SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
AMENDMENT NO. 1
TO
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): April 8, 1996
LILLY INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
INDIANA
(State or other jurisdiction of incorporation)
0-6953 35-0471010
(Commission File Number) (IRS Employer Identification No.)
733 South West Street
Indianapolis, Indiana 46255
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (317) 687-6700
Item 7(b). Pro Forma Financial Information
Lilly Industries, Inc. ("Lilly") acquired 9,322,583 shares, or approximately
96.5% of the outstanding stock, of Guardsman Products, Inc. ("Guardsman")
pursuant to a cash tender offer of $23 per share for all the outstanding stock
of Guardsman. The tender offer expired on April 4, 1996 and the shares tendered
were accepted for purchase on April 8, 1996. Pursuant to a follow-up merger, all
non-tendered shares of Guardsman have been converted into the right to receive
$23 net per share in cash (subject to perfected dissenters' rights, if any). To
finance the purchase of shares, Lilly obtained commitments for $300 million of
senior secured credit facilities and used $275 million of these facilities to
pay-off existing debt, fund the initial purchase of shares and to pay related
expenses.
The following unaudited pro forma balance sheet combines the historical
consolidated balance sheets of Lilly as of February 29, 1996 and Guardsman as of
March 31, 1996 to reflect the April 8, 1996 acquisition as if it had occurred at
the end of the combined period.
The unaudited pro forma combined statement of income for the most recent fiscal
year uses historical income statements for the years ended November 30, 1995 and
December 31, 1995 for Lilly and Guardsman, respectively. The unaudited pro forma
combined statement of income for the most recent interim period uses historical
income statements for the three month periods ended February 29, 1996 and March
31, 1996 for Lilly and Guardsman, respectively. The pro forma income statements
reflect the acquisition as if it occurred at the beginning of the respective
periods.
The pro forma financial information is not necessarily indicative of the
financial position or operating results that would have occurred had the
acquisition been consummated on the date, or at the beginning of the periods,
for which the acquisition is being given effect nor is it necessarily indicative
of future operating results or financial position. Pro forma financial
information should be read in conjunction with the historical consolidated
financial statements and related notes thereto of Lilly and Guardsman.
The Company has adopted and commenced implementation of plans for the
consolidation of manufacturing facilities in conjunction with this acquisition.
Costs of approximately $10 million associated with the planned closure of former
Lilly facilities and related reductions in workforce will be reflected as
restructuring charges in second quarter operations. These charges are not
reflected in the pro forma adjustments.
Costs associated with the planned closure of former Guardsman facilities and
related reductions in workforce approximate $9 million and are reflected as pro
forma adjustments in the opening balance sheet of the combined entity as of the
acquisition date.
Lilly Industries, Inc.
Unaudited Pro Forma Combined Statement of Income
(amounts in thousands)
Lilly
Industries Guardsman
Inc. Products, Inc. Pro Forma
Three Months Three Months ----------------------------
Ended Ended Adjustments Combined
STATEMENT OF INCOME 2/29/96 3/31/96 (Note 1)
- --------------------------------------------------------------------------------------------------------------------
Net sales $73,271 $68,127 $ $141,398
Cost of sales 49,210 43,830 (3,446)(a) 89,594
------- ------- ------ --------
Gross profit 24,061 24,297 3,446 51,804
Operating expenses 18,041 23,075 (1,090)(b) 40,026
------- ------- ------ --------
Operating income 6,020 1,222 4,536 11,778
Interest expense (471) (496) (4,533)(c) (5,500)
Interest income & sundry 166 44 210
------- ------- ------ --------
Income before income
taxes 5,715 770 3 6,488
Income taxes 2,229 323 367 (d) 2,919
------- ------- ------ --------
NET INCOME $ 3,486 $ 447 $ (364) $ 3,569
======= ======= ====== ========
Average number of shares
and equivalent shares of
capital stock outstanding 22,900 9,515 23,000
Net income per share $0.15 $0.05 $0.16
===============================================================================
Note 1 -- The pro forma adjustments necessary to reflect the acquisition of
Guardsman are as follows:
Debit(Credit)
Amount
(a) COST OF SALES PRO FORMA ADJUSTMENTS ---------
Raw material procurement efficiencies $ (1,000)
Reduction in manufacturing costs related
to facility consolidations (2,250)
Reduction in depreciation expense
resulting from purchase accounting ( 196)
------
$ (3,446)
======
Debit(Credit)
(b) OPERATING EXPENSE PRO FORMA ADJUSTMENTS Amount
------
Increase in amortization expense related
to purchased goodwill and capitalized
loan costs $ 660
Decrease in expense due to elimination of
duplicate corporate and sales functions (1,750)
------
$ (1,090)
======
(c) INTEREST EXPENSE PRO FORMA ADJUSTMENT
Increase in interest expense
due to acquisition debt $ 4,533
(d) INCOME TAX PRO FORMA ADJUSTMENT
Income tax effect relating to
acquisition adjustments $ 367
Lilly Industries, Inc.
