-----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, MyrOLaHpRKh6vcL2PmgVMa7sj0Mtq3AZJAaoctO1yRaX1+lMlli1cAGWvs6zyyjC anOJ+8krTMwa+J9Q33dgHA== 0000912057-99-010496.txt : 19991224 0000912057-99-010496.hdr.sgml : 19991224 ACCESSION NUMBER: 0000912057-99-010496 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19991007 ITEM INFORMATION: FILED AS OF DATE: 19991223 FILER: COMPANY DATA: COMPANY CONFORMED NAME: K2 INC CENTRAL INDEX KEY: 0000006720 STANDARD INDUSTRIAL CLASSIFICATION: [3949] IRS NUMBER: 952077125 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-04290 FILM NUMBER: 99779955 BUSINESS ADDRESS: STREET 1: 4900 S EASTERN AVE STREET 2: SUITE 200 CITY: LOS ANGELES STATE: CA ZIP: 90040 BUSINESS PHONE: 3237242800 MAIL ADDRESS: STREET 1: 4900 S EASTERN AVE STREET 2: SUITE 200 CITY: LOS ANGELES STATE: CA ZIP: 90040 FORMER COMPANY: FORMER CONFORMED NAME: ANTHONY INDUSTRIES INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: ANTHONY POOLS INC DATE OF NAME CHANGE: 19720317 8-K/A 1 8-K/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Amendment No. 1 to FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): OCTOBER 7, 1999 K2 INC. (exact name of Registrant as specified in its charter) DELAWARE 1-4290 95-2077125 (State of Incorporation) (Commission File No.) (I.R.S. Employer Identification No.) 4900 SOUTH EASTERN AVENUE, LOS ANGELES, CA 90040 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (323) 724-2800 N/A (Former name or former address, if changed since last report) This Amendment No. 1 amends and supplements the Current Report on Form 8-K filed by K2 Inc. (the "Company" or "Registrant") on October 22, 1999. Item 7 is hereby amended as follows to include the filing of financial statements and pro forma financial information required by Item 7, which information was not practicably available at the time of filing. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (a) Financial Statements of Business Acquired. The following financial statements of Ride, Inc. ("Ride") are incorporated by reference and included herein: (i) Audited Consolidated Balance Sheet as of June 30, 1998 and Audited Consolidated Statements of Operations and Cash Flow for the fiscal periods ended December 31, 1997 and June 30, 1998, filed on the Company's Registration Statement on Form S-4 (Registration No. 333-84791) on August 9, 1999 and incorporated herein by reference. (ii) Notes to Consolidated Financial Statements, filed on pages 112 through 131 of the Company's Registration Statement on Form S-4 (Registration No. 333-84791) on August 9, 1999 and incorporated herein by reference. (iii) Report of Independent Auditors, filed on page 107 of the Company's Registration Statement on Form S-4 (Registration No. 333-84791) on August 9, 1999 and incorporated herein by reference. (iv) Audited Consolidated Balance Sheet and Audited Consolidated Statements of Operations and Cash Flow as of and for the fiscal year ended June 30, 1999, filed on Ride's Annual Report on Form 10-K on September 28, 1999 and incorporated herein by reference. (v) Notes to Consolidated Financial Statements, filed on pages 34 through 52 of Ride's Annual Report on Form 10-K on September 28, 1999 and incorporated herein by reference. (vi) Report of Independent Auditors, filed on page 25 on Ride's Annual Report of Form 10-K on September 28, 1999 and incorporated herein by reference. (b) Pro Forma Financial Information. The following Pro Forma financial statements of the Company and Ride, Inc. ("Ride") are incorporated by reference and included herein: (1) Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 1998, filed on page 94 of the Company's Registration Statement on Form S-4 (Registration No. 333-84791) on August 9, 1999 and incorporated herein by reference. The following unaudited Pro Forma financial statements of the Company and Ride are included herein: 2 Unaudited Pro Forma Financial Data The following tables present summary historical information for the Company and Ride derived from financial statements. The Company's merger with Ride is accounted for using the purchase method of accounting and, accordingly the assets acquired and liabilities assumed are recorded at their fair market values as of the date of the acquisition, which do not differ significantly from historical costs. The excess of the purchase price over the fair value of the assets acquired and liabilities assumed is recorded as goodwill. The unaudited pro forma combined condensed balance sheet as of September 30, 1999 gives effect to the merger of the Company and Ride as of that date. As a result, it reflects the issuance of the Company shares of common stock in exchange for shares of Ride common stock as discussed in the merger agreement. The unaudited pro forma