1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 16, 2000
OXFORD AUTOMOTIVE, INC.
(Exact name of Registrant as specified in its charter)
Michigan 333-75849 38-3262809
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
1250 Stephenson Highway
Troy, Michigan 48083
(Address of principal executive offices)
Registrant's telephone number, including area code: (248) 577-1400
N/A
(Former Name or Former Address, if Changed Since Last Report)
2
AMENDMENT NO. 1
The undersigned Registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K dated
February 16, 2000 as set forth in the pages attached hereto:
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
Filed with this Amendment are the following financial statements of
Tool & Engineering Company:
(1) Audited Combined Balance Sheet as of December 31, 1999.
(2) Audited Combined Statement of Operations, and Statement of Cash
Flows for the year ended December 31, 1999.
(b) Pro Forma Financial Information.
Filed with this Amendment is the following pro forma financial
information:
(1) Unaudited Pro Forma Combined Balance Sheet as of December 31, 1999.
(2) Unaudited Pro Forma Combined Statement of Operations for the year
ended March 31, 1999 and for the nine months ended December 31,
1999.
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated May 1, 2000 OXFORD AUTOMOTIVE, INC.
/S/ Aurelian Bukatko
------------------------------------
Aurelian Bukatko
Senior Vice President and
Chief Financial Officer
4
TOOL & ENGINEERING COMPANY
(WHOLLY-OWNED BY FARLEY, INC.)
CONTENTS
- --------------------------------------------------------------------------------
PAGE(S)
REPORT OF INDEPENDENT ACCOUNTANTS.......................................1
FINANCIAL STATEMENTS
Combined Balance Sheet..................................................2
Combined Statement of Operations........................................3
Combined Statement of Cash Flows........................................4
Notes to Combined Financial Statements................................5-9
5
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholder of
Tool and Engineering Company
In our opinion, the accompanying combined balance sheet and the related combined
statement of operations, and of cash flows present fairly, in all material
respects, the financial position of Tool & Engineering Company as further
defined in Note 2 (the Company) at December 31, 1999 and the results of its
operations and its cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
auditing standards generally accepted in the United States which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.
The Company, as disclosed in Note 5 to the accompanying financial statements, is
wholly-owned by Farley, Inc. and has extensive transactions and relationships
with Farley, Inc. Because of these relationships, it is possible that the terms
of these transactions are not the same as those that would result from
transactions among wholly-unrelated parties.
As discussed in Note 10, on February 15, 2000, Farley, Inc. sold certain net
assets of the Company to Oxford Automotive, Inc. The accompanying financial
statements do not give effect to this purchase transaction.
PRICEWATERHOUSECOOPERS LLP
April 21, 2000
1
6
TOOL & ENGINEERING COMPANY
(WHOLLY-OWNED BY FARLEY, INC.)
COMBINED BALANCE SHEET
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
ASSETS
Current assets
Trade receivables, net of allowance of $289,516 $3,688,948
Inventories 268,186
Prepaid expenses and deposits 132,515
----------
Total current assets 4,089,649
Property, plant and equipment, net 3,699,351
Goodwill, net 154,920
----------
TOTAL ASSETS $7,943,920
==========
LIABILITIES AND INVESTED CAPITAL OF PARENT
Current liabilities
Cash overdraft 63,737
Trade accounts payable 627,926
Accrued liabilities 1,448,410
----------
Total liabilities 2,140,073
Invested Capital of Parent 5,803,847
----------
Total Invested Capital of Parent 5,803,847
----------
TOTAL LIABILITIES AND INVESTED CAPITAL OF PARENT $7,943,920
==========
The accompanying notes are an integral part of the financial statements.
2
7
TOOL & ENGINEERING COMPANY
(WHOLLY-OWNED BY FARLEY, INC.)
COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
Net sales $ 20,578,090
Cost of sales 19,221,395
------------
Gross profit 1,356,695
Selling, general and administrative 3,257,790
------------
Loss before income taxes (1,901,095)
------------
Income tax benefit $ 735,052
------------
Net loss $ (1,166,043)
=============
3
8
TOOL & ENGINEERING COMPANY
(WHOLLY-OWNED BY FARLEY, INC.)
