SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
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): August 28, 1996
RECOTON CORPORATION
(Exact name of registrant as specified in charter)
New York 0-5860 11-1771737
(State or other jurisdic- (Commission (IRS Employer
tion of incorporation) File Number) Identification No.)
2950 Lake Emma Road, Lake Mary, Florida 32746
(Address of principal executive offices, including Zip Code)
Registrant's telephone number, including area code: 407-333-8900
N.A.
(Former name or former address, if changed since last report)
<PAGE>
Item 7 is hereby amended to read as follows, and the items shown as (b)(1)(a)
through (b)(1)(d) are enclosed herewith:
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
a. Financial Statements of Business Acquired
1. International Jensen Incorporated and Subsidiaries
Consolidated Financial Statements:
(a) Report of Independent Accountants Coopers &
Lybrand, L.L.P. dated May 24, 1996.
(b) Consolidated Balance Sheets as of February
29, 1996 and February 28, 1995.
(c) Consolidated Statements of Operations for
each of the three years in the period ended
February 29, 1996.
(d) Consolidated Statements of Cash Flows for
each of the three years in the period ended
February 29, 1996.
(e) Consolidated Statements of Stockholders'
Equity for each of the three years in the
period ended February 29, 1996.
(f) Notes to Consolidated Financial Statements.
b. Pro Forma Financial Information
1. Recoton Corporation and International Jensen
Incorporated Pro Forma Financial Statements:
(a) Unaudited Pro Forma Combined Balance Sheet as
at June 30, 1996.
(b) Unaudited Pro Forma Combined Statement of
Operations for the Year Ended December 31,
1995.
(c) Unaudited Pro Forma Combined Statement of
Operations for the Six Months Ended June 30,
1996.
(d) Notes to Unaudited Pro Forma Combined
Financial Statements.
c. Exhibits
1. Fourth Amended and Restated Agreement and Plan of
Merger Agreement among Recoton Corporation, RC
Acquisition Sub, Inc. and International Jensen
Incorporated dated as of January 3, 1996, but
executed on June 23, 1996 (incorporated by
reference to Exhibit 2.1 of the Registrant's
Current Report on Form 8-K for an event occurring
on June 23, 1996).
2. Certificate of Merger of RC Acquisition Sub, Inc.
into International Jensen Incorporated dated
August 28, 1996.
3. Third Amended and Restated Agreement for Purchase
and Sale of Assets of the OEM Business among
International Jensen Incorporated and IJI
Acquisition, Inc. dated as of January 3, 1996, but
executed on June 23, 1996 (incorporated by
reference to Exhibit 2.2 of International Jensen
Incorporated's Current Report on Form 8-K for an
event occurring on June 23, 1996).
4. Receivables Sales Agreement among International
Jensen Incorporated, IJI Acquisition Corp. and
Harris Trust and Savings Bank dated as of August
28, 1996.
5. Credit Agreement among Recoton Corporation, The Chase
Manhattan Bank, and the Lenders made party thereto
dated as of August 27, 1996.
6. Management Services Agreement among IJI
Acquisition Corp. and International Jensen
Incorporated dated August 28, 1996.
7. Supply and Services Agreement among IJI
Acquisition Corp. and International Jensen
Incorporated dated August 28, 1996.
8. Shared Facilities Agreement among IJI Acquisition
Corp. and International Jensen Incorporated dated
August 28, 1996.
9. Non-Competition Agreement among IJI Acquisition
Corp. and International Jensen Incorporated dated
August 28, 1996.
10. License Agreement among IJI Acquisition Corp. and
International Jensen Incorporated dated August 28,
1996.
11. Employment Agreement among Recoton Corporation and
Robert G. Shaw dated as of May 1, 1996
<PAGE>
RECOTON CORPORATION AND INTERNATIONAL JENSEN INCORPORATED
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS AT JUNE 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
Recoton International
Corporation Jensen, Inc.
