-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BB/AjvFrhGWyT/MOU300g/jMh3gDHaB7uBJaKXaFYrmKJny17tikzwRBTVSAopip T9WSTJHstqrzgHRz939sAg== 0000948600-99-000110.txt : 19990818 0000948600-99-000110.hdr.sgml : 19990818 ACCESSION NUMBER: 0000948600-99-000110 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990802 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990817 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LSB INDUSTRIES INC CENTRAL INDEX KEY: 0000060714 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INORGANIC CHEMICALS [2810] IRS NUMBER: 731015226 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-07677 FILM NUMBER: 99694657 BUSINESS ADDRESS: STREET 1: 16 S PENNSYLVANIA CITY: OKLAHOMA CITY STATE: OK ZIP: 73107 BUSINESS PHONE: 4052354546 MAIL ADDRESS: STREET 1: P.O. BOX 754 CITY: OKLAHOMA STATE: OK ZIP: 73101 8-K 1 08/02/1999 FORM 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) August 2, 1999 __________________________ LSB INDUSTRIES, INC. _____________________________________________________ (Exact name of registrant as specified in its charter) Delaware 1-7677 3-1015226 _______________ _______________ _________________ (State or other (Commission File (IRS Employer jurisdiction of Number) Identification No.) incorporation) 16 South Pennsylvania Avenue, Oklahoma City, Oklahoma 73107 _____________________________________________________ __________ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (405) 235-4546 _________________ Not applicable _____________________________________________________________ (Former name or former address, if changed since last report) Item 2. Acquisition or Disposition of Assets. ____________________________________ On August 2, 1999, LSB Industries, Inc. (the "Company") consummated the sale by the Company's wholly owned subsidiaries, Total Energy Systems, Ltd. ("TES"), TES Mining Services Pty Ltd. ("TES Mining"), Total Energy Systems (International) Pty Ltd. ("TES International"), and Total Energy Systems (NZ) Limited ("TES NZ") (collectively, the "TES Subsidiaries") of substantially all the assets of the TES Subsidiaries to Quantum Explosives ("Quantum"), a subsidiary of Thiess Contractors Pty Limited pursuant to the terms of an Asset Purchase Agreement, dated as of May 7, 1999, and amended June 30, 1999 (the "Asset Purchase Agreement"). The TES Subsidiaries were engaged in the business of manufacturing and supplying bulk and package explosives and blasting agents and other products and services to the mining, quarrying, civil engineering and other industries in Australia, New Zealand, and elsewhere. The TES Subsidiaries are wholly owned subsidiaries of ClimaChem, Inc. ("ClimaChem"), and ClimaChem is a wholly owned subsidiary of the Company. Under the terms of the Asset Purchase Agreement, Quantum purchased all of the plant, equipment, intellectual property, inventory, material contracts, and leases relating to the TES Subsidiaries' business. All of the TES Subsidiaries' accounts receivables (approximately $2.6 million) and trade payables (approximately $1.9 million) were retained by the TES Subsidiaries. The purchase price paid by Quantum under the Asset Purchase Agreement was $11.6 million. The purchase price was determined at closing based on the following: the book value of the inventory and fixed assets, less approximately $650,000 for certain environmental contingencies. The purchase price was paid as follows: $9.8 million in cash, debt assumed of $1.1 million, and an approximately $.7 million holdback to be paid within 21 days following the date of the closing, subject to the final determination of the book value of the TES Subsidiaries' inventory. Approximately $6.4 million of the cash received was used by TES to repay certain indebtedness to its primary lender, the Bank of New Zealand, Australia. The sale of the TES Subsidiaries' business pursuant to the Asset Purchase Agreement resulted in a loss to the Company of approximately $2 million. However, the sale of the TES Subsidiaries will eliminate from the Company's future performance the losses incurred by the TES Subsidiaries, which are currently approximately $3 million per annum. Item 7. Financial Statements and Exhibits. Page No. _________________________________ ________ (a) Financial Statements not applicable. (b) Pro Forma Financial Information. P-1 Pro Forma Consolidated Balance Sheet (Unaudited) as of March 31, 1999 P-2 Pro Forma Consolidated Statement of Operations (Unaudited) for the three months ended March 31, 1999 P-4 Pro Forma Consolidated Statement of Operations (Unaudited) for the year ended December 31, 1998 P-5 Notes to Pro Forma Consolidated Financial Statements (Unaudited) P-6 (c) Exhibits. 