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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-KA
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 19, 1996
KTI, INC.
(Exact name of Registrant as specified in Charter)
New Jersey 33-85234 22-2665282
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(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification
Number)
7000 Boulevard East, Guttenberg, New Jersey 07093
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(Address of principal executive office) (Zip Code)
Registrant's telephone number including area code- (201) 854-7777
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Not Applicable
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(Former name and former address, as changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 19, 1996 KTI, Inc. (the "Company" or the "Registrant") and its
wholly-owned subsidiary DataFocus Incorporated ("DataFocus"), executed an
Agreement with CIBER, Inc. ("CIBER"). Pursuant to the Agreement, DataFocus sold
substantially all of the assets of DataFocus' Business Systems Division, other
than cash and accounts receivable, to CIBER for $5,000,000, subject to customary
prorations, on July 26, 1996. DataFocus retained cash, accounts receivables and
substantially all of the liabilities of its Business Systems Division that arose
prior to July 26, 1996. The net proceeds of such sale, including cash and
accounts receivable retained, less related liabilities, are approximately
$4,250,000. DataFocus has distributed approximately $3,500,000 in cash to the
Company and also distributed Business Systems Division accounts receivable
having a net value of approximately $900,000. Of those sums, approximately
$150,000 will be used to pay transaction costs of KTI, relating to the sale.
Additionally, on July 29, 1996, the Company sold the stock of DataFocus to
certain members of the management of DataFocus. Pursuant to the sale, the
Company will receive $5,000 in cash, the cancellation of stock options issued to
DataFocus management to purchase 132,328 shares of the Company's common stock,
the cancellation of an option to purchase 20% of the common stock of DataFocus,
and a royalty agreement. Under the royalty agreement, the Company will receive a
monthly base royalty payment of $5,000 and quarterly payments of additional
royalties, equal to 5% of net revenue from the sale of NuTCRACKER software
product in excess of $4,000,000 per year. DataFocus will have the right to
repurchase the royalty agreement from the Company for the following payments:
A. $400,000 prior to July 29, 1997;
B. Three times the royalty payments due to the Company for the twelve
months immediately prior to the date of notice of repurchase, if given
on or after July 29, 1997 but before July 29, 1998;
C. Two times the royalty payments due to the Company for the twelve
months immediately prior to the date of notice of repurchase, if given
on or after July 29, 1998 but before July 29, 1999; or
D. An amount equal to the royalty payments due to the Company for the
twelve months immediately prior to the date of notice of repurchase, if
given after July 29, 1999.
As part of the sale of DataFocus to its management, the Company agreed to loan
up to $500,000 to certain members of the management of DataFocus, including
Thomas A. Bosanko, who was a director of the Company through August 13, 1996.
The loan bears interest of 8% per annum and provides for level quarterly
principal payments to repay the loan over a four year period. The loan is
secured by Company common stock owned by the such members of management of
DataFocus.
The royalty agreement provides that royalty payments to the Company terminate
three years after the repayment of the loans.
The Company will use the distribution from DataFocus to pay maturing debt and to
augment its working capital.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Pro forma Financial information
The following pro forma condensed balance sheet is based on the historical
financial statements of the Company at June 30, 1996. The pro forma condensed
balance sheet assumes that the Company's wholly owned subsidiary, DataFocus,
Inc. was sold prior to the end of the stated period.
(b) Exhibits
Exhibit Number DESCRIPTION
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2.1 Agreement dated as of July 19, 1996 by and among KTI, Inc.,
DataFocus Incorporated and CIBER, Inc. The schedules to
this exhibit do not contain information which is material
to an investment decision and which is not otherwise
disclosed in the Agreement. The contents of the schedules
include, among other thing, lists of assets, employees, and
contracts, purchase price and expense allocations, legal
opinions, non-compete and employment agreements,
descriptions of benefit plans and financial statements. The
Company hereby agrees to furnish supplementally a copy of
any omitted schedule to the Commission upon request. (Filed
as an exhibit to registrant's current report on Form 8-K
dated July 19, 1996.)
2.2 Agreement dated July 19, 1996 by and among KTI, Inc.,
Thomas A. Bosanko and Patrick B. Higbie. (Filed as an
exhibit to registrant's current report on Form 8-K dated
July 19, 1996.)
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KTI, INC.
