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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
------------
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 4, 1997
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AMERICAN BUILDINGS COMPANY
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(Exact Name of Registrant as Specified in its Charter)
DELAWARE 0-23688 63-0931058
- ---------------------------- ----------- -------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
P.O. Box 800, State Docks Road, Eufaula, Alabama 36027
- ------------------------------------------------ ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (334) 687-2032
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NOT APPLICABLE
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(Former Name or Former Address, if Changed Since Last Report)
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<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 4, 1997, American Buildings Company (the "Company") acquired
substantially all the assets, and assumed certain liabilities, of the Windsor
Door division (the "Division") of United Dominion Industries, Inc. The Division,
headquartered in Little Rock, Arkansas, is the industry's fourth largest
producer/marketer of steel sectional upward acting doors for residential and
commercial applications. The Division also produces rolling steel doors for
industrial uses and has a contract manufacturing business specializing in metal
stampings. Door products are sold through independent distributors and
company-owned distribution centers. The Division operates two plants in Little
Rock and a plant in Marysville, California, and has 29 company-owned
distribution centers.
The Division had sales of approximately $94 million for the trailing 12
months ended September 30, 1997. The purchase price for the Division was $59.5
million in cash, subject to a post-closing adjustment based on the Division's
net operating working capital on the closing date. The Company utilized
borrowings under its new credit facility to pay the purchase price for the
Division.
ITEM 5. OTHER EVENTS.
On December 4, 1997, the Company entered into a $115 million revolving
credit and term loan facility with Canadian Imperial Bank of Commerce, as
Administrative Agent, and certain other lenders (the "Credit Facility"). The
Credit Facility consists of a $40 million term loan facility (the "Term
Facility") and a $75 million revolving credit facility, including a $30 million
letter of credit subfacility and a $5 million swingline subfacility (the
"Revolving Facility"). The Term Facility, all of which was borrowed on December
4, 1997 to pay a portion of the purchase price for the Division, matures on
January 3, 2003, and will be amortized in 10 consecutive semiannual
installments, commencing July 3, 1998, as follows: six installments of $2
million each, then two installments of $5 million each and then two installments
of $9 million each. The Revolving Facility matures on January 4, 2003. The
Credit Facility bears interest at a rate equal to, at the option of the Company,
either (i) in the case of Eurodollar loans, the sum of (x) the interest rate in
the London interbank market for loans in an amount substantially equal to the
amount of borrowing and for the period of borrowing selected by the Company and
(y) a margin of between one-half percent and one and one-half percent (depending
on the Company's consolidated leverage ratio (as defined in the credit
agreement) and consolidated interest coverage ratio (as defined in the credit
agreement)) or (ii) the higher of (a) Canadian Imperial Bank of Commerce's prime
or base rate or (b) one-half percent plus the latest overnight federal funds
rate. The Credit Facility may be prepaid at any time in whole or in part without
penalty, and must be prepaid to the extent of certain equity or asset sales.
The Credit Facility limits the Company's ability to incur debt, to sell or
dispose of assets, to create or incur liens, to make additional acquisitions, to
pay dividends, to purchase or redeem the Company's stock and to merge or
consolidate with any other
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<PAGE>
person. In addition, the Credit Facility requires that the Company meet certain
financial ratios, and provides the banks with the right to require the payment
of all amounts outstanding under the facility, and to terminate all commitments
thereunder, if there is a change in control of the Company. The Credit Facility
is guaranteed by all of the Company's domestic subsidiaries and secured by the
assets of the Company and its domestic subsidiaries.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
The balance sheets of Windsor Door (a Division of United
Dominion Industries, Inc.) as of September 27, 1997 and
December 28, 1996, and the related statements of operations
and division equity and cash flows for the nine months ended
September 27, 1997 and years ended December 28, 1996 and
December 30, 1995, and the notes thereto, and the report of
KPMG Peat Marwick LLP, are included herein.
(b) PRO FORMA FINANCIAL INFORMATION.
American Building Company's unaudited pro forma condensed
combined balance sheet at September 30, 1997 and statement of
operations for the year ended December 31, 1996 and the nine
months ended September 30, 1997, reflecting the acquisition of
the Division, are included herein.
(c) EXHIBITS.
2.1 Agreement of Purchase and Sale of Assets, dated as of
October 24, 1997, by and between Windsor Door, Inc., as
Purchaser, and United Dominion Industries, Inc. and
WCGD, Inc., as Seller (incorporated herein by reference
to Exhibit 2.0 to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997).
