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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): MAY 30, 1997
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ATRION CORPORATION
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-10763 63-0821819
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(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
POST OFFICE BOX 587, ARAB, ALABAMA 35016
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES ) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (205) 586-1580
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P.O. BOX 3869, MUSCLE SHOALS, ALABAMA 35662
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(FORMER NAME OR FORMER ADDRESS IF CHANGED SINCE LAST REPORT)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
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On May 30, 1997, Atrion Corporation (the "Registrant") completed the sale of
all of the issued and outstanding shares of common stock of Alabama-Tennessee
Natural Gas Company ("Alabama-Tennessee"), Tennessee River Intrastate Gas
Company, Inc. and AlaTenn Energy Marketing Company, Inc., Alabama corporations
hereinafter referred to as the "Natural Gas Subsidiaries," to Midcoast Energy
Resources, Inc. (Midcoast), a Nevada corporation, pursuant to the terms of an
Asset Purchase Agreement dated March 19, 1997 (the "Asset Purchase Agreement"),
between the Registrant and Midcoast. The Natural Gas Subsidiaries comprised
substantially all of the Registrant's natural gas operations and their assets
include approximately 327 miles of natural gas pipelines and related facilities.
Terms of the Disposition.
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In consideration for the common stock of the Natural Gas Subsidiaries, Midcoast
paid to the Registrant cash in the amount of $39,373,000 on May 30, 1997. Such
amount is subject to adjustment depending upon the final determination of the
consolidated net book value of the Natural Gas Subsidiaries as of May 29, 1997.
In addition, certain annual contingent deferred payments of up to $250,000 per
year are to be paid by Midcoast to the Registrant over an eight-year period
beginning in 1999, with the amount paid each year to be dependent upon revenues
received by Midcoast from certain gas transportation contracts. The sales price
received from Midcoast was determined on the basis of arm's length negotiations
between the Registrant and Midcoast following extensive discussions by the
Registrant with a number of parties regarding their interest in purchasing the
Natural Gas Subsidiaries and the receipt of bids from several parties. The
Registrant also received an opinion from Raymond James & Associates, Inc. that
the purchase price was fair, from a financial point of view, to the Registrant.
At the time of the execution and delivery of the Asset Purchase Agreement and
the consummation of the transactions contemplated thereby, there were no
affiliations among Midcoast and its affiliates, on the one hand, and the
Registrant and its affiliates, on the other hand. At the closing of the sale
transaction, the Registrant, Midcoast and Alabama-Tennessee executed certain
agreements pursuant to which Alabama-Tennessee granted certain license rights
with respect to its rights-of-way to AlaTenn Pipeline Company, Inc., the
Registrant's wholly-owned industrial gas pipeline company, and agreed to service
the Registrant's gaseous oxygen pipeline for a period of two years.
A copy of the Asset Purchase Agreement is included as Appendix A to the
Registrant's definitive proxy statement relating to its 1997 annual meeting of
stockholders and filed with the Securities and Exchange Commission on April 23,
1997, and the foregoing description of certain provisions of the Asset Purchase
Agreement and the transactions contemplated thereby is qualified in its entirety
by reference to such Appendix.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
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(a) Not applicable.
(b) Unaudited pro forma financial information.
The following unaudited pro forma condensed consolidated financial statements,
including (i) a pro forma condensed consolidated balance sheet as of March 31,
1997 and (ii) pro forma condensed consolidated statements of income for the
year ended December 31, 1996 and for the three months ended March 31, 1997, give
effect to the discontinuance of the Registrant's natural gas operations,
including the sale of the Natural Gas Subsidiaries as described above. Such
unaudited pro forma financial statements also give effect to the discontinuance
of the Registrant's other two small natural gas subsidiaries, which are
presently anticipated to be sold in the next several months. Such pro forma
financial statements have been derived from the Registrant's audited financial
statements as of and for the year ended December 31, 1996, included in the
Registrant's Annual Report on Form 10-K, filed with the Commission on March 27,
1997 and the unaudited financial statements as of and for the quarter ended
March 31, 1997, included in the Registrant's Quarterly Report on Form 10-Q,
filed with the Commission on May 13, 1997. The adjustments described in the pro
forma condensed consolidated balance sheet assume that the sale of the Natural
Gas Subsidiaries described herein was consummated at March 31, 1997, while the
adjustments described in the pro forma condensed consolidated statements of
income assume that such transaction was consummated at the beginning of the
periods presented.
The unaudited pro forma information is provided for comparative purposes only.
It does not purport to be indicative of the results that actually would have
occurred if the transaction had been consummated on the dates indicated or which
may be obtained in the future. The pro forma condensed consolidated statements
of income do not reflect any gain from the sale of the Natural Gas Subsidiaries,
nor do they reflect any interest which might be earned with the remaining
proceeds from the sale after the payment of related expenses and all long-term
debt. The consolidated pro forma financial information should be read in
conjunction with (i) the historical consolidated financial statements and the
notes related thereto and (ii) "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included in the Registrant's
Annual Report on Form 10-K for 1996 and its Quarterly Report on Form 10-Q for
the quarter ended March 31, 1997.
