SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 of earliest event reported) December 27, 1999
CHEMFAB CORPORATION
(Exact Name of Registrant as Specified in Charter)
DELAWARE ............ 1-12767 03-022-1503
(State or Other Jurisdiction of (Commission File Number) IRS Employer
Incorporation Identification No.
701 Daniel Webster Highway, Merrimack, NH 03054
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (603) 424-9000
This Current Report on Form 8-K\A amends the Current Report on Form 8-K
filed by Chemfab Corporation on January 11, 2000, solely to add the pro forma
financial report required by Item 7 (b) and the related exhibits.
This Current Report on Form 8-K\A contains forward-looking statements that
involve risks and uncertainties. These statements relate to future events or
activities and therefore are inherently uncertain. Actual performance and
results may differ materially from those projected or suggested due to certain
risks and uncertainties, including acquisition and transition challenges,
assimilation issues in the consolidation process, customer reaction to the
acquisitions, and operational and other risks relating to the combination of
separate businesses. Additional information concerning certain other risks and
uncertainties that could cause actual results to differ materially from those
projected or suggested is contained in Chemfab Corporation's Annual Report on
Form 10-K for the fiscal year ended June 30, 1999, and subsequent Form 10-Q
filings, which have been filed with the Securities and Exchange Commission. The
forward-looking statements contained herein represent the judgment of Chemfab
Corporation as of the date of this Current Report on Form 8-K\A and Chemfab
Corporation cautions against the placement of undue reliance on such statements.
Item 2. Acquisition or Disposition of Assets
On December 27, 1999, UROK Acquisition Corp. ("UROK"), a Delaware
corporation and an indirect wholly-owned subsidiary of Chemfab Corporation
("Chemfab"), merged (the "Merger") with and into UroQuest Medical Corporation, a
Delaware corporation ("UroQuest"), with UroQuest surviving the merger, pursuant
to the Agreement and Plan of Merger, dated as of June 3, 1999 (the "Merger
Agreement"), by and among Chemfab, UROK and UroQuest.
UroQuest, through its wholly-owned subsidiary, Bivona, Inc. ("Bivona"),
designs, manufactures and markets proprietary disposable silicone elastomer
products and silicone elastomer components used in products serving the
healthcare and personal care industry. Bivona accounts for virtually all of
UroQuest's consolidated revenues. Following the acquisition by Chemfab, Bivona
is expected to continue to serve its existing customers.
At the closing of the Merger, each share of common stock, $.001 par value
per share, of UroQuest, issued and outstanding immediately prior to the closing
of the Merger, was cancelled and extinguished and automatically converted into
and became a right to receive $2.2665 per share, pursuant to the Merger
Agreement, upon surrender of the certificates that evidenced such shares. The
total merger consideration is approximately $28,419,000, with net merger
consideration to be paid to the stockholders of UroQuest of approximately
$27,408,000 and aggregate payments made to settle outstanding options of
approximately $1,011,000. The total merger consideration was agreed to as the
result of arms'-length negotiations in the Spring of 1999 between Chemfab and
UroQuest.
The recipients of the total merger consideration were the former
stockholders of UroQuest, consisting of former directors and officers of
UroQuest and numerous other stockholders, none of whom had any material
relationship with Chemfab or its affiliates to the best of Chemfab's knowledge.
Acquisition financing was provided to Chemfab pursuant to the Revolving
Credit and Term Loan Agreement, dated as of November 29, 1999 by and among
Chemfab, certain wholly-owned subsidiaries of Chemfab, and Brown Brothers
Harriman & Co., as Lender and as Agent for itself and the other Lenders, Fleet
Bank NH, Citizens Bank of New Hampshire, Bank of New Hampshire and other Lenders
from time to time a party thereto. A copy of the agreement was filed as Exhibit
99.1 to the Current Report on Form 8-K as originally filed on January 11, 2000.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of UroQuest
The following financial statements of UroQuest are incorporated by
reference from pages F-2 through F-20 of UroQuest's Annual Report on Form 10-K
for the year ended December 31, 1998 (Commission File Number 0-20963).
