===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Date of report (Date of earliest event reported): October 1, 1999
------------------------
AFTERMARKET TECHNOLOGY CORP.
----------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 0-21803 95-4486486
------------------------------- ------------ ------------------
(State or Other Jurisdiction of (Commission (I.R.S. Employer
Incorporation or Organization) File Number) Identification No.)
ONE OAK HILL CENTER - SUITE 400, WESTMONT, IL 60559
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (630) 455-6000
----------------------
NONE
----
(Former name or address, if changed since last report)
=============================================================================
AFTERMARKET TECHNOLOGY CORP.
FORM 8-K
Aftermarket Technology Corp. (the "Company") filed a current report on Form
8-K dated October 1, 1999 (the "Current Report") pertaining to the
acquisition of substantially all the assets of All Transmission Parts, Inc.
on October 1, 1999 and the expected acquisition of substantially all the
assets of All Automatic Transmission Parts, Inc., an affiliate of All
Transmission Parts, Inc., on or before December 1, 1999. On December 1, 1999,
the Company completed the acquisition of the All Automatic Transmission
Parts, Inc. assets.
At the time of the filing of the Current Report, it was impractical for the
Company to provide financial statements and pro forma financial information
for All Transmission Parts, Inc. and All Automatic Transmission Parts, Inc.
Pursuant to the instructions for Item 7 of the Form 8-K, the Company hereby
amends Item 7 of the Current Report to include the previously omitted
information, as follows:
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements
1) Combined financial statements of All Transmission
Parts, Inc. and All Automatic Transmission
Parts, Inc. at December 31, 1998 and for the year
ended December 31, 1998.
2) Unaudited combined financial statements of All
Transmission Parts, Inc. and All Automatic
Transmission Parts, Inc. at September 30, 1999 and
for the nine months ended September 30, 1999.
(b) Pro forma financial information
1) Unaudited proforma consolidated financial information
for the Company for the year ended December 31, 1998.
2) Unaudited proforma consolidated financial information
for the Company at September 30, 1999 and for the
nine months ended September 30, 1999.
AFTERMARKET TECHNOLOGY CORP.
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.
AFTERMARKET TECHNOLOGY CORP.
Dated: December 17, 1999
By: /s/Joseph Salamunovich
---------------------------------
Joseph Salamunovich
Vice President
ALL TRANSMISSION PARTS, INC.
AND ALL AUTOMATIC
TRANSMISSION PARTS, INC.
Combined Financial Statements
For the Year Ended December 31, 1998
With Independent Auditors' Report
INDEPENDENT AUDITORS' REPORT
The Stockholders and Board of Directors
All Transmission Parts, Inc. and
All Automatic Transmission Parts, Inc.
Portland, Oregon
We have audited the accompanying combined balance sheets of All Transmission
Parts, Inc. and All Automatic Transmission Parts, Inc. as of December 31,
1998, and the related combined statements of income, stockholders' equity and
comprehensive income and cash flows for the year then ended. These financial
statements are the responsibility of the Companys' 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 combined financial position of All Transmission
Parts, Inc. and All Automatic Transmission Parts, Inc. at December 31, 1998,
and the combined results of their operations and their cash flows for the
year ended December 31, 1998, in conformity with generally accepted
accounting principles.
PERKINS & COMPANY, P.C.
Portland, Oregon
September 27, 1999
ALL TRANSMISSION PARTS, INC. AND
ALL AUTOMATIC TRANSMISSION PARTS, INC.
