Form 8-K
 
 
UNITED STATES
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 11, 2011
ARGAN, INC.
(Exact name of registrant as specified in its charter)
         
Delaware   001-31756   13-1947195
         
(State or other jurisdiction
of incorporation) 		  (Commission File Number)   (IRS Employer Identification No.)
     

One Church Street, Suite 201, Rockville, MD 		   
20850
     
(Address of principal executive offices)   (Zip Code)
Registrant’s telephone number, including area code: : (301) 315-0027
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 

Item 2.01.  
Completion of Acquisition or Disposition of Assets.
On March 11, 2011, Vitarich Laboratories, Inc. (“Vitarich”), a Delaware corporation and a wholly-owned subsidiary of Argan, Inc., a Delaware corporation (“Argan”), completed the sale of its assets (the “Asset Sale”) to NBTY Florida, Inc., a Delaware corporation (“NBTY”), pursuant to the terms of an Asset Purchase Agreement dated March 11, 2011, among Vitarich, NBTY and Argan. The Asset Sale was consummated for an aggregate cash purchase price of up to $3,100,000 and the assumption by NBTY of certain trade payables and accrued expenses of Vitarich. There is no material relationship between Vitarich or any of its affiliates and NBTY other than in respect of the Asset Purchase Agreement.
Of the cash purchase price, $800,000 was paid at closing and the remaining $2,300,000 was placed into escrow. Vitarich will be paid from the escrow amount (i) the cost of all closing inventory sold, used or consumed within nine months of the closing, and (ii) the amounts of all accounts receivable of Vitarich that are collected by September 30, 2011. After September 30, 2011, all uncollected accounts receivable will be returned to Vitarich. At the end of nine months of the closing, all money still held in the escrow account will be returned to NBTY.
The foregoing summary of the Asset Sale does not purport to be complete and is qualified in its entirety by reference to the full text of the Asset Purchase Agreement pursuant to which the Asset Sale was completed. A copy of Argan’s press release is attached hereto as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.
Section 9 — Financial Statements and Exhibits
Item 9.01  
Financial Statements and Exhibits.
(b) Pro Forma Financial Information.
(d) Exhibits.
     
Exhibit No.   Description
 
    
10.1
  Asset Purchase Agreement, dated March 11, 2011, by and among Argan, Inc., NBTY Florida, Inc. and Vitarich Laboratories, Inc.
 
    
10.2
  Escrow Agreement, dated March 11, 2011, by and among NBTY Florida, Inc., Vitarich Laboratories, Inc., Farrell Fritz, P.C. and Argan, Inc.
 
    
99.1
  Argan, Inc., Press Release, issued March 14, 2011.

 

 

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.
         
  ARGAN, INC.
 		  
Date: March 17, 2011  By:   /s/ Arthur Trudel    
    Arthur Trudel   
    Senior Vice President and Chief Financial Officer   
 

 

 

ARGAN, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial statements and related notes are presented to show the effects of the sale of substantially all of the assets of Vitarich Laboratories, Inc. (“VLI”), a wholly-owned subsidiary of Argan, Inc. (“Argan”), to NBTY Florida, Inc. (“NBTY”).
On the date of the closing of the sale, March 11, 2011, VLI received cash proceeds in the amount of $800,000. Certain accounts payable and a limited amount of accrued expenses, in the total amount of $685,000, were assumed by NBTY.
The asset purchase agreement provides for contingent consideration of up to $2,300,000 which was placed in escrow. Amounts shall be released to VLI on a quarterly basis as acquired inventory quantities are sold, used or consumed and acquired accounts receivable balances are collected. All remaining uncollected accounts receivable amounts as of September 30, 2011 shall be returned to VLI. In December 2011, the balance of the escrowed funds shall be returned to NBTY. The amount of the contingent consideration is not included in the pro forma financial statements because it cannot be assured that all conditions for receipt of the amounts will be achieved.
The pro forma condensed consolidated statements of operations for the years ended January 31, 2010 and 2009 are presented to show the net income as if the sale of the assets of VLI occurred on February 1, 2009 and February 1, 2008, respectively. The pro forma condensed consolidated statements of operations for the nine months ended October 31, 2010 and 2009 are presented to show the net income as if the sale of the assets of VLI occurred on February 1, 2010 and February 1, 2009, respectively. The pro forma condensed consolidated balance sheet is based on the assumption that the sale of the assets of VLI occurred on October 31, 2010.
Pro forma data is based on assumptions and include adjustments as explained in the notes to the unaudited pro forma condensed consolidated financial statements. The pro forma data are not necessarily indicative of the financial results that would have been attained had the sale of the assets of VLI occurred on the dates referenced above and should not be viewed as indicative of operations in future periods. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the notes thereto, Argan’s Annual Report on Form 10-K for the year ended January 31, 2010 and Argan’s quarterly report on Form 10-Q for the quarter ended October 31, 2010.

