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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 September 29, 2000 Commission file number 0-784
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DETREX CORPORATION
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(Exact name of registrant as specified in its charter)
Michigan 38-0480840
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
24901 Northwestern Hwy., Ste. 500, Southfield, MI 48075
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (248) 358-5800
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Securities registered pursuant to section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
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None None
Securities registered pursuant to Section (g) of the Act:
Common Capital Stock, $2 Par Value
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 29, 2000, Seibert-Oxidermo, Inc. ("Seibert"), a
wholly-owned subsidiary of the Registrant, completed the sale of assets, other
than real estate, used in its paint business. The buyer was Red Spot Paint &
Varnish Co., Inc. ("Red Spot") of Evansville, Indiana.
The sale was conducted pursuant to an Asset Purchase and Sale Agreement
dated September 1, 2000 (the "Agreement"). The purchase price for the assets and
a non-compete covenant was $11,500,000 cash, adjusted downward by $439,484 to
reflect the value of inventories and accounts receivable as of September 30,
2000. Seibert retained responsibility for accounts payable as of September 30,
2000.
In addition, Seibert and Red Spot entered into a Transition Contract
Manufacturing and Shipping Agreement whereby Seibert will toll manufacture at
cost for Red Spot for a period not to exceed four months commencing October 1,
2000. Also, Seibert and Red Spot entered into a Royalty Agreement whereby Red
Spot will pay Seibert royalties for incremental sales of certain products over
the next two years.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION, AND EXHIBITS.
(a) Not applicable.
(b) PRO FORMA financial statements relating to the sale are set forth
in Appendix A to this Report on Form 8-K and are hereby
incorporated by reference.
(c) Exhibits:
2. Asset Purchase and Sale Agreement By and Among
Seibert-Oxidermo, Inc., Detrex Corporation, and Red Spot
Paint & Varnish Co., Inc. dated September 1, 2000. Exhibits
to the Agreement that are not required to be filed but will
be made available to the Securities and Exchange Commission
on request include the following:
Exhibit A - Personal Property
Exhibit B - Licenses and Permits
Exhibit C - Assumed Leases and Contracts
Exhibit D - Intellectual Property Rights
Exhibit E-1 - No Conflict or Default
Exhibit E-2 - Rebates and Discounts
Exhibit F-1 - Financial Statements
Exhibit F-2 - Absence of Material Changes
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Exhibit G - Litigation, Compliance with Law
Exhibit H - Employees, Compensation and Benefits
Exhibit I - Environmental Compliance
Exhibit J-1 - Taxes
Exhibit J-2 - Customers
Exhibit K - Bill of Sale
Exhibit L - Opinion of Counsel - Seller and Detrex
Exhibit M - Opinion of Counsel - Purchaser
Exhibit N - Confidentiality and Non-Competition Agreement
Exhibit O - Liens to be Released
Exhibit P - Assignment and Assumption Agreement
Exhibit Q - Transition Contract Manufacturing and Shipping
Agreement
Exhibit R - Royalty Agreement
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.
DETREX CORPORATION
/s/ Gerald J. Israel
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Gerald J. Israel
Vice President, Finance,
Chief Financial Officer & Treasurer
Dated: October 16, 2000
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APPENDIX A
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma financial statements are based upon
the historical financial statements of the Registrant. The unaudited pro forma
balance sheet has been prepared to give effect to the asset sale, as though it
had been consummated on June 30, 2000. The unaudited pro forma statements of
operations give effect to the sale and the use of the sale proceeds as though
the sale had been consummated as of the beginning of the earliest period
presented.
The unaudited pro forma financial statements do not purport to be
indicative of the results that would have been obtained had the sale described
above occurred as of the assumed dates. In addition, the pro forma statements of
operations do not propose to reflect the actual results that would have been
achieved had the sale been consummated on either January 1, 1999 or January 1,
2000 or project the Registrant's results of operations for any future period.
The unaudited pro forma financial statements should be read in
conjunction with the consolidated financial statements of the Registrant and the
notes thereto contained in the Registrant's previous filings with the Securities
and Exchange Commission.
