1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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) May 1, 1997
-----------------
Astrotech International Corporation
- ------------------------------------------------------------------------------
(Exact Name of registrant as specified in its charter)
Delaware
- ------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
1-10011 25-1570579
- ------------------------ --------------------------------
(Commission File Number) (IRS Employer Identification No.)
960 Penn Avenue, Suite 800, Pittsburgh, PA 15222
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (412) 391-1896
----------------
- ------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
2
The Registrant filed a Current Report on Form 8-K on May 14, 1997 relating to
its acquisition of Trusco Tank, Inc. ("Trusco"). At the time of such filing, it
was impracticable to provide certain financial statements of the business
acquired and the required pro forma financial information. The Registrant
hereby amends its Current Report on Form 8-K by filing the following required
information on this Form 8-K/A.
2
3
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
PAGE
----
Report of Independent Accountants F-2
Combined Balance Sheet as of December 31, 1996 F-3
Combined Statement of Income for the year ended December 31, 1996 F-4
Combined Statement of Changes in Stockholders' and Partnership Equity for the
year ended December 31, 1996 F-5
Combined Statement of Cash Flows for the year ended December 31, 1996 F-6
Notes to Combined Financial Statements F-7 thru F-13
Condensed Combined Balance Sheets as of March 31, 1997
and December 31, 1996 F-14
Condensed Combined Statements of Income for the Three Months Ended
March 31, 1997 and 1996 F-15
Condensed Combined Statements of Cash Flows for the Three Months Ended
March 31, 1997 and 1996 F-16
Condensed Combined Statement of Changes in Stockholders' and Partnership
Equity for the Three Months Ended March 31, 1997 and 1996 F-17
Notes to Condensed Combined Financial Statements F-18
(b) UNAUDITED PRO FORMA FINANCIAL INFORMATION
Unaudited Pro Forma Condensed Consolidated Balance Sheet F-19 thru F-21
Unaudited Pro Forma Condensed Consolidated Income Statements F-22 thru F-25
(c) EXHIBITS
(10)(i) Stock Purchase Agreement dated as of April 30, 1997, by and
between Jared A. Trussler, Ray E. Crosno and Leslie D. Scott and Astrotech
International Corporation. (Incorporated by reference to Form 8-K filed
May 14, 1997)
(10)(ii) Amended and Restated Revolving Credit and Term Loan Agreement by
and between Astrotech International Corporation and Bank One, Texas, NA
and Bank of America, Texas, NA dated as of April 30, 1997. (Incorporated
by reference to Form 8-K filed May 14, 1997)
(24) Consent of Coopers & Lybrand L.L.P. Certified Public Accountants
3
4
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 officer thereunto duly authorized.
ASTROTECH INTERNATIONAL CORPORATION
July 11, 1997 By: /s/ Raymond T. Royko
----------------------------
Raymond T. Royko
Vice President and Secretary
4
5
TRUSCO TANK, INC. AND AFFILIATE
REPORT ON AUDIT OF COMBINED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996
F-1
6
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Trusco Tank, Inc.:
We have audited the accompanying combined balance sheet of Trusco Tank, Inc.
and Affiliate (the Company) as of December 31, 1996 and the related combined
statements of income, changes in stockholders' and partnership equity, and cash
flows for the year then ended. These combined financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these combined financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of Trusco
Tank, Inc. and Affiliate as of December 31, 1996, and the combined results of
their operations and their cash flows for the year then ended in conformity
with generally accepted accounting principles.
/s/ COOPERS & LYBRAND, L.L.P.
Pittsburgh, Pennsylvania
March 11, 1997
F-2
7
TRUSCO TANK, INC. AND AFFILIATE
COMBINED BALANCE SHEET
December 31, 1996
-------
ASSETS
Current assets:
Cash and cash equivalents $ 562,052
Trade accounts receivable, net of allowance of $135,000 (Notes 4 and 5) 4,432,309
Inventories (Notes 4 and 5) 2,651,497
Costs and estimated earnings in excess of billings
on uncompleted contracts (Note 2) 1,163,606
Prepaid expenses and other current assets 380,363
------------
Total current assets 9,189,827
Property and equipment (Notes 4 and 5):
Land 160,000
Buildings 892,574
Building and leasehold improvements 893,100
Furniture and office equipment 465,877
Machinery and equipment 5,523,089
Construction in progress 130,293
------------
8,064,933
Less accumulated depreciation 5,349,360
------------
2,715,573
------------
Other assets 59,900
------------
Total assets $ 11,965,300
============
LIABILITIES AND STOCKHOLDERS' AND PARTNERSHIP EQUITY
Current liabilities:
Accounts payable $ 2,104,094
Accrued compensation and benefits 1,097,806
Accrued expenses and other current liabilities 613,061
Billings in excess of costs and estimated earnings on
uncompleted contracts (Note 2) 493,460
Line of credit (Note 4) 2,300,000
Current portion of long-term note payable (Note 5) 596,329
Current portion of subordinated notes payable (Note 5) 74,338
------------
Total current liabilities 7,279,088
Long-term liabilities:
Long-term debt, less current portion (Note 5) 2,127,929
Subordinated notes payable, less current portion (Notes 5 and 6) 301,940
------------
Total liabilities 9,708,957
------------
Contingencies (Note 9)
Stockholders' and partnership equity:
Common stock, no par, no stated value, 50,000 shares
authorized, 4,500 shares issued and outstanding 54,000
Partnership equity 161,575
Retained earnings 2,040,768
------------
Total stockholders' and partnership equity 2,256,343
------------
Total liabilities and stockholders' and partnership equity $ 11,965,300
============
The accompanying notes are an integral
part of the combined financial statements.
