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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 Exchange Act of 1934
Date of Report (Date of earliest event reported) June 6, 2001
International Knife & Saw, Inc.
(Exact Name of Registrant as Specified in Charter)
333-17305 (Commission File Number)
Delaware 57-0697252
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation) Identification No.)
1299 Cox Avenue
Erlanger, Kentucky 41018
(Address of principal executive offices)
(859) 371-0333
(Registrant's telephone number, including area code)
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INFORMATION TO BE INCLUDED IN REPORT
Item 2. Acquisition or Disposition of Assets.
On June 6, 2001, International Knife & Saw, Inc., a Delaware
corporation ("the Company"), sold all of the issued and outstanding capital
stock of IKS Klingelnberg GmbH, a wholly-owned German subsidiary of the Company
("IKSK"), to Diether Klingelnberg and TKM GmbH i.G., a company organized under
the laws of Germany ("TKM" and, together with Mr. Klingelnberg, the
"Purchasers"), for approximately $11.7 million in cash. The Company expects to
record a loss on the sale of IKSK of approximately $7.9 million. The loss is
subject to adjustment based on final closing values and transaction expenses.
The proceeds from the sale were immediately applied to repay all indebtedness
and other obligations owed by the Company to Deutsche Bank AG, the Company's
senior lender.
Mr. Klingelnberg and Thomas W.G. Meyer are managing directors and
stockholders of TKM. Mr. Meyer is a minority stockholder of IKS Corporation, a
Delaware corporation and the parent of the Company ("Parent"). In addition,
until April 20, 2001 Mr. Klingelnberg served as a director of the Company and
Parent, and until May 31, 2001 Mr. Meyer served as an Executive Vice President
of the Company and Parent. At the time of the sale, Mr. Meyer was the Chief
Executive Officer of IKSK. The amount of consideration paid to the Company for
the issued and outstanding capital stock of IKSK was determined by arms-length
negotiation between the Board of Directors of the Company and the Purchasers.
In connection with the sale, the Purchasers agreed that, for a period
of 18 months and subject to certain conditions, IKSK would continue the existing
trading arrangements between the Company and IKSK with respect to current
products manufactured by IKSK and purchased by the Company.
Prior to the sale, the holders of a majority in aggregate principal
amount of the Company's Series B 11-3/8% Senior Subordinated Notes due 2006 (the
"Notes") consented to the sale and waived compliance by the Company with the
provisions of Section 4.14 (Limitation on Transactions with Affiliates), Section
4.15 (Change of Control), Section 4.16 (Limitation on Asset Sales) and Article
Five of the Indenture governing the Notes, as well as any other relevant
provisions of such Indenture, to the extent applicable to the transaction.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro Forma Financial Information (Unaudited)
On June 6, 2001, the Company sold all of the issued and outstanding capital
stock of IKSK to the Purchasers for approximately $11.7 million in cash. The
Company expects to record a loss on the sale of IKSK of approximately $7.9
million. The loss is subject to adjustment based on final closing values and
transaction expenses. The proceeds from the sale were immediately applied to
repay all indebtedness and other obligations owed by the Company to Deutsche
Bank AG, the Company's senior lender.
Set forth below are the unaudited pro forma consolidated balance sheet of the
Company at March 31, 2001, and the unaudited pro forma consolidated statements
of income of the Company for the year ended December 31, 2000 and for the three
months ended March 31, 2001.
The unaudited pro forma consolidated balance sheet and unaudited pro forma
consolidated statements of income (collectively, the "Pro Forma Financial
Information") are based on the historical consolidated financial statements of
the Company, adjusted to give effect to the disposition of IKSK. The unaudited
pro forma consolidated balance sheet gives effect to the disposition as if it
had occurred on March 31, 2001. The unaudited pro forma consolidated statements
of income give effect to the disposition as if it had occurred on January 1,
2000. The loss on the sale of IKSK is not considered in the presented unaudited
pro forma consolidated statements of income.
