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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
SCHEDULE 13E-3/A
(AMENDMENT NO. 1)
TRANSACTION STATEMENT UNDER SECTION 13(E)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 13E-3 THEREUNDER
THE OHIO ART COMPANY
(Name of Issuer)
THE OHIO ART COMPANY
(Name of Person(s) Filing Statement)
COMMON STOCK, $1.00 PAR VALUE
(Title of Class of Securities)
677143109
(Cusip Number of Class of Securities)
WILLIAM C. KILLGALLON
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
THE OHIO ART COMPANY
P.O. BOX 111
BRYAN, OHIO 43506
(419) 636-3141
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of the Person(s) Filing Statement)
WITH COPIES TO:
Thomas J. Murphy P.C.
McDermott Will & Emery LLP
227 West Monroe Street
Chicago, Illinois 60606
(312) 372-2000
This statement is filed in connection with (check the appropriate box):
a. |_| The filing of solicitation materials or an information statement subject
to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities Exchange
Act of 1934.
b. |_| The filing of a registration statement under the Securities Act of 1933.
c. |X|A tender offer.
d. |_| None of the above.
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies: |_|
Check the following box if the filing is a final amendment reporting the
results of the transaction: |_|
CALCULATION OF FILING FEE
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Transaction Valuation: Amount of Filing Fee
$69,000 $13.80 (1)
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(1) Previously paid.
* Calculated solely for the purpose of determining the filing fee, based upon
the odd-lot tender offer price of $9.20 per share for the eligible shares of
Common Stock, multiplied by 7,500, the estimated maximum number of shares to be
purchased in the offer.
|_| Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: N/A
Filing Party: N/A
Form or Registration No.: N/A
Date Filed: N/A
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INTRODUCTION
This Amendment No. 1 (this "Amendment") to the Rule 13e-3 Transaction
Statement on Schedule 13E-3 (the "Schedule 13E-3") amends and supplements the
Schedule 13E-3 filed by the Ohio Art Company (the "Company") on February 2, 2005
relating to its offer to purchase for cash (the "Offer") all shares of the
Company's common stock, $1.00 par value per share (the "Shares" or "Common
Stock"), held by shareholders that own 99 or fewer Shares as of the close of
business on January 19, 2005. The Offer is being made pursuant to an offer to
purchase (the "Offer to Purchase"), dated February 2, 2005, which has previously
been attached to the Schedule 13E-3 as Exhibit (a)(1).
The purpose of this Amendment is to amend and supplement the Schedule
13E-3. Except as otherwise noted below, no changes have been made to the
responses to the items of the Schedule 13E-3.
Items 1 through 15 of the Schedule 13E-3, which incorporate by reference
the information contained in the Offer to Purchase, are hereby amended as
follows:
a) The second paragraph of the Offer to Purchase is hereby amended in its
entirety to read as follows:
We will pay $9.20 per Share properly tendered by an eligible
shareholder. This price was selected because it was the closing price
for our Shares on the American Stock Exchange on August 20, 2004, the
last day the Shares were traded on that exchange. Payment will be made
promptly after the expiration of the Offer.
b) The Offer to Purchase is hereby amended to add the following paragraph as
the eighth paragraph in the Section titled "Effects of the Offer; Plans
After Completing the Offer" of the Offer to Purchase:
Officers and directors who are continuing shareholders as well as
other non-tendering shareholders will continue to participate in the
growth of the Company, if any. In addition, these persons' investment
in the Company could reflect any benefit realized by the Company in
its future use, if any, of operating loss carryforwards. Any such
potential benefit cannot be quantified because it is not possible to
determine if or when the Company will have profits sufficient to
utilize these operating loss carryforwards.
c) The Offer to Purchase is hereby amended to add the following paragraph as
the third paragraph under the caption "Why is Ohio Art making the Offer?"
of the Offer to Purchase:
We estimate that the additional annual cost to us being a reporting
company is approximately $300,000, including internal costs. In
addition, we estimate that in order to fully implement the requirement
of Sarbanes-Oxley, particularly the provisions regarding internal
control reports and documentation, we will incur additional
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non-recurring costs of approximately $250,000, including internal
costs.
d) The first and sixth paragraphs of the section "Our Position as to the
Fairness of the Offer to Unaffiliated Shareholders" of the Offer to
Purchase are hereby combined and amended in their entirety to read as the
first paragraph of that section as follows:
Our board selected the Offer price of $9.20 per Share because that was
the closing price for our Shares on the American Stock Exchange on
August 20, 2004. Our board did not consider book value, liquidation
value or going concern value material to its fairness decision given
that this Offer is directed only to shareholders owning small numbers
of Shares who could benefit from selling their Shares without
brokerage commissions. This Offer does not involve a merger, sale of
all outstanding Shares or a sale of substantially all of the assets of
the Company. We believe a measure of book value, going concern value
or liquidation value would be more appropriate under those
circumstances. We believe that the Offer is fair to eligible
shareholders that are unaffiliated with us. The determination of the
Offer price of $9.20 per Share and our belief as to fairness of the
Offer to these shareholders is based on the following factors:
o The Offer is voluntary for eligible shareholders.
