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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 12 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 1, 1997
Graham-Field Health Products, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-8801 11-2578230
(State or Other Juris- (Commission File (IRS Employer
diction of Incorporation) Number) Identification No.)
400 Rabro Drive East, Hauppauge, NY 11788
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 582-5900
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On May 1, 1997, Graham-Field Health Products, Inc., a Delaware
corporation (the "Company"), announced that its Board of Directors has approved
an amendment to the Amended and Restated Stockholder Agreement dated as of
September 3, 1996, as amended on September 19, 1996, by and among BIL (Far East
Holdings) Limited ("BIL"), the Company and Irwin Selinger, pursuant to which
BIL, the Company's largest stockholder, will be permitted to purchase additional
shares of common stock of the Company on the open market or in
privately-negotiated transactions, so long as BIL does not acquire a number of
shares which, together with shares already owned by BIL, represent more than 49%
of the voting power of all shares of the Company stock then outstanding. BIL has
informed the Company that it intends to purchase additional shares on the open
market from time to time subject to market conditions, subject to the
above-mentioned 49% limit. Currently BIL owns shares of common and preferred
stock of the Company representing 34% of the voting power of all shares
outstanding.
Additional information with respect to the transactions
described herein is included in the press release issued by the Company on May
1, 1997 attached hereto as Exhibit 99(a).
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) Not Applicable.
(b) Not Applicable.
(c) Exhibit No. Description
4(a) Amendment No. 1, dated as of May 1, 1997, to
the Amended and Restated Stockholder
Agreement, dated as of September 3, 1996, by
and among Graham-Field Health Products,
Inc., BIL (Far East Holdings) Limited and
Irwin Selinger
99(a) Press Release, dated May 1, 1997
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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 hereunto duly authorized.
GRAHAM-FIELD HEALTH PRODUCTS, INC.
Date: May 14, 1997 By: /s/ Richard S. Kolodny
----------------------------------
Name: Richard S. Kolodny
Title: Vice President, General
Counsel and Secretary
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EXHIBIT INDEX
Page No.
4(a) Amendment No. 1, dated as of May 1,
1997, to the Amended and Restated
Stockholder Agreement, dated as of
September 3, 1996, as amended on
September 19, 1996, by and among
Graham-Field Health Products, Inc., BIL
(Far East Holdings) Limited and Irwin
Selinger
99(a) Press Release, dated May 1, 1997
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AMENDMENT NO. 1 TO AMENDED AND RESTATED STOCKHOLDER AGREEMENT
AMENDMENT NO. 1 TO AMENDED AND RESTATED STOCKHOLDER AGREEMENT,
dated as of May 1, 1997 (this "First Amendment"), by and among BIL (FAR EAST
HOLDINGS) LIMITED, a Hong Kong corporation ("BIL"), GRAHAM-FIELD HEALTH
PRODUCTS, INC., a Delaware corporation (the "Company"), and IRWIN SELINGER ("Mr.
Selinger").
WHEREAS, BIL, the Company and Mr. Selinger are parties to an
Amended and Restated Stockholder Agreement, dated as of September 3, 1996, as
amended on September 19, 1996, pursuant to which BIL, the Company and Mr.
