<PAGE>
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 the earliest event reported) MAY 9, 1996
------------------------------
RXI HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
DELAWARE
- -------------------------------------------------------------------------------
(State or other jurisdiction of Incorporation)
33-94420 95-4426626
- --------------------------- --------------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
11111 SANTA MONICA BOULEVARD, SUITE 270 LOS ANGELES, CALIFORNIA 90025
- --------------------------------------------------------------------------------
(Address Of Principal Executive Offices) (Zip Code)
(310) 473-7005
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Item 7 is hereby amended in its entirety to read as follows:
(a) FINANCIAL STATEMENTS. Financial statements for Vanguard are
set forth on Page F-1.
(b) PRO FORMA FINANCIAL INFORMATION. Pro forma financial statements
for the Registrant and subsidiaries for the twelve months ended June 30, 1995,
and as at and for the nine months ended March 31, 1996, are attached at Page
F-16, F-13, and F-19 respectively.
(c) EXHIBITS. The following exhibits are filed as exhibits to this
current report on Form 8-K, and none have been incorporated by reference to any
other registration statement, report or other document (1).
EXHIBIT NUMBER DESCRIPTION
-------------- ------------
2.1 Stock Purchase Agreement, dated as of May 1,
1996, between the Company, Registrant,
Vanguard Plastics Inc. and the 1989 Steil
Family Trust.
2.2 Amendment to Financing Agreement, dated as of
February 10, 1995 among CIT, Texberry
Container Corporation, Patrick Plastics, Inc.
and the Company.
- ----------------
(1) Exhibits were filed with the initial 8-K filing.
<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 hereunto duly authorized.
RXI Holdings, Inc.
June ___, 1996 By:
------------------------------------
Leon Farahnik, President
and Chief Executive Officer
By:
-------------------------------------
Marvin Liebman,
Chief Financial Officer
<PAGE>
[LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
Vanguard Plastics of California, Inc.
Sun Valley, California
I have audited the accompanying balance sheet of Vanguard Plastics of
California, Inc. (a subsidiary of Vanguard Plastics, Inc. of Pennsylvania) as of
December 31, 1995, and the related statements of income and retained earnings,
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, based on my audit, the financial statements referred to above
present fairly, in all material respects, the financial position of Vanguard
Plastics of California, Inc. ( a subsidiary of Vanguard Plastics, Inc. of
Pennsylvania) as of December 31, 1995, and the results of its operations and its
cash flows for the year then ended, in conformity with generally accepted
accounting principles.
/s/ Gregory O. Smith - An Accounting Corporation
Mission Hills, California
February 28, 1996, except for
Note 10 as to which the
date is May 9, 1996
F-1
<PAGE>
VANGUARD PLASTICS OF CALIFORNIA, INC.
(A SUBSIDIARY OF VANGUARD PLASTICS, INC. OF PENNSYLVANIA)
BALANCE SHEET
DECEMBER 31, 1995
<TABLE>
<CAPTION>
ASSETS
1995
----
<S> <C>
CURRENT ASSETS
Cash $ 16,419
Accounts receivable, less allowance
for possible losses of $16,518
(Notes 3 and 4) 1,489,494
Other accounts receivable 101,951
Due from affiliated company 11,347
Income taxes receivable 86,300
Inventories (Notes 2,3,and 4) 1,019,592
Prepaid expenses 83,009
Deferred income taxes (Note 7) 44,805
----------
Total current assets 2,852,917
----------
PROPERTY AND EQUIPMENT, at cost (Notes 3,4)
Leasehold improvements 254,500
Machinery, equipment and molds 5,835,410
Furniture and fixtures 189,394
Automotive equipment 4,685
----------
6,283,989
Less: Accumulated depreciation and
amortization 4,734,515
----------
Net property and equipment 1,549,474
----------
OTHER ASSETS
Security deposits 66,137
Other deposits 154,028
Deferred income taxes (Note 7) 10,079
----------
Total other assets 230,244
----------
Total assets $4,632,635
----------
----------
</TABLE>
See accompanying summary of accounting policies and
notes to financial statements.
F-2
<PAGE>
VANGUARD PLASTICS OF CALIFORNIA, INC.
