UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
(AMENDMENT NO. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 7, 1999
------------
QMS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 1-9348 63-0737870
---------------------------- ------------ -------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
One Magnum Pass, Mobile, Alabama 36618
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (334) 633-4300
--------------
INDEX TO FINANCIAL STATEMENTS
Item 7. (a) Financial Statements of Businesses Acquired 3
QMS Europe B.V. Consolidated Financial Statements for the
years ended September 27, 1996, October 3, 1997, and
October 2, 1998, and the Independent Auditors' Report 4 - 14
QMS Australia PTY Ltd. Consolidated Financial Statements
for the years ended September 30, 1996, September 30, 1997, and
September 30, 1998, and the Independent Auditors' Report 15 - 33
Unaudited Interim Financial Statements for QMS Europe B.V.
for the six months ended April 2, 1999 and April 3, 1998 34 - 42
Unaudited Interim Financial Statements for QMS Australia
PTY Ltd. for the six months ended March 31, 1999 and 43 - 54
March 31, 1998
Item 7. (b) Pro Forma Financial Information
Pro Forma Combined Financial Information of the Company 55 - 61
Item 7. (c) Exhibits
(i) Independent Auditors Consent -- QMS Europe B.V. 62
(ii) Independent Auditors Consent -- QMS Australia PTY, Ltd. 63
Signatures 64
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired
CONSOLIDATED FINANCIAL STATEMENTS OF QMS EUROPE B.V. FOR THE YEARS ENDED
OCTOBER 2, 1998, OCTOBER 3, 1997 AND SEPTEMBER 26, 1996
Table of contents
INDEPENDENT AUDITORS' REPORT 2
CONSOLIDATED STATEMENTS OF EARNINGS 3
CONSOLIDATED BALANCE SHEETS 4
CONSOLIDATED STATEMENTS OF CASH FLOWS 5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 6
To the Stockholders of QMS Europe B.V.
Postbus 8540
3503 RM Utrecht
Independent auditors' report
We have audited the accompanying consolidated balance sheets of QMS Europe B.V.
and its subsidiaries (collectively, the "Company") as of October 3, 1997 and
October 2, 1998 and the related consolidated statements of earnings and cash
flows for the fiscal years ended September 27, 1996, October 3, 1997 and October
2, 1998, expressed in Netherlands guilders. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the Netherlands and in the United States of America. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatements. 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 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 the
Company at September 27, 1996, October 3, 1997 and October 2, 1998 and the
results of its operations and its cash flows for the fiscal years ended
September 27, 1996, October 3, 1997 and October 2, 1998, in conformity with
generally accepted accounting principles in the United States of America.
Our audit also comprehended the translation of Netherlands Guilder amounts into
U.S. dollar amounts, and, in our opinion, such translation has been made in
conformity with the basis stated in Note 1 to the Consolidated Financial
Statements. Such U.S. dollar amounts are presented solely for the convenience of
the readers in the United States of America.
October 22, 1998, except for note 9,
as to which the date is June 7, 1999
QMS EUROPE B.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands)
fiscal year fiscal year fiscal year fiscal year
1996 1997 1998 1998
--------------------------------------------------------------------
NLG NLG NLG U.S.$
Net sales 132,046 126,800 186,424 100,487
Cost of sales 103,253 95,818 130,409 70,294
--------------------------------------------------------------------
Gross profit 28,793 30,982 56,015 30,193
Selling expenses 7,064 8,824 13,592 7,326
General and administrative expenses 19,227 20,035 22,280 12,009
--------------------------------------------------------------------
Operating result 2,502 2,123 20,143 10,858
Interest income 428 245 299 161
Interest expense -1,415 -1,372 -2,063 -1,112
Exchange gains (losses) 1,641 2,257 -4,514 -2,433
--------------------------------------------------------------------
Net financial income (expense) 654 1,130 -6,278 -3,384
--------------------------------------------------------------------
Earnings before taxes 3,156 3,253 13,865 7,474
Provision for income taxes -1,176 -1,255 -4,929 -2,657
--------------------------------------------------------------------
Net income 1,980 1,998 8,936 4,817
====================================================================
See notes to the consolidated financial statements
QMS EUROPE B.V. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Including proposed appropriation of earnings. Amounts in thousands)
October 3, 1997 October 2, 1998 October 2, 1998
---------------------------------------------------
NLG NLG U.S.$
ASSETS
Current assets
Cash and cash equivalents 3,512 1,912 1,031
Inventories 20,052 28,192 15,196
Accounts receivable 18,712 29,313 15,802
Other receivables 3,047 2,402 1,295
Receivables from group companies 4,222 2,594 1,397
---------------------------------------------------
49,545 64,413 34,721
Fixed assets
Property and equipment, net 2,714 2,739 1,476
---------------------------------------------------
Total assets 52,259 67,152 36,197
===================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Line of credit 13,602 13,549 7,303
Accounts payable 9,705 16,498 8,893
Accrued expenses 7,527 8,067 4,349
Payables to group companies 0 881 475
Taxes and social security 2,102 533 287
---------------------------------------------------
32,936 39,528 21,307
Long term debt 9,895 9,276 5,000
Stockholders' equity
Common shares 35 35 19
Additional paid-in capital 215 215 116
Retained earnings 9,178 18,098 9,755
---------------------------------------------------
9,428 18,348 9,890
---------------------------------------------------
Total liabilities and stockholders' equity 52,259 67,152 36,197
===================================================
See notes to the consolidated financial statements
QMS EUROPE B.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
fiscal year fiscal year fiscal year fiscal year
1996 1997 1998 1998
--------------------------------------------------------------------
NLG NLG NLG U.S.$
Cash flow from operating
Activities:
Net income 1,980 1,998 8,936 4,817
Adjustment to reconcile net income
To net cash flows from operating
Activities:
Depreciation 1,661 1,965 2,284 1,231
Changes in assets and liabilities
that provided (used) cash:
Receivables -4,527 -2,423 -8,328 -4,489
Inventories -1,998 -7,191 -8,140 -4,388
Payables and accrued expenses 5,010 2,152 8,214 4,428
Taxes and social securities 122 959 -1,569 -846
--------------------------------------------------------------------
Net cash provided by (used in)
Operating activities 2,248 -2,540 1,397 753
Cash flow from investing activities:
Capital expenditures -2,294 -2,324 -2,742 -1,478
Proceeds from sale of fixed assets 449 482 433 233
--------------------------------------------------------------------
Net cash used in investing activities -1,845 -1,842 -2,309 -1,245
Net cash provided by (used in)
Financing activities
Line of credit 5,360 -240 -53 -30
Exchange rate differences 603 1,400 -635 -340
--------------------------------------------------------------------
Net increase (decrease) in cash and
cash equivalents 6,366 -3,222 -1,600 -862
Cash and cash equivalents at
beginning of the year 368 6,734 3,512 1,893
--------------------------------------------------------------------
Cash and cash equivalents at end
of the year 6,734 3,512 1,912 1,031
====================================================================
See notes to the consolidated financial statements
QMS EUROPE B.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Significant accounting policies
General - QMS Europe B.V. ("QMS Europe") is engaged in the assembling,
marketing, sale and servicing of intelligent non-impact printing systems.
QMS Europe is wholly owned by ALTO Imaging Group N.V. QMS Europe and its parent
company ALTO Imaging Group N.V. form a fiscal unity.
Presentation - The accompanying consolidated financial statements include the
accounts of QMS Europe, Utrecht, The Netherlands, and its consolidated
subsidiaries (collectively "the Company"). The Company follows accounting
principles that conform to those generally accepted in the United States of
America. The accompanying financial statements are stated in Netherlands
guilders, the currency in which the Company principally operates. For the
convenience of the reader, Netherlands Guilder amounts presented as of and for
the year ended October 2, 1998 have been translated into U.S. dollars using the
exchange rate in effect on October 2, 1998 of U.S.$1.00 = NLG 1.8552. Such
translations should not be construed as representations that the Netherlands
guilders amounts could be converted in U.S. dollars at those or any other
exchange rate.
Principles of consolidation - The consolidated financial statements include the
accounts of QMS Europe and the following fully owned subsidiaries.
Name of Company Statutory domicile Percentage of
ownership
- ------------------------------------------------------------------------------------------
%
QMS GmbH Munich, Germany 100
QMS SARL Paris, France 100
QMS (UK) Limited Egham, United Kingdom 100
QMS Nordic AB Stockholm, Sweden 100
All significant intercompany profits, transactions and balances have been
eliminated in consolidation.
Comparability of the financial statements with those included in the statutory
Annual Report of QMS Europe - The financial statements and related notes of QMS
Europe presented herein differ in certain respects from the financial statements
and notes thereto presented in the statutory Annual Report of QMS Europe. The
principal differences are terminology and disclosure changes in order to present
these financial statements in a format more customary to readers of U.S. annual
reports.
Foreign currency - Balance sheet items recorded in currencies other than
Netherlands guilders (hereafter referred to as foreign currencies) have been
translated at the respective balance sheet dates. Transactions have been
translated at the rate in effect on the transaction date and the resulting
exchange gains and losses are included in determining net income. The financial
position and results of operations of the foreign subsidiaries are measured
using local currency as the functional currency. Assets and liabilities of such
subsidiaries are translated using the exchange rate at the respective balance
sheet dates. Revenues and expenses of the subsidiaries have been translated at
average exchange rates for the corresponding period. These related translation
adjustments are included as a component of stockholders' equity.
Basis of accounting - The assets and liabilities are stated at historical cost
unless otherwise mentioned.
Fair value of financial instruments - The carrying amount of cash, accounts
receivable, current liabilities and long term debts approximates fair value.
Fiscal year - QMS Europe's fiscal year 1996, 1997 and 1998 ended on September
27, 1996, October 3, 1997 and October 2, 1998, respectively.
Tangible fixed assets - Tangible fixed assets are stated at cost, less
accumulated depreciation. Depreciation is calculated using the straight-line
method based on estimated useful lives of the related assets. In the case of
leasehold improvements, the useful lives do not exceed the remaining term of the
corresponding lease.
Assigned economic lives of QMS Europe's tangible fixed assets are as follows:
Category Assigned economic life
- -------- ----------------------
Equipment 2-5 years
Leasehold improvements 5 years
Other assets 4-5 years
Inventories - Inventories are stated at the lower of historical cost based on
the first-in, first-out ("FIFO") method or market value. Allowances are made
for slow moving, obsolete or unsaleable stock.
Receivables - Receivable are recorded at face value less allowance for doubtful
receivables.
Income taxes - No differences exist between the financial statements prepared
under generally accepted accounting principles and their tax basis.