F-3
8
TRUSCO TANK, INC. AND AFFILIATE
COMBINED STATEMENT OF INCOME
for the year ended December 31, 1996
-------
Revenues $24,809,267
Cost of revenues 19,368,546
Depreciation expense 520,730
Selling, general and administrative expense (Note 6) 2,638,171
-----------
Operating profit 2,281,820
Interest and other income 119,548
Interest expense (273,124)
-----------
Income before taxes 2,128,244
Provision for income taxes (Note 3) 30,667
-----------
Net income $ 2,097,577
===========
The accompanying notes are an integral
part of the combined financial statements.
F-4
9
TRUSCO TANK, INC. AND AFFILIATE
COMBINED STATEMENT OF CHANGES IN STOCKHOLDERS' AND PARTNERSHIP EQUITY
for the year ended December 31, 1996
-------
Common Partnership Retained
Stock Equity Earnings Total
----- ------ -------- -----
Balance December 31, 1995 $ 54,000 $ 175,583 $ 3,487,781 $ 3,717,364
Net income - 83,791 2,013,786 2,097,577
Distributions - (97,799) (3,460,799) (3,558,598)
-------- ---------- ------------- -------------
Balance December 31, 1996 $ 54,000 $ 161,575 $ 2,040,768 $ 2,256,343
======== ========== ============= =============
The accompanying notes are an integral
part of the combined financial statements.
F-5
10
TRUSCO TANK, INC. AND AFFILIATE
COMBINED STATEMENT OF CASH FLOWS
for the year ended December 31, 1996
-------
Cash flows from operating activities:
Net income $ 2,097,577
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 520,730
Amortization 2,721
Gain on sale of fixed assets (27,013)
Allowance for doubtful accounts (3,000)
Increase (decrease) in cash from changes in assets and liabilities:
Trade accounts receivable 177,249
Costs and estimated earnings in excess of billings
on uncompleted contracts (316,255)
Inventories (444,153)
Prepaid expenses and other current assets (40,654)
Accounts payable 418,638
Accrued compensation and benefits 239,824
Other accrued expenses 16,376
Billings in excess of costs and estimated earnings
on uncompleted contracts (724,354)
-----------
Net cash provided by operating activities 1,917,686
-----------
Cash flows from investing activities:
Capital expenditures (856,642)
Proceeds from sale of fixed assets 50,387
-----------
Net cash used in investing activities (806,255)
-----------
Cash flows from financing activities:
Borrowings under line of credit 9,600,000
Repayments of line of credit (8,250,000)
Borrowings under notes payable 2,000,000
Principal payments of notes payable (305,686)
Borrowings under subordinated notes payable 200,000
Principal payments of subordinated notes payable (267,761)
Distributions to shareholders and partners (3,558,598)
-----------
Net cash used in financing activities (582,045)
-----------
Net increase in cash and cash equivalents 529,386
-----------
Cash and cash equivalents at beginning of year 32,666
-----------
Cash and cash equivalents at end of year $ 562,052
===========
Schedule of payments of interest and taxes:
Payments for interest $ 267,000
===========
Payments for income taxes $ 24,000
===========
Noncash financing and investing activities:
The Company purchased equipment during the year with notes payable totaling $51,808.
The accompanying notes are an integral
part of the combined financial statements.
F-6
11
TRUSCO TANK, INC. AND AFFILIATE
NOTES TO COMBINED FINANCIAL STATEMENTS
-------
1. Summary of Significant Accounting Policies:
Combined Presentation:
The combined financial statements include the financial statements of
Trusco Tank, Inc. (an S Corporation) and JR Company (a partnership),
hereinafter collectively referred to as the Company. These entities
are under common control and management and are the subject of a
potential acquisition by Astrotech International Corporation (see
Note 10). All intercompany transactions and balances have been
eliminated in combination.
