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)___September 29, 1997__________
_____________________________The Midland Company________________________________
(Exact name of registrant as specified in its charter)
_____Incorporated in Ohio_____ ______1-6026______ _____31-0742526_____
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
_____7000 Midland Boulevard, Amelia, Ohio 45102_____
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code__(513) 943-7100______________
_____________________________N/A______________________________
(Former name or former address, if changed since last report.)
<PAGE>
Item 1. Not applicable.
Item 2. Acquisition or Disposition of Assets.
On September 29, 1997, The Midland Company announced that its wholly
owned subsidiary, CS Crable Sportswear, Inc. (hereinafter "CS Crable"),
completed the sale of substantially all of its sportswear related assets in a
transaction valued at approximately $13,333,000. The assets were acquired by
Brazos Inc. ("Brazos"), a subsidiary of Brazos Sportswear, Inc., located in
Cincinnati, Ohio. There are no material relationships between the purchaser and
the registrant or any of its affiliates, any director or officer of the
registrant, or any associates of any such director or officer.
The purchase price was determined by using the book value of the assets
involved in the transaction, adjusted for negotiated discounts, and was paid in
cash to CS Crable on the date of the transaction. The proceeds from the
transaction were then paid to the registrant and used to reduce the registrant's
short term bank line borrowings.
The transaction, which included the sale of inventory, accounts
receivables, fixed assets and certain prepaid expenses, also included the
rights to the CS Crable Sportswear, Inc. name, contracts, customer lists and a
ten year lease agreement related to the CS Crable production and distribution
facility located in Batavia, Ohio.
The agreement between CS Crable and Brazos requires the registrant to
retain a certain level of assets in the sportswear subsidiary until
March 1, 1999.
The financial results of the sportswear subsidiary will be accounted for
as discontinued operations and, accordingly, will be reported separately from
the registrant's continuing operations in the ensuing consolidated financial
statements.
The Midland Company, which is headquartered in Cincinnati, is engaged in
insurance and transportation operations.
Item 3. Not applicable.
Item 4. Not applicable.
Item 5. Not applicable.
Item 6. Not applicable.
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
Not applicable.
(b) Pro Forma Financial Information.
The following unaudited pro forma condensed consolidated financial
statements are filed with this report:
Pro Forma Condensed Consolidated Balance Sheet
as of June 30, 1997.........................................Page F-1
Pro Forma Condensed Consolidated Statements of
Income:
Six Months Ended June 30, 1997.........................Page F-2
Year Ended December 31, 1996...........................Page F-3
Notes to the Pro Forma Condensed Consolidated
Financial Statements........................................Page F-4
The following pro forma condensed consolidated balance sheet as of
June 30, 1997, and the pro forma condensed consolidated statements of income for
the six month period then ended and the year ended December 31, 1996, give
effect to the sale of substantially all of the sportswear related assets of
CS Crable, the registrant's sportswear apparel subsidiary. The adjustments
related to the pro forma condensed consolidated balance sheet reflect the
assumption that the transaction was consummated on June 30, 1997, while the
adjustments to the pro forma condensed consolidated statements of income reflect
the assumption that the transaction was consummated on January 1, 1996.
The nonrecurring transactions related directly to the sale (i.e. the
loss on disposal) are excluded from the accompanying pro forma condensed
consolidated statements of income, which focus on the continuing operations of
the registrant. At the time of this filing, the books and records of the
registrant and its subsidiaries have not been finalized for the quarter ended
September 30, 1997. The registrant's consolidated financial statements, to be
filed in Form 10-Q for the quarter ended September 30, 1997, will include the
total estimated loss on disposal and the loss from discontinued operations
through September 29, 1997, the date of the sale.
The pro forma condensed consolidated information is based on the
historical consolidated financial statements of The Midland Company. The
pro forma condensed consolidated financial statements should be read in
conjunction with the historical consolidated financial statements and related
notes of the registrant. The pro forma condensed consolidated financial
statements presented herein are shown for illustrative purposes only and are not
necessarily indicative of the results that actually would have occurred if the
sale had been in effect as of, and for, the periods presented or the results
that may be achieved in the future.
(c) Exhibits.
Not applicable.
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 hereunto duly authorized.
The Midland Company
(Registrant)
Date____October 14, 1997____ S/John I. Von Lehman____________________
John I. Von Lehman
Executive Vice President, Treasurer,
Chief Financial and Accounting Officer
<PAGE>
The Midland Company and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheet (Unaudited)
June 30, 1997
(amounts in 000's)
Pro Forma
Description Historical Adjustments Pro Forma
- ------------------------------------ ---------- ----------- ----------
Assets
======
Cash and Marketable Securities $ 416,122 $ 416,122
Accounts Receivable (net) 65,403 $ (2,434) 62,969
Reinsurance Recoverables and
Prepaid Reinsurance Premiums 53,811 53,811
Inventory 15,101 (15,101) -
Property, Plant and Equipment (net) 91,887 (2,552) 89,335
Deferred Policy Acquisition Costs 42,657 42,657
Other Assets 4,491 (240) 4,251
---------- ----------- ----------
Total Assets $ 689,472 $ (20,327) $ 669,145
========== =========== ==========
Liabilities and Shareholders' Equity
====================================
Notes Payable Within One Year $ 23,906 $ (15,018) $ 8,888
Other Payables and Accruals 87,431 (3,541) 83,890
Unearned Insurance Premiums 215,589 215,589
Insurance Loss Reserves 104,066 104,066
Deferred Federal Income Tax 20,995 20,995
Long-Term Debt 63,094 63,094
Shareholders' Equity 174,391 (1,768) 172,623
---------- ----------- ----------
Total Liabilities and
Shareholders' Equity $ 689,472 $ (20,327) $ 669,145
========== =========== ==========
Note: See the accompanying notes to the pro forma condensed consolidated
financial statements at Page F-4.
