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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
20549
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FORM 8-K
Date of Report: October 15, 1998
BINKS SAMES CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
1-1416 36-0808480
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(Commission File Number) (I.R.S. Employer Identification No.)
9201 West Belmont Avenue, Franklin Park, Illinois 60131
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(Address of principal executive offices)
(847) 671-3000
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(Registrant's telephone number, including area code)
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ITEM 2. DISPOSITION OF ASSETS
On August 31, 1998 the Company announced it had signed a definitive agreement
with Illinois Tool Works Inc. (ITW) to sell certain of Binks Sames
Corporation's domestic assets, foreign subsidiaries, and standard products
lines. On September 30, 1998 the Company announced the completion of the sale
transaction. The sale price was approximately $80 million in cash plus the
assumption of certain liabilities, currently estimated to be approximately
$26 million. The sale price is subject to adjustment after delivery of a
closing balance sheet as of September 30, 1998.
Under the terms of the sale, ITW purchased all assets related to the
manufacture and distribution of Binks Sames standard products in the U.S.,
including a leased manufacturing facility in Longmont, Colorado; the
Poly-Craft Systems division in Cottage Grove, Oregon; the Research and
Development facility in Boulder, Colorado and Binks Sames domestic branches
and warehouses. All Binks Sames employees related to the businesses being
acquired became employees of ITW upon closing the transaction. International
operations included in the sale are Binks Sames businesses in the U.K.,
Belgium, Germany, Australia and a portion of the Canadian operations. As part
of the agreement, ITW assumed all trade liabilities of the acquired portion
of the business.
Subject to the final sale price adjustment, management anticipates a net gain
on the sale of approximately $7 million and a net gain in currency
translation adjustment of $2 million. On September 30, 1998 the Company used
approximately $66.5 million of the sale proceeds to reduce debt, and intends
to use the remaining proceeds to pay a settlement of patent infringement
litigation and related licensing arrangements, further reduce debt and
provide working capital to support the Company's operations and growth in the
North American automotive and general industry markets.
Not included in the sale to ITW, and representing the continuing operations
of the Company, are: the Sames business based in Grenoble, France; Sames
Electrostatic Inc., headquartered in Livonia, Michigan; the North American
powder systems group; subsidiaries in Japan and Sweden; and the spray booth
business in North America. Sames is noted for its global leadership position
in electrostatic finishing equipment for the automotive finishing market and
for the general industrial finishing market.
The foregoing description of this transaction is qualified in its entirety by
reference to the Agreement of Purchase and Sale of Assets and Stock dated as
of August 31, 1998, as amended September 30, 1998, filed with the Securities
and Exchange Commission previously and incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Consolidated Condensed Financial Information
Consolidated Condensed Statement of Operations for the nine
months ended August 31, 1998
Consolidated Condensed Statement of Operations for the fiscal
year ended November 30, 1997
Consolidated Condensed Balance Sheet as of August 31, 1998
Notes to Consolidated Condensed Financial Information
(c) Exhibits
99.1 Agreement of Purchase and Sale of Assets and Stock between Binks
Sames Corporation and Illinois Tool Works Inc., dated August 31,
1998 (filed as Exhibit No. 99.3 to the Company's Current Report
on Form 8-K dated September 2, 1998).
99.2 Amendment to Agreement of Purchase and Sale of Assets and Stock
dated as of September 30, 1998 by and between the Company and
Illinois Tool Works Inc. (filed as Exhibit 99.2 to the Company's
Current Report on Form 8-K dated September 30, 1998).
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BINKS SAMES CORPORATION
CONSOLIDATED CONDENSED FINANCIAL INFORMATION
The following unaudited consolidated condensed balance sheet presents the
financial position of Binks Sames Corporation as of August 31, 1998 assuming
the sale transaction with Illinois Tool Works Inc. had occurred on that date.
In addition, the unaudited consolidated condensed statements of operations
present the results of operations of Binks Sames Corporation for the fiscal
year ended November 30, 1997 and the nine months ended August 31, 1998 after
giving effect to the sale transaction.
The following financial information should be read in conjunction with the
consolidated financial statements and related notes contained in the
Company's latest annual report on Form 10-K/A and quarterly report on Form
10-Q.