Selinger established certain terms and conditions concerning the acquisition and
disposition of securities of the Company after the Effective Time (as
subsequently amended and restated, the "Stockholder Agreement"; capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Stockholder Agreement); and
WHEREAS, BIL, the Company and Mr. Selinger desire to amend the
Stockholder Agreement in accordance with the terms hereof;
NOW, THEREFORE, BIL, the Company and Mr. Selinger hereby agree
as follows:
SECTION 1. Amendment to the Stockholder Agreement. Section
4.01 of the Stockholder Agreement is, effective as of the date hereof, amended
in its entirety to read as follows:
4.01 Limitation on Acquisition of Equity Securities. Following
the Effective Time and until the Restricted Group beneficially owns
Outstanding Voting Securities representing less than 5% of the Voting
Power of all Outstanding Voting Securities, no member of the Restricted
Group shall acquire beneficial ownership of any Equity Securities,
except (i) the acquisition of Equity Securities pursuant to the Merger
Agreement or upon the conversion of or as a dividend on the BIL Series
B Preferred Shares or the BIL Series C Preferred Shares in accordance
with their terms, (ii) by way of stock dividends, stock splits or other
distributions or offerings made available to holders of Equity
Securities generally, (iii) pursuant to plans established by the
Company for members of the Board of Directors, (iv) pursuant to the
exercise of BIL's right to acquire Equity Securities directly from the
Company as provided for in Section 4.02 or (v) the purchase of Equity
Securities in open-market or privately-negotiated transactions,
provided that, immediately after giving effect to such purchase, the
members of the Restricted Group would not own, in the aggregate,
Outstanding Voting Securities
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representing more than 49% of the Voting Power of all
Outstanding Voting Securities."
SECTION 2. Representations. (a) The Company represents to BIL
that it has the requisite corporate power to enter into this First Amendment and
to carry out its obligations hereunder, that the execution and delivery of this
First Amendment has been duly authorized by all necessary corporate actions on
the part of the Company and that this First Amendment has been duly executed and
delivered on behalf of the Company.
(b) BIL represents to the Company and Mr. Selinger that it has
the requisite corporate power to enter into this First Amendment and to carry
out its obligations hereunder, that the execution and delivery of this First
Amendment has been duly authorized by all necessary corporate actions on the
part of BIL and that this First Amendment has been duly executed and delivered
on behalf of BIL.
SECTION 3. Effect on the Stockholder Agreement. Except as
specifically amended hereby, the original provisions of the Stockholder
Agreement remain in full force and effect.
SECTION 4. Counterparts. This First Amendment may be executed
in any number of counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which taken together shall
constitute but one and the same instrument.
SECTION 5. Governing Law. This First Amendment shall be
governed by and construed in accordance with the laws of the State of New York
applicable to a contract executed and performed in such State, without giving
effect to the conflicts of laws principles thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be duly executed as of the day and year first above written.
BIL (FAR EAST HOLDINGS) LIMITED
By:
------------------------------------
Name: Rodney F. Price
Title: Director
GRAHAM-FIELD HEALTH PRODUCTS, INC.
By:
------------------------------------
Name: Irwin Selinger
Title: Chairman of the Board and
Chief Executive Officer
------------------------------------
Irwin Selinger
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<PAGE> 1
[LOGO}
FOR IMMEDIATE RELEASE Contacts: Gary M. Jacobs
Vice President, Finance
GRAHAM-FIELD HEALTH PRODUCTS, INC. Chief Financial Officer
(516) 582-5900
400 RABRO DRIVE EAST
Mark Kesselmen
HAUPPAUGE, NEW YORK 11788 Euromedia, Inc.
(212) 628-9866
GRAHAM-FIELD HEALTH PRODUCTS, INC.
REPORTS RECORD REVENUE AND RESULTS
FOR THE FIRST QUARTER ENDED MARCH 31, 1997
AND BIL (FAR EAST HOLDINGS) LIMITED ANNOUNCES
INTENTION TO PURCHASE ADDITIONAL SHARES OF
COMMON STOCK OF GRAHAM-FIELD IN THE OPEN MARKET
HAUPPAUGE, NEW YORK, May 1, 1997--Graham-Field Health Products, Inc. (NYSE-GFI),
a manufacturer and supplier of healthcare products, today reported record
revenues and results for the first quarter ended March 31, 1997. Revenues for
the first quarter, which included the Company's first full quarter of results
for Everest & Jennings, were $51,332,000, as compared to $27,348,000 for the
same period last year, an 88% increase. Income before income taxes was
$3,554,000 for the quarter, as compared to $928,000 for the same period last
year, a 283% increase. Net income for the quarter was $2,084,000 or $.09 per
share on 24,181,000 weighted average shares outstanding, as compared to
$510,000 or $.03 per share (excluding $.01 per share attributable to the gain
on the sale in March 1996 of the Company's Gentle Expressions(R) breast pump
product line) on 14,182,000 weighted average shares outstanding, for the same
period last year.
