-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, U9Mmzb3S3qb8d1OatgDrJwG2pojF7bVza5abRcQROP62sgXM0YE0bq4Ib8BaO5nz S45zEtARE0tv81UTrerbMw== 0000912057-95-004543.txt : 19950613 0000912057-95-004543.hdr.sgml : 19950613 ACCESSION NUMBER: 0000912057-95-004543 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950526 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19950612 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHATTEM INC CENTRAL INDEX KEY: 0000019520 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 620156300 STATE OF INCORPORATION: TN FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-05905 FILM NUMBER: 95546539 BUSINESS ADDRESS: STREET 1: 1715 W 38TH ST CITY: CHATTANOOGA STATE: TN ZIP: 37409 BUSINESS PHONE: 6158214571 MAIL ADDRESS: STREET 1: 1715 W 38TH ST CITY: CHATTANOOGA STATE: TN ZIP: 37409 FORMER COMPANY: FORMER CONFORMED NAME: CHATTEM DRUG & CHEMICAL CO DATE OF NAME CHANGE: 19790111 8-K 1 8-K 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): MAY 26, 1995 CHATTEM, INC. ------------------------------------------------------ (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) TENNESSEE 0-5905 62-0156300 - ------------------------ --------------------- ------------------- (STATE OF INCORPORATION) (COMMISSION FILE NO.) (IRS EMPLOYER IDENTIFICATION NO.) 1715 WEST 38TH STREET, CHATTANOOGA, TENNESSEE 37409 ------------------------------------------------------------ (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE) (615) 821-4571 ---------------------------------------------------- (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) Exhibit Index at Page 9 Page 1 or 10 Pages ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On May 26, 1995, Chattem, Inc. (the "Company") completed the previously reported sale of the Company's specialty chemicals division to Chattem Chemicals, Inc., a wholly-owned subsidiary of Elcat, Inc. (the "Parent"). The Company received $25,000,000 from the sale of the specialty chemicals division, consisting of $20,000,000 in cash and $5,000,000 of 13.125% convertible preferred stock of the Parent. The cash proceeds plus an estimated net working capital adjustment of $465,000 less transaction costs and fees of $575,000 will be used to repay $8,000,000 of the Company's 12.75% Senior Subordinated Notes due 2004 and reduce its bank term loan by $4,000,000. The Company will recognize a gain of approximately $9,900,000 from the sale and an extraordinary charge (after taxes) of approximately $370,000 relating to the early extinguishment of debt. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Not Applicable. (b) Pro Forma Financial Information. See page 3 through 7 hereof. (c) Exhibits. See the Exhibit Index on page 9 hereof. Page 2 of 10 Pages CHATTEM, INC. PRO FORMA CONDENSED FINANCIAL STATEMENTS The following unaudited pro forma condensed statements of operations for the year ended November 30, 1994 and for the three month period ended February 28, 1995, give effect to the sale of the Company's specialty chemical division as if such transaction had taken place on December 1, 1993. The following unaudited pro forma combined balance sheet as of February 28, 1995 gives effect to this sale as if such transaction had taken place on February 28, 1995. The sale of the Company's specialty chemical division was consummated on May 26, 1995. The Company received $25,000,000 from the sale, consisting of $20,000,000 in cash and $5,000,000 of 13.125% convertible preferred stock of Elcat, Inc. The pro forma information is not necessarily indicative of the results that would have been reported had such events actually occurred on the dates specified, nor, is it indicative of the Company's future results. Page 3 of 10 Pages CHATTEM, INC. PRO FORMA CONDENSED STATEMENT OF OPERATIONS FOR THE YEAR ENDED NOVEMBER 30, 1994 (In thousands, except per share amounts)
