SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 7, 1997
-------------
CERBCO, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-16749 54-1448835
(Commission File Number) (IRS Employer Identification No.)
3421 Pennsy Drive, Landover, Maryland 20785
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code:
(301) 773-1784 (tel)
(301) 322-3041 (fax)
(301) 773-4560 (24-Hour Fax Vault Information)
None
(Former name or former address, if
changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
CERBCO, Inc. ("CERBCO") has entered into a definitive Investment,
Redemption and Stock Purchase Agreement (the "Agreement") pursuant to which
Capitol Office Solutions, Inc. ("COS") will redeem CERBCO's entire two-thirds
stake in COS held by CERBCO's wholly-owned subsidiary, CERBERONICS, Inc.
("CERBERONICS"), for a redemption price of approximately $19,000,000. Under the
Agreement, CERBCO, through CERBERONICS, will also receive a two-thirds share of
an approximate $5,000,000 pre-redemption dividend of excess cash to be disbursed
by COS, for a total of approximately $22,000,000 in cash to be received by
CERBCO, subject to formula adjustment based upon audited financial statements at
the time of closing.
COS is a provider of copier and fax equipment sales, service and
supplies in the Washington, DC and Baltimore, MD metropolitan areas. Additional
parties to the Agreement include Armen Manoogian, President and one-third owner
of COS, and Golder, Thoma, Cressey, Rauner Fund IV of Chicago, IL.
The transaction is conditioned, among other things, upon CERBCO
receiving an opinion from an investment banker stating that the consideration to
be received is fair to CERBCO. The transaction is also subject to receiving a
favorable vote of CERBCO's shareholders. The transaction is expected to close on
or before June 30, 1997.
Item 7. Financial Statements and Exhibits
The following unaudited pro forma condensed consolidated balance
sheet represents CERBCO's financial position at December 31, 1996 as if the
disposition by CERBCO of COS had occurred on that date. The unaudited pro forma
condensed consolidated statements of operations represent the results of
CERBCO's operations for the year ended June 30, 1996 and the six months ended
December 31, 1996 as if the disposition of COS had occurred on July 1, 1995. The
unaudited pro forma adjustments are based upon available information and certain
assumptions and estimates which the Company believes are reasonable under the
circumstances. The unaudited pro forma results do not purport to be indicative
of the results that would have obtained had the COS disposition occurred at the
beginning of the periods presented, nor are they intended to be a projection of
future results. The unaudited pro forma financial information should be read in
conjunction with the notes thereto.
<PAGE>
<TABLE>
CERBCO, Inc.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
<CAPTION>
Pro Forma
Entries Pro Forma Pro Forma
to Reverse Entries As Adjusted
($ in thousands) CERBCO, Inc. Consolidation to Dispose for COS
Consolidated of COS of COS Disposition
ASSETS
Current Assets:
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents $10,814 (a) ($4,456) (c) $22,000 $28,358
Accounts receivable 8,997 (a) (2,857) 0 6,140
Inventories 3,538 (a) (2,143) 0 1,395
Deferred income taxes 133 (a) (133) 0 0
Prepaid expenses and other 1,022 (a) (131) 0 891
----- ---- - ---
TOTAL CURRENT ASSETS 24,504 (9,720) 22,000 36,784
Property, Plant and Equipment -
net of accummulated depreciation 12,051 (a) (181) 0 11,870
Other Assets:
Investment in COS 0 (b) 6,887 (c) (6,887) 0
Excess of acquisition cost over
value of net assets acquired - net 4,649 (a) (2,196) 0 2,453
Deferred income taxes 41 (a) (41) 0 0
Deposits and other 887 (a) (24) 0 863
--- --- - ---
TOTAL ASSETS $42,132 ($5,275) $15,113 $51,970
======= ======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued
liabilities $5,047 (a) ($1,106) $0 $3,941
Income taxes payable 198 (a) (168) (c) 5,100 5,130
Deferred revenue 527 (a) (527) 0 0
Current portion of capital lease obligations 44 (a) (14) 0 30
-- --- - --
TOTAL CURRENT LIABILITIES 5,816 (1,815) 5,100 9,101
Long-Term Liabilities:
Capital lease obligations 170 (a) (16) 0 154
Deferred income taxes 1,032 0 0 1,032
Other 364 0 0 364
--- - - ---
TOTAL LIABILITIES 7,382 (1,831) 5,100 10,651
----- ------ ----- ------
Non-Owned Interests 16,951 (a) (3,444) 0 13,507
------ ------ - ------
Stockholders' Equity:
Common stock 117 0 0 117
Class B common stock 31 0 0 31
Additional paid-in capital 7,478 0 0 7,478
Retained earnings 10,173 0 (c) 10,013 20,186
------ - ------ ------
TOTAL STOCKHOLDERS' EQUITY 17,799 0 10,013 27,812
------ - ------ ------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $42,132 ($5,275) $15,113 $51,970
======= ======= ======= =======
See notes to unaudited pro forma condensed consolidated financial information.