COMBINED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
DECEMBER 31,
1998
------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 1) $ 1,478
Accounts receivable, less allowance for doubtful accounts
of $72 at December 31, 1998 and June 30, 1999 1,555
Investments in equity securities (Note 2) 149
Inventories (Note 1) 3,871
Prepaid expenses 20
Deposits 188
Receivable from stockholder 111
Current portion of note receivable (Note 3) 6
-----------
Total current assets 7,378
PROPERTY AND EQUIPMENT (NOTES 1 AND 4) 623
OTHER ASSETS:
Note receivable, less current portion (Note 3) 12
Deposits 7
-----------
19
-----------
$ 8,020
===========
December 31,
1998
------------
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 573
Accrued payroll and payroll taxes 81
Distributions payable to stockholder 312
Warranty accrual (Note 7) 70
Current portion of note payable to related party (Note 9) 38
------------
Total current liabilities 1,074
NOTE PAYABLE TO RELATED PARTY (NOTE 9) 285
COMMITMENTS AND CONTINGENCIES
(NOTES 5,6,7,8,10,11, AND 12)
STOCKHOLDERS' EQUITY:
Common stock, no par value; 2,500 shares authorized,
543.6 shares issued and outstanding 218
Retained earnings 6,382
Accumulated other comprehensive income (Note 2) 61
------------
6,661
------------
$ 8,020
============
The accompanying notes are an integral part of these combined
financial statements.
ALL TRANSMISSION PARTS, INC. AND
ALL AUTOMATIC TRANSMISSION PARTS, INC.
COMBINED STATEMENTS OF INCOME
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
Year Ended
December 31,
1998
--------------
NET SALES $ 21,074
COST OF SALES 14,324
--------------
GROSS PROFIT 6,750
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 2,294
--------------
INCOME FROM OPERATIONS 4,456
OTHER INCOME (EXPENSE):
Loss on equipment disposal (1)
Gain (loss) on sale of investments in equity securities (19)
Interest income 42
Miscellaneous income 40
Interest expense (22)
--------------
40
--------------
NET INCOME 4,496
--------------
Pro forma income taxes (unaudited-Note 14) 1,731
--------------
Pro forma net income (unaudited-Note 14) $ 2,765
==============
The accompanying notes are an integral part of these combined
financial statements.
ALL TRANSMISSION PARTS, INC. AND
ALL AUTOMATIC TRANSMISSION PARTS, INC.
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
AND COMPREHENSIVE INCOME
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
Accumulated
Other Total
Comprehensive Comprehensive Retained Stockholders'
Income Income Common Stock Earnings Equity
---------------- ---------------- --------------- --------------- ----------------
BALANCE AT JANUARY 1, 1998 $ 30 $ 218 $ 4,813 $ 5,061
Comprehensive income:
Net income for the year $ 4,496 -- -- 4,496 4,496
Other comprehensive income:
Change in unrealized holding gains
and losses (Note 2) 31 31 -- -- 31
-----------------
$ 4,527
=================
Distributions to stockholders -- -- (2,927) (2,927)
----------------- --------------- --------------- ----------------
BALANCE AT DECEMBER 31, 1998 $ 61 $ 218 $ 6,382 $ 6,661
================= =============== =============== ===============
The accompanying notes are an integral part of these combined
financial statements.
ALL TRANSMISSION PARTS, INC. AND
ALL AUTOMATIC TRANSMISSION PARTS, INC.
COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
Year Ended
December 31,
1998
-------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,496
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 127
Loss on sale of investments in equity securities 19
Loss on equipment disposal 1
Provision for bad debts 7
(Increase) decrease in:
Accounts receivable (50)
Inventories (894)
Deposits (168)
Prepaid expenses (2)
Increase (decrease) in:
Accounts payable (7)
Accrued payroll and payroll taxes 19
Other accruals 7
-------------
Net cash provided by operating activities 3,555
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (150)
Proceeds from sale of investments in equity securities 27
Purchase of investments in equity securities (24)
Loan made to employee (20)
Payments received on note receivable 3
-------------
Net cash used in investing activities (164)
The accompanying notes are an integral part of these combined
financial statements.
ALL TRANSMISSION PARTS, INC. AND
ALL AUTOMATIC TRANSMISSION PARTS, INC.
COMBINED STATEMENT OF CASH FLOWS (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
Year Ended
December 31,
1998
--------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances to stockholder 201
Distributions to stockholders (2,927)
Principal payments on note payable to related party (36)
--------------
Net cash used in financing activities (2,762)
--------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 629
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 849
--------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,478
==============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the year for:
Interest $ 22
Income taxes --
NON-CASH FINANCING ACTIVITIES:
Distributions payable to stockholder $ 312
The accompanying notes are an integral part of these combined
financial statements.
