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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) April 12, 1999
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Armor Holdings, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-18863 59-3392443
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
13386 International Parkway, Jacksonville, Florida 32218
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (904) 741-5400
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________________________________________________________________________________
(Former name or former address, if changed since last report.)
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Item 2. Acquisition or Disposition of Assets
On April 12 , 1999, Armor Holdings, Inc., a Delaware corporation (the
"Company"), acquired all of the issued and outstanding capital stock (the
"Capital Stock") of Safari Land, Ltd., Inc., a California corporation
("Safariland"), pursuant to the terms of a Stock Purchase Agreement dated April
12, 1999, by and among the Company, The Neale A. Perkins Trust, The Scott T.
O'Brien and Victoria S. O'Brien Revocable Trust, The David M. Holmes and
Katherine C. Holmes Revocable Trust (collectively the "Trusts"), Neale A.
Perkins, David M. Holmes, Scott T. O'Brien (collectively with the Trusts, the
"Sellers") and Safariland (the "Stock Purchase Agreement"). The Trusts
constitute all of the shareholders of Safariland. Safariland is a leading
manufacturer of equipment for the law enforcement, military and sporting goods
markets worldwide.
Pursuant to the terms and conditions of the Stock Purchase Agreement, as
consideration for the Capital Stock, the Company paid to the Trusts an
aggregate purchase price, subject to adjustments, of $39,930,531 (the "Purchase
Price") of which $35,930,531 was paid in cash at closing, and $4,000,000 was
paid by delivery of 300,752 shares of the common stock, par value $0.01 per
share, of the Company (the "Consideration Shares"), valued in accordance with
and subject to restrictions set forth in the terms of the Stock Purchase
Agreement. The Purchase Price was determined through arms-length negotiation of
the parties. As part of its acquisition of Safariland, the Company repaid
approximately $5.1 million of Safariland's indebtedness.
The Company funded the cash portion of the Purchase Price by drawing
down $34,104,024 on its revolving credit facility with CIBC, Inc., NationsBank,
N.A., First Union National Bank and SunTrust Bank, North Florida, N.A. The
Company presently expects to repay such indebtedness with a portion of the
proceeds of the offering of certain shares of its Common Stock pursuant to and
as set forth in a Registration Statement on Form S-3, Registration No.
333-75053, filed by the Company on April 15, 1999 (the "Form S-3").
The foregoing description of the Stock Purchase Agreement and the
transactions contemplated thereby is not intended to be complete and is
qualified in its entirety by the complete text of the Stock Purchase Agreement.
Certain of the matters discussed herein include forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Exchange Act of 1934. Statements that are predictive in nature, that
depend upon or refer to future events or conditions, or that include words such
as "expects", "anticipates", "intends", "plans", "believes", "estimates" and
similar expressions are forward-looking statements. The actions of current and
potential new competitors, changes in technology, seasonality, business cycles,
new regulatory requirements, general economic conditions and other
uncertainties and events outside the Company's control may cause the Company's
actual results to differ from the expectations expressed in such
forward-looking statements.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of the Business Acquired
Audited Consolidated Financial Statements as of September 30,
1998 and September 30, 1997 and for the years then ended. Incorporated by
reference to the financial statements of Safariland (the "Safariland Financial
Statements" included in the Form S-3
Unaudited Consolidated Financial Statements as of September
30, 1998 and December 31, 1998 and for the three months ended December 31, 1998
and December 31, 1997. Incorporated by reference to the Safariland Financial
Statements included in the Form S-3.
(b) Pro Forma Financial Information 16
Unaudited Pro Forma Consolidated Financial Information of the
Company which gives effect to the acquisition of Safariland as if it had
occurred on January 1, 1998.
(c) Exhibits.
The following Exhibits are hereby filed as part of
this Current Report on Form 8-K:
Exhibit Description
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2.1 Stock Purchase Agreement by and among Armor Holdings, Inc.,
The Neale A. Perkins Trust, The Scott T. O'Brien and Victoria
S. O'Brien Revocable Trust, The David M. Holmes and Katherine
C. Holmes Revocable Trust, Neale A. Perkins, David M. Holmes,
Scott T. O'Brien and Safari Land Ltd., Inc. with respect to
the purchase of all of the issued and outstanding capital
stock of Safari Land Ltd., Inc. Incorporated by reference to
Exhibit 2.8 to the Form S-3.
23.1 Consent of Ernst & Young LLP. 21
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SIGNATURES
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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.
Dated: April 26, 1999
ARMOR HOLDINGS, INC.