(A SUBSIDIARY OF VANGUARD PLASTICS, INC. OF PENNSYLVANIA)
BALANCE SHEET
DECEMBER 31, 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
1995
----
<S> <C>
CURRENT LIABILITIES
Revolving line of credit (Note 3) 754,592
Accounts payable 543,246
Accrued expenses 283,516
Payroll and sales taxes payable 3,610
Current maturities of long-term debt
(Note 4) 200,000
----------
Total current liabilities 1,784,964
LONG-TERM DEBT, net of current maturities
(Note 4) 650,000
----------
Total liabilities 2,434,964
----------
COMMITMENTS (Note 5)
STOCKHOLDERS' EQUITY
Common Stock: $1 par value, 1,000,000 shares
authorized, 500,000 shares issued and
outstanding 500,000
Retained earnings 1,697,671
----------
Total stockholders' equity 2,197,671
----------
Total liabilities and stockholders'
equity $4,632,635
----------
----------
</TABLE>
See accompanying summary of accounting policies and
notes to financial statements.
F-3
<PAGE>
VANGUARD PLASTICS OF CALIFORNIA, INC.
(A SUBSIDIARY OF VANGUARD PLASTICS, INC. OF PENNSYLVANIA)
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
1995
----
<S> <C>
NET SALES $11,278,792
COST OF SALES 9,800,573
-----------
GROSS PROFIT 1,478,219
-----------
OPERATING EXPENSES
Selling 493,126
General and
administrative 553,311
-----------
Total 1,046,437
-----------
INCOME FROM OPERATIONS 431,782
OTHER INCOME (EXPENSES):
Interest expense, net
of interest income of
$550 (170,989)
Gain on sale of assets 7,619
-----------
(163,370)
-----------
INCOME BEFORE INCOME
TAXES 268,412
INCOME TAXES:
Current 63,508
Deferred 7,869
-----------
Total 71,377
-----------
NET INCOME 197,035
RETAINED EARNINGS - BEGINNING
OF YEAR 1,500,636
-----------
RETAINED EARNINGS - END OF
YEAR $ 1,697,671
-----------
-----------
</TABLE>
See accompanying summary of accounting policies and
notes to financial statements.
F-4
<PAGE>
VANGUARD PLASTICS OF CALIFORNIA, INC.
(A SUBSIDIARY OF VANGUARD PLASTICS, INC. OF PENNSYLVANIA)
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
1995
----
<S> <C>
Cash flows from operating
activities:
Net income $ 197,035
---------
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 563,293
Gain on sale of fixed assets (7,619)
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable 140,206
Income taxes receivable (86,300)
Inventories (2,722)
Prepaid expenses 9,362
Deferred income taxes 18,795
Other assets 28,934
Decrease in:
Accounts payable, accrued
expenses and other taxes (369,728)
Income taxes payable (119,546)
Deferred income taxes (847)
---------
Total adjustments 173,828
---------
Net cash provided by operating
activities 370,863
---------
Cash flows from investing
activities:
Purchases of equipment (598,453)
From sale of equipment 7,619
---------
Net cash used in investing
activities (590,834)
---------
Cash flows from financing
activities:
Net borrowings
under line of credit agreement 108,218
Proceeds from issuance of
long-term borrowing 1,000,000
Payments on debt (880,000)
---------
Net cash provided by
financing activities 228,218
---------
Net increase in cash 8,247
Cash - beginning of year 8,172
---------
Cash - end of year $ 16,419
---------
---------
</TABLE>
See accompanying summary of accounting policies and
notes to financial statements.
F-5
<PAGE>
VANGUARD PLASTICS OF CALIFORNIA, INC.
(A SUBSIDIARY OF VANGUARD PLASTICS, INC. OF PENNSYLVANIA)
SUMMARY OF ACCOUNTING POLICIES
ORGANIZATION
Vanguard Plastics of California, Inc. was incorporated on April 7, 1981.
The Company is a 51% owned subsidiary of Vanguard Plastics, Inc. of
Pennsylvania.
STATEMENT OF CASH FLOWS
For purposes of the statement of cash flows, the company considers all
highly liquid investments purchased with an original maturity of three months or
less to be cash equivalents.
INVENTORIES
Inventories are valued at the lower of cost or market. Cost is determined
by the first-in, first-out (FIFO) method.
PROPERTY, EQUIPMENT AND DEPRECIATION
Property and equipment are stated at cost. Depreciation is computed over
the estimated useful lives of the assets by the straight-line method for
financial reporting and by accelerated and straight-line methods for income tax
purposes. Machinery and equipment are depreciated from 7 to 10 years, molds from
3 to 5 years, furniture and fixtures from 5 to 7 years, automobiles for 5 years,
and leasehold improvements from 4 to 10 years.
INCOME TAXES
Deferred tax assets and deferred tax liabilities reflect the tax
consequences in future years of differences between the income tax bases of
assets and liabilities and the corresponding bases used for financial reporting
purposes. The measurement of deferred tax assets is adjusted by a valuation
reserve, if necessary, so that the net tax benefits are recognized only to the
extent that they will more likely than not be realized.
