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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): FEBRUARY 22, 1996
_____________
AM INTERNATIONAL, INC.
(EXACT NAME OF ISSUER AS SPECIFIED IN ITS CHARTER)
_____________
DELAWARE
(STATE OR OTHER JURISDICTION
OF INCORPORATION OR ORGANIZATION)
9399 WEST HIGGINS ROAD, SUITE 900, ROSEMONT, ILLINOIS 60018
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
1-683 34-0054940
(COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
IDENTIFICATION NO.)
_____________
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (847) 292-0600
_____________
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CURRENT REPORT
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
In February, 1996, AM International, Inc., a Delaware corporation (the
"Company") completed the exit of its AM Multigraphics European subsidiaries.
This transaction was completed through the sale of its subsidiaries in the
Netherlands, France and Belgium and the placement of the Company's AM
Multigraphics - UK holding company into an Administration Proceeding.
The sale of subsidiaries in the Netherlands, France and Belgium was completed
on February 22, 1996 in accordance with the Agreement for the Sale and Purchase
included in Exhibit 2. This sale agreement provided for the transfer of the
shares of the Company's Netherlands holding company, which in turn owns the
French and Belgium subsidiaries, into a newly acquired Netherlands company. The
transaction requires the Company to provide consideration of approximately $3
million in the form of cash and other assets. The terms of this sale were
determined by arms-length negotiations between the Company and AM Multigraphics
European management, the purchaser. This sale is consistent with the Company's
strategy to exit its unprofitable AM Multigraphics European operations.
In addition, on February 27, 1996, the Company exited its AM Multigraphics UK
Holding Company by initiating an Administration Proceeding, which will
facilitate the sale of the AM Multigraphics UK businesses. This subsidiary
also had incurred significant operating losses.
The financial statements covering the exit of the AM Multigraphics European
subsidiaries include the previously reported exit of the Company's German,
Swiss and Australian subsidiaries. The exit of the German and Swiss
subsidiaries was completed through the German subsidiary's filing for
bankruptcy in October, 1995 and the exit of the Company's Australian subsidiary
occurred through a voluntary administration proceeding in June, 1995.
The costs related to the exit of the AM Multigraphics European subsidiaries,
completed through the various transactions described above, was previously
reserved. The attached pro forma financial statements include the effects of
the exit of the AM Multigraphics European subsidiaries described above as if
the exit had occurred on the first day of the year ended July 31, 1995 and six
months ended January 27, 1996, respectively. The effect of this transaction
has been included in the balance sheet as of January 27, 1996 included within
the Company's Form 10-Q for the period ended January 27, 1996 filed on Thursday,
March 7, 1996.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) The following pro forma financial information is filed
herewith.
Pro forma statement of operations (unaudited) for the year
ended July 31, 1995
Pro forma statement of operations (unaudited) for the six
months ended January 27, 1996
Notes to pro forma financial statements (unaudited)
(b) Exhibit 2 - Agreement for the sale and purchase of the shares
in Rhemai B.V. dated as of February 22, 1996 and among AM
International, Inc. and Paul Koole, Gerardus Middendorp and
Danny Vanheste.
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AM INTERNATIONAL, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JANUARY 27, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
(Dollars in thousands except EUROPEAN PRO FORMA
per share amounts) HISTORICAL SUBSIDIARIES ADJUSTMENTS PRO FORMA
---------- ------------ ----------- ---------
<S> <C> <C> <C> <C>
Revenues $177,415 $40,038 $137,377
Cost of sales 132,140 29,584 102,556
-------- ------- ------- --------
Gross margin 45,275 10,454 - 34,821
Operating expenses 55,790 14,616 41,174
-------- ------- ------- --------
Operating loss (10,515) (4,162) - (6,353)
Non-operating income (expense)
Interest income 236 14 222
Interest expense (2,685) (503) (2,182)
Other (income) expense, net (521) 253 (774)
-------- ------- ------- --------
Loss before taxes (13,485) (4,398) - (9,087)
Income tax benefit 985 248 737
-------- ------- ------- --------
Net loss ($12,500) ($4,150) - ($8,350)
======== ======= ======= ========
Net loss per common share ($1.78) ($1.19)
======== ========
Weighted average shares of common
stock outstanding (in thousands) 7,009 7,009
======== ========
</TABLE>
See accompanying notes to pro forma financial statements (unaudited).
