-----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, WXRKsGwkegoubsanJMAXpBelPmbWjGLcrBMVyaM1sBAH1+l6poo6g5IzoC/Hr6rR P4Tq3Q3hxrgdqiFQAWXEGg== 0000950129-98-002064.txt : 19980514 0000950129-98-002064.hdr.sgml : 19980514 ACCESSION NUMBER: 0000950129-98-002064 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970710 ITEM INFORMATION: FILED AS OF DATE: 19980513 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: STERLING CHEMICALS HOLDINGS INC /TX/ CENTRAL INDEX KEY: 0000795662 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 760185186 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-10059 FILM NUMBER: 98618302 BUSINESS ADDRESS: STREET 1: 1200 SMITH ST, SUITE 1900 CITY: HOUSTON STATE: TX ZIP: 77002-4312 BUSINESS PHONE: 7136503700 MAIL ADDRESS: STREET 1: 1200 SMITH ST SUITE 1900 CITY: HOUSTON STATE: TX ZIP: 77002-4312 FORMER COMPANY: FORMER CONFORMED NAME: STERLING CHEMICALS INC /TX/ DATE OF NAME CHANGE: 19961218 FORMER COMPANY: FORMER CONFORMED NAME: STERLING CHEMICALS HOLDINGS INC DATE OF NAME CHANGE: 19960828 FORMER COMPANY: FORMER CONFORMED NAME: STERLING CHEMICALS INC DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STERLING CHEMICAL INC CENTRAL INDEX KEY: 0001014669 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 760502785 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 333-04343-01 FILM NUMBER: 98618303 BUSINESS ADDRESS: STREET 1: 1200 SMITH STREET STREET 2: SUITE 1900 CITY: HOUSTON STATE: TX ZIP: 77002-4312 BUSINESS PHONE: 7136503700 MAIL ADDRESS: STREET 1: C/O STERLING GROUP INC STREET 2: EIGHT GREENWAY PLAZA, SUITE 702 CITY: HOUSTON STATE: TX ZIP: 77046 FORMER COMPANY: FORMER CONFORMED NAME: STX CHEMICALS CORP DATE OF NAME CHANGE: 19960516 8-K/A 1 STERLING CHEMICALS HOLDINGS, INC. - AMENDMENT #2 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 ------------ FORM 8-K/A AMENDMENT NO. 2 TO CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT 0F 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED), JULY 10, 1997 ------------ STERLING CHEMICALS HOLDINGS, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 1-00059 76-0185186 (STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1200 SMITH STREET, SUITE 1900 HOUSTON, TEXAS 77002-4312 (713) 650-3700 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE) (713) 650-3700 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) ----------- STERLING CHEMICALS, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 333-04343-01 76-0502785 (STATE OF OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER OF INCORPORATION OR IDENTIFICATION NO.) ORGANIZATION)
1200 SMITH STREET, SUITE 1900 HOUSTON, TEXAS 77002-4312 (713) 650-3700 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE) -------------------- (713) 650-3700 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) 2 EXPLANATORY NOTE TO AMENDMENT NO. 2 The undersigned registrant hereby amends its Current Report on Form 8-K originally filed July 25, 1997 for the sole purpose of filing Item 7(a) "Financial statements of the business acquired" and the related auditors' consent. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial statements of the business acquired. The financial statements of Saskatoon Chemicals Ltd. are presented below. 3 Arthur Andersen - -------------------------------------------------------------------------------- Auditors' Report - -------------------------------------------------------------------------------- To the Shareholder of SASKATOON CHEMICALS LTD.: We have audited the balance sheet of SASKATOON CHEMICALS LTD. as at December 29, 1996 and the statements of income, retained earnings and changes in financial position for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at December 29, 1996 and the results of its operations and changes in its financial position for the year then ended in accordance with generally accepted accounting principles. Winnipeg, Manitoba March 27, 1997 4 SASKATOON CHEMICALS LTD. BALANCE SHEET DECEMBER 29, 1996 ASSETS
1996 ----------- CURRENT ASSETS Accounts receivable $ 5,490,964 Income taxes receivable 803,297 Inventories (Note 3) 5,707,672 Prepaid expenses 13,248 ----------- 12,015,181 PROPERTY, PLANT AND EQUIPMENT (Note 4) 49,517,509 OTHER ASSETS (Note 5) 820,918 ----------- $62,353,608 =========== LIABILITIES AND SHAREHOLDER'S EQUITY CURRENT LIABILITIES Bank indebtedness (Note 6) $ 1,252,595 Accounts payable and accrued liabilities 4,084,639 Due to affiliate (Note 8) 7,322,841 ----------- 12,660,075 ----------- DEFERRED INCOME TAXES 15,865,418 ----------- COMMITMENTS (Note 10) SHAREHOLDER'S EQUITY Share capital (Note 7) 3,001,000 Contributed surplus 190,470 Retained earnings 30,636,645 ----------- 33,828,115 ----------- $62,353,608 ===========
