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): July 19, 1995
Giddings & Lewis, Inc.
(Exact name of registrant as specified in its charter)
Wisconsin 0-17873 39-1643189
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
142 Doty Street, Fond du Lac, Wisconsin 54935
(Address of principal executive offices, including zip code)
(414) 921-9400
(Registrant's telephone number)
Item 5. Other Events.
On April 24, 1995, Giddings & Lewis, Inc. ("Giddings & Lewis")
acquired through a wholly owned subsidiary all of the issued and
outstanding shares of capital stock of Fadal Engineering Company, Inc., a
California corporation ("Fadal"), and the land and building in Chatsworth,
California used by Fadal in the operation of its business, which was
leased by Fadal from a related partnership. Fadal is principally involved
in the design, manufacture and sale of computer numerically controlled
vertical machining centers. Giddings & Lewis' acquisition of Fadal was
previously reported in a Current Report on Form 8-K, dated April 24, 1995,
filed by Giddings & Lewis with the Securities and Exchange Commission.
For the purpose of updating certain disclosures, set forth below
are the unaudited financial statements of Fadal at, and for the three
months ended, April 2, 1995 and March 31, 1994, and Giddings & Lewis'
unaudited pro forma financial information, which reflects the acquisition
of Fadal, at, and for the three months ended, April 2, 1995.
Financial Statements of Business Acquired
Fadal Engineering Co., Inc.
Balance Sheets
April 2, 1995 March 31, 1994
(Unaudited)
Assets
Current assets:
Cash $ 348,505 $ 272,998
Accounts receivable, less
allowance for doubtful accounts
of $390,131 and $292,418 in 1995
and 1994, respectively 37,654,017 25,518,541
Note receivable from stockholders'
partnership, current portion 1,785,710 1,785,710
Other receivables 146,485 106,263
Inventories 20,409,332 19,219,904
Prepaid expenses 652,971 569,725
---------- ----------
Total current assets 60,997,020 47,473,141
Equipment and leasehold
improvements, net 5,944,064 4,935,491
Note receivable from stockholders'
partnership, non-current portion 3,928,586 5,714,296
Note receivable from stockholders - 275,817
Accounts receivable, non-current
portion - 13,413
Other assets 148,388 261,884
---------- ----------
Total assets $71,018,058 $58,674,042
=========== ===========
See accompanying notes.
April 2, March 31,
1995 1994
(Unaudited)
Liabilities and stockholders' equity
Current liabilities:
Note payable to bank $ 725,000 $ 4,498,000
Bank term loan, current portion 1,785,710 1,785,710
Accounts payable 6,602,809 8,536,424
Accrued expenses (Note 2) 1,090,826 3,189,014
Income tax payable 149,000 60,300
Notes payable to stockholders 8,461,282 6,475,435
Note payable to estate of former
stockholder 2,094,197 2,145,217
Note payable to former stockholder's
estate, current portion 900,000 900,000
---------- ----------
Total current liabilities 21,808,824 27,590,100
Deferred income - 232,159
Bank term loan, long-term portion 3,928,586 5,714,296
Note payable to former stockholder's
estate, long-term portion 6,300,000 7,200,000
Commitments and contingencies
Stockholders' equity:
Common stock, no par value:
authorized shares - 135,000 issued
and outstanding shares - 18,480 20,533 20,533
Additional paid-in capital 1,200 1,200
Retained earnings 38,958,915 17,915,754
----------- -----------
Total stockholders' equity 38,980,648 17,937,487
---------- -----------
Total liabilities and stockholders'
equity $71,018,058 $58,674,042
========== ===========
See accompanying notes.
Fadal Engineering Co., Inc.