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Revenues for the first quarter included approximately $11.8 million attributable
to Everest & Jennings. Revenues, without Everest & Jennings, increased in excess
of 44% from the same period in the prior year. The increase in revenues,
excluding Everest & Jennings' revenues, was attributable to the continued
roll-out of the Company's innovative "GF Express" program, the expansion of our
Consolidated Advantage Program (C.A.P.), and the introduction of new product
lines.
The increase in net income is due to increased revenues, an increase in the
gross profit margin, and a decrease in selling, general and administrative
expenses, as a percentage of operating revenue. Selling, general and
administrative expenses declined as a percentage of operating revenue to 24%
from 27%. The Company's gross profit margin increased to 32% as compared to 31%
for the same period in the prior year. The increase in the gross profit margin
was primarily attributable to the improved operational efficiencies associated
with the manufacture and distribution of the Company's product lines, and
improved purchasing activities.
BIL (Far East Holdings) Limited, an affiliate of Brierley Investments Limited, a
New Zealand investment holdings company with assets of approximately $10
billion, has informed the Company that it intends to purchase additional shares
of common stock of the Company in the open market, from time to time, subject to
market conditions, in an amount such that BIL's total holdings do not exceed 49%
of the voting power of the Company's outstanding stock. Currently, BIL owns
shares of common stock representing 21% of the issued and outstanding shares of
common stock, and combined with BIL's preferred stock, approximately 34% of the
voting power
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of all outstanding shares of the Company's capital stock. In order to facilitate
BIL's open market purchases, the Board of Directors has approved an amendment to
the Company's Stockholder Agreement with BIL, to enable BIL to purchase
additional shares in the open market.
Rodney F. Price, an executive managing director of BIL and a director of the
Company, stated, "BIL believes that the current market price of the Company's
stock is undervalued and does not reflect the intrinsic value of the Company.
BIL is committed to enhancing the future growth of Graham-Field."
Irwin Selinger, Chairman of the Board and Chief Executive Officer stated, "the
Company posted internal revenue growth in excess of 44% for the quarter. We are
confident that revenue will continue to improve throughout the year. During
March and April, we concluded a number of contracts with major national and
regional accounts such as General Medical, a division of McKesson and Robbins,
Owens and Minor, Sysco Corporation and Physician Sales and Services, Inc. In
April, we signed a new strategic distribution agreement with Baxter Healthcare
Corporation and Allegiance Healthcare Corporation, which will contribute to
increased revenue growth. Two new "GF Express" facilities will be opened in
Baltimore, Maryland and Cleveland, Ohio during the second quarter of 1997. Our
Everest & Jennings acquisition has successfully been integrated in Graham-Field
and in March, we began to see revenues in Everest & Jennings begin to grow. We
are confident that Everest & Jennings' revenues will grow significantly in 1997.
On another note, we are delighted that BIL has reaffirmed its commitment as a
major stockholder of the Company and its intention to purchase additional shares
in the open market.
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We believe that our strategic partnership with BIL will significantly contribute
to the world-wide growth of the Company through BIL's alliances, knowledge of,
and presence in the European and Far Eastern markets."
