Commerce Energy Group, Inc. - Current report filing (8-K)
June 03 2008 - 5:16PM
Edgar (US Regulatory)
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):
May 28, 2008
COMMERCE ENERGY GROUP, INC.
(Exact name of
registrant as specified in its charter)
Delaware
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001-32239
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20-0501090
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(State or other
jurisdiction of
incorporation)
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(Commission File
Number)
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(IRS Employer
Identification
No.)
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600
Anton Blvd., Suite 2000
Costa Mesa, California
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92626
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(Address of
principal executive offices)
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(Zip Code)
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Registrants telephone number, including area code:
(714) 259-2500
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 2.02 Results of Operations and Financial Condition.
The information being furnished in this Item 2.02 and
in Exhibit 99.1 relating to the asset and goodwill impairment charge
relating to Skipping Stone Inc. (Skipping Stone), the wholly-owned subsidiary
of Commerce Energy Group, Inc, (the Company) shall not be deemed filed for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended
(the Exchange Act), or incorporated by referenced in any filing under the
Securities Act of 1933, as amended, or the Exchange Act, except as shall be
expressly set forth by specific reference in such filing.
On June 3, 2008, the Company issued a press
release which described the restructuring plan which is discussed in Item 2.05
of this Report. As part of the discussion
in the release, the Company disclosed that it was exiting its energy consulting
business conducted by its wholly-owned subsidiary, Skipping Stone Inc. In connection with discussing the Skipping
Stone business, the Company disclosed in the release that in connection with
the preparation of financial statements for its third quarter ended April 30,
2008, it expects to recognize an asset and goodwill impairment charge of
approximately $1.4 million in connection with Skipping Stone, all to be recorded
in the third quarter of the fiscal year ending July 31, 2008 (fiscal 2008). A copy of the press release is attached
hereto as Exhibit 99.1 and is hereby incorporated by reference herein.
Item 2.05 Costs Associated with Exit or Disposal Activities.
On May 28, 2008, the
Company committed to a company-wide restructuring plan designed to
significantly reduce costs and streamline functions, as well as to eliminate
those costs and positions not contributing significantly to the efficiency or
potential growth of the Company. The
cost reduction measures include a reduction of the Companys work force by 80
employees, which represents approximately 31% of its regular full-time staff
and exiting its energy consulting business, Skipping Stone Inc., a business
whose revenue, net of inter-company eliminations, accounted for less than 1% of
total net revenue during fiscal 2007 and 2006.
The restructuring plan is designed to centralize all core functions in
the Companys Orange County, California headquarters. In that regard, the Companys Irving, Texas
office will reduce its space and the two Skipping Stone offices in Boston,
Massachusetts and Houston, Texas will be closed.
The Company expects that
the personnel actions necessary to implement the reduction in force to be
substantially completed by June 5, 2008 and anticipates that the remaining
aspects of the restructuring plan will be completed over the next three to four
months.
In connection with the
restructuring, the Company has entered into an agreement with the former president
of Skipping Stone to sell substantially all of the assets of Skipping Stone,
including the name Skipping Stone, for an acquisition price of a nominal
amount of cash and the assumption of substantially all of its liabilities
(valued at approximately $300,000), including the assumption of the Boston,
Massachusetts office lease.
In connection with this
restructuring plan, the Company expects to incur restructuring charges estimated
to range between $575,000 to $650,000 all
of which is expected to be recorded in the fourth quarter of fiscal 2008. Such restructuring charges and costs include:
·
Employee severance and termination costs
estimated to be approximately $500,000; and;
·
Lease termination costs and related
facilities closing expenses estimated to be between $75,000 and $150,000.
A copy of the press release describing the
restructuring is attached hereto as Exhibit 99.1 and (absent the
information identified in Item 2.02 which is not deemed filed) is hereby
incorporated by reference herein.
2
Item 9.01. Financial
Statements and Exhibits.
Exhibit No.
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Description
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99.1
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Press Release dated
June 3, 2008.
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Forward-Looking
Statements
Certain statements in
this Current Report may be deemed to be forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934.
The Company intends that all such statements be subject to the safe
harbor provisions contained in those sections. These statements include, but are not
limited to, the Companys estimates regarding the restructuring charges,
estimates regarding the implementation of the Companys cost reduction measures
and other forward-looking statements.
Many important factors may cause the Companys actual results to differ
from those discussed in any such forward-looking statements, including higher
than expected attrition of Company personnel; the success and effects of the Companys realignment of corporate and
regional functions and how effective the Company is in its implementation of
new strategies; the volatility of the energy market; higher than expected
attrition of, and/or unforeseen operating difficulties relating to, customer
accounts, the volatility of the energy markets, competition, operating hazards,
uninsured risks, failure of performance by suppliers and transmitters, changes
in general economic conditions and seasonal weather or force majeure events that
adversely affect electricity or natural gas supply or infrastructure; decisions
by our energy suppliers requiring us to post additional collateral for our
energy purchases; uncertainties in the capital or debt markets should we seek
to raise additional capital or debt; uncertainties arising from federal and
state proceedings regarding the 2000-2001 California energy crisis; accounts
receivable collection issues caused by unfavorable changes in regulations or
economic trends, increased or unexpected competition, adverse state or federal
legislation or regulation, or adverse determinations by regulators; and other
risks and uncertainties described in the Companys other filings with the U.S.
Securities and Exchange Commission.
Although the Company believes that the assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove
inaccurate and, therefore, the Company cannot assure you that the results
contemplated in forward-looking statements will be realized in the timeframe
anticipated or at all. In light of the
uncertainties inherent in the forward-looking information included herein, the
inclusion of such information should not be regarded as a representation by the
Company or any other person that the Companys objectives or plans will be
achieved. Accordingly, investors are
cautioned not to place undue reliance on our forward-looking statements. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise, except as required by law. New factors emerge from time to time, and it
is not possible for management to predict all such factors.
3
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, Commerce Energy Group, Inc. has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
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COMMERCE ENERGY GROUP,
INC.
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a Delaware corporation
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Date: June 3, 2008
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By:
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/s/ C. DOUGLAS MITCHELL
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C.
Douglas Mitchell
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Interim
Chief Financial Officer
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4
EXHIBIT
INDEX
Exhibit No.
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Description
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99.1
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Press Release dated
June 3, 2008.
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