- Consolidated Statements of Operations for the Years Ended December 31,
1998, 1997 and 1996.
- Consolidated Balance Sheets at December 31, 1998 and 1997.
- Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 1998, 1997 and 1996.
- Consolidated Statements of Cash Flows or the Years Ended December 31,
1998, 1997 and 1996.
- Notes to Consolidated Financial Statements.
- Independent Auditors' Reports
The following financial statements of UroQuest are incorporated by
reference from pages 2 through 8 of the UroQuest Quarterly Report on Form 10-Q
for the quarter ended September 30, 1999.
- Condensed Consolidated Statements of Operations for the Three Months and
the Nine Months Ended September 30, 1999 and 1998 (unaudited).
- Condensed Consolidated Balance Sheets as of September 30, 1999
(unaudited) and December 31, 1998.
- Condensed Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 1999 and 1998 (unaudited).
- Notes to Condensed Consolidated Financial Statements.
(b) Pro Forma Financial Information
Pro forma financial information required by this item is attached
hereto as an exhibit.
(c) Exhibits
Exhibit 23.2 Consent of KPMG LLP attached as an exhibit to the Current
Report on Form 8-K as originally filed on January 11, 2000, is
incorporated herein by reference.
Exhibit 99.1 Revolving Credit and Term Loan Agreement, dated as of
November 29, 1999 by and among Chemfab, certain wholly-owned
subsidiaries of Chemfab, and Brown Brothers Harriman & Co., as
Lender and as Agent for itself the other Lenders, Fleet Bank
NH, Citizens Bank of New Hampshire, Bank of New Hampshire and
Other Lenders from time to time a party thereto, attached as
an exhibit to the Current Report on Form 8-K as originally
filed on January 11, 2000, is incorporated herein by
reference.
Exhibit 99.2 Unaudited pro forma combined balance sheet of Chemfab and
UroQuest as of December 26, 1999, unaudited pro forma combined
statements of income for the year-ended June 30, 1999 and the
six months ended December 26, 1999, and explanatory notes
thereto.
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.
CHEMFAB CORPORATION
By: /S/LAURENCE E. RICHARD
Laurence E. Richard
Chief Financial Officer
Dated: March 13, 2000
Chemfab Corporation and UroQuest
Notes to Pro Forma Combined Condensed Financial Statements
(Unaudited)
(Dollars in Thousands)
Background Information
On December 27,1999 the Company completed the purchase of UroQuest Medical
Corporation ("UroQuest"). The Company acquired all of the outstanding capital
stock of UroQuest in a cash merger for approximately $28,419,000.
The Company financed the acquisition with the proceeds of its new term loan
agreement.
Basis of Accompanying Unaudited Pro Forma Financial Statements
Note 1
The acquisition will be accounted for as a purchase business combination. The
purchase price has been preliminary allocated, pending the final valuation of
certain acquired balances. This preliminary allocation has resulted in acquired
goodwill of approximately $11,269,000, which is being amortized on a
straight-line basis over 30 years and other acquired intangible assets of
$11,858,000 which are being are being amortized over expected useful lives
ranging from 5 to 25 years.
The Pro Forma Balance Sheet combines the unaudited balance sheet of UroQuest at
December 27,1999 with the Company's consolidated balance sheet as of December
26, 1999. The Pro Forma Combined Income Statements present the combined
operations of the Company and UroQuest for the year ended June 30, 1999 and the
six months ended December 26, 1999 as if the acquisition had been completed at
the beginning of the respective period. Adjustments have been made to reflect
the discontinued operations of the Urology division and its corporate
headquarters.
This unaudited pro forma combined financial information does not purport to be
indicative of the results that actually would have been obtained if the
acquisition had been effective on the date indicated, or of those results which
may be obtained in the future. The pro form combined financial information
should be read in conjunction with the consolidated financial statements of
Chemfab Corporation included in the Company's Annual Report on Form 10K for the
year ended June 30, 1999 and subsequent Quarterly Report on Form 10Q filings.