Graham-Field maintains distribution and manufacturing facilities throughout the
United States, Canada, Mexico and Puerto Rico. Graham-Field manufactures,
markets and distributes more than 23,000 healthcare and rehabilitation products
for hospital, physician and home use to approximately 18,500 home healthcare,
physician, hospital supply and pharmaceutical distributors, retailers and
wholesalers.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. This press release contains forward-looking
statements based on current expectations that could be affected by the risks and
uncertainties involved in Graham-Field's business. These risks and uncertainties
include, but are not limited to, the effect of economic and market conditions,
the impact of the consolidation of health care practitioners, the impact of
health care reform, opportunities for acquisitions and Graham-Field's ability to
effectively integrate acquired companies, the acceptance and quality of software
products, acceptance and ability to manage operations in foreign markets,
possible disruptions in Graham-Field's computer systems or telephone systems,
possible increases in shipping rates or interruptions in shipping service, the
level and volatility of interest rates and currency values, the impact of
current or pending legislation and regulation, as well as the risks described
from time to time in Graham-Field's reports to the Securities and Exchange
Commission, which include Graham-Field's Annual Report on Form 10-K for the year
ended December 31, 1996 and Graham-Field's Registration Statement on Form S-4
dated as of October 18, 1996. Subsequent written or oral statements attributable
to Graham-Field or persons acting on its behalf are expressly qualified in their
entirety by the cautionary statements in this press release and those in
Graham-Field's reports previously filed with the Securities and Exchange
Commission.
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CONSOLIDATED CONDENSED BALANCE SHEETS
GRAHAM-FIELD HEALTH PRODUCTS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1997 1996
------ --------- ------------
(unaudited) (audited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents 2,141,000 $ 1,552,000
Accounts receivable - net 50,922,000 43,651,000
Inventories 49,625,000 45,810,000
Other current assets 3,649,000 3,001,000
Recoverable and prepaid income taxes 256,000 256,000
------------- -------------
TOTAL CURRENT ASSETS 106,593,000 94,270,000
PROPERTY, PLANT AND EQUIPMENT - net 11,555,000 10,771,000
EXCESS OF COST OVER NET ASSETS ACQUIRED - net 93,299,000 91,412,000
OTHER ASSETS 4,950,000 5,112,000
DEFERRED TAX ASSET 678,000 911,000
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TOTAL ASSETS $ 217,075,000 $ 202,476,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable to bank $ 33,469,000 $ 13,985,000
Current maturities of long-term debt 2,569,000 2,016,000
Accounts payable 17,181,000 20,781,000
Acceptances payable 14,800,000 19,800,000
Accrued expenses 22,226,000 25,283,000
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TOTAL CURRENT LIABILITIES 90,245,000 81,865,000
LONG-TERM DEBT 6,550,000 6,057,000
OTHER LONG-TERM LIABILITIES 1,522,000 1,752,000
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TOTAL LIABILITIES 98,317,000 89,674,000
STOCKHOLDERS' EQUITY:
Series A preferred stock
Series B preferred stock 28,200,000 28,200,000
Series C preferred stock 3,400,000 3,400,000
Common stock 475,000 467,000
Additional paid-in capital 105,421,000 101,569,000
(Deficit) (18,583,000) (20,667,000)
Cumulative translation adjustment -- (12,000)
------------- -------------
Subtotal 118,913,000 112,957,000
Notes Receivable from sale of shares (155,000) (155,000)
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TOTAL STOCKHOLDERS' EQUITY 118,758,000 112,802,000
COMMITMENTS AND CONTINGENCIES
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 217,075,000 $ 202,476,000
============= =============
</TABLE>
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CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
GRAHAM-FIELD HEALTH PRODUCTS, INC. AND SUBSIDIARIES
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------
1997 1996
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<S> <C> <C>
REVENUES:
Operations $51,204,000 $26,929,000
Interest and other income 128,000 419,000
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51,332,000 27,348,000
COST AND EXPENSES:
Cost of revenues 34,657,000 18,502,000
Selling, general and administrative 12,149,000 7,329,000
Interest expense 972,000 589,000
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47,778,000 26,420,000
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INCOME BEFORE INCOME TAXES 3,554,000 928,000
INCOME TAXES 1,470,000 418,000
----------- -----------
NET INCOME $ 2,084,000 $ 510,000
=========== ===========
PER SHARE DATA:
NET INCOME PER SHARE $ .09 $ .04
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES
OUTSTANDING 24,181,000 14,182,000
=========== ===========
</TABLE>
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