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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) : September 18, 2000
Commission file number 0-26096
THE UNIMARK GROUP, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-2436543
(State of incorporation or organization) (I.R.S. Employer Identification No.)
UNIMARK HOUSE
124 MCMAKIN ROAD
BARTONVILLE, TEXAS 76226
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 491-2992
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ITEM 2. Acquisition or Disposition of Assets.
On August 31, 2000 the Company completed the sale to Del Monte Foods Company
(DLM), of the rights to its Sunfresh(R) brand, its McAllen Texas distribution
center, including certain inventory associated with the Sunfresh(R) brand for
$14.5 million in cash, subject to adjustment for inventory levels. The purchase
price was determined through a series of negotiations in an arms length
transaction between the Company and DLM.
Separately, DLM and UniMark entered into a long-term supply contract under
which UniMark will produce chilled and canned citrus products for DLM at
UniMark's existing facilities in Mexico. Also, DLM has granted UniMark a
long-term license for rights to the Sunfresh(R) brand for specific areas,
including Europe, Asia, the Pacific Rim and Mexico.
Del Monte Foods Company, headquartered in San Francisco, CA, with net
sales of $1.5 billion in fiscal 2000, is the largest producer and distributor
of premium quality, branded processed fruit, vegetable and tomato products in
the United States.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not Applicable
(b) Pro Forma Financial Information
The following unaudited condensed consolidated financial statements
and notes are filed herewith as follows-
- Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
June 30, 2000
- Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the year ended December 31, 1999
- Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the six months ended June 30, 2000
- Notes to Pro Forma Condensed Consolidated Financial Statements
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THE UNIMARK GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2000
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS CONSOLIDATED
---------- ----------- ------------
ASSETS
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents...................................... $ 2,156 $ 12,500(1) $ 2,156
(12,500)(2)
Accounts receivable - trade, net of allowance of $391.......... 5,604 5,604
Accounts receivable - other.................................... 448 448
Notes receivable............................................... 770 770
Inventories.................................................... 19,943 (4,700)(1) 15,243
Income and value added taxes receivable........................ 1,586 1,586
Prepaid expenses............................................... 558 (350)(1) 208
--------- --------- --------
Total current assets..................................... 31,065 (5,050) 26,015
Property, plant and equipment, net................................ 43,008 (4,020)(1) 38,988
Deferred income taxes............................................. 2,788 2,788
Goodwill, net..................................................... 2,917 2,917
Identifiable intangible assets.................................... 130 (130)(1) --
Due from related parties.......................................... 1,558 1,558
Notes receivable, less current portion............................ 902 902
Other assets...................................................... 282 282
--------- --------- --------
Total assets............................................. $ 82,650 $ (9,200) $ 73,450
========= ========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings.......................................... $ 21,566 $ (10,556)(2) $ 11,010
Current portion of long-term debt.............................. 1,670 (56)(2) 1,614
Accounts payable - trade ...................................... 3,687 3,687
Accrued liabilities............................................ 4,756 700(1) 5,456
Deferred income taxes.......................................... 4,402 4,402
--------- --------- --------
Total current liabilities................................ 36,081 (9,912) 26,169
Long-term debt, less current portion.............................. 10,365 (1,888)(2) 8,477
Shareholders' equity:
Common stock, $0.01 par value:
Authorized shares - 20,000,000
Issued and outstanding 13,938,326 shares..................... 139 139
Additional paid-in capital..................................... 63,766 63,766
Accumulated deficit............................................ (27,701) 2,600(1) (25,101)
--------- --------- --------
Total shareholders' equity............................... 36,204 2,600 38,804
--------- --------- --------
Total liabilities and shareholders' equity............... $ 82,650 $ (9,200) $ 73,450
========= ========= ========
</TABLE>
See accompanying notes to pro forma condensed consolidated
financial statements.
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THE UNIMARK GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS CONSOLIDATED
---------- ----------- ------------
<S> <C> <C> <C>
Net sales................................................. $ 66,223 $ $ 66,223
Cost of products sold..................................... 58,593 58,593
-------- -------- --------
Gross profit.............................................. 7,630 7,630
Selling, general and administrative expenses.............. 16,797 (1,312)(4) 15,485
-------- -------- --------
Income (loss) from operations............................. (9,167) 1,312 (7,855)
Other income (expense):
Interest expense........................................ (3,013) 1,300 (3) (1,713)
Interest income......................................... 309 309
Foreign currency translation loss....................... (946) (946)
-------- -------- --------
(3,650) 1,300 (2,350)
-------- -------- --------
Income (loss) before disposal of certain
Operations and income taxes............................. (12,817) 2,612 (10,205)
Operating results of certain operations disposed of
during 1999:
Net sales.......................................... 13,658 13,658
Costs and expenses................................. (13,785) (13,785)
-------- -------- --------
Operating loss .................................... (127) (127)
Loss on disposal of certain operations.................. (1,517) (1,517)
-------- -------- --------
(1,644) (1,644)
-------- -------- --------
Income (loss) before income taxes ........................ (14,461) 2,612 (11,849)
Income tax benefit ....................................... (1,465) (1,465)
-------- -------- --------
Net income (loss)......................................... $(12,996) $ 2,612 $ (10,384)
======== ======== ==========
Basic and diluted earnings (loss) per share............... $ (0.97) $ 0.20 $ (0.77)
======== ======== ==========
Weighted average shares outstanding - basic
and diluted........................................ 13,462 13,462 13,462
======== ======== ==========
</TABLE>
See accompanying notes to pro forma condensed consolidated
financial statements.