The accompanying notes are an integral part of this balance sheet. 5 SASKATOON CHEMICALS LTD. STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 29, 1996
1996 ------------ NET SALES (Note 8) $ 67,344,975 ------------ COSTS AND EXPENSES Cost of goods sold 37,213,784 Interest, net of $125,987 capitalized (Note 8) (298,889) Corporate and administrative 14,220,947 Other 66,406 ------------ 51,202,248 ------------ INCOME BEFORE PROVISION FOR INCOME TAXES 16,142,727 ------------ PROVISION FOR INCOME TAXES Current 5,682,758 Deferred (282,758) ------------ 5,400,000 ------------ NET INCOME 10,742,727 RETAINED EARNINGS, beginning of year 39,893,918 DIVIDEND PAID (20,000,000) ------------ RETAINED EARNINGS, end of year $ 30,636,645 ============
The accompanying notes are an integral part of this statement. 6 SASKATOON CHEMICALS LTD. STATEMENT OF CHANGES IN FINANCIAL POSITION FOR THE YEAR ENDED DECEMBER 29, 1996
1996 ------------ CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Net income $ 10,742,727 Add (deduct) items not affecting cash Depreciation 4,877,395 Deferred income taxes (282,758) Other 349,073 ------------ 15,686,437 Net change in non-cash operating accounts 190,012 ------------ 15,876,449 ------------ FINANCING ACTIVITIES Net change in affiliate accounts (Note 8) 12,455,487 Dividend paid (20,000,000) ------------ (7,544,513) ------------ INVESTING ACTIVITIES Net additions to property, plant and equipment (7,783,041) Net additions to other assets (946,338) ------------ (8,729,379) ------------ DECREASE IN CASH (397,443) BANK INDEBTEDNESS, beginning of year (855,152) ------------ BANK INDEBTEDNESS, end of year $ (1,252,595) ============
The accompanying notes are an integral part of this statement. 7 SASKATOON CHEMICALS LTD. NOTES TO FINANCIAL STATEMENTS DECEMBER 29, 1996 1. SIGNIFICANT ACCOUNTING POLICIES (a) FISCAL YEAR Saskatoon Chemicals Ltd.'s (the "Company") fiscal year ends on the last Sunday of the calendar year. (b) FOREIGN CURRENCY TRANSLATION Sales and expenses are translated at the exchange rate in effect on the date which they occur. Monetary assets and liabilities are translated at the exchange rate in effect at the period-end date. Foreign exchange gains and losses are recorded in the statement of income or, if relating to long-term monetary items, are deferred and amortized over the term of the related item. (c) INVENTORIES Inventories are stated at the lower of average cost and net realizable value. (d) PROPERTY, PLANT AND EQUIPMENT The Company capitalizes the interest cost for capital projects with anticipated costs in excess of $500,000 expended during the construction and pre-operating periods. In addition, the Company capitalizes significant pre-operating and start-up costs. Capitalized interest, pre-operating and start-up costs are amortized against income on the same basis as the related assets. (e) DEPRECIATION Depreciation of property, plant and equipment is provided on the straight-line method based on estimated service lives. The estimated service lives have the following ranges: Buildings 10-40 years Machinery and equipment 3-25 years (f) OTHER ASSETS Costs of membranes and cell parts placed in service are deferred and amortized over their estimated service lives of two to three years. 8 SASKATOON CHEMICALS LTD. NOTES TO FINANCIAL STATEMENTS DECEMBER 29, 1996 1. SIGNIFICANT ACCOUNTING POLICES (continued) (g) REVENUE Revenues are disclosed net freight, discounts and allowances. (h) INCOME TAXES The Company follows the deferral method of tax allocation accounting in determining the provision for income taxes during the year. Deferred income taxes result primarily from timing differences in the recording of depreciation for accounting purposes and the claiming of capital cost allowance for tax purposes. (i) POST RETIREMENT BENEFITS The Company provides certain retired employees with benefits including medical coverage and life insurance. The cost of these benefits is actuarially determined and accrued in the accounts.