Recognition of revenues, income and expense - Sales and corresponding cost of
sales are realized upon shipment of products to distributors, value added
resellers and original equipment manufacturers. Operating income and expenses
are recognized in the statement of earnings as incurred or earned.
Use of estimates - The preparation of QMS Europe's consolidated 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 balance sheet dates and reported amounts of revenue and expense during the
reported periods. Actual results could differ from those estimates.
New accounting pronouncements - On June 16, 1998, the Financial Standards Board
("FASB") in the United States of America issued SFAS 133 "Accounting for
Derivative Instruments and Hedging Activities". SFAS 133 requires fair value
accounting for all stand-alone derivatives and many derivatives embedded in
other instruments and contracts. Companies are required to adopt SFAS 133 for
fiscal years starting after June 15, 2000. Management has not yet reviewed the
possible impact on future earnings.
Amounts in thousands of Netherlands guilders ("NLG") - Unless otherwise
indicated, all amounts included in the Notes to the Consolidated Financial
Statements are stated in thousands of Netherlands guilders.
Note 2. Tangible fixed assets
Tangible fixed assets consist of the following:
Equipment Leasehold Other assets Total
improvements
--------------------------------------------------------------------
Cost, Sept. 27, 1996 6,984 1,118 1,539 9,641
Accumulated depreciation 4,879 918 1,007 6,804
--------------------------------------------------------------------
Net book value, Sept. 27, 1996 2,105 200 532 2,837
Purchases of assets 1,997 68 259 2,324
Net book value of assets sold or disposed -442 - -40 -482
Depreciation -1,501 -140 -324 -1,965
--------------------------------------------------------------------
Net book value, Oct. 3, 1997 2,159 128 427 2,714
====================================================================
Cost, Oct. 3, 1997 7,097 1,115 1,437 9,649
Accumulated depreciation 4,938 987 1,010 6,935
--------------------------------------------------------------------
Net book value, Oct. 3, 1997 2,159 128 427 2,714
Purchases of assets 2,404 180 158 2,742
Net book value of assets sold or disposed -359 - -74 -433
Depreciation -1,888 -210 -186 -2,284
--------------------------------------------------------------------
Net book value, Oct. 2, 1998 2,316 98 325 2,739
====================================================================
Note 3. Inventories
Inventories consist of the following:
October 3, 1997 October 2, 1998
----------------------------------
Raw materials 8,153 14,303
Finished goods 15,602 17,434
----------------------------------
23,755 31,737
Allowance for obsolescence -3,703 -3,545
----------------------------------
Total inventories, net 20,052 28,192
==================================
Note 4. Accounts receivable
Accounts receivable consist of the following:
October 3, 1997 October 2, 1998
----------------------------------
Accounts receivable 18,898 29,464
Allowance for doubtful receivables -186 -151
----------------------------------
Total accounts receivable, net 18,712 29,313
==================================
Note 5. Long-term debt
Long-term debt consists of the following:
Interest Nominal value October 3, 1997 October 2, 1998
------------------------------- ----------------------------------
Subordinated loans:
QMS Inc. 6.5% US$ 4,000 7,916 7,421
Jalak Investments B.V. 6.5% US$ 1,000 1,979 1,855
------------------ ----------------------------------
Total long-term debt $5,000 9,895 9,276
================== ==================================
The U.S. dollar denominated loans are subordinated against the credit facility
of the bank. The loans can only be redeemed if third parties (including QMS
Inc.) contribute additional amounts towards the share capital of QMS Europe B.V.
Note 6. Stockholders' equity
Share capital - The authorized common stock of QMS Europe consists of 35 shares
with a par value of NLG 1,000.
Movement in stockholders' equity - The movement in stockholders' equity can be
summarized as follows:
Common stock Additional Retained Total
paid-in capital earnings
------------------------------------------------------------------
Balance September 27, 1996 35 215 7,127 7,377
Net income - - 1,998 1,998
Cumulative translation
Adjustment - - 53 53
------------------------------------------------------------------
Balance October 3, 1997 35 215 9,178 9,428
Net income - - 8,936 8,936
Cumulative translation adjustment
- - -16 -16
------------------------------------------------------------------
Balance October 2, 1998 35 215 18,098 18,348
==================================================================
Note 7. Sales by geographical area
Fiscal year Fiscal year fiscal year
1996 1997 1998
---------------------------------------------
The Netherlands 13,703 13,532 18,070
European Community, except The
Netherlands 92,697 90,864 135,323
Europe-other 9,701 8,951 11,748
North America 1,375 381 1,253
Other areas 14,570 13,072 20,030
---------------------------------------------
Total Sales 132,046 126,800 186,424
=============================================
Note 8. Commitments and contingencies
Commitments and contingencies are as follows:
Bank guarantees Rental commitments Lease commitments
------------------------------------------------------------
1999 1,891 1,398 1,115
2000 0 588 802
2001 0 465 315
2002 0 274 36
2003 0 481 0
------------------------------------------------------------
1,891 3,206 2,268
============================================================
Rent expense approximated 1,461, 1,213, and 1,380 for the years ended
October 2, 1998, October 3, 1997, and September 27, 1996, respectively.
Note 9. Subsequent events
As of June 7, 1999 all shares of QMS Europe have been sold to QMS Inc, Mobile,
U.S.A. As a result of the acquisition, the fiscal unity between QMS Europe and
Alto Imaging Group N.V. ceased to exist as of October 3, 1998.
QMS Australia Pty Ltd
ACN 007 320 381
Financial Report for the Financial Years
Ended 30 September 1996, 30 September
1997 and 30 September 1998
QMS AUSTRALIA PTY LTD
---------------------
ACN 007 320
FINANCIAL REPORT
----------------
FOR THE FINANCIAL YEARS ENDED
-----------------------------
30 SEPTEMBER 1996, 30 SEPTEMBER 1997 AND 30 SEPTEMBER 1998
----------------------------------------------------------
INDEX PAGE NUMBER
- ----- -----------
1. Directors' Report 1 - 2
2. Independent Auditors' Report 3
3. Directors' Declaration 4
4. Profit and Loss Account 5
5. Balance Sheet 6
6. Statement of Cash Flows 7
7. Notes to and forming part of the accounts 8 - 17
QMS AUSTRALIA PTY LTD
---------------------
DIRECTORS' REPORT
-----------------
The directors of QMS Australia Pty Ltd submit herewith the balance sheets as at
30 September 1996, 30 September 1997 and 30 September 1998 and the profit and
loss accounts for the financial years then ended. In order to comply with the
provisions of the Corporations Law, the directors report as follows :
DIRECTORS
The names of the directors of the company at the date of this report are :
G J Newham (Appointed 15 September 1998)
P P van Schaick
C M Beeny (Resigned 15 September 1998)
PRINCIPAL ACTIVITIES
The principal activity of the company is a cost-plus distribution centre,
providing sales and technical support. During the financial year there was no
significant change in the nature of that activity.
RESULTS AND DIVIDENDS
The profit after tax of the company for the years 1996 to 1998 was:
- - Year ended 30 September 1996 $122,452
- - Year ended 30 September 1997 $37,329
- - Year ended 30 September 1998 $114,176
No dividends have been paid or declared since the start of the financial year.
The directors did not recommend payment of a dividend in respect of the years
ended 30 September 1996, 30 September 1997 and 30 September 1998.
DIRECTORS' BENEFITS
During or since the financial year, no director of the company has received or
become entitled to receive a benefit because of a contract that the director of
a firm of which the director is a member or an entity in which the director has
a substantial financial interest made with the company or an entity that the
company controlled, or a body corporate that was related to the company, when
the contract was made or when the director received, or became entitled to
receive the benefit other than :
i. emoluments received or due and receivable by the directors; or
ii. the fixed salary of a full time employee of the company or an entity that
the company controlled or a related body corporate.
QMS AUSTRALIA PTY LTD
---------------------
DIRECTORS' REPORT
-----------------
(Continued)
-----------
INDEMNIFICATION AND INSURANCE OF OFFICERS
The Articles of Association of the Company provide that every officer of the
Company is indemnified out of the funds of the Company against all liability
incurred as such officer in defending any proceeding whether civil or criminal
in which judgement is given in their favour or in which they are acquitted or in
connection with any application in relation to any such proceedings in which
relief is granted by the Court.
During the financial year, the Company paid a premium for an insurance policy
insuring any past or present director, secretary, executive officer or employee
of the Company, including the directors, secretary and executive officers
referred to above, against certain liabilities. In accordance with common
commercial practice, the insurance policy prohibits disclosure of the nature of
the liability insured against and the amount of the premium.
No amounts have been claimed or paid in respect of the indemnity agreement and
insurance policy other than the payment of the insurance premium referred to
above.
Signed in accordance with a resolution of the directors made pursuant to Section
310(2) of the Corporations Law.
G.J. Newham
Director
Dated
Sydney
INDEPENDENT AUDIT REPORT TO THE MEMBERS
---------------------------------------
OF QMS AUSTRALIA PTY LIMITED
----------------------------
Scope
- -----
We have audited the financial report of QMS Australia Pty Limited for the
financial years ended 30 September 1996, 30 September 1997 and 30 September 1998
as set out on pages 4 to 17. The company's directors are responsible for the
financial report. We have conducted an independent audit of the financial
report in order to express an opinion on it to the members of the company.
Our audit has been conducted in accordance with Australian Auditing Standards to
provide reasonable assurance whether the financial report is free of material
misstatement. Our procedures included examination, on a test basis, of evidence
supporting the amounts and other disclosures in the financial report, and the
evaluation of accounting policies and significant accounting estimates. These
procedures have been undertaken to form an opinion whether, in all material
respects, the financial report is presented fairly in accordance with Accounting
Standards and other mandatory professional reporting requirements and statutory
requirements so as to present a view which is consistent with our understanding
of the company's financial position, and performance as represented by the
results of its operations and its cash flows.
The audit opinion expressed in this report has been formed on the above basis.
Audit Opinion
- -------------
In our opinion, the financial report of QMS Australia Pty Limited is in
accordance with:
(a) the Corporations Law, including:
(i) giving a true and fair view of the company's financial position as at
30 September 1997 and 30 September 1998 and of its performance for the
year ended 30 September 1996, 30 September 1997 and 30 September 1998;
and
(ii) complying with Accounting Standards and the Corporations Regulations;
and
(b) other mandatory professional reporting requirements.
Our audits also comprehended the translation of the Australian dollar amounts
into US dollar amounts, and, in our opinion, such translation has been made in
conformity with the basis stated in Note 1 (1). The translation of the financial
statements amounts into US dollars has been made solely for the convenience of
readers.