Statements of Income
Three months ended
April 2, 1995 March 31, 1994
(Unaudited)
Net sales $42,640,318 $28,107,653
Costs and expenses:
Cost of sales 29,726,484 21,340,209
Selling, general and
administrative expenses (Note 2) 1,878,374 3,764,574
Depreciation and amortization 502,258 444,401
Total operating expenses 32,107,116 25,549,184
---------- ----------
Operating income 10,533,202 2,558,469
Other (income) expense:
Net interest expense 350,774 391,860
Earthquake repairs 3,952 298,096
Other miscellaneous income (18,363) (9,610)
---------- ----------
Total other expense 336,363 680,346
---------- ---------
Income before provision for state
income taxes 10,196,839 1,878,123
Provision for state income taxes 155,000 63,600
---------- ----------
Net income $10,041,839 $ 1,814,523
=========== ==========
See accompanying notes.
Fadal Engineering Co., Inc.
Statements of Stockholders' Equity
Additional Total
Common Stock Paid-in Retained Stockholders'
Shares Amount Capital Earnings Equity
Balance at
December 31,
1992 18,480 $20,533 $1,200 $12,374,744 $12,396,477
Net income - - - 3,726,487 3,726,487
--------- -------- ------- ---------- ----------
Balance at
December 31,
1993 18,480 20,533 1,200 16,101,231 16,122,964
Net income - - - 12,815,845 12,815,845
--------- -------- -------- ----------- -----------
Balance at
December 31,
1994 18,480 $20,533 $1,200 $28,917,076 $28,938,809
Net income - - - 10,041,839 10,041,839
-------- -------- -------- ---------- ----------
Balance at
April 2,
1995 18,480 20,533 1,200 38,958,915 38,980,648
======= ======= ======= =========== ============
See accompanying notes.
Fadal Engineering Co., Inc.
Statements of Cash Flows
Three months ended
April 2, 1995 March 31, 1994
(Unaudited)
Increase (decrease) in cash
Operating activities
Net income $ 10,041,839 $ 1,814,523
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 502,258 444,401
Gain on asset dispositions (18,363) -
Changes in assets and liabilities:
Increase in accounts receivable (4,356,509) (4,243,199)
Decrease in other receivables 17,669 32,174
(Increase) decrease in
inventories 777,593 (843,887)
Increase in prepaid expenses
and other assets (63,879) (144,186)
Increase (decrease) in accounts
payable (2,418,766) 4,197,042
Increase in income taxes payable
and accrued expenses 190,813 2,379,347
---------- -----------
Total adjustments (5,369,184) 1,821,692
---------- -----------
Net Cash provided by operating
activities 4,672,655 3,636,215
========== ===========
Investing activities
Capital expenditures (899,207) (750,944)
Proceeds from disposition of assets 39,768 -
---------- ----------
Net cash used in investing
activities (859,439) (750,944)
Financing activities
Proceeds from draws on lines of
credit 3,525,000 11,115,000
Repayments under lines of credit (14,800,000) (15,389,000)
Net borrowings from stockholders (201,749) (425,821)
----------- -----------
Net cash provided by financing
activities (11,476,749) (4,699,821)
----------- -----------
Net decrease in cash (7,663,533) (1,814,550)
Cash at beginning of period 8,012,038 2,087,548
----------- ----------
Cash at end of period $ 348,505 $ 272,998
=========== ==========
See accompanying notes.
Fadal Engineering Co., Inc.
Notes to Financial Statements
April 2, 1995
(Unaudited)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended
April 2, 1995 are not necessarily indicative of the results that may
be expected for the year ended December 31, 1995.
2. Additional Compensation Expense
The selling, general, and administrative expenses for the quarter
ended March 31, 1994 reflect an allocation to that quarter of
$2,273,484 in additional compensation expense which was paid in
December 1994 to key executives of Fadal.
3. Subsequent Event
Effective April 24, 1995, Fadal was sold to Giddings & Lewis.
Pro Forma Financial Information
GIDDINGS & LEWIS, INC.
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma financial information relates to
the April 24, 1995 acquisition (such acquisition including certain related
transactions are collectively referred to herein as the "Acquisition") by
a wholly owned subsidiary of Giddings & Lewis of (a) all of the issued and
outstanding shares of capital stock of Fadal and (b) the land and building
used by Fadal and leased from a related partnership. The transaction has
been accounted for as a purchase business combination. The pro forma
amounts have been prepared based on certain purchase accounting and other
pro forma adjustments (as described in the accompanying notes) to the
April 2, 1995 historical financial statements of both companies.
