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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8 - K/A
AMENDMENT TO APPLICATION OR REPORT
Filed pursuant to Section 12, 13 or 15 (d) of
THE SECURITIES EXCHANGE ACT OF 1934
MEDICAL ACTION INDUSTRIES INC.
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(Exact name of registrant as specified in charter)
AMENDMENT NO. 3
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its July 19, 1999 Current Report on
Form 8-K as set forth in the pages attached hereto:
Item 7 - Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Pro Forma Combined Balance Sheets at December 31, 1998
(Medical Action Industries Inc.) and December 31, 1998
(Acquired Business)
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
MEDICAL ACTION INDUSTRIES INC.
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(Registrant)
Date: September 14, 1999 By: /s/ Richard G. Satin
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Richard G. Satin
(Principal Accounting Officer)
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Unaudited Pro Forma Financial Data
On March 22, 1999, Registrant, pursuant to an Asset Purchase Agreement
dated as of March 9, 1999 between the Registrant and Acme United Corporation, a
Connecticut corporation ("Acme"), acquired certain of the assets relating to the
medical products business of Acme.
The Purchase price for the assets acquired was approximately $8,484,000
of which $7,476,000 was paid at or prior to the closing, with the balance paid
over the three (3) month period ending on or about June 15, 1999, which includes
the Registrant issuing to Acme at closing a warrant (the "Warrant") to purchase
50,000 shares of its common stock at a purchase price of $2.84 per share. The
aggregate fair value of the Warrant, $73,500, has been estimated using the Black
Scholes Option Pricing Model.
The assets acquired included inventory, factory and office equipment,
trademarks, patents, and a patent application used in the manufacture of Acme's
medical products, including (i) kit and tray products, including suture removal
trays, I.V. start kits, and central line trays; (ii) net, padding, wound care
and antiseptic products, including Acu-Dyne(R), an antimicrobial solution of
povidone iodine prep swabs, and a line of proprietary Tubegauze(R) elastic
netting used in dressing retention; and (iii) instrument packs, which include a
broad line of sterile instruments, such as hemostats, scalpels and forceps
(hereinafter the "Products").
The factory and office equipment acquired by the Registrant for the
manufacture of the Products will continue to be used by the Registrant in its
facility in Arden, North Carolina for the manufacture of the Products.
The acquisition of the Acme business will be accounted for as
a purchase pursuant to Accounting Principles Board Opinion No. 16, and
accordingly, the Registrant has allocated the purchase price to its fair market
value of the assets acquired as follows:
Inventory $2,147,000
Factory and Office Equipment 336,000
Trademarks 447,000
Goodwill 5,554,000
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$8,484,000
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Goodwill and trademarks will be amortized over a twenty (20) year
period.
The Registrant utilized the funds available under its Revolving Credit
Note and Loan Agreement (the "Loan Agreement") with European American Bank in
order to satisfy the purchase price. The funds provided under the Loan Agreement
were made in the ordinary course of business.
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The following unaudited pro forma balance sheet combines the financial
position of Medical Action Industries Inc. (the "Company") as of December 31,
1998 and the net assets acquired of the medical business of Acme United
Corporation as of December 31, 1998 as if the Company had acquired the net
assets on December 31, 1998. A pro forma statement of operations has not been
presented as certain historical operating results of the medical business of
Acme United Corporation is not available.
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Medical Action Industries Inc.
Pro Forma Balance Sheets
December 31, 1998
(unaudited)
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<CAPTION>
Medical Action Medical Business of Pro Forma
Industries Inc. Acme United Corp. Pro Forma Combined
Description December 31, 1998 December 31, 1998 Adjustments December 31, 1998
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<S> <C> <C> <C> <C>
Assets
Current Assets:
Cash $ 550,000 $ $ 550,000
Accounts receivable, net 7,107,000 7,107,000
Inventories 12,228,000 2,658,000 Note 1 (510,637) 14,375,363
Prepaid Expenses 400,000 400,000
Other current Assets 60,000 60,000
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Total current assets 20,345,000 2,658,000 (510,637) 22,492,363
Property and equipment, net 7,825,000 241,000 Note 2 95,250 8,161,250
Investment in Joint Ventures 345,000 345,000
Due from Officers 484,000 484,000
Intangibles 2,291,000 Note 3 6,000,334 8,291,334
Patents - 1,000 Note 3 (1,000) -
Other Assets 126,000 126,000
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Total Assets $ 31,416,000 $ 2,900,000 $ 5,583,947 $ 39,899,947
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Liabilities and Shareholders' Equity
Current liabilities
Accounts Payable $ 1,023,000 1,023,000
Accrued expenses, payroll and payroll taxes 1,240,000 1,240,000
Accrued income taxes 65,000 65,000
Current portion of capital lease obligations 148,000 148,000
Notes payable to bank 4,982,000 4,982,000
Other note payable - Note 4 $ 1,000,000 1,000,000
Current portion of long-term debt 360,000 360,000
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Total current liabilities 7,818,000 - 1,000,000 8,818,000
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Deferred income taxes 355,000 355,000
Capital lease obligations, less current portion 327,000 327,000
Long-term debt, less current portion 5,430,000 Note 5 7,410,447 12,840,447
Shareholders' equity:
Common stock 9,000 9,000
Additional paid in capital 9,151,000 2,900,000 Note 6 (2,826,500) 9,224,500
Retained earnings 8,326,000 8,326,000
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Total Shareholders' equity 17,486,000 2,900,000 (2,826,500) 17,559,500
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Total liabilities and shareholders' equity $ 31,416,000 2,900,000 $ 5,583,947 $ 39,899,947
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Medical Action Industries Inc.
Notes to Pro Forma Balance Sheet
December 31, 1998
(unaudited)
1. Adjustment to record the estimated fair market value of inventories acquired.
2. Adjustment of fixed assets acquired to estimate fair market value on date of
acquisition.
3. To record the value of intangible assets acquired consisting of trademarks
and the excess cost of net assets acquired.
4. In connection with the acquisition, the Company withheld $1,000,000 of the
purchase price, subject to adjustment as defined in a transition plan. Such
amount is expected to be paid in installments through June 15, 1999.
5. To reflect the cash purchase price of Acme, which was financed by additional
long term borrowings under the Company's credit facility.
6. Reflects elimination of the excess net assets over liabilities acquired and
records the estimated fair value of warrants, estimated using the Black
Scholes Option Pricing Model, to purchase 50,000 shares of the Company's
common stock at an exercise price of $2.84 per share.