Page F-1
<PAGE>
The Midland Company and Subsidiaries
Pro Forma Condensed Consolidated Statement of Income (Unaudited)
For the Six Months Ended June 30, 1997
(amounts in 000's except per share amounts)
Pro Forma
Description Historical Adjustments Pro Forma
- ------------------------------------ ---------- ----------- ----------
Revenues
========
Insurance $ 166,805 $ 166,805
Transportation 15,888 15,888
Sportswear 10,225 $ (10,225) -
Other 117 117
---------- ----------- ----------
Total Operating Revenue 193,035 (10,225) 182,810
---------- ----------- ----------
Operating Expenses
==================
Insurance 150,593 150,593
Transportation 14,211 14,211
Sportswear 13,147 (13,147) -
Interest expense 2,925 (515) 2,410
Other 2,567 2,567
---------- ----------- ----------
Total Operating Expenses 183,443 (13,662) 169,781
---------- ----------- ----------
Income from Continuing Operations
Before Federal Income Tax 9,592 3,437 13,029
Provision for Federal Income Tax 2,521 1,196 3,717
---------- ---------- ----------
Income from Continuing Operations $ 7,071 $ 2,241 $ 9,312
========== ========== ==========
Income Per Common and Common Equivalent
Shares from Continuing Operations $ 2.30 $ .73 $ 3.03
========== ========== ==========
Average Number of Common and Common
Equivalent Shares Outstanding 3,072 3,072
========== ==========
Note: See the accompanying notes to the pro forma condensed consolidated
financial statements at Page F-4.
Page F-2
<PAGE>
The Midland Company and Subsidiaries
Pro Forma Condensed Consolidated Statement of Income (Unaudited)
For the Year Ended December 31, 1996
(amounts in 000's except per share amounts)
Pro Forma
Description Historical Adjustments Pro Forma
- ------------------------------------ ---------- ----------- ----------
Revenues
========
Insurance $ 303,175 $ 303,175
Transportation 34,064 34,064
Sportswear 32,754 $ (32,754) -
Other 499 499
---------- ----------- ----------
Total Operating Revenue 370,492 (32,754) 337,738
---------- ----------- ----------
Operating Expenses
==================
Insurance 295,314 295,314
Transportation 31,163 31,163
Sportswear 35,796 (35,796) -
Interest expense 5,873 (1,044) 4,829
Other 3,115 3,115
---------- ----------- ----------
Total Operating Expenses 371,261 (36,840) 334,421
---------- ----------- ----------
Income (Loss) from Continuing Operations
Before Federal Income Tax (769) 4,086 3,317
Provision (Credit) for Federal Income Tax (1,837) 1,411 (426)
---------- ----------- ----------
Income from Continuing Operations $ 1,068 $ 2,675 $ 3,743
========== =========== ==========
Income Per Common and Common Equivalent
Shares from Continuing Operations $ .35 $ .88 $ 1.23
========== =========== ==========
Average Number of Common and Common
Equivalent Shares Outstanding 3,033 3,033
========== ==========
Note: See the accompanying notes to the pro forma condensed consolidated
financial statements at Page F-4.
Page F-3
<PAGE>
Notes to the Pro Forma Condensed Consolidated Financial Statements
Pro Forma Condensed Consolidated Balance Sheet
The adjustments to the pro forma condensed consolidated balance sheet
are intended to illustrate the elimination of substantially all of the
sportswear related assets of CS Crable. Such adjustments were based primarily
on the CS Crable balances which were included in the registrant's consolidated
balance sheet as of June 30, 1997.
The reduction in the short-term debt balance is the result of the use of
substantially all of the $13,333,000 of cash proceeds from the sale of assets
on September 29, 1997, coupled with debt repayments which were funded primarily
from the net reductions in CS Crable's inventory and accounts receivable
balances from June 30, 1997 to September 29, 1997.
The reduction in shareholders' equity in the pro forma condensed
consolidated balance sheet includes the after-tax loss arising from the sale
transaction and does not reflect the impact of certain accruals for severance
expenses and other adjustments that will be required to fully recognize the loss
on the disposal of the discontinued operations. The estimate of such accruals
has not yet been completed by the registrant but the related loss will be
included in the total estimated loss on disposal in the consolidated financial
statements to be filed in Form 10-Q for the quarter ended September 30, 1997
(see below).
Pro Forma Condensed Consolidated Statements of Income
The adjustments to the pro forma condensed consolidated statements of
income for the six months ended June 30, 1997 and for the year ended December
31, 1996 are intended to illustrate the elimination of CS Crable sales and
related costs and expenses assuming the sportswear related assets of CS Crable
were sold on January 1, 1996. Such adjustments also illustrate the reduction of
interest expense based on the assumption that the net proceeds from the sale
were used to reduce the registrant's outstanding debt on January 1, 1996.
The nonrecurring transactions related directly to the sale (i.e. the
loss on disposal) are excluded from the accompanying pro forma condensed
consolidated statements of income, which focus on the continuing operations of
the registrant. At the time of this filing, the books and records of the
registrant and its subsidiaries have not been finalized for the quarter ended
September 30, 1997. The registrant's consolidated financial statements, to be
filed in Form 10-Q for the quarter ended September 30, 1997, will include the
total estimated loss on disposal and the loss from discontinued operations
through September 29, 1997, the date of the sale.
Page F-4
