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): February 23, 1999
Alamo Group Inc.
(Exact name of Registrant as specified in its charter)
Delaware 0-21220 74-1621248
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
1502 E. Walnut, Seguin, Texas 78155
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (830) 379-1480
- ------------------------------------------------------------------------------
(Former address, if changed since last report.)
<PAGE>
ITEM 5. OTHER EVENTS
Filed herewith is a press release dated February 23, 1999 wherein
Alamo Group Inc. ("Alamo") announced the termination of its Merger Agreement
with WEC Company, a subsidiary of Woods Equipment Company. Also contained
therein is the Preliminary Unaudited Earnings Summary for the three and twelve
month periods ended December 31, 1998. The results of operations set forth
therein for such periods are unaudited.
<PAGE>
ITEM 7(C). EXHIBITS
Exhibit
Number Description
99.1 Press release dated February 23, 1999.
<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, thereto duly authorized.
ALAMO GROUP INC.
(Registrant)
By: /s/ Jim A. Smith
--------------------------------------
Name: Jim A. Smith
Title: Executive Vice President
and Chief Financial Officer
Dated:
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ALAMO GROUP INC.
EXHIBITS
TO CURRENT REPORT ON
FORM 8-K DATED February 23, 1999
Commission File Number 0-21220
<PAGE>
Exhibit Index
Exhibit
Number Description
99.1 (i) Press release dated February 23, 1999.
<PAGE>
For: Alamo Group Inc.
Contact: Donald J. Douglass
Chairman and Chief Executive Officer
210-738-1339
Jim A. Smith
Executive Vice President, Chief
Financial Officer
210-738-1339 or 830-372-9618
Morgan-Walke Associates:
June Filingeri/Jennifer Angell
Media Contact: Merridith Ingram/
Eileen King
212-850-5600
ALAMO GROUP INC. ANNOUNCES TERMINATION OF MERGER AGREEMENT WITH WEC AND
REPORTS 1998 FOURTH QUARTER AND YEAR-END RESULTS
SEGUIN, Texas, February 23, 1999 - Alamo Group Inc. (NYSE:ALG) today
announced that WEC Company, a subsidiary of Woods Equipment Company, has
advised Alamo that it would not consummate its acquisition of Alamo. As a
result, Alamo and WEC have mutually agreed to terminate their merger agreement.
As previously reported by the Company in a filing with the Securities
and Exchange Commission on November 20, 1998, WEC had advised the Company that,
in WEC's view, a material adverse effect had occurred with respect to the
Company which would result in a closing condition under the merger agreement
being unsatisfied. While Alamo denied the substance of WEC's claims, Alamo
decided to pursue continuing discussions with representatives of WEC in order
to determine whether a revised transaction that remained in the best interests
of Alamo's stockholders could be achieved. In February, representatives of
Alamo and WEC met several times to discuss the terms of such a transaction, as
well as to review Alamo's recent operating results. On February 19, 1999, WEC's
representatives advised Alamo that, based on their review of Alamo's most
recent financial results and after consulting with their financing sources, WEC
would not proceed with a transaction to acquire Alamo.
1998 FOURTH QUARTER AND YEAR-END RESULTS
Alamo today also reported results for the fourth quarter and year
ended December 31, 1998. Net sales for the 1998 fourth quarter were $40.4
million compared with $40.8 million for the same period last year. The Company
reported a net loss for the 1998 fourth of $4.3 million or $0.45 per diluted
share reflecting substantial losses related to the termination of Rhino
International, the Company's Chinese tractor import and marketing business, as
well as transaction costs relating to the Woods Equipment Company transaction.
Excluding these costs, the net loss for the fourth quarter was $0.3 million or
$0.03 per share on a diluted basis.
For the year ended December 31, 1998, net sales were $200.6 million
compared to $203.1 million in 1997. Net income for 1998 was $4.1 million or
$0.42 per share on a diluted basis, compared with $13.6 million or $1.41 per
share on a diluted basis in 1997. Excluding costs attributable to the
termination of the Company's Rhino International operations and the Woods
Equipment Company transaction, net income was $11.3 million or $1.16 per
diluted share in 1998.
The Company noted that Rhino International sales in 1998 had decreased
to $2.2 million from $7.8 million in 1997 and that operating losses and
termination costs associated with the Rhino International operations reduced
net earnings by $3.4 million or $0.36 per diluted share in the 1998 fourth
quarter. The impact, including the third quarter litigation settlement, was
$6.4 million or $0.66 per diluted share for all of 1998. This compares to a
$0.9 million or $0.08 per diluted share impact for the 1997 year reflecting
operating losses at Rhino International and $0.3 million or $0.04 per diluted
share in the 1997 fourth quarter. Rhino International, which was acquired in
1995, is not related to the Company's core businesses. Disposal of the assets
of the operation is underway and should be concluded by mid 1999.