2. ACCOUNTS RECEIVABLE 1996 ------------- Trade $ 4,950,069 Other 540,895 ------------- $ 5,490,964 ============= 3. INVENTORIES 1996 ------------- Raw Materials $ 77,414 Finished goods 2,257,150 Materials, parts and supplies 3,373,108 ------------- $ 5,707,672 =============
9 SASKATOON CHEMICALS LTD. NOTES TO FINANCIAL STATEMENTS DECEMBER 29, 1996 4. PROPERTY, PLANT AND EQUIPMENT
ACCUMULATED NET BOOK COST DEPRECIATION VALUE ------------ ------------- ------------- Land $ 503,663 $ - $ 503,663 Buildings and improvements 11,869,716 2,921,057 8,948,659 Machinery and equipment 68,053,606 28,259,710 39,793,896 Construction in progress 271,291 - 271,291 ------------ ------------- ------------- $ 80,698,276 $ 31,180,767 $ 49,517,509 ============ ============= =============
5. OTHER ASSETS Deferred membrane costs $ 520,946 Deferred cell parts costs 299,972 ------------ $ 820,918 ============
6. BANK INDEBTEDNESS The Company's banking facilities are maintained by the parent company, Weyerhaeuser Canada Ltd. Bank indebtedness represents outstanding cheques as at year end. 7. SHARE CAPITAL Authorized Unlimited Redeemable, retractable, non-participating, non-voting Class A preference shares without par value Unlimited Voting common shares, without par value 10 SASKATOON CHEMICALS LTD. NOTES TO FINANCIAL STATEMENTS DECEMBER 29, 1996 7. SHARE CAPITAL (Continued) Issued
Shares Amount ------------ ------------ Class A common shares 10 $ 1,000 Class A preferred shares 3,000 3,000,000 ------------ $ 3,001,000 ============
8. RELATED PARTY TRANSACTIONS Saskatoon Chemicals Ltd., is a wholly-owned subsidiary of Weyerhaeuser Canada Ltd., which is itself a wholly-owned subsidiary of Weyerhaeuser Company. Weyerhaeuser Saskatchewan Ltd. is a sister company to Saskatoon Chemicals Ltd. and is wholly-owned by Weyerhaeuser Canada Ltd. The following is a summary of the outstanding balances with related parties: Payable to Weyerhaeuser Canada Ltd. $ 7,322,841
The Company entered into a "Revolving Credit and Term Loan Agreement" with Weyerhaeuser Canada Ltd. for an amount not to exceed $25,000,000 dated February 1, 1993. Under the terms of the agreement, advances bear interest at the Royal Bank of Canada Canadian dollar prime rate. Also, the Company is charged a standby fee equal to three-eighths of a percent per annum on the monthly unused portion of the credit line. This agreement terminates on the sale of substantially all of the assets of the Company (see Note 13). Outstanding advances and interest are payable on or before the date of closing. 11 SASKATOON CHEMICALS LTD. NOTES TO FINANCIAL STATEMENTS DECEMBER 29, 1996 8. RELATED PARTY TRANSACTIONS (Continued) The following is a summary of approximate amounts of transactions with related parties: Chemical sales to Weyerhaeuser Saskatchewan Ltd. $14,315,630 Chemical sales to Weyerhaeuser Canada Ltd. 13,505,973 Corporate administrative charges paid to Weyerhaeuser Saskatchewan Ltd. 793,857 Corporate administrative charges paid to Weyerhaeuser Canada Ltd. 14,000 Interest revenue charged to Weyerhaeuser Canada Ltd. 294,522 Interest expense and standby fee paid to Weyerhaeuser Canada Ltd. 121,620 Chemical sales to Weyerhaeuser Saskatchewan Ltd. and Weyerhaeuser Canada Ltd. are priced at estimated fair market value.
