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SECURITIES AND EXCHANGE COMMISSION
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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): March 14, 1995
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Armco Inc.
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(Exact name of registrant as specified in charter)
Ohio 1-873-2 31-0200500
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation or organization) File Number) Identification No.)
One Oxford Centre, 301 Grant Street, Pittsburgh, Pennsylvania 15219-1415
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 412/255-9800
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 14, 1995, pursuant to an Asset Sale Agreement, dated as of February
9, 1995, among Armco Inc. ("Armco"), Eastern Stainless Corporation
("Eastern"), an 84%-owned subsidiary of Armco, Avesta Sheffield Holding Co.
("Avesta Sheffield") and its wholly-owned subsidiary, Avesta Sheffield East,
Inc. ("ASE"), substantially all of the assets of Eastern were sold to ASE
for consideration consisting of approximately $10.1 million in cash and the
assumption by ASE of approximately $45.5 million of certain liabilities of
Eastern (the "Asset Sale"). The consideration is subject to certain post-
closing adjustments. In the third quarter of 1994, Armco recorded a special
charge of $15 million related to this disposition.
The purchase price had been established through arm's length negotiations
between representatives of Armco, Eastern, Avesta Sheffield and ASE. The
assets sold included Eastern's Baltimore, Maryland stainless steel cut plate
production facility which contained three hot and cold reduction mills,
associated conditioning, annealing, pickling and finishing operations and a
melt shop facility.
In connection with the Asset Sale, Armco entered into an Assumption
Agreement dated as of February 9, 1995, with Eastern, whereby Armco agreed
to assume all liabilities of Eastern that were not assumed by Avesta
Sheffield or were not satisfied by application of the proceeds of the Asset
Sale. The net liabilities assumed by Armco, pursuant to the Assumption
Agreement, are estimated to be $51 million and consist primarily of long
term employee benefit obligations. These obligations were included in
Armco's consolidated balance sheet at December 31, 1994.
Upon the consummation of the transactions contemplated under the Asset Sale
Agreement and the Assumption Agreement, Eastern had no remaining net assets.
In accordance with Eastern's Plan of Complete Liquidation and Dissolution,
Eastern was dissolved and its corporate existence terminated without any
distributions being made to the Class A common stockholders or Class B
common stockholders. Armco held all of the Class A common stock of Eastern,
representing about 84 percent of the outstanding voting shares. The
remaining voting shares consisted of Eastern's Class B common stock, which
was publicly traded. The Asset Sale and the Plan of Dissolution were
approved by the requisite vote of the shareholders of Eastern on March 14,
1995.
ITEM 5. OTHER EVENTS.
One of the holders of Eastern's Class B common stock filed a complaint
against Armco and Eastern asserting derivative claims on behalf of Eastern
and class action claims on behalf of the holders of the Class B common
stock. The complaint seeks various relief based upon Armco's relationship
with Eastern. The Class B common stock had a total liquidation value of
approximately $13 million.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
b. Pro Forma Financial Information
The transaction involved the sale of substantially all of the assets of
Eastern, as described above.
Because of the limited number of pro forma adjustments to Armco's Statement
of Consolidated Financial Position, a narrative description of the pro forma
effects of the transaction is furnished in lieu of a full pro forma
financial statement. The pro forma balance sheet for Armco as of December
31, 1994, assuming the disposition occurred on
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that date, would have reflected an increase of approximately $23 million in
Cash and cash equivalents and a decrease of the same amount in Net assets
held for sale.
The unaudited pro forma Condensed Statement of Consolidated Operations is
presented for the twelve-month period ended December 31, 1994, as if the
transaction had occurred on January 1, 1994, and is based on Armco's
historical Statement of Consolidated Operations for the twelve-month period
ended December 31, 1994.
The unaudited pro forma Condensed Statement of Consolidated Operations has
been prepared by Armco based upon available information and upon certain
assumptions that Armco believes are reasonable in the circumstances. The
unaudited pro forma statement does not purport to be indicative of what the
results of operations would have been if the transaction had, in fact,
occurred on January 1, 1994, or Armco's results of operations for any future
date or period.
PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED OPERATIONS
for the Twelve Months Ended December 31, 1994
(Unaudited)
(Dollars and shares in millions,
except per share amounts)
Armco Pro forma
Historical Disposition Adjustments Pro forma
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Net sales $ 1,437.6 $(52.8) $ 30.1(a) $ 1,414.9
Cost of products sold (1,267.0) 51.7 (30.1)(a) (1,245.4)
Selling and
administrative expenses (96.4) 4.3 (92.1)
Special charges (35.0) 15.0 (20.0)
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Operating profit 39.2 18.2 0.0 57.4
Interest income 10.5 10.5
Interest expense (33.8) 1.2 (0.2)(b) (32.8)
Gain on sale of
investments in
joint ventures 62.6 62.6
Sundry other - net (44.8) 1.0 (43.8)
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Income before income taxes 33.7 20.4 (0.2) 53.9
Credit for income taxes 28.7 28.7
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Income from Armco and
consolidated
subsidiaries 62.4 20.4 (0.2) 82.6
Equity in income of
equity companies 15.3 15.3
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Income from continuing
operations $ 77.7 $ 20.4 $ (0.2) $ 97.9
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Weighted average number
of common and common
equivalent shares
outstanding - primary 104.7 104.7
Income from continuing
operations applicable
to common stock $ 59.9 $ 80.1
Per share of common
stock - primary:
Income from cont-
inuing operations $ 0.57(c) $ 0.77(c)
<FN>
See Notes to unaudited Pro Forma Condensed Statement of Consolidated
Operations.
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Notes to unaudited Pro forma Condensed Statement of Consolidated Operations
(a) Represents the reclassification to Net sales of Armco's intercompany
sales to Eastern during 1994.
(b) Represents the elimination of intercompany interest between Armco and
Eastern during the period January 1, 1994 through September 30, 1994.
(c) In the income from continuing operations per share calculations,
income is decreased by Armco's preferred stock dividends of $17.8. Fully
diluted per share amounts are not presented because they are antidilutive or
because dilution is less than 3%.
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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.
ARMCO INC.
Date: March 29, 1994 By: /s/ Gary R. Hildreth
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Gary R. Hildreth
Vice President
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