F-6
<PAGE>
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash, Accounts Receivable and Accounts Payable - The carrying amounts
approximate fair value because of the short maturities of these instruments.
Revolving Line of Credit - The carrying amount approximates fair value
because the interest rate is based on variable reference rates.
Long-Term Debt (excluding revolving line of credit) - The carrying amount
of long-term debt approximates fair value.
CONCENTRATION OF CREDIT RISK
Financial Instruments which subject the Company to credit risk consist
primarily of accounts receivable. The Company performs ongoing credit
evaluations of its customers and maintains an allowance for potential credit
losses.
F-7
<PAGE>
VANGUARD PLASTICS OF CALIFORNIA, INC.
(A SUBSIDIARY OF VANGUARD PLASTICS, INC. OF PENNSYLVANIA)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. BUSINESS:
The Company manufactures and decorates plastic bottles and containers for
use in the production of consumer and commercial products.
2. INVENTORIES:
Inventories are summarized as follows:
December 31, 1995
------------ ----
Finished goods $ 799,471
Raw Material and supplies 220,122
----------
$1,019,593
----------
----------
3. REVOLVING LINE OF CREDIT:
The Company has credit facilities with a bank in 1995 providing maximum
borrowings of $2,600,000, including a revolving line of credit up to
$1,250,000, an equipment revolver up to $350,000, and a term loan up to
$1,000,000. The agreements contain certain covenants that restrict the
payment of dividends, and require maintenance of minimum tangible net worth
and net income after taxes levels.
Outstanding borrowings under the Company's lines of credit amount to
$754,592 at December 31, 1995. The facilities which require interest on
outstanding borrowings at the bank's prime rate plus 1/2% (9% at December
31, 1995) are collateralized by accounts receivable, inventories and
equipment. The maturity date of the loans is May 30, 1996. Any renewal or
extension of the maturity date remains the sole discretion of the bank.
4. LONG-TERM DEBT:
Long-term debt consists of the following:
December 31, 1995
------------ ----
Note payable to bank $850,000
Less: Current portion 200,000
--------
Total Long-term debt $650,000
--------
--------
F-8
<PAGE>
VANGUARD PLASTICS OF CALIFORNIA, INC.
(A SUBSIDIARY OF VANGUARD PLASTICS, INC OF PENNSYLVANIA)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
The term loan is payable in monthly installments of $16,667, plus interest
at 3/4% in excess of prime (9 1/4% at December 31, 1995), commencing May,
1995, for sixty months. The loan is collateralized by the accounts
receivable, inventory, and equipment of the Company, and has an outstanding
balance of $850,000 at December 31, 1995.
5. COMMITMENTS:
Leases
The Company is obligated under certain lease agreements expiring at various
dates during the next three years. The leases are operating leases. These
leases generally provide that the Company pay for utilities, insurance,
property taxes, and maintenance.
Minimum non-cancellable lease obligations on leases for the next five years
are as follows:
1996 $345,306
1997 210,915
1998 17,738
--------
Total minimum obligation $573,959
--------
--------
Rental expenses for all operating leases are $386,639 in 1995.
6. RELATED PARTY TRANSACTIONS:
The Company had sales of $4,897 to Zuckerman-Honickman, Inc. and sales of
$461,314 to Delta Industries International, Inc. ("Delta") for the year
ended December 31, 1995. The Company and "Delta" are both related to
Zuckerman-Honickman, Inc., which owns 60% of Vanguard Plastics, Inc. of
Pennsylvania and 100% of "Delta".
F-9
<PAGE>
VANGUARD PLASTICS OF CALIFORNIA, INC.
(A SUBSIDIARY OF VANGUARD PLASTICS INC. OF PENNSYLVANIA)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
The Company receives certain management services from Vanguard Plastics,
Inc. of Pennsylvania. Charges for these services were $115,565 in 1995.
A shareholder owning a substantial portion of the outstanding stock of the
Company controls another corporation that supplied materials to the Company
at a total cost of $577,107 in 1995. As of December 31, 1995, the Company
owed $33,800 to this Corporation.
7. TAXES ON INCOME:
Deferred tax assets - Current is recorded for temporary differences between
the treatment of bad debts, accrued vacation pay, and contributions.
