UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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DT INDUSTRIES, INC.
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On May 13, 2002, DT Industries, Inc. (the "Company") held a conference call
concerning its recently-announced financial recapitalization transaction. Upon
completion of the recapitalization, the Company will (1) extend the maturity
date under its senior credit facility from July 2, 2002 to July 2, 2004; (2)
sell shares of its common stock in a private placement; (3) repay a portion of
the outstanding indebtedness under its credit facility; (4) reduce the
outstanding 7.16% Convertible Preferred Securities of DT Capital Trust (and the
related junior subordinated debentures of the Company held by the Trust) (the
"TIDES") through an exchange of half of the aggregate principal amount of the
TIDES, plus all accrued and unpaid interest through March 31, 2002, for shares
of common stock; and (5) amend the terms of the remaining TIDES. A copy of the
transcript of the Company's conference call, which will be available for
telephone and webcast replay, is set forth below.
The Company has filed its preliminary proxy statement on Schedule 14A with the
Securities and Exchange Commission with respect to the special meeting of
stockholders, which is expected to be held in mid-June. At the special meeting,
the Company's stockholders will be asked to approve the issuance of 6,260,658
shares in conjunction with the exchange of $35,000,000 of 7.16% Convertible
Preferred Securities of DT Capital Trust, plus all accrued and unpaid interest
through March 31, 2002, at an exchange price of $8.00 per share and the sale of
7,000,000 shares in a private placement to several current stockholders at $3.20
per share. The Company's stockholders are urged to read the preliminary proxy
statement, and any other relevant documents filed by the Company with the SEC,
because they contain or will contain important information about the Company and
the proposed transactions. You may obtain these documents free of charge at the
web site maintained by the SEC at http://www.sec.gov. In addition, you may
obtain these documents free of charge by making your request to the Company's
General Counsel, Dennis Dockins, at 907 West Fifth Street, Dayton Ohio 45407,
telephone number: 937/586-5600.
The Company and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the Company's stockholders with
respect to the issuance of common stock in the private placement and the TIDES
restructuring. Information regarding the Company's directors and executive
officers is included in the Company's proxy statement for its 2001 Annual
Meeting, which was filed with the SEC on October 4, 2001. More recent
information regarding the beneficial ownership interests in Company common stock
of the Company's directors and executive officers, and additional information
regarding the Company, is included in the preliminary proxy statement regarding
the proposed issuance of common stock in the private placement and the TIDES
restructuring filed with the SEC on May 9, 2002.
** TRANSCRIPT OF CONFERENCE CALL **
Operator: Good morning. My name is Toni and I will be your
conference facilitator today.
At this time, I would welcome everyone to the DT
Industries conference call. All lines have been placed on
mute to prevent any background noise.
After the speakers' remarks there will be a question and
answer period. If you would like to ask a question during
this time, simply press star then the number 1 on your
telephone keypad.
If you would like to withdraw your question, press the
pound key.
Thank you Ms. Fortuna, you may begin your conference.
Lisa Fortuna: Good morning everyone and thank you for joining us for the
DT Industries conference call.
Before we begin, I want to remind everyone that certain
information contained in this conference call will include
forward-looking statements. These statements, comprising
all statements herein which are not historical, are based
upon information currently available to the company
regarding the company's expectations about its future
results, performance, liquidity, financial condition,
prospects and opportunities, and the company's ability to
execute the financial recapitalization agreements and
consummate the financial recapitalization transaction on a
timely basis.
These statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act
of 1995.
References to the words believe, expect, anticipate,
should, achieve, to support and similar expressions used
herein indicate such forward-looking statements.
The company's actual results, performance, liquidity,
financial condition, prospects, and opportunities could
differ materially from those expressed in or implied by
any forward-looking statements as a result of various
factors including economic downturns in industries or
markets served, delays or cancellations of customer
orders, delays in shipping dates of products, significant
costs overruns on projects, excess product warranty
expenses, collectibility of passed due customer
receivables, significant restructuring or other special
non-recurring charges, foreign currency exchange rate
fluctuations, delays in achieving anticipated cost savings
or in fully implementing project management systems,
changes in interest rates, increased inflation, the
outcome of pending litigation related to the previously
announced restated financial statements, the company's
ability to implement operational and financial systems to
manage the company's decentralized operations, and other
factors described in the company's filings with the US
SEC.
