SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 26, 1994
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FIRST BRANDS CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware 06-1171404
(State of Organization) (I.R.S. Employer Identification No.)
83 Wooster Heights Road
Building 301, P. O. Box 1911
Danbury, CT 06813-1911
(Address of principal executive offices)
Registrant's telephone number, including area code: (203) 731-2300
Item 2 Acquisition or Disposition of Assets
On August 26, 1994, First Brands Corporation (the Company) sold its
antifreeze and car care products businesses (excluding STP and SIMONIZ) (the
Business) in an asset sale to Prestone Products Corporation (Prestone), a
company organized and indirectly controlled by Vestar Equity Partners L.P., a
private investment firm. The selling price was $142,000,000 in cash and a
$13,000,000 subordinated debenture maturing in 2003, the fair market value of
which has been estimated at $9,000,000. The debenture carries a cash pay rate of
7 1/2% or an optional compound deferred rate of 10%. As part of the transaction,
the Company will reimburse Prestone approximately $29,000,000, which represents
the proportional interest previously sold in Prestone's accounts receivable
under the Company's securitization program. The consideration received in the
sale was negotiated and is believed to be a fair value for the Business. The
Company is in the process of finalizing its calculation of the gain on sale.
Registrant expects to retain the net proceeds from the sale of the Business for:
1) reduction of debt; 2) the repurchase of 1,500,000 shares of the Company's
common stock; and 3) for future acquisitions and other general corporate
purposes.
The assets sold were all of the assets directly used in the Business
included trademarks, receivables, inventory and the fixed assets at three
antifreeze manufacturing facilities. Liabilities directly involved with the
Business were also assumed.
The Company will provide to Prestone, certain administrative and accounting
services at cost for up to one year, and will supply certain manufactured car
care products at cost for two years. Prestone will provide to the Company
certain automotive laboratory services at cost for up to 2 years. The Company
will also act as Prestone's distributor outside of North America for
compensation believed to be competitive.
Item 7 Financial Statements and Exhibits
A. Not Applicable
B. Proforma Financial Information
The accompanying unaudited condensed consolidated proforma statement of
income is presented as if the sale of the Business had occurred on June 30,
1993. The accompanying unaudited condensed proforma balance sheet is presented
as if the sale occurred June 30, 1994. The proforma financial statements have
been prepared for informational purposes only and do not purport to be
indicative of what would actually have occurred had the sale of the Business
occurred at the beginning of the fiscal year ended June 30, 1994.
June 30, 1994 Proforma June 30, 1994
Historical Adjustments(1) Proforma
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Net Sales $ 1,086,320 ($190,573) $ 895,747
Cost of Goods Sold 665,896 (137,604) 528,292
Selling General & Admin 269,181 (24,180)(2) 245,001
Amortization and other Depreciation 20,768 (3,390) 17,378
Interest, discount and other expenses 26,740 (6,410)(3) 20,330
Provision for Income Taxes 43,569 (7,975) 35,594
Net Income $ 60,166 (11,014) $ 49,152
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Earnings Per Share $ 2.71 -- $ 2.22
FIRST BRANDS CORPORATION
PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1994
(Amounts in thousands)
(Unaudited)
June 30, 1994 Proforma June 30, 1994
Historical Adjustments(1) Proforma
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Cash............................................................... $ 13,384 $ -- $ 13,384
Accounts and Notes Receivable...................................... 89,769 10,785(5) 78,984
Inventory.......................................................... 155,737 29,592 126,145
Deferred Tax Asset................................................. 26,239 -- 26,239
Prepaid Expenses................................................... 5,756 134 5,622
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Total Current Assets.......................................... 290,885 40,511 250,374
Property, Plant & Equip., Net...................................... 266,357 22,246 244,111
Intangibles, Net................................................... 256,743 52,290 204,453
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Total Assets............................................. $ 813,985 $115,047 $ 698,938
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Accounts and Notes Payable......................................... $ 60,510 $(17,878)(6) $ 78,388
Accrued Liabilities................................................ 177,393 18,193 159,200
Current Portion -- Long Term Debt.................................. 204 -- 204
Total Current Liabilities................................ 238,107 315 237,792
Long Term Debt..................................................... 153,430 142,000(7) 11,430
Other Long Term Obligations........................................ 61,718 2,000 59,718
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Total Liabilities........................................ 453,255 144,315 308,940
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Net Assets............................................... 360,730 (29,268) 389,998
Total Liabilities & Net Assets........................... $ 813,985 $115,047 $ 698,938
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NOTES TO PROFORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1-Description of Transaction
On August 26, 1994, the Company sold its antifreeze and car care products
(excluding STP and SIMONIZ) businesses to Prestone Products Corporation for
$142,000,000 in cash and a $13,000,000 subordinated debenture maturing in 2003.
The debenture carries a cash pay rate of 7 1/2% or an optional compound deferred
rate of 10%. For financial statement purposes the note is valued at $9,000,000
due to the nominal interest rates being below market for the type of note
received.
NOTE 2-Basis of Presentation
The proforma condensed consolidated financial statements represent the
results of operations for the year ended June 30, 1994 and the balance sheet at
June 30, 1994, after giving effect to certain proforma adjustments related to
the sale of the Business as if it had occurred June 30, 1993, for the statement
of income and June 30, 1994, for the balance sheet.
NOTE 3-Proforma Adjustments
The proforma adjustments related to the sale of the Business:
(1) Elimination of results of operations of the Business for the year
ended June 30, 1994.
(2) Net of a $3,000,000 portion of overhead expense previously
allocated to the Business which is expected to continue.
(3) Elimination of interest expense of $6,410,000 reflecting the
reduction of debt from the net sale proceeds, calculated based on
the ratio of the net assets sold to the sum of total net assets
plus consolidated debt of the Company.
(4) Elimination of Balance Sheet assets sold to, and liabilities
assumed by, Prestone.
(5) Elimination of $19,785,000 of Prestone receivables offset by
debenture received from Prestone valued at $9,000,000.
(6) Elimination of Prestone payables of $10,912,000 offset by
$28,790,000 obligation to reimburse Prestone for proportional
interest in accounts receivable previously sold.
(7) Reduction of long-term debt from cash proceeds received.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned
there unto duly authorized.
FIRST BRANDS CORPORATION
DATE: September 12, 1994
By: .................................
Donald A. DeSantis
Senior Vice President and
Chief Financial Officer
C. EXHIBIT INDEX
Exhibit
Number Description of Exhibit
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2 (a)* -- Purchase and Sale Agreement, dated as of June 30, 1994, between the Registrant and Vestar/Freeze
Holdings Corporation and Vestar Equity Partners, L.P., relating to the sale by the Registrant of
its businesses of developing, manufacturing, marketing, selling and/or distributing automotive
antifreeze, cooling system service tools, cooling system chemicals for cleaning and sealing
leaks in automotive cooling systems, ice fighting products, Prestone brake fluid products,
Prestone power steering fluid products, and Prestone transmission stop-leak fluid products, and
antifreeze recycling business.
(b)* -- Amendment No. 1 thereto, dated as of August 25, 1994.
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* Filed herewith