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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A-2
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): SEPTEMBER 6, 1996
ROADMASTER INDUSTRIES, INC.
(D/B/A RDM SPORTS GROUP, INC.)
(Exact name of Registrant as Specified in its Charter)
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DELAWARE 0-16482 84-1065239
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
250 SPRING STREET, N.W
SUITE 3 SOUTH
ATLANTA, GEORGIA 30303
(404) 586-9000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
As previously reported, on July 18, 1996, Roadmaster Industries, Inc.
(doing business under the name RDM Sports Group, Inc. since September 6, 1996
and hereinafter the "Company") and its then Roadmaster Corporation subsidiary
entered into a definitive agreement (the "Agreement") with Brunswick Corporation
("Brunswick"), pursuant to which Brunswick was to acquire all of the assets of
the Company's bicycle and snow products business (such business, which also
includes tricycles, wagons and junior ride-ons, is hereinafter sometimes
referred to as the "Bike division") for approximately $212,000,000 in cash (the
"Brunswick Transaction"). The Agreement also provides for: the assumption by
Brunswick of trade payables affiliated with the bicycle and snow products being
conveyed at the time of the closing, the grant to Brunswick of a long-term lease
of the Olney, Illinois facility (such lease being estimated to have a present
value of approximately $2.6 million), the assumption by Brunswick of certain
long-term indebtedness consisting of Industrial Revenue Bonds and UDAG loans
(the assumption of which Industrial Revenue Bonds and UDAG loans will result in
a reduction to the purchase price), and the establishment by the Company of an
escrow account in the amount of $10,000,000 to secure the costs of the
environmental remediation of the property at the Olney, Illinois facility, for
which the Corporation has indemnified Brunswick. At closing, the Company repaid
the UDAG loans; accordingly, the purchase price was not adjusted for the
assumption of such loans. The purchase price also is subject to adjustment for
changes in working capital between December 31, 1995 and the Closing Date. The
Agreement was approved by the Company's Board of Directors on July 18, 1996. The
transaction was subject to satisfaction of certain conditions set forth in the
Agreement, including, without limitation, the consent of the Company's lenders
under its Bank Credit Agreement and waivers (the "Waivers") of certain
provisions of the Indenture governing the Company's 11 3/4% Senior Subordinated
Notes due 2002 (the "Notes") by the holders of the required majority of such
Notes.
On August 2, 1996, the Company commenced an Offer to Purchase and
Consent Solicitation to the holders of its Notes, whereby the Company offered to
purchase all of its outstanding Notes at a purchase price equal to one hundred
percent (100%) of such Notes' principal amount, plus accrued but unpaid
interest. Such Offer terminated on August 29, 1996. Consents to the required
Waivers under the Indenture were obtained from the holders of $88,433,000
principal amount of the Notes. Of such amount, $88,227,000 also were tendered
for purchase. The Waivers to the relevant Indenture provisions were effected
thereafter.
On September 6, 1996, the Company terminated its then existing bank
credit agreement and entered into a new bank credit agreement (the "Bank Credit
Agreement"). The Bank Credit Agreement has a three year term and provides for
borrowings of up to $130,000,000, based on eligible trade receivables and
inventory. Interest under the new Bank Credit Agreement is calculated at the
Agent's Reference Rate (as defined in the Bank Credit Agreement) plus 1.25% and
includes a LIBOR Rate option which equals LIBOR plus 1.25%. The monthly unused
facility fee is .25% on the available unused portion of the facility provided by
the Bank Credit Agreement. Borrowings under the Bank Credit Agreement are
secured by security interests in substantially all of the assets of the Company.
The Bank Credit Agreement requires the maintenance of various financial and
other covenants, including minimum net worth, earnings to interest expense
coverage and prohibitions on various transactions without the consent of the
Lender.
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Following implementation of the Waivers and concurrent with the
execution of the new Bank Credit Agreement, the Brunswick Transaction was
consummated on September 6, 1996. The Company used the net proceeds to reduce
its outstanding indebtedness under its old bank credit agreement by
approximately $75,000,000 and to purchase $88,227,000 principal amounts of its
Notes for one hundred percent of their principal amount, plus accrued but unpaid
interest to the date of repurchase.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
The information required by Item 7 is set forth below, except for the
balance sheet which is incorporated by reference from the Company's Form 10-Q
for the quarter ended September 28, 1996, which has previously been filed with
the Commission.
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ROADMASTER INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED INCOME STATEMENT (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1995
DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
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Roadmaster Industries, Inc.
Nelson/Weather-Rite, Inc. Bike Division
------------------------- -------------------------------
For the year For the year
Roadmaster Industries, Inc. ended Other ended Other
for the year ended December 31, Pro Forma December 31, Pro Forma Pro Forma
December 31, 1995 1995 Adjustments 1995 Adjustments Total
<S> <C> <C> <C> <C> <C> <C>
Net sales 730,875 96,449 211,065 423,361
Cost of sales 644,268 71,501 186,472 386,295
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Gross profit 86,607 37,066
Selling, general and
administrative
expenses 92,814 15,384 (105) (1) 8,672 (30) (5) 68,623
Impairment Loss 23,500 23,500
Restructuring expenses 7,521 7,521
Other expense/
(benefit), net:
Interest 35,470 3,181 (7,970) (2) 509 (16,662) (6) 7,148
Other non-operating 7,785 911 (11) (3) 409 6,454
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43,255 13,602
Loss before
income tax
(benefit)/expense and ----------- -----------
extraordinary item: (80,483) (76,180)
Income tax
(benefit)/expense (29,479) 2,212 3,073 (4) 5,701 6,343 (7) (27,976)
Loss before ----------- -----------
extraordinary item: (51,004) (48,204)
Loss per common
share, primary and fully
diluted:
Loss before
extraordinary item: ($1.04) ($0.98)
Weighted average common
shares outstanding and
common stock equivalents:
Primary and fully
diluted 49,004 49.004
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</TABLE>
Note 1: The pro forma income statement does not include the gain on the sale
of Nelson/Weather-Rite, Inc. or the Roadmaster Industries, Inc. Bike
division, which is estimated to be $31,354 and $90,110, respectively,
before income taxes based on the December 31, 1995 financial
statements.
