SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
April 19, 1999
CALIFORNIA AMPLIFIER, INC.
(Exact name of Registrant as specified in its Charter)
0-12182
(Commission File Number
Delaware 95-3647070
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
460 Calle San Pablo, Camarillo, California 93012
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (805) 987-9000
The undersigned registrant California Amplifier, Inc. hereby amends the Current
Report on Form 8-K dated May 3, 1999 by including herewith for filing the
financial statements and pro forma financial information required by Item 7 of
Form 8-K which information was not practicably available at the time of the
filing of this Form as set forth on the pages indicated below and attached
hereto.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
Independent Auditors' Report........................................F1
Consolidated Balance Sheets as of December
31, 1998 and 1997.................................................F2
Consolidated Statements of Operations for the
years ended December 31, 1998 and 1997............................F4
Consolidated Statements of Changes in
Stockholders Equity for the years ended
December 31, 1998 and 1997........................................F5
Consolidated Statements of Cash Flows for the
years ended December 31, 1998 and 1997............................F6
Notes to Consolidated Financial Statements..........................F8
(b) Pro Forma Financial Data.
Unaudited Pro Forma Combined Balance Sheets
as of February 27, 1999..........................................F15
Unaudited Pro Forma Combined Statements of
Operations for the
year ended February 27, 1999.......................................F16
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
GARDINER COMMUNICATIONS CORPORATION
AND SUBSIDIARIES
We have audited the accompanying consolidated balance sheets of
Gardiner Communications Corporation and Subsidiaries as of December
31, 1998 and 1997, and the related consolidated statements of
operations, stockholders' equity and cash flows for the years then
ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated 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
consolidated financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the consolidated 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 consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Gardiner Communications Corporation and
Subsidiaries as of December 31, 1998 and 1997, and the results of
their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
WEAVER AND TIDWELL, L.L.P.
Dallas, Texas
May 8, 1999
F-1
(a) Financial Statements of Business Acquired.
GARDINER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
1998 1997
- ----------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 348,765 $ 844,262
Accounts receivable, trade 3,021,102 288,277
Inventories, at lower of cost or market 2,690,275 2,038,082
Prepaid expenses 58,845 60,927
Deferred income taxes 73,257 116,796
Note receivable, current --- 6,975
Income tax receivable 766,152 819,576
- -----------------------------------------------------------------------
Total current assets 6,958,396 4,174,895
PROPERTY AND EQUIPMENT, at cost
Land 95,000 95,000
Machinery and equipment 6,655,319 7,048,183
Office furniture and fixtures 352,312 334,271
Building and leasehold improvements 225,544 225,544
Transportation equipment 42,989 41,072
- -----------------------------------------------------------------------
7,371,164 7,744,070
Less accumulated depreciation 5,270,283 5,101,969
- ------------------------------------------------------------------------
2,100,881 2,642,101
PROPERTY AND EQUIPMENT, held for sale 747,442 823,326
- -----------------------------------------------------------------------
OTHER ASSETS 57,727 64,639
- -----------------------------------------------------------------------
DEFERRED INCOME TAXES 668,236 541,620
- -----------------------------------------------------------------------
TOTAL ASSETS $10,532,682 $8,246,581
- ------------------------------------------------------------------------
The Notes to Consolidated Financial Statements are an integral part of these
statements.
F-2
GARDINER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
DECEMBER 31, 1998 AND 1997
1998 1997
- ----------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable, stockholder $ 640,000 $ ---
Current maturities of long-term debt --- 54,209
Current obligations under capital lease 39,982 71,967
Accounts payable, trade 2,079,489 546,335
Accrued expenses 667,697 417,331
Deferred revenue 86,539 184,565
- -----------------------------------------------------------------------
Total current liabilities 3,513,707 1,274,407
CAPITAL LEASE OBLIGATION --- 39,982
- -----------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common stock, $1 par value; 2,000 shares
authorized; 1,105 shares issued and
outstanding 1,105 1,105
Additional paid-in capital 2,337,325 2,337,325
Retained earnings 4,680,545 4,593,762
- ------------------------------------------------------------------------
7,018,975 6,932,192
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $10,532,682 $8,246,581
- ------------------------------------------------------------------------
The Notes to Consolidated Financial Statements are an integral part of these
statements.