PRO FORMA CONDENSED BALANCE SHEET (UNAUDITED)
JUNE 30, 1996
<TABLE>
<CAPTION>
KTI, INC. ELIMINATION OF KTI, INC. WITHOUT
ACTUAL DATAFOCUS DATAFOCUS
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<S> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 762,760 $ 3,525,721 a $ 3,882,429
(300,000) c
(106,052) b
Restricted funds - current portion 7,130,657 150,000 d 7,280,657
Accounts receivable 5,359,834 (1,156,834) b 4,203,000
Notes receivable--officers/shareholders and affiliates - current 143,340 143,340
Other receivables - current portion 265,386 265,386
Other current assets 521,200 (177,974) b 343,226
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Total current assets 14,183,175 1,934,861 16,118,036
Restricted funds 148,591 -- 148,591
Management fees receivable--affiliates 2,573,912 -- 2,573,912
Notes receivable - officers/shareholders and affiliates 67,931 -- 67,931
Other receivables 410,769 300,000 c 710,769
Investment in PERC 3,592,568 3,592,568
Deferred costs 165,967 165,967
Goodwill and other intangibles 1,891,604 (1,891,604) a 0
Other assets 1,458,684 (479,163) b 979,521
Property, equipment and leasehold improvements 82,234,821 (624,365) b 81,610,456
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$106,728,023 $ (760,271) $105,967,752
============ =========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 3,384,594 $ (488,535) b $ 2,896,059
Accrued expenses 2,210,070 (170,284) b 2,189,786
150,000 a
Current portion of long-term debt 9,266,408 9,266,408
Income taxes payable 290,000 290,000
Other current liabilities 634,769 (634,769) b (0)
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Total current liabilities 15,785,839 (1,143,588) 14,642,251
Other liabilities 131,216 150,000 d 281,216
Long-term debt, less current portion 17,327,216 -- 17,327,216
Minority interest - Maine Energy 10,418,242 -- 10,418,242
Deferred gain 44,062,500 44,062,500
Commitments and contingencies
Stockholders' equity
Preferred stock; 10,000,000 shares authorized,
no shares issued or outstanding
Common stock, no par value (stated value $.01 per share);
authorized 11,992,000; issued and outstanding 5,737,417 57,375 -- 57,375
Additional paid-in capital 33,940,831 33,940,831
Accumulated (deficit) (14,995,196) 233,317 a (14,761,879)
------------ ----------- ------------
Total stockholders' equity 19,003,010 233,317 19,236,327
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$106,728,023 $ (760,271) $105,967,752
============ =========== ============
</TABLE>
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KTI, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
KTI, INC. ELIMINATION OF KTI, INC. WITHOUT
ACTUAL DATAFOCUS DATAFOCUS
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<S> <C> <C> <C>
Revenues:
Electric power revenues $26,470,093 $26,470,093
Waste processing revenues 8,049,858 8,049,858
Other waste handling revenues 3,562,560 3,562,560
Computer services revenues 10,198,851 (10,198,851) (1) --
----------- ----------- -----------
Total revenues 48,281,362 (10,198,851) 38,082,511
Costs and expenses:
Electric power and waste processing operating costs 26,139,179 26,139,179
Costs of software sales and contracts 4,678,446 (4,678,446) (1) --
Selling, general and administrative:
Waste handling 2,940,941 2,940,941
Computer services 5,606,302 (5,606,302) (1) --
Interest - net 9,378,605 28,522 (1) 9,407,127
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Total costs and expenses 48,743,472 (10,256,225) 38,487,247
Equity in net income of PERC 334,844 334,844
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Loss before minority interest,
income taxes and extraordinary item (127,267) 57,374 (69,892)
Minority interest in Maine Energy 1,287,005 1,287,005
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Loss before income taxes and extraordinary item (1,414,271) 57,374 (1,356,897)
Income taxes 65,000 (65,000) (1) --
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Loss before extraordinary item (1,479,271) 122,374 (1,356,897)
Extraordinary item:
Gain on extinguishment of debt 147,778 147,778
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Net loss (1,331,493) 122,374 (1,209,119)
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Pro forma earnings (loss) per common share and
common share equivalent:
Extraordinary item $ 0.03 $ 0.03
Net loss $ (0.27) $ (0.24)
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Pro forma weighted average number of common shares and
common share equivalents outstanding 5,013,140 5,013,140
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</TABLE>
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KTI, INC.
JUNE 30, 1996
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
1. DESCRIPTION OF TRANSACTION
On July 26, 1996 the Company and its wholly-owned subsidiary DataFocus,
Incorporated ("DataFocus"), completed the sale of substantially all the assets
of DataFocus' Business Systems Division, other than cash and accounts
receivable, to CIBER, INC. for 5,000,000, subject to customary prorations.
DataFocus retained substantially all of the liabilities of its Business Systems
Division that arose prior to July 26, 1996.
Additionally, on July 29, 1996, the Company sold the stock of DataFocus to
certain members of the management of DataFocus. Pursuant to the sale, the
Company will receive $5,000 in cash, the cancellation of stock options issued to
DataFocus management to purchase 132,328 shares of the Company's common stock
and the cancellation of their option to purchase 20% of the common stock of
DataFocus, and a royalty agreement.
2. PRO FORMA ADJUSTMENTS
BALANCE SHEET
(a) Record proceeds from disposed business as a result of the sale of fixed
assets and sale of stock and recording effects of such sales:
<TABLE>
<S> <C>
Cash received from sale of disposed
business, net of transaction costs of $1,474,279 $3,525,721
Write off of goodwill related to disposed business 1,891,604
Record accrual for closing expenses 150,000
Gain on sale of disposed business 233,317
</TABLE>
(b) Elimination of balances related to disposed business at June 30, 1996.
(c) Record note receivable issued to management of DataFocus as a result of the
sale of stock from the management as described earlier.
(d) Establish escrow cash account and the related liability for future
contractual obligations of disposed business which the Company had guaranteed.
Such accrual will satisfy entire future liability.
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STATEMENT OF OPERATIONS
(1) Elimination of DataFocus' Statement of Operations for the period ended
December 31, 1995. For the six months ended June 30, 1996, DataFocus' operations
were reported by the Company as a discontinued operation.
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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 hereunto duly authorized.
KTI, Inc.
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(Registrant)
Dated: October 8, 1996 By: /s/ Martin J. Sergi
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Name: Martin J. Sergi
Title: President, Chief Operating Officer