2.2 Amendment to Agreement of Purchase and Sale of Assets,
dated November 19, 1997, between Windsor Door, Inc. and
United Dominion Industries, Inc. and WCGD, Inc.*
10.1 Credit Agreement, dated as of December 4, 1997, among
American Buildings Company, as Borrower, the several
lenders from time to time party hereto, and Canadian
Imperial Bank of Commerce, as Administrative Agent.*
10.2 First Amendment, dated as of December 15, 1997, to the
Credit Agreement, dated as of December 4, 1997, among
American Buildings Company, as Borrower, the several
lenders from time to
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<PAGE>
time party hereto, and Canadian Imperial Bank of
Commerce, as Administrative Agent.*
10.3 Guarantee and Collateral Agreement, dated as of
December 4, 1997, made by American Buildings Company
and certain of its subsidiaries in favor of Canadian
Imperial Bank of Commerce, as Administrative Agent.*
10.4 Mortgage from American Buildings Company, Mortgagor, to
Canadian Imperial Bank of Commerce, Mortgagee (Eufaula,
Alabama).*
10.5 Mortgage from American Buildings Company, Mortgagor, to
Canadian Imperial Bank of Commerce, Mortgagee
(Fairfield, Alabama).*
10.6 Mortgage from American Buildings Company, Mortgagor, to
Canadian Imperial Bank of Commerce, Mortgagee (El Paso,
Illinois).*
10.7 Mortgage from American Buildings Company, Mortgagor, to
Canadian Imperial Bank of Commerce, Mortgagee (Carson
City, Nevada).*
10.8 Mortgage from American Buildings Company, Mortgagor, to
Canadian Imperial Bank of Commerce, Mortgagee (La
Crosse, Virginia).*
10.9 Mortgage from AMT/Beaman Corporation, Mortgagor, to
Canadian Imperial Bank of Commerce, Mortgagee (Liberty,
North Carolina).*
10.10 Mortgage from Windsor Door, Inc., Mortgagor, to
Canadian Imperial Bank of Commerce, Mortgagee (Little
Rock, Arkansas).*
10.11 Mortgage from Windsor Door, Inc., Mortgagor, to
Canadian Imperial Bank of Commerce, Mortgagee
(Oliverhurst, California).*
23. Consent of KPMG Peat Marwick LLP.
----------
* Filed as an exhibit to the Company's Current Report on Form
8-K dated December 4, 1997 and filed December 18, 1997.
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<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
United Dominion Industries, Inc.:
We have audited the accompanying balance sheets of Windsor Door (a Division of
United Dominion Industries, Inc.) as of September 27, 1997 and December 28,
1996, and the related statements of operations and division equity and cash
flows for the nine months ended September 27, 1997 and years ended December 28,
1996 and December 30, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Windsor Door (a Division of
United Dominion Industries, Inc.) as of September 27, 1997 and December 28,
1996, and the results of its operations and its cash flows for the nine months
ended September 27, 1997 and years ended December 28, 1996 and December 30,
1995, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Little Rock, Arkansas
January 9, 1998
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<TABLE>
WINDSOR DOOR
(A DIVISION OF UNITED DOMINION
INDUSTRIES, INC.)
Balance Sheets
September 27, 1997 and December 28, 1996
<CAPTION>
ASSETS 1997 1996
------- ----------- ----------
<S> <C> <C>
Current assets:
Cash (note 5) $ 540,891 -
Accounts receivable, less allowance for doubtful
accounts of $674,112 in 1997 and $496,966
in 1996 15,990,701 14,378,579
Inventories (note 3) 9,902,872 9,926,713
Notes receivable 417,769 463,532
Prepaid expenses and other current assets 310,248 764,176
Deferred tax assets (note 6) 819,183 673,371
----------- ----------
Total current assets 27,981,664 26,206,371
Property, plant and equipment, net (note 4) 16,087,073 15,807,580
Goodwill, net of accumulated amortization of $1,380,282
in 1997 and $1,186,680 in 1996 (note 2) 9,160,707 9,354,309
Deferred tax assets (note 6) 1,099,791 1,205,880
Other noncurrent assets 137,518 165,385
----------- ----------
$54,466,753 52,739,525
=========== ==========
LIABILITIES AND DIVISION EQUITY
Current liabilities:
Accounts payable 9,427,271 9,500,485
Accrued salaries and wages 1,148,794 1,609,782
Other accrued expenses 742,054 658,769
----------- ----------
Total current liabilities 11,318,119 11,769,036
Division equity (notes 2 and 5) 43,148,634 40,970,489
Commitments and contingencies (notes 8 and 9)
----------- ----------
$54,466,753 52,739,525
=========== ==========
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
<TABLE>
<CAPTION>
WINDSOR DOOR
(A DIVISION OF UNITED DOMINION
INDUSTRIES, INC.)
Statements of Operations and Division Equity
Nine months ended September 27, 1997 and
years ended December 28, 1996 and December 30, 1995
1997 1996 1995
----------- ---------- ----------
<S> <C> <C> <C>
Net sales (note 2) $70,323,520 87,094,385 74,686,853
Cost of goods sold (note 8) 60,309,973 73,408,092 62,732,870
----------- ---------- ----------
Gross profit 10,013,547 13,686,293 11,953,983
Selling, general and administrative expenses 6,860,711 9,161,176 8,303,373
----------- ---------- ----------
Operating income 3,152,836 4,525,117 3,650,610
Other income:
Interest income 107,902 99,235 101,984
Other, net 61,743 13,786 267,421
----------- ---------- ----------
Income before income taxes 3,322,481 4,638,138 4,020,015
Income tax expense (note 6) 1,394,468 1,891,033 1,668,356
----------- ---------- ----------
Net income (note 2) 1,928,013 2,747,105 2,351,659
Division equity at beginning of period 40,970,489 39,464,023 36,690,041
Net decrease (increase) in advances to
parent (note 5) 250,132 (4,721,837) (2,357,238)
Acquired assets contributed by parent (note 2) - 3,481,198 2,779,561
----------- ---------- ----------
Division equity at end of period $43,148,634 40,970,489 39,464,023
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
<TABLE>
<CAPTION>
WINDSOR DOOR
(A DIVISION OF UNITED DOMINION
INDUSTRIES, INC.)