The unaudited pro forma condensed consolidated statement of income
for the three months ended April 2, 1995 reflects the historical results
of operations of both companies with pro forma acquisition adjustments as
if the Acquisition had occurred on January 1, 1995. The unaudited pro
forma condensed consolidated balance sheet at April 2, 1995 reflects the
historical financial position of both companies at April 2, 1995, with pro
forma acquisition adjustments as if the Acquisition had occurred on
April 2, 1995. The pro forma adjustments are described in the
accompanying notes and give effect to events that are (a) directly
attributable to the Acquisition, (b) factually supportable, and (c) in the
case of certain income statement adjustments, expected to have a
continuing impact.
The unaudited pro forma condensed consolidated financial statements
should be read in connection with Giddings & Lewis' Annual Report on Form
10-K for the year ended December 31, 1994 and Quarterly Report on Form
10-Q for the quarter ended April 2, 1995 along with the April 2, 1995
financial statements of Fadal and related notes appearing elsewhere in
this Current Report on Form 8-K.
The unaudited pro forma financial information presented is for
information purposes only and does not purport to represent what Giddings
& Lewis' and Fadal's financial position or results of operations as of the
dates presented would have been had the Acquisition in fact occurred on
such date or at the beginning of the period indicated or to project
Giddings & Lewis' and Fadal's financial position or results of operations
for any future date or period.
PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
(In thousands)
(Unaudited)
April 2, 1995
Giddings Pro Forma Pro
& Lewis Fadal Adjustments Forma
(Note 2)
ASSETS
Current assets:
Cash and cash
equivalents . . . . $ 10,195 $ 349 $(349)(a) $ 10,195
Accounts receivable . 369,580 37,654 - 407,234
Inventories . . . . . 82,862 20,409 - 103,271
Note receivable . . . - 1,829 (1,829)(a) -
Other current assets 24,027 756 235(a,b) 25,018
--------- ------------------ ---------
Total current assets . 486,664 60,997 (1,943) 545,718
Non-current assets
Net property, plant and
equipment . . . . . 109,678 5,944 6,900(b) 122,522
Note receivable . . . - 3,929 (3,929)(a) -
Costs in excess of net
acquired tangible
assets . . . . . . . 84,420 - 114,564(b) 198,984
Other assets . . . . 30,106 148 1,205(a,b) 31,459
--------- --------- -------- ----------
Total non-current assets
224,204 10,021 118,740 352,965
--------- --------- --------- ----------
Total assets . . . . . $710,868 $71,018 $116,797 $898,683
======== ======== ======== ========
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable . . $50,635 $ 6,603 $ - $ 57,238
Accrued expenses . . 82,436 1,240 (221)(a) 83,455
Notes payable -
revolving credit . . 36,000 - 180,193(c) 216,193
Notes payable - other - 13,966 (13,966)(a) -
-------- --------- -------- ---------
Total current
liabilities . . . . . 169,071 21,809 166,006 356,886
Non-current liabilities:
Notes payable . . . . - 10,228 (10,228)(a) -
Other . . . . . . . . 45,554 - - 45,554
-------- -------- -------- -------
Total non-current
liabilities . . . . . 45,554 10,228 (10,228) 45,554
-------- -------- -------- -------
Total liabilities . . . 214,625 32,037 155,778 402,440
Total shareholders'
equity . . . . . . . 496,243 38,981 (38,981)(a,b) 496,243
-------- -------- --------- --------
Total liabilities and
shareholders' equity $710,868 $71,018 $116,797 $898,683
======== ======= ======== ========
See Notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended April 2, 1995
Giddings Pro Forma
& Lewis Fadal Adjustments Pro Forma
(Note 2)
Net sales . . . . . . $154,576 $42,640 $ - $197,216
Cost of sales . . . . 122,862 29,727 (360)(d) 152,229
Selling, general and
administrative
expenses . . . . . 15,583 1,878 - 17,461
Depreciation and
