SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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) August 19, 2003
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ENGLOBAL CORPORATION
(Exact name of registrant as specified in its chapter)
Nevada 001-14217 88-0322261
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
600 Century Plaza Drive, Building 140, Houston, Texas 77073-6033
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 281 821-3200
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(Former name or former address, if changed since last report)
Item 9. Regulation FD Disclosure
On August 19, 2003, ENGlobal Corporation issued a press release, a copy of which
is set forth below. In accordance with General Instructions B.2. Form 8-K, the
following information shall not be deemed "filed" for purposes of Section 18 of
the Securities Exchange Act of 1934, as amended, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933, as
amended, except as shall be expressly set forth by specific reference in such a
filing.
ENGlobal Exercises Conversion Rights on Preferred Stock And Provides
Details Concerning This Action
HOUSTON--(BUSINESS WIRE)--Aug. 19, 2003--ENGlobal Corporation
(AMEX:ENG), a leading provider of engineering services and engineered
systems, today reported that it exercised its right to convert all of
its outstanding Series A Preferred Stock, par value $.001 per share
("Preferred Stock"), into Common Stock, par value $.001 per share
("Common Stock"). The Preferred Stock was originally issued in
conjunction with the December 2001 merger of Petrocon Engineering,
Inc. with an ENGlobal subsidiary, and is held exclusively by a
significant ENGlobal lender and stockholder.
All of the 2,690,000 shares of ENGlobal's Preferred Stock
currently outstanding, together with accrued but unpaid dividends of
approximately $45 thousand, will be converted into approximately
1,149,000 shares of Common Stock. Since the Company's publicly traded
Common Stock closed above $3.00 per share for 20 consecutive trading
days, the Company was permitted by terms of the Preferred Stock to
require its conversion at the rate of $2.38 per share. While the
shares of Common Stock to be issued on the conversion will not be
registered shares, they will be tradeable under the provisions of Rule
144, subject to the volume limitations and other provisions of that
rule.
The conversion of the Company's Preferred Stock to Common Stock is
significant in a number of respects. The conversion will result in an
increase of approximately 5% in the number of shares of Common Stock
outstanding, which could negatively impact future earnings per share.
However, the Company will save in future dividend payments that are
paid after-tax and accrue at the rate of 8% annually, resulting in
future annual savings of approximately $215 thousand based on the
number of shares of Preferred Stock currently outstanding. Also, with
this action, the Company is relieved from terms that provide for the
future mandatory redemption of all outstanding Preferred Stock in cash
at $1 per share. Finally, the Company believes its balance sheet will
be positively impacted with the removal of the outstanding Preferred
Stock and with an increase in Stockholders' Equity of approximately
$2,735,000.
Mike Burrow, Chairman and CEO, stated, "The conversion of
ENGlobal's Preferred Stock to Common Stock eliminates a future
repayment obligation in excess of $2.7 million and simplifies and
strengthens our balance sheet. These facts, along with the elimination
of the 8% preferred dividend, will be helpful, especially given our
plans for future growth. In summary, I believe that the combined
results of this action will far outweigh the impact of the dilution to
our existing common shareholders."
In an additional and unrelated recent action, the Company and
Pivot Group, LLC have agreed to terminate the previously announced
Asset Purchase Agreement for the purchase of substantially all of the
assets of Thermal Corporation. The Company and Pivot have also
mutually agreed to cancel the management contract that was originally
in place until year-end. The Company is currently reviewing
alternatives pertaining to this subsidiary, which represented
approximately 2.3% of the Company's revenues for the first six months
of 2003.
About ENGlobal Corporation ("ENGlobal")
ENGlobal Corporation provides engineering services and engineered
systems principally to the petroleum refining, petrochemical, and
pipeline and process industries throughout the United States and
across the globe. ENGlobal's multi-disciplinary engineering and design
staff develops projects from the initial planning stage through
detailed design, procurement, and construction management. The
Engineered Systems Group develops, manufactures, installs, and
services control and instrumentation systems utilized in various
energy and processing related industries while its Technologies
Division provides services and products that support the advanced
automation and environmental technology fields. The Constant Power
Division fabricates industrial grade uninterruptible electrical power
systems and battery chargers. Further information about the Company
and its subsidiaries is available at www.englobal.com.
Safe Harbor for Forward-Looking Statements
Certain matters discussed in this press release may constitute
forward-looking statements within the meaning of the federal
securities laws and are subject to risks and uncertainties including,
but not limited to, the Company's ability to achieve its business
strategy while effectively managing costs and expenses. Actual results
and the timing of certain events could differ materially from those
projected in or contemplated by the forward-looking statements due to
a number of factors detailed from time to time in ENGlobal's filings
with the Securities and Exchange Commission. Reference is hereby made
to cautionary statements set forth in the Company's Form 10-K for the
year ended December 31, 2002, Form 10-Q for the quarters ended March
31, 2003 and June 30, 2003, current Forms 8-K, and other SEC filings.
CONTACT: ENGlobal, Houston
Hulda Coskey, 281-821-3200
Fax: 281-209-2409
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.
ENGlobal Corporation
Date August 19, 2003 /s/ Hulda L. Coskey
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Hulda L. Coskey, Chief Governance Officer and
Secretary