The Pro Forma Financial Information is presented for informational purposes and
does not purport to represent what the Company's financial position or results
of operations would actually have been had the disposition of IKSK occurred on
the dates specified or to project the Company's financial position and results
of operations at any future date or for any future period. The Pro Forma
Financial Information reflects certain assumptions described in the accompanying
notes. The Pro Forma Financial Information should be read in conjunction with
the historical consolidated financial statements of the Company previously filed
with the Securities and Exchange Commission.
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International Knife & Saw, Inc. and Subsidiaries
Pro Forma Consolidated Balance Sheet
(Unaudited)
(in thousands)
March 31, 2001
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Historical Disposition Pro Forma
International Historical Pro Forma International
Knife & Saw, Inc. IKSK (a) Adjustments Knife & Saw, Inc.
----------------- -------- ----------- -----------------
Assets
Current assets:
Cash and cash equivalents $ 3,423 $ (2,702) $ - $ 721
Accounts receivable, trade, less
allowances for doubtful accounts 24,543 (12,975) - 11,568
Inventories 29,032 (14,449) 122(b) 14,705
Due (to) from parent (40) (2,306) 2,306(c) (40)
Other current assets 2,425 (1,406) - 1,019
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Total current assets 59,383 (33,838) 2,428 27,973
Other assets:
Goodwill 13,994 (6,703) - 7,291
Debt issuance costs 2,154 - - 2,154
Other noncurrent assets 2,138 (1,435) - 703
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18,286 (8,138) - 10,148
Property, plant and equipment-net 45,249 (24,797) - 20,452
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Total assets $ 122,918 $ (66,773) $ 2,428 $ 58,573
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See notes to Unaudited Pro Forma Consolidated Balance Sheet.
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International Knife & Saw, Inc. and Subsidiaries
Pro Forma Consolidated Balance Sheet (Continued)
(Unaudited)
(in thousands)
March 31, 2000
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Historical Disposition Pro Forma
International Historical Pro Forma International
Knife & Saw, Inc. IKSK (a) Adjustments Knife & Saw, Inc.
----------------- -------- ----------- -----------------
Liabilities and Shareholder's deficit
Current liabilities:
Notes payable $ 22,077 $ (10,358) $ (11,719)(d) $ -
Current portion of long-term debt 3,563 (2,533) - 1,030
Accounts payable 9,477 (5,247) 2,306 (c) 6,536
Accrued liabilities 14,799 (6,503) - 8,296
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Total current liabilities 49,916 (24,641) (9,413) 15,862
Long-term debt, less current portion 106,287 (14,376) - 91,911
Other liabilities 8,426 (7,810) - 616
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Total liabilities 164,629 (46,827) (9,413) 108,389
Minority interest 1,105 (1,105) - -
Shareholder's deficit:
Common stock 5 - - 5
Additional paid-in capital 10,153 - - 10,153
Accumulated deficit (43,581) - (7,000)(e) (50,581)
Accumulated other
comprehensive loss (5,961) - - (5,961)
Treasury stock, at cost (3,432) - - (3,432)
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Total shareholder's deficit (42,816) - (7,000) (49,816)
Total liabilities and shareholder's
deficit $ 122,918 $ (47,932) $ (16,413) $ 58,573
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See notes to Unaudited Pro Forma Consolidated Balance Sheet.
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International Knife & Saw, Inc. and Subsidiaries
Notes to Pro Forma Consolidated Balance Sheet
(Unaudited)
(in thousands)
(a) The amounts in the "Historical IKSK" column are derived from the
unaudited consolidated balance sheet of IKSK at March 31, 2001, which
was prepared based on accounting principles generally accepted in the
United States.
(b) Adjustment to inventory to record the intercompany profit included in
the Company's inventories purchased from IKSK.
(c) Adjustment to reflect the Company's intercompany payable balances with
IKSK as third party trade payables.
(d) Reflects the use of the proceeds from the sale to repay the
indebtedness and other obligations due to the Company's senior lender.
(e) Adjustment to accumulated deficit to reflect loss on the sale of IKSK
at March 31, 2001.
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International Knife & Saw, Inc. and Subsidiaries
Pro Forma Consolidated Statements of Income
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended March 31, 2001
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Historical Disposition Pro Forma
International Historical Pro Forma International
Knife & Saw, Inc. IKSK (a) Adjustments(b) Knife & Saw, Inc.
