UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) July 20, 2000
Catalina Lighting, Inc.
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(Exact name of registrant as specified in its charter)
Florida 1-9917 59-1548266
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(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
18191 N.W. 68th Avenue, Miami, Florida 33015
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(Address of principal executive offices)
Registrant's telephone number, including area code (305) 558-4777
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Not applicable
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(Former name or former address, if changed since last report.)
<PAGE>
Item 2. Acquisition of Ring PLC
On July 5, 2000, Catalina Lighting, Inc. a Florida corporation ("Catalina")
acquired, through a wholly-owned subsidiary, Catalina International PLC, all of
the outstanding ordinary shares and 74% of the convertible preference shares of
Ring PLC ("Ring"). Ring is a leading supplier of lighting, automotive
aftermarket products, and industrial consumables in the United Kingdom. Catalina
offered Ring shareholders 50 pence per share and 20 pence per share (in addition
to the right to receive the dividend of 2.4 pence payable on July 1, 2000) for
the ordinary and convertible preference shares, respectively. The total
consideration for the acquisition was approximately 22.8 million Great British
Pounds ("GBP") or approximately $34.4 million.
On July 18, 2000, the Company entered into a five-year credit facility for
approximately $75 million with a bank syndication group lead by SunTrust Bank to
finance the acquisition of Ring and repay and terminate its existing U.S. credit
facility and Ring's U.K. facility. The new facility consists of two term loans
amounting to $15 million and GBP 9.9 million (approximately $15 million),
respectively, and two facilities for revolving loans, acceptances, trade and
stand-by letters of credit for the Company's ongoing operations in the U.S. and
the U.K. of $20 million and the GBP equivalent of $25 million (approximately GBP
16.5 million), respectively. The facility provides for quarterly payments on the
term loans (in the respective currencies of the loans) aggregating approximately
$1,250,000 for fiscal 2000, $5,125,000 for fiscal 2001, $5,625,000 for fiscal
2002, $6,125,000 for fiscal 2003, $6,625,000 for fiscal 2004 and $5,250,000 for
fiscal 2005. Borrowings under the facility bear interest, payable monthly, at
the Company's option of either the prime rate plus 1.75% (11.25% at September
13, 2000) or the LIBOR rate plus a variable spread based upon earnings, debt and
interest expense levels defined under the credit agreement (9.37% at September
13, 2000). Obligations under the facility are secured by substantially all of
the Company's U.S. and U.K. assets, including 100% of the common stock of the
Company's U.S. subsidiaries and 49% of the stock of the Company's Canadian and
Hong Kong subsidiaries. The agreement contains covenants requiring that the
Company maintain a minimum level of equity and meet certain debt to adjusted
earnings and fixed charge coverage ratios. Borrowings are subject to a borrowing
base defined as the aggregate of certain percentages of the Company's U.S. and
U.K. receivables and inventory. The agreement prohibits the payment of cash
dividends or other distribution on any shares of the Company's common stock,
other than dividends payable solely in shares of common stock, unless approval
is obtained from the lenders. The Company pays a quarterly commitment fee of
.50% per annum based on the unused portion of the revolving facilities.
Ring has employment agreements with eighteen of its officers and key employees
for a total annual salary cost of approximately U.S. $1.8 million. The
agreements contain benefit packages including contributions to Ring's pension
plan ranging from 5% to 10% of salary and provide for notice periods in the case
of termination varying from 6 to 36 months. In addition, the agreements contain
post-termination restrictive covenants.
2
<PAGE>
Item 7. Financial Statements, Pro Forma Information and Exhibits
(a) Financial Statements of Business Acquired.
The financial statements of Ring PLC required by Rule 3-05(b) of
Regulation S-X are included as exhibit 10.197.
(b) Pro Forma Financial Information.
The following unaudited pro forma consolidated financial information
is furnished in accordance with Article 11 of Regulation S-X:
Introduction to unaudited pro forma consolidated financial
statements (page 5)
Unaudited pro forma consolidated balance sheet as of July 5,
2000 (page 6).
Unaudited pro forma consolidated statement of operations for
the nine months ended June 30, 2000 (page 7).