DELOITTE TOUCHE TOHMATSU
Parramatta, Australia
2 August 1999
QMS AUSTRALIA PTY LTD
---------------------
DIRECTORS' DECLARATION
----------------------
FOR THE YEARS ENDED
-------------------
30 SEPTEMBER 1996, 30 SEPTEMBER 1997 AND 30 SEPTEMBER 1998
----------------------------------------------------------
The directors declare that:
(a) the attached financial statements and notes thereto comply with accounting
standards;
(b) the attached financial statements and notes thereto give a true and fair
view of the financial position and performance of the company;
(c) in the directors' opinion, the attached financial statements and notes
thereto are in accordance with the Corporations Law; and
Signed in accordance with a resolution of directors pursuant to Section 295(5)
of the Corporations Law.
G J Newham
Director
Dated
Sydney
QMS AUSTRALIA PTY LTD
---------------------
PROFIT AND LOSS ACCOUNT FOR THE YEARS ENDED
-------------------------------------------
30 SEPTEMBER 1996, 30 SEPTEMBER 1997 AND 30 SEPTEMBER 1998
----------------------------------------------------------
Note 1998 1998 1997 1996
$US $A $A $A
Operating profit/(loss) before abnormal items 2 81,098 125,384 (23,120) 228,766
Abnormal items before income tax 3 - - 104,953 (157,829)
-------- -------- -------- ---------
Operating profit 81,098 125,384 81,833 70,937
Income tax expense/(benefit) attributable to
operating profit 4 7,249 11,208 44,504 (51,515)
-------- -------- -------- ---------
OPERATING PROFIT AFTER INCOME TAX 73,849 114,176 37,329 122,452
Retained profits at the beginning of
the financial year 221,948 305,798 268,469 146,017
-------- -------- -------- ---------
RETAINED PROFITS AT THE END
OF THE FINANCIAL YEAR 295,797 419,974 305,798 268,469
======== ======== ======== =========
The foreign currency translation rates used were:
30 September 1997 A$1.00 = US$0.7258
30 September 1998 A$1.00 = US$0.5933
Average for year ended 30 September 1998 A$1.00 = US$0.6468
Notes to and forming part of the accounts are included on pages 8 to 17.
QMS AUSTRALIA PTY LTD
---------------------
BALANCE SHEET AS AT
-------------------
30 SEPTEMBER 1997 AND 30 SEPTEMBER 1998
---------------------------------------
Note 1998 1998 1997
$US $A $A
CURRENT ASSETS
Cash 26,868 45,285 -
Term Deposits 12,810 21,591 20,000
Receivables 5 1,256,863 2,118,427 2,106,288
Other 6 47,731 80,450 70,695
---------- ---------- ----------
TOTAL CURRENT ASSETS 1,344,272 2,265,753 2,196,983
---------- ---------- ----------
NON-CURRENT ASSETS
Plant and equipment 7 93,594 157,752 179,834
---------- ---------- ----------
TOTAL NON-CURRENT ASSETS 93,594 157,752 179,834
---------- ---------- ----------
TOTAL ASSETS 1,437,866 2,423,505 2,376,817
---------- ---------- ----------
CURRENT LIABILITIES
Accounts payable 8 104,555 176,226 133,817
Borrowings 11 8,551 14,413 28,052
Provisions 9 6,723 11,331 5,431
---------- ---------- ----------
TOTAL CURRENT LIABILITIES 119,829 201,970 167,300
---------- ---------- ----------
NON-CURRENT LIABILITIES
Accounts payable 10 210,834 355,359 478,693
Borrowings 11 32,594 54,936 41,760
Provisions 12 4,746 8,000 -
---------- ---------- ----------
TOTAL NON-CURRENT LIABILITIES 248,174 418,295 520,453
---------- ---------- ----------
TOTAL LIABILITIES 368,003 620,265 687,753
---------- ---------- ----------
NET ASSETS 1,069,863 1,803,240 1,689,064
========== ========== ==========
SHAREHOLDERS' EQUITY
Share capital 13 820,692 1,383,266 1,383,266
Reserves 14 (46,626) - -
Retained Profits 295,797 419,974 305,798
---------- ---------- ----------
TOTAL SHAREHOLDERS' EQUITY 1,069,863 1,803,240 1,689,064
========== ========== ==========
Notes to and forming part of the accounts are included on pages 8 to 17.
QMS AUSTRALIA PTY LTD
---------------------
STATEMENT OF CASH FLOWS FOR THE YEARS ENDED
-------------------------------------------
30 SEPTEMBER 1997 AND 30 SEPTEMBER 1998
---------------------------------------
Note 1998 1998 1997
$US $A $A
Cash Flows from Operating Activities
Receipts from parent company 920,873 1,423,737 937,000
Payments to suppliers and employees (861,778) (1,332,371) (898,813)
Interest received 2,761 4,269 3,325
---------- ----------- ---------
Net cash provided by operating activities 18(b) 61,856 95,635 41,512
---------- ----------- ---------
Cash Flows from Investing Activities
Payment for property, plant and equipment (25,442) (39,335) (121,573)
Proceeds from sale of property, plant and equipment 12,613 19,500 37,996
---------- ----------- ---------
Net cash used in investing activities (12,829) (19,835) (83,577)
---------- ----------- ---------
Cash Flows from Financing Activities
Repayment of borrowings (13,061) (20,193) (32,164)
---------- ----------- ---------
Net cash used in financing activities (13,061) (20,193) (32,164)
---------- ----------- ---------
Net increase in cash held 35,966 55,607 (74,229)
Foreign currency translation (4,467) - -
Cash at the Beginning of the Financial Year 8,179 11,269 85,498
---------- ----------- ---------
Cash at End of the Financial Year 18(a) 39,678 66,876 11,269
========== =========== =========
Notes to and forming part of the accounts are included on pages 8 to 17.
QMS AUSTRALIA PTY LTD
---------------------
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEARS ENDED
-------------------------------------------------------------
30 SEPTEMBER 1996, 30 SEPTEMBER 1997 AND 30 SEPTEMBER 1998
----------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial Reporting Framework
The financial report is a general purpose financial report which has been
prepared in accordance with the Corporations Law, applicable Accounting
Standards and Urgent Issues Group Consensus Views, and complies with other
requirements of the law.
The financial report has been prepared on the basis of historical cost and
except where stated, do not take into accounting changing money values or
current valuations of non current assets. Cost is based on the fair values of
the consideration given in exchange for assets.
Significant Accounting Policies
Accounting policies are selected and applied in a manner which ensures that the
resultant financial information satisfies the concepts of relevance and
reliability, thereby ensuring that the substance of the underlying transactions
and other events is reported.
In addition to the accounting policies prescribed by applicable Accounting
Standards and Urgent Issues Group Consensus Views, the following significant
accounting policies have been adopted in the preparation and presentation of
this special purpose financial report:
(a) Non-Current Assets
Non-current assets are written down to recoverable amount where the carrying
value of any non-current asset exceeds recoverable amount. Recoverable
amount is determined as the present value of the amount expected to be
recovered through the cash inflows and outflows arising from the continued
used and subsequent disposal of the non-current asset. In determining the
recoverable amount of non-current assets the expected net cash flows have
not been discounted to their present value.
(b) Depreciation
Depreciation is provided on a straight line basis on all plant and equipment
at rates calculated to allocate the cost less estimated residual value,
against revenue over the estimated useful lives of the assets. Leasehold
improvements are depreciated over the period of the lease or the estimated
useful life, whichever is the shorter, using the straight line method. The
following estimated useful lives are used in the calculation of
depreciation:
* Plant and equipment 2 - 11 Years
* Leasehold improvements 11 Years
QMS AUSTRALIA PTY LTD
---------------------
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEARS ENDED
-------------------------------------------------------------
30 SEPTEMBER 1996, 30 SEPTEMBER 1997 AND 30 SEPTEMBER 1998
----------------------------------------------------------
(Continued)
-----------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(c) Leased Assets
Leased assets classified as finance leases and capitalised as fixed assets.
The amount initially brought to account is the present value of minimum
lease payments.
A finance lease is one which effectively transfers from the lessor to the
lessee substantially all the risks and benefits incidental to ownership of
the leased property.
Capitalised leased assets are amortised on a straight line basis over the
estimated useful life of the asset.
Finance lease payments are allocated between interest expense and the
reduction of lease liability over the term of the lease. The interest
expense is determined by applying the interest rate implicit in the lease to
the outstanding lease liability at the beginning of each lease payment
period.
Operating lease payments are charged as an expense in the period in which
they are incurred.
(d) Foreign Currency
All foreign currency transactions during the year have been brought to
account using the exchange rate in effect at the date of the transaction.
Foreign currency monetary items at balance date are translated at the
exchange rate existing at that date.
All exchange differences are brought to account in the profit and loss
statement of the financial period in which they arise.
(e) Income Tax
Tax effect accounting principles have been adopted whereby income tax
expense has been calculated on pre-tax accounting profits after adjustment
for permanent differences. The tax effect of timing differences, which occur
when items are included or allowed for income tax purposes in a period
different to that for accounting, is shown at current taxation rates in
provision for deferred income tax and future income tax benefit, as
applicable. A future income tax benefit in relation to timing differences
and tax losses is not carried forward as an asset unless the directors
regard realisation of the benefit as being assured beyond reasonable doubt.
(f) Employee Entitlements
Liabilities for employees' entitlements to wages and salaries, annual leave,
sick leave, and other current employee entitlements are accrued at nominal
amounts. Liabilities for long service leave, which are not expected to be
paid or settled within twelve months of balance date, are accrued in respect
of all employees at the present value of future amounts expected to be paid.
QMS AUSTRALIA PTY LTD
---------------------
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEARS ENDED
-------------------------------------------------------------
30 SEPTEMBER 1996, 30 SEPTEMBER 1997 AND 30 SEPTEMBER 1998
----------------------------------------------------------
(Continued)
-----------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(g) Receivables
Trade receivables and other receivables are recorded at amounts due less any
provision for doubtful debts.
(h) Accounts Payable
Trade payables and other accounts payable are recognised when the company
becomes obliged to make future payments resulting from the purchase of goods
and services.
(i) Comparative Figures
Comparative figures are, where appropriate, reclassified so as to be
comparable with the figures presented for the current financial year.
(j) Acquisition of Assets
Assets acquired are recorded at the cost of acquisition, being the purchase
consideration determined as at the date of acquisition plus costs incidental
to the acquisition.
In the event that settlement of all or part of the cash consideration given
in the acquisition of an asset is deferred, the fair value of the purchase
consideration is determined by discounting the amounts payable in the future
to their present value as at the date of acquisition.