Statements of Cash Flows
Nine months ended September 27, 1997 and
years ended December 28, 1996 and December 30, 1995
1997 1996 1995
----------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 1,928,013 2,747,105 2,351,659
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for doubtful accounts 366,150 346,000 275,904
Provision for obsolete inventory 409,737 208,312 30,212
Provision for deferred taxes (39,723) (125,126) 50,011
Depreciation and amortization 1,695,054 2,335,985 2,381,075
Loss on disposal of property and equipment 89,645 37,432 8,592
Changes in operating assets and liabilities:
Accounts and notes receivable (1,932,509) (2,126,530) (298,796)
Inventories (385,896) 726,196 104,966
Prepaid expenses and other current
and noncurrent assets 481,795 (231,043) (161,973)
Total current liabilities (450,917) 2,805,855 (320,763)
----------- ---------- ----------
Net cash provided by operating
activities 2,161,349 6,724,186 4,420,887
----------- ---------- ----------
Cash flows from investing activities:
Purchases of property and equipment (2,009,244) (2,117,266) (2,177,078)
Proceeds from disposal of property
and equipment 138,654 114,917 113,429
----------- ---------- ----------
Net cash used in investing
activities (1,870,590) (2,002,349) (2,063,649)
----------- ---------- ----------
Cash flows from financing activities - net decrease
(increase) in advances to parent (note 5) 250,132 (4,721,837) (2,357,238)
----------- ---------- ----------
Net change in cash 540,891 - -
Cash at beginning of year - - -
Cash at end of year $ 540,891 - -
=========== ========== ==========
Supplemental disclosure of cash flow information:
Cash received during the year for interest $ (107,902) (99,235) (101,984)
=========== ========== ==========
Acquired assets contributed by parent (note 2) $ - 3,481,198 2,779,561
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
WINDSOR DOOR
(A DIVISION OF UNITED DOMINION
INDUSTRIES, INC.)
Notes to Financial Statements
September 27, 1997 and December 28, 1996
(1) Summary of Significant Accounting Policies
(a) General
Windsor Door ("Company") is an operating division of United Dominion
Industries, Inc. ("UDI" or "the Parent"). Windsor Door is not a
separate legal entity and accordingly has no authorized or outstanding
capital stock. The Company manufactures and sells upward acting
overhead doors, grills and shutters and certain fabricated door
components for both residential and commercial applications throughout
the United States.
(b) Basis of Presentation
The accompanying financial statements include the assets, liabilities,
and operations of the Company and its wholly-owned division, WCGD,
Inc. The preparation of these financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Amounts owed to the Company by UDI (see note 5) have been included as a
component of division equity as these advances do not have any
scheduled maturity dates and are not expected to be settled upon the
sale of the Company by UDI (see note 10).
(c) Inventories
Inventories are valued at the lower of standard cost (which approximates
cost on a first-in, first-out basis) or market. Inventory cost
includes material, labor, and manufacturing overhead.
(d) Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation of plant
and equipment and amortization of leasehold improvements are provided
by the straight-line method based on the shorter of the estimated
useful lives of the assets or the term of the lease. Estimated useful
lives are as follows:
Buildings and improvements 5 - 20 years
Machinery and equipment 4 - 15 years
Office furniture 5 - 10 years
Vehicles 5 years
(Continued)
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WINDSOR DOOR
(A DIVISION OF UNITED DOMINION
INDUSTRIES, INC.)
Notes to Financial Statements
(e) Goodwill
Goodwill, which represents the excess purchase price over the estimated
fair value of assets and liabilities acquired, is amortized on a
straight-line basis over a period of 40 years. The Company continually
reevaluates the carrying value of goodwill as well as the related
amortization period to determine whether current events and
circumstances warrant adjustments to the carrying value and/or revised
estimates of useful lives. This evaluation is based on the Company's
projection of the undiscounted operating income before depreciation,
amortization and interest over the remaining amortization periods of
related goodwill. The projections are based on the historical trend
line of actual results and adjusted for expected changes in operating
results. To the extent such projections indicate that the undiscounted
operating income (as defined above), is not expected to be adequate to
recover the carrying amount of the goodwill, such carrying amounts are
written down by charges to expense in amounts equal to the excess of
the carrying amount of goodwill over the projected discounted
operating cash flows using a discount rate reflecting the Company's
average cost of funds. At this time, the Company believes that no
significant impairment of goodwill has occurred and that no reduction
of the estimated useful lives is warranted.