COMBINED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net loss $(1,166,043)
Adjustments to reconcile net loss to net cash
provided by operating activities
Depreciation and amortization 846,150
Loss on disposal of fixed assets 59,657
Changes in operating assets and liabilities affecting cash
Trade receivables (148,194)
Inventories 2,033,011
Prepaid expenses and other assets (19,685)
Trade accounts payable (10,934)
Accrued expenses and other liabilities (1,179,455)
-----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 414,507
-----------
INVESTING ACTIVITIES
Purchases of property, plant and equipment (12,209)
Proceeds on disposal of fixed assets 11,469
-----------
NET CASH USED IN INVESTING ACTIVITIES (740)
-----------
FINANCING ACTIVITIES
Cash overdraft (663,326)
Net cash transfers to/from parent 249,559
-----------
NET CASH USED IN FINANCING ACTIVITIES (413,767)
-----------
NET INCREASE IN CASH AND CASH EQUIVALENTS --
Cash and cash equivalents at beginning of period --
-----------
Cash and cash equivalents at end of period $ --
===========
The accompanying notes are an integral part of the financial statements.
4
9
TOOL & ENGINEERING COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. NATURE OF OPERATIONS
Tool and Engineering Company (the Company) provides engineering, design
and prototype services to the automotive industry. The Company operates
in two locations: Troy for design work and Chicago for the prototyping
services. The Company's hourly workforce is represented by the United
Steelworkers of America.
Net sales and accounts receivable from the Company's primary customer,
General Motors Corporation, represent approximately 56% of total sales
and 39% of the December 31, 1999 accounts receivable balance.
Although the Company is directly affected by the economic well being of
the automotive industry and the customer referred to above, management
does not believe significant credit risk exists at December 31, 1999. The
Company does not require collateral to reduce such risk and historically
has not experienced significant losses related to receivables from
individual customers or groups of customers in the automotive industry.
2. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF COMBINATION
The combined financial statements of the Company include the accounts of
the Tool and Engineering Division of Farley, Inc. and Tool and
Engineering Company of Detroit, a Michigan Corporation. Both entities are
wholly-owned by Farley, Inc.
Tool and Engineering Company of Detroit was acquired in October 1997 by
Farley, Inc. Such acquisition was accounted for under the purchase method
of accounting.
All intercompany transactions have been eliminated in the combination.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
CASH EQUIVALENTS
Cash overdrafts represent outstanding checks drawn on the Company's bank
accounts, which are funded when the checks are presented.
REVENUE RECOGNITION
Revenue is recognized by the Company when the product is shipped to the
customer or when the services are rendered.
5
10
TOOL & ENGINEERING COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORIES
Inventories consist of work in process representing costs incurred in
connection with certain design, engineering and prototype contracts.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated on the basis of cost and include
expenditures for improvements which materially increase the useful lives
of existing assets. Expenditures for normal repair and maintenance are
charged to operations as incurred. For financial reporting purposes,
depreciation is computed principally using the straight-line method over
the following estimated useful lives:
YEARS
Furniture and equipment 10-20
Machinery and equipment 2-20
IMPAIRMENT OF LONG-LIVED ASSETS
The Company accounts for long-lived assets in accordance with Statement
of Financial Accounting Standards (SFAS) No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of". This statement requires that long-lived assets and certain
identifiable intangibles to be held and used by the Company be reviewed
for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be fully recoverable. The Company
recognizes impairment losses for assets or groups of assets where the sum
of the estimated future cash flows (undiscounted and without interest
charges) is less than the carrying amount of the related asset or group
of assets. The amount of the impairment loss recognized is the excess of
the carrying amount over the fair value of the asset or group of assets
being measured.
In accordance with that policy, the Company wrote down certain non
performing equipment prior to January 1, 1999. The value of this
equipment at December 31, 1999 is approximately $581,000. No depreciation
expense was recorded for this equipment for the year ended December 31,
1999.
GOODWILL
Goodwill represents the excess of the Company's allocated acquisition
cost over the fair value of the net assets of the business acquired and
is being amortized by the straight-line method, over 15 years. Goodwill
is net of amortization of $26,155.
6
11
TOOL & ENGINEERING COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are comprised of the following at December
31, 1999:
Furniture and fixtures $ 283,542
Machinery and equipment 12,945,850
Kirksite dies 1,588,046
------------
14,817,438
Less - accumulated depreciation (11,118,087)
------------
$ 3,699,351
============
Total depreciation charge for the year ended December 31,
1999 was $834,079.
Kirksite dies represent dies made out of zinc that are used in producing
prototype parts. The dies have an indefinite life, as they can be melted
down and reused in production.
4. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities are comprised of the
following at December 31, 1999:
Employee compensation $ 807,143
Accrued workers' compensation 408,492
Accrued property taxes 182,775
Accrued medical benefits 50,000
-----------
$1,448,410
===========
5. RELATED PARTY TRANSACTIONS
CASH MANAGEMENT
Except for certain cash balances controlled at the Company level, cash
accounts have been controlled on a centralized basis by Farley, Inc.
Accordingly, cash receipts and disbursements have been received or made
through Farley, Inc., resulting in net adjustments to the Company's
Invested Capital of Parent.
CORPORATE SERVICES
The Company has been provided certain management, legal, employee benefit
accounting and tax services by Farley, Inc. In order to allocate those
costs to the entities to which the costs relate, the Company was charged
a management fee which amounted to $150,000 for the year ended December
31, 1999. The allocation of general and administrative costs incurred
centrally has been made using a methodology that management believes is
reasonable, based on Farley, Inc.'s costs for key personnel that perform
services for the Company. Such charges and allocations are not
necessarily indicative of the cost that would have been incurred if the
Company had been a stand-alone Company.
7
12
TOOL & ENGINEERING COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5. RELATED PARTY TRANSACTION (CONTINUED)
BUILDING LEASE
At September 15, 1999, the land and building located in Chicago were
transferred to Farley Inc. at net book value of $7,039,434 and
subsequently leased-back to the Company. Depreciation and rent expense
for the year ended December 31, 1999 was approximately $295,000.
EMPLOYEE BENEFITS
Pension benefits for the Company's salaried employees are provided by
Farley, Inc. Charges for the year ended December 31, 1999 approximated
$285,353.
INVESTED CAPITAL OF PARENT
All intercompany balances with Farley, Inc. are included within the
Invested Capital of Parent caption in the accompanying financial
statements. No interest expense or benefit is charged by Farley, Inc. to
the Company.
Changes in the Invested Capital of Parent account were as follows:
1999
Beginning Invested Capital of Parent $13,759,765
Net loss for the period (1,166,043)
Intercompany activity (6,789,875)
-----------
Ending Invested Capital of Parent $ 5,803,847
============
6. POSTRETIREMENT BENEFITS
Union employees are also provided certain postretirement healthcare
benefits in the amount of $500 per year per employee. The liability for
the benefits has been determined using a discount rate of 7.5%. The
liability at the end of December 31, 1999 approximates $248,598 and is
included in accrued liabilities.
7. INCOME TAXES
The Company's results are included in the consolidated federal income tax
return and state tax returns of the parent company, Farley, Inc. Pursuant
to an informal tax allocation agreement, the Company provides for federal
and state income taxes substantially on a stand-alone separate company
basis. Accordingly, all federal and state income taxes (current and
deferred income taxes) are included in the Invested Capital of Parent.
Deferred income taxes are related to the effect of temporary differences
between financial and tax reporting. The differences are related
pricipally to depreciation, provisions for workers' compensation
claims, employee vacation costs and provisions for doubtful accounts. At
December 31, 1999, the deferred tax assets pertaining to these
differences approximate $464.
The calculations of tax provisions necessarily requires certain
assumptions, allocations and estimates which management believes are
reasonable to accurately reflect tax reporting as a stand-alone separate
company.
8
13
TOOL & ENGINEERING COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
7. INCOME TAXES (CONTINUED)
For the year ended December 31, 1999, the Company's tax benefit
comprised:
State tax benefit $ 79,000
Federal income tax benefit 656,052
--------
Total income tax benefit $735,052
--------
8. OPERATING LEASES
As of December 31, 1999, the Company had operating leases for computer
equipment and a facility in Troy. The minimum rental commitments under
noncancellable operating leases through the expiration of the leases in
fiscal year 2000 is $251,769.
9. CONTINGENCIES
The Company is subject to certain legal proceedings, claims and
liabilities which arise in the ordinary course of its business.
Litigation is subject to many uncertainties; the outcome of individual
litigated matters is not predictable with assurance, and it is reasonably
possible that some of the foregoing matters could be decided unfavorably
to the Company. Although the amount of the liability at December 31, 1999
with respect to these matters cannot be ascertained, the Company believes
that any resulting liability will not be material to the financial
position, cashflows and results of operations of the Company at December
31, 1999.
10. SUBSEQUENT EVENT
On February 15, 2000, pursuant to a Purchase Agreement dated February 2,
2000, (the "Asset Purchase Agreement"), Oxford Automotive, Inc. purchased
substantially all assets and assumed substantially all liabilities of the
Company as defined under the agreement for $6,070,000.