ALL TRANSMISSION PARTS, INC. AND
ALL AUTOMATIC TRANSMISSION PARTS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS - All Transmission Parts, Inc. (All Transmission) was
incorporated in the State of Oregon on July 24, 1985. All Automatic Parts, Inc.
(All Automatic) was incorporated in the State of Oregon on January 24, 1996. The
Companies' business is the purchase and sale of new and used transmission cores
and parts on a wholesale and retail basis.
PRINCIPLES OF COMBINATION - The combined financial statements include the
accounts of All Transmission and All Automatic (the Companies) as a result of
their common ownership and management. Significant intercompany balances and
transactions have been eliminated in combination.
CONCENTRATIONS OF CREDIT RISK - The Companies grant credit to customers in the
automotive industry throughout the United States. The Companies do not generally
require collateral but limit their exposure by performing customer credit
evaluations. The Companies also make sales to customers outside the United
States, however, many of those sales are guaranteed through letters of credit.
The Companies maintain cash and money market balances at several financial
institutions and brokerage companies. Non-interest bearing accounts at certain
institutions are insured by the Federal Deposit Insurance Corporation up to
$100.
CASH EQUIVALENTS - For purposes of the Statements of Cash Flows, the Companies
consider all highly liquid investments purchased with original maturities of
three months or less to be cash equivalents.
INVENTORIES - Inventories are carried at the lower of cost (first-in, first-out
method) or market.
PROPERTY AND EQUIPMENT - Property and equipment are stated at cost less
accumulated depreciation. The costs of property and equipment are depreciated
over their estimated useful lives of generally five to fifteen years using
straight-line and accelerated methods.
INCOME TAX - The Companies have elected to be taxed under the provision of
Subchapter S of the Internal Revenue Code. Under those provisions, the Companies
do not pay federal or state corporate income taxes on their taxable income.
Instead, the stockholders are liable for individual federal and state income
taxes on the Companies' taxable income.
ESTIMATES - The preparation of combined 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
disclosures of contingent assets and liabilities at the date of the combined
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
ADVERTISING COSTS - Advertising costs are expensed as incurred and amounted to
$52 for 1998.
COMPREHENSIVE INCOME - Effective January 1, 1998, the Companies adopted
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS 130"), which establishes new rules for the reporting and display
of comprehensive income and its components, however, the adoption had no effect
on the Companies' net income or stockholders' equity. SFAS 130 requires
unrealized gains or losses on the Companies' available for sale securities to be
included in other comprehensive income.
NOTE 2 - INVESTMENTS IN EQUITY SECURITIES
The Companies investment portfolio is composed of marketable equity securities
classified as available-for-sale. The following are the aggregate costs and
market values of investments as of December 31, 1998:
Cost Market
---------------- -----------------
$ 88 $ 149
The gross realized gains (losses) from the sale of marketable securities and
gross unrealized holding gains are as follows for the year ended December 31,
1998:
Gross realized losses for the year $ (19)
Gross unrealized gains at year-end $ 61
Unrealized gains on investment in equity securities:
Change in gross unrealized holding gains for the
year $ 12
Reclassification adjustment for losses included
in net income 19
---------------
$ 31
===============
The cost used in determining realized gains or losses is on a specific
identification basis.
NOTE 3 - NOTE RECEIVABLE
The note receivable consists of the following at December 31, 1998:
Note receivable from an employee, payable in bi-monthly
installments of $250 including interest at 5.9%, until paid
in full, collateralized by real estate $ 18
Less current portion 6
-----------------
$ 12
=================
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31, 1998:
Machinery and equipment $ 406
Office equipment 321
Leasehold improvements 398
Transportation equipment 5
-----------------
1,130
Less accumulated depreciation 507
-----------------
$ 623
=================
NOTE 5 - RETIREMENT PLANS
The Companies contribute to a profit sharing plan for eligible employees who are
21 years of age or older with one or more years of service.
