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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
TO
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) AUGUST 12, 1994
THE ACTAVA GROUP INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1-5706 58-0971455
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification
incorporation or organization) No.)
</TABLE>
4900 GEORGIA-PACIFIC CENTER, ATLANTA, GEORGIA 30303
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code 404/658-9000
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ITEM 2.
On August 12, 1994, JCJ, Inc. ("JCJ"), a wholly owned subsidiary of The
Actava Group Inc. (the "Company"), sold its interest in Qualex Inc. ("Qualex")
to Eastman Kodak Company ("Kodak"), and both JCJ and the Company entered into a
covenant not to compete and a release in favor of Kodak in exchange for payments
in cash and notes totaling $150 million. Qualex is a wholesale photofinishing
company created in 1988 through a merger of the Company's and Kodak's
photofinishing operations. Qualex had been jointly owned by the Company or an
affiliate and Kodak since its formation.
JCJ sold to Kodak its 50% ownership interest in Qualex in exchange for a
total purchase price of $136 million. The purchase price consisted of a $36
million cash payment on August 12, 1994 and a $100 million note, payable in two
installments of $50 million each, without interest, on February 13, 1995 and
August 11, 1995. In the second quarter of 1994, the Company provided for an
anticipated loss of $37.9 million on the sale of its interest in Qualex. Because
the principal amount due under the note does not bear interest, the Company
discounted the value of the note to $92.8 million for financial reporting
purposes and will record imputed interest income of $7.2 million over the term
of the note.
In addition, in exchange for a cash payment on August 12, 1994 of $10
million, both JCJ and the Company entered into a covenant-not-to-compete with
Kodak, under which both JCJ and the Company have agreed not to engage in certain
activities for a period which ends on August 12, 1999. Both JCJ and the Company
also executed a release in favor of Kodak with regard to certain items arising
under the Shareholders' Agreement dated as of December 7, 1987, as amended,
between the Company and Kodak in exchange for a $4 million cash payment on
August 12, 1994. The consideration for the Company's interest in Qualex and the
covenant-not-to-compete and release were determined by arm's length negotiation.
There was no material relationship, other than the joint ownership of
Qualex and related matters, between Kodak and the Company or any of its
affiliates, any director or officer of the Company or any associate of such
director or officer.
ITEM 5. OTHER EVENTS
On June 8, 1993, the Company, through a wholly owned subsidiary, acquired
substantially all the assets of Diversified Products Corporation ("DP") for a
net purchase price consisting of $11.6 million in cash, the issuance of
1,090,909 shares of the Company's Common Stock (the "Acquisition Shares") valued
at $12 million, and the assumption or payment of certain liabilities including
trade payables and a revolving credit facility. The Company also entered into an
agreement providing the holder of the Acquisition Shares (the "Holder") with the
right to receive additional payments depending upon the value of the Acquisition
Shares over a period of not longer than one year from the purchase date. The
agreement gives the Holder the right under certain circumstances to require the
Company to purchase the Acquisition Shares at a price equal to $11.00 per share.
The Company recorded the issuance of the Acquisition Shares as redeemable common
stock in the amount of $12 million. The repurchase of the Acquisition Shares
will not affect the cost recorded by Actava for DP since the cost of DP will be
increased by the amount of the cash payment and simultaneously reduced by the
same amount due to a corresponding adjustment to the respective redeemable
common stock. The right of the Holder to receive additional payments of cash
became exercisable after June 8, 1994 and would have expired if not exercised on
or before August 7, 1994. On August 3, 1994, the Holder agreed to extend the
exercise date to February 7, 1995 in exchange for the payment by Actava of a
$435,000 fee and an irrevocable letter of credit in the amount of $12.0 million
which is available and payable to the Holder on February 17, 1995 upon demand
and tender of the Acquisition Shares. On August 17, 1994, an amendment to the
Shareholder Rights Agreement dated June 8, 1993 between the Company and
Westinghouse Electric Corporation was executed to confirm the August 3, 1994
agreement. A copy of the amendment is herewith filed as an exhibit.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(B) PRO FORMA FINANCIAL INFORMATION
THE ACTAVA GROUP INC.
PRO FORMA BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
The following Pro Forma Balance Sheet reflects the consolidated balance
sheet of the Company as of June 30, 1994, and the adjustments necessary to
reflect the balance sheet as it might have been affected if the sale of the
Company's interest in Qualex had been consummated on June 30, 1994. The
statements are based on the assumptions explained herein. These pro forma
statements do not necessarily reflect the financial position as it would have
been if the Company had sold its interest in Qualex on June 30, 1994. The pro
forma information presented should be read in conjunction with the separate
audited and unaudited consolidated financial statements and notes thereto of the
Company, which were included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1993 and its Quarterly Report on Form 10-Q for the six
months ended June 30, 1994, and the Pro Forma Statements of Continuing
Operations and notes thereto filed herewith.
