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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 28, 2003
PHIBRO ANIMAL HEALTH CORPORATION
(Exact name of registrant as specified in its charter)
New York 333-64641 13-1840497
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
One Parker Plaza
Fort Lee, New Jersey 07024
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(Address of principal executive offices) (Zip Code)
(201) 944-6020
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(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets.
Effective August 28, 2003, pursuant to a Stock Purchase Agreement dated as
of August 14, 2003, Phibro Animal Health Corporation (formerly named Philipp
Brothers Chemicals, Inc.) ("PAHC" or the "Company") completed the sale of its
subsidiary, Mineral Resource Technologies, Inc. ("MRT") to Cemex, Inc. The
transaction consisted of the sale of all of the capital stock of MRT, and the
satisfaction and/or release of all intercompany indebtedness of MRT to the
Company and its other subsidiaries (the "MRT Transaction"), for total net cash
proceeds of approximately $14,000,000 (after giving effect to various fees,
costs and expenses relating to the transaction), which net proceeds are subject
to certain post-closing escrow requirements and potential post-closing
adjustments provided for in such Stock Purchase Agreement.
Item 7. Financial Statements and Exhibits
(b) Pro forma financial information.
Pro Forma consolidated financial statements of the Company giving
effect to the MRT Transaction (see following page).
(c) Exhibits
Exhibit 1 Stock Purchase Agreement, dated as of August 14, 2003, between
Cemex, Inc. and Phibro Animal Health Corporation [A request
for confidential treatment has been made with respect to
portions of these documents. Confidential portions have been
omitted and filed separately with the SEC.]
2
PHIBRO ANIMAL HEALTH CORPORATION
INDEX TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Page
----
Unaudited Pro Forma Condensed Consolidated Balance Sheet
as of March 31, 2003 4
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the nine months ended March 31, 2003 5
Unaudited Pro Forma Condensed Consolidated Statements of Operations
for the years ended June 30, 2002, 2001, and 2000 6-8
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements 9
3
PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
As of March 31, 2003
(In Thousands)
Historical Pro forma Pro forma
Balances Adjustments Balances
---------- ----------- ---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 12,031 $ (15) 2. (a) $ 12,016
Trade receivables, less allowance for doubtful accounts
of $1,629 historical and $1,533 pro forma 59,902 (2,221) 2. (a) 57,681
Other receivables 2,669 (223) 2. (a) 2,446
Inventories 93,312 (1,700) 2. (a) 91,612
Prepaid expenses and other current assets 15,950 (902) 2. (a) 15,048
Current assets from discontinued operations 1,693 -- 1,693
-------- -------- --------
TOTAL CURRENT ASSETS 185,557 (5,061) 180,496
PROPERTY, PLANT AND EQUIPMENT, net 73,368 (10,277) 2. (a) 63,091
INTANGIBLES 11,169 (204) 2. (a) 10,965
OTHER ASSETS 12,379 (489) 2. (a) 11,890
-------- -------- --------
$282,473 $(16,031) $266,442
======== ======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Cash overdraft $ 4,646 $ (274) 2. (a) $ 4,372
Loans payable to banks 35,215 (14,000) 2. (b) 21,215
Current portion of long-term debt 29,741 (63) 2. (a) 29,678
Accounts payable 46,047 (1,093) 2. (a) 44,954
Accrued expenses and other current liabilities 52,096 (177) 2. (a) 51,919
Current liabilities from discontinued operations 1,148 -- 1,148
-------- -------- --------
TOTAL CURRENT LIABILITIES 168,893 (15,607) 153,286
LONG-TERM DEBT 103,027 (226) 2. (a) 102,801
OTHER LIABILITIES 22,138 (198) 2. (a) 21,940
-------- -------- --------
TOTAL LIABILITIES 294,058 (16,031) 278,027
-------- -------- --------
COMMITMENTS AND CONTINGENCIES
REDEEMABLE SECURITIES:
Series B and C preferred stock 63,129 -- 63,129
-------- -------- --------
STOCKHOLDERS' DEFICIT:
Preferred stock 521 -- 521
Common stock 2 -- 2
Paid-in capital 740 -- 740
Accumulated deficit (66,442) (66,442)
Accumulated other comprehensive income (loss):
Gain on derivative instruments 51 -- 51
Cumulative currency translation adjustment (9,586) -- (9,586)
-------- -------- --------
TOTAL STOCKHOLDERS' DEFICIT (74,714) -- (74,714)
-------- -------- --------
$282,473 $(16,031) $266,442
======== ======== ========
See notes to unaudited pro forma condensed consolidated financial statements
4
PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
For the Nine Months Ended March 31, 2003
(In Thousands)
Historical Pro forma Pro forma
Results Adjustments Results
---------- ----------- ---------
NET SALES $280,614 $(14,001) 3. (a) $266,613