Under the profit sharing plan, the Companies may contribute up to 10% of
eligible compensation. Employer contributions for 1998 were $156.
NOTE 6 - LEASE COMMITMENTS
All Transmission conducts its operations from two buildings which are leased
from an affiliated company under noncancelable operating lease agreements.
Monthly rent is $14 and requires All Transmission to pay for maintenance. All
Automatic conducts its operations from a building which is under a noncancelable
operating lease agreement through January 2001 with one five year option for
renewal. Monthly rent for All Automatic is subject to annual adjustment to fair
market value. Combined rent expense for 1998 was $260, which includes short-term
equipment rentals. The following is a schedule of future minimum lease payments
under leases that have remaining lease terms in excess of one year as of
December 31, 1998:
1999 $ 260
2000 254
2001 49
2002 41
-----------------
$ 604
=================
All Transmission subleases a portion of its building to an unrelated party.
Total rental income for 1998 was $5.
NOTE 7 - PRODUCT WARRANTIES
The Companies sell rebuilt transmissions to consumers along with repair or
replacement warranties. The accompanying financial statements include a
provision of $70 for estimated warranty claims based on the Companies'
experience of the amount of claims actually made.
NOTE 8 - BUY-SELL AGREEMENT
The Companies and its stockholders are parties to a buy-sell agreement which
requires the Companies, upon the death or retirement of any stockholder, to
purchase all of his shares of the Companies' common stock to the extent that the
Companies may legally purchase such shares.
NOTE 9 - RELATED PARTY TRANSACTIONS
The note payable to related party is due to the father of the stockholders in
monthly installments of $5, including interest at 6.4%, until paid in full.
Interest paid during 1998 on the note amounted to $22.
Principal maturities as of December 31, 1998 are as follows:
1999 $ 38
2000 41
2001 44
2002 46
2003 49
Thereafter 105
-----------------
$ 323
=================
NOTE 10 - LINE OF CREDIT
All Transmission has an unsecured line of credit agreement with a bank under
which it may borrow up to $500 at the bank's prime rate (7.75% at December 31,
1998) plus 1.25%. The line expires September 1999. There were no outstanding
borrowings at December 31, 1998. All Transmission had outstanding letters of
credit of $188 secured by the line of credit at December 31, 1998.
NOTE 11 - PURCHASE COMMITMENTS
At December 31, 1998 All Transmission had outstanding purchase commitments which
range from one to three years for new transmission parts. Such commitments were
at prices not in excess of current market prices. Total purchases under the
agreements were $4,514 in 1998.
Commitments as of December 31, 1998 are as follows:
1999 $ 5,053
2000 526
-----------------
$ 5,579
=================
NOTE 12 - ENVIRONMENTAL LIABILITY
All Automatic has determined that, as one of a few potentially responsible
parties, it may incur a liability for environmental remediation costs resulting
from substandard waste management practices that may have resulted in adverse
impacts to the site leased by the Company. It is not possible to estimate the
amount of such liability at this time.
NOTE 13 - SUBSEQUENT EVENTS
On July 1, 1999, All Transmission and All Automatic and Aftermarket Technology
Corporation (ATC) entered into an agreement to sell substantially all the
operating assets of the Companies to ATC for cash. The transaction closed on
September 30, 1999. Operating liabilities of the Companies are assumed by ATC.
NOTE 14 - PRO FORMA INCOME TAX INFORMATION (UNAUDITED)
As described in Note 1, the Companies are not subject to federal income taxes.
In connection with the proposed purchase of the Companies to Aftermarket
Technology Corporation (Note 13), the Companies will be subject to corporate
income taxes. The Companies had combined income for income tax purposes of
$4,291 for 1998. Had the Companies filed income tax returns as regular
corporations for 1998, income tax expense under the provisions of Financial
Accounting Standards No. 109 would have been $1,731.