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THE ACTAVA GROUP INC.
PRO FORMA BALANCE SHEET
JUNE 30, 1994
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA PRO
ASSETS ACTAVA ADJUSTMENTS FORMA
-------- ----------- --------
<S> <C> <C> <C>
Current Assets
Cash............................................... $ 14,015 $ 50,000(a) $ 64,015
Short-term investments............................. 31,922 31,922
Receivables........................................ 177,272 177,272
Inventories........................................ 67,051 67,051
Prepaid expenses................................... 4,710 4,710
Future income tax benefits......................... 25,343 25,343
Note receivable from Kodak......................... -- 92,832 92,832
-------- ----------- --------
Total current assets.......................... 320,313 142,832 463,145
Investment in Qualex.................................... 142,832 (142,832)(a) --
Property, plant and equipment........................... 113,455 113,455
Less allowances for depreciation........................ (44,351) (44,351)
-------- ----------- --------
69,104 69,104
Notes receivable from Triton Group Ltd.................. 19,226 19,226
Other assets............................................ 5,610 5,610
Long-term investments................................... 15,473 15,473
Intangibles............................................. 15,048 15,048
-------- ----------- --------
Total assets............................................ $587,606 $ -- $587,606
======== ========= ========
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
AS OF
PRO FORMA JUNE 30,
LIABILITIES AND STOCKHOLDERS' EQUITY ACTAVA ADJUSTMENTS 1994
--------- ----------- ----------
<S> <C> <C> <C>
Current Liabilities
Accounts payable, accrued expenses and other current
liabilities............................................. $ 116,121 $ $ 116,121
Notes payable............................................. 100,447 100,447
Current portion of long-term debt......................... 4,604 4,604
--------- ----------- ----------
Total current liabilities............................ 221,172 221,172
Deferred income taxes..................................... 33,621 33,621
Long-term debt............................................ 2,107 2,107
Subordinated debt......................................... 187,787 187,787
Redeemable common stock................................... 12,000 12,000
Stockholders' equity:
Common Stock............................................ 22,768 22,768
Additional capital 36,310 36,310
Retained earnings....................................... 179,719 179,719
Less treasury stock -- at cost.......................... (107,878) (107,878)
--------- ----------- ----------
Total equity......................................... 130,919 130,919
--------- ----------- ----------
Total liabilities and stockholders' equity........... $ 587,606 $ $ 587,606
========= ========= =========
</TABLE>
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(a) Represents the disposition of the Company's equity investment in Qualex of
$142,832,000 in exchange for a cash payment of $36,000,000 and a
non-interest bearing note with a discounted value of $92,832,000. The note
has required payments of $50,000,000 each on the dates six and twelve
months from the date of the transaction. Also reflects the receipt of cash
payments by the Company of $10,000,000 and $4,000,000 in exchange for a
covenant-not-to-compete and a release relating to certain items arising
under the Qualex Shareholders' Agreement dated as of June 7, 1987, between
Kodak and the Company, respectively.
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THE ACTAVA GROUP INC.
PRO FORMA STATEMENTS OF CONTINUING OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
The following Pro Forma Statements of Continuing Operations reflect the
consolidated results of operations of the Company for the two years ended
December 31, 1991 and 1992 after classifying Qualex's results of operations as
discontinued as a result of the sale of the Company's interest in Qualex as if
it had occurred on January 1, 1991. The statements are based on the assumptions
explained herein. These pro forma statements do not necessarily reflect the
results of operations as they would have been if the Company had disposed of its
interest in Qualex on January 1, 1991. The information presented below should be
read in conjunction with the separate audited consolidated financial statements
and notes thereto of the Company for the years ended December 31, 1991 and 1992
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993.
THE ACTAVA GROUP INC.
