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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): July 5, 2000
APPLIED POWER INC.
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(Exact name of Registrant as specified in its charter)
Wisconsin 1-11288 39-0168610
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(State of Incorporation) (Commission File No.) (I.R.S. Employer Id. No.)
N22 W23685 Ridgeview Parkway West
Waukesha, Wisconsin 53188-1013
Mailing Address: P.O. Box 325, Milwaukee, Wisconsin 53201
(Address of principal executive offices) (Zip code)
(262) 523-7600
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(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Business
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OVERVIEW
On June 30, 2000, Applied Power Inc. (the "Company") completed the sale of all
outstanding capital stock of Barry Wright Corporation. Barry Wright Corporation,
comprised of the Barry Controls Aerospace and Barry Controls Defense and
Industrial divisions, and its UK subsidiary Barry Controls Ltd., were sold to
Hutchinson S.A., a subsidiary of the TotalFinaElf Group, a French based multi-
national corporation. The sales price was $157.5 million in cash, with the
proceeds being used to reduce the debt of Applied Power Inc.
The divisions of Barry Wright Corporation that were sold specialized in
vibration isolation products that are sold to a diverse mix of end markets,
primarily the aerospace, defense and industrial markets. Net sales and net
earnings attributable to the divested Barry Wright Corporation amounted to 7%
and 12%, respectively, of total Applied Power Inc. net sales and net earnings
during the fiscal year ended August 31, 1999.
This disposition was effected to reduce debt and more strategically focus the
remaining industrial businesses of the Company, which will operate as Actuant
Corporation following the spin-off of Applied Power Inc.'s Electronics business.
The spin-off of the Electronics segment is expected to be complete by the end of
August 2000.
A copy of the Stock Purchase Agreement is filed as Exhibit 2.1. The foregoing
description is qualified in its entirety by reference to the Sock Purchase
Agreement.
Item 7. Financial Statements and Exhibits.
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(a) Pro Forma Financial Information
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The following unaudited pro forma Condensed Consolidated financial
statements are filed with this report:
Unaudited Pro Forma Condensed Consolidated Statements of Earnings of
Applied Power Inc. for the year ended August 31, 1999 and the six-month
interim period ended February 29, 2000.
Unaudited Pro Forma Condensed Consolidated Balance Sheet of Applied
Power Inc. as of February 29, 2000.
Notes to the Unaudited Pro Forma Condensed Consolidated Financial
Statements.
(b) Exhibits Index
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Exhibit Description
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2.1 Stock Purchase Agreement, dated April 28, 2000, between
Hutchinson, S.A. and Applied Power Investment II, Inc. and
Applied Power Inc.
99.1 Applied Power Inc. press release, dated June 30, 2000,
announcing the closing of the Barry Wright Corporation sale.
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SIGNATURE
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.
APPLIED POWER INC.
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(Registrant)
Date: July 5, 2000 By: /s/ Richard D. Carroll
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Richard D. Carroll
Vice President - Finance
(Acting Principal Financial
and Accounting Officer and
duly authorized to sign on
behalf of the registrant)
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APPLIED POWER INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The following unaudited pro forma financial statements of Applied Power Inc.
(the "Company") give effect to the sale of capital stock of Barry Wright
Corporation. The statements reflect the application of the after tax proceeds of
the sale transaction as described in the Notes to the Unaudited Pro Forma
Condensed Consolidated Financial Statements. The amounts are estimates and
subject to further closing adjustments which are expected to be insignificant.
The unaudited pro forma condensed consolidated financial statements have been
prepared by the Company's management based on the Company's historical financial
statements.
The following unaudited pro forma condensed consolidated balance sheet as of
February 29, 2000 gives effect to the transaction as though it had been
completed on that date. The unaudited pro forma condensed consolidated
statements of earnings for the year ended August 31, 1999, and the six-month
interim period ended February 29, 2000 give effect to the transaction as though
it had occurred at the beginning of the earliest period presented. See the Notes
to the Unaudited Pro Forma Condensed Consolidated Financial Statements for the
assumptions used in the statements presented.
