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): November 1, 1996
Oak Industries Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-4474 36-1569000
(State or other juris- (Commission File (IRS Employer
diction of incorporation) Number) Identification No.)
1000 Winter Street
Waltham, MA 02154
(Address of principal executive offices) ( Zip Code)
Registrant's telephone number, including area code 617-890-0400
Same
(Former name or former address, if changed since last report.)
ITEM 2. ACQUISITION OF ASSETS
On November 1, 1996, pursuant to the terms of a Stockholders Agreement
dated December 22, 1992 (the "Stockholders Agreement") by and among Oak
Industries Inc. (the "Company"), Connector Holding Company ("Connector"),
and each of Tyler Capital Fund, L.P., Tyler Massachusetts, L.P., Tyler
International, L.P. - II, BCIP Associates and BCIP Trust Associates, L.P.
(collectively, the "Bain Affiliates") and Bain Venture Capital, the
Company purchased all of the shares of common stock, $.01 par value, of
Connector owned by the Bain Affiliates (the "Shares"). The Company
purchased the Shares, which constituted 20% of the outstanding stock of
Connector, for an aggregate purchase price of approximately $95,000,000,
including transaction expenses. As a result of the purchase, Connector is
a wholly-owned subsidiary of the Company. The purchase price for the
shares was determined through negotiations conducted by the parties with
the involvement of investment bankers pursuant to procedures set forth in
the Stockholders Agreement. The transaction was financed with borrowings
from a new $300 million unsecured revolving credit agreement entered into
by the Company, also on November 1, 1996, with certain lenders from time
to time a party thereto, and the Chase Manhattan Bank, as Administrative
Agent and Issuing Bank.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
The following financial statements, pro forma financial information and
exhibits are filed as part of this report.
(A) Financial Statements of Businesses Acquired
N/A
(B) Pro forma financial information required pursuant to Article 11 of
Regulation S-X:
Item
Oak Industries Inc. Pro Forma Condensed Combined
Financial Statements (Unaudited)
Pro Forma Condensed Combined Balance Sheet - September 30, 1996
Pro Forma Condensed Combined Statement of Operations - year ended
December 31, 1995
Pro Forma Condensed Combined Statement of Operations -nine months
ended September 30, 1996
Notes to Pro Forma Condensed Combined Financial Statements
The unaudited pro forma condensed combined balance sheet as of
September
30, 1996 gives effect to the purchase of the 20% interest in Connector
from Bain by the Company as if the acquisition had occurred on September
30, 1996 and the unaudited pro forma condensed combined statements of
operations for the year ended December 31, 1995 and nine-months ended
September 30, 1996 give effect to the acquisition as if the acquisition
had occurred on January 1, 1995 and January 1, 1996, respectively. The
pro forma information is based on historical financial statements of the
Company after giving effect to the proposed transaction using the purchase
method of accounting and the assumptions and adjustments described in the
accompanying notes to the pro forma financial statements.
These pro forma statements may not be indicative of the results that
actually would have occurred if the combination had been in effect on the
date indicated or which may be obtained in the future. The pro forma
financial statements should be read in conjunction with the audited
financial statements of Oak Industries Inc.
<TABLE>
<CAPTION>
PRO FORMA CONDENSED COMBINED BALANCE SHEET
September 30, 1996
(Dollars in thousands)
(Unaudited)
ASSETS
<S>
<C>Pro Forma <C>
Adjustments Pro Forma
<C>Oak Industries Inc. Increase (Decrease) Combined
------------------- ------------------ ---------
Current assets:
Cash and cash equivalents $ 10,623 $ - $ 10,623
Receivables, less reserve 44,829 - 44,829
Inventories 51,946 625 (b) 52,571
Deferred income taxes 12,829 - 12,829
Other current assets 3,489 - 3,489
---------- --------- ----------
Total current assets 123,716 625 124,341
Plant & equipment, net 64,275 - 64,275
Deferred income taxes 8,392 - 8,392
Goodwill and other intangible assets, net 76,663 72,444 (b) 149,107
Investments in affiliates 8,356 - 8,356
Net assets of discontinued operations 8,727 - 8,727
Other assets 6,458 - 6,458
---------- --------- -----------
Total assets $ 296,587 $ 73,069 $ 369,656
========== ========= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 5,098 $ - $ 5,098
Accounts payable 14,119 - 14,119
Accrued liabilities 27,393 - 27,393
---------- --------- -----------
Total current liabilities 46,610 - 46,610
Other liabilities 7,546 - 7,546
Long-term debt 38,416 95,000 (a) 133,416
Minority interest 43,254 (21,931) (a) 21,323
Stockholders' equity:
Common stock 182 - 182
Additional paid-in capital 289,589 - 289,589
Accumulated earnings deficit (127,215) - (127,215)
Other (1,795) - (1,795)
---------- --------- ----------
Total liabilities and
stockholders' equity $ 296,587 $ 73,069 $ 369,656
=========== ========== ===========
</TABLE>
See accompanying notes to pro forma condensed consolidated financial
statements
<TABLE>
<CAPTION>
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
Year Ended December 31, 1995
(Dollars in thousands, except per share data)
(Unaudited)
<S>
<C>Pro Forma
Adjustments <C>Pro Forma
<C>Oak Industries Inc. Increase (Decrease) Combined
Net sales $ 255,364 $ - $ 255,364
Cost of sales (154,281) - (154,281)
----------- ------- -----------
Gross profit 101,083 - 101,083
Selling, general and administrative
expenses (48,108) (2,188) (c) (50,296)
Purchased in-process research and
development (80,872) - (80,872)
----------- ------- -----------
Operating income (loss) (27,897) (2,188) (30,085)
Interest expense (6,273) (6,649) (c) (12,922)
Interest income 1,661 - 1,661
Equity in net income of affiliated
companies 1,583 - 1,583
----------- ------- ------------
Loss from continuing operations
before income taxes and minority interest (30,926) (8,837) (39,763)
Income taxes (11,199) 1,480 (c) (9,719)
Minority interest in net income of
subsidiaries (10,858) 5,637 (c) (5,221)
----------- ------- ------------
Loss from continuing
operations (52,983) (1,720) (54,703)
Income from discontinued operations,
net of income taxes 2,469 - 2,469
----------- ---------- -----------
Net loss before extraordinary
charge (50,514) (1,720) (52,234)
Extraordinary charge for early extinguishment
of debt, net of income taxes and
minority interest (1,610) - (1,610)
----------- ---------- -----------
Net loss $ (52,124) $ (1,720) $ (53,844)
=========== ========== ===========
Income (loss) per common share:
Continuing operations $ (2.87) $ (2.96)
Discontinued operations .13 .13
Extraordinary charge (.09) (.09)
----------- -----------
Net loss $ (2.83) $ (2.92)
============ ===========
Weighted average common shares
outstanding 18,423 18,423
============ ===========
</TABLE>
See accompanying notes to pro forma condensed consolidated financial
statements.