F-3
GARDINER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
- ----------------------------------------------------------------------
Net sales $21,761,038 $20,055,558
Cost of goods sold 19,224,428 18,789,202
- ------------------------------------------------------------------------
Gross profit 2,536,610 1,266,356
General, administrative and selling expenses 2,055,133 2,238,346
Research and development 767,410 1,353,799
- -----------------------------------------------------------------------
Operating income (loss) (285,933) (2,325,789)
Other income (expense)
Interest expense (26,039) (27,981)
Interest income 13,262 58,637
Miscellaneous income 324,840 221,500
- -----------------------------------------------------------------------
Income (loss) before taxes 26,130 (2,073,633)
Income tax benefit (expense) 60,653 736,266
- -----------------------------------------------------------------------
Net income (loss) $ 86,783 $(1,337,367)
- ------------------------------------------------------------------------
The Notes to Consolidated Financial Statements are an integral part of these
statements.
F-4
GARDINER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
Additional
Common Paid-In Retained
Stock Capital Earnings
- -----------------------------------------------------------------------------
Balance,
December 31, 1996 $ 1,105 $2,337,325 $6,531,129
Net loss --- --- (1,337,367)
Dividend distribution --- --- (600,000)
- -----------------------------------------------------------------------------
Balance,
December 31, 1997 1,105 2,337,325 4,593,762
Net income --- --- 86,783
- -----------------------------------------------------------------------------
Balance,
December 31, 1998 $ 1,105 $2,337,325 $4,680,545
- ------------------------------------------------------------------------------
The Notes to Consolidated Financial Statements are an integral part of these
statements.
F-5
GARDINER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
- ----------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $18,930,187 $20,259,396
Cash paid to suppliers and employees (20,260,418) (19,745,436)
Interest paid (26,039) (27,981)
Interest received 13,262 58,637
Income taxes paid --- (102,200)
Other receipts 203,821 118,978
- -----------------------------------------------------------------------
Net cash (used in) provided by
operating activities (1,139,187) 561,394
- -----------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (129,383) (601,694)
Cash received on sale of equipment 252,274 259,000
Proceeds from note receivable 6,975 10,000
- -----------------------------------------------------------------------
Net cash provided by (used in)
investing activities 129,866 (332,694)
- -----------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from note payable, stockholder 640,000 ---
Repayment on long-term debt (54,209) (572,412)
Proceeds received on long-term debt --- 305,517
Payment on capital lease obligation (71,967) (65,314)
Distribution of dividends --- (600,000)
- -----------------------------------------------------------------------
Net cash provided by (used in)
financing activities 513,824 (932,209)
- -----------------------------------------------------------------------
Net decrease in cash and
cash equivalents (495,497) (703,509)
Cash and cash equivalents
at beginning of period 844,262 1,547,771
- -----------------------------------------------------------------------
Cash and cash equivalents
at end of period $ 348,765 $ 844,262
- ------------------------------------------------------------------------
The Notes to Consolidated Financial Statements are an integral part of these
statements.
F-6
GARDINER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
- ----------------------------------------------------------------------------
RECONCILIATION OF NET INCOME (LOSS) TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net income (loss) $ 86,783 $(1,337,367)
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:
Gain on asset disposals (122,019) (89,911)
Depreciation 616,232 1,349,145
Increase in deferred income taxes (83,077) (19,651)
(Increase) decrease in
accounts receivable (2,732,825) 90,499
(Increase) decrease in inventories (652,193) 1,230,459
Decrease in prepaid expenses 2,082 38,631
Decrease (increase) in income
tax receivable 53,424 (713,750)
Decrease (increase) in other assets 6,912 (17,676)
Increase (decrease) in accounts
payable - trade 1,533,154 (50,199)
Increase in accrued expenses 250,366 67,875
Decrease in contingency reserve -- (100,000)
(Decrease) increase in deferred revenues (98,026) 113,339
- ----------------------------------------------------------------------------
Net cash (used in) provided
by operating activities $(1,139,187) $ 561,394
SUPPLEMENTAL DISCLOSURES:
In 1997, the Company acquired a network system consisting of computer
hardware andsoftware in exchange for a capital lease obligation in the amount of
$177,263.