Nature of Business:
Trusco Tank, Inc. was founded in 1963 and incorporated in 1977 as a
steel fabricator with technical expertise in steel fabrication,
construction and corrosion protection. Trusco Tank, Inc. produces
various tanks and steel products from two California facilities in
the cities of San Luis Obispo and Fresno. The Company is a supplier
of steel storage tanks to a variety of industries throughout the
western United States. JR Company was formed in 1983 to own the land
and buildings at the Company's facilities in San Luis Obispo.
Revenue Recognition:
The Company generates revenue from both construction contracts and
product sales.
The Company records income on construction contracts for water tanks,
custom projects and water screens using the percentage-of-completion
method of accounting. Under this method income is determined by
applying the percentage of completion of contracts in each year,
based on actual costs incurred compared to total estimated costs, to
the estimated final income, except that estimated losses which are
apparent prior to completion are provided for in their entirety. As
contracts extend over one or more years, revisions in cost and
profits estimated during the course of the work are reflected in the
accounting period in which the facts which require the revisions
become known. It is reasonably possible that future operating results
may be affected if actual contract costs incurred differ from total
contract costs currently estimated by management. Contract costs
include all direct material and labor costs and certain indirect
costs related to contract performance. Selling, general and
administrative costs are charged to expense as incurred.
The Company records income on the underground tank and above ground
tank segments of its operations when products are shipped to the
customers based on the accrual method of accounting.
Accounts Receivable:
The Company uses the allowance method of accounting for bad debt
expense. The allowance is based on prior history and management's
judgment on the collectibility of accounts receivable.
F-7
12
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
-------
1. Summary of Significant Accounting Policies, continued:
Inventories:
Inventories represent construction materials and supplies not charged
to specific construction projects, and the cost of items associated
with the underground tank and above ground tank segments of the
operations. Inventories are stated at the lower of cost or market
using the first-in, first-out method of valuing inventory. Raw
materials, work in process, and finished goods inventories are
$1,731,170, $305,189 and $615,138, respectively, at December 31,
1996.
Fixed Assets:
Depreciation of fixed assets is computed by the straight-line method
based on the cost of the assets, less allowance for salvage value
where appropriate. Estimated useful lives vary from three to thirty
years. All assets are recorded at cost.
Research and Development Expense:
Research and development expense is charged against income when
incurred. Research and development expense for the year ended
December 31, 1996 was $26,566 and is included in general and
administrative expense.
Cash Equivalents:
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents. The
carrying amounts of these instruments approximate fair value.
Estimates:
The preparation of combined financial statements, in conformity with
generally accepted accounting principles, requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Concentration of Credit Risk:
The Company grants credit to customers principally involved in the
business of Municipal Water Storage. The Company performs ongoing
credit evaluations of its customers to minimize its credit risk.
Warranty Expense:
The Company warrants that its tanks, workmanship and products will
meet certain specifications. The Company records the liability for
estimated warranty claims on specific contracts based on management's
best estimate and on prior experience. The warranty liability, which
totaled $106,000 at December 31, 1996, is subject to estimates and as
such it is at least reasonably possible that actual amounts may
differ from these estimates.
F-8
13
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
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2. Costs and Estimated Earnings on Uncompleted Contracts:
Costs incurred on uncompleted contracts $ 11,515,609
Estimated earnings 3,880,015
------------
15,395,624
Less: billings to date (14,725,478)
------------
$ 670,146
============
Costs and estimated earnings in excess of billings on uncompleted contracts 1,163,606
Billings in excess of costs and estimated earnings on uncompleted contracts (493,460)
------------
$ 670,146
============
3. Income Taxes:
In March 1991, Trusco Tank, Inc. elected to be treated as a small
business corporation under Subchapter S provisions of the Internal
Revenue Code and was granted S corporation status for California state
tax purposes effective February 1, 1991. In this status, Trusco Tank,
Inc. is not a taxable entity for federal income taxes and elements of
income and expense flow through and are taxed to the shareholders on an
individual basis. However, Trusco Tank, Inc. still pays state taxes at
the rate of 1.5%.
Provision for state income taxes at December 31, 1996 consisted of the
following:
Current taxes $30,667
Deferred state taxes are considered immaterial to the combined financial
statements and therefore have not been presented.
The income from JR Company is taxed to the partners on their individual
tax returns. The partnership is not a tax paying entity for purposes of
federal and state income taxes, and no income taxes have been recorded
for it in the combined financial statements.