COST OF GOODS SOLD 211,140 (13,997) 3. (a) 197,143
-------- -------- --------
GROSS PROFIT 69,474 (4) 69,470
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 51,559 (1,684) 3. (a) 49,875
-------- -------- --------
OPERATING INCOME 17,915 1,680 19,595
OTHER:
Interest expense 12,138 (542) 3. (b) 11,596
Interest (income) (135) -- (135)
Other expense, net 1,317 -- 1,317
-------- -------- --------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 4,595 2,222 6,817
PROVISION FOR INCOME TAXES 2,440 -- 3. (c) 2,440
-------- -------- --------
INCOME FROM CONTINUING OPERATIONS $ 2,155 $ 2,222 $ 4,377
======== ======== ========
See notes to unaudited pro forma condensed consolidated financial statements
5
PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
For the Year Ended June 30, 2002
(In Thousands)
Historical Pro forma Pro forma
Results Adjustments Results
---------- ----------- ---------
NET SALES $357,594 $(17,045) 3. (a) $340,549
COST OF GOODS SOLD 276,231 (17,676) 3. (a) 258,555
-------- -------- --------
GROSS PROFIT 81,363 631 81,994
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 74,576 (2,299) 3. (a) 72,277
-------- -------- --------
OPERATING INCOME 6,787 2,930 9,717
OTHER:
Interest expense 18,158 (680) 3. (b) 17,478
Interest (income) (356) -- (356)
Other expense, net 3,086 -- 3,086
-------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (14,101) 3,610 (10,491)
PROVISION FOR INCOME TAXES 14,829 -- 3. (c) 14,829
-------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS $(28,930) $ 3,610 $(25,320)
======== ======== ========
See notes to unaudited pro forma condensed consolidated financial statements
6
PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
For the Year Ended June 30, 2001
(In Thousands)
Historical Pro forma Pro forma
Results Adjustments Results
---------- ----------- ---------
NET SALES $333,970 $(14,306) 3. (a) $319,664
COST OF GOODS SOLD 263,260 (12,955) 3. (a) 250,305
-------- -------- --------
GROSS PROFIT 70,710 (1,351) 69,359
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 66,599 (2,674) 3. (a) 63,925
-------- -------- --------
OPERATING INCOME 4,111 1,323 5,434
OTHER:
Interest expense 18,297 (979) 3. (b) 17,318
Interest (income) (566) -- (566)
Other (income), net (602) -- (602)
-------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (13,018) 2,302 (10,716)
PROVISION (BENEFIT) FOR INCOME TAXES (831) 842 3. (c) 11
-------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS $(12,187) $ 1,460 $(10,727)
======== ======== ========
See notes to unaudited pro forma condensed consolidated financial statements
7
PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
For the Year Ended June 30, 2000
(In Thousands)
Historical Pro forma Pro forma
Results Adjustments Results
---------- ----------- ---------
NET SALES $292,222 $(11,604) 3. (a) $280,618
COST OF GOODS SOLD 226,538 (10,028) 3. (a) 216,510
-------- -------- --------
GROSS PROFIT 65,684 (1,576) 64,108
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 50,769 (1,796) 3. (a) 48,973
-------- -------- --------
OPERATING INCOME 14,915 220 15,135
OTHER:
Interest expense 14,754 (1,168) 3. (b) 13,586
Interest (income) (600) -- (600)
Other (income), net (1,452) -- (1,452)
-------- -------- --------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 2,213 1,388 3,601
PROVISION FOR INCOME TAXES 1,113 542 3. (c) 1,655
-------- -------- --------
INCOME FROM CONTINUING OPERATIONS $ 1,100 $ 846 $ 1,946
======== ======== ========
See notes to unaudited pro forma condensed consolidated financial statements
8
PHIBRO ANIMAL HEALTH CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
For the Nine Months Ended March 31, 2003 and the Years Ended June 30,
2002, 2001 and 2000
(In Thousands)
1. Basis of Presentation
The pro forma condensed consolidated financial statements are presented
for illustrative purposes only, giving effect to the sale of Mineral
Resource Technologies, Inc. ("MRT") as described and therefore are neither
indicative of the operating results that might have been achieved had the
sale occurred as of an earlier date nor indicative of operating results
which may occur in the future. In the opinion of management, these
statements include all material adjustments necessary to reflect, on a pro
forma basis, the effect of the sale on the historical financial
information of the Company. The condensed consolidated statements of
operations of Phibro Animal Health Corporation (the "Company") for the
years ended June 30, 2002, 2001 and 2000 are derived from the audited
financial statements of the Company. All other financial information is
unaudited. The unaudited pro forma condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and related notes contained in the Company's Annual Report on
Form 10-K for the year ended June 30, 2002.
