<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report: March 10, 2000
BALDWIN PIANO & ORGAN COMPANY
(Exact name of registrant as specified in its charter)
Delaware 0-14903 31-1091812
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
4680 Parkway Drive, Mason, Ohio 45040-5301
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (513) 754-4500
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
On March 10, 2000, Baldwin Piano & Organ Company (the "Company")
completed the sale of Keyboard Acceptance Corporation and Signature Leasing
Company to Deutsche Financial Services Corporation ("DFSC") (the "Subsidiary
Sale"). The Company received gross proceeds of $35.0 million. After transaction
expenses, the Company expects to net approximately $32.5 million for an
after-tax gain of $700,000, or $0.20 per share.
This transaction was first reported by the Company on Form 8-K dated
December 9, 1999.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired
Not Applicable.
(b) Pro Forma Financial Information
The following unaudited pro forma balance sheet as of December
31, 1999 estimates the pro forma effect of the Subsidiary Sale to DFSC
as if the Subsidiary Sale and the transactions contemplated in the
related Stock Purchase Agreement had been consummated on December 31,
1999. The following unaudited pro forma statement of operations for the
year ended December 31, 1999 estimates the pro forma statement of
operations based on the pro forma effects of the Subsidiary Sale as if
such sale had occurred on January 1, 1999. The pro forma adjustments
are described in the following notes and are based upon available
information and certain assumptions that the Company believes are
reasonable. The pro forma data may not be indicative of the results of
operations and financial position of the Company, as it may be in the
future or as it might have been had the transaction been consummated on
the respective dates assumed.
<PAGE> 3
Baldwin Piano & Organ Company and Subsidiaries
Pro Forma Consolidated Balance Sheet
December 31, 1999 (In thousands)
<TABLE>
<CAPTION>
Pro Forma
Historical Pro Forma Balance Sheet
Assets 1999 Adjustments 1999
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current assets:
Cash $ 1,705 $ $ 1,705
Receivables, net 11,703 11,703
Installment receivables retained 5,344 5,344
Inventories 38,786 38,786
Deferred income taxes 9,838 9,838
Other current assets 2,974 (802) 2,172
Net assets of discontinued operations (1) 21,748 (21,748) --
- --------------------------------------------------------------------------------------------------------------------
Total current assets 92,098 (22,550) 69,548
- --------------------------------------------------------------------------------------------------------------------
Property, plant and equipment, net 20,985 20,985
Deferred income taxes 874 874
Other assets 14,035 14,035
- --------------------------------------------------------------------------------------------------------------------
Total assets $127,992 (22,550) 105,442
====================================================================================================================
Liabilities and Shareholders' Equity
- --------------------------------------------------------------------------------------------------------------------
Current liabilities:
Accounts payable (2) $ 21,541 $(11,000) 10,541
Current portion of long-term debt (2) 12,765 (1,000) 11,765
Income taxes payable 1,855 370 2,225
Accrued liabilities (4) 3,393 3,480 6,873
- --------------------------------------------------------------------------------------------------------------------
Total current liabilities 39,554 (8,150) 31,404
- --------------------------------------------------------------------------------------------------------------------
Long-term debt, less current portion (2) (3) 32,582 (15,100) 17,482
Other liabilities 2,168 2,168
- --------------------------------------------------------------------------------------------------------------------
Total liabilities 74,304 $(23,250) 51,054
- --------------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Common stock (4,220,694 issued shares
in 1999) 42 42
Additional paid-in capital 12,635 12,635
Accumulated other comprehensive income (loss) (270) (270)
Retained earnings 47,777 700 48,477
Less cost of treasury shares (767,868 shares
in 1999) (6,496) (6,496)
- --------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 53,688 700 54,388
- --------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $127,992 (22,550) $105,442
====================================================================================================================
</TABLE>
See accompanying Footnotes for Pro Forma Adjustments.
<PAGE> 4
Footnotes to Pro Forma Adjustments (Amounts in thousands)
1. Net assets of discontinued operations consisted of the following:
<TABLE>
<S> <C>
Installment receivables, net $15,520
Other current assets 4,541
Servicing asset 3,339
Liabilities (1,652)
-------
$21,748
-------
</TABLE>
2. Net proceeds from the sale of Retail Finance subsidiaries of $32,500
plus transaction expenses paid prior to closing of $802 were used to
reduce debt by $22,302 and certain trade payables by $11,000.
3. At closing, in accordance with the Stock Purchase Agreement, Baldwin
repurchased certain past due accounts, installment receivables of
$5,344 and repossessed inventory of $858, with a Promissory Note to
DFSC with an initial amount of $6,202.
4. Accrued liabilities includes the contingent liabilities primarily
related to future losses estimated for the past due installment
contracts to be purchased for the next two years of $3,480.
5. The pro forma interest expense adjustment assumes that debt is reduced
by $16,100 (see note 2) with an average interest rate during the year
of 8.5%.