(1) Represents the elimination of the Nelson/Weather-Rite, Inc. related legal
fees incurred by the former parent corporation.
(2) Represents the elimination of interest expense related to the reduction of
the revolving lines of credit under the Company's Bank Credit Agreement
associated with the sale of Nelson/Weather-Rite, Inc..
(3) Represents the elimination of the amortization expense related to MZH,
Inc., a subsidiary of Nelson/Weather-Rite, Inc..
(4) Represents the tax effect of the Nelson/Weather-Rite, Inc. other pro-forma
adjustments at the statutory rate of 38%.
(5) Represents the elimination of the Roadmaster Industries, Inc. Bike
division related legal fees incurred by the former parent corporation.
(6) Represents the elimination of $6,063 of interest expense related to the
reduction of the revolving lines of credit under the Company's Bank Credit
Agreement and the elimination of $10,179 of interest expense and $420 of
amortization expense related to the repurchase of $88,227 of the 11 3/4%
Senior Subordinated Notes due 2002 of Roadmaster Industries, Inc.
effected in connection with the sale of the Roadmaster Industries, Inc.
Bike division.
(7) Represents the tax effect of the Roadmaster Industries, Inc. Bike division
other pro forma adjustments at the statutory rate of 38%.
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ROADMASTER INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED INCOME STATEMENT (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 28, 1996
DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
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Nelson/Weather-Rite, Roadmaster Industries, Inc.
Inc. Bike division
Roadmaster ------------------------------ ------------------------------
Industries, Inc. for For the period
the nine months For the period Other ended Other
ended September ended Pro Forma September 6, Pro Forma Pro Forma
28, 1996 March 8, 1996 Adjustments 1996 Adjustments Total
<S> <C> <C> <C> <C> <C> <C>
Net sales 304,235 18,767 106,024 179,444
Cost of sales 291,866 14,705 95,930 181,231
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Gross profit/(loss) 12,369 (1,787)
Selling, general and
administrative expenses 68,630 3,243 (49) (1) 6,495 (210) (6) 58,633
Restructuring expenses 4,262 4,262
Other expense/(benefit), net:
Interest 19,920 543 (1,393) (2) 385 (10,705) (7) 6,894
Gain on sale of subsidiaries (98,475) 20,151 (3) 78,324 (8) 0
Other non-operating 8,472 156 (212) (4) 608 7,496
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(70,083) 14,390
Earnings/(loss) before
income tax expense/(benefit)
and extraordinary item: ------------ ---------
9,560 (79,072)
Income tax expense/(benefit) 5,416 45 (9,522) (5) 990 (25,615) (9) (30,756)
Income/(loss) before
extraordinary item: ------------ ---------
4,144 (48,316)
Earnings/loss per common share,
primary and fully diluted:
Income/loss before
extraordinary item: $0.08 ($0.97)
Weighted average common shares
outstanding and common stock
equivalents:
Primary and fully diluted 48,870 49,870
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</TABLE>
(1) Represents the elimination of the Nelson/Weather-Rite, Inc. related legal
fees incurred by the former parent corporation.
(2) Represents the elimination of interest expense related to the reduction of
the revolving lines of credit under the Company's Bank Credit Agreement
associated with the sale of Nelson/Weather-Rite, Inc..
(3) Represents the elimination of the gain on the sale of Nelson/Weather-Rite,
Inc., which is estimated to be $20,151 before income taxes on the
September 28, 1996 financial statements.
(4) Represents the elimination of amortization expenses related to MZH, Inc.,
a subsidiary of Nelson/Weather-Rite, Inc..
(5) Represents the tax effect of the Nelson/Weather-Rite, Inc. interest,
expense and other non-operating income at the statutory rate of 38% and
the gain on the sale of Nelson//Weather-Rite, Inc. at a rate of 50.4%.
(6) Represents the elimination of the Roadmaster Industries, Inc. Bike
division related legal fees incurred by the former parent corporation.
(7) Represents the elimination of $3,815 of interest expense related to the
reduction of the revolving lines of credit under the Company's Bank Credit
Agreement and the elimination of $6,445 of interest expense and $435 of
amortization expense related to the repurchase of $88,227 of the 11 3/4%
Senior Subordinated Notes due 2002, effected in connection with the sale
of the Roadmaster Industries, Inc. Bike division.
(8) Represents the elimination of the gain on the sale of the Roadmaster
Industries, Inc. Bike division, which is estimated to be $78,324 before
income taxes based on the September 28, 1996 financial statements.
(9) Represents the tax effect of the Roadmaster Industries, Inc. Bike division
other pro forma adjustments at the statutory rate of 38%.
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EXHIBITS.
23.1 Consent of Arthur Andersen, LLP
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.
ROADMASTER INDUSTRIES, INC.
(d/b/a RDM Sports Group, Inc.)
Date: November 20, 1996 By: /s/ Charles E. Sanders
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Charles E. Sanders
Vice President and Secretary
(Principal Accounting Officer)
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EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports included or incorporated by reference in this Form 8-K/A-2, into
the Company's previously filed Registration Statements Files Nos. 33-63567,
33-87520, 33-87522, 33-87524 and 33-87526.
ARTHUR ANDERSEN, LLP
Chicago, Illinois
November 20, 1996
