Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K/A
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: June 19, 1995
(Date of earliest event reported): (April 5, 1995)
Commission file number 1-5558
Katy Industries, Inc.
(Exact name of registrant as specified in its charter)
Delaware
75-1277589
(State of Incorporation) (IRS Employer
Identification Number)
6300 S. Syracuse #300, Englewood, Colorado 80111
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (303) 290-9300
(Former name or former address, if changed since last report) Not
applicable
Item 7. Financial Statements and Exhibits
Set forth below is the information required by 7(a), Financial
Statements of Acquired Businesses, and 7(b), Pro Forma Financial
Statements of Form 8-K with respect to the GC Thorsen, Inc.
acquisition filed on Form 8-K (Item 2) with the Securities and
Exchange Commission on April 20, 1995.
Financial Statements of Acquired Business and Pro Forma Financial
Statements
Unaudited Financial Statements
Consolidated Balance Sheets as of March 31, 1995 and
December 31, 1994 F-1
Consolidated Statements of Operations for the three
months ended March 31, 1995 and 1994 F-2
Consolidated Statement of Stockholder's Equity for the
three months ended March 31, 1995 F-3
Consolidated Statements of Cash Flows for the three
months ended March 31, 1995 and 1994 F-4
Notes to the Consolidated Financial Statements F-5
Audited Financial Statements
Independent Auditors' Report F-6
Consolidated Balance Sheet as of December 31, 1994 F-7
Consolidated Statement of Operations for the Year
Ended December 31, 1994 F-8
Consolidated Statement of Stockholder's Equity for
the Year Ended December 31, 1994 F-9
Consolidated Statement of Cash Flows for the Year Ended
December 31, 1994 F-10
Notes to the Consolidated Financial Statements F-11
Pro Forma Financial Statements F-15
Unaudited Pro Forma Statement of Operations for the
twelve months ended December 31, 1994 F-16
Unaudited Pro Forma Statement of Operations for the
three months ended March 31, 1995 F-17
Unaudited Pro Forma Notes to Statements of Operations F-18
GC THORSEN, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In 000's, except share data)
ASSETS
March 31, December 31,
1995 1994
(Unaudited)
CURRENT ASSETS:
Cash $ 323 $ 117
Accounts receivable, net of allowance for doubtful
Accounts of $303 6,092 5,839
Inventories (Note 2) 13,120 12,763
Prepaid expenses and other current assets 831 805
Total current assets 20,366 19,524
PROPERTY, PLANT AND EQUIPMENT, Net 6,127 6,282
OTHER ASSETS:
Covenants not to compete,
net of accumulated amortization 1,898 2,036
Other 418 418
TOTAL ASSETS $28,809 $28,260
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Bank overdraft $ 342 $ 511
Accounts payable 1,684 1,944
Accrued compensation expense 532 854
Accrued advertising expense 1,148 921
Accrued warranty expense 394 394
Current portion of long-term debt 146 146
Other accrued expenses 262 148
Total current liabilities 4,508 4,918
OTHER LIABILITIES 675 675
LONG-TERM DEBT 4,235 4,274
DUE TO PARENT 18,840 17,926
Total liabilities 28,258 27,793
STOCKHOLDER'S EQUITY
Common stock, no par value, stated value
$0.01 per share;
1,000 shares authorized,
840 shares issued and outstanding - -
Paid in capital 500 500
Retained earnings (Accumulated deficit) 51 ( 33)
TOTAL STOCKHOLDER'S EQUITY 551 467
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $28,809 $28,260
See Notes to Consolidated Financial Statements.
GC THORSEN, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(in 000's) - UNAUDITED
1995 1994
NET SALES $10,481 $9,396
COST OF SALES 7,817 7,676
2,664 1,720
OPERATING EXPENSES:
Selling, general and administrative 2,272 1,992
Amortization 139 139
2,411 2,131
OPERATING INCOME (LOSS) 253 ( 411)
INTEREST EXPENSE 110 114
INCOME (LOSS) BEFORE INCOME TAXES 143 ( 525)
INCOME TAX PROVISION (BENEFIT) 59 ( 205)
NET INCOME (LOSS) $ 84 ($ 320)
See Notes to Consolidated Financial Statements.
GC THORSEN, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
THREE MONTHS ENDED MARCH 31, 1995
(In 000's) - UNAUDITED
Retained Earnings Total
Common Paid-in (Accumulated Stockholder's
Stock Capital Deficit) Equity
BALANCE,
JANUARY 1, 1995 $ - $500 ($33) $ 467
Net income - - 84 84
BALANCE,
MARCH 31, 1995 $ - $500 $51 $551
See Notes to Consolidated Financial Statements.