Costs associated with the Woods Equipment transaction were $0.6
million after tax or $0.06 per diluted share in the 1998 fourth quarter and
$0.8 million or $0.08 per diluted share for the twelve month period.
American agricultural sales were down 6% in the quarter and 2% for the
year as a result of the beginning impact of a cyclical decline in the
agricultural industry in late 1998 and a decline in parts business due to the
effect of the summer drought on the Company's principle market areas. American
industrial sales increased 7% for the quarter and 8% for the year, despite the
reduction in parts sales caused by the drought. The drought effect on parts
sales is estimated to have reduced pre-tax profits an estimated $1.5 million in
1998, or $0.10 per diluted share. European sales showed firming in the quarter
with sales about even with the year-ago period but still reflecting declines
from historical norms.
Donald J. Douglass, Chairman and Chief Executive Officer, commented:
"We anticipate the weak agricultural markets to continue in 1999 and that our
sales and profits will be effected. Agricultural backlogs are currently at low
levels, but we have taken appropriate steps to reduce costs and will continue
to react to this situation. Our Industrial business remains our strongest
operation, and we are optimistic about our European business as we continue to
see firming in our sales. We remain strong financially and are a leader in our
major markets."
Mr. Douglass concluded: "With the Woods Equipment transaction behind
us, we will focus our attention on growing and strengthening our operations as
an independent company."
Alamo Group is a leader in the design, manufacture and distribution of
heavy duty, tractor-mounted mowing and vegetation maintenance equipment in
America and Europe. The Company has 920 employees in the U.S. and 341 in
Europe, and operates eleven manufacturing facilities. The corporate offices of
Alamo Group Inc. are located in Seguin, Texas, near San Antonio, and the
headquarters for its European operations is located in Salford Priors, England,
near Birmingham.
This release contains forward looking statements that are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward looking statements involve known and unknown risks
and uncertainties which may cause the Company's actual results in future
periods to differ materially from forecasted results. Among those factors which
could cause actual results to differ materially are the following: market
demand, market softness, competition, weather, seasonality, currency-related
issues, and other risk factors listed from time to time in the Company's SEC
reports. The Company does not undertake any obligation to update the
information contained herein, which speaks only as of this date.
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<TABLE>
<CAPTION>
ALAMO GROUP INC. AND SUBSIDIARIES (NYSE:ALG)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
FOURTH QUARTER ENDED YEAR ENDED
12/31/98 12/31/97 12/31/98 12/31/97
<S> <C> <C> <C> <C>
American
Agricultural $19,463 $20,676 $ 98,393 $100,398
Industrial 12,435 11,663 61,133 56,453
European 8,512 8,457 41,027 46,241
------- ------- -------- --------
Total sales 40,410 40,796 200,553 203,092
Cost of sales 37,931 32,573 156,895 149,940
------- ------- -------- --------
Gross Margin 2,479 8,223 43,658 53,152
Operating expenses 9,082 8,060 35,169 31,026
------- ------- -------- --------
Income from operations (6,603) 163 8,489 22,126
Interest expense (557) (506) (2,647) (2,262)
Interest income 201 149 697 523
Other income (Expense) 135 (68) (4) 208
------- ------- -------- --------
Income before income taxes (6,824) (262) 6,535 20,595
Provision for income taxes (2,480) (484) 2,420 6,995
------- ------- -------- --------
Net income $ 4,344 $ 222 $ 4,115 $13,600
------- ------- -------- --------
Net income per common share:
Basic ($ 0.45) $ 0.02 $ 0.42 $ 1.42
------- ------- -------- --------
Diluted ($ 0.45) $ 0.02 $ 0.42 $ 1.41
------- ------- -------- --------
Average common shares:
Basic 9,736 9,636 9,714 9,602
------- ------- -------- --------
Diluted 9,736 9,709 9,730 9,674
------- ------- -------- --------
</TABLE>
SUMMARY BALANCE SHEET DATA
12/31/98 12/31/97
Receivables $ 49,834 $ 42,165
Inventories $ 64,578 $ 65,752
Current Liabilities $ 17,422 $ 19,876
Long Term Debt $ 35,858 $ 28,617
Equity $106,906 $106,265