(k) United States Generally Accepted Accounting Principles
There were no material differences between US GAAP and Australian GAAP in
the periods presented, and as such no reconciliation of net profit, share
holders equity and balance sheet is required.
(l) Convenience Translation
The financial statements are stated in Australian dollars, the currency of
Australia. The US Dollar equivalent financial statements are presented
solely for the convenience of the reader and should not be construed as
representations that the amount stated in Australian dollars have been or
could have been or could be now or at any time in the future converted into
US Dollars at this or any other rate of exchange. The exchange rates used
for the purpose of this disclosure are the daily published bank rates, which
were 30 September 1997 A$1.00 = US$0.7258, 30 September 1998 A$1.00 -
US$0.5933, average for the year ended 30 September 1998 A$1.00 = US0.6468.
QMS AUSTRALIA PTY LTD
---------------------
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEARS ENDED
-------------------------------------------------------------
30 SEPTEMBER 1996, 30 SEPTEMBER 1997 AND 30 SEPTEMBER 1998
----------------------------------------------------------
(Continued)
-----------
1998 1998 1997 1996
2. OPERATING PROFIT $US $A $A $A
The operating profit before income tax is arrived
at after charging the following items :
Revenue
Other revenue:
Interest - other persons 2,761 4,269 3,325 19,977
Proceeds on disposal of fixed assets 4,204 6,500 25,446 35,166
Proceeds on disposal of asset on finance lease 8,408 13,000 12,550 134,405
Service Fees 892,083 1,379,225 929,988 1,882,457
-------- ---------- -------- ----------
Total operating revenue 907,456 1,402,994 971,309 2,072,005
-------- ---------- -------- ----------
Expenses
Amortisation of leased assets 10,748 16,617 21,368 32,053
Depreciation of property, plant and equipment 28,236 43,655 53,566 94,891
Finance charges - lease liability 4,618 7,139 9,068 11,395
Provision for employee entitlements 18,865 29,166 13,536 25,036
Rental - operating leases 30,455 47,086 57,700 219,498
Bad debts - - - 2,441
Net exchange loss on foreign currency transactions - - - 73,044
3. ABNORMAL ITEMS
Abnormal revenue
Surplus lease space - - 104,953 157,829
Applicable income tax - - - 56,818
-------- ---------- -------- ----------
- - 104,953 101,011
======== ========== ======== ==========
4. INCOME TAX
Operating profit before income tax 81,098 125,384 81,833 70,937
-------- ---------- -------- ----------
Income tax expense calculated at 36%
of operating profit 29,195 45,138 29,460 25,537
Tax effect of permanent differences :
Legal fees 3,742 5,786 - 2,880
Entertainment 1,686 2,606 2,696 1,061
Future income tax benefit not previously
recognised now brought to account (27,374) (42,322) - (80,993)
Under provision for income tax in previous year - - 12,348 -
-------- ---------- -------- ----------
Income tax expense attributable to
operating profit 7,249 11,208 44,504 (51,515)
======== ========== ======== ==========
QMS AUSTRALIA PTY LTD
---------------------
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEARS ENDED
-------------------------------------------------------------
30 SEPTEMBER 1997 AND 30 SEPTEMBER 1998
---------------------------------------
(Continued)
-----------
1998 1998 1997
$US $A $A
5. CURRENT RECEIVABLES
Trade debtors - - 12,897
Sundry debtors 22,281 37,554 12,518
Amounts receivable from parent entity 1,234,582 2,080,873 2,080,873
---------- ---------- ----------
1,256,863 2,118,427 2,106,288
========== ========== ==========
6. OTHER CURRENT ASSETS
Prepayments 20,513 34,574 13,611
Future income tax benefit:
- attributable to timing difference 4,135 6,970 18,433
- attributable to tax losses 23,083 38,906 38,651
---------- ---------- ----------
47,731 80,450 70,695
========== ========== ==========
7. PLANT AND EQUIPMENT
Plant and equipment - at cost 103,825 174,996 273,441
Provision for depreciation (53,972) (90,969) (171,201)
---------- ---------- ----------
49,853 84,027 102,240
---------- ---------- ----------
Plant and equipment under lease - at cost 58,588 98,750 90,450
Provision for amortisation (15,470) (26,075) (22,945)
---------- ---------- ----------
43,118 72,675 67,505
---------- ---------- ----------
Leasehold improvements - at cost 896 1,510 12,622
Accumulated depreciation (273) (460) (2,533)
---------- ---------- ----------
623 1,050 10,089
---------- ---------- ----------
Total plant and equipment 93,594 157,752 179,834
========== ========== ==========
8. CURRENT ACCOUNTS PAYABLE
Unsecured - trade creditors 104,555 176,226 133,817
========== ========== ==========
QMS AUSTRALIA PTY LTD
---------------------
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEARS ENDED
-------------------------------------------------------------
30 SEPTEMBER 1996, 30 SEPTEMBER 1997 AND 30 SEPTEMBER 1998
----------------------------------------------------------
(Continued)
-----------
1998 1998 1997
9. CURRENT PROVISIONS $US $A $A
Annual leave 6,723 11,331 5,431
Provision for income tax - - -
Provision for surplus lease space - - -
---------- ----------- -----------
6,723 11,331 5,431
========== =========== ===========
10. NON CURRENT ACCOUNTS PAYABLE
Creditors - - -
Amounts payable to related entity - QMS Europe B.V. 208,854 352,021 476,994
Amounts payable to related entity - Alto Imaging
Group B.V. 1,980 3,338 1,699
---------- ----------- -----------
210,834 355,359 478,693
========== =========== ===========
11. BORROWINGS
Current
- -------
Secured - lease liability (Note 15) 8,551 14,413 19,321
Unsecured - Bank Overdraft - - 8,731
---------- ----------- -----------
8,551 14,413 28,052
========== =========== ===========
Non-Current
- -----------
Secured - lease liability (Note 15) 32,594 54,936 41,760
========== =========== ===========
Lease liability is secured by a chattel mortgage
over the relevant leased assets.
12. NON-CURRENT PROVISIONS
Long service leave 4,746 8,000 -
========== =========== ===========
13. SHARE CAPITAL
(a) Authorised Capital
10,000,000 ordinary shares of $1.00 each 5,933,000 10,000,000 10,000,000
(b) Issued Capital
1,383,266 ordinary shares of $1.00 each
fully paid 820,692 1,383,266 1,383,266
========== =========== ===========
14. RESERVES
Foreign currency translation (46,626) - -
========== =========== ===========
QMS AUSTRALIA PTY LTD
---------------------
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEARS ENDED
-------------------------------------------------------------
30 SEPTEMBER 1996, 30 SEPTEMBER 1997 AND 30 SEPTEMBER 1998
----------------------------------------------------------
(Continued)
-----------
1998 1998 1997 1996
$US $A $A $A
15. EXPENDITURE COMMITMENTS
Lease expenditure commitments
Operating lease (non-cancellable)
- - not later than one year 48,885 82,395 15,533 113,460
- - later than one year but not later than two years 68,469 115,404 - 74,653
- - later than two years but not later than five years 225,262 379,677 - 4,560
-------- -------- ------- --------
342,616 577,476 15,533 192,673
======== ======== ======= ========
Finance leases
- - not later than one year 12,169 20,511 24,899 41,231
- - later than one year but not later than two years 26,637 44,897 12,178 24,899
- - later than two years but not later than five years 8,596 14,489 36,564 48,743
-------- -------- ------- --------
Minimum lease payments 47,402 79,897 73,641 114,873
Deduct future finance charges 6,257 10,548 12,560 21,628
-------- -------- ------- --------
Finance lease liabilities 41,145 69,349 61,081 93,245
======== ======== ======= ========
Included in the accounts as :
- - current liability (note 11) 8,551 14,413 19,321 32,164
- - non current liability (note 11) 32,594 54,936 41,760 61,081
-------- -------- ------- --------
41,145 69,349 61,081 93,245
======== ======== ======= ========
16. CONTINGENT LIABILITIES
Contingent liabilities of the company at year end are:
Bank guarantee 16,112 27,156 - -
Indemnity Guarantee 5,933 10,000 10,000 10,000
======== ======== ======= ========
17. AUDITORS REMUNERATION
Amounts received, or due and receivable, by the auditors
from thec ompany and any related body corporate for:
a) Audit of the accounts 3,263 5,500 5,500 7,500
b) Other Services 6,823 11,500 8,000 37,525
-------- -------- ------- --------
10,086 17,000 13,500 45,025
======== ======== ======= ========
QMS AUSTRALIA PTY LTD
---------------------
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEARS ENDED
-------------------------------------------------------------
30 SEPTEMBER 1996, 30 SEPTEMBER 1997 AND 30 SEPTEMBER 1998
----------------------------------------------------------
(Continued)
-----------
1998 1998 1997
$US $A $A
18. NOTES TO THE STATEMENT
OF CASH FLOWS
(a) Reconciliation of Cash
For the purposes of the statement of cash flows,
cash includes cash on hand and in banks and
investments in money market instruments, net
of outstanding bank overdraft. Cash at the
end of the financial year as shown in the
statement of cash flows is reconciled to the
related items on the balance sheet as follows:
Cash/(overdraft) 26,868 45,285 (8,731)
Term deposit 12,810 21,591 20,000
------ ------ ------
39,678 66,876 11,269
====== ====== ======
(b) Reconciliation of net cash provided by operating
activities to operating profit after income tax
Operating profit after tax 73,849 114,176 37,329
Depreciation/amortisation 38,983 60,272 74,934
Loss on disposal of fixed assets 6,537 10,106 -
Changes in net assets and liabilities:
(Increase)/decrease in receivables (7,852) (12,139) 22,487
(Increase)/decrease in prepayments (13,559) (20,963) 12,331
Decrease in future income tax benefits 7,249 11,208 34,400
Increase in provision for employee entitlement 8,991 13,900 1,865
Increase in current payables 27,430 42,409 34,414
(Decrease) in provision for income tax - - (41,969)
(Decrease) in surplus lease space - - (157,829)
(Decrease)/increase in non current payables (79,772) (123,334) 23,550
------- -------- --------
Net cash provided by operating activities 61,856 95,635 41,512
======= ======== ========
QMS AUSTRALIA PTY LTD
---------------------
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEARS ENDED
-------------------------------------------------------------
30 SEPTEMBER 1996, 30 SEPTEMBER 1997 AND 30 SEPTEMBER 1998
----------------------------------------------------------
(Continued)
-----------
19. FINANCIAL INSTRUMENTS
Significant accounting policies, including the criteria for recognition, the
basis of measurement and the basis on which revenues and expenses are recognised
in respect of each class of financial asset and liability are disclosed in Note
1 to the accounts.
