SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): October 28, 1998
JPE, INC.
(Exact name of registrant as specified in its charter)
MICHIGAN
(State or Other Jurisdiction of Incorporation)
0-22580 38-2958730
(Commission File No.) (IRS Employer Identification No.)
775 Technology Drive, Suite 200
Ann Arbor, Michigan 48108
(Address of Principal Executive Offices) (Zip Code)
(734) 662-2323
(Registrant's Telephone Number, Including Area Code)
ITEM 2 ACQUISITION AND DISPOSITION OF ASSETS
On September 4, 1998, R&B, Inc., a Delaware corporation ("Buyer") entered
into an Asset Purchase Agreement dated as of August 28, 1998 (the "Agreement")
(the Agreement is filed as Exhibit 2.1 to this Report) with JPE, Inc., a
Michigan corporation (the "Registrant"), and Registrant's wholly-owned
subsidiary, Allparts, Incorporated, a Missouri corporation ("Allparts"),
pursuant to which Buyer agreed to purchase substantially all of the assets of
Allparts. Allparts is a distributor of hydraulic brake parts to the automotive
aftermarket.
On October 15, 1998, the parties entered into Amendment No. 1 to the
Agreement (the "Amendment") (the Amendment is filed as Exhibit 2.2 to this
Report).
On October 28, 1998 (the "Closing Date"), the sale of Allparts was
completed. In accordance with the Agreement, as amended, the consideration
received was approximately $10.1 million in cash, plus the assumption of
Allparts' trade and accrued liabilities.
In the Agreement, Allparts made certain representations and warranties as
to itself. The only representations and warranties which survived the Closing
Date were those relating to taxes and fraud or gross negligence. Allparts and
Registrant are jointly and severally liable for the indemnification related to
the surviving representations and warranties. Registrant believes that the taxes
incurred in connection with the business of Allparts have been properly accrued
on Registrant's balance sheet.
The proceeds of the sale, net of selling commissions and related expenses,
were used to permanently reduce the Registrant's borrowings under the
Forbearance Agreement dated August 10, 1998, as amended, among the Registrant
and Comerica Bank, and other banks participant thereto.
Prior to the disposition, there were no relationships between Registrant
and Buyer, any of Registrant's affiliates, any director or officer of
Registrant, or any associates of any of Registrant's officers or directors.
ITEM 7(b) PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial statements give
effect to the sale of Allparts, Incorporated. The Pro Forma Consolidated Balance
Sheet as of December 31, 1997 and September 30, 1998 and the Statement of Income
for the nine months ended September 30, 1998 and the year ended December 31,
1997 reflect the divestiture as if it had been completed as of January 1, 1997.
The pro forma data does not purport to be indicative of the results which would
actually have been reported if this transaction had occurred on January 1, 1997.
JPE, INC.
Pro Forma Condensed Consolidated Balance Sheet
as of September 30, 1998
(Unaudited)
Pro Forma
JPE Allparts, Pro Forma JPE
Consolidated Inc. Adjustment Consolidated
------------ --------- ---------- ------------
Cash and cash equivalents $ 408 -- -- $ 408
Accounts receivable trade, net 18,968 $ 4,923 -- 14,045
Inventory, net 26,141 5,674 -- 20,467
Other current assets 3,507 158 -- 3,349
-------- ------- ------- --------
Total current assets 49,024 10,755 -- 38,269
Investment in affiliated companies 27,232 -- -- 27,232
Net fixed assets 22,138 540 -- 21,598
Goodwill 7,322 18 -- 7,304
Other assets, long-term 761 -- -- 761
-------- ------- ------- --------
Total assets $106,477 $11,313 -- $ 95,164
======== ======= ======= ========
Current portion long-term debt $104,024 $ 29 $(9,891) (a) $ 94,104
Accounts payable trade 12,049 1,211 -- 10,838
Accounts payable - intercompany -- 687 687 (b) --
Accrued liabilities 2,779 124 326 (d) 2,981
Other current liabilities 1,361 -- -- 1,361
-------- ------- ------- --------
Total current liabilities 120,213 2,051 (8,878) 109,284
Other long-term accrued liabilities 1,502 -- -- 1,502
Long-term debt 141 81 -- 60
Foreign currency translation (336) -- -- (336)
Common stock and paid-in capital 28,051 11,046 11,046 (b) 28,051
Retained earnings - prior (43,094) (1,865) (2,168) (c) (43,397)
-------- ------- ------- --------
Total stockholders' equity (15,379) 9,181 8,878 (15,682)
-------- ------- ------- --------
Total liabilities and equity $106,477 $11,313 $ -- $ 95,164
======== ======= ======= ========
<FN>
(a) To reduce debt for net proceeds received.
(b) To eliminate intercompany accounts payable and the investment account.
(c) To adjust earnings for the impact of the above transactions on retained
earnings.
(d) To record tax accrual as a result of interest saving.
</FN>
JPE, INC.