PRO FORMA CONSOLIDATED STATEMENT OF CONTINUING OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1991
---------------------------------
ACTAVA
RESTATED(A) QUALEX(B) PRO FORMA
--------- --------- ---------
<S> <C> <C> <C>
Net Sales...................................................... $ 924,635 $ 649,728 $ 274,907
Cost and Expenses:
Costs of products sold....................................... 669,129 446,576 222,553
Selling, general & administrative............................ 291,197 175,133 116,064
--------- --------- ---------
Total operating expenses............................. 960,326 621,709 338,617
--------- --------- ---------
Operating (Loss)..................................... (35,691) 28,019 (63,710)
Interest (expense)............................................. (23,534) (3,871) (19,663)
Other income -- net............................................ 3,537 602 2,935
--------- --------- ---------
(Loss) before income taxes and minority interest............... (55,688) 24,750 (80,438)
Income tax (benefit)........................................... (10,033) 14,418 (24,451)
--------- --------- ---------
Income (loss) before Minority Interest......................... (45,655) 10,332 (55,987)
Minority Interest.............................................. (5,166) (5,166) --
--------- --------- ---------
(Loss) from Continuing Operations.............................. $ (50,821) $ 5,166 $ (55,987)
======== ======== ========
Average Common and Common Equivalent Shares:
Primary...................................................... 16,526 16,526
Fully Diluted................................................ 16,526 16,526
(Loss) Per Share of Stock:
Primary -- (Loss) from Continuing Operations................. $ (3.07) $ (3.39)
Fully Diluted -- (Loss) from Continuing Operations........... $ (3.07) $ (3.39)
</TABLE>
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(a) Historical statement of operations has been restated to reflect the
classification of Qualex distribution costs as costs of products sold to be
consistent with the statements of operation presented for the three year
period ended December 31, 1993.
(b) Represents deletion of the financial accounts of Qualex to the extent
included in the Company's consolidated results of continuing operations.
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THE ACTAVA GROUP INC.
PRO FORMA CONSOLIDATED STATEMENT OF CONTINUING OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1992
----------------------------------
ACTAVA
RESTATED(A) QUALEX(B) PRO FORMA
---------- --------- ---------
<S> <C> <C> <C>
Net Sales..................................................... $1,148,743 $ 770,853 $ 377,890
Cost and Expenses:
Costs of products sold...................................... 812,932 529,297 283,635
Selling, general & administrative........................... 263,675 186,920 76,755
---------- --------- ---------
Total operating expenses............................ 1,076,607 716,217 360,390
---------- --------- ---------
Operating Income.................................... 72,136 54,636 17,500
Interest (expense).......................................... (33,454) (12,643) (20,811)
Other income -- net......................................... 6,099 1,448 4,651
---------- --------- ---------
Income before income taxes and minority interest............ 44,781 43,441 1,340
Income tax expense.......................................... 23,328 21,666 1,662
---------- --------- ---------
Income (loss) before Minority Interest...................... 21,453 21,775 (322)
Minority Interest........................................... (10,888) (10,888) --
---------- --------- ---------
Income (Loss) from Continuing Operations.................... $ 10,565 $ 10,887 $ (322)
========= ======== ========
Average Common and Common
Equivalent Shares:
Primary.................................................. 16,544 16,544
Fully Diluted............................................ 16,544 16,544
Income (Loss) Per Share of Stock:
Primary -- Income (Loss) from Continuing Operations......... $ 0.64 $ (0.02)
Fully Diluted -- Income (Loss) from Continuing Operations... $ 0.64 $ (0.02)
</TABLE>
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(a) Historical statement of operations has been restated to reflect the
classification of Qualex distribution costs as costs of products sold to be
consistent with the statements of operation presented for the three year
period ended December 31, 1993.
(b) Represents deletion of the financial accounts of Qualex to the extent
included in the Company's consolidated results of continuing operations.
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The following Pro Forma Statements of Continuing Operations reflect the
consolidated results of operations of the Company for the year ended December
31, 1993 and the six months ended June 30, 1994 after classifying the results of
operations or Qualex as discontinued and after giving effect to the sale of the
Company's interest in Qualex as if the disposition had taken place at January 1,
1993. The statements are based on the assumptions explained herein. These pro
forma statements do not necessarily reflect the results of operations as they
would have been if the Company had disposed of its interest in Qualex on January
1, 1993. The information presented below should be read in conjunction with the
separate audited and unaudited consolidated financial statements and notes
thereto of the Company which were included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1993 and its Quarterly Report on Form
10-Q for the six months ended June 30, 1994, and the Pro Forma Balance Sheet and
notes thereto included elsewhere in this Report.
THE ACTAVA GROUP INC.