Deferred tax assets - Noncurrent is comprised of available tax credit
carryforwards generated under the Alternative Minimum Tax ("AMT") system
and the California Manufacturers' Investment Credit. The AMT credits can be
carried forward indefinitely and can be used to offset regular tax
liabilities whenever such liabilities exceed AMT liabilities. The
Manufacturers' Investment Credit, new in 1995, offsets regular state tax
and can be carried forward for ten years. A deferred tax asset valuation
allowance is not deemed necessary at December 31, 1995.
Deferred tax liabilities - Noncurrent is due primarily to temporary
differences arising from accelerated methods of depreciation for tax
purposes.
1995
----
Deferred tax assets -
Current
Accrued vacation $16,321
Bad Debts 6,607
Inventory 21,877
-------
Total current deferred tax assets $44,805
-------
-------
F-10
<PAGE>
VANGUARD PLASTICS OF CALIFORNIA, INC.
(A SUBSIDIARY OF VANGUARD PLASTICS INC. OF PENNSYLVANIA)
NOTES TO FINANCIAL STATEMENT (CONTINUED)
DECEMBER 31, 1995
Deferred tax assets -
Noncurrent
California Manufacturers' Investment Credit $ 32,040
Federal Alternative Minimum Tax Credits 32,903
--------
$ 64,943
Deferred tax liabilities -
Noncurrent
Depreciation (54,864)
--------
Total noncurrent deferred tax assets $ 10,079
--------
--------
The difference between the income taxes computed at the Federal statutory
rate and the provision for income taxes is primarily the result of the
benefit from the current utilization of some of the Company's alternative
minimum tax credits, California Manufacturers' Investment credits, and
state income taxes net of Federal benefit.
8. SIGNIFICANT CUSTOMERS:
The Company derived approximately 54% of its sales in 1995 from five major
customers.
9. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Year Ended December 31, 1995
----------------------- ----
Cash paid for:
Interest $171,914
Income taxes 269,154
10. SUBSEQUENT EVENT:
On May 9, 1996, the stockholders of the Company signed an agreement to sell
100% of the outstanding shares of the Company to RXI Plastics, Inc.
F-11
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following pro forma consolidated financial information of the Company
presents the unaudited consolidated balance sheet as of March 31, 1996, and the
unaudited consolidated statements of operations for the year ended June 30, 1995
and for the nine months ended March 31, 1996. The pro forma consolidated balance
sheet gives effect to the acquisition of Vanguard Plastics of California, Inc.
("Vanguard") (as set forth in the Company's Form 8-K as filed with the
Securities and Exchange Commission on May 24, 1996)(File Number 033-94420) and
to the disposition of the distribution business of Texberry Container
Corporation ("Texberry Distribution") as if both transactions had occurred on
March 31, 1996. The pro forma consolidated statement of operations for the year
ended June 30, 1995 gives effect to the acquisition of Vanguard, the acquisition
of Continental Plastics, Inc. ("Continental") and the issuance of $60 million of
14% senior notes due 2002 (the "Issuance") (both as set forth in the Company's
Registration Statement on Form S-4 as filed with the Securities and Exchange
Commission on October 10, 1995)(File Number 033-94420) and to the
disposition of Texberry Distribution, as if each of these transactions had
occurred on July 1, 1994. The pro forma consolidated statement of operations for
the nine months ended March 31, 1996 gives effect to the acquisition of Vanguard
and the disposition of Texberry Distribution as if both transactions had
occurred on July 1, 1995.
The pro forma consolidated financial statements should be read in
conjunction with the Company's Consolidated Financial Statements and
"Management's Discussion and Analysis" appearing in the Company's Registration
Statement on Form S-4, which are incorporated herein by this reference. The pro
forma consolidated balance sheet and statements of operations do not purport to
present what the Company's actual statement of financial condition or results of
operations would have been had such transactions in fact occurred on such dates.
The pro forma consolidated statements of operations also do not purport to
project the results of operations of the Company for the current year or for any
other period.
