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): August 28, 1997
Hein-Werner Corporation
(Exact name of registrant as specified in its charter)
Wisconsin 1-2725 39-0340430
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
2120 Pewaukee Road
Waukesha, WI 53188
(Address of principal executive office, including zip code)
(414) 542-6611
(Registrant's telephone number)
Item 2. Acquisition or Disposition of Assets.
On August 28, 1997, Hein-Werner Corporation (the "Company") sold
substantially all of the business, including certain assets and
liabilities, of its Winona Van Norman Division (the "Division") to Van
Norman Equipment Co., Inc., a Minnesota corporation ("Buyer"), pursuant to
an Asset Purchase Agreement, dated as of August 18, 1997, by and among the
Company, Buyer and Cornelius E. Mieras ("Mieras")(the "Asset Agreement" ).
The Company's sale of the business, including certain assets and
liabilities of the Division, as well as the consummation of the
transactions related thereto, is referred to as the "Disposition." Prior
to the Disposition, Mieras was employed by the Company as President of the
Division.
Pursuant to the Asset Agreement: (i) the Company sold the Division to
Buyer for $1,277,652 in cash at the closing of the Disposition subject to
the assumption by Buyer of certain contractual and other liabilities of
the Division; (ii) the Company agreed to a five-year convenant not to
compete in the manufacture or sale of (a) machines used in gas or diesel
engine rebuilding or reconditioning and (b) truck and automotive brake
lathes, (subject to certain exceptions) and (iii) the Company agreed to
indemnify Buyer (a) against any inaccuracy in or breach by the Company of
the Company's representations and warranties contained therein, (b)
against the breach of any covenant of the Company contained therein, and
(c) for liabilities not specifically assumed by Buyer under the Asset
Agreement. The purchase price paid by Buyer for the business, certain
assets and liabilities of the Division was determined on the basis of
arm's length negotiations between the parties. The Company has paid or
accrued approximately $1.8 million of direct Disposition costs.
The Division designs, manufactures and supplies advanced engineered
machinery for the automotive aftermarket, primarily for automotive, truck,
diesel and high-performance engine rebuilding. The Division also
manufactures brake lathes and related equipment as well as providing
contract machining services. Located in Winona, Minnesota, the Division
employs 59 people and recorded net sales of approximately $7 million in
1996.
The Asset Agreement is filed as an exhibit to this Current Report on
Form 8-K and is incorporated herein by reference. The brief summaries of
certain of the material provisions of the Asset Agreement set forth above
are each qualified in their entirety by reference to the agreement filed
as an exhibit hereto.
Item 7. Financial Statements and Exhibits.
(a) Financial Statement of Business Acquired - Not applicable
(b) Pro Forma Financial Information
HEIN-WERNER CORPORATION
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma financial information relates to
the disposition (such disposition as well as the consummation of certain
related transactions is referred to herein as the "Disposition") by Hein-
Werner Corporation (the "Company") of substantially all of the business,
certain assets and liabilities of its Winona Van Norma Division (the
"Division") pursuant to an Asset Purchase Agreement, dated August 18,
1997, by and among the Company, Winona Van Norman Equipment Co, Inc., a
Minnesota corporation, and Cornelius E. Mieras. The Disposition was
deemed to be effective as of the close of business on August 28, 1997.
The pro forma amounts have been prepared based upon certain accounting and
other pro forma adjustments as described in the accompanying notes to the
unaudited pro forma condensed consolidated financial statements of the
Company.
The unaudited pro forma condensed consolidated statements of
operations reflect the historical results of operations of the Company
including the Division for the year ended December 31, 1996, with pro
forma adjustments as if the Disposition had occurred as of the beginning
of fiscal 1996. The historical financial statements for the six months
ended June 28, 1997 reflect the Division as a discontinued operation. The
pro forma condensed consolidated statement of operations for the year
ended December 31, 1996 includes a column titled "H-W pro forma without
GBI." This information is taken from the Company's Current Report on Form
8-K filed with the Securities and Exchange Commission relating to the May
29, 1997 sale of the Company's Great Bend Industries ("GBI) division. The
final pro forma numbers, therefore, reflect the sale of both GBI and the
Division. The pro forma adjustments are described in the accompanying
notes and give effect to events that are (a) directly attributable to the
Disposition, (b) factually supportable and (c) in the case of certain
income adjustments, expected to have a continuing impact.