9
14
UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
(DOLLARS IN THOUSANDS)
The unaudited pro forma combined balance sheet as of December 31, 1999 (the
"Unaudited Pro Forma Balance Sheet") gives pro forma effect to the acquisition
of the Tool & Engineering Company (the "Technology Division") as if it had
occurred on December 31, 1999. The acquisition of the Technology Division is
accounted for by the purchase method of accounting pursuant to which the
purchase price is allocated among the acquired tangible and intangible assets
and assumed liabilities in accordance with estimates of their fair values on the
date of acquisition. The pro forma adjustments represent management's
preliminary determination of purchase accounting adjustments and are based upon
available information and certain assumptions that Oxford Automotive, Inc. (the
"Company") believes to be reasonable under the circumstances. Consequently, the
amounts reflected in the Unaudited Pro Forma Balance Sheet are subject to change
and the final values may differ substantially from these amounts. Management
does not expect that differences between the preliminary and final purchase
price allocation will have a material impact on the Company's financial
position. The Unaudited Pro Forma Balance Sheet does not purport to be
indicative of the financial position of the Company had such transactions
actually been completed as of the assumed dates and for the periods presented,
or which may be obtained in the future.
The unaudited pro forma combined statement of operations for the year ended
March 31, 1999 gives pro forma effect to the acquisitions of Cofimeta S.A.
("Cofimeta")and the Technology Division as if they had occurred on April 1,
1998. The unaudited pro forma combined statement of operations for the nine
months ended December 31, 1999 gives pro forma effect to the acquisition of the
Technology Division as if it had occurred on April 1, 1999. Cofimeta was
acquired February 5, 1999. The pro forma statement of operations for the year
ended March 31, 1999 includes the results of Cofimeta for the period prior to
acquisition (April 1, 1998 to February 4, 1999). Based on the acquisition date,
Cofimeta is included in the Company's operations for the nine months ended
December 31, 1999. The unaudited pro forma combined statement of operations for
the year ended March 31, 1999 and for the nine months ended December 31, 1999
are collectively referred to as the "Unaudited Pro Forma Statements of
Operations." The Unaudited Pro Forma Statements of Operations do not purport to
be indicative of the results of operations of the Company had such transactions
actually been completed as of the assumed dates and for the periods presented,
or which may be obtained in the future.
15
UNAUDITED PRO FORMA COMBINED BALANCE SHEET AS OF THE PERIOD ENDED
TECHNOLOGY PRO FORMA PRO FORMA
COMPANY DIVISION ADJUSTMENTS COMBINED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1999 (a) 1999 1999
---------------- ------------------- ---------------- ----------------
ASSETS (DOLLARS IN THOUSANDS)
Cash and cash equivalents $11,129 ($6,070)(b)(c) $5,059
Accounts receivable, net 126,403 3,689 130,092
Inventories 52,764 268 53,032
Reimbursable tooling 17,030 17,030
Deferred Taxes 2,556 2,556
Prepaid expense and other current
assets 24,195 133 24,328
---------------- ------------------- ---------------- ----------------
Total current assets 234,077 4,090 (6,070) 232,097
Other noncurrent assets 27,961 155 (155)(c) 27,961
Deferred income taxes 26,183 26,183
Property, plant and equipment 264,355 3,699 663 (c) 268,717
---------------- ------------------- ---------------- ----------------
Total assets $552,576 $7,944 ($5,562) $554,958
================ =================== ================ ================
Trade accounts payable $91,161 $628 $91,789
Restructuring reserve 7,464 800 (c) 8,264
Other current liabilities 45,161 1,512 (558)(c) 46,115
Current portion of long-term debt 10,075 10,075
---------------- ------------------- ---------------- ----------------
Total current liabilities 153,861 2,140 242 156,243
Pension liability 9,641 9,641
Post-employment medical benefits 45,416 45,416
Deferred income taxes 9,005 9,005
Other long-term liabilities 7,293 7,293
Long-term debt 281,866 281,866
---------------- ------------------- ---------------- ----------------
Total liabilities 507,082 2,140 242 509,464
Redeemable Series A 40,713 40,713
Common stock 1,050 1,050
Accumulated other
comprehensive income (7,680) (7,680)
Retained earnings 11,411 5,804 (5,804)(c) 11,411
---------------- ------------------- ---------------- ----------------
Total stockholders' equity 4,781 5,804 (5,804) 4,781
---------------- ------------------- ---------------- ----------------
Total liabilities and stockholders'
equity $552,576 $7,944 ($5,562) $554,958
================ =================== ================ ================
See Accompanying Notes To Unaudited Pro Forma Combined Balance Sheet.