(f) Income Taxes
The Company does not file separate tax returns but, instead, files as
part of the consolidated UDI group. Income taxes are accounted for
under the asset and liability method. Deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases and operating loss carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to
taxable income in the year in which those temporary differences are
expected to be recovered or settled. The effect on deferred taxes of a
change in tax rates is recognized in income in the period that
includes the enactment date.
(g) Impairment of Long-Lived Assets
The Company adopted the provisions of Statements on Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of," on
January 1, 1996. SFAS No. 121 requires that long-lived assets and
certain identifiable intangibles be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount
of the asset may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount of an
asset to future net cash flows expected to be generated by the asset.
If such assets are considered impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of
the assets exceed the fair value of the assets. Adoption of SFAS No.
121 did not have a material impact on the Company's financial
position, results of operations, or liquidity.
(Continued)
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<PAGE>
WINDSOR DOOR
(A DIVISION OF UNITED DOMINION
INDUSTRIES, INC.)
Notes to Financial Statements
(h) Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of trade accounts and
notes receivable. Concentrations of credit risk with respect to trade
accounts and notes receivable are limited due to the number of
customers and range of industries which they represent. The Company
typically does not require collateral or security from its customers.
The amount of loss should customers fail to pay the receivables is
limited to the notional amount of such receivables.
The Company relies on several key vendors to supply its primary raw
material needs. Although there are a limited number of manufacturers
capable of supplying these needs, the Company believes that other
suppliers could provide for the Company's needs on substantially
comparable terms. The Company's three largest raw material suppliers
accounted for approximately 45%, 49%, and 54%, respectively, of total
raw material purchases during 1997, 1996 and 1995.
(i) Revenue Recognition
The Company recognizes revenue and related expenses upon the shipment of
products.
(j) Advertising Costs
The Company generally expenses external costs incurred in producing
media advertising the first time the advertising takes place.
Advertising expenses included in selling, general, and administrative
expenses for 1997, 1996 and 1995 were approximately $328,000,
$346,000, and $271,000, respectively. At September 27, 1997 and
December 28, 1996, advertising costs of approximately $35,000 and
$138,000, respectively, were included in prepaid expenses and other
current assets.
(k) Research and Development Costs
Research and development costs are charged to expense as incurred and
were approximately $276,000, $374,000 and $330,000 for 1997, 1996 and
1995, respectively.
(l) Warranty Costs
The Company generally provides the customer a warranty with each product
and accrues estimated warranty expense at the time of sale based upon
actual claims history. Actual warranty costs incurred are charged
against the accrual when paid.
(Continued)
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<PAGE>
WINDSOR DOOR
(A DIVISION OF UNITED DOMINION
INDUSTRIES, INC.)
Notes to Financial Statements
(2) Acquisitions
On December 20, 1991, UDI acquired the net assets of Robertson-Ceco for a
purchase price of approximately $137,000,000. Included in this acquisition
were the net assets of Windsor Door, to which approximately $27,200,000 of
the total purchase price was allocated including approximately $9,500,000
of goodwill. This acquisition of the Company by UDI was accounted for
under the purchase method of accounting and all purchase accounting
adjustments for this acquisition have been pushed down by UDI and recorded
by the Company.
Effective May 18, 1995, the Company acquired certain assets of McKee Door,
Inc. ("McKee") for a total purchase price of $2,779,561. Also, effective
July 26, 1996, the Company acquired certain assets of Harris Door Company
("Harris") for $3,316,999. Additionally, on October 1, 1996, the Company
acquired certain assets of Dominion Garage Door Distribution, Inc.
("Dominion") for $164,199. Each of the acquisitions was negotiated and
paid for by UDI on behalf of the Company with the purchase price recorded
as an adjustment to division equity in the accompanying financial
statements of the Company. Accordingly, the acquisitions of McKee, Harris
and Dominion have been accounted for under the purchase method, and the
results of operations of McKee, Harris and Dominion have been included in
the Company's results of operations from the acquisition dates forward.
The allocations of the purchase price to assets and liabilities acquired
in connection with these acquisitions are as follows:
<TABLE>
<CAPTION>
McKee Harris Dominion
---------- --------- -------
<S> <C> <C> <C>
Assets acquired:
Accounts receivable, net $1,141,905 951,289 -
Notes receivable 70,000 - -
Inventory 900,656 1,748,404 115,547
Net property and equipment 667,000 50,000 3,421
Goodwill 225,551 784,306 -
Other assets - - 45,231
---------- --------- -------
3,005,112 3,533,999 164,199
Liabilities assumed - accrued expenses 225,551 217,000 -
---------- --------- -------
Net assets acquired $2,779,561 3,316,999 164,199
========== ========= =======
</TABLE>
Assuming the acquisitions of Harris and Dominion had occurred on January 1,
1996, pro forma unaudited results of operations for the Company for the
year ended December 28, 1996 would have been as follows:
Net sales $93,600,000
===========
Net income $ 2,900,000
===========
(Continued)
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<PAGE>
WINDSOR DOOR
(A DIVISION OF UNITED DOMINION
INDUSTRIES, INC.)
