UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 21, 1998
PEN-TAB INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 54-1833398
(State or other jurisdiction (I.R.S. Employer
Incorporation or organization) Identification Number)
167 KELLEY DRIVE
FRONT ROYAL, VA 22630
TELEPHONE: (540) 622-2000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Item 2. Acquisition or Disposition of Assets.
Pen-Tab Industries, Inc. ("Pen-Tab") issued a press release announcing that
on August 21, 1998, that it has completed the purchase of Stuart all Company
Inc. ("Stuart Hall"), a subsidiary of Newell Co. Stuart Hall, is a manufacturer
and marketer of school, home, and office supply products which will complement
Pen-Tab's current product offerings. The impact of the purchase is material to
Pen-Tab's consolidated results. Pen-Tab Industries is financing the stock
purchase through an equity contribution of $40 million from Pen-Tab Holdings and
$70 million of bank debt.
A copy of the press release is attached hereto as Exhibit 99.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired
(b) Pro Forma Financial Information
(c) Exhibits.
SIGNATURE
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 thereunto duly authorized.
Pen-Tab Industries, Inc.
(Registrant)
Date: By: /s/ William Leary
- ---------------------------- ---------------------
William Leary
Vice President, Chief Financial
and Administrative Officer
(principal financial officer
and accounting officer)
PRO FORMA CONDENSED FINANCIAL STATEMENTS
Pen-Tab Industries, Inc. ("Pen-Tab") consummated the purchase of Stuart Hall
Company, Inc. ("Stuart Hall") a subsidiary of Newell Co., on August 20, 1998.
Pen-Tab is financing the stock purchase through an equity contribution of $40
million from its parent company, Pen-Tab Holdings, Inc. and the balance in bank
debt. The purchase price is $107 million plus a post closing purchase price
adjustment based on the closing date working capital balance. This post closing
purchase price adjustment is expected to be approximately $20 million. For
purposes of the pro forma condensed balance sheet as of July 4, 1998, the post
closing purchase price adjustment was estimated to be $38 million at that time.
The pro forma condensed balance sheet is presented at July 4, 1998 and the pro
forma condensed statement of operations is presented for the year ended January
3, 1998 and for the six month period ended July 4, 1998.
FOR THE YEAR ENDED JANUARY 3, 1998
PRO FORMA CONDENSED STATEMENTS OF OPERATIONS PEN-TAB STUART PRO FORMA PRO FORMA
INDUSTRIES HALL ADJUSTMENTS RESULTS
(In thousands)
Net Sales.............................................. $96637 $87183 $ $183820
Cost of goods sold..................................... 71701 65732 -2000 135433
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Gross profit.......................................... 24936 21451 3000 48347
Selling, general and administration
expenses. 17642 13128 -4593 26177
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Income from operations................................. 7294 8323 6593 22210
Interest expense....................................... 8194 1252 6414 15860
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(Loss) income before income tax
expense.............................................. -900 7071 179 6350
Income tax provision (benefit)......................... 1945 3183 -2715 2413
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Net income (loss)...................................... $-2845 $3888 $2894 $3937
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Pro Forma Adjustment
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1) Income from operations; reflects the expected $6.6 million of operational
synergies in combining the two businesses including headcount reductions and
reallocation of product shipments among the three manufacturing and
distribution facilities.
2) Interest expense; reflects the acquisition debt as if the acquisition
occurred at the beginning of the year.
3) Income taxes; reflects adjustment to bring income taxes to an effective rate
of 38%.
FOR THE YEAR ENDED JULY 4, 1998
PRO FORMA CONDENSED STATEMENTS OF OPERATIONS PEN-TAB STUART PRO FORMA PRO FORMA
INDUSTRIES HALL ADJUSTMENTS RESULTS
(In Thousands)
Net Sales.............................................. $55440 $52125 $107565
Cost of goods sold..................................... 41015 34989 -1000 74504
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Gross profit.......................................... 14425 17136 1000 33061
Selling, general and administrative
expenses............................................. 9022 7587 2297 3100
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Income from operations................................. 5403 9549 3297 18249
Interest expense....................................... 4261 626 3100 7987
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Income (loss) income before income taxes...............
1142 8923 197 10262
Income tax provision (benefit)......................... 542 4015 -657 3900
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Net income (loss)...................................... $600 $4908 $854 $6362
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Pro Forma Adjustment
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1) Income from operations; reflects 50% or $3.3 million of operational
synergies in combining the two businesses including headcount reductions and
reallocation of product shipments among the three manufacturing and
distribution facilities.
2) Interest expense; reflects the acquisition debt as if the acquisition
occurred at the beginning of the year.
3) Income taxes; reflects adjustment to bring income taxes to an effective rate
of 38%.
JULY 4, 1998
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PEN-TAB STUART PRO FORMA PRO FORMA
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HALL BALANCES
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PRO FORMA CONDENSED BALANCE SHEET: (In thousands)
Cash and cash equivalents................ $ 0 $ 1 $ 0 $1
Working capital.......................... 51813 29965 -13922 67856
Total assets............................. 82057 144709 26766 253532
Total debt............................... 95990 12175 70800 178965
Total stockholders' equity............... -27405 87702 -48502 11795
Pro Forma Adjustments
- ---------------------
1) Working capital; reduction in inventory due to product rationalization and
increase in due to Newell (sellor) reflect the estimated post-closing
purchase price adjustment.
2) Total assets; reflects the write off of $49 million of goodwill on the
balance sheet of Stuart Hall at the date of acquisition and the recording of
$75 million of goodwill associated with Pen-Tab's purchase of Stuart Hall.
3) Total debt; reflects the bank debt incurred to acquire the stock of Stuart
Hall. $35 million is in the form of a fully drawn $35 million three year
term loan. $36 is in drawings under a 3 year $100 million dollar revolving
credit facility.
4) Total stockholders equity; reflects the write off of Stuart Hall's
stockholders equity of $88 million offset partially by the equity
contribution of $40 million from Pen-Tab Holdings, Inc.