Pro forma As Historical Adjustments Adjusted ---------- ----------- -------- NET SALES $107,956 $(13,586)(a) $94,370 --------------------------------------- COSTS AND EXPENSES: Cost of sales 37,175 (8,679)(a) 28,496 Advertising and promotion 33,346 (10)(a) 33,336 Selling, general and administrative 21,244 (1,804)(a) 19,440 Nonrecurring and unusual charges 559 -- 559 --------------------------------------- Total costs and expenses 92,324 (10,493) 81,831 --------------------------------------- INCOME FROM OPERATIONS 15,632 (3,093) 12,539 OTHER INCOME (EXPENSE): Interest expense (10,112) 1,151 (b) (8,961) Investment income (loss) 186 -- 186 Other income (expense), net (74) 656 (c) 582 --------------------------------------- Total other income (expense) (10,000) 1,807 (8,193) --------------------------------------- INCOME BEFORE INCOME TAXES, EXTRAORDINARY LOSS 5,632 (1,286) 4,346 PROVISION FOR INCOME TAXES 2,022 (627)(d) 1,395 --------------------------------------- INCOME BEFORE EXTRAORDINARY LOSS 3,610 (659) 2,951 EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT OF DEBT, NET (1,556) -- (1,556) --------------------------------------- NET INCOME $ 2,054 $ (659) $ 1,395 (e) --------------------------------------- --------------------------------------- NET INCOME PER COMMON SHARE: Before extraordinary loss $ 0.50 $ 0.40 Extraordinary loss (0.21) (0.21) ------- ------- Net income per common share $ 0.29 $ 0.19 (e) ------- ------- ------- ------- WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 7,292 7,292 ------- ------- ------- ------- (a) Reflects the elimination of the historical revenues and expenses directly attributable to the chemicals division which will be reported as a discontinued operation. (b) Reflects the approximate reduction in interest expense from the use of proceeds from the sale to reduce outstanding debt. (c) Reflects the dividend income from the $5,000 13.125% cumulative convertible preferred stock received from the sale. (d) Reflects the income tax effect related to the pro forma adjustments. (e) Excludes gain on sale of the division of approximately $9,900 and related loss on the early extinguishment of debt of $370 net of tax.
Page 4 of 10 Pages CHATTEM, INC. PRO FORMA CONDENSED BALANCE SHEET FEBRUARY 28, 1995 (In thousands)
Pro forma As Historical Adjustments Adjusted --------------------------------------- CURRENT ASSETS: Cash and cash equivalents $ 1,963 $ $ 1,963 Accounts receivable, net 18,875 (2,224)(a) 16,651 Refundable and deferred income taxes 853 -- 853 Inventories 7,443 (895)(a) 6,548 Prepaid expenses and other current assets 1,541 -- 1,541 --------------------------------------- Total current assets 30,675 (3,119) 27,556 --------------------------------------- PROPERTY, PLANT AND EQUIPMENT, NET 11,744 (3,223)(a) 8,521 --------------------------------------- OTHER NONCURRENT ASSETS: Patents, trademarks and other purchased product rights, net 31,884 -- 31,884 Debt issuance costs, net 3,665 (481)(b) 3,184 Deferred income tax benefit 1,831 -- 1,831 Other 4,287 5,000 (c) 9,287 --------------------------------------- Total other noncurrent assets 41,667 4,519 46,186 --------------------------------------- TOTAL ASSETS $84,086 $(1,823) $82,263 --------------------------------------- --------------------------------------- CURRENT LIABILITIES: Current maturities of long-term debt $ 2,500 $(1,200)(d) $ 1,300 Accounts payable 4,478 (391)(a) 4,087 Accrued advertising and promotion 1,717 -- 1,717 Other accrued liabilities 6,079 2,925 (e) 9,004 -- 6,000 (f) 5,000 (f) --------------------------------------- Total current liabilities 14,774 7,334 22,108 --------------------------------------- LONG-TERM DEBT, LESS CURRENT MATURITIES 97,911 (19,887)(g) 78,024 -- 1,200 (d) 1,200 ACCRUED POSTRETIREMENT HEALTH CARE BENEFITS 1,324 -- 1,324 SHAREHOLDERS' DEFICIT: Common stock, without par value, at stated value 1,519 -- 1,519 Paid-in surplus 51,797 -- 51,797 Accumulated deficit (81,611) 9,530 (h) (72,081) Foreign currency translation adjustment (1,628) -- (1,628) --------------------------------------- Total shareholders' deficit (29,923) 9,530 (20,393) --------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $84,086 $(1,631) $82,763 --------------------------------------- --------------------------------------- (a) To reflect the elimination of receivables, inventory, equipment and payables included in the sale of the chemicals division. (b) To reflect the gross amount associated with the early extinguishment of debt. Page 5 of 10 Pages (c) To reflect the preferred shares received by the Company. (d) As a result of the transaction the Company received an amendment to its bank loan agreement that adjusted the amortization schedule of the remaining term debt. (e) To reflect the costs associated with the transfer of assets, production facilities and employees. (f) To reflect the tax effect of the pro forma adjustments. (g) To reflect the application of the net cash proceeds to reduce the Company's term loan, revolver and senior subordinated notes by $4,000 $7,999 and $7,889, respectively. (h) To reflect the approximate gain on the sale of the chemicals division and the loss on the early extinguishment of debt.