Notes to Financial Statements
(3) Inventories
Inventories at September 27, 1997 and December 28, 1996 consist of the
following:
1997 1996
---------- ----------
Raw materials $2,843,401 3,597,012
Work-in-process 1,048,622 1,128,748
Finished goods 6,420,586 5,409,265
---------- ----------
10,312,609 10,135,025
Less: Reserve for obsolete inventory 409,737 208,312
---------- ----------
$9,902,872 9,926,713
========== ==========
(4) Property, Plant and Equipment
Property, plant and equipment at September 27, 1997 and December 28, 1996
consist of the following:
1997 1996
----------- ----------
Land $ 985,000 985,000
Buildings and improvements 5,795,951 5,805,451
Machinery and equipment 17,117,483 15,920,352
Office furniture and equipment 966,258 772,429
Vehicles 120,324 109,182
Construction in progress 1,456,103 938,634
----------- ----------
26,441,119 24,531,048
Less accumulated depreciation 10,354,046 8,723,468
----------- ----------
$16,087,073 15,807,580
=========== ==========
(Continued)
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<PAGE>
WINDSOR DOOR
(A DIVISION OF UNITED DOMINION
INDUSTRIES, INC.)
Notes to Financial Statements
(5) Transactions with Parent
The Company has advances to/from UDI on a daily basis based on available
cash. Additionally, UDI pays certain expenses for or on behalf of the
Company. These expenses paid by UDI are netted against net cash
transferred by the Company to UDI and are recorded as expenses in the
accompanying statements of operations. The following summarizes the
activities between the Company and UDI:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Due from UDI, beginning of year $15,692,639 10,970,802 8,613,564
Cash paid to UDI 5,503,808 12,761,018 9,873,192
Payroll taxes (3,730,322) (4,391,917) (3,944,411)
Group health insurance (817,293) (1,087,166) (881,001)
Pension costs (note 9) (309,030) (319,435) (294,276)
Income taxes (note 6) (1,434,191) (2,016,159) (1,618,345)
Other miscellaneous 536,896 (224,504) (777,921)
----------- ---------- ----------
Net (decrease) increase (250,132) 4,721,837 2,357,238
----------- ---------- ----------
Due from UDI, end of year $15,442,507 15,692,639 10,970,802
=========== ========== ==========
</TABLE>
These advances are non-interest bearing and have no scheduled maturity date.
As discussed in note 1(b), these aggregate advances are included as a
component of division equity in the accompanying financial statements.
(6) Income Taxes
Components of income tax expense (benefit) for 1997, 1996 and 1995 are as
follows:
Current Deferred Total
---------- --------- ---------
1997:
Federal $1,190,727 (32,980) 1,157,747
State 243,464 (6,743) 236,721
---------- -------- ---------
$1,434,191 (39,723) 1,394,468
========== ======== =========
1996:
Federal 1,673,902 (103,885) 1,570,017
State 342,257 (21,241) 321,016
---------- -------- ---------
$2,016,159 (125,126) 1,891,033
========== ======== =========
1995:
Federal 1,343,620 41,521 1,385,141
State 274,725 8,490 283,215
---------- -------- ---------
$3,618,345 50,011 1,668,356
========== ======== =========
(Continued)
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<PAGE>
WINDSOR DOOR
(A DIVISION OF UNITED DOMINION
INDUSTRIES, INC.)
Notes to Financial Statements
The provision for income taxes differs from that computed at the Federal
statutory corporate rate of 34 percent as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---------- --------- ---------
<S> <C> <C> <C>
Computed "expected" tax expense $1,129,644 1,576,967 1,366,805
Increase in income taxes resulting from:
Amortization of goodwill 60,761 81,015 81,015
State income taxes, net of Federal
income tax benefit 156,236 211,871 186,922
Nondeductible meals and
entertainment 37,740 28,587 33,277
Other, net 10,087 (7,407) 337
---------- --------- ---------
$1,394,468 1,891,033 1,668,356
========== ========= =========
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets at September 27, 1997 and December 28,
1996 are presented below:
<TABLE>
<CAPTION>
1997 1996
---------- ---------
<S> <C> <C>
Intangible assets, principally due to differences
in amortization $ 466,004 541,115
Inventories, principally due to additional costs
inventoried for tax purposes and allowance
for obsolete inventory 260,271 169,306
Accounts and notes receivable, principally due
to allowance for doubtful accounts 258,117 190,288
Compensated absences, principally due to accrual
for financial reporting purposes 292,101 249,653
Property and equipment, principally due to
differences in depreciation 633,787 664,765
Warranty costs and other reserves, principally
due to accrual for financial reporting purposes 8,694 64,124
---------- ---------
$1,918,974 1,879,251
========== =========
</TABLE>
There was no valuation allowance for deferred tax assets as of January 1,
1996. In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all of
the deferred tax assets will not be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable
income during the periods in which those temporary differences become
deductible. Management considers the scheduled reversal of deferred tax
liabilities, projected future taxable income, and tax planning strategies
in making this assessment. Based upon the historical and projected levels
of income, management believes it is more likely than not that the
deferred tax assets will be realized and, accordingly, has established no
valuation allowance at September 27, 1997 or December 28, 1996.