 

 

 

ARGAN, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
                         
    Historical     Pro     Pro Forma  
    October 31,     Forma     October 31,  
    2010     Adjustments(1)     2010  
 
                        
ASSETS
                        
CURRENT ASSETS
                        
Cash and cash equivalents
   $ 76,420     $ 993 (2)   $ 77,413  
Accounts receivable, net
     22,684       (1,541 )     21,143  
Costs and estimated earnings in excess of billings
     4,902       —       4,902  
Inventories, net
     1,130       (1,054 )     76  
Current deferred tax assets
     2,223       (1,352 )     871  
Other current assets
     2,303       (44 )     2,259  
 
                  
TOTAL CURRENT ASSETS
     109,662       (2,998 )     106,664  
Property and equipment, net
     1,596       —       1,596  
Goodwill
     18,476       —       18,476  
Intangible and other assets, net
     3,055       (36 )     3,019  
Deferred tax assets
     1,506       (430 )     1,076  
 
                  
TOTAL ASSETS
   $ 134,295     $ (3,464 )   $ 130,831  
 
                  
 
                        
LIABILITIES AND STOCKHOLDERS’ EQUITY
                        
CURRENT LIABILITIES
                        
Accounts payable
   $ 12,672     $ (649 )   $ 12,023  
Accrued expenses
     9,700       (715 )(3)     8,985  
Billings in excess of costs and estimated earnings
     15,112       —       15,112  
Current portion of long-term debt
     333       —       333  
 
                  
TOTAL CURRENT LIABILITIES
     37,817       (1,364 )     36,453  
Other liabilities
     33       (3 )     30  
 
                  
TOTAL LIABILITIES
     37,850       (1,367 )     36,483  
 
                  
 
                        
STOCKHOLDERS’ EQUITY
                        
Paid-in capital
     90,917       —       90,917  
Retained earnings
     5,561       (2,097 )(4)     3,464  
Treasury stock, at cost
     (33 )     —       (33 )
 
                  
TOTAL STOCKHOLDERS’ EQUITY
     96,445       (2,097 )     94,348  
 
                  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
   $ 134,295     $ (3,464 )   $ 130,831  
 
                  
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
     
(1)  
Removes the assets and liabilities of VLI as of October 31, 2010.
 
(2)  
Includes the cash proceeds from the sale in the approximate amount of $800,000.
 
(3)  
Includes the reduction of accrued income taxes in the amount of $1,447,000 related to the estimated net income tax benefit of the disposition.
 
(4)  
Represents the net loss on the sale before the effect of any proceeds to be received from the collection of receivables and use of inventories sold to the purchaser.

 

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ARGAN, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
                         
    Historical             Pro Forma  
    Nine Months             Nine Months  
    Ended             Ended  
    October 31,     Pro Forma     October 31,  
    2010     Adjustments(1)     2010  
 
                        
Net revenues
                        
Power industry services
   $ 144,475     $ —     $ 144,475  
Nutritional products
     7,817       (7,817 )     —  
Telecommunications infrastructure services
     6,308       —       6,308  
 
                  
Net revenues
     158,600       (7,817 )     150,783  
 
                  
 
                        
Cost of revenues
                        
Power industry services
     122,568       —       122,568  
Nutritional products
     8,213       (8,213 )     —  
Telecommunications infrastructure services
     5,281       —       5,281  
 
                  
Cost of revenues
     136,062       (8,213 )     127,849  
 
                  
Gross profit
     22,538       396       22,934  
 
                        
Selling, general and administrative expenses
     11,285       (2,526 )     8,759  
 
                  
Income from operations
     11,253       2,922       14,175  
 
                        
Other income
     29       —       29  
 
                  
Income before income taxes
     11,282       2,922       14,204  
 
                        
Income tax expense
     4,423       1,145       5,568  
 
                  
Net income
   $ 6,859     $ 1,777     $ 8,636  
 
                  
 
                        
Earnings per share:
                        
Basic
   $ 0.50             $ 0.64  
 
                    
Diluted
   $ 0.50             $ 0.63  
 
                    
 
                        
Weighted average number of shares outstanding:
                        
Basic
     13,591               13,591  
 
                    
Diluted
     13,714               13,714  
 
                    
Note to Unaudited Pro Forma Condensed Consolidated Statement of Operations
     
(1)  
Removes the net revenues, costs and expenses of VLI for the nine months ended October 31, 2010.