Interest Rate Risk
The following table details the company's exposure to interest risk as at the
reporting date.
Fixed Interest Rate Maturity
-------------------------------------------------------------------------------------------------------
Average Variable More Non Total
Interest Interest Less than 1 1 to5 than 5 Interest $
Rate Rate Year Years Years Bearing
% $ $ $ $ $
-------------------------------------------------------------------------------------------------------
1998
Financial Assets
Cash 3.669 44,985 - - - 300 45,285
Investments 4.10 21,591 - - - - 21,591
Receivables - - - - - 2,118,427 2,118,427
-------------------------------------------------------------------------------------------------------
66,576 - - - 2,118,727 2,185,303
=======================================================================================================
Financial Liabilities
Accounts Payable - - - - - 531,585 531,585
Finance Lease Liability 10.50 - 14,413 54,936 - - 69,349
Employee Entitlements - - - - - 19,331 19,331
-------------------------------------------------------------------------------------------------------
- 14,413 54,936 - 550,916 620,265
=======================================================================================================
1997
Financial Assets 5.40 20,000 - - - 2,106,288 2,126,288
-------------------------------------------------------------------------------------------------------
Financial Liabilities 3.59 8,731 19,321 41,760 - 617,941 687,753
Credit Risk
The company does not have any significant credit risk exposure.
Net Fair Value
The carrying value of financial assets and liabilities recorded in the financial
statements represent their respective fair values, in accordance with the
accounting policies disclosed in Note 1 to the accounts.
20. SEGMENT REPORTING
The company operates predominantly in one industry, being distribution, sales
and technical support and one geographical segment being Australia.
21. RELATED PARTIES
During the year the company received service fees of $1,379,225 (1997: $929,988,
1996: $1,882,457) from its parent entity, and made purchases of $119,252 (1997:
$97,760, 1996: $372,222 (net)) from its parent entity.
QMS AUSTRALIA PTY LTD
---------------------
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEARS ENDED
-------------------------------------------------------------
30 SEPTEMBER 1996, 30 SEPTEMBER 1997 AND 30 SEPTEMBER 1998
----------------------------------------------------------
(Continued)
-----------
22. ECONOMIC DEPENDENCY
The company is economically dependent upon a related entity, QMS Europe BV from
whom they receive service fees on a cost-plus basis in respect of expenditure
incurred locally.
CONSOLIDATED INTERIM FINANCIAL STATEMENTS OF QMS EUROPE
B.V. FOR THE SIX MONTHS ENDED APRIL 2, 1999 (UNAUDITED)
Table of contents
CONSOLIDATED STATEMENTS OF EARNINGS FOR THE SIX MONTHS ENDED APRIL
2, 1999 (UNAUDITED) AND APRIL 3, 1998 .................................................................... 2
CONSOLIDATED BALANCE SHEETS AS AT APRIL 2, 1999 (UNAUDITED) AND OCTOBER 2, 1998 .......................... 3
NOTES TO THE CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF EARNINGS
(UNAUDITED)............................................................................................... 4
QMS EUROPE B.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS FOR THE SIX MONTHS ENDED APRIL 2, 1999
(UNAUDITED) AND APRIL 3, 1998
(Amounts in thousands)
Six months Six months Six months
ended April 3, ended April 2, ended April 2,
1998 1999 1999
-----------------------------------------------------
NLG NLG U.S.$
Net sales 79,711 136,773 66,947
Cost of sales 59,691 118,032 57,774
-----------------------------------------------------
Gross profit 20,020 18,741 9,173
Selling expenses 5,868 8,753 4,284
General and administrative expenses 10,533 15,080 7,381
-----------------------------------------------------
Operating result 3,619 -5,092 -2,492
Interest income 159 156 76
Interest expense -761 -1,262 -618
Exchange gains (losses) -294 4,850 2,374
-----------------------------------------------------
Net financial income (expense) -896 3,744 1,832
-----------------------------------------------------
Earnings (losses) before taxes 2,723 -1,348 -660
Provision for income taxes -989 472 231
-----------------------------------------------------
Net income (loss) 1,734 -876 -429
=====================================================
CONSOLIDATED BALANCE SHEETS AS AT APRIL 2, 1999
(UNAUDITED) AND OCTOBER 2, 1998
(Amounts in thousands)
October 2, 1998 April 2, 1999 April 2, 1999
---------------------------------------------------
NLG NLG U.S.$
ASSETS
Current assets
Cash and cash equivalents 1,912 7,193 3,521
Inventories 28,192 47,188 23,097
Accounts receivable 29,313 49,346 24,154
Deferred income taxes 0 472 231
Other receivables 2,402 3,695 1,809
Receivables from group companies 2,594 6,552 3,207
---------------------------------------------------
64,413 114,446 56,019
Fixed assets
Property and equipment, net 2,739 3,396 1,662
---------------------------------------------------
Total assets 67,152 117,842 57,681
===================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Line of credit 13,549 31,152 15,248
Accounts payable 16,498 44,419 21,742
Accrued expenses 8,067 16,303 7,980
Other taxes and social security 881 1,615 791
Income taxes 533 4,814 2,356
---------------------------------------------------
39,528 98,303 48,117
Long term debt 9,276 2,043 1,000
Stockholders' equity
Common shares 35 35 17
Additional paid-in capital 215 215 105
Retained earnings 18,098 17,246 8,442
---------------------------------------------------
18,348 17,496 8,564
---------------------------------------------------
Total liabilities and stockholders' equity 67,152 117,842 57,681
===================================================
QMS EUROPE B.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED BALANCE SHEETS AND STATEMENTS
OF EARNINGS (UNAUDITED)
Note 1. Significant accounting policies
General - QMS Europe B.V. ("QMS Europe") is engaged in the assembling,
marketing, sale and servicing of intelligent non-impact printing systems.
QMS Europe is wholly owned by ALTO Imaging Group N.V. QMS Europe and its parent
company ALTO Imaging Group N.V. form a fiscal unity.
Presentation - The accompanying consolidated balance sheets and statements of
earnings include the accounts of QMS Europe, Utrecht, The Netherlands, and its
consolidated subsidiaries (collectively "the Company"). The Company follows
accounting principles that conform to those generally accepted in the United
States of America. The accompanying financial statements are stated in
Netherlands guilders, the currency in which the Company principally operates.
For the convenience of the reader, Netherlands Guilder amounts presented as of
and for the period ended April 2, 1999 have been translated into U.S. dollars
using the exchange rate in effect on April 2, 1999 of U.S.$1.00 = NLG
2.04300706. Such translations should not be construed as representations that
the Netherlands guilders amounts could be converted in U.S. dollars at those or
any other exchange rate.
Principles of consolidation - The consolidated financial statements include the
accounts of QMS Europe and the following fully owned subsidiaries.
Name of Company Statutory domicile Percentage of
ownership
- ------------------------------------------------------------------------------------------
%
QMS GmbH Munich, Germany 100
QMS SARL Paris, France 100
QMS (UK) Limited Egham, United Kingdom 100
QMS Nordic AB Stockholm, Sweden 100
All significant intercompany profits transactions and balances have been
eliminated in consolidation.
Foreign currency - Balance sheet items recorded in currencies other than
Netherlands Guilders (hereafter referred to as foreign currencies) have been
translated at the respective balance sheet dates. Transactions have been
translated at the rate in effect on the transaction date and resulting exchange
gains and losses are included in determining net income. The financial position
and results of operations of the foreign subsidiaries are measured using local
currency as the functional currency. Assets and liabilities of such subsidiaries
are translated using the exchange rate at the respective balance sheet dates.
Revenues and expenses of the subsidiaries have been translated at average
exchange rates for the corresponding period. These related translation
adjustments are included as a component of stockholders' equity.
Basis of accounting - The assets and liabilities are stated at historical cost
unless otherwise mentioned.
Fair value of financial instruments - The carrying amount of cash, accounts
receivable, current liabilities and long term debts approximates fair value.
Tangible fixed assets - Tangible fixed assets are stated at cost, less
accumulated depreciation. Depreciation is calculated using the straight-line
method based on estimated useful lives of the related assets. In the case of
leasehold improvements, the useful lives do not exceed the remaining term of the
corresponding lease.
Assigned economic lives of QMS Europe's tangible fixed assets are as follows:
Category Assigned economic life
- -------- ----------------------
Equipment 2-5 years
Leasehold improvements 5 years
Other assets 4-5 years
Inventories - Inventories are stated at the lower of historical cost based on
the first-in, first-out ("FIFO") method or market value. Allowances are made
for slow moving, obsolete or unsaleable stock.
Receivables - Receivable are recorded at face value less allowance for doubtful
receivables.
Income taxes - No differences exist between the financial statements prepared
under generally accepted accounting principles and their tax basis except for
certain permanent differences.
Recognition of revenues, income and expense - Sales and corresponding cost of
sales are realized upon shipment of products to distributors, value added
resellers and original equipment manufacturers. Operating income and expenses
are recognized in the statement of earnings as incurred or earned.
Use of estimates - The preparation of QMS Europe's consolidated 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 balance sheet dates and reported amounts of revenue and expense during the
reported periods. Actual results could differ from those estimates.
New accounting pronouncements - On June 16, 1998, the Financial Standards Board
("FASB") in the United States of America issued SFAS 133 "Accounting for
Derivative Instruments and Hedging Activities". SFAS 133 requires fair value
accounting for all stand-alone derivatives and many derivatives embedded in
other instruments and contracts. Companies are required to adopt SFAS 133 for
fiscal years starting after June 15, 2000. Management has not yet reviewed the
possible impact on future earnings.
Amounts in thousands of Netherlands guilders ("NLG") - Unless otherwise
indicated, all amounts included in the Notes to the Consolidated Financial
Statements are stated in thousands of Netherlands guilders.
Note 2. Tangible fixed assets
Tangible fixed assets consist of the following:
Equipment Leasehold Other Total
improvements assets
----------------------------------------------------------------
Cost, April 2, 1999 9,471 1,401 1,327 12,199
Accumulated depreciation 6,540 1,243 1,020 8,803
----------------------------------------------------------------
Net book value, April 2, 1999 2,931 158 307 3,396
================================================================
Note 3. Inventories
Inventories consist of the following:
April 2, 1999
-----------------
Raw materials 25,149
Finished goods 27,089
-----------------
52,238
Allowance for the lower market value -2,338
Allowance for obsolescence -2,712
-----------------
Total inventories, net 47,188
=================
Note 4. Accounts receivable
Accounts receivable consist of the following:
April 2, 1999
-----------------
Accounts receivable 49,524
Allowance for doubtful receivables -178
-----------------
Total accounts receivable, net 49,346
=================
The accounts receivable are pledged as collateral for the line of credit
Note 5. Deferred income taxes
This amount reflects a deferred tax asset resulting from the loss for the period
from October 4, 1998 through April 2, 1999. It is expected that this deferred
income tax asset will be realized in the next fiscal year.