The Notes to Consolidated Financial Statements are an integral part of these
statements.
F-7
GARDINER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies
The accounting policies relative to the carrying value of inventories and
property and equipment are indicated in the captions on the balance sheets.
Nature of operations and other significant accounting policies are as follows:
Nature of Operations
Gardiner Communications Corporation (the Company) is a manufacturer and
worldwide distributor of satellite receiver components.
Principles of Consolidation
The consolidated financial statements include the accounts of Gardiner
Communications Corporation and Gardiner Communications - (Hong Kong),
Limited, Gardiner Corporation, F.S.C., and European Satellite Imports Ltd.,
Inc., all wholly-owned subsidiaries. Gardiner Communications - (Hong Kong),
Limited was formed effective January, 1994 and was previously operated as a
division of the Company. Gardiner Corporation, F.S.C. was formed in May,
1996 as a U.S. Virgin Islands Foreign Sales Corporation and European
Satellite Imports Ltd., Inc. was formed in October, 1997. All material
intercompany transactions have been eliminated.
Concentrations of Credit Risk and Financial Instruments
Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist of cash, cash investments and
accounts receivable.
The Company maintains its cash in bank deposit accounts, which, at times,
may exceed federally insured limits. The Company has not experienced any
losses in such accounts. The Company believes it is not exposed to any
significant credit risk on cash and cash equivalents.
The Company maintains cash in bank deposit accounts located in Hong Kong.
The carrying value of these accounts was $92,466 and $131,914 at December
31, 1998 and 1997, respectively.
Depreciation
Property and equipment is depreciated using the straight-line method over
the estimated useful lives of the assets as follows:
Machinery and equipment 3 - 5 years
Office furniture and fixtures 3 - 5 years
Building and leasehold improvements 5 - 31.5 years
Transportation equipment 3 - 5 years
F-8
GARDINER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies - continued
Maintenance, repairs, rearrangement expenses, renewals and betterments,
which do not enhance the value or increase the basic productive capacity of
the assets are expensed as incurred.
Inventories
Inventories are stated at the lower of cost or market cost as determined by
the average cost method.
Allowance for Doubtful Accounts
All accounts the Company considers uncollectible have been charged-off. In
the opinion of management no significant amount of receivables are
considered uncollectible.
Research and Development
Expenditures for research and development are expensed as incurred.
Cash Flows Presentation
For purposes of the statement of cash flows, the Company considers all
highly liquid investments with initial maturities of ninety days or less
from the date of purchase to be cash equivalents.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Reclassification
Certain prior year amounts have been reclassified to conform to current year
presentation.
F-9
GARDINER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2. Inventories
Inventories consist of the following:
1998 1997
---------------------------
Raw materials $ 906,876 $ 1,004,622
Work in process 1,178,920 370,525
Finished goods 604,479 662,935
-------------------------
$2,690,275 $ 2,038,082
========================
Included in cost of goods sold for the years ended December 31, 1998 and 1997
was approximately $125,000 and $1,000,000, respectively, in abandoned
inventory components and materials which were determined to be obsolete.
Note 3. Note Payable - Stockholder
The note payable to a stockholder is a demand note bearing interest at 10% per
annum. Interest is due and payable monthly. The note is unsecured.
Note 4. Long-Term Debt
At December 31, long-term debt consists of the following:
1998 1997
--------------------------
Note to lending corporation, payable in monthly
installments of $54,581, interest at 8.25%,
secured by machining equipment, retired. $ 0 $ 54,209
===========================
Note 5. Computer Hardware and Software Under Capital Lease
In 1997, the Company entered into a leasing arrangement for the lease of
computer hardware and software which is classified as a capital lease.
1998 1997
-----------------------
Computer software $ 177,263 $ 177,263
Less accumulated amortization 41,361 5,909
--------------------------
$ 135,902 $ 171,354
============ ===========
F-10
GARDINER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Amortization expense for equipment under capital lease is included in
depreciation expense.