 

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ARGAN, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
                         
    Historical             Pro Forma  
    Nine Months             Nine Months  
    Ended             Ended  
    October 31,     Pro Forma     October 31,  
    2009     Adjustments(1)     2009  
Net revenues
                        
Power industry services
   $ 172,003     $ —     $ 172,003  
Nutritional products
     10,535       (10,535 )     —  
Telecommunications infrastructure services
     6,694       —       6,694  
 
                  
Net revenues
     189,232       (10,535 )     178,697  
 
                  
 
                        
Cost of revenues
                        
Power industry services
     153,465       —       153,465  
Nutritional products
     9,435       (9,435 )     —  
Telecommunications infrastructure services
     5,102       —       5,102  
 
                  
Cost of revenues
     168,002       (9,435 )     158,567  
 
                  
Gross profit
     21,230       (1,100 )     20,130  
 
                        
Selling, general and administrative expenses
     10,417       (1,851 )     8,566  
 
                  
Income from operations
     10,813       751       11,564  
 
                        
Other income
     1,277       —       1,277  
 
                  
Income before income taxes
     12,090       751       12,841  
 
                        
Income tax expense
     4,475       278       4,753  
 
                  
Net income
   $ 7,615     $ 473     $ 8,088  
 
                  
 
                        
Earnings per share:
                        
Basic
   $ 0.56             $ 0.60  
 
                    
Diluted
   $ 0.55             $ 0.59  
 
                    
 
                        
Weighted average number of shares outstanding:
                        
Basic
     13,506               13,506  
 
                    
Diluted
     13,765               13,765  
 
                    
Note to Unaudited Pro Forma Condensed Consolidated Statement of Operations
 
     
(1)  
Removes the net revenues, costs and expenses of VLI for the nine months ended October 31, 2009.

 

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ARGAN, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
                         
    Historical             Pro Forma  
    Year Ended             Year Ended  
    January 31,     Pro Forma     January 31,  
    2010     Adjustments(1)     2010  
Net revenues
                        
Power industry services
   $ 209,814     $ —     $ 209,814  
Nutritional products
     13,999       (13,999 )     —  
Telecommunications infrastructure services
     8,517       —       8,517  
 
                  
Net revenues
     232,330       (13,999 )     218,331  
 
                  
 
                        
Cost of revenues
                        
Power industry services
     188,983       —       188,983  
Nutritional products
     13,237       (13,237 )     —  
Telecommunications infrastructure services
     6,629       —       6,629  
 
                  
Cost of revenues
     208,849       (13,237 )     195,612  
 
                  
Gross profit
     23,481       (762 )     22,719  
 
                        
Selling, general and administrative expenses
     14,910       (2,911 )     11,999  
 
                  
Income from operations
     8,571       2,149       10,720  
 
                        
Equity in the earnings of the unconsolidated subsidiary
     1,288       —       1,288  
Gain from bargain purchase
     877       —       877  
Other expense
     (76 )     —       (76 )
 
                  
Income before income taxes
     10,660       2,149       12,809  
 
                        
Income tax expense
     3,620       730       4,350  
 
                  
Net income
   $ 7,040     $ 1,419     $ 8,459  
 
                  
 
                        
Earnings per share:
                        
Basic
   $ 0.52             $ 0.63  
 
                    
Diluted
   $ 0.51             $ 0.61  
 
                    
 
                        
Weighted average number of shares outstanding:
                        
Basic
     13,525               13,525  
 
                    
Diluted
     13,766               13,766  
 
                    
Note to Unaudited Pro Forma Condensed Consolidated Statement of Operations
 
     
(1)  
Removes the net revenues, costs and expenses of VLI for the year ended January 31, 2010.

 

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ARGAN, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
                         
    Historical             Pro Forma  
    Year Ended             Year Ended  
    January 31,     Pro Forma     January 31,  
    2009     Adjustments(1)     2009  
Net revenues
                        
Power industry services
   $ 202,298     $ —     $ 202,298  
Nutritional products
     10,075       (10,075 )     —  
Telecommunications infrastructure services
     8,553       —       8,553  
 
                  
Net revenues
     220,926       (10,075 )     210,851  
 
                  
 
                        
Cost of revenues
                        
Power industry services
     169,046       —       169,046  
Nutritional products
     11,868       (11,868 )     —  
Telecommunications infrastructure services
     7,127       —       7,127  
 
                  
Cost of revenues
     188,041       (11,868 )     176,173  
 
                  
Gross profit
     32,885       1,793       34,678  
 
                        
Selling, general and administrative expenses
     14,858       (3,025 )     11,833  
Impairment losses
     3,134       (2,043 )     1,091  
 
                  
Income from operations
     14,893       6,861       21,754  
 
                        
Equity in the earnings of the unconsolidated subsidiary
     507       —       507  
Other income
     1,345       —       1,345  
 
                  
Income before income taxes
     16,745       6,861       23,606  
 
                        
Income tax expense
     6,726       2,756       9,482  
 
                  
Net income
   $ 10,019     $ 4,105     $ 14,124  
 
                  
 
                        
Earnings per share:
                        
Basic
   $ 0.80             $ 1.13  
 
                    
Diluted
   $ 0.78             $ 1.11  
 
                    
 
                        
Weighted average number of shares outstanding:
                        
Basic
     12,465               12,465  
 
                    
Diluted
     12,779               12,779  
 
                    
Note to Unaudited Pro Forma Condensed Consolidated Statement of Operations
 
     
(1)  
Removes the net revenues, costs and expenses of VLI for the year ended January 31, 2009.

 

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