Unaudited pro forma consolidated statement of operations for
the year ended September 30, 1999 (page 8).
(c) Exhibits
Exhibit Filing in Which Exhibit
Number Description is Incorporated By Reference
------ ----------- ----------------------------
10.193 Recommended Cash Offers by NM Form 8-K dated July 20, 2000
Rothschild & Sons Limited on
behalf of Catalina International
PLC, a wholly owned subsidiary
of Catalina Lighting, Inc. to acquire
the whole of the ordinary and convertible
preference Share capital of Ring PLC.
10.194 Form 429(4) - Notice to Form 8-K dated July 20, 2000
non-assenting shareholders
by Catalina International PLC
dated July 5, 2000.
10.195 Press release dated July 5, 2000. Form 8-K dated July 20, 2000
10.197 Audited Financial Statements of Filed herewith
Ring PLC for the years ended
June 30, 2000, 1999 and 1998.
3
<PAGE>
Item 7. Financial Statements, Pro Forma Information and Exhibits (continued)
(c) Exhibits (continued)
Exhibit Filing in Which Exhibit
Number Description is Incorporated By Reference
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10.198 Amended and Restated Filed herewith
Revolving Credit and Term Loan
Agreement dated August 18, 2000
between Catalina Lighting, Inc.,
Catalina International PLC,
Ring PLC and SunTrust Bank
as administrative Agent.
4
<PAGE>
CATALINA LIGHTING, INC. AND SUBSIDIARIES
Introduction to Unaudited Pro Forma Consolidated
Financial Statements
The Unaudited Pro Forma Consolidated Balance Sheet as of July 5, 2000 and
Unaudited Pro Forma Consolidated Statements of Operations for the year ended
September 30, 1999, and the nine months ended June 30, 2000 have been prepared
to give effect to the July 5, 2000 acquisition by Catalina Lighting, Inc. (the
"Company") of Ring PLC ("Ring").
The Unaudited Pro Forma Consolidated Balance Sheet and Statements of Operations
are based upon the historical combined financial statements of the Company and
Ring, after giving effect to the pro forma adjustments described in the note
thereto and as if the acquisition of Ring by the Company had been consummated on
October 1, 1998 for statements of operations purposes and as of July 5, 2000 for
balance sheet purposes. Differences between the June 30, 2000 amounts used
herein for proforma balance sheet purposes and actual July 5, 2000 balances are
not material.
5
<PAGE>
CATALINA LIGHTING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JULY 5, 2000
(In thousands)
<TABLE>
<CAPTION>
Pro Forma
Adjustments
------------------------------ Pro Forma
ASSETS Catalina (A) Ring (B),(C) Dr Cr Combined
------------ ------------ ------------------------------ -----------
<S> <C> <C> <C> <C> <C>
Current assets
Cash and cash equivalents $ 4,760 $ 469 $ 5,229
Restricted cash equivalents and short-term
investments 1,636 - 1,636
Accounts receivable, net of allowances 16,062 18,528 2,278(d) 32,312
Inventories 26,134 21,790 47,924
Other current assets 5,016 1,968 6,984
------------ ------------ -----------
Total current assets 53,608 42,755 - 94,085
Property and equipment, net 24,576 5,069 29,645
Goodwill, net 10,218 3,231 20,727(a) 3,231(a) 30,945
Other assets 3,690 1,665 1,750(e) 7,105
------------ ------------ -----------
$ 92,092 $ 52,720 $ 161,780
============ ============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts and letters of credit payable $ 15,966 $ 19,612 $ 2,278(d) $ 33,300
Credit lines 406 1,534 1,534(a) 406
Note payable - other 1,402 - 1,402
Current maturities of bonds payable-real
estate related 900 - 900
Current maturities of other long-term debt 636 802 1,438
Other current liabilities 6,168 9,626 15,794
------------ ------------ -----------
Total current liabilities 25,478 31,574 53,240
Credit lines and term loans 8,300 - 37,649(a),(e) 45,949
Convertible subordinated notes 733 - 733
Bonds payable - real estate related 5,100 - 5,100
Other long-term debt 1,435 623 2,058
Other liabilities 695 2,555 3,250
------------ ------------ -----------
Total liabilities 41,741 34,752 110,330
Minority interest 149 950(a) 1,099
Commitments and contingencies
Stockholders' equity
Common stock 78 29,899 29,899(a) 78
Preference stock - 3,599 3,599(a) -
Additional paid-in capital 27,956 15,694 15,694(a) 27,956
Retained earnings 24,635 (31,373) 31,373(a) 24,635
Treasury stock (2,318) - (2,318)
------------ ------------ -----------
Total stockholders' equity 50,351 17,819 50,351
------------ ------------ ------------------------------ -----------
$ 92,092 $ 52,720 $ 75,481 $ 75,481 $ 161,780
============ ============ ============================== ===========
</TABLE>
The accompanying note is an integral part of these unaudited Pro Forma
Consolidated Financial Statements.