F-12
<PAGE>
RXI HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
As of March 31, 1996
(dollars in thousands)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Vanguard Adjustments Adjustments
Company Plastics, Inc. for the for the Pro Forma
Historical Historical Acquisition Disposition Adjusted
---------- -------------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 254 $ 288 $ (288) (e) $ 1,624 (h) $ 1,878
Accounts receivable 10,348 1,554 (222) (f) (2,831) (g) 8,849
Inventories 12,359 1,098 (100) (a) (2,109) (g) 11,248
Prepaid expenses and other current assets 644 88 732
Income tax refund receivable 211 86 297
Current deferred income taxes 876 45 921
-------- ------ ------- -------- --------
Total current assets 24,692 3,159 (610) (3,316) 23,925
Deferred payment from purchaser - - 2,250 (h) 2,250
Funds held in escrow - (h)
Property, plant and equipment, net 36,692 1,525 (1,292) (a) (6) (i) 36,919
Intangible assets, net 34,094 - (6,514) (i) 27,580
Other assets 436 231 369 (a) 1,036
-------- ------ ------- -------- --------
TOTAL ASSETS $ 95,914 $4,915 $(1,533) $ (7,586) $ 91,710
-------- ------ ------- -------- --------
-------- ------ ------- -------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term obligations $ 175 $ 200 $ (200) (c) $ 175
Accounts payable 7,956 894 (222) (f) (2,900) (g) 5,728
Accrued liabilities-other 3,702 139 200 (a) (490) (g) 3,551
Accrued interest 1,473 - 1,473
Revolving line of credit 12,348 683 (188) (c)(e) (4,000) (j) 8,843
-------- ------ ------- -------- --------
Total current liabilities 25,654 1,916 (410) (7,390) 19,770
-------- ------ ------- -------- --------
Long-term obligations, less current maturities 64,788 600 1,276 (c)(d) 66,664
-------- ------ ------- -------- --------
Deferred income taxes 2,699 (50) (k) 2,649
-------- - -------- --------
Redeemable stock 803 803
-------- --------
Shareholders' Equity:
Series A preferred stock 9 - 9
Series B preferred stock 5 - 5
Common stock 3 500 (500) (b) 3
Warrants 1,608 - 1,608
Additional paid-in capital 13,296 - 13,296
Retained earnings (deficit) (12,951) 1,899 (1,899) (b) (146) (k) (13,097)
-------- ------ ------- -------- --------
Total shareholders' equity 1,970 2,399 (2,399) (146) 1,824
-------- ------ ------- -------- --------
-------- ------ ------- -------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 95,914 $4,915 $(1,533) $ (7,586) $ 91,710
-------- ------ ------- -------- --------
-------- ------ ------- -------- --------
</TABLE>
See accompanying notes to unaudited pro forma consolidated balance sheet.
F-13
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
NOTES TO PRO FORMA ADJUSTMENTS FOR THE ACQUISITION
(a) The Vanguard acquisition has been accounted for as a purchase. The total
purchase cost will be allocated to Vanguard's assets and liabilities based
on their relative fair values as of the closing date of the acquisition,
based on valuations and other studies which are not yet complete. The
excess of the fair value of the net assets acquired over the purchase
cost may result in negative goodwill which will be allocated to property,
plant and equipment.
The purchase cost and preliminary allocation of the excess of the net book
value of the assets acquired over their purchase cost is as follows:
<TABLE>
<CAPTION>
<S> <C>
Purchase of Vanguard's outstanding common equity. . . . . . . . . $1,176
Fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . 200
------
Total purchase cost . . . . . . . . . . . . . . . . . . . . 1,376
------
Net book value of net assets acquired . . . . . . . . . . . . . . 2,399
------
Excess of net book value over total purchase cost . . . . . . . . $1,023
------
------
Preliminary adjustments to bring historical book values to
fair value and allocate negative goodwill:
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . $ 100
Property, plant & equipment . . . . . . . . . . . . . . . . 1,292
Deferred income taxes. . . . . . . . . . . . . . . . . . . . (369)
------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,023
------
------
</TABLE>
(b) Reflects purchase of existing stockholders' equity.
(c) Reflects payment of existing indebtedness as follows:
<TABLE>
<CAPTION>
<S> <C>
Revolving line of credit . . . . . . . . . . . . . . . . . . $ 683
Current portion of long-term obligations . . . . . . . . . . 200
Long-term obligations . . . . . . . . . . . . . . . . . . . 600
------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $1,483
------
------
</TABLE>
(d) Reflects the issuance of indebtedness in connection with the acquisition as
follows:
<TABLE>
<CAPTION>
<S> <C>
Seller note . . . . . . . . . . . . . . . . . . . . . . . . $ 576
Secured term debt . . . . . . . . . . . . . . . . . . . . . 1,300
------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $1,876
------
------
</TABLE>
(e) Reflects the application of cash and initial draw on the new revolving
line of credit facility to fund the balance of the acquisition in the
amounts of $288 and $495, respectively.
(f) Reflects the elimination of accounts receivable and accounts payable
related to sales by Vanguard to the Company.
F-14
<PAGE>
NOTES TO PRO FORMA ADJUSTMENTS FOR THE DISPOSITION
(g) Reflects the sale of accounts receivable and inventories totalling $2,831
and $2,109, respectively, and the assumption by the purchaser of accounts
payable and accrued expenses of $2,900 and $490, respectively.