Note 6. Line of credit
QMS Europe has a floating line of credit with a bank, amounting to a maximum of
85% of trade receivables plus 50% of inventory less trade creditors subject to a
maximum of NLG 5,000,000). The interest rate amounts to AIBOR + 1.25 % (with a
minimum of 4% per annum)
Note 7. Long-term debt
Long-term debt is a debt from a related party and consists of the following:
Interest Nominal value April 2, 1999
-------------------------------- ------------------
Jalak Investments B.V. 6.0% US$ 1,000 2,043
------------------- ------------------
Total long-term debt $1,000 2,043
=================== ==================
Note 8. Stockholders' equity
Share capital - The authorized common stock of QMS Europe consists of 35 shares
with a par value of NLG 1,000.
Movement in stockholders' equity - The movement in stockholders' equity can be
summarized as follows:
Common stock Additional Retained Total
paid-in capital earnings
------------------------------------------------------------------
Balance October 2, 1998 35 215 18,098 18,348
Net loss - - -876 -876
Cumulative translation
Adjustment - - 24 24
------------------------------------------------------------------
Balance April 2, 1999 35 215 17,246 17,496
==================================================================
Note 9. Sales by geographical area
Six months ended
April 2, 1999
-----------------------
The Netherlands 11,874
European Community, except The
Netherlands 84,839
Europe-other 29,537
North America 855
Other areas 9,668
-----------------------
Total Sales 136,773
=======================
Note 10. Cost of sales
Included in the cost of sales is an estimated loss of NLG 3,335,000 as a result
of firm purchase commitments to reflect inventory at lower of cost or market
value.
Note 11. Commitments and contingencies
Commitments and contingencies are as follows:
Bank Rental Lease
guarantees commitments commitments
------------------------------------------------------------
1999 535 646 597
2000 0 932 849
2001 0 436 321
2002 0 259 33
2003 0 481 0
------------------------------------------------------------
535 2,754 1,800
============================================================
Note 12. Subsequent events
As of June 7, 1999, all shares of QMS Europe have been sold to QMS Inc, Mobile,
USA. As a result of the acquisition, the fiscal unity between QMS Europe and
Alto Imaging Group N.V. ceased to exist as of October 3, 1998.
QMS Australia
Pty Ltd
ACN 007 320 381
Unaudited Financial Report for the
six months ended 31 March 1998 and six months ended 31
March 1999.
QMS AUSTRALIA PTY LTD
---------------------
ACN 007 320 381
UNAUDITED FINANCIAL REPORT
--------------------------
FOR THE SIX MONTHS ENDED
------------------------
31 MARCH 1998 AND SIX MONTHS ENDED 31 MARCH 1999
------------------------------------------------
INDEX PAGE NUMBER
- ----- -----------
1. Profit & Loss Accounts 1
2. Balance Sheets 2
3. Notes to and forming part of the accounts 6 - 12
QMS AUSTRALIA PTY LTD
---------------------
PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED
------------------------------------------------
31 MARCH 1998 (UNAUDITED) AND SIX MONTHS ENDED 31 MARCH 1999 (UNAUDITED)
------------------------------------------------------------------------
Unaudited Unaudited Unaudited
Note 6 Months 6 Months 6 Months
March 99 March 99 March 98
$US $A $A
Operating profit 2 46,515 73,998 43,104
Income tax expense attributable to
operating profit 3 19,103 30,390 -
-------- -------- --------
OPERATING PROFIT AFTER INCOME TAX 27,412 43,608 43,104
Retained profits at the beginning of
the financial year 249,170 419,974 305,798
-------- -------- --------
RETAINED PROFITS AT THE END
OF THE FINANCIAL YEAR 276,582 463,582 348,902
======== ======== ========
Figures were calculated based on the following exchange rates:
Half year average March 1999: A$1.00 = $0.6286
31 March 1999: A$1.00 = $0.6315
30 September 1998 A$1.00 = $0.5933
QMS AUSTRALIA PTY LTD
---------------------
BALANCE SHEET AS OF
-------------------
30 SEPTEMBER 1998 & 31 MARCH 1999 (UNAUDITED)
----------------------------------------------
Unaudited Unaudited
March 99 March 99 Sept 1998
$US $A $A
Note
CURRENT ASSETS
Cash 49,458 78,318 45,285
Term Deposits 13,635 21,591 21,591
Receivables 4 1,314,071 2,080,873 2,118,427
Other 5 53,578 84,843 80,450
---------- ---------- ----------
TOTAL CURRENT ASSETS 1,430,742 2,265,625 2,265,753
---------- ========== ----------
NON-CURRENT ASSETS
Plant and equipment 6 110,560 175,075 157,752
---------- ---------- ----------
TOTAL NON-CURRENT ASSETS 110,560 175,075 157,752
---------- ---------- ----------
TOTAL ASSETS 1,541,302 2,440,700 2,423,505
---------- ---------- ----------
CURRENT LIABILITIES
Accounts payable 7 70,783 112,087 176,226
Borrowings 10 9,102 14,413 14,413
Provisions 8 9,234 14,623 11,331
---------- ---------- ----------
TOTAL CURRENT LIABILITIES 89,119 141,123 201,970
---------- ---------- ----------
NON-CURRENT LIABILITIES
Accounts payable 9 252,470 399,793 355,359
Borrowings 10 28,377 44,936 54,936
Provisions 11 5,052 8,000 8,000
---------- ---------- ----------
TOTAL NON-CURRENT LIABILITIES 285,899 452,729 418,295
---------- ---------- ----------
TOTAL LIABILITIES 375,018 593,852 620,265
---------- ---------- ----------
NET ASSETS 1,166,284 1,846,848 1,803,240
========== ========== ==========
SHAREHOLDERS' EQUITY
Share capital 12 873,532 1,383,266 1,383,266
Reserves 13 16,170 - -
Retained Profits 276,582 463,582 419,974
---------- ---------- ----------
TOTAL SHAREHOLDERS' EQUITY 1,166,284 1,846,848 1,803,240
========== ========== ==========
QMS AUSTRALIA PTY LTD
---------------------
STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED
------------------------------------------------
31 MARCH 1998 (UNAUDITED) AND SIX MONTHS ENDED 31 MARCH 1999 (UNAUDITED)
------------------------------------------------------------------------
Unaudited Unaudited Unaudited
March 99 March 99 March 98
US$ $A $A
Note
Cash Flows from Operating Activities
Receipts from parent company 538,191 856,174 599,183
Payments to suppliers and employees (481,874) (766,585) (475,512)
Interest received 1,488 2,367 2,103
-------- --------- ---------
Net cash provided by operating activities 14(b) 57,805 91,956 125,774
-------- --------- ---------
Cash Flows from Investing Activities
Payment for property, plant and equipment (30,753) (48,923) (42,874)
Proceeds from sale of property, plant and equipment - - 2,769
-------- --------- ---------
Net cash provided by/(used in) investing activities (30,753) (48,923) (40,105)
-------- --------- ---------
Cash Flows from Financing Activities
Repayment of borrowings (6,286) (10,000) -
Proceeds from borrowings - - 13,170
--------- ---------
Net cash provided by/(used in) financing activities (6,286) (10,000) 13,170
-------- --------- ---------
Net increase in cash held 20,766 33,033 98,839
Foreign Exchange adjustment 2,649 - -
Cash at the Beginning of the Financial Period 39,678 66,876 11,269
-------- --------- ---------
Cash at End of the Financial Period 14(a) 63,093 99,909 110,108
======== ========= =========
QMS AUSTRALIA PTY LTD
----------------------
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE SIX MONTHS ENDED
------------------------------------------------------------------
31 MARCH 1998 (UNAUDITED) AND SIX MONTHS ENDED 31 MARCH 1999 (UNAUDITED)
------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial Reporting Framework
The financial report is a general purpose financial report which has been
prepared in accordance with the Corporations Law, applicable Accounting
Standards and Urgent Issues Group Consensus Views, and complies with other
requirements of the law.
The financial report has been prepared on the basis of historical cost and
except where stated, do not take into accounting changing money values or
current valuations of non current assets. Cost is based on the fair values of
the consideration given in exchange for assets.
Significant Accounting Policies
Accounting policies are selected and applied in a manner which ensures that the
resultant financial information satisfies the concepts of relevance and
reliability, thereby ensuring that the substance of the underlying transactions
and other events is reported.
In addition to the accounting policies prescribed by applicable Accounting
Standards and Urgent Issues Group Consensus Views, the following significant
accounting policies have been adopted in the preparation and presentation of
this special purpose financial report:
(a) Non-Current Assets
Non-current assets are written down to recoverable amount where the carrying
value of any non-current asset exceeds recoverable amount. Recoverable
amount is determined as the present value of the amount expected to be
recovered through the cash inflows and outflows arising from the continued
used and subsequent disposal of the non-current asset. In determining the
recoverable amount of non-current assets the expected net cash flows have
not been discounted to their present value.
(b) Depreciation
Depreciation is provided on a straight line basis on all plant and equipment
at rates calculated to allocate the cost less estimated residual value,
against revenue over the estimated useful lives of the assets. Leasehold
improvements are depreciated over the period of the lease or the estimated
useful life, whichever is the shorter, using the straight line method. The
following estimated useful lives are used in the calculation of
depreciation:
. Plant and equipment 2 - 11 Years
. Leasehold improvements 11 Years
QMS AUSTRALIA PTY LTD
---------------------
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE SIX MONTHS ENDED
------------------------------------------------------------------
31 MARCH 1998 (UNAUDITED) AND SIX MONTHS ENDED 31 MARCH 1999 (UNAUDITED)
------------------------------------------------------------------------
(Continued)
-----------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(c) Leased Assets
Leased assets classified as finance leases and capitalised as fixed assets.
The amount initially brought to account is the present value of minimum
lease payments.
A finance lease is one which effectively transfers from the lessor to the
lessee substantially all the risks and benefits incidental to ownership of
the leased property.
Capitalised leased assets are amortised on a straight line basis over the
estimated useful life of the asset.
Finance lease payments are allocated between interest expense and the
reduction of lease liability over the term of the lease. The interest
expense is determined by applying the interest rate implicit in the lease to
the outstanding lease liability at the beginning of each lease payment
period.
Operating lease payments are charged as an expense in the period in which
they are incurred.
(d) Foreign Currency
All foreign currency transactions during the year have been brought to
account using the exchange rate in effect at the date of the transaction.