<PAGE> 5
Baldwin Piano & Organ Company and Subsidiaries
Pro Forma Consolidated Statement of Operations
Year ended December 31, 1999 (In thousands, except earnings per share)
<TABLE>
<CAPTION>
Historical Pro Forma
1999 Adjustments Pro Forma
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $124,289 $ $124,289
Cost of goods sold 120,902 120,902
- --------------------------------------------------------------------------------------------------------------------------
Gross profit 3,387 3,387
Other operating income, net 6,896 6,896
- --------------------------------------------------------------------------------------------------------------------------
10,283 10,283
Selling, general and administrative 23,586 23,586
- --------------------------------------------------------------------------------------------------------------------------
Operating profit (loss) (13,303) (13,303)
Interest expense (5) 3,519 1,369 2,150
- --------------------------------------------------------------------------------------------------------------------------
Earnings (loss) before income taxes (16,822) 1,369 (15,453)
Income tax expense (benefit) (7,221) 520 (6,701)
- --------------------------------------------------------------------------------------------------------------------------
Net earnings (loss) from continuing operations (9,601) 849 (8,752)
- --------------------------------------------------------------------------------------------------------------------------
Basic earnings (loss) per share from continuing operations
Earnings (loss) from continuing operations $ (2.78) $ 0.25 $ (2.53)
- --------------------------------------------------------------------------------------------------------------------------
Weighted average number of common shares 3,455 3,455 3,455
- --------------------------------------------------------------------------------------------------------------------------
Diluted earnings (loss) per share from continuing operations
Earnings (loss) from continuing operations $ (2.78) $ 0.25 $ (2.53)
Weighted average number of common and
common equivalent shares 3,455 3,455 3,455
==========================================================================================================================
</TABLE>
See accompanying Footnotes for Pro Forma Adjustments.
<PAGE> 6
(c) Exhibits
99.1 Stock Purchase Agreement dated December 8, 1999*
99.2 Press Release dated March 13, 2000
- ----------
* Incorporated by reference to the Company's Form 8-K dated December 9, 2000.
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.
BALDWIN PIANO & ORGAN COMPANY
(Registrant)
Date: March 24, 2000 By: /s/ Duane D. Kimble
----------------------------------------
Duane D. Kimble
Chief Financial Officer
<PAGE> 1
EXHIBIT 99.2
CONTACTS: Duane Kimble Ken Di Paola or Joel Pomerantz
Baldwin Piano & Organ Company The Dilenschneider Group
(513) 754-4647 (212) 922-0900
BALDWIN PIANO COMPLETES SALE OF
RETAIL FINANCING UNITS TO DEUTSCHE FINANCIAL SERVICES
SALE WILL SHARPLY REDUCE DEBT AND IMPROVE FOCUS ON
BALDWIN'S CORE PIANO AND CONTRACT ELECTRONICS BUSINESSES
Mason, Ohio, March 13, 2000 -- Baldwin Piano & Organ Company (NASDAQ:
BPAO) today announced that it has completed the sale of its two wholly owned
retail financing units -- Keyboard Acceptance Corporation (KAC) and Signature
Leasing Corporation (SLC)- to Deutsche Financial Services Corporation (DFS).
Baldwin received gross proceeds of $35 million. After transaction expenses,
Baldwin expects to net approximately $32.5 million for an after-tax gain of
$700,000, or 20 cents per share.
Karen L. Hendricks, Chairman, President, and Chief Executive Office of
Baldwin said, "With this sale completed, Baldwin can focus on its two
manufacturing-based businesses, pianos and contract electronics. Debt reduction
and a significant deleveraging of our balance sheet will benefit our remaining
businesses and our shareholders. Looking ahead, we feel we have an aggressive
but realistic business plan that is clearly focused on returning the company to
profitability."
Key elements of the transaction include commitments from Baldwin to
continue to use KAC and SLC to service the retail financing needs of its
company-owned stores and to use Baldwin's retail outlets to sell pianos
repossessed by KAC and SLC. Baldwin also agreed to retain a contingent
obligation for certain past-due installment receivables for a period of two
years.
-more-
<PAGE> 2
-2-
Baldwin Piano & Organ Company has marketed keyboard musical products
for over 138 years. Baldwin, maker of America's best selling pianos, also
manufactures electronic and electro-mechanical components for Original Equipment
Manufacturers.
Deutsche Financial Services Corporation, a unit of Deutsche Bank Group,
is an international leader in providing financing and servicing programs that
facilitate the product distribution and sales process. Programs and services
include inventory financing, middle market secured lending, leveraged
acquisition financing, non-funded service programs, consumer and commercial
end-user financing, franchise financing, leasing, extended warranty programs and
related financial services.
Deutsche Financial Services Corporation, based in St. Louis, Missouri,
operates across the United States, Canada, Europe and Puerto Rico. Deutsche Bank
Group is the world's largest financial institution with assets in excess of $840
billion on December 31, 1999. Additional information about DFS may be found on
the World Wide Web at http://www.dfsc.com.
# # #
"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995: This release contains forward-looking statements that are subject to risks
and uncertainties, including, but not limited to, the impact of competitive
products and pricing, product demand and market acceptance, reliance on key
strategic alliances, fluctuations in operating results and other risks detailed
from time to time in the company's filings with the Securities and Exchange
Commission.