The following is a schedule by year of future minimum lease payments under the
capital lease obligation together with the present value of the net minimum
lease payments as of December 31, 1998:
Amounts Present Value
Net Minimum Representing of Net Minimum
Lease Interest Lease
Payments and Taxes Payments
1999 $ 43,106 $ 3,124 $ 39,982
=================================================
Note 6. Commitments and Contingencies
The Company leases office and manufacturing space under long-term and month to
month lease agreements classified as operating leases. During 1998 and 1997,
the Company incurred rental expense of approximately $107,000.
Future minimum lease payments are as follows:
1999 $ 85,177
==============
The Company is involved in certain litigation and disputes in the normal
course of business. One matter involves a suit and countersuit by and against
a foreign customer. Management intends to vigorously defend such litigation.
No resolution has been reached on this matter, but management believes that
the Company has adequately provided for this contingency at December 31, 1998
and that the impact of any variance between a settlement and the provision
will not be material to the Company's financial position.
Note 7. Capital Stock
In addition to the common stock, the Company is authorized to issue capital
stock in the following series:
400 shares of Class A-1 preferred stock $1,000 par value
800 shares of Class A-2 preferred stock $1,000 par value
1,000 shares of Class B preferred stock $1,000 par value
At December 31, 1998 and 1997, there were no shares of the above listed series
issued and outstanding.
F-11
GARDINER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 8. Income Taxes
Income tax (benefit) expense is as follows:
1998 1997
------------------------------
Current $ 22,424 ($ 716,615)
Deferred (83,077) (19,651)
------------- ----------------
($ 60,653) ($ 736,266)
==============================
Deferred income taxes have been provided for the differences between the basis
of assets and liabilities for financial reporting purposes and federal income
tax purposes. Differences relate primarily to depreciation, capitalized
inventory costs for federal income tax purposes, provisions for warranty and
settlement expenses, and net operating loss and tax credit carryforwards. The
current tax expense for 1998 is comprised of foreign sales corporation tax of
$22,424. The current tax benefit for 1997 is comprised of foreign sales
corporation tax of $7,239 less research and development tax credits of
$74,275, a work opportunity credit of $2,100 and net operating loss carrybacks
of $647,479.
The net deferred tax assets and liabilities in the accompanying balance sheets
include the following components:
1998 1997
-----------------------
Current deferred tax asset $ 73,257 $ 116,796
-------------------------
Net current deferred tax asset $ 73,257 $ 116,796
=========================
Long-term deferred tax asset $ 843,360 $ 650,512
Long-term deferred tax (liability) (175,124) (108,892)
------------- ------------
Net long-term deferred tax asset $ 668,236 $ 541,620
==========================
The Company is subject to United States federal income taxes as well as
foreign income taxes related to its wholly owned foreign subsidiary. The
differences between the income tax expense (benefit) at statutory rates and
the Company's income tax expense (benefit) is due to differences between
financial accounting and federal income tax treatment of deductions for
depreciation, inventory costs and benefits related to net operating loss and
tax credit carryovers.
No valuation allowance has been provided for the deferred tax assets in 1998
or 1997, as management believes these assets will be fully realized.
F-12
GARDINER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 1998, the Company has available approximately $2,000,000 in
net operating losses and tax credit carryovers to offset future taxable
income, which expire in various years through 2012.
Note 9. Profit Sharing Plan
The Company sponsors a 401(k) Profit Sharing Plan (the Plan) whereby employees
of the Company select how much they wish to contribute to the Plan. Any
employee, except non-resident aliens and employees who are members of a union,
who bargained for retirement benefits during negotiations, are initially
eligible to participate in the Plan after three months of employment. Each
participant is eligible to contribute a selected percentage of their gross pay
to the Plan up to the maximum allowable under the Plan (25% or $30,000). The
Company may make discretionary contributions but elected not to contribute to
the Plan in 1998 or 1997.
Note 10. Year 2000 Issues
The Company is working to resolve the potential impact of the year 2000 on the
ability of the Company's computerized information systems to accurately
process information that may be date sensitive. Any of the Company's programs
that recognize a date using "00" as the year 1900 rather than the year 2000
could result in errors or system failures. The Company utilizes a number of
computer programs across its entire operation. The Company has not completed
its assessment, but currently believes that costs of addressing this issue
will not have a material adverse impact on the Company's financial position.