(h) The total net proceeds from the disposition were $6,502 including $2,628
deposited to an escrow account to be held by a designated trustee and
remitted to the Company at the end of a one year escrow period. The
amount remitted to the Company may be subject to adjustment based on the
performance of the Texberry Distribution business during the twelve
months ending May 31, 1997. The Company will not recognize any of the
proceeds held in escrow until such funds are paid to the Company. The
remaining proceeds from the disposition are as follows:
<TABLE>
<CAPTION>
<S> <C>
Deferred payment from purchaser . . . . . . . . . . $2,250
Cash received at close . . . . . . . . . . . . . . 1,624
------
Total . . . . . . . . . . . . . . . . . . . . $3,874
------
------
</TABLE>
(i) Reflects the disposition of $6 of fixed assets and $6,514 of goodwill
related to the business sold.
(j) Reflects the assumption by the purchaser of $4,000 of revolving line of
credit liability.
(k) Reflects the loss realized from the disposition as follows:
<TABLE>
<CAPTION>
<S> <C>
Assets sold:
Accounts receivable . . . . . . . . . . . . . . . $ 2,831
Inventories . . . . . . . . . . . . . . . . . . . 2,109
Fixed assets . . . . . . . . . . . . . . . . . . . 6
Goodwill . . . . . . . . . . . . . . . . . . . . . 6,514
-------
Total assets sold . . . . . . . . . . . . . . 11,460
-------
Liabilities assumed:
Accounts payable . . . . . . . . . . . . . . . . . 2,900
Accrued liabilties . . . . . . . . . . . . . . . . 490
Revolving line of credit obligation . . . . . . . 4,000
-------
Total liabilities assumed . . . . . . . . . . 7,390
-------
Net assets sold . . . . . . . . . . . . . . . . . . . . 4,070
Proceeds received . . . . . . . . . . . . . . . . . . . 3,874
-------
Loss on disposition before income taxes . . . . . . . . (196)
Benefit for income taxes on loss from disposition . . . 50
-------
Net loss on sale . . . . . . . . . . . . . . . . . . . $ (146)
-------
-------
</TABLE>
F-15
<PAGE>
RXI HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended June 30, 1995
(dollars in thousands)
<TABLE>
<CAPTION>
Continental
Plastics, Inc. Pro Forma
Historical Adjustments Pro Forma
Vanguard (period July 1, for the Adjustments
Company Plastics, Inc. 1994 to February Issuance and for the Pro Forma
Historical Historical(a) 10, 1995)(b) Acquisitions Disposition Adjusted(c)
---------- -------------- ---------------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $86,779 $11,584 $9,038 $(1,045) (d) $(32,104) (i) $74,252
Cost of sales 66,756 9,931 5,679 (1,103) (d)(e) (25,573) (i) 55,690
------- ------- ------ ------- -------- -------
Gross profit 20,023 1,653 3,359 58 (6,531) 18,562
Operating expenses 19,338 1,098 2,009 386 (e) (4,133) (j) 18,698
------- ------- ------ ------- -------- -------
Income from operations 685 555 1,350 (328) (2,398) (136)
------- ------- ------ ------- -------- -------
Other expense (income):
Interest 7,284 195 832 2,231 (f) (787) (k) 9,755
Other (102) - 20 (82)
------- ------- ------ ------- -------- -------
Total 7,182 195 852 2,231 (787) 9,673
------- ------- ------ ------- -------- -------
Income (loss) before income taxes (6,497) 360 498 (2,559) (1,611) (9,809)
Provision (benefit) for income taxes (1,877) 87 296 (1,024) (g) (644) (g) (3,162)
------- ------- ------ ------- -------- -------
Income (loss) before minority interest (4,620) 273 202 (1,535) (967) (6,647)
Minority interest in income of
subsidiary (10) - - 10 (h) - -
------- ------- ------ ------- -------- -------
Net income (loss) $(4,630) $ 273 $ 202 $(1,525) $ (967) $(6,647)
------- ------- ------ ------- -------- -------
------- ------- ------ ------- -------- -------
</TABLE>
See accompanying notes to unaudited pro forma
consolidated statement of operations.
F-16
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1995
(a) Vanguard Historical amounts reflect the operations of Vanguard from July 1,
1994 to June 30, 1995.
(b) Continental Historical amounts reflect the operations of Continental from
July 1, 1994 to February 10, 1995 (its date of acquisition).
(c) Pro forma amounts reflect the Company's operating results as if the
Issuance, the acquisitions and the disposition had all occurred on July 1,
1994.