2.1 Asset Purchase Agreement, dated as of May 7, 1999, between Quantum Explosives Pty Ltd., Total Energy Systems, Ltd., TES Mining Services Pty Ltd., Total Energy Systems (International) Pty. Ltd., and Total Energy Systems (NZ) Ltd. The Asset Purchase Agreement is attached as Exhibit 10.1 to the Form 10-Q for the quarter ended March 31, 1999, and is incorporated herein by reference. CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF COMMISSION ORDER CF #8161, DATED JUNE 9, 1999, GRANTING A REQUEST FOR CONFIDENTIAL TREATMENT UNDER THE FREEDOM OF INFORMATION ACT AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 2.2 Variation to Asset Purchase Agreement, dated June 30, 1999, between Quantum Explosives Pty Ltd., Total Energy Systems, Ltd., TES Mining Services Pty Ltd., Total Energy Systems (International) Pty. Ltd., and Total Energy Systems (NZ) Ltd. 99.1 Press release, dated August 3, 1999. -2- 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 hereunto duly authorized. Dated: August 17, 1999. LSB INDUSTRIES, INC. By: /s/ Tony M. Shelby __________________________________ Tony M. Shelby Senior Vice President and Chief Financial Officer K-M\LSB\8K\899\8K0899.5 -3- LSB INDUSTRIES, INC. UNAUDITED PRO FORMA FINANCIAL INFORMATION August 17, 1999 On May 7, 1999, Total Energy Systems Limited and its subsidiaries ("TES") entered into an agreement to sell substantially all the assets of TES. Under the agreement, TES retains all of its liabilities, except liabilities for the financing of certain property and equipment, and will liquidate such liabilities retained from the proceeds of the sale and from the collection of its accounts receivables which were retained by TES (collectively, the "Transactions"). The accompanying unaudited pro forma consolidated balance sheet as of March 31, 1999 gives effect to the Transactions involving the Company's wholly owned Australian subsidiary, Total Energy Systems, Limited, as if they had occurred on March 31, 1999. The accompanying unaudited consolidated statements of operations for the year ended December 31, 1998 and the three months ended March 31, 1999 give effect to the sale and realization of the assets of TES as if the Transactions had occurred as of January 1, 1998. Such unaudited pro forma consolidated financial information has been prepared based on estimates and assumptions deemed by the Company to be appropriate and does not purport to be indicative of the financial position or results of operations which may actually be obtained in the future. Future results may vary significantly from the results reflected in the unaudited pro forma consolidated statements of operations of the Company and its other retained subsidiaries due to general economic conditions and other factors. The pro forma consolidated financial information should be read in conjunction with the Company's historical financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Annual Report on Form 10-K for the year ended December 31, 1998 and Quarterly report on Form 10-Q for the three months ended March 31, 1999. P-1
LSB INDUSTRIES, INC. UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET March 31, 1999 (In thousands) Pro Forma Historical Adjustments Pro Forma __________ ___________ _________ ASSETS _______ CURRENT ASSETS Cash and cash equivalents $ 1,240 $ 1,240 Trade accounts receivable, net 57,113 $(3,532) (5) 53,581 Inventories 63,349 (8,900) (1) 54,449 Supplies and prepaid items 9,503 (94) (5) 9,409 __________ __________ ________ Total current assets 131,205 (12,526) 118,679 Plant, property and equipment, at cost 198,233 (8,254) 189,979 Less accumulated depreciation and amortization 99,131 (3,564) 95,567 __________ __________ ________ 99,102 (4,690) (1) 94,412 Other assets, net 21,120 21,120 __________ __________ ________ $251,427 ($17,216) $234,211 ========== ========== ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Drafts payable $499 $499 Accounts payable 20,534 ($1,213) (5) 19,321 Accrued liabilities 19,490 (2,176) (5) 17,314 Current portion of long-term debt 14,559 (6,626) (1) 7,933 __________ __________ ________ Total current liabilities 55,082 (10,015) 45,067 Long-term debt 165,759 (6,301)(1)(2) 159,458 Redeemable, noncumulative, con- vertible preferred stock 139 139 STOCKHOLDERS' EQUITY Series B 12% cumulative, con- vertible preferred, $100 par value; 20,000 shares issued and outstanding 2,000 2,000 P-2 Series 2 $3.25 convertible, exchangeable able Class C pre- ferred stock, $50 stated value; 920,000 shares issued 46,000 46,000 Common stock, $.10 par value; 75,000,000 shares authorized, 15,108,676 shares issued 1,511 1,511 Capital in excess of par value 38,329 38,329 Accumulated other comprehensive loss (1,337) 1,337 (3) 0 Accumulated deficit (39,794) (2,237)(3)(4) (42,031) __________ __________ ________ 46,709 (900) 45,809 Less treasury stock, at cost: Series 2 preferred, 5,000 shares 200 200 Common stock, 3,273,290 shares 16,062 16,062 __________ __________ ________ Total stockholders' equity 30,447 (900) 29,547 __________ __________ ________ $251,427 ($17,216) $234,211 ========== ========== ========
See accompanying notes. P-3
LSB INDUSTRIES, INC. UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS Three Months ended March 31, 1999 (In Thousands, Except Per Share Amounts) Pro Forma Historical Adjustments Pro Forma __________ ___________ _________ REVENUES Net sales $73,057 ($2,868) (6) $70,189 Other income (312) 102 (6) (210) __________ ___________ _________ 72,745 (2,766) 69,979 COSTS AND EXPENSES Cost of sales 57,101 (3,026) (6) 54,075 Selling general and administrative 14,912 (585) (6) 14,327 Interest 4,492 (227) (6)(7) 4,265 __________ __________ _________ 76,505 (3,838) 72,667 __________ ___________ _________ Loss before provision for income taxes (3,760) 1,072 (2,688) Provision for income taxes 50 50 __________ ___________ _________ Net loss (3,810) $1,072 (2,738) =========== Preferred stock dividends 816 816 __________ _________ Net loss applicable to common stock ($4,626) ($3,554) ========== ========= Net loss per common share - basic and diluted ($0.39) ($0.30) ========== ========= Weighted average common shares outstanding 11,881 11,881 ========== ========
See accompanying notes. P-4
LSB INDUSTRIES, INC. UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS Year ended December 31, 1998 (In Thousands, Except Per Share Amounts) Pro Forma Historical Adjustments Pro Forma __________ ___________ _________ REVENUES Net sales $310,037 ($14,184) (6) $295,853 Other income 1,290 (11) (6) 1,279 Gain on sale of The Tower 12,993 12,993 __________ ___________ _________ 324,320 (14,195) 310,125 COSTS AND EXPENSES Cost of sales 247,084 (14,426) (6) 232,658 Selling general and administrative 61,729 (2,189) (6) 59,540 Interest 17,327 (954) (6)(7) 16,373 __________ ___________ _________ 326,140 (17,569) 308,571 __________ ___________ _________ Income (loss) before provision for income taxes (1,820) 3,374 1,554 Provision for income taxes 100 100 __________ ___________ _________ Net income (loss) (1,920) $3,374 1,454 =========== Preferred stock dividends 3,229 3,229 __________ _________ Net loss applicable to common stock ($5,149) ($1,775) ========== ======== Net loss per common share - basic and diluted ($0.42) ($0.14) ========== ======== Weighted average common shares outstanding 12,373 12,373 ========== ========
See accompanying notes. P-5 LSB INDUSTRIES, INC. NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS Unaudited Pro Forma Consolidated Balance Sheet ______________________________________________ (1) To eliminate inventory and net property, plant and equipment ("PP&E") sold; the related PP&E debt financing assumed by the purchaser; and, to apply cash proceeds to reduce the revolving credit bank debt of the Australian subsidiaries. (2) To apply cash proceeds from the sale and realization of the Australian subsidiary's assets to reduce the indebtedness of the Company. (3) To eliminate the cumulative transaction adjustment. (4) To recognize the loss on sale of the assets of the Australian subsidiary including the recognition of the foreign currency translation loss related