The Company's S Corporation and partnership tax returns and the amount
of distributable income are subject to examination by federal and state
taxing authorities. In the event of an examination of the Company's or
partnership's tax returns, the tax liabilities of the shareholder or
partner could be changed by the taxing authorities.
4. Line of Credit:
The Company has a bank revolving line of credit outstanding of
$2,300,000 at December 31, 1996. The indebtedness is secured by accounts
receivable, inventory and equipment of the Company. A maximum of 80% of
the Company's eligible accounts receivable plus 25% of the Company's
inventory excluding work in process can be advanced up to a total of
$2,500,000. These funds are to be used to provide working capital.
Interest on advanced amounts is payable monthly at the rate of 1% above
the bank's prime rate which was 9.25% at December 31, 1996. The
outstanding principal matures June 5, 1997. This agreement, as well as
the bank term loan and installment loans discussed in Note 5, contain
subjective acceleration clauses which permit the bank to accelerate the
repayment of the debt upon the occurrence of certain events as defined
in the agreements.
F-9
14
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
-------
5. Long-Term Liabilities:
Long-Term Debt
--------------------
Outstanding
Interest Rate Description Principal
-------------------- ---------------
9.0% Installment note payable due in monthly payments of $445
including interest through November 1997, collateralized by a
vehicle $ 4,684
9.0% Installment note payable due in yearly payments of $50,000
plus interest through November 1997, uncollateralized 50,000
3.9% Installment note payable due in monthly installments of $376
including interest through July 1998, collateralized by a vehicle 6,561
Prime (9.25%) Bank term loan due in monthly principal payments of $16,253
Plus 1.5% including interest through November 1998, collateralized by
accounts receivable, equipment, and inventory 304,798
Prime (9.25%) Installment note payable due in monthly payments of $41,882
Plus 1.0% including interest through November 2001, collateralized by
accounts receivable, equipment and inventory 1,946,835
9.0% Installment note payable due in monthly payments of $588
including interest through September 2001, collateralized by a
vehicle 26,746
8.4% Installment note payable due in monthly payments of $743,
including interest through August 1999, collateralized by a
vehicle 20,626
12.1% Installment note payable due in monthly payments of $2,830
including interest through January 2009, collateralized by
property. Additionally, the Company is required to maintain
an escrow account related to this note. 214,988
10.2% Installment note payable due in monthly payments of $2,377
including interest through July 2004, collateralized by property. 149,020
----------
2,724,258
Less current portion of long-term debt 596,329
----------
$2,127,929
==========
F-10
15
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
-------
5. Long-Term Liabilities, continued:
Maturities of long-term debt are as follows:
Year ended December 31 Amount
---------------------- -----------
1997 $ 596,329
1998 537,782
1999 438,346
2000 476,043
2001 451,902
Thereafter 223,856
-----------
Total $ 2,724,258
===========
The Company has a subordinated note payable to an unrelated party of
$316,278. The note is payable in monthly installments of $8,600
including interest at 7.45% through September 2000. At December 31,
1996, $74,338 of this note is shown as a current liability. The Company
also has a subordinated note payable to a related party of $60,000 with
interest only due in quarterly payments until March 2000, at which time
the entire principal and interest shall be paid in full. The note bears
interest at 10.0%.
Maturities of subordinated notes payable are as follows:
Year ended December 31 Amount
---------------------- ----------
1997 $ 74,338
1998 82,759
1999 91,445
2000 127,736
----------
Total $ 376,278
==========
6. Related Party Transactions:
The real estate and facilities associated with Trusco Tank, Inc.'s
Fresno, California operations were purchased by a partnership in which
two partners are stockholders in Trusco Tank, Inc. The real estate and
facilities are leased to Trusco Tank, Inc. for approximately $8,000 per
month. The lease is on a month-to-month basis. The total lease expense
for the year ended December 31, 1996 approximated $96,000.
Trusco Tank, Inc. has incurred notes payable of $60,000 to this
partnership to provide working capital which is included in subordinated
debt at December 31, 1996.
Trusco Tank, Inc. pays $3,950 per month to the majority stockholder for
lease of land used for storage. This lease is on a month-to-month basis.
F-11
16
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
-------
6. Related Party Transactions, continued:
The Company sells above ground and underground tanks to, and purchases
miscellaneous accessories for those tanks from, Petrowest Equipment, an
uncombined affiliated company which distributes petroleum products
throughout California and Nevada (uncombined affiliate). Certain
stockholders of the uncombined affiliate also have ownership interests
in the Company. For the year ended December 31, 1996, the Company
recorded sales of $2,526,786 to, and purchases of $144,926 from, the
uncombined affiliate. These amounts have been included in sales and cost
of revenues. Additionally, the Company provides administrative support
and other miscellaneous services to the uncombined affiliate. The
Company recovered $337,428 in general and administrative expenses from
the uncombined affiliated company for the year ended December 31, 1996.
