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 9,1994
FEDERAL SIGNAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-6003 36-1063330
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1415 WEST 22ND STREET, OAK BROOK, ILLINOIS 60521
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 708-954-2000
NONE
(Former name or former address, if changed since last report)
Item 2 - Acquisition or Disposition of Assets
On May 9, 1994, Federal Signal Corporation (hereinafter "Registrant"), a
Delaware corporation, acquired the principal operating assets and assumed
the principal operating liabilities of Justrite Manufacturing Company
(hereinafter "Seller"), an Illinois corporation, pursuant to an Asset
Purchase Agreement between Registrant and Seller.
Consideration paid by the Registrant to Seller was $45 million in cash paid
at closing. The amount of consideration for the Registrant's acquisition
of Seller's assets and liabilities was determined pursuant to negotiation
between officers and other representatives of the Registrant and officers
and other representatives of Seller. The consideration offered by the
Registrant was determined after a review of Seller's financial statements
and other material deemed appropriate by the Registrant as well as a review
of the Registrant's internal acquisition criteria.
No material relationship exists between the shareholders of Seller and
shareholders of the Registrant or any of their affiliates, any director or
officer of Seller and the Registrant or any associate of any such director
or officer.
The sources of funds for the consideration paid were loans from various
banks with which Registrant has preexisting lines of credit available
(NBD Bank, N.A., SunBank, N.A. and Wachovia Bank of Georgia, N.A.).
The principal assets of Seller acquired by the Registrant include accounts
receivable, inventories, operating equipment and the rights to the name
"Justrite". The principal liabilities of Seller assumed by the Registrant
include the accounts payable and other operating liabilities. Justrite is
a manufacturer of products for the safe containment of flammable and other
hazardous materials. Justrite manufactures its products in facilities
located in Charleston, Illinois and Mattoon, Illinois, both of which are
leased from affiliates of Seller. Justrite also maintains a corporate
office facility in Des Plaines, Illinois, leased from a non-affiliated
entity. The Registrant intends to continue such use of these facilities
under the existing lease agreements.
Item 7 - Financial Statements and Exhibits
(a) & (b)
The Registrant has acquired the principal operating assets and assumed
the principal operating liabilities of Seller. The Registrant has
reviewed the financial information provided by Seller which the
Registrant considered material to its decision to enter into the Asset
Purchase Agreement with Seller. The financial information for
Justrite Manufacturing Company is filed in this report pursuant to
Item 2 of this Form 8-K and is limited, at this time, to the
following, all filed as part of this report:
(1) The audited balance sheets of Justrite Manufacturing Company as
of June 30, 1993 and 1992.
(2) The audited statements of income and retained earnings of
Justrite Manufacturing Company for the years ended June 30, 1993
and 1992.
(3) The audited statements of cash flows for the years ended June 30,
1993 and 1992.
(4) Notes to the financial statements described in (1), (2) and (3)
above.
(5) The opinion of Coopers & Lybrand dated August 11, 1993 on the
financial statements listed above.
(6) Additional explanatory notes prepared by the Registrant.
Pro forma financial information required pursuant to Article 11 of
Regulation S-X is not yet practicably determinable. The Registrant intends
to file any additional statements it deems necessary including appropriate
interim financial information which have been prepared pursuant to the
instructions of this Item 7 and Regulation S-X, file any necessary
corrections to the information filed with this report, and file the pro
forma financial information required pursuant to Article 11 of
Regulation S-X by July 11, 1994.
(c) In accordance with Item 601 of Regulation S-K, the following
information is filed with the report:
Exhibit
2 Asset Purchase Agreement
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.