16
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(Dollars in thousands)
(a) Represents the adjustments for the Technology Division acquisition as
if it had occurred on December 31, 1999. The December 31, 1999 balance
sheet for the Technology Division was derived from the December 31,
1999 audited financial statements attached.
(b) Represents the estimated purchase price for the Technology Division.
The acquisition was funded using available working capital.
(c) The acquisition of the Technology Division will be accounted for by the
purchase method of accounting, pursuant to which the purchase price is
allocated among the acquired tangible and intangible assets and assumed
liabilities in accordance with their estimated fair values on the date
of acquisition. The purchase price and preliminary adjustments to
historical book value of the Technology Division as a result of the
transaction are as follows:
Elimination of predecessor goodwill $ (155)
Increase to fair market value:
Kirksite dies $ 680
Property plant and equipment 564
Net book value of assets not purchased (581) 663
------- -------
Net increase in assets $ 508
=======
Cash used to finance acquisition $ 6,070
Decrease in health and retirement benefits
not assumed as a part of the acquisition (558)
Restructuring reserves
Serverance costs 500
Lease exit costs 300 800
-------
Elimination of predecessors investment in the
Technology Division (5,804)
-------
Net increase in liabilities and shareholders
equity $ 508
=======
17
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
TECHNOLOGY
COMPANY DIVISION PRO FORMA
COMPANY (a) PRO FORMA (b) PRO FORMA (c) COMBINED
------------------ --------------- ---------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 1999 MARCH 31, 1999 MARCH 31, 1999 MARCH 31, 1999
------------------ --------------- ---------------------------------
Net Sales $591,645 $167,486 $19,926 $786,673
Cost of Sales 536,578 150,399 17,952 712,545
----------------- -------------- ---------------------------------
Gross Profit 55,067 17,087 1,974 74,128
Selling, general and
administrative expenses 32,770 11,199 3,549 47,518
Restructuring provision 1,151 1,151
Gain on sale of fixed assets (777) (777)
----------------- -------------- ---------------------------------
Income (loss) from operations 21,923 5,888 (1,575) 26,236
Interest expense, net (20,903) (5,465) (485) (26,853)
Other income (expense) 4,445 52 4,497
----------------- -------------- ----------------------------------
Income (loss) before income
taxes 5,465 475 (2,060) 3,880
(Provision) benefit for income (2,312) (190) 804 (1,698)
taxes ----------------- -------------- ---------------------------------
Net income (loss) $3,153 $ 285 $(1,256) $2,182
================= ============== =================================
18
TECHNOLOGY
DIVISION PRO FORMA
COMPANY PRO FORMA(d) COMBINED
------------------ --------------- ----------------
NINE MONTHS PERIOD NINE MONTHS
ENDED APRIL 1, 1999- ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1999 1999
------------------ --------------- ----------------
Net Sales $607,128 $13,640 $620,768
Cost of Sales 537,181 12,871 550,052
------------------ --------------- ----------------
Gross Profit 69,947 769 70,716
Selling, general and
administrative expenses 36,950 2,441 39,391
Restructuring provision 0
Gain on sale of fixed assets 132 132
------------------ --------------- ----------------
Income (loss) from operations 32,865 (1,672) 31,193
Interest expense, net (23,265) (421) (23,686)
Other income (expense) 524 524
------------------ --------------- ----------------
Income (loss) before income
taxes 10,124 (2,093) 8,031
(Provision) benefit for
income taxes (4,306) 814 (3,492)
------------------ --------------- ----------------
Net income (loss) $5,818 $(1,279) $ 4,539
================== =============== ================
19
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(a) Statement of Operations Data for the Company for the year ended March
31, 1999 includes operating data for Cofimeta for the period
subsequent to acquisition (February 4, 1999 to March 31, 1999).