The following unaudited pro forma information reflects income tax expense for
the Companies as if the Companies had been subject to income taxes:
Current:
Federal $ 1,459
State 303
-----------------
1,762
Deferred (31)
-----------------
Pro forma income taxes $ 1,731
=================
The pro forma provisions for income taxes for the year ended December 31, 1998
differ from the amounts computed by applying the applicable statutory federal
income tax rate of (34%) to income before income taxes due to certain
non-deductible expenses, and state income taxes.
The Companies' pro forma deferred income tax asset of approximately $104 as of
December 31, 1998 relates principally to differences in the recognition of
liability reserves and certain other temporary differences. The Companies also
had pro forma deferred tax liabilities as of December 31, 1998 of approximately
$25 which relate to differences between tax and financial methods of
depreciation.
NOTE 15 - YEAR 2000 ISSUE (UNAUDITED)
Like other companies, the Companies could be adversely affected if the computer
systems we, our suppliers or customers use do not properly process and calculate
date-related information and data from the period surrounding and including
January 1, 2000. This is commonly known as the "Year 2000" issue. Additionally,
this issue could impact non-computer systems and devices such as production
equipment, etc. At this time, because of the complexities involved in the issue,
management cannot provide assurances that the Year 2000 issue will not have an
impact on the Companies' operations.
UNAUDITED COMBINED FINANCIAL STATEMENTS
ALL TRANSMISSION PARTS, INC. AND
ALL AUTOMATIC TRANSMISSION PARTS, INC.
AT SEPTEMBER 30, 1999 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
ALL TRANSMISSION PARTS, INC. AND
ALL AUTOMATIC TRANSMISSION PARTS, INC.
COMBINED BALANCE SHEETS - UNAUDITED
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
September 30,
1999
---------------
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 1,523
Accounts receivable, less allowance for doubtful accounts
of $145 at September 30, 1999 1,756
Inventories 4,528
Deposits 142
Receivable from stockholder 1,349
Current portion of note receivable 6
---------------
Total current assets 9,304
PROPERTY AND EQUIPMENT 677
OTHER ASSETS:
Note receivable, less current portion 12
Deposits 7
---------------
19
---------------
$ 10,000
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 902
Accrued payroll and payroll taxes 195
Warranty accrual 70
Current portion of note payable to related party 40
---------------
Total current liabilities 1,207
NOTE PAYABLE TO RELATED PARTY 259
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, no par value; 2,500 shares authorized,
543.6 shares issued and outstanding 218
Retained earnings 8,316
---------------
8,534
---------------
$ 10,000
===============
ALL TRANSMISSION PARTS, INC. AND
ALL AUTOMATIC TRANSMISSION PARTS, INC.
COMBINED STATEMENTS OF INCOME-UNAUDITED
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
Nine Months Ended
September 30, 1999
------------------
NET SALES $ 18,130
COST OF SALES 10,924
------------------
GROSS PROFIT 7,206
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 2,992
------------------
INCOME FROM OPERATIONS 4,214
OTHER INCOME (EXPENSE):
Gain on sale of investments in
equity securities 53
Interest income 57
Miscellaneous income 5
Interest expense (13)
------------------
102
------------------
NET INCOME 4,316
------------------
Pro forma income taxes 1,662
------------------
Pro forma net income $ 2,654
==================
ALL TRANSMISSION PARTS, INC. AND
ALL AUTOMATIC TRANSMISSION PARTS, INC.
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
AND COMPREHENSIVE INCOME-UNAUDITED
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
Accumulated
Other Total
Comprehensive Comprehensive Common Retained Stockholders'
Income Income Stock Earnings Equity
-------------- ------------- ------- -------- -------------
BALANCE AT DECEMBER 31, 1998 $ 61 $ 218 $ 6,382 $ 6,661
Comprehensive income:
Net income for the period $ 4,316 -- -- 4,316 4,316
Other comprehensive income:
Change in unrealized holding
gains and losses (61) (61) -- -- (61)
-----------
$ 4,255
===========
Distributions to stockholders -- -- (2,382) (2,382)
----------- ------- -------- -----------
BALANCE AT SEPTEMBER 30, 1999 $ -- $ 218 $ 8,316 $ 8,534
=========== ======= ======== ===========
ALL TRANSMISSION PARTS, INC. AND
ALL AUTOMATIC TRANSMISSION PARTS, INC.