Unaudited Pro Forma Combined Statement of Income
(amounts in thousands)
Lilly
Industries Guardsman
Inc. Products, Inc. Pro Forma
Fiscal Year Fiscal Year ----------------------------
Ended Ended Adjustments Combined
STATEMENT OF INCOME 11/30/95 12/31/95 (Note 2)
- --------------------------------------------------------------------------------------------------------------------
Net sales $328,345 $250,574 $ $578,919
Cost of sales 219,899 165,618 (13,783)(a) 371,734
-------- -------- -------- --------
Gross profit 108,446 84,956 13,783 207,185
Operating expenses 73,058 70,274 (4,359)(b) 138,973
-------- -------- -------- --------
Operating income 35,388 14,682 18,142 68,212
Interest expense (2,158) (2,131) (17,711)(c) (22,000)
Interest income & sundry 544 587 1,131
Restructuring charge 0 (10,458) (10,458)
-------- -------- -------- --------
Income before income
taxes 33,774 2,680 431 36,885
Income taxes 13,510 1,248 1,840 (d) 16,598
-------- -------- -------- --------
NET INCOME $ 20,264 $ 1,432 $ (1,409) $ 20,287
======== ======== ======== ========
Average number of shares
and equivalent shares of
capital stock outstanding 23,100 9,515 23,100
Net income per share $0.88 $0.15 $0.88
===============================================================================
Note 2 -- The pro forma adjustments necessary to reflect the acquisition of
Guardsman are as follows:
Debit(Credit)
Amount
(a) COST OF SALES PRO FORMA ADJUSTMENTS ------
Raw material procurement efficiencies $ (4,000)
Reduction in manufacturing costs
related to facility consolidations (9,000)
Reduction in depreciation expense
resulting from purchase accounting ( 783)
-------
$(13,783)
=======
Debit(Credit)
(b) OPERATING EXPENSE PRO FORMA ADJUSTMENTS Amount
------
Increase in amortization expense related
to purchased goodwill and
capitalized loan costs $ 2,641
Decrease in expense due to elimination of
duplicate corporate and sales functions (7,000)
------
$ (4,359)
======
(c) INTEREST EXPENSE PRO FORMA ADJUSTMENT
Increase in interest expense due
to acquisition debt $ 17,711
(d) INCOME TAX PRO FORMA ADJUSTMENT
Income tax effect relating to
acquisition adjustments $ 1,840
Lilly Industries, Inc.