(A) As shown in the Company's Quarterly Report on Form 10-Q as of June 30, 2000.
(B) Represents Ring's consolidated balance sheet at June 30, 2000.
(C) Translation of amounts for Ring from Great British Pounds ("GBP") to U.S.
dollars has been made at the rate of 1 GBP = US$1.5083.
6
<PAGE>
CATALINA LIGHTING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED JUNE 30, 2000
(In thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
Adjustments
------------------------------ Pro Forma
Catalina (A) Ring (B),(C) Dr Cr Combined
------------ ------------ ------------------------------ -----------
<S> <C> <C> <C> <C> <C>
Net sales $ 131,946 $ 89,606 $ 4,991 (b) $ 216,561
Cost of sales 106,143 75,393 (57) (b) 4,991 (b) 176,488
------------ ------------ ------------------------------ -----------
Gross profit 25,803 14,213 4,934 4,991 40,073
Selling, general and administrative expenses 20,246 11,319 1,007 (c),(e) 32,572
Executive management reorganization 788 - 788
------------ ------------ ------------------------------ -----------
Operating income 4,769 2,894 5,941 4,991 6,713
------------ ------------ ------------------------------ -----------
Other income (expenses):
Interest expense (1,564) (347) 2,583 (f) (4,494)
Other income (expenses) 426 43 469
------------ ------------ ------------------------------ -----------
Total other income (expenses) (1,138) (304) 2,583 - (4,025)
------------ ------------ ------------------------------ -----------
Income before income taxes 3,631 2,590 8,524 4,991 2,688
Income tax provision 1,262 930 966 (g) 1,226
------------ ------------ ------------------------------ -----------
Net income $ 2,369 $ 1,660 $ 8,524 $ 5,957 $ 1,462
============ ============ ============================== ===========
Weighted average number of
shares outstanding
Basic 7,022 7,022
Diluted 8,674 7,676
Earnings per share
Basic $ 0.34 $ 0.18
Diluted $ 0.30 $ 0.16
</TABLE>
The accompanying note is an integral part of these Unaudited Pro Forma
Consolidated Financial Statements.
(A) As described in the Company's Quarterly Report on Form 10-Q for the nine
months ended June 30, 2000.
(B) Represents the results of operations for Ring for the nine months ended June
30, 2000.
(C) Translation of amounts for Ring from Great British Pounds to U.S. dollars
has been made at the rate of 1 Pound = US$1.5898.