combined condensed income statement for the nine months ended September 30, 1999 presents the results for the Company and Ride as if the merger has occurred on January 1, 1999 and reflects the issuance of shares of Company common stock in exchange for shares of Ride common stock as discussed in the merger agreement. This unaudited pro forma financial information presented is based on the assumptions and adjustments described in the accompanying notes. The unaudited pro forma statement of operations does not purport to represent what the Company's results of operations actually would have been if the events described above had occurred as of the dates indicated or what such results would be for any future periods. In addition, the unaudited pro forma combined condensed financial information does not reflect certain cost savings potentially realizable through combining the operations of the companies and implementing the Company's management practices. 3 K2 INC. AND RIDE, INC. UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF SEPTEMBER 30, 1999 (IN THOUSANDS)
HISTORICAL ---------------------------- PRO FORMA K2 INC. RIDE, INC. ADJUSTMENTS COMBINED ------------ ------------ --------------- ----------- ASSETS Current Assets Cash and cash equivalents $ 9,855 $ 332 $ 10,187 Accounts receivable, net 115,054 12,487 127,541 Inventories, net 116,190 9,636 175,826 Income taxes receivable 10,130 48 10,178 Prepaid expenses and other current assets 6,012 230 6,242 ----------- ---------- -------------- ----------- Total current assets 307,241 22,732 329,973 Property, plant and equipment, net 71,624 3,316 74,940 Intangibles, principally goodwill, net 20,244 6,194 $ (6,194) (1) 38,774 18,530 (1) Net assets of discontinued operations 25,092 25,092 Other Assets 6,253 2,235 8,488 ----------- ---------- -------------- ----------- Total Assets $ 430,454 $ 34,476 $ 12,336 $ 477,266 ----------- ---------- -------------- ----------- ----------- ---------- -------------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Bank loans $ 42,114 $ 15,758 $ 57,872 Accounts payable 21,212 9,036 30,248 Accrued payroll and related expenses 17,259 884 18,143 Other accruals 26,356 7,402 $ 800 (1) 34,558 Current portion of long-term debt 4,444 4,444 ----------- ---------- -------------- ----------- Total current liabilities 111,385 33,081 800 145,266 Long-term debt 93,724 93,724 Deferred taxes 13,014 861 13,875 Shareholders' equity Preferred stock 500 500 (1) Common stock 17,191 44,128 (44,128) (1) 18,643 1,452 (1) Additional paid-in capital 132,488 10,619 (1) 143,107 Retained earnings (deficit) 79,992 (43,931) 43,931 (1) 79,992 Employee Stock Ownership Plan and stock option loans (1,976) (1,976) Treasury shares (8,313) (8,313) Accumulated other comprehensive income (loss) (7,051) (162) 162 (1) (7,051) ----------- ---------- -------------- ----------- Total shareholders' equity 212,331 535 11,536 224,401 Total liabilities and shareholders' equity $ 430,454 $ 34,476 $ 12,336 $ 477,266 ----------- ---------- -------------- -----------
See Notes to Pro Forma Financial Data 4 K2 INC. AND RIDE, INC. UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1999 (IN THOUSANDS EXCEPT PER SHARE DATA)
HISTORICAL ---------------------- PRO FORMA K2 INC. RIDE, INC. ADJUSTMENTS COMBINED -------- ---------- ----------- --------- Net sales $461,235 $13,264 $474,499 Cost of products sold 325,098 9,976 335,074 -------- ------- -------- -------- Gross profit 136,137 3,288 139,425 Selling, general and administrative expenses 107,320 7,803 $ 463 (2) 115,586 -------- ------- -------- -------- Operating income (loss) 28,817 (4,515) (463) 23,839 Interest expense 9,005 327 9,332 Other income, net (106) (106) -------- ------- -------- -------- Income (loss) from continuing operations before provision for income taxes 19,918 (4,842) (463) 14,613 Provision for income taxes 6,375 17 (1,701)(3) 4,691 -------- ------- -------- -------- Income (loss) from continuing operations $ 13,543 $(4,859) $ 1,238 $ 9,922 -------- ------- -------- -------- -------- ------- -------- -------- Pro forma income from continuing operations Basic $ 0.82 $ 0.55 Diluted $ 0.82 $ 0.55 Basic shares outstanding 16,559 1,452 (1) 18,011 Diluted shares outstanding 16,559 1,452 (1) 18,011
See Notes to Pro Forma Financial Data 5 NOTES TO PRO FORMA FINANCIAL DATA The following adjustments were recorded in the pro forma financial statements: (1) Reflects adjustments to assets and liabilities assumed based on their estimated fair market values under the purchase method of accounting. The allocation of the aggregate purchase cost below is preliminary. The final allocation of the purchase cost and the resulting effect on net income may differ significantly from the pro forma amounts included herein.