(Continued)
-15-
<PAGE>
WINDSOR DOOR
(A DIVISION OF UNITED DOMINION
INDUSTRIES, INC.)
Notes to Financial Statements
(7) Fair Value of Financial Instruments
The carrying value of cash, accounts receivable, accounts payable and
accrued expenses approximates fair value at September 27, 1997 and
December 28, 1996, because of the relatively short-maturity of these
instruments. The fair value of notes receivable is estimated by
discounting the future cash flows of each instrument at current rates for
instruments with comparable terms and maturities and does not materially
differ from the carrying value.
(8) Commitments and Contingencies
The Company leases certain office and warehouse space under various
operating lease arrangements. A summary of approximate future lease
payments at September 27, 1997 follows:
1998 $1,570,000
1999 1,238,000
2000 710,000
2001 606,000
2002 603,000
==========
Rent expense incurred on the above operating leases during 1997, 1996 and
1995 was approximately $1,742,000, $1,798,000 and $1,482,000,
respectively. Such amounts are included in the accompanying statements of
operations primarily as a component of cost of goods sold.
The Company is involved in certain claims and litigation encountered in the
normal course of business. In the opinion of the Company's management, the
ultimate outcome of these matters will not have a material adverse impact
on the financial position, results of operations, or cash flows of the
Company.
(9) Retirement Plans
The Parent has defined benefit and defined contribution retirement plans
which cover substantially all employees of the Company. Periodic pension
expense for the defined benefit plans are allocated to the Company by the
Parent (note 5). The Company's pension expense for these plans was
approximately $309,000; $319,000; and $294,000 for the defined benefit
plans and approximately $146,000; $157,000; and $133,000 for the defined
contribution plan during 1997, 1996 and 1995, respectively.
(Continued)
-16-
<PAGE>
WINDSOR DOOR
(A DIVISION OF UNITED DOMINION
INDUSTRIES, INC.)
Notes to Financial Statements
The defined benefit plans covering eligible salaried employees call for
benefits to be paid at retirement based primarily upon years of service
and the participants' compensation rates near retirement. The defined
benefit plans covering hourly employees generally provide benefits of
stated amounts for each year of service. Contributions to the plans
reflect benefits attributed to participants' service to date and also for
benefits expected to be earned in the future. Assets of the plan consist
primarily of cash and cash equivalents, common and preferred stocks,
government bonds, investment-grade corporate bonds and other fixed income
investments. The net assets and accumulated benefit obligations of the
defined benefit plans have not been separately determined for the Company
by the Parent.
The defined contribution plans allow eligible employees to contribute from
1 - 15% of their salary to the plan. These plans allow for discretionary
matching and/or profit-sharing contributions as determined by the Parent.
(10) Subsequent Events
On October 24, 1997, UDI signed a sales agreement to sell substantially all
of the assets and liabilities of the Company to American Buildings
Company ("American") for approximately $60,000,000. The sale of the
Company to American was effective at the close of business on December 3,
1997.
-17-
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
On December 4, 1997, American Buildings Company (the "Company") purchased
certain assets of Windsor Door (A Division of United Dominion Industries, Inc.)
("Windsor") for $58.0 million in cash. The purchase price reflects a $1.5
million adjustment related to the estimated amount of working capital
transferred to the Company on December 4, 1997. The acquisition will be
accounted for as a purchase.
The accompanying unaudited pro forma condensed combined balance sheet as of
September 30, 1997, gives effect to the acquisition as if it had occurred on
that date. The accompanying unaudited pro forma condensed combined statements of
operations for the nine months ended September 30, 1997 and for the year ended
December 31, 1996 have been prepared to reflect adjustments to the Company's
historical results of operations to give effect to the acquisition as if it had
occurred January 1, 1996. The purchase price and pro forma adjustments are based
upon available information and certain assumptions that management believes to
be reasonable. The final purchase price and pro forma adjustments may differ
from amounts and adjustments herein.
The accompanying pro forma statements are not necessarily indicative of the
results of operations which would have been attained had the acquisition been
consummated on the dates indicated or which may be attained in the future. These
pro forma statements should be read in conjunction with the historical financial
statements and related notes thereto, which have been incorporated by reference
or included in this Form 8-K.