PRO FORMA STATEMENT OF CONTINUING OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1993
-------------------------------------------------------
ADJUSTMENTS FOR
----------------------
ACTAVA QUALEX(A) OTHER PRO FORMA
---------- --------- ------ ---------
<S> <C> <C> <C> <C>
Net Sales................................. $1,241,111 $ 775,299 $ $ 465,812
Cost and Expenses:
Costs of products sold.................. 957,440 555,969 401,471
Selling, general and administrative..... 256,958 167,983 88,975
---------- --------- ------ ---------
Total operating expenses........... 1,214,398 723,952 490,446
Operating Profit (Loss)............ 26,713 51,347 (24,634)
Interest (expense)........................ (43,299) (16,488) (26,811)
Other income (expense) -- net............. (2,915) (1,209) 7,168(b)(c) 5,462
---------- --------- ------ ---------
(Loss) Before Income Taxes, & Minority
Interest................................ (19,501) 33,650 7,168 (45,983)
Income Tax Expense (Benefit).............. 15,163 16,598 (1,435)
---------- --------- ------ ---------
(Loss) Before Minority Interest........... (34,664) 17,052 7,168 (44,548)
Minority Interest......................... (8,526) (8,526) --
---------- --------- ------ ---------
(Loss) from Continuing Operations......... $ (43,190) $ 8,526 $7,168 $ (44,548)
========= ======== ====== ========
Average Common and Common Equivalent
Shares:
Primary.............................. 17,163 17,163
Fully Diluted........................ 17,163 17,163
(Loss) Per Share of Stock:
Primary -- (Loss) from Continuing
Operations........................... $ (2.52) $ (2.60)
Fully Diluted -- (Loss) from Continuing
Operations.............................. $ (2.52) $ (2.60)
</TABLE>
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(a) Represents deletion of the financial accounts of Qualex to the extent
included in the Company's consolidated results of continuing operations. The
loss upon sale of Qualex is reflected as a loss from discontinued operations
and not included in the loss from continuing operations presented herein.
The Company provided for an anticipated loss of $37.9 million on the sale of
Qualex. This loss included the effect of the sale of stock in exchange for
cash of $50 million and notes with a face amount of $100 million valued at
$92.8 million, the receipt of $10 million in exchange for a covenant-not-to-
compete and the receipt of $4 million in exchange for a release in favor of
the purchaser.
(b) Represents imputed interest income of $7,168,000 on the $100,000,000 one
year non-interest bearing note received by the Company in the sale of its
investment in Qualex as though the note had been received on January 1,
1993.
(c) No pro forma investment income from the proceeds received by the Company
from the sale of its investment in Qualex is included in the pro forma
financial statement.
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THE ACTAVA GROUP INC.
PRO FORMA STATEMENT OF CONTINUING OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1994
----------------------------------------------
ADJUSTMENTS FOR
--------------------
ACTAVA(A) QUALEX OTHER(B) PRO FORMA
--------- -------- -------- ---------
<S> <C> <C> <C> <C>
Net Sales.......................................... $ 279,214 $ $ $ 279,214
Cost and Expenses:
Costs of products sold........................... 233,488 233,488
Selling, general and administrative.............. 49,908 49,908
--------- -------- -------- ---------
Total operating expenses.................... 283,396 283,396
Operating (Loss)............................ (4,182) (4,182)
Interest (expense)................................. (14,822) (14,822)
Other income -- net................................ 741 741
--------- -------- -------- ---------
(Loss) Before Income Taxes & Discontinued
Operations....................................... (18,263) (18,263)
Income Tax Expense................................. -- --
--------- -------- -------- ---------
(Loss) from Continuing Operations.................. $ (18,263) $ (18,263)
======== ======== ======== ========
Average Common and Common Equivalent Shares:
Primary.......................................... 17,918 17,918
Fully Diluted.................................... 17,918 17,918
(Loss) Per Share of Stock:
Primary -- (Loss) from Continuing Operations..... $ (1.02) $ (1.02)
Fully Diluted -- (Loss) from Continuing
Operations.................................... $ (1.02) $ (1.02)
</TABLE>
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(a) Reflects Actava's historical financial information as previously reported in
its Quarterly Report on Form 10-Q for the quarter ended June 30, 1994. The
sale of Actava's 50% ownership interest in Qualex had been given effect in
the Company's results of operations for the quarter ended June 30, 1994, by
treating Qualex as a discontinued operation. Discontinued operations are
excluded from the condensed pro forma statement set forth above.
(b) No pro forma investment income from the proceeds received by the Company in
the herein described transaction is included in the pro forma financial
statement.
No imputed interest income is included in this pro forma financial
statement since it is presented as though the Qualex disposition had taken
place at January 1, 1993 and all such income would have been recognized
over the preceding one year period for the one year non-interest bearing
note received in the Qualex disposition.
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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 hereunto duly authorized.
THE ACTAVA GROUP INC.
Registrant
/s/ FREDERICK B. BEILSTEIN, III
--------------------------------------
Frederick B. Beilstein, III
Senior Vice President and
Chief Financial Officer
Dated: October 7, 1994
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