GC THORSEN, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(In 000's) - UNAUDITED
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 84 ($ 320)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 304 288
Other charges 14 24
Changes in assets and liabilities:
(Increase) Decrease in accounts receivable ( 253) 115
(Increase) Decrease in inventories ( 357) 204
(Increase) Decrease in prepaid expenses
and other assets ( 26) 76
Decrease in accounts payable
and other current liabilities ( 241) ( 224)
Net cash (used in) provided by
operating activities ( 475) 163
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment ( 22) ( 10)
Net cash used in investing activities ( 22) ( 10)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt ( 39) ( 39)
(Decrease) Increase in bank overdraft ( 169) 110
Increase (Decrease) in Due to Parent 911 (1,040)
Net cash provided by (used in)
financing activities 703 ( 969)
NET INCREASE (DECREASE) IN CASH 206 ( 816)
CASH AT BEGINNING OF PERIOD 117 882
CASH AT END OF PERIOD $ 323 $ 66
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 100 $ 114
See Notes to Consolidated Financial Statements.
GC THORSEN, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements - Unaudited
March 31, 1995
1. Significant Accounting Policies
In the opinion of management, the unaudited information presented as of March
31, 1995 and for the three months ended March 31, 1995 and 1994 reflects all
adjustments necessary, which consists only of normal recurring adjustments,
for a fair presentation of the interim period.
2. Inventories
Inventories are valued at lower of cost (first-in, first-out) or market and at
March 31, 1995 and December 31, 1994 consisted of the following (in
thousands):
March 31, December 31,
1995 1994
(Unaudited)
Finished goods $9,351 $ 9,041
Work-in-process 82 81
Raw materials 3,687 3,641
$13,120 $12,763
3. Subsequent Event
On April 5, 1995, effective March 31, 1995, all of the Company's outstanding
common stock was acquired by Hallmark Holdings, Inc., a wholly-owned
subsidiary of Katy Industries, Inc. ("Katy"). Katy is a publicly-held
diversified corporation with interests in industrial machinery, industrial
components, consumer products and electronic distribution. The purchase price
was approximately $24,000,000.
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholder
GC Thorsen, Inc.:
We have audited the accompanying consolidated balance sheet of GC Thorsen,
Inc. and subsidiary as of December 31, 1994 and the related consolidated
statements of operations, stockholder's equity, and cash flows for the year
then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. We did not audit the financial
statements of HMO, Inc., Taiwan Branch (a consolidated subsidiary), which
statements reflect total assets constituting 3% of consolidated total assets
as of December 31, 1994, and total revenues constituting 2% of consolidated
total revenues for the year then ended. Those statements were audited by
other auditors whose report has been furnished to us, and our opinion, insofar
as it relates to the amounts included for HMO, Inc., Taiwan Branch, is based
solely on the report of such other auditors.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit and the report of the other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audit and the report of the other auditors, such
consolidated financial statements present fairly, in all material respects,
the financial position of GC Thorsen, Inc. and subsidiary as of December 31,
1994 and the results of their operations and their cash flows for the year
then ended in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Chicago, Illinois
April 27, 1995
GC THORSEN, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1994
(in 000's, except share data)
ASSETS
CURRENT ASSETS:
Cash $ 117
Accounts receivable, net of allowance
for doubtful accounts of $303 (Note 3) 5,839
Inventories ( Note 4) 12,763
Prepaid expenses and other current assets 805
Total current assets 19,524
PROPERTY, PLANT AND EQUIPMENT - Net (Note 5) 6,282
OTHER ASSETS (Note 6):
Covenants not to compete,
net of accumulated amortization of $741 2,036
Other 418
TOTAL ASSETS $28,260
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Bank overdraft $ 511
Accounts payable 1,944
Accrued compensation expense 854
Accrued advertising expense 921
Accrued warranty expense 394
Current portion of long-term debt 146
Other accrued expenses 148
Total current liabilities 4,918
OTHER LIABILITIES 675
LONG-TERM DEBT (Note 7) 4,274
DUE TO PARENT 17,926
Total liabilities 27,793
STOCKHOLDER'S EQUITY:
Common stock, no par value, stated value $0.01 per share;
1,000 shares authorized; 840 shares issued and outstanding
Paid-in capital 500
Accumulated deficit ( 33)
Total stockholder's equity 467
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $28,260
See Notes to Consolidated Financial Statements.