-18-
<PAGE>
<TABLE>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS
As of September 30, 1997
ASSETS
<CAPTION>
Pro Forma Pro Forma
American (A) Windsor (B) Adjustments Combined
------------ ----------- ----------- --------
(In thousands)
<S> <C> <C> <C> <C>
Current assets
Cash and cash equivalents .................... $ -- $ 541 $ 59,000 (1) $ 541
(59,000)(2)
Accounts receivable, net ..................... 38,778 16,409 55,187
Inventories .................................. 21,651 9,903 31,554
Deferred income taxes ........................ - 819 (819)(3) --
Other ........................................ 6,731 310 7,041
-------- ------- -------- --------
Total current assets ........... 67,160 27,982 (819) 94,323
Property and equipment, net .................... 36,517 16,087 52,604
Deferred income tax assets ..................... 1,313 1,100 (1,100)(3) 1,313
Other assets, net .............................. 6,947 137 1,500 (1) 8,584
Goodwill ....................................... 9,161 (9,161)(3) 27,731
27,731 (3)
-------- ------- -------- --------
$111,937 $54,467 $ 18,151 $184,555
======== ======= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term debt .......... $ 1,251 $ -- $ 2,000 (1) $ 3,251
Accounts payable .............................. 30,563 9,427 39,990
Accrued liabilitites .......................... 17,792 1,891 800 (3) 20,483
Accrued income taxes .......................... 851 851
-------- ------- -------- --------
Total current liabilities ....... 50,457 11,318 2,800 64,575
Long term debt, less current portion ............ 7,718 58,500 (1) 66,218
Other noncurrent liabilities .................... 2,995 2,995
Stockholders' Equity ............................ 50,767 43,149 (43,149)(3) 50,767
-------- ------- -------- --------
Total liabilities and equity .................... $111,937 $54,467 $ 18,151 $184,555
======== ======= ======== ========
- -------------
(A) Derived from the September 30, 1997 unaudited financial statements of the Company previously filed on
Form 10-Q with the Securities and Exchange Commission.
(B) Derived from the September 30, 1997 financial statements of Windsor Door appearing elsewhere in this
document.
</TABLE>
-19-
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(In thousands)
1. Reflects (i) borrowings under the new credit facility, (ii) the use of a
portion of the net proceeds to repay the existing credit facility and
(iii) the capitalization of deferred financing costs of $1,500.
Borrowings under new credit facility................. $60,700
Repay existing credit facility ...................... (200)
Pay financing costs ................................. (1,500)
-------
Increase to cash .................................... $59,000
=======
2. Reflects purchase price consideration of (i) $58,000 in cash, net of the
estimated working capital adjustment and (ii) transaction related expenses
of $1,000.
3. Reflects adjustments to record the fair market value of the identifiable
intangible assets acquired plus the resulting goodwill related to the
excess purchase price over the fair value of net assets acquired:
Total consideration and transaction costs ........... $59,000
Fair value of net assets purchased .................. 31,269
-------
Excess of purchase price over fair value of net
assets acquired -- adjustment to goodwill ......... $27,731
=======
Adjustments made to record historical book value at fair value
are as follows:
Historical book value of net assets acquired ........ $43,149
Eliminate acquired goodwill ......................... 9,161
Adjust defined benefit liability to the projected
benefit obligation ................................ 800
Eliminate deferred tax asset ........................ 1,919
-------
Fair value of net assets purchased .................. $31,269
=======
-20-
<PAGE>
<TABLE>
<CAPTION>
Unaudited Pro Forma Condensed Combined Statements of Operations
For the Year Ended December 31, 1996
Pro Forma Pro Forma
American (A) Windsor (B) Adjustments Consolidated
------------ ----------- ----------- ------------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Net Sales $273,953 $87,094 $361,047
Costs and Expenses:
Cost of sales 229,260 73,408 302,668
Selling, general and administrative 24,311 9,161 693 (1) 33,908
(257)(2)
-------- ------- ------- --------
253,571 82,569 436 336,576
Operating Income (loss) 20,382 4,525 (436) 24,471
Interest expense (income) 143 (113) (17)(3) 4,444
4,130 (4)
300 (5)
-------- ------- ------- --------
Income before provision for income taxes 20,239 4,638 (4,849) 20,028
Provision for income taxes 7,792 1,891 (1,972)(6) 7,711
-------- ------- ------- --------
Net Income $ 12,447 $ 2,747 $(2,877) $ 12,317
======== ======= ======= ========
Pro forma net income per common and common
equivalent share $ 2.06 $ 2.04
======== ========
Weighted average common and common equivalent
shares outstanding 6,040 6,040
======== ========
</TABLE>
- -------------
(A) Derived from the December 31, 1996 audited financial statements of the
Company previously filed on Form 10-K with the Securities and Exchange
Commission.
(B) Derived from the December 31, 1996 audited financial statements of Windsor
Door appearing elsewhere in this document.
-21-
<PAGE>
<TABLE>
<CAPTION>
Unaudited Pro Forma Condensed Combined Statements of Operations
For the nine months ended September 30, 1997
Pro Forma Pro Forma
American(A) Windsor(B) Adjustments Combined
--------- --------- --------- ---------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Net Sales $ 221,001 $ 70,324 $ 291,325
Costs and Expenses:
Cost of sales 182,706 60,310 243,016
Selling, general and administrative 20,305 6,861 520 (1) 28,013
(193)(2)
--------- --------- --------- ---------
203,011 67,171 327 271,029
Operating Income (loss) 17,990 3,153 (327) 20,296
Interest expense (income) 622 (169) (12)(3) 3,763
3,098 (4)
225 (5)
--------- --------- --------- ---------
Income before provision for income taxes 17,368 3,322 (3,637) 16,533
Provision for income taxes 6,687 1,394 (1,716)(6) 6,365
========= ========= ========= =========
Net Income $ 10,681 $ 1,928 $ (1,921) $ 10,168
========= ========= ========= =========
Pro forma net income per common and common
equivalent share $ 1.89 $ 1.80
========= =========
Weighted average common and common equivalent
shares outstanding 5,658 5,658
========= =========
</TABLE>
- ------------
(A) Derived from the September 30, 1997 unaudited financial statements of the
Company previously filed on Form 10-Q with the Securities and Exchange
Commission.