The unaudited pro forma condensed consolidated financial statements presented
herein are shown for illustrative purposes only and are not necessarily
indicative of the future financial position or results of operations of the
Company, or of the financial position or results of operations of the Company
that would have actually occurred had the transaction been in effect as of the
date or for the periods presented. The unaudited pro forma condensed
consolidated financial statements should be read in conjunction with the
Company's audited financial statements as filed with the Securities and Exchange
Commission in its Annual Report on Form 10-K for the year ended August 31, 1999,
and the Company's unaudited financial statements included in its Quarterly
Reports on Form 10-Q for the periods ended November 30, 1999 and February 29,
2000.
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Applied Power Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Earnings
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Six Months Ended February 29, 2000
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Pro Forma Pro
Historical Adjustments Forma
------------ ---------------- -------------
<S> <C> <C> <C>
Net sales $ 923,344 $ (60,539) (1) $ 862,805
Cost of products sold 645,836 (37,294) (1) 608,542
------------ ---------------- -------------
Gross profit 277,508 (23,245) 254,263
Engineering, selling and administrative expenses 156,741 (11,418) (1) 145,323
Amortization of intangible assets 15,798 (547) (1) 15,251
Contract termination recovery (1,446) - (1,446)
Corporate reorganization expenses 3,487 - 3,487
------------ ---------------- -------------
Operating earnings 102,928 (11,280) 91,648
Other expense (income)
Net financing costs 28,360 (6,103) (2) 22,257
Other - net 701 (52) (1) 649
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Earnings before income tax expense 73,867 (5,125) 68,742
Income tax expense 27,560 (2,355) (3) 25,205
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Net earnings before extraordinary item 46,307 (2,770) 43,537
Extraordinary loss on early retirement of debt,
net of income tax benefit of $1,250 (2,083) - (2,083)
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Net earnings $ 44,224 $ (2,770) $ 41,454
============ ================ =============
Basic earnings per share:
Earnings per share before extraordinary item $ 1.18 $ 1.11
Extraordinary loss on early retirement of debt,
net of income tax benefit (0.05) (0.05)
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Earnings per share $ 1.13 $ 1.06
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Weighted average common
shares outstanding (000's) 39,023 39,023
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Diluted earnings per share:
Earnings per share before extraordinary item $ 1.15 $ 1.08
Extraordinary loss on early retirement of debt,
net of income tax benefit (0.05) (0.05)
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Earnings per share $ 1.10 $ 1.03
============ =============
Weighted average common and equivalent
shares outstanding (000's) 40,343 40,343
============ =============
</TABLE>
The accompanying notes are an integral part of these pro forma
financial statements
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Applied Power Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Earnings
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended August 31, 1999
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Pro Forma Pro
Historical Adjustments Forma
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<S> <C> <C> <C>
Net sales $1,751,042 $ (117,668) (1) $1,633,374
Cost of products sold 1,206,605 (67,253) (1) 1,139,352
------------ -------------- --------------
Gross profit 544,437 (50,415) 494,022
Engineering, selling and administrative expenses 317,286 (22,004) (1) 295,282
Amortization of intangible assets 29,624 (988) (1) 28,636
Contract termination costs 7,824 - 7,824
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Operating earnings 189,703 (27,423) 162,280
Other expense (income)
Net financing costs 63,888 (12,206) (2) 51,682
Other - net (936) 67 (1) (869)
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Earnings before income tax expense 126,751 (15,284) 111,467
Income tax expense 47,354 (6,724) (3) 40,630
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Net earnings $ 79,397 $ (8,560) $ 70,837
============ ============== ==============
Basic earnings per share:
Earnings per share $ 2.04 $ 1.82
============ ==============
Weighted average common