The Company received payments for miscellaneous reimbursements of
$241,664 from the uncombined affiliated company. Included in accounts
payable and trade accounts receivable is $14,732 and $274,691,
respectively, that is related to the above transactions.
7. Leases:
The Company leases a copy machine and a postage machine with lease terms
which expire in 1998 and 2000, respectively.
Future minimum lease payments for operating leases are as follows:
1997 $ 7,205
1998 2,833
1999 1,376
2000 1,376
---------
Total $ 12,790
=========
Rent expense for the year ended December 31, 1996 was $125,999.
8. Employee Retirement Plans:
The Company is the sponsor of a 401(k) profit sharing pension plan which
covers substantially all full-time employees. Company contributions are
discretionary with the maximum calculated at 7% of eligible wages less
forfeitures. Expense related to the Company contribution to this 401(k)
profit-sharing plan for the year ended December 31, 1996 was $203,824.
The Company is also the sponsor of a 401(k) profit sharing pension plan
which covers all prevailing wage earners. For prevailing wage
contributions, there is no minimum age or service requirement and the
amount contributed by the Company is a flat rate, which varies by job,
and is set by the state of California. The contribution to the
prevailing wage profit sharing plan for the year ended December 31, 1996
was $129,885.
F-12
17
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
-------
9. Contingencies:
The Company is a party to a number of lawsuits and claims arising out of
the ordinary conduct of its business, including those relating to
employee relations, contractual disputes and regulatory matters. While
the ultimate results of lawsuits or other proceedings against the
Company cannot be predicted with certainty, management does not expect
that these matters will have a material adverse effect on the combined
financial position, results of operations or cash flows of the Company.
Additionally, the Company currently guarantees selected liabilities of
the uncombined affiliate some of whose shareholders are also
shareholders of the Company. The balances outstanding on these related
party liabilities at December 31, 1996 are $3,600,000 on a line of
credit and $44,302 on a note payable.
10. Subsequent Event:
On February 12, 1997, the shareholders and partners (sellers) entered
into a letter of intent to sell the stock of Trusco Tank, Inc. and the
real estate and facilities located in San Luis Obispo, owned by JR
Company, to Astrotech International Corporation (Astrotech). In
addition, the Fresno real estate and facilities, owned by a related
party, will continue to be leased to Trusco Tank, Inc. The sellers have
a put provision to sell the real estate and facilities to Astrotech upon
the satisfactory completion of an environmental study.
F-13
18
TRUSCO TANK, INC. AND AFFILIATE
CONDENSED COMBINED BALANCE SHEETS
(Dollars in Thousands)
March 31, December 31,
1997 1996
----------- ------------
ASSETS (Unaudited) *
CURRENT ASSETS
Cash and cash equivalents $ 62 $ 562
Trade accounts receivable 4,933 4,432
Inventories 2,518 2,652
Costs and estimated earnings in excess of billings
on uncompleted contracts 584 1,164
Prepaid expenses and other current assets 382 380
------- -------
TOTAL CURRENT ASSETS 8,479 9,190
PROPERTY, PLANT AND EQUIPMENT
Land 160 160
Buildings 893 893
Building and leasehold improvements 925 893
Furniture and office equipment 361 466
Machinery and equipment 5,610 5,523
Construction in progress 182 130
------- -------
8,131 8,065
Less accumulated depreciation 5,361 5,349
------- -------
2,770 2,716
Other assets 59 59
------- -------
TOTAL ASSETS $11,308 $11,965
======= =======
LIABILITIES AND STOCKHOLDERS' AND PARTNERSHIP EQUITY
CURRENT LIABILITIES
Accounts payable $ 1,664 $ 2,104
Accrued compensation and benefits 624 1,098
Accrued expenses and other current liabilities 1,283 613
Billings in excess of costs and estimated earnings
on uncompleted contracts 857 494
Line of credit 1,600 2,300
Current portion of long-term notes payable 621 596
Current portion of long-term subordinated notes payable 76 74
------- -------
TOTAL CURRENT LIABILITIES 6,725 7,279
Long-term liabilities:
Long-term debt, less current portion 2,000 2,128
Subordinated notes payable, less current portion 281 302
------- -------
TOTAL LIABILITIES 9,006 9,709
------- -------
STOCKHOLDERS' AND PARTNERSHIP EQUITY
Common Stock, no par, no stated value, 50,000 shares
authorized, 4,500 shares issued and outstanding 54 54
Partnership equity 203 161
Retained earnings 2,045 2,041
------- -------
TOTAL STOCKHOLDERS' AND PARTNERSHIP AND PARTNERSHIP EQUITY 2,302 2,256
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $11,308 $11,965
======= =======
* Summarized from audited balance sheet included elsewhere herein.