Foreign currency monetary items at balance date are translated at the
exchange rate existing at that date.
All exchange differences are brought to account in the profit and loss
statement of the financial period in which they arise.
(e) Income Tax
Tax effect accounting principles have been adopted whereby income tax
expense has been calculated on pre-tax accounting profits after adjustment
for permanent differences. The tax effect of timing differences, which occur
when items are included or allowed for income tax purposes in a period
different to that for accounting, is shown at current taxation rates in
provision for deferred income tax and future income tax benefit, as
applicable. A future income tax benefit in relation to timing differences
and tax losses is not carried forward as an asset unless the directors
regard realisation of the benefit as being assured beyond reasonable doubt.
(f) Employee Entitlements
Liabilities for employees' entitlements to wages and salaries, annual leave,
sick leave, and other current employee entitlements are accrued at nominal
amounts. Liabilities for long service leave, which are not expected to be
paid or settled within twelve months of balance date, are accrued in respect
of all employees at the present value of future amounts expected to be paid.
QMS AUSTRALIA PTY LTD
---------------------
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE SIX MONTHS ENDED
------------------------------------------------------------------
31 MARCH 1998 (UNAUDITED) AND THE SIX MONTHS ENDED 31 MARCH 1999 (UNAUDITED)
----------------------------------------------------------------------------
(Continued)
-----------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(g) Receivables
Trade receivables and other receivables are recorded at amounts due less any
provision for doubtful debts.
(h) Accounts Payable
Trade payables and other accounts payable are recognised when the company
becomes obliged to make future payments resulting from the purchase of goods
and services.
(i) Comparative Figures
Comparative figures are, where appropriate, reclassified so as to be
comparable with the figures presented for the current financial year.
(j) Acquisition of Assets
Assets acquired are recorded at the cost of acquisition, being the purchase
consideration determined as at the date of acquisition plus costs incidental
to the acquisition.
In the event that settlement of all or part of the cash consideration given
in the acquisition of an asset is deferred, the fair value of the purchase
consideration is determined by discounting the amounts payable in the future
to their present value as at the date of acquisition.
(k) United States Generally Accepted Accounting Principles
There were no material differences between US GAAP and Australian GAAP in
the periods presented, and as such no reconciliation of net profit, share
holders equity and balance sheet is required.
l) Convenience Translation
The financial statements are stated in Australian dollars, the currency of
Australia. The US Dollar equivalent financial statements are presented
solely for the convenience of the reader and should not be construed as
representations that the amount stated in Australian dollars have been or
could have been or could be now or at any time in the future converted into
US Dollars at this or any other rate of exchange. The exchange rates used
for the purpose of this disclosure are the daily published bank rates, which
were 31 March 1999 A$1.00 = US$0.6315, 30 September 1998 A$1.00 - US$0.5933,
average for the six months ended 31 March 1999 A$1.00 = US0.6286.
QMS AUSTRALIA PTY LTD
---------------------
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE SIX MONTHS ENDED
------------------------------------------------------------------
31 MARCH 1998 (UNAUDITED) AND SIX MONTHS ENDED 31 MARCH 1999 (UNAUDITED)
------------------------------------------------------------------------
(Continued)
-----------
Unaudited Unaudited Unaudited
March 99 March 99 March 98
US$ $A $A
Note
2. OPERATING PROFIT
The operating profit before income tax is arrived
at after charging the following items :
Revenue
Other revenue:
Interest - other persons 1,488 2,367 2,103
Proceeds on disposal of fixed assets - - 2,768
Proceeds on disposal of asset on finance lease - - -
Service Fees 511,690 814,016 474,137
------- -------- --------
Total operating revenue 513,178 816,383 479,008
------- -------- --------
Expenses
Amortisation of leased assets 5,029 8,000 10,000
Depreciation of property, plant and equipment 14,835 23,600 21,933
Finance charges - lease liability 2,200 3,500 4,500
Provision for employee entitlements 2,069 3,292 (186)
Rental - operating leases 21,106 33,576 23,300
3. INCOME TAX
Operating profit before income tax 46,515 73,998 43,104
------- -------- --------
Income tax expense calculated at 36%
of operating profit 16,745 26,639 15,517
Tax effect of permanent differences :
Legal fees 59 94 -
Entertainment 1,823 2,900 1,088
Future income tax benefit not previously
recognised now brought to account - (16,605)
Under provision for income tax in previous year 476 757
------- -------- --------
Income tax expense attributable to
operating profit 19,103 30,390 -
======= ======== ========
QMS AUSTRALIA PTY LTD
---------------------
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE SIX MONTHS ENDED
------------------------------------------------------------------
31 MARCH 1998 (UNAUDITED) AND SIX MONTHS ENDED 31 MARCH 1999 (UNAUDITED)
------------------------------------------------------------------------
(Continued)
-----------
Unaudited Unaudited
March 99 March 99 Sept 1998
US$ $A $A
Note
4. CURRENT RECEIVABLES
Trade debtors - - -
Sundry debtors - - 37,554
Amounts receivable from parent entity 1,314,071 2,080,873 2,080,873
--------- ---------- ----------
1,314,071 2,080,873 2,118,427
========= ========== ==========
5. OTHER CURRENT ASSETS
Prepayments 43,799 69,357 34,574
Future income tax benefit:
- attributable to timing difference - - 6,970
- attributable to tax losses 9,779 15,486 38,906
--------- ---------- ----------
53,578 84,843 80,450
========= ========== ==========
6. PLANT AND EQUIPMENT
Plant and equipment - at cost 141,450 223,989 174,996
Provision for depreciation (72,161) (114,269) (90,969)
--------- ---------- ----------
69,289 109,720 84,027
--------- ---------- ----------
Plant and equipment under lease - at cost 62,360 98,750 98,750
Provision for amortisation (22,781) (36,075) (26,075)
--------- ---------- ----------
39,579 62,675 72,675
--------- ---------- ----------
Leasehold improvements - at cost 2,172 3,440 1,510
Accumulated depreciation (480) (760) (460)
--------- ---------- ----------
1,692 2,680 1,050
--------- ---------- ----------
Total plant and equipment 110,560 175,075 157,752
========= ========== ==========
7. CURRENT ACCOUNTS PAYABLE
Unsecured - trade creditors 70,783 112,087 176,226
========= ========== ==========
QMS AUSTRALIA PTY LTD
---------------------
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE SIX MONTHS ENDED
------------------------------------------------------------------
31 MARCH 1998 (UNAUDITED) AND SIX MONTHS ENDED 31 MARCH 1999 (UNAUDITED)
------------------------------------------------------------------------
(Continued)
-----------
Unaudited Unaudited
March 99 March 99 Sept 1998
US$ $A $A
Note
8. CURRENT PROVISIONS
Annual leave 9,234 14,623 11,331
========== ======== ========
9. NON CURRENT ACCOUNTS PAYABLE
Amounts payable to related entity - QMS Europe B.V. 250,361 396,455 352,021
Amounts payable to related entity - Alto Imaging
Group B.V. 2,108 3,338 3,338
---------- -------- ---------
252,469 399,793 355,359
========== ======== =========
10. BORROWINGS
Current
- -------
Secured - lease liability 9,102 14,413 14,413
Unsecured - Bank Overdraft - - -
---------- -------- ---------
9,102 14,413 14,413
========== ======== =========
Non-Current
- -----------
Secured - lease liability 28,377 44,936 54,936
========== ======== =========
Lease liability is secured by a chattel mortgage
over the relevant leased assets.
11. NON-CURRENT PROVISIONS
Long service leave 5,052 8,000 8,000
========== ========= =========
12. SHARE CAPITAL
Issued Capital
1,383,266 ordinary shares of $1.00 each
fully paid 873,532 1,383,266 1,383,266
========== ========== =========
13. RESERVES
Foreign currency translation 16,170 - -
======== ========== =========
QMS AUSTRALIA PTY LTD
---------------------
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE SIX MONTHS ENDED
------------------------------------------------------------------
31 MARCH 1998 (UNAUDITED) AND SIX MONTHS ENDED 31 MARCH 1999 (UNAUDITED)
------------------------------------------------------------------------
(Continued)
-----------
Unaudited Unaudited Unaudited
March 99 March 99 March 98
$US $A $A
14. NOTES TO THE STATEMENT
OF CASH FLOWS
(a) Reconciliation of Cash
For the purposes of the statement of cash flows,
cash includes cash on hand and in banks and
investments in money market instruments, net of
outstanding bank overdraft. Cash at the end of
the financial year as shown in the statement of
cash flows is reconciled to the related items on
the balance sheet as follows:
Cash/(overdraft) 49,458 78,318 90,108
Term deposit 13,635 21,591 20,000
------ ------ -------
63,093 99,909 110,108
====== ====== =======
(b) Reconciliation of net cash provided by operating
activities to operating profit after income tax
Operating profit after tax 27,412 43,608 43,104
Depreciation/amortisation 19,864 31,600 31,933
Changes in net assets and liabilities:
Decrease/(Increase) in receivables 23,606 37,554 (12,139)
(Increase) in prepayments (21,865) (34,783) (27,355)
Decrease in future income tax benefits 19,104 30,390 -
(Decrease)/Increase in provision
for employee entitlements 2,069 3,292 (186)
Decrease in current payables (40,318) (64,139) (28,445)
Increase in non current payables 27,932 44,434 118,862
------- ------- -------
Net cash provided by operating activities 57,804 91,956 125,774
====== ====== =======
(b) Pro Forma Financial Information
The following unaudited pro forma financial information combines the historical
financial information of QMS, Inc. and QMS Europe B.V. and QMS Australia PTY
Ltd. The transactions are accounted for as a purchase business combination.
The pro forma amounts have been prepared based on certain proforma adjustments,
as described in the accompanying notes to the pro forma financial statements of
QMS, Inc.
On June 7, 1999, QMS Inc. reacquired the stock of its former subsidiaries, QMS
Europe B.V. and QMS Australia PTY Ltd., by purchase from Alto Imaging Group N.V.
and Jalak Investments B.V. for a purchase price of $24,725,700 for the QMS
Europe B.V stock and $2,685,300 for the QMS Australia PTY Ltd stock,
respectively, determined in arms length negotiations with the sellers. Of the
total $27,411,000 purchase price, $5,000,000 cash earnest money was paid on May
18, 1999, $13,000,000 was paid in cash upon the closing June 7, 1999, $3,176,082
was paid by an offset to receivables balances, and $6,234,918 was represented by
a promissory note of QMS, Inc. In addition the Company incurred approximately
$2.5 million in transaction costs.