The unaudited pro forma condensed consolidated financial statements
should be read in connection with the Company's Annual Report on Form 10-K
for the year ended December 31, 1996, the Company's Quarterly Report on
Form 10-Q for the quarter ended June 28, 1997 and the Company's Current
Report on Form 8-K relating to the sale of GBI.
The unaudited pro forma financial information presented is for
information purposes only and does not purport to represent what the
Company's financial position or results of operations as of the dates
presented would have been had the Disposition in fact occurred on such
date or at the beginning of the periods indicated, or to project the
Company's financial position or results of operations for any future date
or period.
Pro Forma Condensed Consolidated Balance Sheet
June 28, 1997
(unaudited)
Pro Forma
(in thousands) Adjust-
Hein-Werner ments(1) Pro Forma
ASSETS
Current assets:
Cash $ 8,861 $ 1,489 $10,350
Accounts receivable, net 12,928 12,928
Inventories 9,727 9,727
Assets of discontinued
business awaiting
disposition 5,052 (5,052) 0
Prepaid expenses and other 2,361 2,361
-------- --------- ---------
Total current assets 38,929 (3,563) 35,366
Property, plant and equipment 2,777 2,777
Other assets 1,599 1,599
-------- --------- ---------
Total assets $43,305 $(3,563) $39,742
======== ========= =========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Notes payable $ 2,404 $2,404
Current installments of
long-term debt 170 170
Accounts payable 3,619 3,619
Income taxes payable 3,172 3,172
Other current liabilities 8,788 (3,563) 5,225
-------- -------- --------
Total current
liabilities 18,153 (3,563) 14,590
Long-term debt, excluding
current installments 328 328
Other long-term liabilities 1,573 1,573
--------- --------- ---------
Total Liabilities 20,054 (3,563) 16,491
Stockholder's Equity 23,251 -- 23,251
--------- --------- ---------
Total liabilities and
stockholders' equity $43,305 $(3,563) $39,742
========= ========= =========
See accompanying notes to unaudited pro forma condensed consolidated
financial statements.
Pro Forma Condensed Consolidated Statement of Operations
Year Ended December 31, 1996
(unaudited)
H-W Pro Forma
(in thousands, except per Pro Forma Disposed Adjust-
share data) Hein-Werner w/o GBI Division ments(2) Pro Forma
Net sales $68,492 $48,443 $ 6,747 $41,696
Cost of sales 42,672 27,015 5,154 21,861
------- ------- -------- -------- ---------
Gross profit 25,820 21,428 1,593 19,835
Selling, engineering, and
administrative expenses 21,471 19,566 2,738 585 17,413
Bad debt expenses 420 406 15 391
------- -------- -------- -------- ---------
Operating profit (loss) 3,929 1,456 (1,160) (585) 2,031
Interest (income) expense-net 1,465 47 199 (146) (298)
Other expense-net 164 164 164
------- -------- -------- -------- ---------
Income before income taxes 2,300 1,245 (1,359) (439) 2,165
Income tax expense 124 420 41 461
-------- ------- --------- --------- ---------
Net income (loss) $ 2,176 $ 825 $(1,359) $ (480) $ 1,704
======== ======= ========= ========= =========
Earnings per common share-
primary $ 0.78 $ 0.29 $ 0.59
======== ======= ========= ========= =========
Earnings per common share-
fully diluted $ 0.64 $ 0.29 $ 0.59
======== ======= ========= ========= =========
Weighted average common and
common equivalent shares
outstanding-primary 2,804 2,874 2,874
======== ======= ========= ========= =========
Weighted average common and
common equivalent shares
outstanding-fully diluted 3,383 2,874 2,874
======== ======= ========= ========= =========
See accompanying notes to unaudited pro forma condensed consolidated
financial statements.