</TABLE>
<PAGE>
<TABLE>
CERBCO, Inc.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996
<CAPTION>
Pro Forma
Entries Pro Forma Pro Forma
to Reverse Entries As Adjusted
($ in thousands) CERBCO, Inc. Consolidation to Dispose for COS
Consolidated of COS of COS Disposition
<S> <C> <C> <C> <C> <C>
SALES $23,459 (d) ($11,501) $0 $11,958
------- -------- -- -------
COSTS AND EXPENSES:
Cost of sales 16,753 (d) (7,146) 0 9,607
Selling, general and administrative
expenses 4,957 (d) (1,944) 0 3,013
----- ------ - ------
Total Costs and Expenses 21,710 (9,090) 0 12,620
------ ------ - ------
Operating Profit (Loss) 1,749 (2,411) 0 (662)
Investment Income 301 (d) (108) 0 193
Interest Expense (17) (d) 2 0 (15)
Other Income (Expense) - net (2) (d) 36 0 34
-- -- - --
Earnings (Loss) Before Income Taxes and
Non-Owned Interests 2,031 (2,481) 0 (450)
Provision (Credit) for Income Taxes 728 (d) (875) 0 (147)
--- ---- - ----
Earnings (Loss) Before Non-Owned Interests 1,303 (1,606) 0 (303)
Non-Owned Interests in Earnings of
Consolidated Subs 553 (d) (535) 0 18
--- ---- - --
NET EARNINGS (LOSS) $750 ($1,071) $0 ($321)
==== ======= == =====
NET EARNINGS (LOSS)
PER SHARE $0.51 ($0.73) $0.00 ($0.22)
===== ====== ===== ======
See notes to unaudited pro forma condensed consolidated financial information.
</TABLE>
<PAGE>
<TABLE>
CERBCO, Inc.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996
<CAPTION>
Pro Forma
Entries Pro Forma Pro Forma
to Reverse Entries As Adjusted
($ in thousands) CERBCO, Inc. Consolidation to Dispose for COS
Consolidated of COS of COS Disposition
<S> <C> <C> <C> <C> <C>
SALES $50,680 (e) ($20,209) $0 $30,471
------- -------- -- -------
COSTS AND EXPENSES:
Cost of sales 34,325 (e) (12,037) 0 22,288
Selling, general and administrative
expenses 9,342 (e) (3,710) 0 5,632
----- ------ - -----
Total Costs and Expenses 43,667 (15,747) 0 27,920
------ ------- - ------
Operating Profit 7,013 (4,462) 0 2,551
Investment Income 380 (e) (89) 0 291
Interest Expense (28) (e) 11 0 (17)
Other Income - net 248 (e) 48 0 296
--- -- - ---
Earnings Before Income Taxes and
Non-Owned Interests 7,613 (4,492) 0 3,121
Provision for Income Taxes 2,854 (e) (1,780) 0 1,074
----- ------ - -----
Earnings Before Non-Owned Interests 4,759 (2,712) 0 2,047
Non-Owned Interests in Earnings of
Consolidated Subs 2,704 (e) (904) 0 1,800
----- ---- - -----
NET EARNINGS $2,055 ($1,808) $0 $247
====== ======= == ====
NET EARNINGS PER SHARE $1.40 ($1.23) $0.00 $0.17
===== ===== ===== =====
See notes to unaudited pro forma condensed consolidated financial information.
</TABLE>
<PAGE>
Description of Unaudited Pro Forma Entries
(a) represents COS's historical amounts at December 31, 1996.
(b) represents CERBCO's investment in COS at December 31, 1996 using the equity
method.
(c) represents the disposition transaction described in Item 2.
(d) represents COS's historical amounts for the six months ended December 31,
1996.
(e) represents COS's historical amounts for the year ended June 30, 1996.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
INFORMATION
1. Basis of Presentation
The unaudited pro forma financial information presented is based on
CERBCO's financial position and results of operations as of December 31, 1996
and for the periods ended June 30, 1996 and December 31, 1996, showing the
effect of the deletion of COS from the consolidated entity and the receipt of
the cash proceeds from the transaction. The pro forma statements do not show any
interest income that might have been earned on the cash proceeds. The unaudited
pro forma financial information has been prepared in accordance with the
instructions to Article 11, Regulation S-X.
2. Earnings Per Share
Earnings per share data have been computed based upon the weighted average
number of common shares outstanding and common share equivalents during each
period. The following numbers of shares have been used in the computations.
Six Months Ended Year Ended
December 31, 1996 June 30, 1996
----------------- -------------
1,468,445 1,465,169
========= =========
3. Tax Effects of Pro Forma Adjustments
The tax effects of the stock redemption transaction and the pre-redemption
dividend are calculated at the statutory rates in effect at December 31, 1996.
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.
Date: March 21, 1997 CERBCO, Inc.
(Registrant)
By: /s/ Robert W. Erikson
Robert W. Erikson
President