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THE UNIMARK GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS CONSOLIDATED
---------- ----------- ------------
<S> <C> <C> <C>
Net sales........................................ $ 27,186 $ $ 27,186
Cost of products sold............................ 21,777 21,777
---------- ------- ---------
Gross profit .................................... 5,409 5,409
Selling, general and administrative expenses..... 6,240 (478)(4) 5,762
---------- ------- ---------
Loss from operations............................. (831) 478 (353)
Other income (expense):
Interest expense.............................. (1,617) 625 (3) (992)
Interest income............................... 269 269
Provision for losses on abandonment
of leased facility....................... (2,490) (2,490)
Foreign currency translation loss............. (308) (308)
---------- ------- ---------
(4,146) 625 (3,521)
---------- ------- ---------
Income (loss) before income taxes................. (4,977) 1,103 (3,874)
Income tax benefit............................... (490) (490)
---------- ------- ---------
Net income (loss)................................ $ (4,487) $ 1,103 $ (3,384)
========= ======= ==========
Basic and diluted earnings (loss) per share ...... $ (0.32) $ 0.08 $ (0.24)
========= ======= ==========
Weighted average shares outstanding - basic
and diluted................................ 13,938 13,938 13,938
========= ======= ==========
</TABLE>
See accompanying notes to pro forma condensed consolidated
financial statements.
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THE UNIMARK GROUP, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1 - HISTORICAL FINANCIAL STATEMENTS
Year End Statement of Operations: The condensed consolidated statement of
operations for the year ended December 31, 1999 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
Interim Financial Statements: The condensed consolidated balance sheet at
June 30, 2000 and the condensed consolidated statement of operations for the
six months then ended are unaudited and reflect all adjustments (consisting
only of normal recurring adjustments) which are, in the opinion of management,
necessary for a fair presentation of the financial position and operating
results for the interim period. These condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto, together with Management's Discussion and
Analysis of Financial Condition And Results of Operations, contained in the
Company's annual Report on Form 10-K for the year ended December 31, 1999 filed
with the Securities and Exchange Commission. The results of operations for the
six months ended June 30, 2000 are not necessarily indicative of future
financial results.
NOTE 2 - DISPOSITION OF ASSETS
On August 31, 2000 the Company completed the sale to Del Monte Foods
Company (DLM), of the rights to its Sunfresh(R) brand, its McAllen Texas
distribution center, including certain inventory associated with the Sunfresh(R)
brand for $14.5 million in cash, subject to adjustment for inventory levels.
Separately, DLM and UniMark entered into a long-term supply contract under
which UniMark will produce chilled and canned citrus products for DLM at
UniMark's existing facilities in Mexico. Also, DLM has granted UniMark a
long-term license for rights to the Sunfresh(R) brand for specific areas,
including Europe, Asia, the Pacific Rim and Mexico.
NOTE 3 - BASIS OF PRESENTATION
The unaudited pro forma condensed consolidated balance sheet as of June
30, 2000 gives effect to the sale to DLM as if it had occurred on June 30, 2000
by applying certain pro forma adjustments to the historical financial
information. The unaudited pro forma condensed consolidated statement of
operations for the year ended December 31, 1999, and the unaudited pro forma
condensed consolidated statement of operations for the six months ended June
30, 2000, gives effect to the sale to DLM as if it had occurred on January 1,
1999 by applying certain pro forma adjustments to the historical financial
information.
The unaudited pro forma information is presented for illustrative purposes
only and does not purport to present what the Company's results would be if the
transaction occurred at the dates indicated, nor does such information purport
to project the results of operations or financial position for any future
period or as of any future date due to UniMark disposing of certain assets.