(B) Derived from the September 30, 1997 audited financial statements of Windsor
Door appearing elsewhere in this document.
-22-
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(In thousands)
1. Reflects amortization of goodwill associated with the acquisition over 40
years.
2. Reflects elimination of Windsor historical goodwill amortization, which was
being amortized over 40 years.
3. Reflects elimination of historical interest expense on existing credit
facility.
4. Reflects interest expense on the new credit facility at 7.0%.
5. Reflects amortization of deferred financing costs of $1,500 over the life
of the related debt of 5 years.
6. Reflects adjustments to record the tax benefit for the pro forma
adjustments and to adjust Windsor's effective tax rate to the Company's
effective rate of 38.5%.
-23-
<PAGE>
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.
AMERICAN BUILDINGS COMPANY
Date: February 12, 1998 By: /s/ R. CHARLES BLACKMON
-----------------------------------
Name: R. Charles Blackmon
Title: Executive Vice President
and Chief Financial Officer
-24-
<PAGE>
Exhibit Index
2.1 Agreement of Purchase and Sale of Assets, dated as of October
24, 1997, by and between Windsor Door, Inc., as Purchaser, and
United Dominion Industries, Inc. and WCGD, Inc., as Seller
(incorporated herein by reference to Exhibit 2.0 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997).
2.2 Amendment to Agreement of Purchase and Sale of Assets, dated
November 19, 1997, between Windsor Door, Inc. and United
Dominion Industries, Inc. and WCGD, Inc.*
10.1 Credit Agreement, dated as of December 4, 1997, among American
Buildings Company, as Borrower, the several lenders from time
to time party hereto, and Canadian Imperial Bank of Commerce,
as Administrative Agent.*
10.2 First Amendment, dated as of December 15, 1997, to the Credit
Agreement, dated as of December 4, 1997, among American
Buildings Company, as Borrower, the several lenders from time
to time party hereto, and Canadian Imperial Bank of Commerce,
as Administrative Agent.*
10.3 Guarantee and Collateral Agreement, dated as of December 4,
1997, made by American Buildings Company and certain of its
subsidiaries in favor of Canadian Imperial Bank of Commerce,
as Administrative Agent.*
10.4 Mortgage from American Buildings Company, Mortgagor, to
Canadian Imperial Bank of Commerce, Mortgagee (Eufaula,
Alabama).*
10.5 Mortgage from American Buildings Company, Mortgagor, to
Canadian Imperial Bank of Commerce, Mortgagee (Fairfield,
Alabama).*
10.6 Mortgage from American Buildings Company, Mortgagor, to
Canadian Imperial Bank of Commerce, Mortgagee (El Paso,
Illinois).*
10.7 Mortgage from American Buildings Company, Mortgagor, to
Canadian Imperial Bank of Commerce, Mortgagee (Carson City,
Nevada).*
10.8 Mortgage from American Buildings Company, Mortgagor, to
Canadian Imperial Bank of Commerce, Mortgagee (La Crosse,
Virginia).*
10.9 Mortgage from AMT/Beaman Corporation, Mortgagor, to Canadian
Imperial Bank of Commerce, Mortgagee (Liberty, North
Carolina).*
-25-
<PAGE>
10.10 Mortgage from Windsor Door, Inc., Mortgagor, to Canadian
Imperial Bank of Commerce, Mortgagee (Little Rock, Arkansas).*
10.11 Mortgage from Windsor Door, Inc., Mortgagor, to Canadian
Imperial Bank of Commerce, Mortgagee (Oliverhurst,
California).*
23. Consent of KPMG Peat Marwick LLP.
----------
* Filed as an exhibit to the Company's Current Report on Form 8-K
dated December 4, 1997 and filed December 18, 1997
-26-
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
United Dominion Industries, Inc.:
We consent to the incorporation by reference in the registration statements
(No. 33-86556, No. 33-86558 and No. 33-86560) on Form S-8 of American Buildings
Company of our report dated January 9, 1998, with respect to the balance sheets
of Windsor Door (a division of United Dominion Industries, Inc.) as of September
27, 1997 and December 28, 1996, and the related statements of operations and
division equity and cash flows for the nine months ended September 27, 1997 and
the years ended December 28, 1996 and December 30, 1995, which report appears
in the Form 8-K/A of American Buildings Company dated December 4, 1997.
KPMG Peat Marwick LLP
Little Rock, Arkansas
February 12, 1998