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AM INTERNATIONAL, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
(Dollars in thousands except EUROPEAN PRO FORMA
per share amounts) HISTORICAL SUBSIDIARIES ADJUSTMENTS PRO FORMA
---------- ------------ ----------- ---------
<S> <C> <C> <C> <C>
Revenues $509,501 $135,772 $373,729
Cost of sales 370,549 98,920 271,629
-------- -------- ------- --------
Gross margin 138,952 36,852 - 102,100
Operating expenses 124,499 39,367 85,132
-------- -------- ------- --------
Operating income (loss) 14,453 (2,515) - 16,968
Non-operating income (expense)
Interest income 543 42 501
Interest expense (5,156) (1,253) (3,903)
Other expense, net (2,099) (238) (1,861)
-------- -------- ------- --------
Income (Loss) before taxes 7,741 (3,964) - 11,705
Income tax (expense) benefit (3,128) 821 (3,949)
-------- -------- ------- --------
Net income (loss) $4,613 ($3,143) - $7,756
======== ======== ======= ========
Net income (loss) Per Common Share $0.66 $1.10
======== ========
Weighted average shares of common
stock outstanding (in thousands) 7,021 7,021
======== ========
</TABLE>
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NOTES TO PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
The following unaudited pro forma financial information should be read in
conjunction with historical financial statements contained in the Company's
Annual Report on Form 10-K for the year ended July 31, 1995 and Quarterly
Report on Form 10-Q for the quarter ended January 27, 1996. The pro forma
information is presented for illustrative purposes only.
Basis of Presentation
The unaudited pro forma combined statements of operations for the year ended
July 31, 1995 and the six months ended January 27, 1996 present the
consolidated results of operations assuming the exit of all AM Multigraphics
European subsidiaries had been consummated on August 1, 1994 and August 1,
1995, respectively.
European Subsidiaries
The column titled European Subsidiaries includes the effects of exiting all of
AM Multigraphics European subsidiaries (i.e. the Netherlands, France, Belgium,
UK, Germany and Switzerland subsidiaries), as well as the Australian
subsidiary. The effects of the transaction include the disposal of all assets
and liabilities of those subsidiaries. There was no gain or loss reported as a
result of this transaction as all costs related to the exit were previously
reserved.
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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 thereunto duly authorized.
AM INTERNATIONAL, INC.
Date: March 7, 1996 By: /s/ Thomas D. Rooney
----------------------------
Thomas D. Rooney
Vice President and Chief
Financial Officer
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EXHIBIT 2
AGREEMENT FOR THE SALE AND PURCHASE
OF THE SHARES IN RHEMAI I B.V.
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SHARE PURCHASE AGREEMENT
THIS AGREEMENT IS MADE ON FEBRUARY 22, 1996
BETWEEN:
1. AM INTERNATIONAL, INC., a corporation incorporated under the laws of
the state of Delaware, whose registered office is at Rosemont,
Illinois, 9399 W. Higgins Rd., United States of America, for the
purpose of this agreement duly represented by Steven R. Andrews, (the
"Vendor");
at the one side and
2. PAUL KOOLE, living in Capelle aan de IJssel, either acting in his
private capacity or on behalf of the besloten vennootschap met
beperkte aansprakelijkheid in oprichting PK BEHEER B.V. (i.o.), a
private company with limited liability in the process of incorporation
under the laws of the Netherlands;
3. GERARDUS JOHANNES ANTONIUS MIDDENDORP, living at Rotterdam, either in
his private capacity or on behalf of the besloten vennootschap met
beperkte aansprakelijkheid in oprichting GBM BEHEER B.V. (i.o.), a
private company with limited liability in the process of incorporation
under the laws of the Netherlands;
4. DANNY MARCEL VANHESTE, either in his private capacity or on behalf of
a besloten vennootschap met beperkte aansprakelijkheid in oprichting
DVH BEHEER B.V. (i.o.), a private company with limited liability
in the process of incorporation under the laws of the Netherlands;
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parties sub 2, 3 and 4 will be referred to hereinafter as the
"Purchasers";
at the other side
WHEREAS the Vendor is the owner of all the issued and outstanding
shares of the capital stock (the "Shares") of Rhemai I B.V., a Netherlands
corporation (a besloten vennootschap met beperkte aansprakelijkheid), whose
registered office is at Amsterdam, Herengracht 450, the Netherlands (the
"Company");
WHEREAS the Company owns all the shares in a besloten vennootschap met
beperkte aansprakelijkheid AM International B.V., a private company with
limited liability under the laws of the Netherlands, having its registered
offices in Rijswijk, the Netherlands, ("Holding");
WHEREAS Holding is the owner of all the issued and outstanding shares