Note 2
The following adjustments were applied to the historical balance sheet or
historical statements of income in order to arrive at the pro forma combined
balance sheet and pro forma combined statements of income.
(a) Reflects the preliminary allocation of the purchase price and the
assumption of approximately $30,000,000 in debt used to affect the purchase
as follows:
Consideration Paid $28,419,000
Closing Costs 1,519,000
Purchase Price $29,938,000
The preliminary purchase price allocation is as follows:
Cash $ 1,217,000
Accounts Receivable 3,118,000
Inventory 3,288,000
Plant and Equipment 2,645,000
Goodwill 11,269,000
Other Current Assets 77,000
Other Acquisition Intangibles 11,858,000
Deferred Taxes (848,000)
Payables and Accruals (2,686,000)
$29,938,000
(b) Reflects an increase to cost of goods sold for the year ending June 30,
1999 of $250,000 related to the purchase accounting for inventory and
open orders.
(c) Reflects a decrease in depreciation expense of $73,000 and $135,000 due
to purchase accounting for the year ending June 30, 1999 and the six
months ending December 26, 1999, respectively.
(d) Reflects cost savings associated with the discontinued Urology division
and UroQuest's corporate headquarters of $ 2,368,000 and $4,967,000 for
the year ending June 30, 1999 and the six months ending December 26,
1999, respectively, and a reduction to depreciation expense of $215,000
and $176,000 for the year ending June 30, 1999 and the six months ending
December 26, 1999, respectively due to purchase accounting.
(e) Reflects the additional amortization of acquisition related intangibles,
including goodwill of $304,000 and $152,000 for the year ending June 30,
1999 and the six months ending December 26, 1999, respectively.
(f) Reflects anticipated cost savings associated with the discontinued
Urology division and the UroQuest's corporate headquarters of $2,355,000
for the year ending June 30, 1999 and $70,000 for the six months ending
December 26, 1999. Also includes a reduction to depreciation expense due
to purchase accounting of $65,000 and $12,000 for the year ending June
30, 1999 and the six months ending December 26, 1999, respectively.
(g) Assumes the additional interest expense on the bank debt used to finance
the acquisition at a 7.25% interest rate and elimination of UroQuest's
net interest income as if the acquisition had occurred on July 1, 1998.
(h) The provision for taxes is adjusted to reflect a tax charge based on the
effective U.S. tax rate of 40%.
CHEMFAB CORPORATION and UROQUEST Exhibit 99.2
PRO FORMA COMBINED BALANCE SHEET
(Dollars in thousands)
Chemfab UroQuest Adjustments Combined
(Unaudited) (See Note 2)
12/26/99 12/27/99
Historical Historical Pro Forma Pro Forma
Current assets:
Cash and cash equivalents ............... 3,161 1,217 62 (a) 4,440
Receivables:
Trade ................................. 27,454 3,218 (100) (a) 30,572
Other ................................. 75 75
Costs and estimated earnings in excess of
billings on uncompleted contracts ..... 2,134 2,134
Inventories ............................. 22,841 2,950 338 (a) 26,129
Prepaid expenses and other current assets 2,244 77 2,321
Deferred tax assets ..................... 1,248 1,248
Total current assets ................ 59,157 7,462 300 66,919
Property, plant and equipment, at cost ..... 61,281 7,484 (4,839) (a) 63,926
Less: accumulated depreciation ......... (30,713) (3,616) 3,616 (a) (30,713)
Property, plant and equipment, net .. 30,568 3,868 (1,223) (a) 33,213
Goodwill, net of amortization .............. 23,103 9,624 1,645 (a) 34,372
Other acquisition intangibles .............. 2,114 8 11,850 (a) 13,972
Deferred tax assets ........................ 628 (1,476) (a) (848)
Total assets ............................... 114,942 21,590 11,096 147,628
Current liabilities:
Accounts payable and accrued expenses ... 17,411 1,491 1,113 (a) 20,015
Short term borrowings ................... 12,632 6,000 (a) 18,632
Accrued income taxes .................... 3,000 20 3,020
Billings in excess of costs and estimated
earnings on uncompleted contracts ..... 75 62 137
Total current liabilities ........... 33,118 1,573 7,113 41,804
Other liabilities .......................... 1,115 1,115
Long-term debt ............................. 0 24,000 (a) 24,000
Deferred tax liabilities ................... 2,394 712 (712) (a) 2,394
Shareholders' equity:
Common stock, par value $0.10 ........... 888 888
Common stock, par value $0.001 .......... 0 13 (13) (a) 0
Additional paid-in capital .............. 27,468 37,433 (37,433) (a) 27,468
Retained earnings ....................... 75,176 (18,141) 18,141 (a) 75,176
Treasury stock, at cost ................. (23,464) (23,464)
Foreign currency translation adjustment . (1,753) (1,753)
Total shareholders' equity .......... 78,315 19,305 (19,305) (a) 78,315
Total liabilities and shareholders' equity . 114,942 21,590 11,096 147,628
See accompanying Notes to Pro Forma Combined Condensed Financial Statements.