The company may suffer delays in finding and consummating
the financial recapitalization and there can be no
assurance that the company will be able to execute the
financial recapitalization documents soon or consummate
the financial recapitalization prior to July 2, 2002,
which is when the company's credit facility currently
matures and the private placement purchasers and TIDES
holders will be able to terminate their agreements if at
all.
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The ability of the company to execute the financial
recapitalization documents or consummate the financial
recapitalization on a timely basis could also cause the
company's actual results, performance, liquidity,
financial condition, prospects, and opportunities to
differ materially from those expressed in or implied by
any forward-looking statements.
I will now turn the call over to Jack Casper, CFO of DT
Industries.
Jack Casper: Good morning. Thank you for joining us to discuss our
recently announced recapitalization plans. With me is
Steve Perkins, President and CEO of the company, Dennis
Dockins our General Counsel, Christine Kelly, our
investment advisor with William Blair and Company, and
Herb Wander, our outside legal advisor from Katten,
Muchin, Zavis and Roseman in Chicago.
The company has filed its preliminary proxy on Schedule
14a with the SEC with respect to the special meeting of
stockholders, which we expect to be held in mid June in
connection with our stock issuance and common stock sale
aspect of the transactions.
These transactions, which I'll be talking about, are
dependent upon each other to provide the overall
recapitalization. The three parts of it is the extension
of our senior credit facility from July 2, 2002 to July 2,
2004, which on consummation we expect to repay
approximately $16.3 million of the outstanding
indebtedness under the facility and concurrently reduce
the lenders' commitments by approximately $12 million.
The second part is we expect to sell 7 million shares of
the common stock in a private placement to several current
stockholders at a purchase price of $3.20 a share, for an
increase of capital of $22.4 million less expenses and
taxes.
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And I would like to thank our - publicly thank our equity
holders for expressing the support that they have because
when they made their decision our closing price at that
time was between $3.05 and $3.25. So thank you.
And the third part is with our TIDES holders, where
they're going to reduce the outstanding 7.16% convertible
preferred securities of the company by approximately $50.1
million through an exchange of half of the outstanding
amount -- the face amount of that issue is $70 million --
plus all of the accrued and unpaid interest through the 31
of March or 6,260,658 shares of the company's common stock
at an exchange price of $8.
And at the same time we'll amend the terms of the
remaining $35 million of TIDES by reducing their
conversion price from $38.75 to $14 per share and
shortening the maturity from May 31, 2012 to May 31, 2008.
And the final thing is in the TIDES portion is that
interest will not accrue to the company from the period
from March 31, 2002 until July 2, 2004.
Now the effects of this, when these transactions take
place, which we expect again to happen around mid-June, on
the capital structure of the company will be to lower the
debt to equity ratio from currently around 2:1 to
approximately 0.65:1. And the total debt as a percent of
total capitalization will go from roughly 67% to 40%.
That is roughly the summation of how we see the
transactions happening in mid June and I'd like to open
the lines for any questions that our listeners may have.
Page 5
Operator: At this time I would like to remind everyone, in order to
ask a question please press star then the number 1 on your
telephone keypad. We'll pause for just a moment to compile
the Q&A roster.
At this time there are no questions.
Jack Casper: Let's wait another minute in case anyone's bashful out
there.
Operator: Your first question comes from Dennis Delafield of
Delafield Asset Management.
Dennis Delafield: Good morning. I haven't followed this closely so I
wondered if you would just help me out with the fully
diluted number of shares that will be outstanding
afterwards and any pro forma numbers you could give us for
the past or present as to the impact of the total recap.
Jack Casper: Well on the impact of the total recap I would direct you
to our press release that we put out on the 8 May.
Dennis Delafield: I have that press release.
Jack Casper: Okay and appendix one.
Dennis Delafield: I have appendix one. But would you like to just tell me
the number of shares - I think it's about 25 million 3 is
that right?
Jack Casper: Hold on. It's 23 million...
Christine Kelly: Jack, I think -- it's Christine Kelly -- I think it's
23.650 approximately rounding.
