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UNITED STATES
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) November 18, 1997
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Chemi-Trol Chemical Co.
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(Exact name of registrant as specified in its charter)
Ohio 0-18797 34-4439286
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(State or other jurisdiction (Commission (IRS Employer
if incorporation) File Number) Identification No.)
2776 C.R. 69 Gibsonburg, Ohio 43431
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(Address of principal executive offices)
Registrant's telephone number, including area code (419) 665-2367
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Not Applicable
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(Former name or former address, if changed since last report.)
This document contains 31 pages.
The Exhibit Index is located on page number 8.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On November 18, 1997 Chemi-Trol Chemical Co. "Chemi-Trol" completed the sale
of certain assets of its Cal-Van Tools Division "Cal-Van" to Eagle Tools, Inc.
"Eagle" an Ohio Corporation having its principal office in Guilford County,
North Carolina. Eagle is a newly-formed corporation having common ownership
with Horizon Tool, Inc. "Horizon" a privately owned company located in
Greensboro, North Carolina. Eagle purchased inventory, machinery, equipment,
fixtures, dies and the Cal-Van Tools name for a cash payment of $1.5 million
and a note of approximately $2.4 million. Chemi-Trol retained accounts
receivable of approximately $4.8 million and inventory having an estimated net
market value of $400,000. The majority of retained receivables and inventory
are expected to be liquidated within six months in accordance with
Chemi-Trol's plans to exit this business. Eagle signed a related one year
lease for the Cal-Van land and building not sold as a part of the business.
All of the obligations of Eagle under the acquisition agreement, the lease and
the note have been guaranteed by Horizon and certain obligations have been
guaranteed by Eagle's and Horizon's principle shareholders.
Chemi-Trol plans to use the sale proceeds and the subsequent cash collected
from accounts receivable and inventory net of payments on accounts payable and
accrued liabilities related to the discontinued business to reduce current
outstanding long-term debt and fund future working capital needs.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
Not applicable
(b) Proforma Financial Information
The following unaudited pro forma condensed financial statements are filed with
this report:
Page
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Unaudited Pro forma Condensed Balance Sheet as of
September 30, 1997 4
Unaudited Pro forma Condensed Statements of Income:
Fiscal Year Ended December 31, 1996 5
Nine Months Ended September 30, 1997 5
Notes to Unaudited Pro forma Financial Information 6-7
The Pro forma Condensed Balance Sheet and Notes as of September 30, 1997 reflect
the financial position of Chemi-Trol Chemical Co. after giving effect to the
disposition of the Cal-Van Tools Division discussed in Item 2 and assumes the
disposition of certain inventories and equipment and liquidation of remaining
inventories, accounts receivable, accounts payable and accrued liabilities took
place on September 30, 1997. The Pro
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forma Condensed Statements of Income and Notes for the year ended December 31,
1996 and for the nine months ended September 30, 1997 assumes that the
disposition and liquidation occurred on January 1, 1996, and are based on the
operations of Chemi-Trol Chemical Co. for the year ended December 31, 1996 and
for the nine months ended September 30, 1997.
The unaudited pro forma condensed financial statements have been prepared by
Chemi-Trol Chemical Co. based upon assumptions deemed reasonable. The unaudited
pro forma condensed financial statements presented herein are shown for
illustrative purposes only and are not necessarily indicative of the future
financial position or future operating results of Chemi-Trol Chemical Co., or of
the financial position or operating results of Chemi-Trol Chemical Co. that
would have actually occurred had the transaction been in effect as of the date
or for the periods presented.
The unaudited pro forma financial information should be read in conjunction with
Chemi-Trol Chemical Co.'s historical financial statements and notes thereto
contained in the 1996 Annual Report on Form 10-K as of December 31, 1996 and the
Quarterly Report on Form 10-Q as of September 30, 1997.
(c) Exhibits
Exhibit 2.1 -Agreement of Purchase and Sale of Assets dated
November 18, 1997.
