set forth in the Asset Purchase
Agreement.
A copy of the Asset Purchase Agreement was filed as Exhibit 99.2 to the
Form 8-K dated August 12, 1999. The foregoing description is qualified in
its entirety by reference to the Asset Purchase Agreement.
Ziegler Thrift Trading, Inc.'s intention to sell the business was
previously announced by The Ziegler Companies, Inc. (the "Company" or
"ZCO"). The terms of the transaction were determined by arms-length
negotiations between Ziegler Thrift Trading, Inc. and the Buyer.
Item 7. Pro Forma Financial Information.
The following pro forma unaudited financial statements of the Company
electing the foregoing transactions are included.
Pro Forma Consolidated Balance Sheet
at September 30, 1999 (Unaudited) F-1
Pro Forma Consolidated Statements of Operations
Year Ended December 31, 1998 (Unaudited) F-2
Nine Months Ended September 30, 1999 (Unaudited) F-3
Notes to Pro Forma Consolidated Financial Statements F-4
The exhibits to this Report are listed in the Exhibit Index set forth
elsewhere herein.
The following unaudited pro forma financial statements of the Company
give effect to the sale of the business of Ziegler Thrift Trading, Inc.
("ZTT") and substantially all of the non-cash assets and liabilities of ZTT.
The statements reflect the application of the net proceeds as described in
The Notes to Pro Forma Consolidated Financial Statements. The amounts are
estimated and subject to further closing adjustments which are expected to be
insignificant. The pro forma consolidated balance sheet as of September 30,
1999, is based on the historical balance sheet of the Company and is
presented as if the sale had occurred on that date. The pro forma
consolidated statements of operations for the year ended December 31, 1998
and for the nine months ended September 30, 1999 assume that the sale
occurred at the beginning of 1998.
The condensed pro forma statement of consolidated operations is not
necessarily indicative of the financial results that would have occurred had
the sale of ZTT been consummated on the indicated date, nor is it necessarily
indicative of future financial results. See the notes to pro forma
consolidated financial statements for the assumptions used in the statements
presented. The pro forma consolidated financial statements should be read in
conjunction with the historical financial statements and related notes of the
Company.
<PAGE>
THE ZIEGLER COMPANIES, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Historical
ZCO
As Previously Pro Forma Pro Forma
Reported Adjustments Statement
ASSETS
<S> <C> <C> <C>
Cash $ 8,608,749 $ - $ 8,608,749
Short-term investments 6,530,241 4,800,000 (1) 11,330,241
Total cash and cash equivalents 15,138,990 4,800,000 19,938,990
Securities inventory 39,625,668 - 39,625,668
Securities purchased under agreements
to resell 4,483,125 - 4,483,125
Accounts receivable 7,073,304 (517,581) (2) 6,555,723
Accrued income taxes receivable 2,470,708 2,470,708
Investment in and receivables from
Affiliates 1,678,651 - 1,678,651
Notes receivable 4,654,390 - 4,654,390
Other investments 27,055,377 - 27,055,377
Land, buildings and equipment, net 12,565,291 (192,255) (2) 12,373,036
Deferred income tax benefit 2,783,390 - 2,783,390
Goodwill 12,641,421 - 12,641,421
Other assets 5,480,045 (224,092) (2) 5,255,953
TOTAL ASSETS $135,650,360 $ 3,866,072 $139,516,432
LIABILITIES & STOCKHOLDERS' EQUITY
LIABILITIES:
Short-term notes payable $ 8,898,200 $ - $ 8,898,200
Securities sold under agreements to
repurchase 29,470,000 - 29,470,000
Payable to broker-dealers and clearing
organizations 24,736,257 - 24,736,257
Accounts payable 1,820,537 - 1,820,537
Securities sold, not yet purchased 4,438,125 - 4,438,125
Notes payable to banks 657,342 - 657,342
Bonds payable 4,595,124 - 4,595,124
Other liabilities and deferred items 12,779,695 214,318 (2) 12,994,013
TOTAL LIABILITIES 87,395,280 214,318 87,609,598
STOCKHOLDERS' EQUITY:
Common stock 3,544,030 - 3,544,030
Additional paid-in capital 6,220,888 - 6,220,888
Retained earnings 55,799,750 3,651,754 59,451,504
Treasury stock, at cost (17,172,432) - (17,172,432)
Unearned compensation (137,156) - (137,156)
TOTAL STOCKHOLDERS' EQUITY 48,255,080 3,651,754 51,906,834
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $135,650,360 $ 3,866,072 $139,516,432
(1) Represents an estimate of $7,235,000 of cash received net of applicable tax
expense. Estimated tax expense is assumed to be paid at the date of the
transaction.
