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) March 22, 2004
Armor Holdings, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-18863 59-3392443
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(State or other jurisdiction of (Commission File Number) (IRS Employer Identification
incorporation) No.)
1400 Marsh Landing Parkway, Suite 112, Jacksonville, Florida 32250
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (904) 741-5400
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(Former name or former address, if changed since last report.)
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information. The pro forma financial
information required by this item are hereby included in
Exhibit 99.1 attached hereto.
(c) Exhibits.
The following Exhibit is hereby filed as part of this Current
Report on Form 8-K:
Exhibit 99.1 Pro Forma Financial Information of
Armor Holdings, Inc.
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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.
Dated: March 22, 2004
ARMOR HOLDINGS, INC.
By: /s/ Robert R. Schiller
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Name: Robert R. Schiller
Title: President and Chief Operating Officer
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EXHIBIT INDEX
Exhibit No. Item
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Exhibit 99.1 Pro Forma Financial Information of
Armor Holdings, Inc.
Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On December 9, 2003, we completed our acquisition of Simula for $110.5
million in cash, subject to adjustment, including adjustments for certain
transaction fees and costs. A portion of the $110.5 million was used to retire a
majority of Simula's outstanding indebtedness. On January 5, 2004, $31.1 million
of 8% Senior Subordinated Convertible Notes plus accrued interest was paid in
full. After payment of 100% of the outstanding indebtedness and transaction
expenses, the merger consideration paid to Simula's shareholders at closing
pursuant to the merger agreement was approximately $43.5 million.
The unaudited pro forma condensed consolidated statements of continuing
operations for the years ended December 31, 2003 and 2002 give effect to the
acquisition of Simula as if it had occurred on January 1, 2002.
The acquisition of Simula was structured as a merger, pursuant to which
a wholly-owned subsidiary of Armor Holdings was merged with and into Simula,
with Simula surviving the merger and becoming a wholly-owned subsidiary of Armor
Holdings. The acquisition is accounted for under the purchase method of
accounting with the assets acquired and liabilities assumed recorded at their
estimated fair values. Goodwill is generated to the extent that the merger
consideration, including transaction and closing costs, exceeds the fair value
of net assets acquired.
The unaudited pro forma condensed consolidated statements of continuing
operations for the years ended December 31, 2003 and 2002 have been prepared by
combining Armor Holdings' historical condensed consolidated statement of
continuing operations for the years ended December 31, 2003 and 2002 with the
historical condensed consolidated statement of continuing operations of Simula
for the years ended December 31, 2003 and 2002. The unaudited pro forma
condensed consolidated financial information is presented for informational
purposes only and it is not necessarily indicative of the financial position and
results of operations that would have been achieved had the acquisition been
completed as of the dates indicated and is not necessarily indicative of our
future financial position or results of operations.
The unaudited pro forma condensed consolidated financial statements
should be read in conjunction with the historical consolidated financial
statements of Armor Holdings and Simula, respectively, including related notes
thereto.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF
CONTINUING OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2003
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
100% CASH PAID TO SIMULA
SHAREHOLDERS
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HISTORICAL HISTORICAL PRO FORMA
ARMOR SIMULA(1) ADJUSTMENTS PRO FORMA
------------- -------------- ----------------- --------------
Revenues
Products $199,093 $ -- $ -- $199,093
Mobile Security 157,548 -- -- 157,548
Simula 8,531 68,883 9,826(2) 87,240
------------- -------------- ----------------- --------------
Total revenues 365,172 68,883 9,826 443,881
Costs and expenses
Cost of sales 253,586 45,341 3,885(2) 302,812
Operating expenses 63,284 18,167 1,302(3)(4)(5) 82,753
Integration and other
non--recurring charges 12,573 -- -- 12,573
------------- -------------- ----------------- --------------
Operating income 35,729 5,375 4,639 45,743
Interest expense, net 4,012 10,333 (6,972)(6) 7,373
Other expense, net 508 2,394 (1,000)(7) 1,902
------------- -------------- ----------------- --------------
Income (loss) from continuing
operations before provision for
income taxes 31,209 (7,352) 12,611 36,468
Provision for income taxes 14,203 2,232 (179)(8) 16,256
------------- -------------- ----------------- --------------
Income (loss) from continuing
operations $ 17,006 $(9,584) $12,790 $ 20,212
============= ============== ================= ==============
Earnings per common share for continuing
operations:
Basic $ 0.61 (9) $ 0.72
Diluted $ 0.59 (9) $ 0.70
Weighted average common shares
outstanding:
Basic 28,175 28,175
Diluted 28,954 28,954
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF CONTINUING
OPERATIONS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2003
(1) Simula's condensed consolidated statement of continuing operations as
adjusted for the sale of its automotive safety division is presented for
the period January 1, 2003 to December 9, 2003.
(2) Reflects a change of Simula's revenue recognition policy to conform to the
accounting policy used by Armor Holdings on long-term contracts from
percentage completion based on the cost incurred basis to Armor Holding's
policy of percentage completion based on the units completed basis. For the
twelve-months ended December 31, 2003, this change in revenue recognition
would have resulted in an increase in revenues of approximately $9.8
million and an increase in cost of sales of approximately $3.9 million.
(3) Reflects a reduction to depreciation expense of $172,000 due to an increase
in the weighted average estimated useful lives of property and equipment to
six years and leasehold improvements to 12 years, which exceeds the
remaining useful life on a historical basis.
(4) Reflects an increase to amortization expense of $2.9 million from purchase
accounting due to an increase in the fair value of identifiable intangible
assets over their estimated useful lives.
(5) Reflects a reduction for transactions costs of approximately $1.4 million
related to the sale of Simula's automotive safety division and costs to
sell Simula.