----------------- -------- ----------- -----------------
Net sales $ 38,745 $ (18,398) $ 16 (c) $ 20,363
Cost of sales 28,909 (12,490) (106)(d) 16,313
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Gross profit 9,836 (5,908) 122 4,050
Selling, general and administrative expenses 9,435 (4,129) - 5,306
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Operating income 401 (1,779) 122 (1,256)
Other expenses (income):
Interest income (169) 30 - (139)
Interest expense 3,219 (409) (116)(e) 2,694
Minority interest 52 (52) - -
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3,102 (431) (116) 2,555
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Loss before income taxes (2,701) (1,348) 238 (3,811)
Benefit for income taxes (547) (467) - (1,014)
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Net loss $ (2,154) $ (881) $ 238 $ (2,797)
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Net loss per common share $ (4.47) $ (5.80)
See Notes to Unaudited Pro Forma Consolidated Statements of Income.
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International Knife & Saw, Inc. and Subsidiaries
Pro Forma Consolidated Statements of Income
(Unaudited)
(in thousands, except per share amounts)
Year Ended December 31, 2000
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Historical Disposition Pro Forma
International Historical Pro Forma International
Knife & Saw, Inc. IKSK (a) Adjustments(b) Knife & Saw, Inc.
----------------- ---------- ----------- -----------------
Net sales $ 160,917 $ (68,185) $ 135 (c) $ 92,867
Cost of sales 120,388 (46,890) 13 (d) 73,511
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Gross profit 40,529 (21,295) 122 19,356
Selling, general and administrative expenses 40,026 (15,554) - 24,472
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Operating income 503 (5,741) 122 (5,116)
Other expenses (income):
Interest income (179) 134 - (45)
Interest expense 13,210 (1,550) (356)(e) 11,304
Minority interest 157 (157) - -
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13,188 (1,573) (356) 11,259
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Loss before income taxes (12,685) (4,168) 478 (16,375)
Provision (benefit) for income taxes 2,844 (1,488) 1,356
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Net loss $ (15,529) $ (2,680) $ 478 $ (17,731)
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Net loss per common share $ (32.22) $ (36.79)
See Notes to Unaudited Pro Forma Consolidated Statements of Income.
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International Knife & Saw, Inc. and Subsidiaries
Notes to Pro Forma Consolidated Condensed Statement of Income
(Unaudited)
(in thousands)
(a) The amounts in the "Historical IKSK" column are derived from the
unaudited consolidated statement of income of IKSK for the quarter
ended March 31, 2001 and the audited consolidated statement of income
of IKSK for the year ended December 31, 2000, which were prepared based
on accounting principles generally accepted in the United States.
(b) The loss on the sale of IKSK is not considered in the unaudited pro
forma consolidated statements of income.
(c) Adjustment to net sales to record sales from the Company to IKSK,
previously eliminated.
(d) Adjustment to cost of sales to record the intercompany profit included
in the Company's inventories purchased from IKSK.
(e) Decrease in interest expense to reflect the repayment of the
indebtedness and other obligations due to the Company's senior lender.
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(c) Exhibits
Exhibit 10.01 Agreement dated as of June 5, 2001 among TKM GmbH,
i.G., Diether Klingelnberg and International Knife &
Saw, Inc.
Exhibit 10.02 Notarial Deed
Exhibit 10.03 Supply Agreement dated June 5, 2001 among TKM GmbH,
i.G., Diether Klingelnberg and International Knife &
Saw, Inc.
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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.
INTERNATIONAL KNIFE & SAW, INC.
By: /s/ William M. Schult
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William M. Schult, Executive Vice President
Chief Financial Officer, Treasurer and
Secretary (Principal Financial and Accounting
Officer, and Executive Committee member)
Date: June 19, 2001
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EXHIBIT INDEX
Exhibit 10.01 Agreement dated as of June 5, 2001 among TKM GmbH,
i.G., Diether Klingelnberg and International Knife &
Saw, Inc.
Exhibit 10.02 Notarial Deed
Exhibit 10.03 Supply Agreement dated June 5, 2001 among TKM GmbH,
i.G., Diether Klingelnberg and International Knife &
Saw, Inc.
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