(2) Represents the estimated assets purchased and the liabilities assumed by Strong
Investments, Inc.
(3) Represents the estimated net gain to be recorded on the transaction.
</TABLE>
F-1
<PAGE>
THE ZIEGLER COMPANIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the year ended December 31, 1998
Historical
ZCO Historical
As Previously 1998 Transaction Pro Forma
Reported ZTT Adjustments Statement
<S> <C> <C> <C> <C>
REVENUES
Investment banking income $32,140,627 $ - $ - $32,140,627
Commission income 21,696,458 4,679,475 - 17,016,983
Investment management and
advisory fees 6,841,618 - - 6,841,618
Interest and dividends 8,556,919 124,223 327,888 8,760,584
Gross profit on chemical products 3,410,869 - - 3,410 869
Other 3,136,641 271,337 58,930 2,924,234
TOTAL REVENUES 75,783,132 5,075,035 386,818 71,094,915
EXPENSES
Employee compensation and benefits 43,702,807 2,002,184 - 41,700,623
Commissions and clearing fees 6,757,124 1,039,296 11,323 5,729,151
Communications 3,651,630 311,772 - 3,339,858
Occupancy and equipment 6,735,450 571,753 - 6,163,697
Promotional 4,672,791 200,761 - 4,472,030
Professional and regulatory 1,582,927 69,190 - 1,513,737
Interest 6,577,250 41,831 - 6,535,419
Goodwill 136,740 - - 136,740
Other operating expenses 6,532,101 284,704 - 6,247,397
TOTAL EXPENSES 80,348,820 4,521,491 11,323 75,838,652
Income (loss) before income taxes (4,565,688) 553,544 375,495 (4,743,737)
Provision for (benefit from
income taxes (1,724,900) 208 000 146,400 (1,786,500)
NET INCOME (LOSS) $(2,840,788) $ 345,544 $ 229,095 $(2,957,237)
Net loss per share of common stock:
Basic and diluted loss per share (1.20) (1.25)
Average number of shares outstanding
Basic 2,368,560 2,368,560
Diluted 2,437,507 2,437,507
</TABLE>
F-2
<PAGE>
THE ZIEGLER COMPANIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the nine months ended September 30, 1999
Historical
ZCO Historical
As Previously 1999 Transaction Pro Forma
Reported ZTT Adjustments Statement
<S> <C> <C> <C> <C>
REVENUES
Investment banking income $20,450,020 $ 4,129,717 $ - $16,320,303
Commission income 18,447,498 - - 18,447,498
Investment management and
advisory fees 19,674,327 - - 19,674,327
Interest and dividends 4,831,800 111,380 253,000 4,973,420
Gross profit on chemical products 2,163,940 - - 2,163,940
Other 2,831,868 156,743 7,785 2,682,910
TOTAL REVENUES 68,399,453 4,397,840 260,785 64,262,398
EXPENSES
Employee compensation and benefits 33,138,153 1,652,073 - 31,486,080
Commissions and clearing fees 12,817,770 1,108,346 - 11,709,424
Communications 2,753,315 180,228 - 2,573,087
Occupancy and equipment 7,042,607 395,989 - 6,646,618
Promotional 3,149,061 133,793 - 3,015,268
Professional and regulatory 1,654,886 65,004 - 1,589,882
Interest 3,105,236 - - 3,105,236
Goodwill 705,577 - - 705,577
Other operating expenses 3,975,232 120,150 - 3,855,082
TOTAL EXPENSES 68,341,837 3,655,583 - 64,686,254
Income (loss) before income taxes 57,616 742,257 260,785 (423,856)
Provision for (benefit from)
income taxes 172,582 235,000 101,700 39,282
NET INCOME (LOSS) $ (114,966) $ 507,257 $ 159,085 $ (463,138)
Net loss per share of common stock:
Basic and diluted loss per share (0.05) (0.19)
Average number of shares outstanding
Basic 2,427,415 2,427,415
Diluted 2,454,576 2,454,576
</TABLE>
F-3
<PAGE>
THE ZIEGLER COMPANIES, INC.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(A) Except as otherwise described, the pro forma adjustments reflect the
removal of ZTT balances from the historical, consolidated balances.