By: /s/ Robert R. Schiller
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Name: Robert R. Schiller
Title: Executive Vice President and
Director - Corporate Development
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(b) Pro Forma Financial Information
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following historical and unaudited pro forma consolidated financial
information has been derived from our audited consolidated historical financial
statements as of and for the year ended December 31, 1998, and of Safariland as
of and for the year ended September 30, 1998, each having been filed previously
on Form S-3 dated April 15, 1999, and incorporated herein by reference. The
unaudited pro forma consolidated statement of operations for fiscal 1998 gives
effect to the acquisition of Safariland as if it had occurred at the beginning
of our 1998 fiscal year. The unaudited pro forma consolidated balance sheet as
of December 31, 1998 gives effect to the acquisition of Safariland as if it had
occurred as of December 31, 1998. The acquisition of Safariland was accounted
for using the purchase method. Additionally, the pro forma results do not give
effect to any of our other acquisitions that occurred during 1998.
The unaudited pro forma consolidated financial statements are presented
for informational purposes only and are not necessarily indicative of actual
results that would have been achieved had the transaction been consummated on
the dates or for the periods indicated and do not purport to indicate results
of operations as of any future period. The pro forma consolidated statement of
operations only reflects anticipated cost savings directly attributable to the
acquisition of Safariland which we believe would have resulted had the
acquisition occurred at the beginning of our fiscal 1998. The unaudited pro
forma consolidated financial statements should be read in conjunction with
Consolidated Financial Statements and the related notes thereto, and the
Consolidated Financial Statements of Safariland each having been filed
previously on Form S-3 dated April 15, 1999, and incorporated herein by
reference.
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UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
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<CAPTION>
HISTORICAL
--------------------------- PRO FORMA
COMPANY SAFARILAND(1) ADJUSTMENTS PRO FORMA
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<S> <C> <C> <C> <C>
Revenues:
Services .............................. $51,563 $ -- $ 51,563
Products .............................. 45,644 45,283 90,927
------- ------- --------
Total revenues ......................... 97,207 45,283 142,490
Cost of sales .......................... 66,451 26,209 (1,320)(2) 91,340
Operating expenses ..................... 17,204 18,715 (5,193)(3) 30,726
Amortization ........................... 1,245 -- 1,430 (4) 2,675
Interest expense (income), net ......... (625) 482 2,607 (5) 2,464
Equity in earnings of unconsolidated
subsidiaries .......................... (713) 16 (697)
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Operating income ....................... 13,645 (139) 2,476 15,982
Non-operating income ................... 28 473 501
Provision (benefit) for taxes .......... 5,077 (166) 1,465 (6) 6,376
------- ------- ------ --------
Net income ............................. $ 8,596 $ 500 $ 1,011 $ 10,107
Earnings per common share
Basic ................................. $ 0.53 $ 0.61
Diluted ............................... $ 0.50 $ 0.57
Weighted average common shares
outstanding
Basic ................................. 16,165 301 (7) 16,466
Diluted ............................... 17,354 301 (7) 17,655
Other Data:
EBITDA* ............................... 15,702 1,477 6,513 23,692
Depreciation & amortization** ......... 2,654 661 1,430 (4) 4,745
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* EBITDA is defined as net income plus interest, taxes, depreciation and
amortization. EBITDA is not a substitute for operating income, net income
and cash flow from operating activities as determined in accordance with
generally accepted accounting principles as a measure of profitability or
liquidity. EBITDA is presented because we believe some investors may find
it useful in evaluating an investment in our common stock.
** For the Company, fiscal 1998 depreciation and amortization includes
$1,409 of depreciation, which is included in cost of sales and operating
expenses, and $1,245 of amortization.
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NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS)
(1) Safariland's consolidated results of operations are presented for the
fiscal year ended September 30, 1998.
(2) Reflects an annual rent reduction of $380 negotiated with the landlord in
connection with the acquisition of Safariland and reduction of labor
costs of $940 to reflect headcount reductions achieved from the
combination of body armor manufacturing operations with Safariland.
(3) Represents an adjustment to operating expenses to reflect the following:
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Reduced compensation expense ...................... $ 3,962 (a)
Eliminated airplane costs ......................... 125 (b)
Reduced professional fees ......................... 743 (c)
Reduction in banking fees ......................... 75 (d)
Net reduction in executive auto leases ............ 43
Reduction in other non-recurring expenses ......... 245 (e)
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$ 5,193
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(a) Reflects headcount reductions ($2,247), termination of certain
employment agreements ($1,098) and elimination of non-recurring
expenses ($617) incurred by Safariland in the fiscal year ended
September 30, 1998.
(b) Reflects the elimination of costs incurred to operate an airplane
which is not being purchased in the acquisition of Safariland.
(c) Reflects the extraordinary professional fees incurred by Safariland
in contemplation of the sale of the company which would not
otherwise have been incurred.