o We selected the closing price of $9.20 per Share on the American
Stock Exchange on August 20, 2004, the last day the Common Stock was
traded on that exchange, because it is the last market price
determined on a registered securities exchange and because we believe
that the trading on that exchange was sufficiently developed and
liquid to establish a fair value for the Shares. The $9.20 price also
represents a 31% premium over the highest bid price of $7.00 quoted on
the pink sheets in the 30 days prior to announcement of this Offer.
o Eligible shareholders who choose to participate in the Offer will
avoid the brokerage commissions that they would otherwise incur if
they disposed of their Shares in a brokerage transaction (although a
holder will have federal and state income tax consequences and may be
charged a fee if it holds its Shares through a nominee, as discussed
below).
e) The fourth paragraph under the section captioned "Effects of the Offer;
Plans After Completing the Offer" of the Offer to Purchase is hereby
amended in its entirety as follows:
Under applicable SEC rules, companies are permitted to terminate the
registration of, and suspend their SEC reporting obligations with
respect to, any class of securities held of record by fewer than 300
persons. Once these obligations have been suspended, companies are no
longer required to file periodic reports, including annual reports on
Form 10-K, quarterly reports on Form 10-Q and current reports on Form
8-K or to comply with the SEC's proxy rules and holders of our Common
Stock will no longer be subject to the requirements of Sections 13(d)
and 16 of the Exchange Act or the corporate governance provisions of
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Sarbanes-Oxley, including management certification of periodic reports
(and related penalties for false certifications), the prohibition on
loans to directors and executive officers, certain audit committee
charter requirements, documentation and report requirements, and
internal control. Because our Common Stock is our only class of
securities outstanding, once we suspend our reporting obligations with
respect to our Common Stock, we will have no obligation under federal
securities laws to provide our shareholders with any periodic reports
as to new developments in our business, our financial condition or
results of operations. Therefore, following the suspension of our
reporting obligations, it will be more difficult for our shareholders
to obtain information about us. We do intend, however, to provide our
remaining shareholders by mail with basic information with respect to
our financial condition and results of operations on an annual basis,
including audited financial statements, after we become a
non-reporting company. This information will not be as detailed or
extensive as the information we currently file with the SEC. As a
company incorporated under the laws of the State of Ohio, the Company
is required to call an annual meeting of shareholders and is required
at the annual meeting to lay before the shareholders financial
statements, which may be a balance sheet and statement of profit and
loss. These financial statements are not required to be audited but if
not audited are required to be signed by the president or
vice-president or the treasurer or an assistant treasurer of the
corporation.
Ohio law also provides that the shareholders have a right to inspect
the books and records of their company for a specific reasonable and
proper purpose.
f) The paragraph under the caption "Conditions of the Offer" of the Offer to
Purchase is hereby amended in its entirety as follows:
This Offer is not conditioned on the receipt of tenders for any
minimum number of Shares. This Offer is not subject to any conditions
except that tenders must be in proper form, tendering holders must be
eligible to tender and we must not have terminated the Offer. We will
not accept any alternative, conditional or contingent tenders. Also,
any tenders of Shares by any eligible shareholder must be for all of
such holder's Shares. If we fail at any time to exercise any of our
rights, such as the right to reject any or all tenders not in proper
form and our right to terminate the Offer, that failure to exercise
shall not constitute a waiver of these rights.
g) The following sentence is added to the section of the Offer to Purchase
captioned "Source and Amount of Funds":
Because of the relatively modest amount of cash expected to be needed
to complete the Offer and the substantial availability on our credit
line, no other alternative financing plan was considered.
h) The following line items are added to summary consolidated financial
information included in the Offer to Purchase under the caption "Summary
Consolidated Financial Information":
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Nine Months Ended Fiscal Year Ended
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October 31, October 31, January 31, January 31,
2004 2003 2004 2003
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Current assets................... $11,568 $10,417 $9,138 $12,702
Noncurrent assets................ $6,096 $7,385 $6,921 $7,754
Current liabilities.............. $8,230 $4,833 $3,338 $6,884
Noncurrent liabilities........... $3,496 $4,882 $4,080 $4,795
Gross profit..................... $5,134 $6,779 $9,069 $13,281
i) The Offer to Purchase is hereby amended by amending and replacing the fifth
paragraph under the caption "Where You Can Find More Information" in its
entirety:
We intend to file with the SEC an amendment to the Transaction
Statement on Schedule 13E-3 and this Offer to Purchase in order to
incorporate by reference any additional documents that contain
material information with respect to the Offer that we may file with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act,
after the date of this Offer to Purchase and prior to the expiration
of the Offer, or any extension thereof.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify the
information set forth in this statement is true, complete and correct.
THE OHIO ART COMPANY
By: /s/ William C. Killgallon
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Name: William C. Killgallon
Title: Chairman and Chief Executive Officer
Dated: February 28, 2005
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