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Dennis Delafield: And that's before the conversion of the remaining 35
million.
Christine Kelly: That's correct.
Dennis Delafield: Right. And how about - have you gone back and pro
formered any numbers to show the impact on the company at
any point in time?
Jack Casper: No we haven't. Basically just looked forward.
Dennis Delafield: Okay. Will you have any information available in the proxy
as to anticipated revenues, profitability, or anything
else of the company in the period ahead?
Jack Casper: No. I mean our proxy is dealing strictly with this
transaction.
Dennis Delafield: Yes, I just didn't know if there would be any - if any
estimates had been made to the shareholders and therefore
those estimates perhaps either as to revenues, margins or
anything else would be also in the body of the document.
Jack Casper: No. Other than what we've publicly disclosed on our
conference calls on where our expectations were going to
be in three to four years time.
Dennis Delafield: Would you mind repeating those.
Jack Casper: Sure. We bought - Steve would you like to...
Steve Perkins: Yes, we've - we're coming through a - this industry as
well as the company is coming through a very difficult
time relative to the capital spending in our industry. So
we're at a low point in terms of revenues but we are
anticipating with the - that the recovery is beginning and
we think over the next three to
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four years - that four year period we will take our - we
should be able to - and this is without acquisitions, this
is basically on internal growth and a recovery of capital
spending to more normal levels, that it's our target to
get revenues in the $500 million range and to have EBITDA
numbers around 12%.
Dennis Delafield: EBITDA numbers around 12% and of that - and what would the
EBIT number be? I don't know what the DA will be.
Jack Casper: That'd be about 10%.
Dennis Delafield: About 10%. Okay. That helps. Thanks very much.
Jack Casper: You're welcome.
Operator: Your next question comes from Paul Haagensen of Putnam
Investments.
Paul Haagensen Yes, good morning. What is the total debt now post this
transaction including the TIDES remaining debt that's out
there?
Jack Casper: That should be approaching $95 million Paul.
Paul Haagensen: Ninety-five million.
Jack Casper: Right. If we had used the pro forma March 24.
Paul Haagensen: And post the most recent quarter where there were some
write downs, what will be in the equity account post this
transaction?
Jack Casper: Roughly $145 million.
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Paul Haagensen: Hundred forty five million. And that's adjusting for the
recent restructuring?
Jack Casper: That's correct. It'll be - total debt would be roughly
$60 million. The remaining TIDES will be $35 million and
stockholders' equity would be roughly $145 million.
Paul Haagensen: Could you go over those one more time?
Jack Casper: Sure could. The total debt will be roughly $60 million.
The - excuse me, that would be the senior debt. And the
TIDES will be $35 million. That'd be the $95 million I was
talking about. And then the stockholders' equity would be
roughly $145 million.
Paul Haagensen: Have your customers had any reaction at this point to this
recapitalization?
Jack Casper: I've had conversations with two and they're elated.
Paul Haagensen: I mean do you think there are any customers out there who
have been on the fence with you that, you know, would view
this as sort of turning the corner kind of thing and okay
to do business with now?
Steve Perkins: You know, Paul, that's - this is Steve. That's hard to
answer. We've had a number of questions over the last
three to six months and where we've had those questions
we've been able to deal with that pretty proactively
without a problem.
What you don't know and it's hard to measure is those that
don't ask the question. And - but to the best of our
knowledge we haven't lost any business that we can
specifically - there's been a lot of concern and we know
that with
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this announcement that has removed that concern going
forward. And we've been proactive in communicating that
out to the marketplace.
Paul Haagensen: Any other comments on your order and backlog situation
here and the trends you might be looking at in orders and
backlogs?
Steve Perkins: Well, in our conference call last week we had projected,
and this is based on our opportunities that we have quoted
and our expected timing of when the customers would be
placing the order, so in the fourth quarter we would
expect new orders to be in the $80 to $90 million range,
which is a significant step-up from what we've been
experiencing over the last number of quarters.
All we can really speak...
Paul Haagensen: So do you kind of interpret that to mean we're past the
low point of the cycle here?