of the capital stock of AM Nederland B.V., a Netherlands corporation ("AM
Nederland"), AM Finance B.V., a Netherlands corporation ("AM Finance"), a
company incorporated under the laws of Belgium AM International N.V. ("AM
Belgium"), a company incorporated under the laws of France AM International
S.A. ("AM France") and a company incorporated under the laws of the Federal
Republic of Germany Am International GmbH ("AM Germany"), these subsdiaries to
be collectively to be referred to as the "Holding Subsidiaries", and the
activities of the Holding Subsidiaries to be referred to as the "Continental
European AM Business", and whereas AM Germany is in formal bankruptcy
proceedings in Germany;
WHEREAS the Vendor has agreed to sell and the purchasers have agreed to
purchase the whole of the share capital of the Company on the terms of this
agreement, taking into consideration, that the Purchaser sub. 3 will
participate in the share capital of the Company for a percentage of 40%
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and the Purchasers sub. 2 and sub. 4 for a percentage of 30% each;
WHEREAS the Vendor and the Purchasers are of the opinion that
additional equity is required in order for the Company, Holding or the Holding
Subsidiaries to continue and to expand, in whole or in part, the Continental
European Business;
WHEREAS the Vendor is willing to enter into a Distribution Agreement
and a Supply Agreement with the Company, both as conditions suspensive to the
execution of this Agreement, these agreements being in conformity with the
draft agreements attached hereto as Annex 1;
WHEREAS the management of Holding will inform the Works Council of
Holding on Friday February 23, 1996, about the transaction contemplated in this
Agreement in order to enable the Works Council to exercise its rights under
section 25 of the Netherlands Works Council Act (Wet op de ondernemingsraden),
and whereas management of Holding will use its best efforts to procure that the
Works Council's advice will be rendered on Monday February 26, 1996, at the
latest.
THE PARTIES AGREE as follows:
ARTICLE 1
Purchase and Sale
1.1 Subject to the conditions set out in this Agreement, the Vendor
as legal and beneficial owner sells and the Purchasers buy the Shares
and all rights attaching or accruing to the Shares now or after the
date of completion of this Agreement, free of all pledges, liens,
options, restrictions, rights of first refusal or rights of
pre-emption, or any other incumbrance of security
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interest of any kind, other than those set out in the Company's
Articles of Association.
1.2 The Vendor shall waive before completion of the sale and
purchase of the Shares all rights of pre-emption and other restrictions
on transfer over the Shares conferred upon it or any other person under
the Articles of Association of the Company or otherwise.
1.3 The consideration payable by the Purchasers to the Vendor for the
Shares is NLG 1, -- (ONE DUTCH GUILDER) to be paid in cash at the date
of completion.
1.4 This Agreement will be executed upon the suspensive conditions of (i)
the execution of a notarial deed between the Vendor and Deutsche de
Bary Trust N.V. regarding the acquisition of the Shares by the Vendor
and of (ii) the execution of a notarial deed between the Company and
the Vendor regarding the acquisition of the shares in Holding by the
Company and of (iii) the execution of the Supply Agreement and the
Distribution Agreement.
ARTICLE 2
Closing
The transfer of the Shares will be effectuated on Monday February 26, 1996, by
the execution of a notarial deed before one of the civil law notaries
(notarissen) of Stibbe Simont Monahan Duhot, Amsterdam office, in conformity
with the draft notarial deed (notariele akte levering aandelen) as attached
hereto as Annex 2.
ARTICLE 3
Further covenants
3.1 The Purchasers hereby explicitly acknowledges that it
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does not enter into this Agreement in reliance on any warranties,
representations or undertakings howsoever or to whomsoever made, with
respect to the Shares, with respect to Holding or with respect to the
Holding Subsidiaries, except in sofar as such are expressly contained
in Article 3.2 of this Agreement, and in particular the Purchasers
acknowledge that this Agreement is entered into on the basis and
condition that no information, representation or opinion set out or
represented in the negotiations between the Purchasers and the Vendor
forms part of this Agreement.
3.2 The Vendor hereby warrants and represents that it has the legal right
and full power and authority to enter into and to perform this
Agreement and the transactions described herein, and this Agreement,
and all the documents which are to be executed at completion of this
Agreement in relation to the transactions described herein will, when
executed, constitute binding obligations on the Vendor, in accordance
with its terms.