(6) Reflects interest expense of $7.0 million (net of $3.1 million previously
recognized in Armor Holding's historical financial statements) related to
the acquisition debt used to fund the acquisition of Simula, net of the
elimination of Simula's allocated interest expense of $10.3 million. If
interest rates were to increase or decrease by 1/8%, pro forma income from
continuing operations would be $19.9 million and $20.1 million,
respectively. The acquisition debt was issued by Armor Holdings in August
of 2003 and matures in August of 2013. The acquisition debt carries a
current variable interest rate of six-month LIBOR, set in arrears, plus a
spread ranging from 2.735% to 2.75% as a result of interest rate hedge
transactions. Pro forma interest expense for the acquisition debt was based
on historical six-month LIBOR rates of 1.37%, or 4.12%, for the two-month
period ended February 2003 and 1.19%, or 3.94%, for the ten-month period
ended August 2003.
(7) Reflects the elimination of the $1.0 million performance fee paid related
to Simula's default on a certain non-monetary financial covenant under
their Senior Secured Note.
(8) Reflects the adjustment to the provision for taxes by applying Armor
Holdings' statutory tax rate of approximately 37.7% to the pro forma
adjustments and to Simula's historical losses.
(9) Basic earnings per common share for continuing operations is computed as
follows: Income from continuing operations divided by basic weighted
average common shares outstanding. Diluted earnings per common share for
continuing operations is computed as follows: Income from continuing
operations divided by diluted weighted average common shares outstanding.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF
CONTINUING OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
100% CASH PAID TO SIMULA
SHAREHOLDERS
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HISTORICAL HISTORICAL PRO FORMA
ARMOR SIMULA(1) ADJUSTMENTS PRO FORMA
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Revenues
Products $179,946 $ -- $ -- $179,946
Mobile Security 125,171 -- -- 125,171
Simula -- 75,556 (1,152)(2) 74,404
------------ ----------- -------------- -------------
Total revenues 305,117 75,556 (1,152) 379,521
Costs and expenses
Cost of sales 210,745 48,168 2,572(2) 261,485
Operating expenses 50,081 16,977 1,632(3)(4)(5) 68,690
Integration and other
non-recurring charges 5,926 -- -- 5,926
------------ ----------- -------------- -------------
Operating income 38,365 10,411 (5,356) 43,420
Interest expense, net 923 10,411 (3,240)(6) 8,094
Other expense, net 51 81 -- 132
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Income (loss) from continuing
operations before provision
for income taxes 37,391 (81) (2,116) 35,194
Provision for income taxes 16,054 37,960 (38,754)(7) 15,260
------------ ----------- -------------- -------------
Income (loss) from continuing
operations $ 21,337 $(38,041) $ 36,638 $ 19,934
============ =========== ============== =============
Earnings per common share for
continuing operations:
Basic $ 0.70 (8) $ 0.66
Diluted $ 0.69 (8) $ 0.64
Weighted average common shares
outstanding:
Basic 30,341 30,341
Diluted 30,957 30,957
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF CONTINUING
OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2002
(1) Simula's condensed consolidated statement of continuing operations as
adjusted for the sale of its automotive safety business is presented for
the year ended December 31, 2002.
(2) Reflects a change of Simula's revenue recognition policy to conform to
accounting policy used by Armor Holdings on long-term contracts from
percentage completion based on the cost incurred basis to Armor Holdings'
policy of percentage completion based on the units completed basis. For the
year ended December 31, 2002, this change in revenue recognition would have
resulted in a decrease in revenues of approximately $1.2 million and an
increase in cost of sales of approximately $2.6 million including reduction
in margin for opening in-process inventory.
(3) Reflects a reduction to depreciation expense of $168,000 due to an increase
in the weighted average estimated useful lives of property and equipment to
six years and leasehold improvements to 12 years, which exceeds the
remaining useful life on a historical basis.
(4) Reflects an increase to amortization expense of $3.1 million due to an
increase from purchase accounting in the fair value of identifiable
intangible assets over their estimated useful lives. See Note 5 to the Pro
Forma Condensed Consolidated Balance Sheet.
(5) Reflects a reduction for transactions costs of approximately $1.3 million
related to the costs to sell Simula.
(6) Reflects interest expense of $7.2 million related to the acquisition debt
used to fund the acquisition of Simula, net of the elimination of Simula's
historical interest expense of $10.4 million. If interest rates were to
increase or decrease by 1/8%, pro forma income from continuing operations
would be $20.1 million and $19.7 million, respectively. The acquisition
debt was issued by Armor Holdings in August of 2003 and matures in August
of 2013. The acquisition debt carries a current variable interest rate of
six-month LIBOR, set in arrears, plus a spread ranging from 2.735% to 2.75%
as a result of interest rate hedge transactions. Pro forma interest expense
for the acquisition debt was based on historical six-month LIBOR rates of
2.07%, or 4.82%, for the two-month period ended February 2002, 1.82%, or
4.57%, for the six-month period ended August 2002 and 1.37%, or 4.12%, for
the four-month period ended December 31, 2002.
(7) Reflects the adjustment to the provision for taxes by applying Armor
Holdings' statutory tax rate of approximately 37.7% to the pro forma
adjustments and eliminating the provision of $37.9 million that Simula
recognized in 2002, which principally related to providing a valuation
allowance for deferred tax assets resulting from net operating loss
carry-forward deductions.
(8) Basic earnings per common share for continuing operations is computed as
follows: Income from continuing operations divided by basic weighted
average common shares outstanding. Diluted earnings per common share for
continuing operations is computed as follows: Income from continuing
operations divided by diluted weighted average common shares outstanding.