COMBINED STATEMENTS OF CASH FLOWS-UNAUDITED
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
Nine Months Ended
September 30, 1999
------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,316
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 89
Gain on sale of investments in equity securities (53)
Provision for bad debts 73
(Increase) decrease in:
Accounts receivable (275)
Inventories (657)
Deposits 47
Prepaid expenses 21
Increase in:
Accounts payable 330
Accrued payroll and payroll taxes 184
------------------
Net cash provided by operating activities 4,075
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (143)
Proceeds from sale of investments in equity securities 187
Purchase of investments in equity securities (46)
-----------------
Net cash used in investing activities (2)
ALL TRANSMISSION PARTS, INC. AND
ALL AUTOMATIC TRANSMISSION PARTS, INC.
COMBINED STATEMENTS OF CASH FLOWS-UNAUDITED (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
Nine Months Ended
September 30, 1999
------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances to stockholder (1,621)
Distributions to stockholders (2,382)
Principal payments on long-term debt to related party (25)
------------------
Net cash used in financing activities (4,028)
------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 45
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,478
------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,523
==================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ 13
Income taxes $ 0
ALL TRANSMISSION PARTS, INC. AND
ALL AUTOMATIC TRANSMISSION PARTS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS-UNAUDITED
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
NOTE 1-BASIS OF PRESENTATION AND NATURE OF OPERATIONS
All Transmission Parts, Inc. (All Transmission) was incorporated in the State
of Oregon on July 24, 1985. All Automatic Parts, Inc. (All Automatic) was
incorporated in the State of Oregon on January 24, 1996. The Companies'
business is the purchase and sale of new and used transmission cores and
parts on a wholesale and retail basis.
The combined financial statements include the accounts of All Transmission
and All Automatic (the Companies) as a result of their common ownership and
management. Significant intercompany balances and transactions have been
eliminated in combination.
The combined balance sheet at September 30, 1999, and the combined statements
of income, stockholders' equity and comprehensive income and cash flows for
the nine months ended September 30, 1999, are unaudited, but include all
adjustments (consisting only of normal and recurring accruals) which the
Companies consider necessary for fair presentation.
The accompanying combined financial statements do not include all disclosures
normally provided in annual financial statements and, therefore, should be
read in conjunction with the December 31, 1998, combined financial statements.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes.
NOTE 2-SUBSEQUENT EVENTS
On July 1, 1999, All Transmission and All Automatic and Aftermarket
Technology Corporation (ATC) entered into an agreement to sell substantially
all the operating assets of the Companies to ATC for cash. The transaction
closed on October 1, 1999. Operating liabilities of the Companies were
assumed by ATC. The total cash purchase price sale was $40,000.
AFTERMARKET TECHNOLOGY CORP.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Dr (Cr)
Aftermarket Pro Forma Pro Forma Pro Forma
Technology Corp. All Trans Adjustments Adj. Ref. Consolidated
-------------- --------- ----------- --------- ------------
Net sales $ 486,773 $ 21,074 $ (1,357) (1) $ 506,490
Cost of sales 348,443 14,324 (1,340) (1) 361,427
---------------------------------------- -----------
Gross profit 138,330 6,750 (17) 145,063
Selling, general and
administrative expense 109,357 2,294 111,651
Amortization of intangible assets 6,806 -- 905 (2) 7,711
Special charges 8,744 -- 8,744
---------------------------------------- -----------
Income from operations 13,423 4,456 (922) 16,957
Other income (expense), net (41) 62 (23) (3) (2)
Interest expense 23,673 22 (22) (4)
3,051 (5) 26,724
---------------------------------------- -----------
Income (loss) before income taxes
and extraordinary items (10,291) 4,496 (3,974) (9,769)
Income tax expense (benefit) (3,176) 1,731 (1,583) (6) (3,028)
---------------------------------------- ------------
Income (loss) before extraordinary items (7,115) 2,765 (2,391) (6,741)
Extraordinary items, net of income taxes (703) -- -- (703)
--------------------------------------- -----------
Net income $ (7,818) $ 2,765 $ (2,391) $ (7,444)
======================================== ============
Per common share - basic:
Income (loss) before extraordinary items $ (0.36) $ 0.14 $ (0.12) $ (0.34)
Extraordinary items (0.03) -- -- (0.03)
---------------------------------------- ------------
Net income (loss) $ (0.39) $ 0.14 $ (0.12) $ (0.37)
======================================= ============
Weighted average number of common shares
outstanding 19,986 19,986 19,986 19,986
======================================= ============
Per common share - diluted:
Income before extraordinary items $ (0.36) $ 0.14 $ (0.12) $ (0.34)
Extraordinary items (0.03) -- -- (0.03)
---------------------------------------- ------------
Net income (loss) $ (0.39) $ 0.14 $ (0.12) $ (0.37)
======================================= ============
Weighted average number of common and
common equivalent shares outstanding 19,986 19,986 19,986 19,986
======================================= ============
SEE ACCOMPANYING NOTES FOR PRO FORMA ADJUSTMENTS.
