<PAGE>
UNITED STATES
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) September 28, 1998
MATTHEWS STUDIO EQUIPMENT GROUP
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(Exact name of registrant as specified in its charter)
CALIFORNIA
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(State or other jurisdiction of incorporation)
0-18102 95-1447751
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(Commission file number) (I.R.S. Employer Identification Number)
3111 NORTH KENWOOD STREET, BURBANK, CA 91505
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(Address of principal executive office) (Zip Code)
(818)525-5200
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(Registrant's telephone number, including area code)
N/A
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(Former name, former address and former fiscal year, if changed since last
report)
Page 1 of 10
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Item 2. Acquisition or Disposition of Assets
Effective September 28, 1998, Matthews Studio Equipment Group ("Matthews") sold
a subsidiary of Matthews named Matthews Studio Equipment, Inc., to Phillips
Associates, LLC ("Acquiror"). Such subsidiary is engaged primarily in the
business of manufacturing, sale and distribution of grip equipment used by the
entertainment production industry (the "Manufacturing Subsidiary").
The Acquiror is beneficially owned by Mr. Edward Phillips and Mrs. Norma
Phillips, through the Edward and Norma Phillips Family Trust. Mr. Phillips is
one of the co-founders of Matthews and, prior to this transaction, Mr. Phillips
was the president of the Manufacturing Subsidiary as well as one of the
directors of Matthews.
The consideration paid by the Acquiror to Matthews for the Manufacturing
Subsidiary was reached through arms-length negotiations. The Acquiror exchanged
1,916,450 shares of Matthews common stock and assumed $5 million of debt under
Matthews' bank line of credit with The Chase Manhattan Bank, for all of the
stock in the Manufacturing Subsidiary. Also, Matthews paid to Mr. Phillips
$75,000 in consideration for his cancellation of options to purchase 274,000
shares of Matthews common stock, and Mr. Phillips and Matthews exchanged mutual
general releases in respect of his employment agreement with the Manufacturing
Subsidiary and Matthews, originally entered into on July 1, 1995.
Effective September 28, 1998, Mr. Phillips resigned from all officer and
director positions he previously held with Matthews and its subsidiaries.
A copy of the press release made by Matthews in respect of this disposition of
the Manufacturing Subsidiary is attached as an exhibit.
Item 7. Financial Statements and Exhibits
(b) Pro forma financial information (unaudited)
Pro forma condensed consolidated financial data related to the disposition
of a subsidiary is located at addendum 1.
Page 2 of 10
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(2)(c) Exhibits
EXHIBIT INDEX
Exhibit Document Description
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99.1* Stock Exchange Agreement dated September 28, 1998,
among Matthews Studio Equipment Group, Matthews Studio
Equipment, Inc., Phillips Associates, LLC and Edward
Phillips, without the schedules and exhibits thereto,
other than as listed below:
i. Amendment No. 2 to Employment Agreement dated
September 28, 1998, among Matthews Studio
Equipment Group, Matthews Studio Equipment, Inc.
and Edward Phillips.
ii. Indemnification Agreement dated September 28,
1998, among Matthews Studio Equipment Group,
Matthews Studio Equipment, Inc., Phillips
Associates, LLC and Edward Phillips.
99.2* Matthews' press release in respect of the disposition
of Matthews Studio Equipment, Inc.
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* Previously filed.
Page 3 of 10
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report on Form 8-K/A to be signed on its behalf
by the undersigned hereunto duly authorized.
MATTHEWS STUDIO EQUIPMENT GROUP
(Registrant)
Date: December 10, 1998 By: /s/ Carlos D. DeMattos
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Carlos D. DeMattos
Chairman of the Board, Chief Executive Officer,
President & Chief Financial Officer
Page 4 of 10
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Addendum 1
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Pro forma financial data
The following unaudited pro forma condensed consolidated statements of
operations for the year ended September 30, 1997, and the nine months ended June
30, 1998, and the unaudited pro forma condensed consolidated balance sheet of
June 30, 1998, give effect to the sale by Matthews Studio Equipment Group (the
Company) of Matthews Studio Equipment, Inc. (the Manufacturing Subsidiary). The
pro forma information is based on the historical financial statements of the
Company and gives effect to the disposal of the operations and assets of the
Manufacturing Subsidiary. The pro forma information includes the pro forma
adjustments described in the accompanying notes to the unaudited pro forma
condensed consolidated financial statements.
The unaudited pro forma condensed consolidated financial statements have been
prepared by the management of the Company and the Manufacturing Subsidiary based
upon the historical information included herein and other financial information.
These pro forma statements do not purport to be indicative of the results of
operations or financial position which would have occurred had the disposition
been made at the beginning of the periods or as of the date indicated or of the
financial position or results of operations which may be obtained in the future.