Page 6 of 10 Pages CHATTEM, INC. PRO FORMA CONDENSED STATEMENT OF OPERATIONS FOR THE THREE-MONTH PERIOD ENDED FEBRUARY 28, 1995 (In thousands, except per share amounts)
Pro forma As Historical Adjustments Adjusted ---------- ----------- -------- NET SALES............................... $ 22,719 $(3,347)(a) $19,372 --------- ------------ -------- COSTS AND EXPENSES: Cost of sales.......................... 8,376 (2,148)(a) 6,228 Advertising and promotion.............. 7,420 (4)(a) 7,416 Selling, general and administrative.... 4,304 (436)(a) 3,868 --------- ------------ -------- Total costs and expenses............ 20,100 (2,588) 17,512 --------- ------------ -------- INCOME FROM OPERATIONS.................. 2,619 (759) 1,860 OTHER INCOME (EXPENSE): Interest expense....................... (3,060) 351 (b) (2,709) Investment income (loss)............... 33 - 33 Other income (expense), net............ - 164 (c) 164 --------- ----------- ------- Total other income (expense)........ (3,027) 515 (2,512) --------- ----------- ------- INCOME (LOSS) BEFORE INCOME TAXES....... (408) (244) (652) PROVISION FOR (BENEFIT FROM) INCOME TAXES.................................. (155) (136)(d) (291) --------- ----------- ------- NET INCOME (LOSS) $ (253) $ (108) $ (361)(e) --------- ----------- ------- --------- ----------- ------- NET INCOME (LOSS) PER COMMON SHARE:..... $(0.03) $(0.05)(e) --------- ------- --------- ------- WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING... 7,292 7,292 --------- ------- --------- ------- (a) Reflects the elimination of the historical revenues and expenses directly attributable to the chemicals division which will be reported as a discontinued operation. (b) Reflects the approximate reduction in interest expense from the use of proceeds from the sale to reduce outstanding debt. (c) Reflects the dividend income from the $5,000 13.125% cumulative convertible preferred stock received from the sale. (d) Reflects the income tax effect related to the pro forma adjustments. (e) Excludes gain or sale of the division of approximately $9,900 and related loss on the early extinguishment of debt of $370 net of tax.
Page 7 of 10 Pages 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. June 12, 1995 CHATTEM, INC. By: /s/ Robert E. Bosworth ---------------------------- Robert E. Bosworth, Executive Vice President and Chief Financial Officer Page 8 of 10 Pages EXHIBIT INDEX
Exhibit No. Description Page No. - ---------- ----------- -------- 28.1 Press Release dated May 30, 1995 10
Page 9 of 10 Pages EX-28.1 2 EXHIBIT 28.1 EXHIBIT 28.1 CHATTEM, INC. May 30, 1995 FOR IMMEDIATE RELEASE CHATTANOOGA, TENNESSEE, MAY 30, 1995....Chattem, Inc. (NASDAQ: CHTT) announced today that it has completed the previously announced sale of its Specialty Chemicals division to Elcat, Inc., a privately held company based in Warren, New Jersey. Terms of the agreement call for Elcat to pay Chattem $25 million for the Chemicals unit, consisting of $20 million in cash and $5 million of 13.125% convertible preferred stock. The cash proceeds will be used to reduce indebtedness. Elcat will maintain the operations of the acquired business in Chattanooga and operate under the name Chattem Chemicals, Inc. In commenting on today's announcement, Chattem Chairman and President Zan Guerry said: "The sale of Chattem Chemicals enables us to focus on our expanding consumer products business. The convertible preferred stock transaction gives Chattem a substantial equity position in a growing company with a unique technology and a global presence through its wholly owned subsidiary, Electrocatalytic, Inc. The combination of earnings from the preferred stock and lower interest expense associated with the repayment of debt should offset to a large degree the loss of income from the Specialty Chemicals division." Chattem, Inc. is a manufacturer of nationally branded health and beauty aids. Electrocatalytic, Inc. provides electrochemical process technology and custom designed systems throughout the world. Company Contacts: Joey B. Hogan, Director of Investor Relations or Robert E. Bosworth, Executive Vice President & Chief Financial Officer Chattem, Inc. (615) 821-4571 Page 10 of 10 Pages -----END PRIVACY-ENHANCED MESSAGE-----