Article 4
Equity Contribution
4.1 Parties agree that prior to the execution of the Notarial Deed the
Vendor will contribute as equity (in the form of paid-in surplus)
to the Company:
- an amount of USD 1,000,000, (ONE MILLION US DOLLARS) in cash,
to be transferred to the bank account of the Company;
- a promissory note (a draft of which is attached hereto as
Annex 3) in the amount of USD 1,000,000 (ONE MILLION US
DOLLARS), consisting of the obligation to transfer to the
Company in this amount the present product mix of machines
(standard and
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system machines, supplies and parts) of AM Multigraphics
products at standard current transfer pricing rates, this
obligation to be fulfilled in equal monthly installments (or in
greater amounts with the consent of the Vendor) beginning on
the first day of the seventh month following the date of the
execution of the Notarial Deed through the first day of the
eighteenth month following such date. The Purchasers will
procure that the Company will provide 90 days forecasts for
product orders;
- PrePress inventory (i.e. imagesetters, parts, etc.) for an
amount of USD 308,000, (THREE HUNDRED AND EIGHT THOUSAND US
DOLLARS) as listed on Annex 4, as well as two separate
shipments of AM Multigraphics products with a total inventory
value of USD 198,000, (ONE HUNDRED AND NINETY EIGHT THOUSAND US
DOLLARS) and USD 45,000, (FORTY FIVE THOUSAND US DOLLARS) in
current AM Products, or the corresponding receivable for such
amount;
4.2 It is explicitly agreed that the contribution in cash of USD 1,000,000
(ONE MILLION US DOLLARS) will solely be used by the Company to
continue and to expand the Continental European AM business.
4.3 If the full USD 308,000 (THREE HUNDRED AND EIGHT THOUSAND US DOLLARS)
of PrePress inventory is not available, the difference between the
actual amount available and USD 308,000, will be contributed in form of
the current product mix of AM machines and parts.
ARTICLE 5
Intercompany debt
Prior to the execution of the Notarial Deed, the Vendor will transfer and sell
to the Company all intercompany debt owed
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to the Vendor by Holding or the Holding Subsidiaries as shown on the Vendor's
books as of such date. The consideration will be NLG 1,-- (ONE NETHERLANDS
GUILDER).
ARTICLE 6
Supply Agreement for Masters
Prior to the execution of the Notarial Deed the Vendor will enter into a
five-year requirements contract with the Company for the purchase of masters
currently produced at Liege. Terms will include cash with order for the first
12 months of the contract (for shipment within thirty days of receipt of cash)
and terms equal to those in the Distribution Agreement thereafter. Normal
provisions will apply allowing the Vendor to seek other sources in the event of
quality, supply or pricing issues (with respect to pricing issues this is
limited to a price difference of more than 15%). The Vendor will retain
ownership of all formulations, know-how and other technical or intellectual
property rights with respect to the production of the masters and will license
such rights to the Company at no costs for a period of ten years (pursuant to
the Supply Agreement for Masters). The Company will agree not to sell the
masters in the territory of North and South America and Japan without the
Vendor's written consent, which will not be unreasonably withheld. The Company
will provide 90 days written notice in the event it wishes to quit supplying
any types of masters in the product line, or 120 days if it wishes to
permanently quit manufacturing thereof.
ARTICLE 7
Assignment of AGFA rebate
Prior to the execution of the Notarial Deed the Vendor will assign to Holding
its right to receive a rebate from AGFA for 1995 purchases, up to a maximum of
USD 120,000, for Canadian, U.S. and New Zealand sales. If the rebate will not
be paid
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prior to May 31, 1996, the Vendor will transfer to Holding within one week
thereafter an amount up to a maximum of USD 110,000, and the remainder up to
USD 120,000 (ONE HUNDRED AND TWENTY THOUSAND US DOLLARS) in the form of
equipment specified in Annex 5.
ARTICLE 8
Indemnification
The Company and Holding will indemnify (vrijwaren) the Vendor against all
claims that third parties may have against the Vendor as a result of the
operation of Holding. As acknowledgement of their obligations resulting
therefrom the Company and Holding will co-sign this Agreement. The Vendor
acknowledges that it has no information at the date hereof that any such claim
exists or is likely to become existent.
ARTICLE 9
Discharge of Management
The Vendor herewith formally releases and discharges the members of the
Management Board of Holding from their liabilities, if any, incurred towards
the Vendor during the period as from July 1994 up and until the date of the
transfer of the shares in Holding to the Company.