NOTE 4 - UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL ADJUSTMENTS
Unaudited Pro Forma Condensed Consolidated Balance Sheet at June 30, 2000:
The following adjustments have been made to the unaudited pro forma condensed
consolidated balance sheet:
(1) Reflects the sale proceeds received from DLM, the write-off of the
tangible and intangible assets and contractual costs of reducing US
operations associated with the sale (in thousands):
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<TABLE>
<S> <C> <C>
Cash received, net of transaction closing costs and inventory
adjustments $ 12,500
Less : Net book value of disposed assets -
Inventory $ (4,700)
Prepaid expenses (350)
Property, plant and equipment (4,020)
Identifiable intangible assets (130)
Accrued liabilities
(700) (9,900)
----------
Estimated gain before income taxes $ 2,600
==========
(2) Repayment of Debt:
Contractual -
Short-term working capital borrowings $ 8,534
Current portion of long-term debt 56
Long-term debt 1,888 $ 10,478
Other -
Short-term working capital borrowings 2,022
----------
Total Debt Repayment $ 12,500
==========
</TABLE>
The above calculations are preliminary, subject to final
determination of the net book value of inventory, property plant and equipment
and identifiable intangible assets disposed of, income tax consequences and
transaction and other costs. Actual accounting adjustments related to the
dispositions may differ from the pro forma adjustments.
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
year ended December 31, 1999 and the six months ended June 30, 2000: The
following adjustments have been made to the unaudited pro forma condensed
consolidated statement of operations for the year ended December 31, 1999 and
the six months ended June 30, 2000, assuming that the transaction was completed
effective January 1, 1999 -
(3) To adjust interest expense as a result of the use of the $12.5
million net proceeds from the sale to reduce contractually payable
debt as a result of the sale of the related collateral.
(4) To adjust selling, general and administrative expenses for costs
directly associated with the assets sold to DLM. Included in these
costs are property taxes, depreciation and amortization, repairs and
maintenance and insurance.
NOTE 5 - UNIMARK OPERATIONS SUBSEQUENT TO SALE OF THE SUNFRESH(R) BRAND TO DLM
The Company's operations, subsequent to the sale of the rights to its
Sunfresh(R) brand and the related assets to DLM, will consist primarily of
its Mexican subsidiaries and their existing facilities located in Mexico. These
subsidiaries are as follows:
1. Industrias Citricolas de Montemorelos, S.A. de C.V.
("ICMOSA"), which processes and packages the Sunfresh(R) brand
and other citrus products at its five plants in Mexico.
2. Grupo Industrial Santa Engracia S.A. de C.V. ("GISE"), which
is a major Mexican producer of citrus concentrate, oils and
juices at its three juice concentrate plants strategically
located in the citrus growing regions of Mexico. In addition,
GISE is developing, pursuant to a long-term supply contract
with an affiliate of the Coca-Cola Company, 8,650 acres of
lemon groves.
3. AgroMark, S.A. de C.V. ("AgroMark"), is an agricultural
company that grows and processes pineapples in Mexico.
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As a result of the sale, the U.S operations formally conducted by UniMark
Foods, Inc. ("Foods") will be substantially eliminated. All retail and
wholesale club sales generated in the U.S. will now be conducted by DLM. As
discussed in Note 2 above, UniMark will supply DLM, through its subsidiary
ICMOSA, with the chilled and canned citrus products previously distributed by
Foods under a long-term supply contract. During the first year of the contract,
minimum quantities committed to by DLM are less than the actual sales generated
by Foods and at margins that are substantially less than those previously
generated. The Company believes that the sales associated with the DLM contract
will be substantially greater than the minimums.
Due to the sale, UniMark has embarked on a restructuring of its operations
in order to address the change in how it will conduct its ongoing businesses.
Subsequent to September 30, 2000 substantially all of its U.S. employees will
be terminated. All cost associated with the distribution facility sold to DLM,
the sales and marketing and general and administrative costs associated with
Foods sales, will be substantially eliminated. In addition, significant costs
associated with being a publicly owned company will be reduced.
(c) The following Exhibits are provided in accordance with the
provisions of Item 601 of Regulation S-K filed herewith.
EXHIBIT INDEX
99.1 Asset Purchase Agreement dated August 25, 2000 by and among
Del Monte Corporation, UniMark Foods, Inc. and The UniMark
Group, Inc.;
99.2 Supply Agreement by and between Del Monte Corporation,
UniMark Foods, Inc. and Industrias Citricolas de Montemorelos
S.A. de C.V.;
99.3 Trademark License Agreement by and between Del Monte
Corporation and UniMark Foods, Inc.;
99.4 Transition Services Agreements
`
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 hereto duly authorized.
THE UNIMARK GROUP, INC.
(Registrant)
Date: September 18, 2000 By: /s/ Soren Bjorn
------------------------------------------
Soren Bjorn
President, Chief Executive Officer and
Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
99.1 Asset Purchase Agreement dated August 25, 2000 by and among
Del Monte Corporation, UniMark Foods, Inc. and The UniMark
Group, Inc.;
99.2 Supply Agreement by and between Del Monte Corporation,
UniMark Foods, Inc. and Industrias Citricolas de Montemorelos
S.A. de C.V.;
99.3 Trademark License Agreement by and between Del Monte
Corporation and UniMark Foods, Inc.;
99.4 Transition Services Agreements
</TABLE>
