Business Context and Reporting Period
This Form 8-K was filed by WESCO International, Inc. on September 11, 1998, reporting an asset acquisition completed on that date. The Company, through its wholly owned subsidiary WESCO Distribution, Inc., acquired substantially all assets and assumed liabilities of Bruckner Supply Company, Inc. ("Bruckner"), a provider of integrated supply procurement services headquartered in Port Washington, New York. Bruckner will operate as a division of WESCO.
Key Financial Metrics
- Acquisition Price: $99.1 million total.
- Payment Structure: $72.5 million in cash and a $26.6 million noninterest-bearing convertible note.
- Cash Funding: $60.5 million from operating funds and $12.0 million from borrowings under an existing credit agreement.
- Target Historical Revenue: Bruckner reported net sales of approximately $222 million in 1997 and $145 million in 1996.
- Contingent Consideration: Additional payments based on a multiple of Bruckner's annual EBITDA for 1998 through 2004.
Material Changes
The primary material change is the expansion of WESCO's operations through the acquisition of Bruckner. The transaction increases the Company's asset base and introduces a new division focused on outsourcing activities for large industrial companies. The Company's debt load increased by $12.0 million immediately to fund the cash portion of the purchase price.
Outlook, Risks, and Unusual Items
- Convertible Note: The $26.6 million note is due March 31, 2000, and automatically converts to common stock if WESCO conducts a public offering prior to that date.
- Change of Control: Some or all contingent consideration is subject to earlier payment if a change of control occurs (excluding a public offering).
- Management: Robert Rosenbaum, former CEO of Bruckner, will serve as President of the Bruckner Division and Vice President of WESCO.
- Missing Data: The filing explicitly states that financial statements of the acquired business and pro forma financial information are not included and will be filed via an amendment.
Investor Verification Checklist
- Verify the terms of the contingent consideration and the specific EBITDA multiples for the years 1998-2004.
- Monitor the upcoming amendment to this Form 8-K for pro forma financial information and audited statements of Bruckner.
- Assess the impact of the $12.0 million new borrowing on the Company's existing credit agreement covenants.
- Track the status of any potential public offering by WESCO prior to March 31, 2000, which would trigger the conversion of the note.