(b) The Company Pro Forma information has been adjusted as follows to
reflect the Company's Statement of Operations Data as if the Company
had acquired Cofimeta on April 1, 1998:
PRO FORMA COMPANY
COFIMETA(1) ADJUSTMENTS PRO FORMA
PERIOD FROM
APRIL 1, 1998
THROUGH YEAR ENDED YEAR ENDED
FEBRUARY 4, 1999 MARCH 31, 1999 MARCH 31, 1999
---------------- -------------- ---------------
Net Sales $ 167,486 $167,486
Cost of Sales 153,733 $ (3,334)(2) 150,399
------------ -------- --------
Gross Profit 13,753 3,334 17,089
Selling, general and administrative
expenses 11,107 92(3) 11,199
Restructuring provision
Gain on sale of fixed assets ------------ -------- --------
Income (loss) from operations 2,646 3,242 5,888
Interest expense, net (1,708) (3,757)(4) (5,465)
Other income (expense) 52 52
------------ -------- --------
Income (loss) before income taxes 990 (515) 475
(Provision) benefit for income taxes (53) (137)(5) (190)
------------ -------- --------
Net income (loss) 937 $ (652) $ 285
============= ========= =========
(1) Statement of Operations data for Cofimeta for the period prior to
acquisition by the Company (April 1, 1998 - February 4, 1999) was
derived from Cofimeta's unaudited internal financial statements.
(2) Represents decreased depreciation as a result of the conformance
of accounting policies and depreciable lives between the Company
and Cofimeta.
(3) Represents amortization of bond acquisition fees associated with
the $125.0 million Series A Senior Subordinated Notes issued June
24, 1997.
(4) Represents the net effect on interest expense as a result of the
following:
Use of proceeds from the Series C offering for the acquisition of
Cofimeta of $37,625. Interest expense is calculated using an
interest rate of 10.125% per annum 3,175
Interest an deferred share purchase price deferred debt payments 582
and continuation plan indebtedness in accordance with the ------
acquisition. $3,757
======
(5) Represents the estimated income tax effect of the pro forma
adjustments using an effective tax rate of 40%.
20
(c) The Technology Division Pro Forma information includes the Statement of
Operations data as if the Company had acquired Technology Division on April 1,
1998:
PRO FORMA TECHNOLOGY
TECHNOLOGY(1) ADJUSTMENTS PRO FORMA
PERIOD FROM
APRIL 1, 1998
THROUGH YEAR ENDED YEAR ENDED
MARCH 31, 1999 MARCH 31, 1999 MARCH 31, 1999
-------------- -------------- --------------
Net Sales $ 19,926 $ 19,926
Cost of Sales 17,952 17,952
------------ ------------ -------------
Gross Profit 1,974 1,974
Selling, general and administrative
expenses 3,549 3,549
Restructuring provision 0
Gain on sale of fixed assets 0
------------ ------------ -------------
Income (loss) from operations (1,575) (1,575)
Interest expense, net (485)(2) (485)
Other income (expense)
------------ ------------ -------------
Income (loss) before income taxes (1,575) (485) (2,060)
Provision for income taxes 610 $ 194(3) 804
------------ ------------ -------------
Net income (loss) $ (965) $ (291) $ (1,256)
============ ============ =============
(1) The Statement of Operations data for the period April
1, 1998 to March 31, 1999 was derived from the
Technology Division's unaudited internal financial
statements.
(2) Represents the net effect on interest expenses as a
result of allocations for working capital fluctuations
during the period. As the Technology Division was not
separately allocated interest by the parent, the above
adjustment reflects the estimated interest for the
period.
(3) Represents the estimated income tax effect of the pro
forma adjustments using an effective tax rate of 39%.
21
(d) The Technology Division Pro Forma information includes the Statement of
Operations data as if the Company had acquired Technology Division on April 1,
1998:
PRO FORMA TECHNOLOGY
TECHNOLOGY(1) ADJUSTMENTS PRO FORMA
PERIOD FROM
NINE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED
DECEMBER 31, 1999 DECEMBER 31, 1999 DECEMBER 31, 1999
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Net Sales $ 13,640 $ 13,640
Cost of Sales 12,499 12,871
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Gross Profit 769 769
Selling, general and administrative
expenses 2,441 2,441
Restructuring provision
Gain on sale of fixed assets
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Income (loss) from operations (1,672) (1,672)
Interest expense, net 0 (421)(2) (421)
Other income (expense) 0 0
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Income (loss) before income taxes (1,672) (421) (2,093)
(Provision) benefit for income taxes 646 $ 168(3) 814
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Net income (loss) (1,026) $ (253) $ (1,279)
============== ============== =============
(1) The Statement of Operations data for the nine months
ended December 31, 1999 was derived from the Technology
Division's unaudited internal financial statements.
(2) Represents the net effect on interest expenses as a
result of allocations for working capital fluctuations
during the period. As the Technology Division was not
separately allocated interest by the parent, the above
adjustment reflects the estimated interest for the
period.
(3) Represents the estimated income tax effect of the pro
forma adjustments using an effective tax rate of 39%.