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ATRION CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
<TABLE>
<CAPTION>
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Discontinued
Registrant Natural Gas Pro Forma Registrant
Historical Operations/(1)/ Adjustments/(2)/ Pro Forma
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ASSETS (in thousands)
<S> <C> <C> <C> <C>
Current assets:
Cash and temporary cash investments $ 174 $ 1 $29,541/(a)/ $29,714
Accounts receivable 12,408 8,041 0 4,367
Other current assets 5,249 858 256/(b)/ 4,647
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17,831 8,900 29,797 38,728
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Plant and equipment (net) 25,288 12,597 22/(b)/ 12,713
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Other assets:
Intangibles 11,088 0 0 11,088
Other 4,062 1,467 (329)/(b)(c)/ 2,266
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15,150 1,467 (329) 13,354
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58,269 22,964 29,490 64,795
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STOCKHOLDERS' EQUITY AND LIABILITIES
Current liabilities 11,906 7,042 (783)/(b)/ 4,081
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Long-term debt 7,066 0 (7,066)/(d)/ 0
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Other liabilities 3,889 2,721 7,174/(b)/ 8,342
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Stockholders' equity 35,408 13,201 30,165/(e)/ 52,372
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$58,269 $22,964 $29,490 $64,795
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</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Information.
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ATRION CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
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Discontinued
Registrant Natural Gas Pro Forma Registrant
Historical Operations/(1)/ Adjustments/(2)/ Pro Forma
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<S> <C> <C> <C> <C>
(in thousands, except per share data)
Revenues $135,977 $(113,936) $ 0 $22,041
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Cost of goods sold 113,995 (101,042) 0 12,953
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Gross margin 21,982 (12,894) 0 9,088
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Operating expenses 12,631 (6,062) 1,294/(f)/ 7,863
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Net operating income 9,351 (6,832) (1,294) 1,225
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Other income (expense):
Investment and other income 1,238 (702) 0/(h)/ 536
Interest expense (435) 251 184/(g)/ 0
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803 (451) 184 536
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Income before income taxes 10,154 (7,283) (1,110) 1,761
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Income tax expense 3,677 (2,644) (402)/(i)/ 631
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Net income $ 6,477 $ (4,639) $ (708) $ 1,130
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Earnings per share $2.03 $.35
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Average shares of common stock outstanding 3,189 3,189
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</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Information.
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ATRION CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
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Discontinued
Registrant Natural Gas Pro Forma Registrant
Historical Operations/(1)/ Adjustments/(2)/ Pro Forma
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<S> <C> <C> <C> <C>
(in thousands, except per share data)
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Revenues $40,018 $(32,174) $ 0 $7,844
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Cost of goods sold 33,942 (28,942) 0 5,000
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Gross margin 6,076 (3,232) 0 2,844
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Operating expenses 3,403 (1,428) 376/(f)/ 2,351
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Net operating income 2,673 (1,804) (376) 493
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Other income (expense):
Investment and other income 49 (5) 0/(h)/ 44
Interest expense (142) 0 142/(g)/ 0
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(93) (5) 142 44
Income before income taxes 2,580 (1,809) (234) 537
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Income tax expense 948 (657) (85)/(i)/ 206
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Net income $ 1,632 $ (1,152) $(149) $ 331
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Earnings per share $.51 $.10
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Average shares of common stock outstanding 3,215 3,215
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</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Information.
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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(1) To reflect the sale of the Natural Gas Subsidiaries by adjusting the
Registrant's historical financial statements for all assets, liabilities,
revenues and expenses attributable to the Natural Gas Subsidiaries as well
as the assets, liabilities, revenues and expenses of the remaining
discontinued operations.
(2) To reflect certain other adjustments as a result of the sale of the Natural
Gas Subsidiaries, as follows:
(a) Gross proceeds of $39,373 received at closing, less transaction-related
expenses, expenses related to discontinuing the natural gas operations,
repayment of all long-term debt and payment of estimated income tax
liabilities. Assumes $223 received as a post-closing adjustment and no
contingent deferred purchase price payments.
(b) The retention of certain assets and liabilities of the Natural Gas
Subsidiaries by the Registrant and the accrual of certain expenses
related to the sale of the Natural Gas Subsidiaries.
(c) The recognition of the curtailment of certain Registrant benefit plans
as a result of the sale of the Natural Gas Subsidiaries.
(d) Assumes all long-term debt of the Registrant is paid off from the
proceeds of the sale of the Natural Gas Subsidiaries.
(e) Includes an estimated gain on the sale of the Natural Gas Subsidiaries
of $17,005 which is not included in the pro forma condensed
consolidated statements of income.
(f) The reallocation of certain overhead expenses from the discontinued
operations to the Registrant's continuing operations.
(g) The elimination of all remaining interest expense on the Registrant's
long-term debt not previously allocated from the Registrant to the
Natural Gas Subsidiaries based on the assumption that all long-term
debt will be retired.
(h) Assumes no interest income on the net proceeds from the sale of the
Natural Gas Subsidiaries remaining after payment of related expenses
and all long-term debt.
(i) Estimated income tax effect of (f) and (g) above.
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(c) Exhibits.
Exhibit No. Description
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2 Asset Purchase Agreement, dated March 19, 1997, between Atrion
Corporation and Midcoast Energy Resources, Inc. (incorporated
herein by reference to Appendix A to the Registrant's
definitive Proxy Statement, filed with the Commission on April
23, 1997)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Atrion
Corporation has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Atrion Corporation
Dated: June 16, 1997 /s/ Jerry A. Howard
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Jerry A. Howard
Chairman of the Board, President
and Chief Executive Officer
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EXHIBIT INDEX
Exhibit No. Description
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2 Asset Purchase Agreement, dated March 19, 1997, between Atrion
Corporation and Midcoast Energy Resources, Inc. (incorporated
herein by reference to Appendix A to the Registrant's definitive
Proxy Statement, filed with the Commission on April 23, 1997)
10