Pro Forma Condensed Consolidated Statement of Operations
Six Months Ended June 28, 1997
(unaudited)
Pro
Forma
(in thousands, except per Hein- Adjust-
share data) Werner ments(2) Pro Forma
Net sales $ 19,639 $ -- $ 19,639
Cost of sales 10,570 10,570
------- -------- --------
Gross profit 9,069 -- 9,069
Selling, engineering, and
administrative expenses 8,044 309 8,353
------- ------- -------
Operating profit (loss) 1,025 (309) 716
Interest (income) expense-net 114 (152) (38)
Other expense-net 88 -- 88
------- ------- -------
Income before income taxes 823 (157) 666
Income tax expense 133 215 348
Income from continuing
operations $ 690 $ (372) $ 318
======= ======= =======
Earnings for continuing
operations per common share-
primary $ 0.24 $ 0.11
======= =======
Earnings from continuing
operations per common share-
fully diluted $ 0.24 $ 0.11
======= =======
Weighted average common and
common equivalent shares
outstanding-primary 2,838 2,838
======= =======
Weighted average common and
common equivalent shares
outstanding-fully diluted 2,881 2,881
======= =======
See accompanying notes to unaudited pro forma condensed consolidated
financial statements.
HEIN-WERNER CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
The pro forma condensed consolidated balance sheet has been prepared to
reflect the sale by the Company of substantially all of the business,
certain assets and liabilities of the Division. The pro forma adjustments
as of June 28, 1997 reflect the application of proceeds from the sale of
the Division to investments in cash equivalents and to establish remaining
accrued liabilities.
NOTE 2
The pro forma condensed consolidated statement of operations for the year
ended December 31, 1996 includes a column titled "H-W pro forma without
GBI." This information is taken from the Company's Current Report on Form
8-K filed with the Securities and Exchange Commission relating to the May
29, 1997 sale of the Great Bend Industries ("GBI") division. The final
pro forma numbers, therefore, reflect the sale of both GBI and the
Division. The pro forma condensed consolidated statements of operations
for the year ended December 31, 1996 and the six months ended June 28,
1997 are based upon the financial statements of the Company for the year
ended December 31, 1996 and the six months ended June 28, 1997,
respectively, after giving effect to the following pro forma adjustments:
a) Increase in interest earned from the investment of the proceeds
obtained from the sale of the Division and collection of the
receivables retained in the transaction, computed at rates in effect
during the respective periods.
b) Retention of certain central office selling, engineering, and
administrative expenses and other expenses previously allocated to
the Division, offset by a reduction of certain central office
expenses as a result of the sale of the Division. The historical
financial statements for the six months ended June 28, 1997, reflect
the Division as a discontinued operation. As a result, the only
adjustments to the statement of operations are those which reflect
pro forma interest earned on cash proceeds received and for certain
central office costs previously allocated to the Division but which
will continue after the disposition.
c) Provision for income taxes is needed so that income taxes on the U.S.
portion of consolidated pro forma income before taxes reflects U.S.
statutory rates. For the six months ended June 28, 1997, losses in
certain countries for which no tax benefit could be recorded due to
an inability to carry those losses back resulted in tax expense of
$133 on foreign losses before income taxes of $99. This results in
consolidated pro forma income tax expense of 52.3% of consolidated
income before income taxes, even though income taxes have been
provided at 38% on the U.S. portion thereof.
d) For the year ended December 31, 1996, pro forma weighted average
common and common equivalent shares reflect the issuance of 564,381
additional options in connection with the repayment of certain
convertible subordinated notes. For the six months ended June 28,
1997, the issuance of these additional options had already occurred
and is reflected in both this historical and pro forma amounts.
(c.) Exhibits.
The exhibits listed in the accompanying Exhibit Index are filed
as part of this Current Report on Form 8-K.
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.
HEIN-WERNER CORPORATION
September 12, 1997 By: /s/ Mary L. Kielich
Mary L. Kielich
Corporate Controller, Assistant
Secretary and Assistant
Treasurer
HEIN-WERNER CORPORATION
EXHIBIT INDEX TO FORM 8-K
Report Dated August 28, 1997
Exhibit
(2.1) Asset Purchase Agreement, dated as of August 18, 1997, by and
among Hein-Werner Corporation, a Wisconsin corporation, Van
Norman Equipment Co., Inc., a Minnesota corporation, and
Cornelius E. Mieras