FEDERAL SIGNAL CORPORATION
(Registrant)
Date: May 13, 1994 Richard L. Ritz
Vice President and Controller
THE JUSTRITE MANUFACTURING COMPANY
BALANCE SHEETS
June 30, 1993 and 1992
1993 1992
ASSETS
Current assets:
Cash and cash equivalents $1,644,787 $1,253,011
Accounts receivable, less allowance
of $232,000 in 1993 and $137,000
in 1992 for doubtful accounts 2,396,424 2,962,977
Inventories 1,808,508 1,603,644
Prepaid expenses 21,262 12,951
Total current assets 5,870,981 5,832,583
Equipment 8,051,608 6,961,252
Less accumulated depreciation 4,931,897 4,311,838
Net equipment 3,119,711 2,649,414
Tax deposits and other assets 828,996 928,834
---------- ----------
$9,819,688 $9,410,831
========== ==========
LIABILITIES
Current liabilities:
Accounts payable $1,555,800 $1,275,628
Accrued expenses and taxes withheld 1,140,992 1,115,159
Accrued profit-sharing contribution 313,532 282,529
Total current liabilities 3,010,324 2,673,316
Deferred income 191,000 224,000
Stockholders' equity:
Common stock, $10 par value -
100,000 shares authorized,
2,500 shares issued and outstanding 25,000 25,000
Retained earnings 6,593,364 6,488,515
Total stockholders' equity 6,618,364 6,513,515
---------- ----------
$9,819,688 $9,410,831
========== ==========
The accompanying notes are an integral part of the financial statements.
THE JUSTRITE MANUFACTURING COMPANY
STATEMENTS OF INCOME AND RETAINED EARNINGS
for the years ended June 30, 1993 and 1992
1993 1992
Net sales $31,951,238 $32,000,174
Cost of sales 18,893,733 18,418,313
----------- -----------
13,057,505 13,581,861
----------- -----------
Operating expenses:
Selling 4,396,256 5,033,034
General and administrative 2,828,737 3,174,896
Contributions to employees'
profit-sharing plan 313,532 282,529
----------- -----------
7,538,525 8,490,459
----------- -----------
Income from operations 5,518,980 5,091,402
Interest income 59,875 41,574
Loss on sale of assets and other, net (224,006) (65,568)
Net income 5,354,849 5,067,408
Retained earnings, beginning of year 6,488,515 5,871,107
Distributions to stockholders (5,250,000) (4,450,000)
Retained earnings, end of year $ 6,593,364 $ 6,488,515
The accompanying notes are an integral part of the financial statements.
THE JUSTRITE MANUFACTURING COMPANY
STATEMENTS OF CASH FLOWS
for the years ended June 30, 1993 and 1992
1993 1992
Cash and cash equivalents,
beginning of year $ 1,253,011 $ 875,245
Operating activities:
Net income 5,354,849 5,067,408
Adjustments to reconcile net income
to net cash provided by operating
activities:
Amortization of deferred income (33,000) (33,000)
Depreciation and amortization 656,443 525,763
(Increase) decrease in accounts receivable 566,553 (311,440)
(Increase) decrease in inventories (204,864) 1,052,670
(Increase) decrease in prepaid expenses (8,311) 15,917
Increase (decrease) in accounts payable 280,172 (78,465)
Increase in accrued expenses 56,836 8,646
----------- -----------
6,668,678 6,247,499
----------- -----------
Investing activities:
Additions to equipment (1,137,270) (1,319,647)
Disposals of equipment 21,230 41,399
Other 14,445 (9,033)
----------- -----------
(1,101,595) (1,287,281)
----------- -----------
Financing activities:
Distributions to stockholders (5,250,000) (4,450,000)
Tax deposits 74,693 (132,452)
----------- -----------
(5,175,307) (4,582,452)
----------- -----------
Cash and cash equivalents, end of year $ 1,644,787 $ 1,253,011
=========== ===========
The accompanying notes are an integral part of the financial statements.
THE JUSTRITE MANUFACTURING COMPANY
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Summarized below are the significant accounting policies of The
Justrite Manufacturing Company (the "Company").
Cash and cash equivalents
Cash and cash equivalents include demand deposits and investments with
maturities of ninety days or less.