ZTT is a separate corporation whose balances can be directly
identified. Intercompany transactions were infrequent and
insignificant. In 1998 such transactions included occasional lending
to ZTT, occasional brokerage transactions executed by ZTT on behalf of
the Company, and a charge for management information systems services
to ZTT. In 1999 such transactions included only those for management
information systems services.
(B) Pro forma adjustments to the pro forma consolidated balance sheet as of
September 30, 1999, reflect the investment of the proceeds in short-
term investments. Also reflected is the sale of specified assets and
the assumption of specified liabilities. The net assets retained
approximated $925,000 which consisted primarily of cash and deposits
offset by liabilities primarily related to compensation accruals.
Additionally, a dividend of approximately $1,370,000 was received from
ZTT by the Company after the date of the balance sheet and prior to the
closing of the transaction. This was in addition to a dividend of
$495,000 received prior to September 30, 1999.
(C) Pro forma adjustments to the pro forma consolidated statements of
operations for the year ended December 31, 1998 and for the nine month
period ended September 30, 1999 reflect adjustments primarily to
interest income. The proceeds from the transaction were assumed to be
invested in short-term investments whose yield is 6% in both 1998 and
1999. Adjustments for intercompany transactions as discussed in Note A
are also included.
F-4
<PAGE>
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 thereunto duly authorized.
THE ZIEGLER COMPANIES, INC.
Date: November 15, 1999 By: /s/ Gary P. Engle
Gary P. Engle
Senior Vice President and
Chief Financial Officer
<PAGE>
THE ZIEGLER COMPANIES, INC.
Exhibit Index to Current Report on Form 8-K
Dated October 29, 1999
Exhibit Number Exhibit
10.1 Asset Purchase Agreement dated August 12, 1999
(incorporated by reference from Exhibit 99.2 of The
Ziegler Companies, Inc. Form 8-K, dated August 12, 1999)
99.1 Press release dated October 29, 1999 of The Ziegler
Companies, Inc.
<PAGE>
Exhibit 99.1
FOR RELEASE AFTER 3 P.M.CDT CONTACT: Peter D. Ziegler
October 29, 1999 President and CEO
262-334-5521
The Ziegler Companies, Inc. Closes Sale of
Ziegler Thrift Trading, Inc.
WEST BEND, WIS. - The Ziegler Companies, Inc. (AMEX: ZCO), a financial
services holding company based in West Bend, Wis., announced today it has
closed the sale of substantially all the assets and liabilities of its
Ziegler Thrift Trading, Inc. discount trading subsidiary to Strong
Investments, Inc., a wholly owned subsidiary of Strong Capital Management,
Inc., Menomonee Falls, Wis.
The announcement of Ziegler's intent to sell Ziegler Thrift Trading,
Inc. was made on August 12, 1999. Ziegler Thrift Trading operated as a
discount brokerage firm with corporate headquarters in Minneapolis and
additional offices in St. Paul, Minn., Naperville, Ill. and Brookfield, Wis.
Strong has indicated that it will continue to operate the discount brokerage
business, through its Strong Investments, Inc. subsidiary. Substantially all
of Ziegler Thrift Trading's employees were hired by Strong at closing, and
investors will continue to be served by experienced staff through office
locations, by telephone and over the internet.
Strong's cash purchase price was $7.4 million plus 1999 earnings through
closing. Ziegler will retain certain cash, assets and deposits, which will
result in total cash proceeds of approximately $10 million.
The Ziegler Companies, Inc. provides investment banking, asset
management and retail brokerage services. The firm advises, holds or manages
more than $10.5 billion in individual and institutional assets.