and and
Subsidiaries Subsidiaries Pro Forma Adjustments
Historical Historical Pro Forma
ASSETS (Note 3) (Note 3) Amount Note Combined
- ------ ---------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 5,745 $ 3,146 $ 8,891
Accounts receivable (less
allowance for possible loss) 38,009 42,002 80,011
Inventories 65,264 36,237 $ 1,045 5A(1) 102,546
Receivable from sale of OEM Business 4,598 (4,598) 5A(4)
Prepaid expenses and other
current assets 12,243 8,497 20,740
-------- -------- ------- --------
Total current assets 121,261 94,480 (3,553) 212,188
Property and equipment (less
accumulated depreciation and
amortization) 25,717 3,516 29,233
Goodwill 15,952 6,377 9,558 5A(2) 31,887
Other assets 6,067 8,263 (2,000) 5A(3) 12,330
-------- -------- ------- --------
T O T A L $168,997 $112,636 $ 4,005 $285,638
======== ======== ======= ========
LIABILITIES
Current liabilities:
Due to banks $ 3,416 $19,173 $ (4,598) 5A(4) $ 3,416
(14,575) 5A(5)
Short-term borrowings 2,000 (2,000) 5A(3)
Long-term debt classified as
current 15,000 (15,000) 5A(6)
Current portion of long-term debt 4,913 4,913
Accounts payable 10,348 9,757 20,105
Accrued expenses 4,997 14,891 19,888
Income taxes payable 2,142 2,142
-------- ------- -------- --------
Total current liabilities 25,816 60,821 (36,173) 50,464
Long-term debt (less current
portion above) 17,959 74,663 5A(5) 107,622
15,000 5A(6)
Other non-current liabilities 1,113 2,330 3,443
Negative goodwill (excess of fair
value of acquired assets over
cost, net) 3,660 (3,660) 5A(2)
-------- ------- -------- -------
Total liabilities 44,888 66,811 49,830 161,529
-------- ------- -------- --------
STOCKHOLDERS' EQUITY
Common stock $ 2,516 $ 59 $ (59) 5A(7) $ 2,516
Additional paid-in capital 75,822 18,144 (18,144) 5A(7) 75,822
Retained earnings 50,968 27,203 (27,203) 5A(7) 50,968
Cumulative foreign currency
translation adjustment (262) 1,056 (1,056) 5A(7) (262)
-------- -------- -------- --------
129,044 46,462 (46,462) 129,044
Treasury stock, at cost (4,935) (637) 637 5A(7) (4,935)
-------- -------- -------- --------
Total stockholders' equity 124,109 45,825 (45,825) 124,109
-------- -------- -------- --------
T O T A L $168,997 $112,636 $ 4,005 $285,638
======== ======== ======== ========
</TABLE>
The attached notes to pro forma financial statements are made a part hereof.
<PAGE>
RECOTON CORPORATION AND INTERNATIONAL JENSEN INCORPORATED
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
International
Recoton STD Holding Jensen
Corporation Limited Incorporated
and and and
Subsidiaries Subsidiaries Subsidiaries Pro Forma Adjustments
Pro Forma Jensen OEM
Historical (Notes 1 Historical Business Pro Forma
(Note 2) and 4) (Note 3) (Note 5B (1)) Other Note Combined
---------- -------- ---------- ------------- --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales $212,677 $21,220 $249,695 $(88,160) $395,432
Cost of sales 129,981 12,926 183,065 (76,039) $ 1,548 5B(2) 251,481
-------- ------- -------- -------- ------- --------
Gross profit 82,696 8,294 66,630 (12,121) (1,548) 143,951
-------- ------- -------- -------- ------- --------
Selling, general and administrative
expenses 62,747 8,316 63,735 (9,545) 172 5B(2) 125,425
Interest expense 793 1,047 4,574 (85) 3,211 5B(3) 9,540
Investment income (569) (70) (278) (917)
-------- ------- -------- -------- ------- --------
62,971 9,293 68,031 (9,630) 3,383 134,048
-------- ------- ------- -------- ------- --------
Income (loss) before income taxes 19,725 (999) (1,401) (2,491) (4,931) 9,903
Income taxes provision (credit) 4,672 (83) (518) (1,000) (1,165) 5B(4) 1,906
-------- ------- ------- ------- ------- --------
NET INCOME (LOSS) $ 15,053 $ (916) $ (883) $(1,491) $(3,766) $ 7,997
======== ======= ======= ======= ======= ========
Earnings per share:
Primary $1.32 $.69
===== ====
Assuming full dilution $1.31 $.68
===== ====
Number of shares used in computing
per share amounts:
Primary 11,402 271 11,673
======== ======= ======
Assuming full dilution 11,466 271 11,737
======== ======= ======
</TABLE>
The attached notes to unaudited pro forma combined financial
statements are made a part hereof.