Exhibit 99 - Chemi-Trol Chemical Co. press release dated
November 18, 1997.
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.
CHEMI-TROL CHEMICAL CO.
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(Registrant)
Date: November 24, 1997 By: /s/ Robert W. Woolf
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(Registrant)
Name: Robert W. Woolf
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Title: President
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Date: November 24, 1997 By: /s/ Kevin D. Lauck
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(Registrant)
Name: Kevin D. Lauck
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Title: Secretary/Treasurer and Controller
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CHEMI-TROL CHEMICAL CO.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET (A)
September 30, 1997
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
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ASSETS
Current assets:
Cash $ 186,178 $ 1,500,000 (B) $ 186,178
(1,500,000)(C)
Notes and accounts receivable 21,290,063 (5,325,000)(C) 15,965,063
Inventories 8,281,142 (4,092,211)(B) 3,788,931
(400,000)(C)
Other assets 1,264,976 1,264,976
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Total current assets 31,022,359 (9,817,211) 21,205,148
Investments and other assets 3,263,007 3,263,007
Notes receivable 2,707,000 (B) 2,707,000
Property, plant and equipment, net 9,537,897 (779,000)(B) 8,758,897
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$43,823,263 $(7,889,211) $35,934,052
========================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 2,364,063 $(2,364,063)(C) $ -
Accounts payable 6,536,964 (794,000)(C) 5,742,964
Income taxes 85,173 85,173
Accrued liabilities 2,153,055 852,000 (B) 1,865,055
(1,140,000)(C)
Long-term debt due within one year 2,990,978 (1,161,000)(C) 1,829,978
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14,130,233 (4,607,063) 9,523,170
Long-term debt 4,547,968 (1,766,148)(C) 2,781,820
Other long-term liabilities 695,331 695,331
Deferred federal income tax 876,000 (606,000)(B) 270,000
Shareholders' equity:
Common stock, without par value
6,000,000 shares authorized
2,009,930 shares issued and outstanding 4,590,767 4,590,767
Retained earnings 18,982,964 (910,000)(B) 18,072,964
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Total shareholders' equity 23,573,731 (910,000) 22,663,731
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$43,823,263 $(7,889,211) $35,934,052
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See accompanying notes to unaudited pro forma financial information.
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CHEMI-TROL CHEMICAL CO.
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF INCOME (A)
For the Fiscal Year Ended December 31, 1996
PRO FORMA
HISTORICAL(D) ADJUSTMENTS PRO FORMA
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Revenues:
Net sales $63,894,000 $(17,338,000)(E) $46,556,000
Interest and financing income 883,000 883,000
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64,777,000 (17,338,000) 47,439,0000
Costs and expenses:
Cost of sales 54,912,000 (13,986,000)(E) 40,926,000
Selling 3,202,000 (2,051,000)(E) 1,151,000
General and administrative expenses 3,015,000 (840,000)(E) 2,175,000
Interest 1,455,000 (456,000)(E) 999,000
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62,584,000 (17,333,000) 45,251,000
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Income (loss) from continuing operations
before income taxes 2,193,000 (5,000) 2,188,000
Provision (benefit) for income taxes 875,000 (1,000)(F) 874,000
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Income (loss) from continuing operations $ 1,318,000 $ (4,000) $ 1,314,000
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Income per share of common stock - continuing
operations $0.66 $0.66
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Weighted average common shares outstanding 2,004,930 2,004,930
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For the Nine-Month Period Ended September 30, 1997
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
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Revenues:
Net sales $48,630,000 $(11,128,000)(E) $37,502,000
Interest and financing income 638,000 638,000
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49,268,000 (11,128,000) 38,140,000
Costs and expenses:
Cost of sales 41,881,000 (9,104,000)(E) 32,777,000
Selling 2,225,000 (1,430,000)(E) 795,000
General and administrative expenses 2,172,000 (522,000)(E) 1,650,000
Interest 614,000 (192,000)(E) 422,000
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46,892,000 (11,248,000) 35,644,000
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Income (loss) from continuing operations
before income taxes 2,376,000 120,000 2,496,000
Provision (benefit) for income taxes 930,000 46,000 (F) 976,000
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Income (loss) from continuing operations $ 1,446,000 $ 74,000 $1,520,000
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Income per share of common stock- continuing
operations $0.72 $0.76
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Weighted average common shares outstanding 2,004,930 2,004,930
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See accompanying unaudited notes to pro forma financial information.