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BINKS SAMES CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
Amounts in thousands, except per share data
<TABLE>
<CAPTION>
For the nine months ended August 31, 1998
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Reclassify
discontinued Historical
Historical operations (1) as restated
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<S> <C> <C> <C>
Net sales $ 160,313 $ (72,819) $ 87,494
Cost of goods sold 112,931 (48,989) 63,942
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Gross profit 47,382 (23,830) 23,552
Selling, general and administrative expenses (2) 49,904 (28,892) 21,012
Nonrecurring costs (3) 12,309 (2,555) 9,754
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Operating income (loss) (14,831) 7,617 (7,214)
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Other expense (income):
Interest expense 5,480 (4,997) 483
Other expense (income), net (1,379) 2,312 933
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4,101 (2,685) 1,416
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Income (loss) from continuing operations
before income taxes (18,932) 10,302 (8,630)
Income tax expense (benefit) (5,113) 1,180 (3,933)
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Income (loss) from continuing operations $ (13,819) $ 9,122 $ (4,697)
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Income (loss) per share from
continuing operations - basic and diluted $ (4.66) $ 3.08 $ (1.58)
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Average number of common shares outstanding 2,964 2,964 2,964
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</TABLE>
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BINKS SAMES CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
Amounts in thousands, except per share data
<TABLE>
<CAPTION>
For the fiscal year ended November 30, 1997
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Reclassify
discontinued Historical
Historical operations (1) as restated
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<S> <C> <C> <C>
Net sales $ 236,998 $ (135,861) $ 101,137
Cost of goods sold 178,420 (110,403) 68,017
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Gross profit 58,578 (25,458) 33,120
Selling, general and administrative expenses (2) 78,588 (49,102) 29,486
Restructuring costs (3) 9,612 (9,292) 320
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Operating income (loss) (29,622) 32,936 3,314
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Other expense (income):
Interest expense 5,080 (4,297) 783
Other expense (income), net (2,149) 1,001 (1,148)
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2,931 (3,296) (365)
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Income (loss) from continuing operations
before income taxes (32,553) 36,232 3,679
Income tax expense (benefit) 7,527 (5,782) 1,745
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Income (loss) from continuing operations $ (40,080) $ 42,014 $ 1,934
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Income (loss) per share from
continuing operations:
Basic $ (13.07) $ 13.70 $ .63
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Diluted $ (12.92) $ 13.54 $ .62
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Average number of shares
Common shares outstanding 3,066 3,066 3,066
Equivalent shares on outstanding stock
options 36 36 36
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Shares applicable to diluted earnings 3,102 3,102 3,102
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</TABLE>
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BINKS SAMES CORPORATION
HISTORICAL AND PRO FORMA UNAUDITED
CONSOLIDATED CONDENSED BALANCE SHEET
Dollar amounts in thousands, except share data
<TABLE>
<CAPTION>
As of August 31, 1998
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Reclassify
discontinued Historical Pro Forma
Historical operations (4) as restated adjustments (5) Pro Forma
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<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 2,012 $ (1,144) $ 868 $ 6,729 $ 7,597
Receivables, net 60,458 (16,886) 43,572 (7,064) 36,508
Inventories 74,092 (50,746) 23,346 - 23,346
Other current assets 8,330 (2,504) 5,826 - 5,826
Net assets of discontinued operations - 63,268 63,268 (63,268) -
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TOTAL CURRENT ASSETS 144,892 (8,012) 136,880 (63,603) 73,277
Other noncurrent assets 5,966 (962) 5,004 - 5,004
Property, plant and equipment, at cost 39,847 (24,342) 15,505 - 15,505
Less accumulated depreciation 23,571 (14,129) 9,442 - 9,442
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Net property, plant and equipment 16,276 (10,213) 6,063 - 6,063
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TOTAL ASSETS $ 167,134 $ (19,187) $ 147,947 $ (63,603) $ 84,344
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LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable, bank overdrafts
and current maturities of long-term debt $ 9,840 $ (4,975) $ 4,865 $ $ 4,865
Accounts payable 36,189 (8,003) 28,186 (4,172) 24,014
Other current liabilities 28,095 (8,045) 20,050 20,050
Debt to be repaid with proceeds from sale
of business - 66,469 66,469 (66,469) -
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TOTAL CURRENT LIABILITIES 74,124 45,446 119,570 (70,641) 48,929
Deferred compensation 7,146 (64) 7,082 7,082
Deferred income taxes 276 (276) - -
Long-term debt, less current maturities 67,876 (66,522) 1,354 - 1,354
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TOTAL LIABILITIES 149,422 (21,416) 128,006 (70,641) 57,365
STOCKHOLDERS' EQUITY
Capital stock, $l.00 par value. Authorized 12,000,000
shares; issued 2,964,837 shares at August 31, 1998 2,965 2,965 2,965
Additional paid-in capital 19,652 19,652 19,652
Retained earnings (deficit) (486) (486) 7,038 6,552
Foreign currency translation adjustments (4,419) 2,229 (2,190) (2,190)
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TOTAL STOCKHOLDERS' EQUITY 17,712 2,229 19,941 7,038 26,979
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 167,134 $ (19,187) $ 147,947 $ (63,603) $ 84,344
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</TABLE>
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BINKS SAMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL INFORMATION
(1) Reflects the results of operations, for the period indicated, of the
operations purchased by Illinois Tool Works Inc. (ITW) on September 30,
1998. These operations are: the manufacture and distribution of Binks Sames
standard products in the U.S. and Canada, the Poly-Craft Systems division
in Cottage Grove, Oregon; the Research and Development facility in Boulder,
Colorado, and Binks Sames businesses in the U.K., Belgium, Germany and
Australia.
(2) Included in selling, general and administrative expenses of the continuing
operations is an allocated amount reflecting the continuing operations'
share of overhead costs related to the historical organization's shared
selling, general and administrative expenses. The amounts allocated to the
continuing operations were based on the ratio of the continuing operations'
sales to the historical organization's sales. They are not necessarily
indicative of the expenses the continuing operations would have incurred as
a separate, independent company.
(3) The nonrecurring costs of $9.8 million in the nine months fiscal 1998 are
comprised of costs associated with the settlement of patent infringement
litigation and related licensing arrangements. The restructuring costs of
$320 thousand in fiscal 1997 are related to litigation costs incurred by
the Company's operations in Japan.
(4) Reflects, as of August 31, 1998, the assets and liabilities of the
operations purchased by ITW.
(5) Reflects (a) the sale of operations to ITW, (b) the application of $66.5
million of the proceeds to repay all indebtedness outstanding under the
Company's U.S. credit agreements, as required by such agreements, (c) the
settlement of all intercompany receivables and payables between the
continuing operations and the discontinued operations, (d) the retention of
the unused proceeds as cash and cash equivalents, and (e) the gain on the
sale as an increase in retained earnings and stockholders' equity.
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.
Binks Sames Corporation
/s/ Jeffrey W. Lemajeur
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Jeffrey W. Lemajeur, Treasurer/Chief Financial Officer
Date October 15, 1998
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