<PAGE>
RECOTON CORPORATION AND INTERNATIONAL JENSEN INCORPORATED
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
International
Recoton Jensen
Corporation Incorporated
and and
Subsidiaries Subsidiaries Pro Forma Adjustments
Jensen OEM
Historical Historical Business Pro Forma
(Note 3) (Note 3) (Note 5B (1)) Other Note Combined
----------- ------------ ---------------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net sales $106,404 $118,368 $(45,259) $179,513
Cost of sales 66,254 86,265 (37,138) $ 774 5B(2) 116,155
-------- -------- -------- ------- --------
Gross profit 40,150 32,103 (8,121) (774) 63,358
-------- -------- -------- ------- --------
Selling, general and
administrative expenses 36,283 31,287 (4,659) 81 5B(2) 62,992
Interest expense 1,154 2,088 (42) 1,480 5B(3) 4,680
Investment income (144) (158) (302)
-------- ------- ------- ------- --------
37,293 33,217 (4,701) 1,561 67,370
-------- ------- ------- ------- --------
Income (loss) before income taxes 2,857 (1,114) (3,420) (2,335) (4,012)
Income taxes provision (credit) 686 (412) (1,400) (537) 5B(4) (1,663)
-------- ------- ------- ------- --------
NET INCOME (LOSS) $ 2,171 $ (702) $(2,020) $(1,798) $ (2,349)
======== ======= ======= ======= ========
Earnings (loss) per share:
Primary $.19 $(.21)
==== =====
Assuming full dilution $.19 $(.21)
==== =====
Number of shares used in computing
per share amounts:
Primary 11,694 (456) 5B(5) 11,238
====== ==== ======
Assuming full dilution 11,702 (464) 5B(5) 11,238
====== ==== ======
</TABLE>
The attached notes to unaudited pro forma combined financial
statements are made a part hereof.
<PAGE>
RECOTON CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
AS AT JUNE 30, 1996 AND
FOR THE YEAR AND SIX MONTHS PERIODS ENDED
DECEMBER 31, 1995 AND JUNE 30, 1996
NOTE 1 - Summary of Transaction and Basis of Presentation:
- ------ ------------------------------------------------
On August 28, 1996, a newly formed wholly-owned subsidiary of
Recoton Corporation ("Recoton"), acquired for cash, in a
purchase transaction, all of the outstanding stock of
International Jensen, Inc. ("Jensen") for a purchase price
aggregating approximately $55.6 million, plus approximately $4.5
million for investment banker fees and other costs of the
transaction. The transaction was preceded by Jensen's sale of
its original equipment manufacturing business ("OEM Business")
to a member of its management.
Jensen is an Illinois based international designer, assembler
and marketer of home and car stereo loudspeakers, car stereo
players and amplifiers.
The unaudited pro forma combined financial statements give
effect to the acquisition of Jensen, after the sale of its OEM
business, under the "purchase" method of accounting. Effective
September 1, 1995, Recoton also acquired, in a purchase
transaction, the capital stock of STD Holding, Ltd. ("STD") and
certain assets of one of its subsidiaries. The pro forma
statement of operations data for the year ended December 31,
1995 also includes the historical operating results of STD for
the eight months ended August 31, 1995, adjusted for the pro
forma effects of that transaction. These unaudited pro forma
combined financial statements are presented for illustrative
purposes only, and therefore are not necessarily indicative of
the operating results and financial position that might have
been achieved had the acquisition of Jensen and STD occurred as
of an earlier date, nor are they necessarily indicative of
operating results which may occur in the future.
The unaudited pro forma combined balance sheet as at June 30,
1996 gives effect to the Jensen acquisition as though it had
been consummated on that date. Unaudited pro forma combined
statements of operations are provided for the year ended
December 31, 1995, giving effect to the Jensen and STD purchases
as though they had occurred on January 1, 1995 and for the six
month period ended June 30, 1996, giving effect to the Jensen
purchase as though it had occurred on January 1, 1996. Certain
amounts reported in Jensen's and STD's historical financial
information have been reclassified to conform with Recoton's
financial statement presentation.
In connection with the acquisition and immediately prior
thereto, Jensen sold its OEM Business for approximately $18.7
million, of which $14.1 million was paid at closing.
Additionally, Recoton borrowed, in the form of bridge loan,
approximately $60 million for the purchase of the Jensen stock
and related acquisition costs which it intends to refinance,
along with Jensen's remaining short-term debt. Recoton is
currently negotiating with financial institutions and
institutional investors for such long-term financing.
NOTE 2 - Jensen Purchase Price Determination and Allocation:
- ------ --------------------------------------------------
The purchase price of approximately $60.1 million is based on cash
paid at the closing, plus $4.5 million for estimated investment
banking fees and other costs of the acquisition.