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CHEMI-TROL CHEMICAL CO.
NOTES TO PRO FORMA FINANCIAL INFORMATION
(A) The Pro forma Condensed Statements of Income for the year ended December
31, 1996 and for the nine-month period ended September 30, 1997 present
the operating results of Chemi-Trol Chemical Co. "Chemi-Trol", assuming
that the sale of certain assets and liquidation of certain assets and
liabilities of the Cal-Van Tools Division "Cal-Van" had taken place as of
January 1, 1996. The statements include all material adjustments
necessary to present the historical results to reflect the assumptions.
The Pro forma Condensed Balance Sheet as of September 30, 1997 presents
Chemi-Trol's financial position assuming the sale and subsequent
liquidations had taken place at September 30, 1997.
The pro forma information is not necessarily indicative of operating
results or the financial position which may have actually been obtained
if the sale transaction had been consummated on the dates indicated. In
addition, the pro forma financial information does not purport to be
indicative of operating results or financial position which may be
obtained in the future. Chemi-Trol has prepared these proforma financial
statements based upon assumptions deemed reasonable by management. The
pro forma financial information should be read in conjunction with
Chemi-Trol's historical financial statements and notes thereto contained
in the 1996 Annual Report on Form 10-K as of December 31, 1996 and the
Quarterly Report on Form 10-Q as of September 30, 1997.
(B) Included in this adjustment was cash received of $1,500,000, inventory
and fixed assets sold of $4,871,000, notes received of $2,707,000,
liabilities incurred as a result of sale of $852,000, estimated income
tax benefit of $606,000 and the estimated after tax loss on sale of
$910,000. The change in net assets sold between the actual sale date and
September 30, 1997, was reflected through an increase in the pro forma
notes receivable adjustment of approximately $307,000 over the actual
note received at November 18, 1997.
(C) In conjunction with Chemi-Trol's disposition of Cal-Van, the liquidation
of the remaining assets and liabilities were recorded as having taken
place on September 30, 1997. Included in this adjustment was collection
of accounts receivable of $5,325,000, sale of remaining inventory of
$400,000, payment of accounts payable of $794,000, and payment of accrued
liabilities of $1,140,000. The net cash effect of these receipts and
payments plus the $1,500,000 of proceeds from Note (B) above were used to
eliminate short-term borrowings of $2,364,000 and reduce long-term debt
by $2,927,000.
(D) The presentation of the historical Statement of Income has been revised
from the 1996 Annual Report on Form 10-K as of December 31, 1996 to
reflect the
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discontinued operations of the Cory Orchard and Turf Division which was
sold on March 25, 1997.
(E) Revenue, cost of sales, selling expenses, and general and administrative
expenses for Cal-Van were eliminated based on actual results of
operations. The adjustment in interest expense was calculated based on
the ratio net assets of Cal-Van operations to the total net assets of
Chemi-Trol plus existing outstanding debt.
(F) The income tax effects of the pro forma adjustments referred to in Notes
(B) and (E) were recorded at 40 percent, the combined Federal and State
statutory income tax rate.
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Exhibit Index
Exhibit
Number Exhibit Page
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2.1 Agreement of Purchase and Sale of Assets dated November 18, 1997 9
99.1 Chemi-Trol Chemical Co. press release dated November 18, 1997 31
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