Aftermarket Technology Corp.
Notes To Consolidated Pro Forma Statements Of Income
The accompanying consolidated pro forma statements of income reflect the
acquisition of All Transmission Parts, Inc. and All Automatic Transmission
Parts, Inc. ("All Trans") as if the acquisition had occurred on January 1,
1998. The adjustments reflect the acquisition as follows:
(1) Eliminates sales from All Trans to Aftermarket Technology Corp.
(2) Reflects additional amortization expense from the goodwill recorded.
(3) Eliminates other income (loss) generated from assets not assumed in the
acquisition.
(4) Eliminates interest expense on notes payable not assumed in the
acquisition.
(5) Reflects additional interest expense on debt incurred in connection with
the acquisition.
(6) Reflects the adjustment to income taxes as a result of the pro forma
adjustments describe in these Notes.
AFTERMARKET TECHNOLOGY CORP.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
SEPTEMBER 30, 1999
(IN THOUSANDS)
Dr (Cr)
Aftermarket Pro Forma Pro Forma Pro Forma
Technology Corp. All Trans Adjustments Adj. Ref. Consolidated
---------------- --------- ----------- --------- ------------
ASSETS
Current Assets:
Cash and cash equivalents $ 2,099 $ 1,523 $ (1,523) (1) $ 2,099
Accounts receivable, net 78,314 1,756 -- 80,070
Inventories 116,156 4,528 (425) (2) 120,259
Prepaid and other assets 4,762 1,497 (1,355) (1) 4,904
Deferred income taxes 10,519 -- -- 10,519
---------------------------------------------- ---------
Total current assets 211,850 9,304 (3,303) 217,851
Property, plant and equipment, net 75,900 677 (466) (2) 76,111
Debt issuance costs, net 4,983 -- -- 4,983
Cost in excess of net assets acquired, net 261,928 -- 36,198 (3) 298,126
Other assets 455 19 (12) (1) 462
---------------------------------------------- ---------
total assets $ 555,116 $ 10,000 $ 32,417 $ 597,533
============================================== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 39,442 $ 902 $ -- $ 40,344
Accrued expenses and other current liabilities 45,374 305 (190) (1) 45,489
Amounts due to acquired companies 8,313 -- 8,313
Bank line of credit 1,228 -- 1,228
Income taxes payable 553 -- 553
Current portion of credit facility 18,426 -- -- 18,426
---------------------------------------------- ---------
Total current liabilities 113,336 1,207 (190) 114,353
12% Series B and D Senior Subordinated Notes 111,259 -- -- 111,259
Amount drawn on credit facility, less current portion 129,618 -- 41,400 (4) 171,018
Amounts due to acquired companies, less current portion 7,606 -- -- 7,606
Note payable to related party -- 259 (259) (1) --
Deferred compensation 3,534 -- -- 3,534
Deferred income taxes 13,626 -- -- 13,626
Stockholders' equity:
Preferred stock -- -- -- --
Common stock 206 218 (218) (5) 206
Additional paid-in capital 135,757 -- -- 135,757
Retained earnings 42,740 8,316 (8,316) (5) 42,740
Accumulated other comprehensive loss (572) -- -- (572)
Common stock held in treasury, at cost (172,000 shares) (1,994) -- (1,994)
---------------------------------------------- ---------
Total stockholders' equity 176,137 8,534 (8,534) 176,137
---------------------------------------------- ---------
Total liabilities and stockholders' equity $ 555,116 $ 10,000 $ 32,417 $ 597,533
============================================== =========
Aftermarket Technology Corp.