7
<PAGE>
CATALINA LIGHTING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1999
(In thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
Adjustments
------------------------------ Pro Forma
Catalina (A) Ring (B),(C) Dr Cr Combined
------------ ------------ ------------------------------ -----------
<S> <C> <C> <C> <C> <C>
Net sales $ 176,561 $115,543 $ 6,422 (b) $ 285,682
Cost of sales 140,906 93,704 554 (b) 6,422 (b) 228,742
------------ ------------ ------------------------------ -----------
Gross profit 35,655 21,839 6,976 6,422 56,940
Selling, general and administrative expenses 28,554 16,560 1,407 (c),(e) 46,521
Reversal of provision for litigation (2,728) (2,728)
------------ ------------ ------------------------------ -----------
Operating income 9,829 5,279 8,383 6,422 13,147
------------ ------------ ------------------------------ -----------
Other income (expenses):
Interest expense (2,413) (332) 3,085 (f) (5,830)
Reversal of post judgment interest related
to litigation settlement 893 893
Other income (expenses) 1,118 0 1,118
------------ ------------ ------------------------------ -----------
Total other income (expenses) (402) (332) 3,085 - (3,819)
------------ ------------ ------------------------------ -----------
Income before income taxes 9,427 4,947 11,468 6,422 9,328
Income tax provision 2,938 1,101 1,312 (g) 2,727
------------ ------------ ------------------------------ -----------
Net income $ 6,489 $ 3,846 $ 11,468 $ 7,734 $ 6,601
============ ============ ============================== ===========
Weighted average number of
shares outstanding
Basic 7,055 7,055
Diluted 8,688 8,688
Earnings per share
Basic $ 0.92 $ 0.89
Diluted $ 0.80 $ 0.77
</TABLE>
The accompanying note is an integral part of these Unaudited Pro Forma
Consolidated Financial Statements.
(A) As described in the Company's Annual Report on Form 10-K for the Year ended
September 30, 1999.
(B) Represents the results of operations for Ring for the year ended September
30, 1999.
(C) Translation of amounts for Ring from Great British Pounds to U.S. dollars
has been made at the rate of 1 GBP = US$1.6293.
8
<PAGE>
CATALINA LIGHTING, INC. AND SUBSIDIARIES
NOTE TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - DESCRIPTION OF PRO FORMA ADJUSTMENTS
The cost of acquisition has been allocated to the assets acquired and
liabilities assumed based upon their respective fair values at the date of
acquisition, with the excess of cost over fair value of net assets acquired
allocated to goodwill. The basis for valuation for each of the major categories
of assets and liabilities is as follows:
Accounts receivable - At current values less allowances for (i)
doubtful accounts, (ii) sales returns and (iii) sales incentives.
Inventory - Finished goods at estimated selling prices less the
sum of (a) costs of disposal and (b) a reasonable
profit allowance; work in process at estimated
selling prices of finished goods less (a) costs to
complete, (b) costs of disposal and (c) a reasonable
profit allowance; raw materials at current
replacement costs.
Property and Equipment - At approximated current replacement costs.
Accounts Payable - At current values.
Debt and Other Liabilities - At present values (determined at
appropriate interest rates) of amounts to
be paid.
The pro forma adjustments give effect to:
(a) Elimination of Ring's equity accounts, the recording
of goodwill, minority interest, borrowings under the
Company's new credit facility, and other assets and
liabilities arising from the acquisition.
(b) Elimination of intercompany sales and the elimination
of intercompany profits in ending inventory.
(c) Amortization of goodwill over 20 years.
(d) Elimination of Intercompany receivables and payables.
(e) Credit facility fees and amortization of such fees.
(f) Increase in interest expense from (1) additional
borrowings utilized to fund the acquisition and (2)
the increase in the interest rate on borrowings under
the new U.K. and U.S. revolving facilities.
(g) Effect of the pro forma adjustments on the provision
for income taxes.
The unaudited pro forma consolidated statements of operations exclude the
following non-recurring income (expense) items:
Nine Months Year
Ended 6/30/00 Ended 6/30/99
------------- -------------
Costs incurred by
Ring related to the
acquisition ($ 739,000)
Additional consideration
from the sale of the Ring
Engineering Division
following the release
of warranty retention $ 815,000
9
<PAGE>
SIGNATURE
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.
CATALINA LIGHTING, INC.
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(Registrant)
By: /s/ David W. Sasnett
---------------------
David W. Sasnett
Senior Vice President and
Chief Financial Officer
Date: September 18, 2000
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
10.197 Audited Financial Statements of Ring PLC for the years ended
June 30, 2000, 1999 and 1998.
10.198 Amended and Restated Revolving Credit and Term Loan Agreement
dated August 18, 2000 between Catalina Lighting, Inc.,
Catalina International PLC, Ring PLC and SunTrust Bank as
administrative Agent.