(d) Reflects the net elimination of bank fees paid to maintain
Safariland's banking and credit functions.
(e) Reflects the reduction in other non-recurring expenses that would
have otherwise been capitalized by the Company.
(4) Reflects the annual amortization expense of the goodwill generated
by the Safariland acquisition estimated to be $75,749. The goodwill is
being amortized over a 25 year period.
(5) Represents the interest expense to be incurred to finance the purchase of
Safariland, to be eliminated due to the repayment of certain Safariland
indebtedness, and is calculated using a rate of 7.875% on borrowings of
$39,224. The actual borrowing rate is expected to be 6.375%.
(6) Reflects the adjustment to the provision for taxes by applying the
Company's effective tax rate of 37.5% to the above pro forma.
Amortization of goodwill is not tax deductible.
(7) Reflects the shares issued in the acquisition of Safariland.
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UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1998
(IN THOUSANDS)
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<CAPTION>
HISTORICAL
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PRO FORMA
COMPANY SAFARILAND(1) ADJUSTMENTS PRO FORMA
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<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ...... $ 6,789 $ -- $ 6,789
Accounts receivable, net ....... 21,363 6,202 27,565
Inventories .................... 9,103 3,555 12,658
Prepaid expenses and other
current assets ............... 5,910 2,847 8,757
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Total current assets ........... 43,165 12,604 55,769
Property, plant and
equipment, net ................. 12,173 3,733 (1,836)(2) 14,070
Intangible assets, net .......... 34,562 35,749 (3) 70,311
Investment in unconsolidated
subsidiary ..................... 483 1,459 1,942
Other assets .................... 3,970 548 4,518
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TOTAL ASSETS .................... $ 94,353 $18,344 $ 33,913 $146,610
======== ======= ========= ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Short-term debt ................ $ 5,041 $ 2,450 $ (2,450)(4) $ 5,041
Borrowing from credit
facility ..................... 39,224 (4) 39,224
Current portion of
long-term debt and
capitalized lease
obligations .................. 433 378 (338)(4) 473
Accounts payable, accrued
expenses and other ........... 13,325 3,788 5,000 (5) 22,113
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Total current liabilities ....... 18,799 6,616 41,436 66,851
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Minority interest ............... 108 108
Long-term debt and
capitalized lease obligations
and other long term
liabilities .................... 344 2,343 (2,138)(4) 549
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Total liabilities ............... 19,251 8,959 39,298 67,508
Stockholders' equity:
Common stock ................... 165 272 (269)(6) 168
Preferred stock ................ 1,200 (1,200)(6)
Additional paid in capital ..... 65,408 100 3,897 (7) 69,405
Cumulative comprehensive
income, net of tax ........... (574) (574)
Notes receivable from
stockholders ................. (215) 215 (2)
Retained earnings .............. 13,419 8,028 (8,028)(8) 13,419
Treasury stock ................. (3,316) (3,316)
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Total stockholders'
equity ...................... 75,102 9,385 (5,385) 79,102
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY ........... $ 94,353 $18,344 $ 33,913 $146,610
======== ======= ========= ========
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NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(1) Safariland's consolidated balance sheet as of September 30, 1998.
(2) Reflects the elimination of assets that will not be purchased by the
Company, pursuant to the stock purchase agreement.
(3) Reflects the excess of purchase price over the fair value of the net
assets acquired.
(4) Reflects borrowings necessary to consummate the Safariland acquisition and
to repay certain indebtedness of Safariland.
(5) The adjustment to accounts payable, accrued expenses and other liabilities
represents the accrual of direct costs and other non-recurring charges we
have incurred and expect to incur related to the acquisition.
(6) Reflects the acquisition of all of the issued and outstanding common and
preferred shares of Safariland, and the issuance of 300,752 shares of our
common stock with $0.01 par value per share.
(7) Represents additional paid in capital associated with the issuance of
300,752 shares of our common stock at an assumed price of $13.30 per
share and the elimination of $100 of Safariland additional paid in
capital.
(8) Represents the elimination of Safariland retained earnings.
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EXHIBIT 23.1
Consent of Independent Auditors
We consent to the incorporation by reference of our report dated December 10,
1998 (except for Note 11, as to which the date is February 24, 1999) with
respect to the consolidated financial statements of Safariland Ltd., Inc. for
the years ended September 30, 1998 and 1997 included in Amendment No. 1 to the
Registration Statement (Form S-3 No. 333-75053) of Armor Holdings, Inc. and
filed with the Securities and Exchange Commission in Armor Holdings, Inc.
Current Report on Form 8-K dated April 26, 1999.
ERNST & YOUNG LLP
Riverside, California
April 26, 1999
