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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 and Exchange Act of 1934
Date of Report (Date of earliest event reported): February 8, 1999
JPE, INC.
(Exact name of registrant as specified in its charter)
MICHIGAN
(State or Other Jurisdiction of Incorporation)
0-22580 38-2958730
(Commission File No.) (IRS Employer Identification No.)
775 Technology Drive, Suite 200
Ann Arbor, Michigan 48108
(Address of Principal Executive Offices) (Zip Code)
(734) 662-2323
(Registrant's Telephone Number, Including Area Code)
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ITEM 2 ACQUISITION AND DISPOSITION OF ASSETS
JPE Canada Inc. ("JPEC"), an Ontario, Canada corporation and a wholly-owned
subsidiary of JPE, Inc., a Michigan corporation ("Registrant"), was under the
control of an Interim Receiver appointed pursuant to Section 47 of the
Bankruptcy and Insolvency Act of Canada. The duties of the Interim Receiver
included commencing the process of realizing value of the assets of JPEC for the
benefit of The Bank of Nova Scotia (the "Secured Lender"). On December 8, 1998,
the Secured Lender, the Interim Receiver, General Motors Corporation and General
Motors of Canada Limited entered into an agreement (the "JPEC Agreement") to
sell substantially all the assets of JPEC to the Ventra Group, Inc., an Ontario,
Canada corporation (the "Buyer"). The JPEC Agreement required that JPEC make an
assignment in bankruptcy prior to closing. On February 8, 1999, JPEC filed an
assignment in bankruptcy with the Ontario Court (General Division) Commercial
List and substantially all of the assets of JPEC were sold to the Buyer for
approximately $13.7 million. This amount was paid to the Secured Lender. The
Registrant has a guarantee in the amount of approximately Cdn. $820,000. The
Registrant is negotiating with JPEC's Secured Lender to settle amounts due under
the guarantee.
In the JPEC Agreement, JPEC made no representations or warranties as to
itself.
Prior to the disposition, there were no relationships between Registrant
and Buyer, any of Registrant's affiliates, any director or officer of
Registrant, or an associates of any of Registrant's officers or directors.
On March 26, 1999, MacLean Acquisition Company, a Delaware corporation
("IAF Buyer") entered into a Stock Purchase Agreement (the "IAF Agreement") with
the Registrant and its wholly-owned subsidiary, Industrial & Automotive
Fasteners, Inc. ("IAF"), a Michigan corporation, pursuant to which IAF Buyer
agreed to purchase 100% of the issued and outstanding shares of common stock of
IAF. IAF is a manufacturer of wheel nuts and other fasteners.
Pursuant to the terms of the IAF Agreement, Registrant agreed to indemnify
IAF Buyer against all taxes incurred or payable by IAF on or before March 26,
1999 (the "Closing Date"). Registrant believes that the taxes incurred in
connection with the business of IAF on or before the Closing Date have been
properly accrued on Registrant's balance sheet. Registrant also agreed to
indemnify IAF Buyer against any losses, damages or expenses for claims brought
or incurred by IAF's employees prior to the Closing Date. Notwithstanding the
express terms of the IAF Agreement, Registrant is responsible for any liability
arising out of fraud or gross negligence of IAF in connection with the
transaction.
The proceeds of the sale of approximately $19.2 million were used to reduce
the Registrant's borrowings under the Forbearance Agreement dated August 10,
1998, as amended, among the Registrant and Comerica Bank, and other banks
participant thereto.
In connection with this transaction, certain vendors compromised their
accounts receivable from IAF to 30% of the outstanding balance and union
employees of IAF accepted annuity contracts in lieu of their postretirement
health care and life insurance benefits.
Prior to the disposition, there were no relationships between Registrant
and IAF Buyer, any of Registrant's affiliates, any director or officer of
Registrant, or any associates of any of Registrant's officers or directors.
ITEM 7(b) PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial statements give
effect to the sales of Allparts, Incorporated which occurred on October 28, 1998
(as reported in Registrant's Report on Form 8-K filed on November 12, 1998), JPE
Canada Inc., and Industrial & Automotive Fasteners, Inc. The Pro Forma
Consolidated Balance Sheet as of December 31, 1998 and the Statement of
Operations for the year ended December 31, 1998 reflect the divestitures as if
they had been completed as of January 1, 1998. The pro forma data does not
purport to be indicative of the results which would actually have been reported
if these transactions had occurred on January 1, 1998.
JPE, INC.