Steve Perkins: Well, we would like to think that. But again the
visibility is limited and I think in our prior two
quarters we actually were not comfortable with even
talking about the next quarter. So this is the first time
we've felt comfortable talking about the quarter ahead.
And from a responsible standpoint that's about all we can
really look at this particular point.
Our quotations are continuing to be very active and very
strong and that normally is a precursor to increased
orders.
So we'll - we're feeling better today than we did this
time - at the end of last quarter.
Page 10
Paul Haagensen: Right. In terms of your total debt now going forward, what
are your objectives with - are you happy with that debt
level? Do you want to take it down further? Where do you
think you might be headed, you know, over the next 12 to
18 months in terms of that debt level?
Jack Casper: Paul this is Jack. And I would venture to say that we'd be
heading to taking the debt down further.
I mean obviously there are situations where for
shareholder value and so forth it's good to have some
debt. But the best way to have all the flexibility in the
world is to have no debt and you're not owing to anybody
but your shareholders and your employees.
Steve Perkins: But based on our short term cash flow forecasting and
timing of receipts and so forth, we do expect that debt
level to drop a little bit in the near term.
Paul Haagensen: Do you have any other assets that you're contemplating
selling or...?
Jack Casper: Well, we're looking at a sale leaseback now of our Hyannis
facility that's covered by the industrial revenue bonds
and if we do that transaction we'll also pay back $5
million worth of (unintelligible) industrial revenue
bonds.
Paul Haagensen: Okay. So that'd be a $5 million debt reduction right
there.
Jack Casper: That's correct.
Paul Haagensen: And any other assets up - possibly up for sale?
Steve Perkins: Well, no companies are for sale but we are I think we
announced in our restructuring that we are moving to a
larger facility in the Leominister area
Page 11
and we'll be leasing that new facility and selling the
existing facility that we have there.
And we also will be selling our facility in England,
Gawcott that we announced that we were consolidating into
our Buckingham facility. Those these aren't - this is kind
of clean-up Paul and there isn't a lot of money there but
it's a little bit.
Paul Haagensen: Okay. So what are we talking about in total here, $5, $6,
$7 million?
Jack Casper: I'd give an estimate of $6 million Paul.
Paul Haagensen: Okay. And post this restructuring you'll have available
credit lines of what?
Jack Casper: Seventy-six point three million approximately.
Paul Haagensen: Available?
Jack Casper: That's correct.
Steve Perkins: No, that's the commitment.
Paul Haagensen: That's the commitment.
Jack Casper: Excuse me Paul, yes. We would have roughly $20 million
available.
Paul Haagensen: Okay, $20 million available.
Jack Casper: Yes, $20, $21 million.
Page 12
Paul Haagensen: Okay. All right, thank you.
Jack Casper: You're welcome.
Operator: At this time there are no further questions. But if you
would like to ask a question, please press star then the
number 1 on your telephone keypad.
Jack Casper: We want to thank - this is Jack Casper, I guess if there's
no other questions we'll kind of circle around and
finalize here. I would like to thank again the bank group
and our TIDES holders and our equity holders for
participating in our recapitalization plan.
And also thanking all the people who have joined us this
morning. Thank you.
Operator: Mr. Casper.
Jack Casper: Yes.
Operator: You do have a follow-up question from Mr. Haagensen.
Jack Casper: Okay. Hello?
Paul Haagensen: Yes, I'm here. Just one more question. On a running rate
interest cost basis going forward post the recap, what
will be your annual interest expense do you think going
forward?
Jack Casper: I don't expect that to exceed $6 million Paul.
Paul Haagensen: Okay.
Page 13
Jack Casper: And at that that will include amortization of deferred
financing costs.
Paul Haagensen: Okay. So you think $5 or $6 million including the
amortization?
Jack Casper: That's correct.
Paul Haagensen: And the cash expenses will be actually less than that
right?
Jack Casper: That's correct. That'll probably in the $4, $4-1/2
million range.
Paul Haagensen: Actual cash?
Jack Casper: Actual cash.
Paul Haagensen: Yes. Okay, thank you.
Jack Casper: You're welcome.
Operator: At this time there are no further questions.
Jack Casper: Thank you.
Operator: This concludes today's DT Industries conference call.
You may now disconnect.
END