However, if the Company and third parties upon which it relies are unable to
address this issue in a timely manner, it could result in a material financial
statement risk to the Company. In order to assure that this does not occur,
the Company plans to devote the necessary time and resources to resolve any
significant year 2000 issues in a timely manner.
Because of the unprecedented nature of the year 2000 issue, its effects and
the success of related remediation efforts will not be fully determinable
until the year 2000 and thereafter. Management cannot assure that the Company
is or will be year 2000 ready, that the Company's remediation efforts will be
successful in whole or in part, or that parties with whom the Company does
business will be year 2000 ready.
Note 11. Subsequent Event
On April 19, 1999, the Company entered an agreement with an unrelated company
to sell certain tangible and intangible assets, properties and technology
relating to certain of the Company's products.
The purchase price included an initial payment of approximately $4,600,000
(approximately $1,500,000 in cash and $3,100,000 in a convertible promissory
note payable) and subsequent payment of up to $2,525,000 for certain Company
inventory.
As a result of the sale, the Company intends to liquidate its wholly-owned
subsidiaries in 1999.
F-13
(b) Pro Forma Financial Data
On April 19, 1999, California Amplifier acquired the technology and product
rights to substantially all of Gardiner Communications Corp.'s ("Gardiner")
products, and manufacturing and development related equipment and inventory from
Gardiner to support these product lines. The total purchase price, including
related costs, was approximately $9.1 million, of which $3.5 million relates to
the acquisition of product and technology rights. California Amplifier paid
approximately $2.8 million in cash on closing and will pay approximately $2.5
million in cash on or about August 30, 1999 for additional inventory and
equipment. Gardiner received a $3.1 million, 8% one-year promissory note due
April 19, 2000. A portion of the debt can be converted into 525,000 shares of
California Amplifier's common stock at the lower per share conversion price
equal to $4.25 or the average closing sales price of California Amplifier's
common stock for the immediate twenty trading days prior to conversion.
The following pro forma data combines the consolidated Statement of Operations
of California Amplifier for the year ended February 27, 1999 with the
consolidated Statement of Operations of Gardiner for the year ended December 31,
1998, as if the acquisition had occurred at the beginning of California
Amplifier's 1999 fiscal year. Pro forma adjustments related primarily to
adjusting cost of sales for current standard costs, incremental manufacturing
related costs including depreciation expense on the write-up of assets,
elimination of Gardiner's selling, general and administrative and research and
development costs because no infrastructure was acquired, inclusion of
incremental selling, general and administrative and research and development
expenses to be added by California Amplifier to support the acquired products,
amortization of goodwill, incremental interest expense and adjustment of the tax
rate.
F-14
CALIFORNIA AMPLIFIER, INC.
PRO FORMA COMBINED BALANCE SHEETS
(in 000's except per share data)
The unaudited pro forma combined balance sheets of California Amplifier has
been prepared assuming that the transaction occurred on February 28, 1998.
The pro forma combined balance sheets should be read in conjunction with the
historical financial statements and the notes thereto for the year ended
February 27, 1999, filed with California Amplifier's Annual Report on Form
10-K for such year. The pro forma combined balance sheets is not
necessarily indicative of the financial results of California Amplifier that
would have actually been obtained had the transaction been consummated on
February 27, 1999.