Pro Forma Condensed Consolidated Balance Sheet
as of December 31, 1998
(Unaudited in thousands)
Pro Forma
JPE JPE Canada Pro Forma JPE
Consolidated Inc. IAF, Inc. Adjustment Consolidated
------------ ---------- --------- ---------- ------------
Cash and cash equivalents $ 394 -- -- -- $ 394
Accounts receivable trade, net 12,151 -- $ 5,291 -- 6,860
Inventory, net 18,572 -- 4,729 -- 13,843
Other current assets 1,413 -- 363 -- 1,050
------- ------- ------- -------
Total current assets 32,530 -- 10,383 -- 22,147
Investment in affiliated companies 14,661 $(2,860) -- -- 17,521
Net fixed assets 20,963 -- 10,272 -- 10,691
Goodwill 7,458 -- 1,979 -- 5,479
Other assets, long-term 1,362 -- 722 -- 640
------- ------- ------- ------- -------
Total assets $76,974 $(2,860) $23,356 -- $56,478
======= ======= ======= ======= =======
Current portion long-term debt $84,492 -- -- $29,046 (a)(e) $55,446
Accounts payable trade 8,273 -- $ 3,349 -- 4,924
Accrued liabilities 1,931 -- 272 -- 1,659
Other current liabilities 649 -- -- -- 649
------- ------- ------- ------- -------
Total current liabilities 95,345 -- 3,621 29,046 62,678
Other long-term accrued liabilities 1,720 -- 1,400 -- 320
Long-term debt 50 -- -- -- 50
Foreign currency translation (336) (238) -- (98)(b) --
Common stock and paid-in capital 28,051 7,223 24,095 (31,318)(c) 28,051
Retained earnings (47,856) (9,845) (5,760) 2,370 (d) (34,621)
------- ------- ------- ------- -------
Total stockholders' equity (20,141) (2,860) 18,335 (29,046) (6,590)
------- ------- ------- ------- -------
Total liabilities and equity $76,974 $(2,860) $23,356 $ -- $56,478
======= ======= ======= ======= =======
<FN>
(a) To reduce debt for net proceeds of $9,891 received for Allparts and $19,155
received for IAF.
(b) To eliminate foreign currency translation reflected on JPE, Inc. corporate
accounts.
(c) To eliminate the investment account.
(d) To adjust earnings for the impact of the above transactions on retained
earnings.
(e) Proceeds of $13.7 million from sale of JPE Canada Inc. applied to reduction
of Bank of Nova Scotia debt which is reflected through the Investment in
Affiliate Companies caption.
</FN>
JPE, INC.
Pro Forma Condensed Consolidated Statement of Operations
for the Year Ended December 31, 1998
(Unaudited in thousands)
Pro Forma
JPE Allparts, JPE Canada Pro Forma JPE
Consolidated Inc. Inc. IAF, Inc. Adjustment Consolidated
------------ --------- ---------- --------- ---------- ------------
Net sales $210,122 $15,379 $26,789 $38,342 -- $129,612
Cost of sales 186,657 11,391 30,063 34,855 -- 110,348
-------- ------- ------- ------- -------- --------
Gross profit (loss) 23,465 3,988 (3,274) 3,487 -- 19,264
Selling expenses 27,609 2,705 1,444 2,026 -- 21,434
Other expenses 37,376 5,190 1,587 97 -- 30,502
-------- ------- ------- ------- -------- --------
Income (loss) before
interest and taxes (41,520) (3,907) (6,305) 1,364 -- (32,672)
Interest expense, net 13,085 -- 973 -- $ 2,863 (a) 9,249
-------- ------- ------- ------- ------- --------
Income (loss) before taxes (54,605) (3,907) (7,278) 1,364 (2,863) (41,921)
Tax expense (benefit) (1,035) (878) 829 2,437 1,532 (b) (1,891)
-------- ------- ------- ------- ------- --------
Net loss $(53,570) $(3,029) $(8,107) $(1,073) $(1,331) $(40,030)
======== ======= ======= ======= ======= ========
Weighted average shares 4,602 4,602
===== =====
Loss per share $(11.64) $(8.70)
======= ======
<FN>
(a) Interest expense adjusted for the net cash proceeds paid to the bank
Net cash proceeds $29,046
Average interest 9.86%
Annual interest expense $ 2,863
(b) Tax provision adjusted for foreign taxes and state and local taxes. JPE,
Inc. has a net operating loss carryforward that has 100% valuation reserve.
The tax benefit reflects the elimination of deferred tax credits.
</FN>
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.
JPE, INC.
Date: April 15, 1999 /s/ James J. Fahrner
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James J. Fahrner
Executive Vice President and
Chief Financial Officer
Exhibits Index
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Exhibit
Number Description
- ------- -----------
2.1 Agreement dated December 8, 1998 between The Bank of Nova Scotia,
Ventra Group, Inc., General Motors Corporation, General Motors of
Canada Limited and Grant Thornton Limited, incorporated by reference
to Exhibit 2.9 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1998.
2.2 Stock Purchase Agreement dated as of March 26, 1999 by and among JPE,
Inc., Industrial & Automotive Fasteners, Inc. and MacLean Acquisition
Company, incorporated by reference to Exhibit 2.10 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1998.