shares outstanding (000's) 38,825 38,825
============ ==============
Diluted earnings per share:
Earnings per share $ 1.98 $ 1.76
============ ==============
Weighted average common and equivalent
shares outstanding (000's) 40,200 40,200
============ ==============
</TABLE>
The accompanying notes are an integral part of these pro forma
financial statements
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Applied Power Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
(Dollars in Thousands)
<TABLE>
<CAPTION>
February 29, 2000
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Pro Forma Pro
Historical Adjustments Forma
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<S> <C> <C> <C>
ASSETS
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Current assets
Cash and cash equivalents $ 7,510 $ - $ 7,510
Accounts receivable, net 168,994 (23,068) (4) 145,926
Inventories, net 230,414 (21,780) (4) 208,634
Prepaid expenses and deferred income taxes 33,972 (993) (4) 32,979
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Total current assets 440,890 (45,841) 395,049
Property, plant and equipment, net 267,491 (15,693) (4) 251,798
Goodwill and other intangibles, net 878,872 (28,879) (4) 849,993
Other assets 51,768 (3) (4) 51,765
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Total assets $ 1,639,021 $ (90,416) $ 1,548,605
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities
Short-term borrowings $ 2,383 $ - $ 2,383
Trade accounts payable 155,727 (10,157) (4) 145,570
Accrued compensation and benefits 44,601 (2,741) (4) 41,860
Income taxes payable 39,139 - 39,139
Other current liabilities 67,594 (531) (4) 67,063
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Total current liabilities 309,444 (13,429) 296,015
Long-term debt 792,953 (157,500) (5) 635,453
Deferred income taxes 16,641 - 16,641
Other deferred liabilities 60,092 (147) (4) 59,945
Shareholders' equity
Class A common stock 7,817 - 7,817
Additional paid-in capital 13,971 - 13,971
Accumulated other comprehensive income (17,813 - (17,813)
Retained earnings 455,916 80,660 (4) 536,576
---------------- ---------------- ---------------
Total Shareholders' Equity 459,891 80,660 540,551
---------------- ---------------- ---------------
Total Liabilities and Shareholders' Equity $ 1,639,021 $ (90,416) $ 1,548,605
================ ================ ===============
</TABLE>
The accompanying notes are an integral part of these pro forma
financial statements
<PAGE>
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
(1) The pro forma adjustments for the year ended August 31, 1999, and the six-
months ended February 29, 2000 reflect the historical operating
results of the divested Barry Wright Corporation, which was sold June 30,
2000.
(2) The pro forma adjustment to net financing costs for the year ended August
31, 1999, and the six-months ended February 29, 2000 reflects the impact of
proceeds from the sale of the Barry Wright Corporation being used to reduce
debt, and lower financing costs associated with the reduced debt levels. An
effective interest rate of 7.75% was used in calculating the pro forma
adjustment to net financing costs. The effective interest rate used is
Applied Power Inc.'s average effective borrowing rate on all of its
interest bearing obligations.
(3) The pro forma income tax expense adjustment for the year ended August 31,
1999, and the six-months ended February 29, 2000 reflects the elimination
of the Barry Wright Corporation historical income tax expense and Applied
Power Inc.'s increased income tax expense related to the decrease in net
financing costs. Pro forma income tax expense for the periods presented is
as follows (in millions):
February August
29, 2000 31, 1999
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Barry Wright Corporation income tax expense $ (4,491) $(10,996)
Income tax expense associated with increased
pre-tax income resulting from reduced
financing costs 2,136 4,272
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Pro forma income tax expense adjustment $ (2,355) $ (6,724)
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(4) The pro forma adjustment reflects the financial position as of February 29,
2000 of the divested Barry Wright Corporation, which was sold June 30,
2000, net of the estimated liabilities retained by Applied Power Inc.
(5) The pro forma adjustment represents the net of tax cash proceeds of the
sale of Barry Wright Corporation. Immediately following the closing and
receipt of the proceeds, Applied Power Inc. used those proceeds to reduce
long-term debt.
