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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: October 4, 2001
(Date of earliest event reported)
OPEN PLAN SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
Virginia 0-20743 54-1515256
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
4299 Carolina Avenue, Building C
Richmond, Virginia 23222
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(804) 228-5600
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Item 2. Acquisition or Disposition of Assets
Closing of Remanufacturing Facility and Sales Offices
On June 20, 2001, the Board of Directors approved and the Company began
the implementation of a restructuring plan that closed its remanufacturing
facility in Lansing, Michigan and consolidated remanufacturing operations in
Richmond, Virginia; closed five under performing sales offices located in
Cincinnati, Indianapolis, Nashville, Lansing and Boston; reduced the size of
sales offices in Philadelphia, Atlanta and Washington, D.C.; and restructured
back office operations at the Company's headquarters in Richmond, Virginia. In
connection with the closing of its remanufacturing operations in Lansing,
Michigan, the restructuring plan contemplated (i) the disposal of the leased
Michigan remanufacturing facility and related assets and (ii) the sale of the
new facility under construction in Michigan and the retirement of the Industrial
Revenue Bond debt issued to finance the construction of the new facility.
In the second quarter, the Company recorded a restructuring charge of
approximately $4.7 million in connection with the restructuring plan, which
included an estimate for the disposal of the existing leased manufacturing
facility in Michigan and related assets, as well as the new facility under
construction. In implementing the restructuring plan, the Company terminated
approximately 65 personnel, primarily sales personnel in offices being closed or
personnel associated with the manufacturing facility in Michigan.
Disposition of Lansing Facility Assets
On July 5, 2001, the Company sold certain office, telephone and
computer equipment and resources, removable leasehold improvements, warehouse
equipment and related inventory located at the Company's leased remanufacturing
facility in Lansing, Michigan to Smart Office Systems, Inc., a Michigan
corporation ("SOS"). The aggregate purchase price for the assets sold was
$275,000. In addition, the Company assigned to SOS its lease obligations with
respect to the leased Lansing remanufacturing facility.
The purchase price and other terms of the transaction were arrived at
through private arms-length negotiations. Two of the principals of SOS, Paul A.
Covert and Todd A. Thomann, are former executive officers of the Company.
Neither the Company nor any of its affiliates, directors, officers or the
associates of such directors or officers have any material relationship with the
purchaser.
Sale of New Lansing Facility Under Construction
As part of the restructuring plan, the Company sold its unfinished
Lansing, Michigan remanufacturing facility to Ena Drive, L.L.C., a Michigan
limited liability company, on October 4, 2001. The aggregate purchase price for
the unfinished facility was $2,150,000, of which $1,024,000 was paid to L. D.
Clark Building Co. for work completed in connection with the construction of the
facility and other amounts owed under the construction contract, $709,000 was
retained by the purchaser to pay future construction costs incurred by L. D.
Clark Building Co. in connection with the completion of the facility, $22,000.00
was used to pay certain
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expenses related to the sale, and $395,000.00 was paid directly to the Company.
Upon consummation of the sale, the contractor's suit against the Company for
amounts owed under the construction contract was dismissed.
The sale of the Lansing facility also resulted in the redemption of all
of the outstanding Michigan Strategic Fund Variable Rate Demand Limited
Obligation Revenue Bonds issued to finance the construction of the new facility.
At the time of redemption, there were $2.4 million of such bonds outstanding.
The purchase price and other terms of the transaction were arrived at
through private arms-length negotiations. Neither the Company nor any of its
affiliates, directors, officers or the associates of such directors or officers
have any material relationship with the purchaser.
Item 5. Other Events.
The press release issued by the Company on October 5, 2001 regarding
the sale of the Company's unfinished remanufacturing facility in Michigan and
attached hereto as an exhibit is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro Forma Financial Information
The following presents the Company's unaudited pro forma financial
information for the fiscal year ended December 31, 2000 and as of and for the
six months ended June 30, 2001. The pro forma statements of operations for the
year ended December 31, 2000 and for the six months ended June 30, 2001
represent the effect of the Company's restructuring plan as if it had been
implemented as of January 1, 2000. The unaudited pro forma balance sheet as of
June 30, 2001 has been prepared as if the restructuring plan was completed as of
that date. The pro forma adjustments are based upon available information and
certain assumptions that management believes are reasonable.
The unaudited pro forma financial information is for informational
purposes only and does not purport to present what the Company's results would
have been had these transactions actually occurred on the dates presented or to
project the Company's results of operations or financial position for any future
period. The information set forth below should be read together with the
Company's consolidated financial statements and footnotes thereto included in
the Company's Form 10-K for the year ended December 31, 2000 and Form 10-Q for
the quarter ended June 30, 2001 as filed with the SEC.
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Open Plan Systems, Inc.