Effective August 28, 2003, pursuant to a Stock Purchase Agreement dated as
of August 14, 2003, the Company completed the sale of its subsidiary,
Mineral Resource Technologies, Inc. ("MRT"), to Cemex, Inc. The
transaction consisted of the sale of all of the capital stock of MRT, and
the satisfaction and/or release of all intercompany indebtedness of MRT to
the Company and its other subsidiaries (the "MRT Transaction"), for total
net cash proceeds of approximately $14,000 (after giving effect to various
fees, costs and expenses relating to the transaction), which net proceeds
are subject to certain post-closing escrow requirements and potential
post-closing adjustments provided for in such Stock Purchase Agreement.
The Company does not anticipate a material gain or loss on disposal based
upon its assessment of the likely outcomes of the post-closing
adjustments.
The following unaudited pro forma condensed consolidated financial
statements give effect to the disposition of MRT. The disposition will be
accounted for as a discontinued operation in accordance with SFAS No. 144.
The accompanying unaudited pro forma condensed consolidated balance sheet
reflects the sale as if it occurred at March 31, 2003. The accompanying
unaudited pro forma condensed consolidated statements of operations
reflect the sale as if it occurred at the beginning of each period
presented.
The Company's Odda Smelteverk (Norway) and Carbide Industries (U.K.)
businesses have been classified as discontinued operations in the
historical financial statements. These pro forma condensed consolidated
statements of operations present only results of continuing operations.
2. Pro forma Adjustments - Condensed Consolidated Balance Sheet as of March
31, 2003
(a) To reflect the removal of the balance sheet accounts of MRT as of
March 31, 2003.
(b) To reflect the assumed reduction of the Company's senior credit
facility by the approximate net cash proceeds from the sale of MRT.
9
PHIBRO ANIMAL HEALTH CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
For the Nine Months Ended March 31, 2003 and the Years Ended June 30,
2002, 2001 and 2000
(In Thousands)
3. Pro Forma Adjustments - Condensed Consolidated Statements of Operations
for the Nine Months ended March 31, 2003 and for the Years Ended June 30,
2002, 2001 and 2000.
(a) To reflect the removal of the income statement accounts of MRT for
each period presented.
(b) To reflect the reduction of interest expense due to the assumed
reduction of the Company's senior credit facility by the approximate
net cash proceeds from the sale of MRT. Interest expense was
adjusted based on average interest rates of the senior bank credit
facility of 5.2% for the nine months ended March 31, 2003 and 4.9%,
7.0% and 8.3% for the fiscal years ended June 30, 2002, 2001 and
2000, respectively.
(c) To reflect the removal of estimated income taxes related to the
historical financial results of MRT and related to the unaudited pro
forma adjustment to interest expense. For the nine months ended
March 31, 2003 and for the year ended June 30, 2002, the Company did
not recognize income tax benefits related to domestic operating
losses, due to the uncertainty of future profitability, and
accordingly, no adjustment to income taxes was reflected in these
pro forma condensed consolidated statements of operations.
4. Statements made in this Form 8-K may contain forward-looking statements
made pursuant to the safe harbor provisions of the Securities Litigation
Act of 1995. Such statements involve certain risks and uncertainties that
could cause results to differ materially from those in the forward-looking
statements.
Information on potential risks and uncertainties may be found under the
caption "Risks and Uncertainties" in Note 1 of the Notes to Consolidated
Financial Statements included in the Company's Annual Report on Form 10-K
for the year ended June 30, 2002, as well as under the caption "Certain
Factors Affecting Future Operating Results" under Item 7 of such Annual
Report.
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PHIBRO ANIMAL HEALTH CORPORATION
By: /s/ Richard G. Johnson
-----------------------
Richard G. Johnson,
Chief Financial Officer
Dated: September 11, 2003
11
Exhibit Index
Exhibit No. Description
Exhibit 1 Stock Purchase Agreement, dated as of August 14, 2003, between
Cemex, Inc. and Phibro Animal Health Corporation [A request
for confidential treatment has been made with respect to
portions of this document. Confidential portions have been
omitted and filed separately with the SEC.]
12