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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 (Date of earliest event reported): December 31, 1996
AMERICAN BUSINESS PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
GEORGIA 1-7088 58-1030529
(State of (Commission File No.) (I.R.S. Employer
incorporation) Identification No.)
2100 RIVEREDGE PARKWAY, SUITE 1200
ATLANTA, GEORGIA 30328
(Address of principal executive offices, including zip code)
(770) 953-8300
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Effective on December 31, 1996 (the "Effective Time"), VANIER GRAPHICS
CORPORATION, a California corporation ("Vanier"), sold substantially all its
assets (the "Vanier Sale") to THE REYNOLDS AND REYNOLDS COMPANY, an Ohio
corporation ("Reynolds"), for a purchase price of approximately $47,211,000 in
cash (the "Purchase Price") and the assumption by Reynolds of certain
liabilities of Vanier. As described in more detail below, the Purchase Price
is subject to adjustment. Vanier is a wholly-owned subsidiary of AMERICAN
BUSINESS PRODUCTS, INC. (the "Company").
The Vanier Sale was consummated pursuant to a definitive Asset
Purchase Agreement by and between Vanier and Reynolds dated December 23, 1996
(the "Asset Purchase Agreement"). Vanier is a manufacturer of business forms
and a provider of forms management and work-flow analysis (collectively, the
"Business"). The assets sold by Vanier to Reynolds consisted of substantially
all of the assets of Vanier relating to the Business, consisting principally of
certain plants, facilities and real property; leasehold interests; furniture
and fixtures; machines and equipment; inventory; accounts receivable; customer
contracts; software used in the Business; intellectual property relating to the
Business; and other tangible and intangible property of Vanier relating to the
Business (collectively, the "Assets"). The Assets did not include certain
facilities and real property owned by Vanier. It currently is anticipated that
Vanier will sell these facilities and the real property at a later date.
In connection with the Vanier Sale, Curtis 1000, Inc., a Georgia
corporation and a wholly-owned subsidiary of the Company ("Curtis 1000"),
entered into a two and one-half year supply agreement with Reynolds (the
"Supply Agreement"). Prior to the Vanier Sale, Vanier provided to Curtis 1000
certain products and services relative to the business of Curtis 1000.
Pursuant to the Supply Agreement, Reynolds will continue to provide to Curtis
1000 substantially the same products and services.
The amount of consideration to be paid and the terms and conditions of
the Asset Purchase Agreement, was determined through arms-length negotiation
between the parties. Further, and prior to any negotiation by and between
Vanier with Reynolds, Vanier and the Company engaged the investment banking
firm of Dean Witter Reynolds Inc. ("Dean Witter") to provide advice and
consultation with respect to the proposed Vanier Sale and to solicit
indications of interest relative to the contemplated Vanier Sale. Through this
process, Dean Witter identified Reynolds as an interested purchaser.
Pursuant to the Asset Purchase Agreement, the Purchase Price was
derived from the September 30, 1996 Balance Sheet of Vanier, as adjusted to
eliminate the assets and liabilities that were excluded from the Vanier Sale
(the "Adjusted 9/30/96 Balance Sheet"). Within ninety (90) days following the
Effective Time, Vanier will prepare and deliver to Reynolds a "Closing Balance
Sheet" as of the Effective Time. The Closing Balance Sheet will be prepared in
accordance with generally accepted accounting principles and otherwise in a
manner consistent with the Adjusted 9/30/96 Balance Sheet. The Purchase Price
will be reduced or increased, as the case may be, by the amount the Acquired
Net Book Value (as defined in the Asset Purchase Agreement) on the Closing
Balance Sheet is less than, or greater than, as the case may be, the Acquired
Net Book Value on the Adjusted 9/30/96 Balance Sheet.
Pursuant to the Asset Purchase Agreement, Vanier agreed to indemnify
Reynolds against certain potential liabilities and losses. Vanier also agreed
to reimburse Reynolds for any expenses incurred by Reynolds to repair damage
existing as of the Effective Time, if any, to the physical structure of two of
the facilities included in the Assets. In addition, the Company has agreed to
guarantee Vanier's indemnification obligations and other obligations under the
Asset Purchase Agreement and the documents executed in connection therewith.