Inventories
Inventories are stated at the lower of last-in, first-out (LIFO) cost
or market. The inventory value at June 30, 1993 and 1992 under the
FIFO (first-in, first-out) method, which approximates replacement
cost, would have been approximately $1,472,000 and $1,410,000,
respectively, greater than the value under the LIFO method.
Equipment
Equipment is carried at cost and depreciated on a straight-line basis
over estimated useful lives of 3 to 8 years. The cost and accumulated
depreciation relating to assets retired or otherwise disposed of are
eliminated from the respective accounts at the time of disposition.
The resultant gain or loss is included in net loss on sale of assets
and other.
2. Income Taxes
The Company has elected to be treated as a small business
(Subchapter S) corporation for income tax purposes. Accordingly, the
Company's taxable income and related tax credits are reportable by the
stockholders on their individual income tax returns. Tax regulations
stipulate that the Company, due to its fiscal year, must place funds
on deposit with the Internal Revenue Service. These deposits are
included in tax deposits and other assets and totaled $811,897 and
$886,590 at June 30, 1993 and 1992, respectively.
3. Related Party Transactions
In 1984, certain real property was sold and leased back for 15 years.
Minimum annual rentals are $338,000; the Company also pays
maintenance, insurance and real estate taxes. The gain from the 1984
transaction is being recognized over the term of the lease.
The Company also leases a different manufacturing plant from a related
party at a minimum annual rental of $110,000, plus maintenance,
insurance and taxes. This lease expires in 1996.
The Company has an agreement with Northbrook Management Corporation
(NMC) which is owned by a related party, under which NMC provides
operational and financial management services to the Company. Fees
paid for these services for the years ended June 30, 1993 and 1992
were $624,000 and $629,002, respectively.
4. Employees' Profit-Sharing Plan
The Company has a profit-sharing plan which covers substantially all
salaried and office hourly employees. Contributions to the trust are
discretionary but generally are limited to amounts deductible for
federal income tax purposes.
5. Leases
The Company leases manufacturing facilities and administrative office
space under operating leases. Rent expenses related to these leases
were $606,000 during 1993 and $587,000 in 1992. Future minimum rental
commitments for noncancelable operating leases are summarized as
follows:
1994 655,000
1995 655,000
1996 655,000
1997 591,000
1998 545,000
Thereafter 767,000
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
The Justrite Manufacturing Company
We have audited the accompanying balance sheets of The Justrite
Manufacturing Company as of June 30, 1993 and 1992, and the related
statements of income and retained earnings, and cash flows for the years
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 audits.
We conducted our audits 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 audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Justrite
Manufacturing Company as of June 30, 1993 and 1992, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
Coopers & Lybrand
Chicago, Illinois
August 11, 1993
ADDITIONAL EXPLANATORY NOTES
The following notes are not part of the audited financial statements of
Justrite and are submitted by the Registrant to provide a further
understanding regarding the assets acquired and the liabilities assumed by
the Registrant as a result of the Asset Purchase Agreement dated April 18,
1994 between the Registrant and Justrite.
Assets not acquired:
Cash of $1,644,787 and a tax deposit of approximately $812,000 included in
the June 30,1993 balance sheet were the principal assets not acquired by
the Registrant from Justrite.
Deferred income:
Deferred income of $191,000 in the June 30, 1993 balance sheet will not be
realized by the Registrant. This balance represents the remaining portion
of a gain realized on the sale to an affiliated party and leaseback by
Justrite of real estate used in Justrite's operations. Approximately
$33,000 of the gain was amortized to income for the fiscal year ending
June 30, 1993.
Related party administrative fees:
Justrite's agreement with an affiliate for the affiliate's providing of
operational and financial management services will not be assumed by the
Registrant. Justrite paid the affiliate $624,000 for these services during
the fiscal year ended June 30, 1993. This amount represents the
approximate amount of expense recognized in general and administrative
expense for the same period.