9. PENSION COSTS The Company maintains a defined benefit pension plan for salaried employees. The actuarial value of assets are based on market values. The actuarial value of the obligation is determined using the projected unit credit actuarial cost method pro-rated on service and the Company's best estimates of future plan assumptions. The estimated position of the plan at December 29, 1996 based on an actuarial valuation performed as at January 1, 1996 are as follows: Actuarial value of assets $ 3,320,514 Actuarial value of obligations 3,308,572 ---------- Plan surplus $ 11,942 ===========
The current year deferred benefit pension plan expense amounted to $180,227. 12 SASKATOON CHEMICALS LTD. NOTES TO FINANCIAL STATEMENTS DECEMBER 29, 1996 10. COMMITMENTS As at December 29, 1996, the estimated amount to complete authorized capital projects was approximately $1,600,000. Management believes that the Company met the environmental compliance standards applicable to it as at December 29, 1996, and it estimates that capital expenditures required to meet known future environmental compliance standards will approximate $1,550,000. These costs have been budgeted to be incurred in fiscal 1998. 11. ENVIRONMENTAL INDEMNITY The previous owner of the plant has indemnified the Company against any losses resulting from environmental claims arising out of the operations prior to the 1986 purchase by the Company. 12. ECONOMIC DEPENDENCE During 1996, 41% of the Company's sales were made to Weyerhaeuser Canada Ltd. and Weyerhaeuser Saskatchewan Ltd. combined. The Company does not have a sales agreement with either of the above companies. 13. SUBSEQUENT EVENT Subsequent to year end, the Company realized an agreement in principle with an unrelated party to sell substantially all of its assets. The sale is expected to take effect in June 1997. The Company expects to realize a gain on sale. 13 (b) Pro forma financial information. Not amended (c) Exhibits The following exhibits are filed as part of this Form 8-K/A. EXHIBIT NUMBER DESCRIPTION OF EXHIBIT -------------- ---------------------- 23.1 Consent of Arthur Andersen & Co. 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized. STERLING CHEMICALS HOLDINGS, INC. STERLING CHEMICALS, INC. (Registrants) Date: May 12, 1998 By: /s/ Gary M. Spitz ----------------------------- Gary M. Spitz Vice President-Finance and Chief Financial Officer EX-23.1 2 CONSENT OF ARTHUR ANDERSEN & CO. 1 EXHIBIT 23.1 ARTHUR ANDERSEN CHARTERED ACCOUNTANTS __________________________________ 500 - 330 St. Mary Avenue Winnipeg, Manitoba R3C 3Z5 204 942 6541 Telephone 204 956 0830 Facsimile May 11, 1998 To: The Securities and Exchange Commission Dear Sir/Madam: As independent public accountants, we hereby consent to the use of our report dated March 27, 1997 and to all references to our Firm included in or made part of Sterling Chemicals Holdings, Inc.'s Form 8-K/A Amendment No. 2 to Current Report dated July 10, 1997. Yours very truly, "ARTHUR ANDERSEN & CO." -----END PRIVACY-ENHANCED MESSAGE-----