GC THORSEN, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
(in 000's, except share data)
NET SALES $41,843
COST OF SALES 31,152
10,691
OPERATING EXPENSES:
Selling, general and administrative 8,595
Amortization 555
9,150
OPERATING INCOME 1,541
INTEREST EXPENSE 452
INCOME BEFORE INCOME TAXES 1,089
INCOME TAXES 481
NET INCOME $ 608
EARNINGS PER COMMON SHARE (Based on 840 shares outstanding) $ 0.72
See Notes to Consolidated Financial Statements.
GC THORSEN, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
YEAR ENDED DECEMBER 31, 1994
(In 000's)
Total
Common Paid-In Accumulated Stockholder's
Stock Capital Deficit Equity
BALANCE,
JANUARY 1, 1994 $ - $500 ($ 641) ($ 141)
Net income - - 608 608
BALANCE,
DECEMBER 31, 1994 $ - $500 ($ 33) $ 467
See Notes to Consolidated Financial Statements.
GC THORSEN, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1994
(In 000's)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 608
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,177
Provision for doubtful accounts 80
Loss on sale of assets 27
Deferred taxes 481
Changes in assets and liabilities:
Increase in accounts receivable ( 517)
Increase in inventories ( 979)
Increase in prepaid expenses and other assets ( 128)
Increase in accounts payable and
other current liabilities 892
Net cash provided by operating activities 1,641
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets 10
Purchase of property, plant and equipment ( 130)
Net cash used in investing activities ( 120)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt ( 166)
Increase in bank overdraft 274
Decrease in Due to Parent ( 2,394)
Net cash used in financing activities ( 2,286)
NET DECREASE IN CASH ( 765)
CASH, BEGINNING OF YEAR 882
CASH, END OF YEAR $ 117
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 452
Income taxes 170
See Notes to Consolidated Financial Statements.
GC THORSEN, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1994
1. DESCRIPTION OF THE COMPANY
GC Thorsen, Inc. and subsidiary (the "Company") is a wholly owned
subsidiary of Elgin National Industries, Inc. ("Elgin"), a privately held
diversified engineering, manufacturing, and industrial products company
headquartered in Chicago, Illinois. An investor group led by Elgin
management acquired Elgin and the Company from the Jupiter Corporation in
September, 1993. As a result of the acquisition, all assets of the Company
were revalued at their fair market value as of the acquisition date.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies of the Company, as summarized below,
conform with generally accepted accounting principles and reflect practices
appropriate for the businesses in which they operate.
Principles of Consolidation - The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiary, HMO, Inc. All
significant intercompany transactions and balances have been eliminated in
consolidation.
Inventories - Inventories are valued at the lower of cost or market. Cost
is determined on the first-in, first-out (FIFO) basis.
Property, Plant and Equipment - Property, plant and equipment are stated at
cost. Depreciation is computed using the straight-line and 150% declining-
balance methods over the estimated useful lives of the related assets.
Upon retirement or other disposition of property, cost and related
allowances for depreciation are removed from the accounts, and the
resulting gain or loss is included in income. Amounts expended for repairs
and maintenance are charged to income, and expenditures for major renewals
and improvements are capitalized.
Accrued Advertising Expense - The Company enters into various cooperative
advertising and other promotional arrangements with its customers. The
estimated expense for such programs is recorded during the same month as
the related sale.
Accrued Warranty Expense - Accrued warranty expense consists mainly of the
estimated product warranty liability. It is the Company's policy to
provide a lifetime warranty on certain tools and a ninety-day warranty on
electronic items. The amounts not expected to be incurred within the next
twelve months are classified as "Other Liabilities".
Income Taxes - The Company's operations are included in the consolidated
federal income tax return of Elgin and governed by an informal agreement
between Elgin and the Company. The Company is charged/credited for its
contribution to the consolidated federal income tax return of Elgin.
Deferred income taxes, resulting from differences in the bases of the
Company's assets and liabilities for financial statement and tax reporting
purposes, are reflected in the Company's financial statements.
3. ACCOUNTS RECEIVABLE
Accounts receivable consist of:
December 31,
1994
(In 000's)
Trade accounts $6,056
Other receivables 86
6,142
Less allowance for doubtful accounts 303
Total $5,839
While the Company has an active customer base of over 4,000, a significant
portion of the Company's trade receivables is represented by a small number
of customers. As of December 31, 1994, ten customers accounted for
approximately 50% of the Company's trade receivables.