Unaudited Pro Forma Combined Balance Sheet
(amounts in thousands)
Lilly Guardsman Pro Forma
Industries, Products --------------------------
Inc. Inc. Adjustments Combined
2/29/96 3/31/96 (Note 3)
- ----------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash and cash equivalents $ 6,507 $ 6,443 $ 394 (a) $ 13,344
Accounts receivable 43,300 38,561 81,861
Less allowances (2,098) (729) (2,827)
Inventories 20,509 27,530 (950)(b) 47,089
Prepaids & other current assets 1,181 12,338 1,649 (c) 15,168
-------- -------- -------- --------
Total current assets 69,399 84,143 1,093 154,635
Property, plant & equipment 89,280 46,435 (17,008)(d) 118,707
Accumulated depreciation (41,765) (18,802) 18,802 (d) (41,765)
-------- -------- -------- --------
PROPERTY, Net 47,515 27,633 1,794 76,942
Goodwill 27,129 19,052 175,459 (e) 221,640
Intangibles 19,307 11,307 3,135 (f) 33,749
Other assets 14,034 5,229 3,701 (g) 22,964
-------- -------- -------- --------
TOTAL ASSETS $177,384 $147,364 $185,182 $509,930
======== ======== ======== ========
CURRENT LIABILITIES
Accounts payable $ 24,585 $ 21,088 $ $ 45,673
Income taxes 2,335 (405) 1,930
Current portion of
long term debt 7,029 47 3,924 (h) 11,000
Other current liabilities 6,167 16,545 11,861 (i) 34,573
-------- -------- -------- --------
Total current liabilities 40,116 37,275 15,785 93,176
LONG-TERM DEBT 14,200 28,549 221,251 (j) 264,000
OTHER LIABILITIES 11,734 17,354 12,332 (k) 41,420
STOCKHOLDERS' EQUITY
Capital stock 15,283 9,625 (9,625)(l) 15,283
Additional paid-in capital 73,998 48,033 (48,033)(l) 73,998
Retained earnings 53,132 7,820 (7,820)(l) 53,132
Currency translation 82 (1,292) 1,292 (l) 82
Less treasury stock (31,161) 0 0 (31,161)
-------- -------- -------- --------
Total stockholders' equity 111,334 64,186 (64,186)(1) 111,334
-------- -------- -------- --------
TOTAL LIABILITIES & EQUITY $177,384 $147,364 $185,182 $509,930
======== ======== ======== ========
===============================================================================
Note 3 -- The pro forma adjustments necessary to reflect the acquisition of
Guardsman are as follows:
Debit(Credit)
(a) CASH PRO FORMA ADJUSTMENTS Amount
------
Cash from acquisition financing $ 394
(b) INVENTORY PRO FORMA ADJUSTMENT
Acquisition fair value adjustment -
facility consolidations $ (950)
(c) PREPAIDS AND OTHER CURRENT ASSETS PRO FORMA
ADJUSTMENT
Acquisition fair value adjustment
- deferred taxes and other adjustments $ 1,649
(d) PROPERTY, PLANT & EQUIPMENT PRO FORMA
ADJUSTMENT
Acquisition fair value adjustment -
including facility consolidations $ (17,008)
Elimination of accumulated depreciation 18,802
-------
$ 1,794
=======
(e) GOODWILL PRO FORMA ADJUSTMENT
Eliminate historical goodwill $ (19,052)
Goodwill acquired 194,511
-------
$ 175,459
=======
(f) INTANGIBLES PRO FORMA ADJUSTMENT
Acquisition fair value adjustment $ (3,368)
Capitalization of loan issue costs 6,503
-------
$ 3,135
=======
Debit(Credit)
(g) OTHER ASSETS PRO FORMA ADJUSTMENT Amount
------
Acquisition fair value adjustment $ 3,701
(h) CURRENT PORTION OF LONG TERM DEBT
PRO FORMA ADJUSTMENT
Retirement of existing debt $ 7,076
Current portion of acquisition financing (11,000)
-------
$ (3,924)
=======
(i) OTHER CURRENT LIABILITIES PRO FORMA
ADJUSTMENT
Acquisition fair value adjustment,
including facility consolidations $ 997
Accruals for non-tendered shares, options,
and acquisition expenditures $(12,858)
-------
$(11,861)
=======
(j) LONG TERM DEBT PRO FORMA ADJUSTMENT
Long-term portion of acquisition financing $(264,000)
Retirement of existing debt 42,749
--------
$(221,251)
========
(k) OTHER LIABILITIES PRO FORMA ADJUSTMENT
Acquisition fair value adjustment,
including facility consolidations $(12,332)
(l) EQUITY PRO FORMA ADJUSTMENT
Elimination of GPI equity balances $ 64,186
Item 7(c). Exhibits
The following exhibit is filed as part of this report:
Exhibit 23 Consent of Independent Public Accountants
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.
Dated: June 20, 1996
Lilly Industries, Inc.
By: /s/ Roman J. Klusas
---------------------------
Roman J. Klusas,
Vice President, Secretary
and Chief Financial Officer