Unaudited Pro Forma Consolidated Balance Sheet
As of June 30, 2001
(in thousands)
Pro Forma
Historical (a) Adjustments Pro Forma
ASSETS
Current assets:
Cash and cash equivalents $ 280 $ 33 (b) $ 313
Cash and cash equivalents restricted under
bond indenture agreement 2,098 (2,098) (c) -
Accounts receivable, net 5,626 5,626
Inventories 3,609 (275) (d) 3,334
Assets held for sale 571 (571) (d) -
Prepaids and other 484 484
Refundable income taxes 57 57
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Total current assets 12,725 (2,911) 9,814
Property and equipment, net 1,431 1,431
Other 101 101
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Total assets $ 14,257 $ (2,911) $ 11,346
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 2,495 $ (2,400) (c) $ 95
Revolving line of credit 4,007 4,007
Trade accounts payable 3,343 3,343
Restructuring liabilities 420 (420) (e) -
Accrued compensation 467 467
Other accrued liabilities 858 858
Customer deposits 964 964
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Total current liabilities 12,554 (2,820) 9,734
Long-term debt 181 181
Other long-term liabilities 20 20
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Total liabilities 12,755 (2,820) 9,935
Shareholders' equity:
Common stock, no par value: 18,537 18,537
Authorized shares - 50,000
Issued and outstanding shares-
4,337 at 6/30/01
Additional capital 137 137
Accumulated deficit (17,154) (91) (f) (17,245)
Accumulated other comprehensive income 22 22
Notes receivable from employees-sale of stock (40) (40)
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Total shareholders' equity 1,502 (91) 1,411
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Total liabilities & shareholders' equity $ 14,257 $ (2,911) $ 11,346
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See accompanying notes to unaudited pro forma consolidated financial statements.
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Open Plan Systems, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the Six Months Ended June 30, 2001
(in thousands, except per share data)
Pro Forma
Historical (a) Adjustments Pro Forma
Net sales $ 18,002 $ (2,999) (g) $ 15,003
Cost of sales 15,563 (4,140) (g),(h) 11,423
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Gross profit 2,439 1,141 3,580
Operating expenses:
Amortization of intangibles 114 (114) (i) -
Selling and marketing 4,639 (1,207) (j) 3,432
General and administrative 2,286 (141) (j) 2,145
Operational restructuring 4,725 (4,725) (k) -
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11,764 (6,187) 5,577
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Operating loss (9,325) 7,328 (1,997)
Other (income) expense:
Interest expense 256 256
Gain on disposal of fixed assets (260) (260)
Other, net (7) (7)
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(11) - (11)
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Loss before income taxes (9,314) 7,328 (1,986)
Income tax expense - - -
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Net loss $ (9,314) $ 7,328 $ (1,986)
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Basic and diluted loss per common share $ (2.15) $ 1.69 $ (0.46)
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Diluted weighted average common shares outstanding
4,338 4,338 4,338
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See accompanying notes to unaudited pro forma consolidated financial statements.
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Open Plan Systems, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2000
(in thousands, except per share data)
Pro Forma
Historical (a) Adjustments Pro Forma
Net sales $ 42,675 $ (6,970) (g) $ 35,705
Cost of sales 33,158 (6,731) (g),(h) 26,427
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Gross profit 9,517 (239) 9,278
Operating expenses:
Amortization of intangibles 274 (274) (i) -
Selling and marketing 8,144 (2,323) (j) 5,821
General and administrative 3,395 (220) (j) 3,175
Arbitration costs 142 142
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11,955 (2,817) 9,138
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Operating (loss) profit (2,438) 2,578 140
Other (income) expense:
Interest expense 446 446
Other, net 52 52
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498 - 498
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Loss before income taxes (2,936) 2,578 (358)
Income tax expense 1,571 - 1,571
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Net loss $ (4,507) $ 2,578 $ (1,929)
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Basic and diluted loss per common share $ (1.03) $ 0.59 $ (0.44)
Diluted weighted average common shares
outstanding 4,395 4,395 4,395
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See accompanying notes to unaudited pro forma consolidated financial statements.
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Open Plan Systems, Inc.
Notes to Unaudited Pro Forma Consolidated Financial Statements
(a) Represents historical results of operations and balance sheet
information derived from financial statements included in the Company's
Form 10-K for the fiscal year ended December 31, 2000 and Form 10-Q for
the quarter ended June 30, 2001, as applicable.
(b) Represents the net cash proceeds from the disposition of the Lansing
facility assets, the redemption of the outstanding debt under the
Industrial Revenue Bonds and the sale of the facility under
construction in Lansing, Michigan.
(c) This adjustment reflects the effect of the redemption of the
outstanding debt under the Industrial Revenue bonds, using, in part,
the cash externally restricted under the bond indenture agreement.
(d) These adjustments eliminate the value of the new facility under
construction in Lansing Michigan that was sold, inventory related to
the Michigan operations that was sold, and certain trucking equipment
that was used by the Lansing Michigan manufacturing facility prior to
its closing.