NOTES TO PRO FORMA ADJUSTMENTS FOR THE ACQUISITIONS AND ISSUANCE
(d) Reflects adjustment for sales and cost of sales by Vanguard to the Company
totalling $1,045.
(e) Reflects adjustments to Continental's and Vanguard's cost of sales,
selling, general and administrative expenses for the following:
<TABLE>
<CAPTION>
Selling, General
Cost of Sales and Administrative
------------- ------------------
<S> <C> <C>
Pro forma amortization of Continental goodwill
over a useful life of 15 years . . . . . . . . . . . . $ --- $ 447
Less historical amortization . . . . . . . . . . . . . --- (61)
Additional depreciation expense related to the
increase in the book value of Continental's
property and equipment as a result of purchase
accounting adjustments . . . . . . . . . . . . . . . . 187 ---
Reduction in depreciation expense related
to the adjustment to Vanguard's property and
equipment as a result of purchase
accounting adjustments. . . . . . . . . . . . . . . . . (245) ---
----- -----
$ (58) $ 386
----- -----
----- -----
</TABLE>
(f) Reflects adjustment to interest expense for the Issuance and acquisitions
as follows:
<TABLE>
<CAPTION>
<S> <C>
Interest on $60,000,000 face amount of Senior
Notes at 14% . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,400
Amortization of original issue discount on Senior Notes . . . . . . . 106
Interest on average balance of new line of credit of
$10,500,000 at 9% . . . . . . . . . . . . . . . . . . . . . . . . . . 945
Interest on $4,500,000 Seller Note at 8% . . . . . . . . . . . . . . 360
Amortization of deferred financing costs relating to the Issuance . . 521
Interest on $1,300,000 term note issued in connection with the
purchase of Vanguard at 10.5%. . . . . . . . . . . . . . . . . . . . 126
Interest on $576,000 Vanguard Seller Note at 10% . . . . . . . . . . 54
-------
Pro forma interest expense for the Issuance and the Acquisitions . . 10,512
Less Company historical interest expense (net of $21 of interest
relating to other term obligations) . . . . . . . . . . . . . . . . . 7,263
Less Continental historical interest . . . . . . . . . . . . . . . . 822
Less Vanguard historical interest . . . . . . . . . . . . . . . . . . 196
-------
Net adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,231
-------
-------
</TABLE>
(g) The benefit for income taxes is computed by applying the combined statutory
rate of 40%.
(h) Reflects the elimination of minority interest which was reacquired in
October 1994.
F-17
<PAGE>
NOTES TO PRO FORMA ADJUSTMENTS FOR THE DISPOSITION
(i) Reflects adjustment for historical sales and cost of sales to distribution
customers which were sold to the Purchaser as part of the disposition.
(j) Reflects adjustments to the Company's selling, general and administrative
expenses for the following:
<TABLE>
<CAPTION>
Selling, General
and Administrative
------------------
<S> <C>
Elimination of amortization expense related to the
goodwill of Texberry Distribution . . . . . . . . . . . $ 293
Eliminate expenses related to branch
operations sold . . . . . . . . . . . . . . . . . . . . 2,114
Eliminate personnel expenses related to
reductions in staffing as a result of the
disposition . . . . . . . . . . . . . . . . . . . . . . 1,726
-------
$ 4,133
-------
-------
</TABLE>
(k) Reflects adjustments to interest income/expense as a result of the
Disposition as follows:
<TABLE>
<CAPTION>
<S> <C>
Interest income on the $2,250,000 deferred payment
from purchaser at 10% . . . . . . . . . . . . . . . . . $ 225
Reduction in interest expense arising from the
application of proceeds from the Disposition
to reduce the Company's short-term debt . . . . . . . . 162
Reduction in interest expense arising from the
assumption of debt by the purchaser . . . . . . . . . . 400
-----
Total adjustment . . . . . . . . . . . . . . . . . . . $ 787
-----
-----
</TABLE>
F-18
<PAGE>
RXI HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Nine Months Ended March 31, 1996
(dollars in thousands)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Vanguard Adjustments Adjustments
Company Plastics, Inc. for the for the Pro Forma
Historical Historical (a) Acquisition Disposition Adjusted(b)
---------- -------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net sales $70,164 $8,086 $ (942) (c) $(22,327) (f) $54,981
Cost of sales 55,029 6,959 (1,126) (c)(d) (17,878) (f) 42,984
------- ------ ------- -------- -------
Gross profit 15,135 1,127 184 (4,449) 11,997
Operating expenses 13,245 715 (3,101) (g) 10,859
------- ------ ------- -------- -------
Income from operations 1,890 412 184 (1,348) 1,138
------- ------ ------- -------- -------
Other expense (income):
Interest 7,962 117 29 (e) (591) (h) 7,517
Other 78 - 78
------- ------ ------- -------- -------
Total 8,040 117 29 (591) 7,595
------- ------ ------- -------- -------
Income (loss) before income taxes (6,150) 295 155 (757) (6,457)
Provision (benefit) for income taxes (1,547) 62 (i) (303) (i) (1,788)
------- ------ ------- -------- -------
Net income (loss) $(4,603) $ 295 $ 93 $ (454) $(4,669)
------- ------ ------- -------- -------
------- ------ ------- -------- -------
OTHER DATA:
</TABLE>
See accompanying notes to unaudited pro forma
consolidated statement of operations.