Pro Forma Condensed Consolidated Income Statement
for the Nine Months Ended September 30, 1998
(Unaudited)
Pro Forma
JPE Allparts, Pro Forma JPE
Consolidated Inc. Adjustment Consolidated
------------ --------- ---------- ------------
Sales $185,217 $14,034 -- $171,183
Cost of sales 164,126 10,386 -- 153,740
-------- ------- ------ --------
Gross margin 21,091 3,648 -- 17,443
Selling expense 21,425 2,442 -- 18,983
Other expense 39,311 5,268 -- 34,043
-------- ------- ------ --------
Income before interest and taxes (39,645) (4,062) -- (35,583)
Interest 10,659 968 $ (816) (a) 8,875
-------- ------- ------ --------
Income before taxes (50,304) (5,030) 816 (44,458)
Tax expense (1,496) 190 326 (b) (1,360)
-------- ------- ------ --------
Net income $(48,808) $(5,220) $ 490 $(43,098)
======== ======== ====== ========
Weighted average shares 4,602 4,602
===== =====
Earnings per share $(10.61) $(9.37)
======= ======
<FN>
(a) Interest expense adjusted for the net cash proceeds paid to the bank
Net cash proceeds $9,891
Average interest 11%
Annual interest expense $1,088
(b) Tax provision computed at an effective rate of 40%.
</FN>
JPE, INC.
Pro Forma Condensed Consolidated Balance Sheet
as of December 31, 1997
(Unaudited)
Pro Forma
JPE Allparts, Pro Forma JPE
Consolidated Inc. Adjustment Consolidated
------------ --------- ---------- ------------
Cash and cash equivalents $ 29 -- -- $ 29
Accounts receivable trade, net 37,997 $ 4,445 -- 33,552
Inventory, net 39,412 4,784 -- 34,628
Other current assets 8,375 50 -- 8,325
-------- ------- ------- --------
Total current assets 85,813 9,279 -- 76,534
Net fixed assets 72,981 1,254 -- 71,727
Goodwill 31,962 4,799 -- 27,163
Other assets, long-term 2,459 -- -- 2,459
-------- ------- ------- --------
Total assets $193,215 $15,332 -- $177,883
======== ======= ======= ========
Short term debt $ 7,723 -- -- $ 7,723
Current portion long-term debt 105,402 -- $(9,891) (a) 95,511
Accounts payable trade 25,219 $ 584 -- 24,635
Accounts payable - intercompany -- 454 454 (b) --
Accrued corporate taxes 314 725 324 (d) (87)
Accrued liabilities 6,336 274 -- 6,062
-------- ------- ------- --------
Total current liabilities 144,994 2,037 (9,113) 133,844
Other long-term accrued liabilities 1,651 105 -- 1,546
Deferred income tax 3,804 23 -- 3,781
Long-term debt 9,272 -- -- 9,272
Foreign currency translation (271) -- -- (271)
Common stock and paid-in capital 28,051 11,046 11,046 (b) 28,051
Retained earnings - prior 5,714 2,121 (1,933) (c) 1,660
-------- ------- ------- --------
Total stockholders' equity 33,494 3,167 9,113 29,440
-------- ------- ------- --------
Total liabilities and equity $193,215 $15,332 $ -- $177,883
======== ======= ======= ========
<FN>
(a) To reduce debt for net proceeds received.
(b) To eliminate intercompany accounts payable and the investment account.
(c) To adjust earnings for the impact of the above transactions on retained
earnings.
(d) To record tax accrual as a result of interest saving.
</FN>
JPE, INC.
Pro Forma Condensed Consolidated Income Statement
for the Year Ended December 31, 1997
(Unaudited)
Pro Forma
JPE Allparts, Pro Forma JPE
Consolidated Inc. Adjustment Consolidated
------------ --------- ---------- ------------
Sales $287,066 $17,732 -- $269,334
Cost of sales 246,903 12,658 -- 234,245
-------- ------- ------ --------
Gross margin 40,163 5,074 -- 35,089
Selling expense 29,254 3,250 -- 26,004
Discontinuance of stamping operations 2,164 -- -- 2,164
Other expense 618 -- -- 618
-------- ------- ------ --------
Income before interest and taxes 8,127 1,824 -- 6,303
Interest 10,464 870 $ (811) (a) 8,783
-------- ------- ------ --------
Income before taxes (2,337) 954 811 (2,480)
Tax expense (194) 442 324 (b) (312)
-------- ------- ------ --------
Net income $( 2,143) $ 512 $ 487 $ (2,168)
======== ======= ====== ========
Weighted average shares 4,602 4,602
===== =====
Earnings per share $(0.47) $(0.47)
====== ======
<FN>
(a) Interest expense adjusted for the net cash proceeds paid to the bank
Net cash proceeds $9,891
Average interest 8.2%
Annual interest expense $ 811
(b) Tax provision computed at an effective rate of 40%.
</FN>
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.
JPE, INC.
Date: November 12, 1998 /s/ James J. Fahrner
----------------------------------
James J. Fahrner
Chief Operating Officer and
Chief Financial Officer
Exhibits Index
--------------
Exhibit
Number Description
- ------- -----------
2.1 Asset Purchase Agreement, dated as of August 28, 1998, by and between
R&B, Inc. and Allparts, Inc.
2.2 Amendment No. 1, dated as of October 15, 1998, to Asset Purchase
Agreement, dated as of August 28, 1998, by and between R&B, Inc. and
Allparts, Inc.