SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Security Exchange Act of 1934
Date of Report (Date of earliest event reported):
April 20, 1999
Dixon Ticonderoga Company
(Exact name of registrant as specified in its charter)
Delaware 0-2655 23-0973760
(State or the Jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification
Number)
195 International Parkway, Heathrow, FL 32746
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (407) 829 - 9000
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ITEM 2. Acquisition or Disposition of Assets
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On February 9, 1999, Dixon Ticonderoga Company (the "Company") entered into
an Asset Purchase Agreement with Asbury Carbons, Inc., a Delaware corporation
("Asbury") pursuant to which Asbury agreed to purchase the assets comprising the
Company's U.S. Graphite and Lubricants Division. On March 2, 1999, the Company
completed the sale pursuant to the Asset Purchase Agreement for $23.5 million,
plus the assumption of certain trade obligations related to the division.
Except as specifically provided in the Asset Purchase Agreement, the Company
generally retained all liabilities of the business arising from the operations
of the division up through the closing date, including various environmental
liabilities. Asbury, a privately-held company based in Wilmington, Delaware,
purchased the division for $20.25 million in cash and executed a five-year
subordinated note for the balance of $3.25 million. The note is unsecured and
bears interest at 9% per annum, deferred until September 2, 2001. The Company's
prior relationship with Asbury was limited to the purchase of certain carbon
products used in its other businesses. Such purchases approximated $200,000 in
fiscal 1998.
The Asset Purchase Agreement provides that the note is subject to certain
setoffs. The Company placed in escrow $705,000 pending the completion of
certain post-closing procedures. Certain disputes (if any) with respect to
claims of Asbury for indemnification for loss under the Asset Purchase Agreement
would be subject to binding arbitration.
On the closing date, the Company entered into various agreements with
Asbury or its affiliate, Dixon Southwestern, Inc., pursuant to the Asset
Purchase Agreement, including (a) a Noncompetition Agreement prohibiting the
Company and its affiliates from competing with the division in all geo-
graphic areas except Mexico, Central America and South America, for a period of
ten years; (b) a Ground Lease relating to the Company's facility in Burnet,
Texas; (c) a Ground Lease with option to purchase relating to the Company's
facility located in Lakehurst, New Jersey; (d) an Environmental Agreement
pursuant to which the Company agreed to perform remediation activities with
respect to the facility in Lakehurst, New Jersey: (e) a Subordination Agreement
with respect to the note; (f) a Product Supply Agreement pursuant to which
Asbury's affiliate agreed to provide certain graphite products to the Company;
and (g) a Texas Services Agreement, pursuant to which Asbury's affiliate agreed
to provide certain services to the Company with respect to the Company's
remaining property located in Burnet, Texas.
The Company's U.S. Graphite and Lubricants Division generated revenues of
approximately $11.5 million in fiscal 1998 and $2.7 million in the three months
ended December 31, 1998. The division sources, refines, blends and markets bulk
graphite in various grades and also produces and markets graphite-based
lubricants for industrial and commercial applications. It operates
manufacturing facilities in Lakehurst, New Jersey and Burnet, Texas, both
included in this transaction. The sale included essentially all the operating
assets of the division as well as intangible assets, such as tradenames and
technology.
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ITEM 7. Financial Statements and Exhibits
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(a) Not applicable.
(b) Pro forma financial information:
PAGE
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Introduction 4
Unaudited Pro Forma Condensed Consolidated Balance Sheet
as of December 31, 1998 5
Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the Year Ended September 30, 1998 6
Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the Three Months Ended December 31, 1998 7
Notes to Unaudited Pro Forma Condensed Consolidated
Financial Statements 8
(c) Exhibits
The following exhibit is required to be filed as part of this report on
Form 8-K/A:
(2) Asset Purchase Agreement dated February 9, 1999, by and between
Dixon Ticonderoga Company, as Seller, and Asbury Carbons, Inc.,
as Buyer (without schedules or exhibits).*
* Incorporated by reference to the Company's current report on Form 8-K
dated March 2, 1999, and incorporated herein by reference. The Company
agrees to supplementally furnish to the Commission upon request, a copy
of any omitted schedule or exhibit.
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DIXON TICONDEROGA COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
INTRODUCTION
The unaudited pro forma condensed consolidated balance sheet as December 31,
1998, assumes that the sale of its U.S. Graphite and Lubricants Division had
occurred on December 31, 1998, and accordingly, is reflected in the financial
position of Dixon Ticonderoga Company as of that date.
The unaudited pro forma condensed consolidated statements of operations for
the year ended September 30, 1998, and the three months ended December 31, 1998,
present the results of operations of Dixon Ticonderoga Company assuming the
acquisition had been consummated as of the beginning of each respective period.
The unaudited pro forma condensed consolidated financial statements have been
prepared by Dixon Ticonderoga Company and all calculations have been made upon
assumptions deemed appropriate, using the Company's prevailing accounting
policies.
The unaudited pro forma financial information does not purport to be
indicative of the results of operations or the financial position which would
have actually been obtained if the sale had been consummated on the dates
indicated. In addition, the unaudited pro forma financial information does not
purport to be indicative of results of operations or financial position which
may be achieved in the future.
The unaudited pro forma financial information should be read in conjunction
with consolidated financial statements and notes thereto contained in the Dixon
Ticonderoga Company 1998 Annual Report on Form 10-K and December 31, 1998 Form
10-Q.