thereto. (5) To reflect the realization of assets and liquidation of liabilities retained. Unaudited Pro Forma Consolidated Statement of Operations ________________________________________________________ (6) To eliminate the results of operations of TES included in the Company's consolidated financial statements. (7) To recognize the interest reduction on debt required to be retired with the net cash proceeds received by the Company. P-6 EX-2.2 2 EXHIBIT 2.2 VARIATION TO ASSET PURCHASE AGREEMENT VARIATION TO ASSET PURCHASE AGREEMENT DATED MAY 7, 1999 The Vendors and Purchaser under the abovementioned contract have agreed to the following variations to the contract: 1 Clause 1.1.12 is amended to read "Completion Date" means 2 August 1999; and 2 Clause 1.1.20 is amended to read "Existing Environmental Cost" means $1 million; and 3 Clause 1.1.44 is amended to read "Satisfaction Date" means 30 July 1999. The Vendors and Purchaser acknowledge and agree for the purposes of clause 2.1.7 of the contract that the Existing Environmental Cost is $1 million which in accordance with clause 2.3.2 of the contract the Vendors have elected to accept as a deduction from the Purchase Price in accordance with clause 6.1.4 of the contract. Terms used in this document shall have the meanings given to them under the Asset Purchase Agreement. DATED this 30th day of June 1999. SIGNED by TOTAL ENERGY SYSTEMS ) LIMITED ACN 010 876 150 by a ) duly authorised director in the ) presence of: ) ________________________________ Witness SIGNED by T.E.S. MINING SERVICES ) PTY LTD ACN 010 975 676 by a ) duly authorised director in the ) presence of: ) ________________________________ Witness SIGNED by TOTAL ENERGY SYSTEMS ) (INTERNATIONAL) PTY LTD. ) ACN 084 562 247 by a duly ) authorised director in the ) presence of: ) _________________________________ SIGNED by TOTAL ENERGY SYSTEMS ) (NZ) LIMITED D/N682396 by a ) duly authorised director in the ) presence of: ) ________________________________ Witness SIGNED by QUANTUM EXPLOSIVES PTY ) LIMITED ACN 087 119 515 by a duly ) authorised director in the ) presence of: ) ________________________________ Witness EX-99.1 3 EXHIBIT 99.1 - PRESS RELEASE LSB INDUSTRIES NEWS: for immediate release ________________________________________________________________ POST OFFICE BOX 754 (73101) 16 SOUTH PENNSYLVANIA (73107) OKLAHOMA CITY, OK U.S.A. PHONE: 405-235-4546 TELEX: 203656 LSB UR FAX: 405-235-5067 LSB Industries, Inc. Announces Completion of Sale of Its Australian Subsidiary OKLAHOMA CITY, Aug. 3 /PRNewswire/ LSB Industries, Inc. (OTC Bulletin Board: LSBD) ("LSB") announced today that it has completed the sale of its wholly-owned subsidiary, Total Energy Systems Limited ("TES"), incorporated in Australia. The Asset Purchase Agreement between LSB and Quantum Explosives ("Quantum"), a subsidiary of Thiess Contractors Pty Limited ("Thiess") for the assets of TES and its related subsidiaries in Australia and New Zealand was closed in Brisbane, Australia on August 2. Jack E. Golsen, Board Chairman, stated that proceeds from the sale of approximately $14 million will be used to reduce debt. The transaction will result in a loss on the sale of approximately $2.0 million. However, the sale will eliminate TES' current losses which have been running approximately $3 million per annum. LSB is a manufacturing, marketing, and engineering company with activities on a worldwide basis. LSB's principal business activities consist of the manufacture and sale of chemical products for the mining, agricultural and industrial markets, the manufacture and sale of commercial and residential climate control products, the provision of specialized engineering services, and other activities. LSB's common shares are traded on the Over-the-Counter Bulletin Board under the symbol of LSBD. Certain brokers have filed with the NASD to become Market Makers in LSB's stock. Those Market Makers are listed on LSB's website at www.lsb-okc.com. SOURCE LSB Industries, Inc. -0- 08/03/99 /CONTACT: Tony M. Shelby, Chief Financial Officer of LSB Industries, Inc., 405-235-4546; or Leslie A. Schupak, ext. 205, or Joe Mansi, ext. 207, both of KCSA, 212-682-6300, for LSB Industries, Inc./ /Web site: http://www.lsb-okc.com (LSBD) -0- -----END PRIVACY-ENHANCED MESSAGE-----