Feb. 27, Combined Pro Forma
1999 Adjustments(h) Combined
- ------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 9,312 $ (5,700) 3,612
Accounts receivable, net 5,002 5,002
Inventories 3,974 2,700 6,674
Prepaid expenses and other current assets 2,043 2,043
- --------------------------------------------------------------------------
Total current assets 20,331 (3,000) 17,331
Property and equipment - at cost, net of
accumulated depreciation and amortization 4,498 2,600 7,098
Other assets 720 720
Goodwill --- 3,800 3,800
- --------------------------------------------------------------------------
$25,549 $ 3,400 $28,949
- ------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,644 $ 2,644
Accrued liabilities 1,613 300 1,913
Current portion of long-term debt 597 3,100 3,697
- --------------------------------------------------------------------------
Total current liabilities 4,854 3,400 $ 8,254
Long-term debt 516 516
Minority interest share in net assets of
Micro Pulse, Inc. 114 114
Stockholders' equity:
Preferred stock, 3,000 shares authorized;
no shares outstanding --- ---
Common stock, $.01 par value; 30,000 shares authorized;
11,785 shares outstanding in February 1999 and
11,771 shares outstanding in February 1998 118 118
Additional paid-in capital 14,050 14,050
Retained earnings 6,067 6,067
Accumulated other comprehensive income (170) (170)
- --------------------------------------------------------------------------
Total stockholders' equity 20,065 20,065
- --------------------------------------------------------------------------
$25,549 $ 3,400 $28,949
- ------------------------------------------------------------------------------
F-15
CALIFORNIA AMPLIFIER, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FISCAL YEAR ENDED FEBRUARY 27, 1999
(in 000's except per share data)
The unaudited pro forma combined statement of operations of California Amplifier
has been prepared assuming that the transaction occurred on February 28, 1998.
The pro forma combined statement of operations should be read in conjunction
with the historical financial statements and the notes thereto for the year
ended February 27, 1999, filed with California Amplifier's Annual Report on Form
10-K for such year. The pro forma combined statement of operations is not
necessarily indicative of the financial results of California Amplifier that
would have actually been obtained had the transaction been consummated on
February 27, 1999.
Transaction
California Pro Forma Transaction
Amplifier Gardiner Adjustments Pro Forma
- -------------------------------------------------------------------------------
Sales $ 37,140 $21,761 $ --- $58,901
Cost of sales 26,595 19,224 (2,303)(a) 43,516
- -------------------------------------------------------------------------------
Gross profit 10,545 2,537 2,303 15,385
Research and development 4,764 767 (767)(b)
840 (c) 5,604
Selling, general and
administrative 8,321 2,055 (2,055)(b)
780 (c)
253 (d) 9,354
- -------------------------------------------------------------------------------
Loss from operations (2,540) (285) 3,252 427
Interest and other income, net 28 311 (311)(e)
(248)(f) (220)
Minority interest share in
(income) loss of Micro Pulse 295 --- 295
- ------------------------------------------------------------------------------
Income (loss) before benefit from
(provision for) income taxes (2,217) 26 2,693 502
Benefit from (provision for)
income taxes 781 61 (1,027)(g) (181)
- ------------------------------------------------------------------------------
Net income (loss) ($1,436) $ 87 $ 1,670 $ 321
- ------------------------------------------------------------------------------
Net income (loss) per share:
Basic/Diluted ($ .12) $ --- $ --- $ .03
- -------------------------------------------------------------------------------
See Explanation for Adjustments at F-17
F-16
ADJUSTMENTS:
a) Adjust cost of sales to current standard costs for each of the products
acquired from Gardiner, adjusted for incremental depreciation related to
equipment acquired, and incremental overhead costs added to California
Amplifier's current manufacturing infrastructure.
b) Elimination of operating costs incurred by Gardiner.
c) Incremental operating costs to be incurred by combined organization.
d) Amortization of goodwill.
e) Elimination of Gardiner's interest and other income, net.
f) Interest expense relating to the $3.1 million, 8%, one-year seller
note.
g) Adjust tax rate to California Amplifier's consolidated rate of 36%.
h) California Amplifier acquired the product and technology rights to
substantially all of Gardiner's products, inventory and certain equipment
to manufacture such products and assumed warranty for products shipped
prior to the acquisition. The purchase price of approximately $9.1
million comprised of inventory ($2.7 million), equipment ($2.6 million),
product rights ($3.5 million) and assumption of certain liabilities and
costs associated with the acquisition ($300,000). The pro forma
adjustments assume California Amplifier paid cash of $5.7 million and
Gardiner carried $3.1 million, one-year note. California Amplifier may
use bank borrowings available under a $6.0 million credit facility to
pay a percentage of the purchase price.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report tobe signed on its behalf by the
undersigned, thereunto duly authorized.
CALIFORNIA AMPLIFIER, INC.
July 1, 1999 By:
Michael R. Ferron
Vice President, Finance,
Chief Executive Officer and Secretary
F-17