See Notes to Condensed Combined Financial Statements.
F-14
19
TRUSCO TANK, INC. AND AFFILIATE
CONDENSED COMBINED STATEMENTS OF INCOME
(Dollars in Thousands)
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
------------ ------------
(Unaudited) (Unaudited)
Revenues $5,556 $5,386
Cost of revenues 4,527 4,165
Depreciation and amortization expense 142 111
Selling, general and administrative expenses 743 825
------ ------
OPERATING PROFIT 144 285
Interest and other income 13 20
Interest expense (111) (59)
------ ------
INCOME BEFORE INCOME TAXES 46 246
Provision for income tax -- (3)
------ ------
NET INCOME $ 46 $ 243
====== ======
See Notes to Condensed Combined Financial Statements.
F-15
20
TRUSCO TANK, INC. AND AFFILIATE
CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
------------ ------------
(Unaudited) (Unaudited)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 521 $ (97)
------- -------
Cash flows from investing activities:
Capital expenditures (207) (216)
Proceeds from sale of fixed assets 8 14
------- -------
NET CASH USED IN INVESTING ACTIVITIES (199) (202)
------- -------
Cash flows from financing activities:
Borrowings under line of credit 1,950 2,100
Repayments of line of credit (2,650) (1,650)
Borrowings under notes payable 21 0
Principal payments of notes payable (124) (47)
Principal payments of subordinated notes payable (19) (16)
Distribution to shareholders and partners -- (88)
------- -------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (822) 299
------- -------
Net decrease in cash and cash equivalents (500) -
------- -------
Cash and cash equivalents at beginning of period 562 27
------- -------
Cash and cash equivalents at end of period $ 62 $ 27
======= =======
See Notes to Condensed Combined Financial Statements.
F-16
21
TRUSCO TANK, INC. AND AFFILIATE
CONDENSED COMBINED STATEMENT OF STOCKHOLDERS' AND PARTNERSHIP EQUITY
For the three months ended March 31, 1997
(Dollars in Thousands)
(Unaudited)
Common Partnership Retained
Stock Equity Earnings Total
------ ----------- -------- -----
BALANCE AT DECEMBER 31, 1996 $54 $161 $2,041 $2,256
Net income -- 42 4 46
Distributions -- -- -- --
--- ---- ------ ------
BALANCE AT MARCH 31, 1997 $54 $203 $2,045 $2,302
--- ==== ====== ======
See Notes to Condensed Combined Financial Statements.
F-17
22
TRUSCO TANK, INC. AND AFFILIATE
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying condensed combined financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for fair presentation have been included. Operating results for
the three-month period ended March 31, 1997 are not necessarily indicative
of the results that may be expected for the fiscal year ending December 31,
1997. For further information, refer to the audited combined financial
statements and footnotes thereto of Trusco Tank, Inc. and Affiliate (the
"Company") for the year ended December 31, 1996.
The condensed combined financial statements include the financial
statements of Trusco Tank, Inc. (an S Corporation) and JR Company (a
partnership), hereinafter collectively referred to as the Company. These
entities are under common control and management and are the subject of
an acquisition by Astrotech International Corporation (see Note 4). All
intercompany transactions and balances have been eliminated in combination.
2. INVENTORIES
Inventories are valued at the lower of cost or market using the first-in,
first-out method and consisted of the following:
March 31, December 31,
1997 1996
--------- ------------
Raw materials and components parts $1,593,000 $1,732,000
Work in process 294,000 305,000
Finished goods 631,000 615,000
---------- ----------
$2,518,000 $2,652,000
========== ==========
3. CHANGES IN ACCOUNTING AND NEW ACCOUNTING STANDARDS
Effective January 1997, the Company adopted 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." The adoption
of SFAS No.121 did not have a material effect on the Company's financial
position or results of operations.
4. CHANGE IN OWNERSHIP
On May 1, 1997, all of the issued and outstanding shares of capital stock
of Trusco Tank, Inc. and two parcels of real property, including
manufacturing facilities owned by JR Company, used in Trusco's business were
sold to Astrotech International Corporation.