<TABLE>
<CAPTION>
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
Nine Months Ended September 30, 1996
(Dollars in thousands, except per share data)
(Unaudited)
<C>Pro Forma
Adjustments <C>ProForma
<C>Oak Industries Inc. Increase (Decrease) Combined
<S>
Net sales $ 233,413 $ - $ 233,413
Cost of sales (139,826) - (139,826)
----------- ----- -----------
Gross profit 93,587 - 93,587
Selling, general and administrative
expenses (47,264) (1,582) (c) (48,846)
----------- ------ -------
Operating income 46,323 (1,582) 44,741
Interest expense (4,100) (4,541) (c) (8,641)
Interest income 374 - 374
Equity in net loss of affiliated
companies (1,065) - (1,065)
Gain on sale of equity investments 21,502 - 21,502
----------- ----- -----------
Income from continuing operations
before income taxes and minority interest 63,034 (6,123) 56,911
Income taxes (23,552) 1,726 (c) (21,826)
Minority interest in net income of
subsidiaries (6,611) 3,499 (c) (3,112)
----------- ------ -----------
Income from continuing
operations 32,871 (898) 31,973
Income from discontinued operations,
net of income taxes 1,442 - 1,442
----------- ------ -----------
Net income $ 34,313 $ (898) $ 33,415
=========== ======== ===========
Income per common share:
Continuing operations $ 1.76 $ 1.71
Discontinued operations .08 .08
----------- -----------
Net income $ 1.84 $ 1.79
=========== ===========
Weighted average common shares
outstanding 18,612 18,612
=========== ===========
</TABLE>
See accompanying notes to pro forma condensed consolidated financial
statements.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
(a) The following pro forma adjustments reflect the Company's purchase of
the 20% interest in Connector owned by Bain and the consolidation by the
Company of this acquisition.
Long-term debt $ 95,000
Minority interest elimination (21,931)
----------
Investment in Connector $ 73,069
==========
(b) The following pro forma adjustments are made to reflect estimated fair
value adjustments at September 30, 1996 and to eliminate the Company's
investment in Connector.
Fair value adjustments:
Increase carrying amount of inventories $ 625
Increase carrying amount of goodwill 72,444
--------
Investment in Connector $ 73,069
========
(c) The following pro forma adjustments are incorporated in the pro forma
condensed combined statements of operations:
Year Ended Nine Months Ended
December 31, September 30,
1995 1996
------------- -----------------
[Increase (Decrease) Income]
1. Increase in interest expense on new
borrowings at rates ranging from
5.56% to 6.94% in 1995 and from
6.06% to 6.28% in 1996. $ (6,649) $ (4,541)
2. Increase in amortization resulting
from adjustments to carrying amounts
of goodwill (2,188) (1,582)
3. Decrease in income taxes after taking into
effect the above adjustments 1,480 1,726
4. Decrease in minority interest in net income
of subsidiaries subsequent to purchase
of Connector 5,637 3,499
--------- -------
$ (1,720) $ (898)
========= ========
(d) Not included in the pro forma condensed combined statements of
operations are two nonrecurring charges. The first charge is to cost of
sales resulting from the adjustment to increase inventories to fair value.
This charge, which is estimated to be $625,000, will flow through cost of
sales as the inventory is assumed to be sold. The second charge, which is
estimated to be $949,000, relates to the early extinguishment of debt.
Both will be reported as unusual items in the fourth quarter of 1996.
(C) Exhibits
2.1 Stockholders Agreement dated as of December 22, 1992 by and among
Connector Holding Company, Oak Industries Inc., Tyler Capital Fund, L.P.,
Tyler Massachusetts, L.P., Tyler International, L.P. - II, BCIP
Associates, BCIP Trust Associates, and, solely as to Sections 1.5 and 11
thereof, Bain Venture Capital, filed as Exhibit 2.1 to the Company's
Amendment No. 2 to Form S-3 dated December 16, 1993 is incorporated herein
by this reference.
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 thereunto duly authorized.
OAK INDUSTRIES INC.
Date: November 15, 1996 /s/ Thomas F. Sheehan
---------------------
Thomas F. Sheehan
Vice President and Controller