AS OF SEPTEMBER 30, 1999 ------------------ (in thousands) Purchase price $12,071 Merger related expenses 800 ------- Aggregate merger cost 12,871 Add: Fair market value estimate of net liabilities assumed (excluding historical goodwill) 5,659 ------- Excess of net liabilities assumed over cost (i.e. goodwill) $18,530 -------
The purchase price was based on an $8.3125 per share price of the Company's common stock at the time of the merger. The number of shares issued was based on a $10.00 per share price for the Company's common stock, which represents the floor price used in calculating the exchange ratio. The adjustment to shareholders' equity is based on the pro forma capitalization of the Company as follows:
AS OF SEPTEMBER 30, 1999 ------------------ (IN THOUSANDS) Ride, Inc. common shares outstanding 14,321 Conversion of Ride, Inc. preferred stock common equivalent 200 ------- Pro Forma Ride, Inc. common shares 14,521 Conversion ratio 0.10 ------- Shares of K2 Inc. common stock 1,452 Multipled by: stock price at closing 8.3125 ------- Value of K2 Inc. stock to be issued $12,071 Less: Ride shareholders' equity 535 ------- Net adjustment to shareholders' equity $11,536 -------
6 (2) Pro forma amortization of goodwill compared to the amortization of goodwill included in Ride's historical financial statements is summarized as follows:
NINE MONTHS ENDED SEPTEMBER 30, 1999 ------------------ (IN THOUSANDS) Cost in excess of net liabilities assumed of business acquired $ 18,530 Amortization period in months x 9/240 --------- 695 Less: Amortization recorded by Ride, Inc. (232) --------- Increase amortization $ 463 --------- ---------
The above is based on preliminary fair values of the assets acquired and liabilities assumed. The final allocation of the purchase price, the amortization in years and the resulting effect on net income may differ significantly from the pro forma amounts indicated herein. (3) For the nine months ended September 30, 1999, a pro forma income tax benefit was recorded due to losses by Ride to the extent of U.S. tax expense recorded by the Company. (c) Exhibits The following exhibits are filed with this report on Form 8-K:
Exhibit No. Description ----------- ------------ 23(a) Consent of Ernst & Young LLP, Independent Auditors 23(b) Consent of Grant Thornton LLP, Independent Certified Public Accountants
7 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. Date: December 23, 1999 K2 INC. By: /s/ RICHARD M. RODSTEIN --------------------------- Richard M. Rodstein President and Chief Executive Officer Date: December 23, 1999 K2 INC. By: /s/ JOHN J. RANGEL ---------------------- John J. Rangel Senior Vice President - Finance 8 EX-23.A 2 EXHIBIT 23(A) EXHIBIT 23(a) CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in this Current Report (Form 8-K/A) of K2 Inc. of our report on the financial statements of Ride, Inc. dated September 11, 1998, included in the Proxy Statement of Ride, Inc. that is made a part of the Registration Statement (Form S-4) and Prospectus of K2 Inc. for the registration of 1,519,574 shares of its common stock filed with the Securities and Exchange Commission on August 9, 1999. We also consent to the incorporation by reference in the Registration Statements (Form S-8 dated October 14, 1988 and Form S-8 dated December 28, 1994) pertaining to the 1988 Incentive Stock Option Plan and the 1994 Incentive Stock Option Plan of K2 Inc. of our report dated September 18, 1998 with respect to the consolidated financial statements of Ride, Inc. incorporated by reference in the Current Report on Form 8-K/A dated December 22, 1999. /s/ Ernst & Young LLP Seattle, Washington December 22, 1999 EX-23.B 3 EXHIBIT 23(B) [LETTERHEAD OF GRANT THORNTON] EXHIBIT 23(b) CONSENT OF GRANT THORNTON LLP, INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We consent to the incorporation by reference in this Current Report (Form 8-K/A) of K2 Inc. of our report on the financial statements of Ride, Inc. dated September 27, 1999, included in the Proxy Statement of Ride, Inc., that is made a part of the Registration Statement (Form S-4) and Prospectus of K2 Inc. for the registration of 1,519,574 shares of its common stock filed with the Securities and Exchange Commission on August 9, 1999. GRANT THORNTON LLP /s/ GRANT THORNTON LLP Seattle, Washington December 22, 1999 -----END PRIVACY-ENHANCED MESSAGE-----