F-18
23
UNAUDITED PRO FORMA FINANCIAL INFORMATION
On May 1, 1997 Astrotech International Corporation ("Astrotech") acquired all of
the outstanding common stock of Trusco Tank, Inc. ("Trusco") and two parcels
of real property, including manufacturing facilities owned by JR Company, used
in Trusco's business. The acquisition is being accounted for using the purchase
method of accounting. The results of operations for the periods since the date
of acquisition are included in Astrotech's historical consolidated financial
statements. The purchase accounting adjustments presented in the following pro
forma financial statements are estimates based on conditions existing at the
assumed dates of acquisition. The following pro forma financial statements
should be read in conjunction with the historical financial statements of Trusco
in this Form 8-K/A-1 and the historical financial statements and other financial
information of Astrotech appearing in its 1996 Annual Report on Form 10-K and
its Quarterly Report on Form 10-Q for the quarter ended March 31, 1997.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
The following Unaudited Pro Forma Condensed Consolidated Balance Sheet of
Astrotech at March 31, 1997 has been adjusted to give effect to the purchase of
Trusco as though such purchase had occurred on March 31, 1997.
F-19
24
ASTROTECH INTERNATIONAL CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 1997
(Unaudited)
(Dollars in Thousands)
Astrotech Trusco
March 31, March 31, Pro Forma
1997 1997 Adjustments Consolidated
--------- --------- ----------- ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,706 $ 62 $ 309 d $ 2,077
(10,958)a
(3,775)e
(16,910)e
31,643 e
Trade accounts receivable 21,267 4,933 26,200
Inventories (Note 2) 5,488 2,518 8,006
Costs and estimated earnings in excess
of billings on uncompleted contracts 6,165 584 6,749
Deferred income taxes 1,726 -- 1,726
Prepaid expenses and other current assets 902 382 356 b1 1,284
(356)d
-------- ------- --------
TOTAL CURRENT ASSETS 37,254 8,479 46,042
PROPERTY, PLANT AND EQUIPMENT
Land 2,404 160 1,205 b2 3,769
Buildings and building improvements 6,759 1,818 (868)b2 7,709
Furniture and office equipment 2,927 361 (271)b2 3,017
Machinery and equipment 17,951 5,792 (4,571)b2 19,172
Tanks and trucks held for lease 7,717 -- 7,717
-------- ------- --------
37,758 8,131 41,384
Less accumulated depreciation and amortization 11,760 5,361 (5,361)b2 11,760
-------- ------- --------
25,998 2,770 29,624
OTHER ASSETS
Costs in excess of net assets acquired, net of
accumulated amortization of $4,636
September 30, 1995 20,059 -- 7,670 b3 27,729
Other assets 2,150 59 (47)b1 2,162
-------- ------- --------
TOTAL ASSETS 85,461 11,308 105,557
======== ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 5,358 1,664 7,022
Accrued compensation and benefits 3,401 624 4,025
Accrued expenses and other current liabilities 6,598 1,283 500 a 8,381
Earn-outs payable 2,000 -- 2,000
Notes payable -- 1,600 (1,600)e --
Billings in excess of costs and estimated
earnings on uncompleted contracts 7,944 857 8,801
Current portion of long-term debt 3,380 697 (3,200)e 3,892
(524)e
(32)b1
3,571 e
47 b1
(47)d
-------- ------- --------
TOTAL CURRENT LIABILITIES 28,681 6,725 34,121
LONG-TERM DEBT 13,710 2,281 (336)b1 28,366
(1,651)e
(13,710)e
6,643 e
21,429 e
DEFERRED INCOME TAXES 3,900 -- 3,900
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common Stock, $.01 par value,
authorized 20,000,000 shares;
issued and outstanding 9,934,999 99 54 (54)c 99
Additional capital 59,937 203 (203)c 59,937
Retained earnings (deficit) (20,866) 2,045 (2,045)c (20,866)
-------- ------- --------
39,170 2,302 39,170
-------- ------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 85,461 $11,308 $105,557
======== ======= ========
See Notes to Pro Forma Condensed Consolidated Balance Sheet.
F-20
25
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
a. The purchase price of Trusco consists of the following:
Cash $10,958
Direct expenses of the purchase 500
-------
$11,458
=======
The direct expenses of the purchase consist primarily of investment
advisory, legal and accounting fees.
b. For purposes of determining the pro forma effect of the acquisition on
Astrotech consolidated financial statements, the fair value of Trusco's
net assets has been estimated in accordance with Accounting Principles
Board Opinion No. 16:
Net assets of Trusco at March 31, 1997 $ 2,302
Adjustments for net liabilities of JR Company not assumed (b1) 630
Fair value adjustments:
Adjustments of fixed assets to estimated fair value (b2) 856
Costs in excess of fair value of net assets acquired (b3) 7,670
-------
Astrotech's investment in Trusco $11,458
=======
c. Trusco's stockholders' equity as of March 31, 1997 is eliminated.
d. The parties eliminated affiliate receivables, by cash exchange, at the
time of the acquisition in accordance with the Stock Purchase.