CHEMFAB CORPORATION and UROQUEST
PRO FORMA COMBINED INCOME STATEMENTS
(Dollars in thousands)
(Unaudited)
Chemfab UroQuest Adjustments Combined
(Audited) (See Note 2)
For the Year Ended
6/30/99 6/30/99
Historical Historical Pro Forma Pro Forma
Net sales ........................... 126,480 18,266 144,746
Gross profit ........................ 41,772 9,089 (177) (b) (c) 50,684
Gross margin % ...................... 33.0% 49.8% 35.0%
Selling, general and
administrative expenses ........ 19,830 7,216 (2,583) (d) 24,463
Intangible amortization ............. 1,465 632 304 (e) 2,401
Research and development ............ 3,568 4,193 (2,420) (f) 5,341
Interest expense .................... 529 106 2,032 (g) 2,667
Interest income ..................... (262) (337) 337 (g) (262)
Other (income) expense, net ......... (55) (55)
Special charges ..................... 3,986 3,986
Income before taxes ................. 12,711 (2,721) 2,153 12,143
Provision for income taxes .......... 3,775 125 (202) (h) 3,698
Net income .......................... 8,936 (2,846) 2,355 8,445
Earnings per share of common stock:
- Basic $ 1.14 $ 1.08
- Diluted $ 1.11 $ 1.05
Weighted average common shares outstanding:
- Basic 7,806 7,806
- Diluted 8,038 8,038
See accompanying Notes to Pro Forma Combined Condensed Financial Statements
CHEMFAB CORPORATION and UROQUEST
PRO FORMA COMBINED INCOME STATEMENTS
(Dollars in thousands)
(Unaudited)
Chemfab UroQuest Adjustments Combined
(Audited) (See Note 2)
For the Six Months Ended
12/26/99 12/27/99
Historical Historical Pro Forma Pro Forma
Net sales ................................. 57,147 10,249 67,396
Gross profit .............................. 20,044 5,227 135 (c) 25,406
Gross margin % ............................ 35.1% 51.0%
Selling, general and
administrative expenses .............. 9,847 7,372 (5,143) (d) 12,076
Intangible amortization ................... 950 316 152 (e) 1,418
Research and development .................. 1,581 968 (82) (f) 2,467
Interest expense .......................... 193 37 973 (g) 1,203
Interest income ........................... (74) (142) 142 (g) (74)
Other (income) expense, net ............... 112 0 112
Special charges
Income before taxes ....................... 7,435 (3,324) 4,093 8,204
Provision for income taxes ................ 2,231 145 238 (h) 2,614
Net income ................................ 5,204 (3,469) 3,855 5,590
Earnings per share of common stock:
- Basic $0.68 $ 0.73
- Diluted $0.67 $ 0.72
Weighted average common shares outstanding:
- Basic 7,648 7,648
- Diluted 7,795 7,795
See accompanying Notes to Pro Forma Combined Condensed Financial Statements.