amortization . . . 4,182 502 1,262(e,f,g) 5,946
--------- ------- --------- --------
Operating income . . 11,949 10,533 (902) 21,580
Net interest expense 290 351 2,866(h,i,j) 3,507
Other (income) expense (31) (15) - (46)
--------- ------- --------- --------
Income before
provision for income
taxes . . . . . . . 11,690 10,197 (3,768) 18,119
Provision for income
taxes . . . . . . . 4,594 155 2,513(k) 7,262
-------- ------- --------- --------
Net income . . . . . $ 7,096 $10,042 ($6,281) $10,857
======= ======= ======= =======
Net income per common
share . . . . . . . $ .21 $ .32(l)
===== ======
Average number of
common shares
outstanding . . . . 34,364 34,364
====== ======
See Notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements
GIDDINGS & LEWIS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except share data)
1. Basis of Presentation
The accompanying unaudited pro forma condensed consolidated
financial statements have been prepared using the historical financial
statements of Giddings & Lewis and Fadal, with pro forma adjustments as if
the Acquisition had occurred on January 1, 1995 for purposes of the income
statement and April 2, 1995 for purposes of the balance sheet.
2. Pro Form Adjustments
The pro forma adjustments are summarized as follows:
Balance Sheet:
1. To eliminate related party and other assets and liabilities
not acquired/assumed in the Acquisition, as follows:
Cash . . . . . . . . . $349
Note receivable:
Current . . . . . . 1,829
Non-current . . . . 3,929
Other current assets . 15
Other assets . . . . . 95
Accrued expenses . . . (221)
Notes payable-current . (13,966)
Notes payable-
non-current . . . . . (10,228)
--------
$(18,198)
========
2. To adjust the acquired assets and assumed liabilities to their
estimated fair value:
Total cash consideration . . . . . . . . . . $180,193
========
Purchase price allocation
Book value of acquired net assets
of Fadal at April 2, 1995 . . . . . . . $57,179
Adjustments to acquired net assets:
Estimated fair value of land and
buildings acquired from related
partnership . . . . . . . . . . . . 6,900
Organization costs . . . . . . . . . 1,300
Loan origination fee . . . . . . . . 250
Costs in excess of net acquired
tangible assets . . . . . . . . . . 114,564
--------
$180,193
========
(a) To record the debt incurred by Giddings & Lewis to finance the
Acquisition (via draws on its new and amended U.S. revolving credit
facilities).
Income Statement:
(b) Reduction in lease costs due to the real estate and building
purchase - $360
(c) Amortization of costs in excess of net acquired tangible
assets. Giddings & Lewis is in the process of valuing intangible assets
acquired. For purposes of this pro forma condensed consolidated statement
of income, Giddings & Lewis estimates the average life of these
intangibles will approximate 24 years - $1,176.
(d) Depreciation expense on the building purchase - $21.
(e) Amortization of organization costs during a period of 5 years
- $65.
(f) Eliminate interest expense on the debt retained by the sellers
- $350.
(g) Amortization of loan origination fees - $63.
(h) Additional interest expense on the acquisition debt of
$180,193. Interest rate used was 7.0% - $3,153.
(i) To reflect corporate and state income taxes at the estimated
combined effective statutory rate (41.5%) as if Fadal had been a C
corporation during 1995, and the tax effect of pro forma adjustments using
a 41.5% tax rate.
Per Share Computation:
(j) The computation of earnings per share is based upon the pro
forma net income divided by the historical weighted average number of
Giddings & Lewis common shares outstanding during the first quarter of
1995.
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 thereunto duly authorized.
GIDDINGS & LEWIS, INC.
Date: July 19, 1995 By: /s/ Richard C. Kleinfeldt
Richard C. Kleinfeldt
Vice President-Finance, Secretary
and Chief Financial Officer