This transaction is reflected on a pro forma basis.
e. Proceeds of a Loan Agreement with a bank were used to finance the cash
portion of the purchase price, repay existing bank obligations of Trusco
of $3,775 (long-term portion, $1,651, current portion, $2,124) and
refinance existing bank obligations of Astrotech of $16,910 (long-term
portion $13,710, current portion, $3,200). Components of the new loan on
a pro forma basis are as follows:
Revolving note payable $ 6,643
Long-term debt (current portion, $3,571) 25,000
-------
$31,643
=======
F-21
26
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENTS
The following Unaudited Pro Forma Condensed Consolidated Income Statements of
Astrotech for the year ended September 30, 1996 and for the six months ended
March 31, 1997 present the separate historical results of Astrotech and Trusco
and consolidated pro forma results as though such purchase had occurred on
October 1, 1995. The Unaudited Pro Forma Condensed Consolidated Income
Statements do not purport to be indicative of the results which actually would
have occurred if the acquisition had been consummated on October 1, 1995 or
which may occur in the future.
F-22
27
ASTROTECH INTERNATIONAL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
SIX MONTHS ENDED MARCH 31, 1997
(Dollars in Thousands, Except Share Data)
Astrotech Trusco
Six Months Six Months
Ended Ended
March March Pro Forma
31, 1997 31, 1997 Adjustments Consolidated
---------- ---------- ----------- ------------
Revenues $63,222 $10,924 $74,146
Cost of revenues 46,742 7,924 54,666
Depreciation and amortization expense 2,202 287 $(158)a 2,412
81 b
Selling, general and administrative expenses 10,566 1,923 12,489
---------- ------ ----- ----------
OPERATING PROFIT 3,712 790 77 4,579
Interest and other income 146 175 321
Interest expense (635) (201) (483)c (1,123)
196 d
---------- ------ ----- ----------
INCOME BEFORE INCOME TAXES 3,223 764 (210) 3,777
Income tax expense (1,309) (10) (215)e (1,534)
---------- ------ ----- ----------
NET INCOME $ 1,914 $ 754 $(425) $ 2,243
========== ====== ===== ==========
Net income per common share $0.19 $0.22
Weighted average shares outstanding 10,231,777 10,231,777
See Notes to Pro Forma Condensed Consolidated Income Statements.
F-23
28
ASTROTECH INTERNATIONAL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
YEAR ENDED SEPTEMBER 30, 1996
(Dollars in Thousands, Except Share Data)
Astrotech Trusco
Year Year
Ended Ended
September December Pro Forma
30, 1996 31, 1996 Adjustments Consolidated
---------------- ------------------ ----------------- ----------------
Revenues $122,190 $24,809 $146,999
Cost of revenues 91,102 19,369 110,471
Depreciation and amortization expense 3,852 521 $ (294)a 4,240
161 b
Selling, general and administrative expenses 19,704 2,638 22,342
---------- ------- ------- ----------
OPERATING PROFIT 7,532 2,281 133 9,946
Interest and other income 329 120 449
Interest expense (1,331) (273) (965)c (2,307)
262 d
---------- ------- ------- ----------
INCOME BEFORE INCOME TAXES 6,530 2,128 (570) 8,088
Income tax expense (2,520) (30) (571)e (3,121)
---------- ------- ------- ----------
NET INCOME $ 4,010 $ 2,098 $(1,141) $ 4,967
========== ======= ======= ==========
Net income per common share $0.40 $0.49
Weighted average shares outstanding 10,108,397 10,108,397
See Notes to Pro Forma Condensed Consolidated Income Statements.
F-24
29
NOTES TO PRO FORMA CONDENSED INCOME STATEMENTS
(Dollars in Thousands)
Adjustments to the Pro Forma Condensed Income Statements for the twelve months
ended September 30, 1996 and the six-month period ended March 31, 1997 in
connection with the acquisition of Trusco are presented below:
Increase (decrease) income
9/30/96 3/31/97
----------- -----------
a. As a result of the net effect of recording the fixed assets at fair market value
and assigning new useful lives, depreciation expense is decreased on a pro
forma basis 294 158
b. Goodwill is amortized over a 40-year life on a straight line basis. (161) (81)
c. Interest at 7.5% on borrowings to pay purchase price and repay certain
existing outstanding indebtedness of Trusco at assumed date of acquisition (965) (483)
d. To eliminate interest expense on Trusco's existing debt which was repaid
by Astrotech at assumed date of acquisition. (See c. above) 262 196
e. Represents the pro forma income tax effect of consolidating the companies. (571) (215)
F-25