ARTICLE 10
Announcements
10.1 No public announcement or communication concerning the transaction
referred to in this Agreement shall be made or despatched at any time
(whether before or after the closing of this Agreement) by any party
without the prior written consent of the other party (such consent
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not to be unreasonably withheld or delayed).
10.2 Where such announcement or communication is required by law or
any regulation or rule of any stock exchange in the United States of
America or code of conduct, it shall so far as it is practicable be
made by a party after consultation with the other party and taking into
account the reasonable requirements of the other party. The Purchasers
are entitled to inform the trade unions and the Works Council of
Holding to the extent necessary to comply with Holding's obligations
under the Netherlands Works Council Act and under the SER Merger Code.
ARTICLE 11
Change of Name
The Purchasers will procure that not later than five years after the execution
of this Agreement the corporate names of Holding and the Holding Subsidiaries
have been changed to the effect that these no longer contain the name "AM". In
the meantime the use of the name "AM" will be permitted by license as
contemplated herein.
ARTICLE 12
Costs
Except as otherwise expressly agreed between the parties, each party shall pay
its own costs of and incidental to the negotiation, preparation, execution and
implementation by it of this Agreement and of all other documents referred to
in it. The costs of the notarial deed regarding the transfer of the Shares
shall be borne by the Vendor.
ARTICLE 13
General
13.1 No variation in this Agreement or any of the documents
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in the agreed form shall be valid unless it is in writing and signed by
or on behalf of both parties.
13.2 The failure to exercise or delay in exercising a right or remedy under
this Agreement shall not constitute a waiver of the right or remedy or
a waiver of any other rights or remedies and no single or partial
exercise of any right or remedy under this Agreement shall prevent any
further exercise of the right or remedy or the exercise of any other
right or remedy.
13.3 The invalidity, illegality or unenforceability of any provision of this
Agreement shall not affect or impair the continuation in force of the
remainder of this Agreement.
13.4 The parties to this Agreement expressly waive their right to rescind or
to terminate this Agreement as set forth in section 265 Book 6 Dutch
Civil Code.
13.5 This agreement shall be binding on and inure to the benefit of the
parties and their successors and assigns, provided, however, that this
agreement shall not be assignable by the Purchasers without the express
written consent of the Vendor.
ARTICLE 14
Governing Law and Jurisdiction
14.1 This Agreement is governed by, and shall be construed in accordance
with the laws of the Kingdom of the Netherlands.
14.2 Each party irrevocably agrees that the Courts of Amsterdam shall have
exclusive jurisdiction to hear and determine any proceedings
and to settle any disputes in
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connection with or arising from this Agreement, subject only to
appeal (cassatie) to the Supreme Court (Hoge Raad) in The Hague.
This Agreement has been signed on the twenty second day of February, 1996, in
one original copy
Signed by:
STEVEN R. ANDREWS
For and on behalf of
AM INTERNATIONAL INC.
/s/ STEVEN R. ANDREWS
--------------------------
Signed by:
For and on behalf of
RHEMAI 1 B.V.
/s/
--------------------------
Signed by:
PAUL KOOLE
either in his private capacity or on behalf of
PK BEHEER B.V. (I.O.)
/s/ PAUL KOOLE
--------------------------
Signed by:
GERARDUS JOHANNES ANTONIUS MIDDENDORP
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signed in his private capacity or on behalf of
GBM BEHEER B.V. (I.O.)
/s/ GERARDUS JOHANNES ANTONIUS MIDDENDORP
-------------------------------------
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Signed by:
DENNY MARCEL VANHESTE
signed in his private capacity or on behalf of
DVH BEHEER B.V. (I.O.)
/s/ DENNY MARCEL VANHESTE
- ----------------------------------------------
Signed by:
G.J.A. MIDDENDORP
signed on behalf of
AM INTERNATIONAL B.V.
/s/ G.J.A. MIDDENDORP
- ----------------------------------------------
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ANNEXES TO AGREEMENT
FOR THE SALE AND PURCHASE
OF THE SHARES OF RHEMAI 1 B.V.
1. FORMS OF DISTRIBUTION AND SUPPLY AGREEMENTS
2. TRANSFER OF SHARES
3. FORM OF PROMISSORY NOTE
4. SCHEDULE OF PREPRESS INVENTORY
5. SCHEDULE OF EQUIPMENT
Copies of the above annexes will be made available to the Commission upon
request.