4. INVENTORIES
Inventories consist of:
December 31,
1994
(In 000's)
Finished goods $ 9,041
Work-in-process 81
Raw materials 3,641
Total $12,763
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, at cost, consist of:
December 31,
1994
(In 000's)
Land $ 425
Buildings and improvements 4,647
Machinery and equipment 2,065
7,137
Less accumulated depreciation 855
Total $6,282
6. OTHER ASSETS
Other assets consist primarily of covenants not to compete. The covenants
not to compete are amortized on the straight-line method over their
estimated lives of five years. Amortization expense for 1994 related to
the covenants not to compete was $555,000.
7. LONG-TERM DEBT
Long-term debt consists of a mortgage note secured by the Company's
building and land in Rockford, Illinois. The note is due December 31, 1998
and bears interest at 10% per annum. Principal and interest payments are
due in monthly installments.
Substantially all of the assets of the Company are pledged as collateral
under the revolver, term and subordinated loan facilities of Elgin.
In connection with the acquisition of the Company subsequent to year-end
(see Note 10), the mortgage note was repaid in full.
8. INCOME TAXES
Income taxes are provided based on the asset and liability method. The
entire provision for income taxes related to deferred domestic taxes as the
Company utilized a net operating loss carryforward of $447,000.
Deferred tax assets as of December 31, 1994 comprise the following:
(In 000's)
Depreciation and amortization $ 149
Inventories 74
Warranty accrual 427
Accounts receivable 121
Other 55
Total $ 826
Current deferred tax assets, net, total $444,000 and are included in
"Prepaid Expenses and Other Current Assets." Noncurrent deferred tax
assets, net, total $382,000 and are included in "Other Assets - Other."
The total income tax provision differed from the amount computed by
applying the statutory federal income tax rate to pretax income as follows:
Federal statutory income tax rate 34.0%
State income taxes 6.0%
Other, principally nondeductible items 4.0%
Total 44.0%
9. PENSION AND PROFIT SHARING PLANS
The Company participates in a multi-employer noncontributory defined
benefit plan open to all eligible, full-time employees. This defined
benefit plan is salary-related and integrated with Social Security. It is
the Company's policy to fund the minimum annual contribution required by
applicable regulations. Pension plan assets are primarily invested in
bonds, corporate notes and common stocks. The Company was not required to,
and did not, make any contributions to the plan in 1994.
The Company has a combined 401(k) employee savings plan and a profit-
sharing plan for all eligible, full-time employees. The contributions to
the plans are based upon management's discretion. The Company's aggregate
expense for these plans was $223,000 for the year ended December 31, 1994.
10. SUBSEQUENT EVENT
On April 5, 1995, effective March 31, 1995, all of the Company's
outstanding common stock was acquired by Hallmark Holdings, Inc., a wholly
owned subsidiary of Katy Industries, Inc. ("Katy"). Katy is a publicly
held diversified corporation with interests in industrial machinery,
industrial components, consumer products and electronic distribution. The
purchase price was approximately $24,000,000.
KATY INDUSTRIES, INC. AND GC THORSEN, INC.
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1994 AND THE THREE MONTHS
ENDED MARCH 31, 1995
The following unaudited pro forma combined statements of operations for the
twelve months ended December 31, 1994 and the three months ended March 31,
1995 give effect to the acquisition by Hallmark Holdings, Inc., a wholly-owned
subsidiary of Katy Industries, Inc. ("Katy") of the common stock of GC
Thorsen, Inc. ("Thorsen") as if the acquisition had occurred on January 1,
1994. The transaction was accounted for as a purchase in accordance with the
provisions of Accounting Principles Board Opinion No. 16.
The historical financial data included in the pro forma statements is as of
the periods presented. The historical financial data of Thorsen included in
the pro forma statement of operations for the twelve months ended December 31,
1994 was derived from audited financial statements for the year ended December
31, 1994. The historical financial data of Thorsen for the three months ended
March 31, 1995 was derived from unaudited financial statements for the three
months ended March 31, 1995.
The unaudited pro forma financial data is based on management's best estimate
of the effects of the acquisition of Thorsen. Pro forma adjustments are based
on currently available information; however, the actual adjustments will be
based on more precise appraisals, evaluations and estimates of fair values.
It is possible that the actual adjustments could differ substantially from
those presented in the unadjusted pro forma combined financial statements.
The unaudited pro forma statements of operations for the twelve months ended
December 31, 1994, and the three months ended March 31, 1995, are not
necessarily indicative of the results of operations that actually would have
been achieved had the acquisition of Thorsen been consummated as of the dates
indicated, or that may be achieved in the future. The unaudited pro forma
financial statements should be read in conjunction with the accompanying notes
and historical financial statements and notes thereto.