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Reynolds is a provider of integrated information management systems
and related value-added services to the automotive, healthcare and general
business markets. Reynolds reported fiscal 1996 revenues of approximately $1.1
billion.
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ITEM 7 - FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(B) PRO FORMA FINANCIAL INFORMATION
The accompanying unaudited pro forma condensed consolidated financial
statements give effect to the Vanier Sale as described in Item 2 of this Form
8-K. The pro forma consolidated balance sheet as of September 30, 1996 gives
effect to the Vanier Sale as if the transaction occurred on that date. The pro
forma consolidated statements of income for the year ended December 31, 1995
and for the nine months ended September 30, 1996 give effect to the Vanier Sale
as if the transaction occurred on January 1, 1995.
The consolidated financial information with respect to the Company as
of and for the year ended December 31, 1995 has been derived from the Company's
audited consolidated financial statements which are not presented herein. The
consolidated financial information with respect to the Company for the nine
months ended September 30, 1996 has been derived from the Company's unaudited
condensed consolidated financial statements which are not presented herein.
The pro forma condensed consolidated financial statements of the
Company are presented for informational purposes only and may not reflect the
Company's future results of operations or what the results of operations of the
Company would have been had the Vanier Sale occurred as of the date indicated.
AMERICAN BUSINESS PRODUCTS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Nine Months Ended September 30, 1996
(dollars in thousands except per share data)
ACTUAL PRO FORMA PRO FORMA
SEPTEMBER 30, ADJUSTMENT FOR SEPTEMBER 30,
1996 DISPOSITION 1996
---- ----------- ----
NET SALES $ 472,394 $ (98,961) $ 373,433
------------ ------------ ---------
COST AND EXPENSES
Cost of goods sold 332,032 (70,573) 261,459
Selling and administrative 105,736 (23,779) 81,957
Restructuring Expenses 5,799 (1,327) 4,472
------------ ------------ ---------
443,567 (95,679) 347,888
------------ ------------ ---------
OPERATING INCOME 28,827 (3,282) 25,545
OTHER INCOME (EXPENSES)
Interest Expense (5,452) 257 (5,195)
Miscellaneous-net 3,210 1,213(1) 4,423
------------ ------------ ---------
INCOME BEFORE INCOME TAXES 26,585 (1,812) 24,773
PROVISION FOR INCOME TAXES 10,412 (834) 9,578
------------ ------------ ---------
NET INCOME $ 16,173 $ (978)(2) $ 15,195
============ ============ =========
EARNINGS PER SHARE $ 0.99 $ (0.06) $ 0.93
============ ============ =========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 16,392,705 16,392,705
============ =========
See accompanying notes to pro forma condensed consolidated financial statements.
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AMERICAN BUSINESS PRODUCTS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31, 1995
(dollars in thousands except per share data)
ACTUAL PRO FORMA PRO FORMA
DECEMBER 31, ADJUSTMENT FOR DECEMBER 31,
1995 DISPOSITION 1995
---- ----------- ----
NET SALES $ 633,955 $(137,531) $ 496,424
------------ --------- ------------
COST AND EXPENSES
Cost of goods sold 447,375 (98,828) 348,547
Selling and administrative 138,474 (31,091) 107,383
Restructuring Expenses 0 0 0
------------ --------- ------------
585,849 (129,919) 455,930
------------ --------- ------------
OPERATING INCOME 48,106 (7,612) 40,494
OTHER INCOME (EXPENSES)
Interest Expense (8,243) 341 (7,902)
Miscellaneous-net 1,639 1,683(1) 3,322
------------ --------- ------------
INCOME BEFORE INCOME TAXES 41,502 (5,588) 35,914
PROVISION FOR INCOME TAXES 15,997 (2,384) 13,613
------------ --------- ------------
NET INCOME $ 25,505 $ (3,204)(2) $ 22,301
============ ========= ============
EARNINGS PER SHARE $ 1.57 $ (0.19) $ 1.38
============ ========= ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 16,197,044 16,197,044
============ ============
See accompanying notes to pro forma condensed consolidated financial statements.