Notes To Condensed Pro Forma Balance Sheet
The accompanying condensed pro forma balance sheet reflects the acquisition of
All Transmission Parts, Inc. and All Automatic Transmission Parts, Inc. ("All
Trans") as if the acquisition had occurred on September 30, 1999. The
adjustments reflect the acquisition as follows:
(1) Per the terms of the purchase agreement, certain All Trans assets and
liabilities were not transferred to Aftermarket Technology Corp.
(2) Reflects adjustment to inventory and fixed assets to their approximate
fair value.
(3) Records the preliminary goodwill arising from the acquisition of All
Trans.
(4) Reflects amount drawn on credit facility to finance the acquisition of
All Trans.
(5) Reflects elimination of prior equity of All Trans.
AFTERMARKET TECHNOLOGY CORP.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED
SEPTEMBER 30, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Dr(Cr)
Aftermarket Pro Forma Pro Forma Pro Forma
Technology Corp. AllTrans Adjustments Adj. Ref. Consolidated
---------------- --------- ----------- --------- ------------
Net sales $ 418,557 $ 18,130 $ (1,138) (1) $ 435,549
Cost of sales 286,560 10,924 (1,118) (1) 296,366
---------------------------------------------- ------------
Gross profit 131,997 7,206 (20) 139,183
Selling, general and
administrative expense 91,265 2,992 94,257
Amortization of intangible assets 5,370 -- 679 (2) 6,049
Special charges 4,000 -- 4,000
---------------------------------------------- ------------
Income from operations 31,362 4,214 (699) 34,877
Other income (expense), net 163 115 (110) (3) 168
Interest expense 19,750 13 (13) (4)
2,360 (5) 22,110
---------------------------------------------- ------------
Income before income taxes
and extraordinary items 11,775 4,316 (3,156) 12,935
Income tax expense 4,711 1,662 (1,254) (6) 5,119
---------------------------------------------- ------------
Net income $ 7,064 $ 2,654 $ (1,902) $ 7,816
============================================== ============
Per common share-basic:
Net Income $ 0.35 $ 0.13 $ (0.09) $ 0.39
---------------------------------------------- ------------
Weighted average number of
common shares outstanding 20,294 20,294 20,294 20,294
============================================== ============
Per common share-diluted:
Net Income $ 0.33 $ 0.13 $ (0.09) $ 0.37
============================================== ============
Weighted average number of common and
common equivalent shares outstanding 21,142 21,142 21,142 21,142
============================================== ============
SEE ACCOMPANYING NOTES FOR PRO FORMA ADJUSTMENTS.
Aftermarket Technology Corp.
Notes to Consolidated Pro Forma Statement of Income
The accompanying consolidated pro forma statements of income reflect the
acquisition of All Transmission Parts, Inc. and All Automatic Transmission
Parts, Inc. ("All Trans") as if the acquisition had occurred on January 1,
1999. The adjustments reflect the acquisition as follows:
(1) Eliminates sales from All Trans to Aftermarket Technology Corp.
(2) Reflects additional amortization expense from the goodwill recorded.
(3) Eliminates other income (loss) generated from assets not assumed in the
acquisition.
(4) Eliminates interest expense on notes payable not assumed in the
acquisition.
(5) Reflects additional interest expense on debt incurred in connection with
the acquisition.
(6) Reflects the adjustment to income taxes as a result of the pro forma
adjustments described in these Notes.