GC Thorsen's financial performance for the three months ended March 31, 1995,
prior to the acquisition by Katy, was affected by several factors. In 1994,
the cost basis of a portion of the inventory sold had been stepped up to
approximately its selling price as part of the acquisition of GC Thorsen by
its previous parent, Elgin National Industries, Inc., late in 1993. The
effect in 1994 of this cost basis step-up was to depress margins on sales made
in early 1994, and as a result, 1995 margins are higher. The improved margins
in 1995 were partially offset by higher material prices for Thorsen's tool
business and higher selling expenses due to the increase in sales during the
three months ended March 31, 1995.
KATY INDUSTRIES, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1994
(in thousands except per share information)
Katy GC Thorsen Pro forma
Historical Historical Adjustments Pro forma
Net sales $159,581 $ 41,843 $201,424
Costs and expenses:
Cost of goods sold 113,932 31,152 ( 420) (1) 144,664
Selling, general and
administrative expenses 47,630 8,595 ( 282) (1) (2) 55,943
Depreciation and amortization 6,049 555 279 (1) (3) 6,883
Provision (Recovery) for doubtful accounts
and notes ( 1,013) 80 (2) ( 933)
Interest expense 1,916 452 1,108 (4) 3,476
Interest income ( 3,438) ( 3,438)
Other, net 1,265 1,265
Write-off of assets 9,288 9,288
175,629 40,754 765 217,148
Income (Loss) from continuing consolidated
operations before benefit (provision) for
income taxes and minority interest
( 16,048) 1,089 ( 765) ( 15,724)
Benefit (Provision) for
income taxes 3,923 ( 481) 454 (5) 3,896
Minority interest ( 13) ( 13)
Income (Loss) from continuing consolidated
operations ( 12,138) 608 ( 311) ( 11,841)
Equity in income of unconsolidated
subsidiaries (net of tax) 3,295 3,295
Income (Loss) from continuing
operations ($ 8,843) $ 608 ($ 311) ($ 8,546)
Loss per share of Common Stock ($ 0.98) ($ 0.95)
Weighted average shares outstanding 9,032 9,032
KATY INDUSTRIES, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1995
(in thousands except per share information)
Katy
GC Thorsen Pro forma
Historical Historical Adjustments Pro forma
Net sales $ 38,358 $ 10,481 $ 48,839
Cost and expenses:
Cost of goods sold 26,456 7,817( 110) (1) 34,163
Selling, general and
administrative expenses 10,954 2,272 ( 55) (1) 13,171
Depreciation and amortization 1,378 139 79 (1) (3) 1,596
Interest expense 418 110 304 (4) 832
Interest income ( 276) ( 276)
Other, net 237 237
39,167 10,338 218 49,723
Income (Loss) from continuing consolidated
operations before benefit (provision) for
income taxes ( 809) 143 ( 218) ( 884)
Benefit (Provision) for
income taxes ( 628) ( 59) 125 (5) ( 562)
Income (Loss) from continuing consolidated
operations ( 1,437) 84 ( 93) ( 1,446)
Equity in income of unconsolidated
subsidiaries (net of tax) 700 700
Income (Loss) from
continuing operations ($ 737) $ 84 ($ 93) ($ 746)
Loss per share of Common Stock ($ 0.08) ($ 0.08)
Weighted average shares outstanding 9,076 9,076
KATY INDUSTRIES, INC.
UNAUDITED PRO FORMA NOTES TO STATEMENTS OF OPERATIONS
(In thousands except per share information)
NOTES:
(1) Reclassifies GC Thorsen's depreciation expense from Cost of goods sold
($420 for the twelve months and $110 for the three months) and Selling,
general and administrative expenses ($202 for the twelve months and $55
for the three months) to Depreciation and amortization to be consistent
with Katy's classification.
(2) Reclassifies GC Thorsen's provision for doubtful accounts to be
consistent with Katy's classification.
(3) Represents the elimination of GC Thorsen's amortization expense relating
to certain non-competition agreements ($555 for the twelve months and
$139 for the three months) which will no longer be incurred as a result
of the acquisition and the amortization of the purchase price paid by
Katy in excess of the fair value of the net assets acquired ($212 for
the twelve months and $53 for the three months) arising from the
acquisition of GC Thorsen.
(4) Represents the estimated effect on interest expense ($1,560 for the
twelve months and $414 for the three months) from the $19,500,000 of
borrowings under the Katy bank line of credit to finance the acquisition
of GC Thorsen at an effective borrowing rate of approximately 8.5% and
the elimination of interest expense ($452 for the twelve months and $110
for the three months) on GC Thorsen's mortgage note retired by Katy.
(5) Represents the tax effects of the pro forma adjustments described above.