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AMERICAN BUSINESS PRODUCTS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 1996
(in thousands)
Pro Forma
Adjustments
for
Actual Disposition Pro Forma
---------- ----------- ------------
Current Assets
Cash and cash equivalents $ 41,012 $ 45,833 (1),(2),(7) $ 86,845
Accounts receivable, net 78,568 (17,152)(1) 61,416
Inventories 47,610 (12,728)(1) 34,882
Other 4,573 (48)(1) 4,525
--------- -------- --------
Total Current Assets 171,763 15,905 187,668
Plant and Equipment, net 95,363 (12,770)(1) 82,593
Intangible Assets From Acquisitions
Goodwill, net 35,562 (7,248)(1) 28,314
Other, net 1,461 (3)(1) 1,458
--------- -------- --------
37,023 (7,251) 29,772
Deferred Income Taxes 13,212 (1,317)(5) 11,895
Other Assets 29,980 (3,809)(1) 26,171
--------- -------- --------
$ 347,341 $ (9,242) $338,099
========= ======== ========
Current Liabilities
Accounts payable and accrued liabilities $ 46,204 $ (1,885)(1),(3) $ 44,319
Salaries and wages 12,440 (1,294)(1) 11,146
Profit sharing contributions 5,075 5,075
Current maturities of long-term debt 5,508 5,508
--------- -------- --------
Total Current Liabilities 69,227 (3,179) 66,048
Long-Term Debt 67,743 (1,373)(7) 66,370
Supplemental Retirement Benefits 17,942 834 (6) 18,776
Postretirement and Postemployment Benefits 22,014 (3,359)(5) 18,655
Stockholders' Equity
Common stock 33,224 33,224
Additional paid-in capital 6,025 6,025
Retained earnings 133,501 (2,165)(4) 131,336
Foreign currency translation adjustment 616 616
--------- -------- --------
173,366 (2,165) 171,201
Common stock in treasury-at cost 2,951 2,951
--------- -------- --------
170,415 (2,165) 168,250
--------- -------- --------
$ 347,341 $ (9,242) $338,099
========= ======== ========
See accompanying notes to pro forma condensed consolidated financial statements.
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NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The notes to the pro forma unaudited condensed consolidated financial statements
follow:
Pro Forma Statement of Income Adjustments
(1) Assumes net proceeds of the Vanier Sale had been invested in money
market instruments.
(2) Does not reflect the loss on the Vanier Sale.
Pro Forma Balance Sheet Adjustments
(1) To eliminate assets acquired and liabilities assumed by Reynolds.
(2) To record the proceeds from the Vanier Sale.
(3) To record estimated fees and adjustments related to the Vanier Sale.
(4) To reflect the after-tax loss on the Vanier Sale.
(5) To adjust the Financial Accounting Standards No. 106 accrual for post
retirement benefits and related deferred taxes due to plan
curtailment.
(6) To accelerate related accruals for former Vanier executives.
(7) To reflect early extinguishment of a bond issue on a Vanier facility.
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(c) Exhibits:
The following exhibit is filed herewith:
EXHIBIT NO. DESCRIPTION
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2 Asset Purchase Agreement dated as of December 23, 1996, by and among Vanier Graphics
Corporation and The Reynolds and Reynolds Company.
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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.
Date: January 7, 1997
AMERICAN BUSINESS PRODUCTS, INC.
/s/ Richard G. Smith
-------------------------------------------
Richard G. Smith
Vice President and Chief Financial Officer
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EXHIBIT INDEX
The following exhibits are filed as part of this Report.
EXHIBIT NO. DESCRIPTION PAGE NO.
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2 Asset Purchase Agreement dated as of December 23,
1996, by and among Vanier Graphics Corporation and
The Reynolds and Reynolds Company.
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