The unaudited pro forma combined financial information reflects a
preliminary allocation of the purchase price of Jensen and is based
primarily on its recorded book values at August 28, 1996. It is
therefore subject to revision upon the determination of the fair value
of assets acquired and liabilities assumed, including any estimated
costs to eliminate duplicate facilities.
NOTE 3 - Accounting Periods:
- ------ -------------------
The pro forma periods for the year ended December 31, 1995 and for
the six months ended June 30, 1996 are Recoton's historical financial
reporting periods. Jensen has historically reported on a fiscal year
ending on the last day of February with equivalent interim quarterly
basis reporting. The unaudited pro forma financial statements combine
the historical consolidated amounts of Recoton as at June 30, 1996 and
for the six months then ended and for the year ended December 31, 1995
with those of Jensen as at August 28, 1996 (after the sale of the OEM
Business) and for the six months ended May 31, 1996 and for the year
ended February 29, 1996. Recoton believes the effect of the
difference in the reporting periods is not significant to an
understanding of the pro forma results of operations.
NOTE 4 - Pro Forma STD Amounts:
- ------ ---------------------
The amounts for STD included in the unaudited Pro Forma combined
statements of operations for the year ended December 31, 1995 have
been derived from interim unaudited financial accounting records for
the eight months ended August 31, 1995 adjusted for the pro forma
effect of that acquisition as follows:
Historical income before taxes $ 224
Eliminate nonrecurring charge incurred as a
result of the acquisition of STD by Recoton 259
-----
Balance 483
Deduct:
Interest on bank financing obtained (802)
STD executive bonuses payable under terms of
purchase contract (131)
Amortization of goodwill over 15 years on
excess of purchase price over fair value
of net assets acquired (549)
------
Pro forma (loss) before income taxes (999)
Income taxes (including pro forma effect of
foregoing adjustments of $172) 83
------
PRO FORMA NET (LOSS) $(916)
======
In addition, the number of shares used to compute pro forma earnings
per share was adjusted to include Recoton common shares issued in
connection with the STD purchase.
STD's pro forma results of operations for the eight months ended
August 31, 1995 are not considered indicative of its results for a
full year because of the seasonal nature of its business.
NOTE 5 - Jensen Pro Forma Adjustments:
- ------ ----------------------------
A. Pro forma adjustments to the balance sheet are as follows:
1. Upward restatement of inventory to fair value based on current
LIFO reserves.
2. Remeasurement of goodwill and negative goodwill based on the
purchase price to Recoton and the book values of the net
assets acquired.
3. Elimination of Jensen's short-term borrowing from Recoton.
4. Application of the remaining $4.6 million sales proceeds of
the OEM business in reduction of existing Jensen short-term
bank borrowings.
5. Long-term borrowings by Recoton to fund the acquisition of
Jensen and to refinance Jensen's remaining short-term bank
borrowings of $14.6 million. For purposes of this pro forma
presentation it has been assumed that the bridge loan
financing will be converted into longer term financing with
financial institutions and/or institutional investors.
However, no assurance is given that such financing will be
obtained based on the terms used for this presentation.
6. Reclassification of debt to noncurrent as a result of
Recoton's obtaining waivers or otherwise causing Jensen to be
in compliance with its loan covenants.
7. Elimination of Jensen's stockholders' equity accounts.
B. Pro forma adjustments to the statements of operations are as
follows:
1. The elimination of the revenues, costs and expenses of the OEM
Business, which are not acquired by Recoton, based, in part,
on Jensen's management's estimates of the allocation of
certain joint costs and expenses. It has been assumed that
after the acquisition the relative operating results of the
businesses will not be materially affected by the Management
Service Agreement and the Supply Agreement entered into with
the purchasers of the OEM Business.
2. Elimination of Jensen's amortization of negative goodwill from
cost of sales and positive goodwill from selling, general and
administrative expenses plus a charge ($746,000 for the year
and $373,000 for the six month period) for amortization of the
goodwill over a 20 year period relating to the excess of the
purchase price of Jensen over Recoton's preliminary estimates
of the fair value of the net assets acquired.
3. Interest expense on estimated net additional bank borrowings
of $42.9 million at assumed interest rates of 6.345% a year
during the estimated 120 day period of the bridge loan
financing and 8.05% a year for the permanent financing (see
Note 5A(5)).
4. The income tax effect of the foregoing, at Recoton's effective
U.S. income tax rate, and
5. The elimination of the dilutive effect of outstanding stock
options in computing loss per share amounts.
<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.
RECOTON CORPORATION
By: /s/ Joseph H. Massot
Name: Joseph H. Massot
Title: Vice President &
Treasurer
Dated: November 8, 1996