QMS, Inc. raised the cash paid from a combination of a $5,000,000 non-interest
bearing advance payment from Minolta Co. Ltd. for future engineering services
and future manufactured controller boards, $12,247,500 of QMS, Inc. stock sold
to Minolta Investments Company, and a $12,800,000 loan from Minolta Co, Ltd.
The unaudited Pro Forma Combined Balance Sheet combines the April 2, 1999
historical consolidated balance sheet of QMS, Inc. and the historical balance
sheet of QMS Europe B.V. and QMS Australia PTY Ltd. The balance sheets are
combined on a pro forma basis as if the acquisition and related financing of QMS
Europe B.V. and QMS Australia PTY Ltd had been effective as of April 2, 1999,
after giving effect to various accounting adjustments for purchase accounting
rules as well as the financing of the transaction.
The unaudited Pro Forma Combined Statement of Operations presents the combined
historical results of operations of QMS, Inc. and QMS Europe B.V. and QMS
Australia PTY Ltd. for the 13 weeks ended April 2, 1999 and for the fiscal year
ended October 2, 1998, as if the acquisition and related financing had been
effective as of the beginning of the periods presented. QMS Inc. modified its
fiscal year to a 52-53 week calendar year starting January 3, 1999, and,
accordingly, the unaudited pro forma interim period presented is the 13-week
period ending April 2, 1999.
Certain pro forma adjustments are based on preliminary estimates. Final
allocations will be made on the basis of further evaluations and, therefore,
such allocations may differ from those reflected in the pro forma financial
statements.
The historical annual statements of earnings for QMS, Inc and QMS Europe B.V.
and QMS Australia PTY Ltd were derived from the audited financial statements of
the respective companies. The unaudited historical statements of operations for
the 13 weeks ended April 2, 1999 were derived from QMS Quarterly Report on Form
10-Q and unaudited financial information provided to QMS, Inc. by QMS Europe
B.V. and QMS Australia PTY Ltd. The financial statements of QMS Europe B. V.
and QMS Australia PTY Ltd. have been translated to U.S. dollars.
The unaudited pro forma combined financial information has been prepared using
the assumptions set forth in the Notes to Pro Forma Financial Information and
should be read in conjunction with the Company's Consolidated financial
Statements and notes thereto, which have been previously filed with
the Securities and Exchange commission in the QMS Annual Report on Form 10-K for
the fiscal year ended October 2, 1998 and the Quarterly Report on Form 10-Q for
the period ended April 2, 1999 and with the financial statements of QMS Europe
B.V. and QMS Australia PTY Ltd and notes filed herewith.
The unaudited pro forma combined financial information is intended for
informational purposes and is not necessarily indicative of the consolidated
results of operations of QMS, Inc. had the acquisition occurred at the beginning
of the periods presented, nor is it indicative of the future financial position
or future results of operations of QMS, Inc.
QMS, INC. AND SUBSIDIARIES
PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF APRIL 2, 1999
(UNAUDITED)
QMS Pro Forma
QMS Australia Pro Forma Combined
(in thousands) QMS, Inc. Europe BV Pty Ltd Adjustments (unaudited)
- ---------------------------------------------------------------------------------------------- -----------
Assets
Current Assets:
Cash and cash equivalents $ 1,005 $ 3,521 $ 63 $ 30,048 a $ 4,589
(20,500)a
(9,548)a
Trade receivable, net 27,747 27,361 1,314 (3,428)c 52,994
Note receivable, net 239 - 239
Inventories, net 29,902 23,097 - 52,999
Other 3,186 2,040 54 5,280
------------------------------------------- --------
Total current assets 62,079 56,019 1,431 (3,428) 116,101
Net property and equipment 6,135 1,662 110 - 7,907
Capitalized and deferred software 10,477 - - 10,477
Goodwill - 20,180 b 20,180
Other assets, net 2,098 - - 2,098
------------------------------------------- --------
Total assets 80,789 57,681 1,541 16,752 156,763
=========================================== ========
Liabilities and stockholders' equity
Current liabilities:
Current liabilities
Accounts payable 22,157 21,742 323 (251)c 43,970
Revolving credit loan and short-term debt 10,837 15,248 - (9,548)a 16,538
Note payable - 6,235 a 6,235
Deferred service revenue 7,817 - - 7,817
Other 8,750 11,127 18 19,895
------------------------------------------- --------
Total current liabilities 49,561 48,117 341 (3,564) 94,455
Long term debts 12,800 a 12,800
Deferred compensation 2,613 - 2,613
Capital lease obligations 1,429 28 1,457
Deferred revenue 775 5,000 a 5,775
Other liabilities 1,085 1,000 5 2,090
------------------------------------------- --------
Total liabilities 55,463 49,117 374 14,236 119,190
Stockholders' equity
Common stock 118 17 874 21 a 139
(891)c
Additional paid in capital 40,714 105 - 12,226 a 52,940
(105)c
Retained earnings (2,207) 8,442 277 (8,719)c (2,207)
Treasury stock (13,102) - - (13,102)
Translation adjustment (197) - 16 (16)c (197)
------------------------------------------- --------
Total equity 25,326 8,564 1,167 2,516 37,573
------------------------------------------- --------
Total liabilities and
stockholders' equity $ 80,789 $57,681 $1,541 $ 16,752 $156,763
=========================================== ========
See notes to unaudited pro forma combined condensed financial statements
QMS, INC. AND SUBSIDIARIES
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE THIRTEEN WEEKS ENDED APRIL 2, 1999
(UNAUDITED)
QMS Pro Forma
(in thousands except share QMS Australia Pro Forma Combined
and per share amounts) QMS, Inc. Europe BV Pty Ltd Adjustments (Unaudited)
- ------------------------------------------------------------------------------------------ -----------
Revenue $43,366 $39,085 $260 ($9,325)c $73,386
-
Cost of sales 33,325 33,973 - (9,325)c 57,973
------------------------------------------- -------
Gross profit 10,041 5,112 260 - 15,413
------------------------------------------- -------
Selling expense 4,838 2,411 33 7,282
General and administrative expense 5,802 3,918 204 9,924
Goodwill amortization 548 a 548
Interest income (26) (47) (1) (74)
Interest expense 247 313 - 121 b 681
Exchange gains - (1,435) (1,435)
Other non-operating expense 37 - - 37
------------------------------------------- -------
Total expense 10,898 5,160 236 669 16,963
------------------------------------------- -------
Income (loss) before provision for taxes (857) (48) 24 (669) (1,550)
Income taxes (benefit) provision 34 (17) 9 d 26
------------------------------------------- -------
Net income (loss) ($891) ($31) $15 ($669) ($1,576)
=========================================== ========
Net loss per share, basic and diluted ($0.08) ($0.12)
Weighted average common and
common equivalent shares
basic and diluted 10,700,000 2,130,000 e 12,830,000
See notes to unaudited pro forma combined condensed financial statements
QMS, INC. AND SUBSIDIARIES
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 2, 1998
(UNAUDITED)
QMS Pro Forma
(in thousands except share QMS Australia Pro Forma Combined
and per share amounts) QMS, Inc. Europe BV PTY Ltd. Adjustments (Unaudited)
- ------------------------------------------------------------------------------------------ -----------
Revenue $133,491 $100,487 $892 ($21,509)c $213,361
-
Cost of sales 94,071 70,294 - (21,509)c 142,856
-------------------------------------------------- --------
Gross profit 39,420 30,193 892 - 70,505
-------------------------------------------------- --------
Marketing and Selling expense 18,896 7,326 114 26,336
General and administrative expense 18,443 12,009 711 31,163
Goodwill amortization 2,190 a 2,190
Interest income (381) (161) (2) (544)
Interest expense 485 1,112 - 482 b 2,079
Exchange gains - 2,433 - 2,433
Other non-operating expense 117 - (12) 105
-------------------------------------------------- --------
Total expense 37,560 22,719 811 2,672 63,762
-------------------------------------------------- --------
Income before provision for taxes 1,860 7,474 81 (2,672) 6,743
Income tax provision 35 2,657 7 d 2,699
-------------------------------------------------- --------
Net income $1,825 $4,817 $74 ($2,672) $4,044
================================================== ========
Net income per share - basic $0.17 $0.32
Net income per share - diluted $0.17 $0.31
Weighted average common and
common and equivalent shares:
Basic 10,697,000 2,130,000 e 12,827,000
Diluted 10,887,000 2,130,000 e 13,017,000
See notes to unaudited pro forma combined condensed financial statements
Item 7 (b) 4
QMS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS
UNAUDITED PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS
a) To record transactions associated with financing the acquisition as follows:
Minolta advance $ 5,000,000
Minolta loan 12,800,000
Sale of common stock 12,247,500
-----------
Total cash sources $30,047,500
-----------
Purchase price $27,411,000
Transaction costs 2,500,000
-----------
Acquisition cost 29,911,000
Portion offset by payables due
by seller to QMS, Inc. 3,176,082
Note to seller 6,234,918
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Cash used in acquisition $20,500,000
-----------
Surplus financing applied to
revolving credit balance $ 9,547,500
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b) To record QMS, Inc.'s purchase of QMS Europe B.V. and QMS Australia PTY Ltd.
The consideration paid and allocation of the excess purchase price over the
historical net assets acquired is summarized as follows:
Total acquisition cost $29,911,000
Historical assets net of liabilities 9,731,000
-----------
Goodwill $20,180,000
===========
c) To eliminate intercompany balances
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS ADJUSTMENTS
a) To record goodwill amortization. Goodwill of $20,180,000 is being amortized
over 10 years.
b) To record interest expense on debts incurred in connection with the
acquisition as follows:
Interest Rate Quarterly Annual
Amount Per Annum Interest Interest
--------------- ---------- ---------- ----------
Note to seller $ 6,234,918 6.50% $ 101,317 $ 405,270
Minolta loan 12,800,000 7.50% 240,000 960,000
Surplus financing applied to
revolving credit balance (9,547,500) 9.25% (220,786) (883,144)
----------- --------- ---------
Net Change in Financing $ 9,487,418 $120,531 $ 482,126
=========== ======== =========
The interest rates used approximate the average interest rate in effect for the
respective loans during the periods.
c) To eliminate intercompany commissions and product sales.
d) The excess of the purchase price over the historical cost will not generate
additional tax deductions in the US or in Netherlands. The additional
interest expenses will be tax deductible in the US but is not estimated to
reduce US taxes because of tax carryovers from prior years.
e) To reflect shares issued to Minolta Investments Company to partially
finance the acquisition.
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.
Registrant:
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QMS, INC.
/s/ Albert A. Butler
---------------------------
Albert A. Butler
Chief Financial Officer and
Corporate Secretary
Date: August 11, 1999