(e) This adjustment eliminates the remaining liability that was accrued as
of June 30, 2001 associated with the implementation of the
restructuring plan, and primarily consists of severance, legal and
accounting fees, and rent on closed sales offices.
(f) This adjustment reflects the loss on the sale of the Michigan
operations in excess of the amount recorded as of June 30, 2001.
(g) These adjustments eliminate the historical sales revenue and related
cost of sales attributable to the sales offices that were closed as a
result of the restructuring plan.
(h) The adjustment to cost of sales also includes the elimination of
historical expenses related to the leased remanufacturing facility in
Lansing, Michigan closed as a result of the restructuring, which would
not have been incurred if the remanufacturing operations had been
consolidated into the Richmond, Virginia remanufacturing facility as of
January 1, 2000.
(i) This adjustment eliminates the amortization of goodwill related to the
1996 purchase of the remanufacturing business in Lansing, Michigan. The
goodwill was written off as of June 30, 2001 as a result of the closing
of the facility.
(j) These adjustments eliminate the selling and marketing as well as
general and administrative expenses related to closed locations, aside
from severance costs recorded as part of the June 30, 2001
restructuring charge, that would not have been incurred had these
locations been closed as of January 1, 2001.
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Open Plan Systems, Inc.
Notes to Unaudited Pro Forma Consolidated Financial Statements
(k) This adjustment eliminates the restructuring expense incurred and/or
accrued in the second quarter of 2001 as a result of the development
and implementation of the Company's restructuring plan, as more fully
described in the Company's Form 10-Q for the quarter ended June 30,
2001.
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(c) Exhibits.
2(a) Purchase Agreement between Company and Ena Drive, L.L.C. dated
August 17, 2001.
The Exhibits to the Purchase Agreement are omitted from this
filing in accordance with Item 601(b)(2) of Regulation S-K.
The Company agrees to supply any omitted Exhibit to the
Commission upon receipt of a request by the Commission,
subject to the reservation of the Company's right to request
confidential treatment as to certain information under the
Freedom of Information Act, the Privacy Act and the
Commission's confidential treatment rules and regulations, all
as in effect at the time of any such request.
The omitted Exhibits are as follows:
Exhibit A, Legal Description
Exhibit B, List of Permitted Exceptions
Exhibit C, Covenant Deed
Exhibit D, Assignment and Assumption Agreement
Exhibit E, Discharge of Construction Lien
2(b) Addendum to the Purchase Agreement between the Company and Ena
Drive, L.L.C. dated September 19, 2001.
The Exhibit to the Addendum to the Purchase Agreement is
omitted from this filing in accordance with Item 601(b)(2) of
Regulation S-K. The Company agrees to supply the omitted
Exhibit to the Commission upon receipt of a request by the
Commission, subject to the reservation of the Company's right
to request confidential treatment as to certain information
under the Freedom of Information Act, the Privacy Act and the
Commission's confidential treatment rules and regulations, all
as in effect at the time of any such request.
The omitted Exhibit is as follows:
Exhibit A, Assignment and Assumption Agreement
99.1 Press release issued by the Company on October 5, 2001.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Company has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
OPEN PLAN SYSTEMS, INC.
(Registrant)
Date: October 19, 2001 By: /s/ Thomas M. Mishoe, Jr.
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Thomas M. Mishoe, Jr.
President and Chief Executive Officer
Exhibit Index
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Exhibit
Number Document
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2(a) Purchase Agreement between Company and Ena Drive, L.L.C. dated
August 17, 2001.
The Exhibits to the Purchase Agreement are omitted from
this filing in accordance with Item 601(b)(2) of
Regulation S-K. The Company agrees to supply any omitted
Exhibit to the Commission upon receipt of a request by the
Commission, subject to the reservation of the Company's
right to request confidential treatment as to certain
information under the Freedom of Information Act, the
Privacy Act and the Commission's confidential treatment
rules and regulations, all as in effect at the time of any
such request.
The omitted Exhibits are as follows:
Exhibit A, Legal Description
Exhibit B, List of Permitted Exceptions
Exhibit C, Covenant Deed
Exhibit D, Assignment and Assumption Agreement
Exhibit E, Discharge of Construction Lien
2(b) Addendum to the Purchase Agreement between the Company and Ena
Drive, L.L.C. dated September 19, 2001.
The Exhibit to the Addendum to the Purchase Agreement is
omitted from this filing in accordance with Item 601(b)(2)
of Regulation S-K. The Company agrees to supply the
omitted Exhibit to the Commission upon receipt of a
request by the Commission, subject to the reservation of
the Company's right to request confidential treatment as
to certain information under the Freedom of Information
Act, the Privacy Act and the Commission's confidential
treatment rules and regulations, all as in effect at the
time of any such request.
The omitted Exhibit is as follows:
Exhibit A, Assignment and Assumption Agreement
99.1 Press release issued by the Company on October 5, 2001.