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Detrex Corporation
Unaudited Pro-Forma Condensed Consolidated Balance Sheet
June 30, 2000
Detrex Pro-Forma Pro-Forma
Corporation Adjustments June 30, 2000
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CURRENT ASSETS
Cash and Cash Equivalents $ 433,424 ----- 433,424
Accounts Receivable 14,424,081 (1,990,000) 12,434,081
Inventories 12,477,790 (2,308,000) 10,169,790
Prepaid expenses and other 2,104,380 (18,000) 2,086,380
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Total Current Assets $ 29,439,675 (4,316,000) 25,123,675
Land, Buildings & Equipment 25,389,575 (1,218,000) 24,171,575
Other Assets 4,261,870 (1,698,000) 2,563,870
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Total Assets $ 59,091,120 (7,232,000)(a) 51,859,120
==================== ==================== ===================
CURRENT LIABILITIES
Current Debt $ 10,231,313 (9,439,745)(b) 791,568
Accounts Payable 10,023,134 (366,280)(c) 9,656,854
Environmental Reserve 1,500,000 ---- 1,500,000
Accrued Compensation 508,995 490,000 (a) 998,995
Other Accruals 2,364,397 642,000 (a) 3,006,397
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Total Current Liabilities $ 24,627,839 (8,674,025) 15,953,814
Capital Lease Obligations 178,874 ---- 178,874
Long-Term Debt 4,154,975 (1,254,975)(b) 2,900,000
Accrued Postretirement Benefit 4,852,822 ---- 4,852,822
Environmental Reserve 5,380,132 ---- 5,380,132
Accrued Pensions & Other 100,696 ---- 100,696
Minority Interest 2,350,869 ---- 2,350,869
Stockholders' Equity 17,444,913 2,697,000 (a) 20,141,913
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 59,091,120 (7,232,000) 51,859,120
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See notes to unaudited pro-forma condensed consolidated balance sheet
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Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
(a) To reflect the sale of assets for $11,061,000 of cash resulting in a
gain before tax of $4,219,000:
$000
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Cash received $11,061
Estimated accrued expenses related
to the transaction:
Legal expenses $ 100
Employee related termination
and retention costs 700
Product disposal costs 200 1,000
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$10,061
Carrying value of assets sold
or disposed of:
Receivables $1,990
Inventories 2,308
Prepaid expenses 18
Other assets 308
Fixed assets 1,218 5,842
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Gain before tax 4,219
Michigan Single Business Tax 132
Deferred taxes on income 1,390
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Net gain $ 2,697
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(b) To utilize the proceeds from the sale to repay bank borrowings of
$9,439,745 of current debt and $1,254,975 of long-term debt.
(c) To reduce accounts payable for the remaining cash of $366,280.
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Detrex Corporation
Unaudited Pro-Forma Condensed Consolidated Statement of Operations
Six Months Ended June 30, 2000
Detrex Pro-Forma Pro-Forma
Corporation Adjustments Consolidated
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Net Sales $ 52,866,246 $ 7,707,604 $ 45,158,642
Cost of sales 39,699,359 5,664,238 34,035,121
Selling, general and administrative expenses 9,429,981 1,599,594 7,830,387
Provision for depreciation and amortization 1,919,271 169,422 1,749,849
Net loss (gain) from property transactions 98,859 98,859
Other income and deductions (182,745) (842) (181,903)
Minority interest 220,489 220,489
Interest expense 744,455 587,605 156,850
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Income before income taxes $ 936,577 $ 312,413 $ 1,248,990
Provision for income taxes 383,992 106,220 490,212
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Net income from continuing operations $ 552,585 206,193 758,778
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Basic and diluted earnings per share $ 0.35 $ 0.48
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Shares outstanding 1,583,414 1,583,414
See notes to unaudited pro-forma condensed consolidated statements of operations
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Detrex Corporation
Unaudited Pro-Forma Condensed Consolidated Statement of Operations
Twelve Months Ended December 31, 1999
Detrex Pro-Forma Pro-Forma
Corporation Adjustments Consolidated
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Net Sales $ 90,415,835 $ 13,519,396 $ 76,896,439
Cost of sales 69,730,585 10,213,522 59,517,063
Selling, general and administrative expenses 18,146,524 2,821,730 15,324,794
Provision for depreciation and amortization 3,654,842 292,799 3,362,043
Net loss (gain) from property transactions (285,039) (285,039)
Other income and deductions (179,734) 21,460 (201,194)
Minority interest 212,879 212,879
Interest expense 1,074,629 824,122 250,507
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Loss before income taxes $ (1,938,851) $ 654,237 $ (1,284,614)
Credit for income taxes (805,932) 222,441 (583,491)
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Net loss from continuing operations $ (1,132,919) $ 431,796 $ (701,123)
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Basic and diluted earnings per share $ (0.72) $ (0.44)
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Shares outstanding 1,583,414 1,583,414
See notes to unaudited pro-forma condensed consolidated statements of operations
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Notes to unaudited pro-forma condensed statements of operations:
(a) To remove from the results of operations the business sold.
(b) To eliminate from interest expense the amount of interest attributable
to the repayment of current and long-term debt resulting from the sale.
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Exhibit Index
Exhibit No. Description
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99 Asset Purchase and Sale Agreement By and Among
Seibert-Oxidermo, Inc., Detrex Corporation, and
Red Spot Paint & Varnish Co., Inc. dated
September 1, 2000.