F-19
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 31, 1996
(a) Vanguard Historical amounts reflect the operations of Vanguard from July 1,
1995 to March 31, 1996.
(b) Pro forma amounts reflect the Company's operating results as if the
acquisition of Vanguard and the Disposition occurred on July 1, 1995.
(c) Reflects adjustment to sales and cost of sales of $942 to eliminate the
impact of sales from Vanguard to the Company.
(d) Reflects the reduction in depreciation expense totalling $184 related to
the adjustment to Vanguard's property and equipment as a result of
purchase accounting adjustments.
(e) Reflects adjustment to interest expense for the Vanguard acquisition as
follows:
<TABLE>
<CAPTION>
<S> <C>
Interest on average balance of new line of credit of
$500,000 at 9% . . . . . . . . . . . . . . . . . . . . . . . . . $ 37
Interest on $1,300,000 term note issued in connection with the
purchase of Vanguard at 10.5%. . . . . . . . . . . . . . . . . . 75
Interest on $576,000 Vanguard Seller Note at 10% . . . . . . . . 34
----
Pro forma interest expense for the Vanguard acquisition . . . . . 146
Less Vanguard historical interest . . . . . . . . . . . . . . . . 117
----
Net adjustment . . . . . . . . . . . . . . . . . . . . . . . . . $ 29
----
----
</TABLE>
(f) Reflects adjustment for historical sales and cost of sales to distribution
customers which were sold to the Purchaser as part of the disposition.
(g) Reflects adjustments to the Company's selling, general and administrative
expenses for the following:
<TABLE>
<CAPTION>
Selling, General
and Administrative
------------------
<S> <C>
Elimination of amortization expense related to the
goodwill of Texberry Distribution . . . . . . . . . . . $ 220
Eliminate expenses related to branch
operations sold . . . . . . . . . . . . . . . . . . . . 1,586
Eliminate personnel expenses related to
reductions in staffing as a result of the
disposition . . . . . . . . . . . . . . . . . . . . . . 1,295
-------
$ 3,101
-------
-------
</TABLE>
(h) Reflects adjustments to interest income/expense as a result of the
Disposition as follows:
<TABLE>
<CAPTION>
<S> <C>
Interest income on the $2,250,000 note receivable
from purchaser at 10% . . . . . . . . . . . . . . . . . $ 169
Reduction in interest expense arising from the
application of proceeds from the Disposition to
to reduce the Company's short-term debt . . . . . . . . 122
Reduction in interest expense arising from the
assumption of debt by the purchaser . . . . . . . . . . 300
-----
Total adjustment . . . . . . . . . . . . . . . . . . . $ 591
-----
-----
</TABLE>
(i) The provision (benefit) for income taxes is computed by applying the
combined statutory rate of 40%.
F-20
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 16,419
<SECURITIES> 0
<RECEIVABLES> 1,489,494
<ALLOWANCES> 16,518
<INVENTORY> 1,019,592
<CURRENT-ASSETS> 2,852,917
<PP&E> 6,283,989
<DEPRECIATION> 4,734,515
<TOTAL-ASSETS> 4,632,635
<CURRENT-LIABILITIES> 1,784,964
<BONDS> 650,000
0
0
<COMMON> 500,000
<OTHER-SE> 1,697,671
<TOTAL-LIABILITY-AND-EQUITY> 4,632,635
<SALES> 11,278,792
<TOTAL-REVENUES> 11,278,792
<CGS> 9,800,573
<TOTAL-COSTS> 9,800,573
<OTHER-EXPENSES> 1,046,437
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 170,989
<INCOME-PRETAX> 268,412
<INCOME-TAX> 71,377
<INCOME-CONTINUING> 197,035
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 197,035
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