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DIXON TICONDEROGA COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
AS PRO FORMA PRO
REPORTED ADJUSTMENTS FORMA
CURRENT ASSETS:
Cash and cash equivalents $ 444,938 $( 7,411)(a) $ 437,527
Receivables, net 22,431,900 ( 1,517,485)(a) 20,914,415
Inventories 45,579,947 ( 6,119,979)(a) 39,459,968
Other current assets 2,063,680 ( 33,323)(a) 2,030,357
------------- --------------- ------------
Total current assets 70,520,465 ( 7,678,198) 62,842,267
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PROPERTY, PLANT AND EQUIPMENT 37,446,250 ( 5,626,289)(a) 31,819,961
Less accumulated
depreciation (21,529,408) 3,466,879 (a) (18,062,529)
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15,916,842 ( 2,159,410) 13,757,432
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OTHER ASSETS 2,698,046 3,250,000 (a) 5,948,046
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$ 89,135,353 $( 6,587,608) $ 82,547,745
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CURRENT LIABILITIES:
Notes payable $ 25,190,802 $( 15,940,103)(a) $ 9,422,901
Current portion of
long-term debt 1,871,102 -- 1,871,102
Accounts payable 7,918,726 ( 351,875)(a) 7,566,851
Accrued liabilities 7,013,913 ( 89,475)(a)
4,708,536 (b) 11,171,944
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Total current liabilities 41,994,543 ( 11,672,917) 30,032,798
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LONG-TERM DEBT 21,446,891 -- 21,446,891
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DEFERRED INCOME TAXES
AND OTHER 534,770 ( 315,579)(a) 219,191
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MINORITY INTEREST 2,676,727 -- 2,676,727
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SHAREHOLDERS' EQUITY
Common stock 3,662,808 -- 3,662,808
Capital in excess of par value 3,386,005 -- 3,386,005
Retained earnings 19,664,143 5,400,888 (a)(b) 25,353,859
Accumulated comprehensive
income (loss) ( 3,413,239) -- ( 3,413,239)
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23,299,717 5,400,888 28,989,433
Less treasury stock ( 817,295) -- ( 817,295)
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TOTAL SHAREHOLDERS' EQUITY 22,482,422 5,400,888 28,172,138
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$ 89,135,353 $( 6,587,608) $ 82,547,745
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DIXON TICONDEROGA COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1998
AS PRO FORMA PRO
REPORTED ADJUSTMENTS FORMA
REVENUES $124,721,758 $(11,491,537)(c) $113,230,221
------------ ------------ ------------
COSTS AND EXPENSES:
Cost of goods sold 76,296,877 ( 6,872,557)(c) 69,424,320
Selling and
administrative expenses 38,349,867 ( 2,459,246)(c) 35,890,621
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114,646,744 ( 9,331,803) 105,314,941
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OPERATING INCOME 10,075,014 ( 2,159,734) 7,915,280
INTEREST EXPENSE 4,671,646 ( 1,370,000)(d) 3,301,646
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INCOME BEFORE
INCOME TAXES AND
MINORITY INTEREST 5,403,368 ( 789,734) 4,613,634
INCOME TAXES 1,562,069 ( 315,900)(e) 1,246,169
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3,841,299 ( 473,834) 3,367,465
MINORITY INTEREST 704,940 -- 704,940
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NET INCOME $ 3,136,359 $( 473,834) $ 2,662,525
============ ============ ============
EARNINGS PER SHARE:
Basic $ .93 $ .79
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Diluted $ .85 $ .72
============ ============
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic 3,387,202 3,387,202
============ ============
Diluted 3,708,026 3,708,026
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DIXON TICONDEROGA COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1998
AS PRO FORMA PRO
REPORTED ADJUSTMENTS FORMA
REVENUES $ 22,807,169 $( 2,656,624) (c) $ 20,150,545
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COSTS AND EXPENSES:
Cost of goods sold 14,899,619 ( 1,716,995) (c) 13,182,624
Selling and
administrative expenses 7,797,673 ( 554,284) (c) 7,243,389
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22,697,292 ( 2,271,279) 20,426,013
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OPERATING INCOME (LOSS) 109,877 ( 385,345) ( 275,468)
INTEREST EXPENSE 1,109,072 ( 340,000) (d) 769,072
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LOSS BEFORE
INCOME TAXES AND
MINORITY INTEREST ( 999,195) ( 45,345) ( 1,044,540)
INCOME TAXES (BENEFIT) ( 364,200) ( 18,100) (e) ( 382,300)
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( 634,995) ( 27,245) ( 662,240)
MINORITY INTEREST ( 35,078) -- ( 35,078)
------------ ------------ ------------
NET LOSS $( 599,917) $( 27,245) $( 627,162)
============ ============ ============
NET LOSS PER SHARE:
Basic $( .17) $( .18)
============ ============
Diluted $( .17) $( .18)
============ ============
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic 3,431,797 3,431,797
============ ============
Diluted 3,539,740 3,539,740
============ ============
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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
a. To reflect the sale of the Company's U.S. Graphite and Lubricants Division
(net after-tax proceeds and assets sold to and liabilities assumed by buyer)
and the application of net proceeds to reduce outstanding notes payable.
b. To recognize accrued liabilities for ongoing maintenance of unsold real
estate, environmental expenses, employee severances and benefit costs and
other post-closing obligations.
c. To exclude the results of operations of the Company's U.S. Graphite and
Lubricants Division after adjustment for allocated corporate expenses not
eliminated.
d. To adjust interest expense to reflect the reduction in bank debt from net
sales proceeds and interest income from note receivable.
e. To adjust income taxes on pro forma results of operations at prevailing
statutory rates.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: April 20, 1999 By: /s/ Gino N. Pala
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Gino N. Pala, Chairman
of the Board, Co-Chief
Executive Officer
and Director