Page 5 of 10
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MATTHEWS STUDIO EQUIPMENT GROUP AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statements of Operations
For the Year Ended September 30, 1997
(in thousands, except per share data)
<TABLE>
<CAPTION>
Less
Company Manufacturing Pro forma
------------------------------------
Historical Subsidiary Adjustments Adjusted (4)
----------- -------------- ------------- ---------------
<S> <C> <C> <C> <C>
Revenues from rental operations $ 25,589 $ $ $ 25,589
Net product sales 20,769 13,291 (602) (1) 8,080
-------- -------- -------- --------
46,358 13,291 (602) 33,669
Costs and expenses:
Cost of rental operations 14,519 14,519
Cost of sales 14,081 8,561 (602) (1) 6,122
Selling, general and administrative 12,629 4,408 8,221
Interest 2,675 (8) 450 (3) 2,340
-------- -------- -------- --------
43,904 12,961 (152) 31,095
Income before income taxes 2,454 330 (450) 2,574
Provision for income taxes 748 99 (135) 784
-------- -------- -------- --------
Income from operations $ 1,706 $ 231 $ (315) $ 1,790
======== ======== ======== ========
Income from operations:
Basic (2) $0.16 $0.21
====== ======
Diluted (2) $0.15 $0.19
====== ======
</TABLE>
See notes to pro forma condensed consolidated statements of operations
Page 6 of 10
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MATTHEWS STUDIO EQUIPMENT GROUP AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statements of Operations
For the Nine Months Ended June 30, 1998
(in thousands, except per share data)
<TABLE>
<CAPTION>
Less
Company Manufacturing Pro forma
-----------------------
Historical Subsidiary Adjustments Adjusted (4)
---------- ------------- ----------- --------
<S> <C> <C> <C> <C>
Revenues from rental operations $23,448 $ $ $23,448
Net Product Sales 20,064 10,198 (367) (1) 10,233
------- ------- ----- -------
43,512 10,198 (367) 33,681
Costs and expenses:
Cost of rental operations 13,949 13,949
Cost of sales 13,678 6,542 (367) (1) 7,503
Selling, general and administrative 14,484 3,202 11,282
Interest 4,128 16 450 (3) 3,662
------- ------- ----- -------
46,239 9,760 83 36,396
Income (loss) before income taxes (2,727) 438 (450) (2,715)
Provision (benefit) for income taxes (946) 153 (158) (942)
------- ------- ----- -------
Net income (loss) $(1,781) $ 285 $(293) $(1,773)
======= ======= ===== =======
Net income (loss) per common share,
basic and diluted (2) $ (0.16) $ (0.20)
======= =======
</TABLE>
See notes to pro forma condensed consolidated statements of operations
Page 7 of 10
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MATTHEWS STUDIO EQUIPMENT GROUP AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
1. To revise the Manufacturing Subsidiary intercompany sales elimination.
2. For the nine months ended June 30, 1998, the number of shares used to
calculate the historical and pro forma adjusted basic and diluted earnings
per share were 11,001,000 and 9,085,000, respectively.
For the twelve months ended September 30, 1997, the number of shares used to
calculate the historical basic and diluted earnings per share were
10,456,000 and 11,108,000 respectively. The number of shares used to
calculate the pro forma adjusted basic and diluted earnings per share were
8,540,000, and 9,192,000, respectively.
3. To record interest relating to the $5,000,000 debt assumed by the
Manufacturing Subsidiary.
4. The accompanying unaudited pro forma condensed consolidated financial
statements exclude the $3,963,000 gain from the sale of the Manufacturing
Subsidiary.
Page 8 of 10
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MATTHEWS STUDIO EQUIPMENT GROUP AND SUBSIDIARIES
Pro Forma Condensed Consolidated Balance Sheets
June 30, 1998
($ in thousands)
<TABLE>
<CAPTION>
Less
Company Manufacturing Pro forma
-----------------------
Historical Subsidiary Adjustments Adjusted (3)
---------- ------------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 141 $ 1 $ $ 140
Accounts receivable, net 11,424 2,796 8,628
Current portion of net investment in leases 450 450
Inventories 9,438 5,966 3,472
Prepaid expenses and other current assets 3,692 734 2,958
-------- ------- ------- --------
Total current assets 25,145 9,497 0 15,648
Property, plant and equipment 76,820 3,090 73,730
Less accumulated depreciation (25,962) (2,152) (23,810)
-------- ------- ------- --------
Net property, plant and equipment 50,858 938 49,920
Investment in leases, less current portion 291 291
Other assets 27,194 72 27,122
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Total assets $103,488 $10,507 $ 0 $ 92,981
======== ======= ======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 3,498 $ 938 $ $ 2,560
Accrued liabilities 3,219 347 1,667 (1) 4,539
Current portion of long-term debt and capital
lease obligations 2,899 61 2,838
-------- ------- ------- --------
Total current liabilities 9,616 1,346 1,667 9,937
Long-term debt and capital leases 79,126 130 5,000 (2) 73,996
Deferred income taxes 4,382 4,382
Shareholders' equity:
Preferred stock 0
Common stock 7,143 6,156 (5,000) (2) 5,987
Retained earnings 3,221 2,875 (1,667) (1) (1,321)
-------- ------- ------- --------
Total shareholders' equity 10,364 9,031 (6,667) 4,666
-------- ------- ------- --------
Total liabilities and shareholders' equit $103,488 $10,507 $ 0 $ 92,981
======== ======= ======= ========
</TABLE>
See notes to pro forma condensed consolidated balance sheets
Page 9 of 10
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MATTHEWS STUDIO EQUIPMENT GROUP AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
1. To record the costs related to the disposal of the Manufacturing Subsidiary.
2. To record the debt assumed by the Manufacturing Subsidiary.
3. The accompanying unaudited pro forma condensed consolidated financial
statements exclude the $3,963,000 gain from sale of the Manufacturing
Subsidiary.
Page 10 of 10
