1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8K/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): October 25, 1996
COMMISSION FILE NUMBER 0-26142
BELMONT HOMES, INC.
-------------------
(Exact name of registrant as specified in its charter)
MISSISSIPPI 64-0834574
----------- ----------
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification Number)
organization)
HIGHWAY 25 SOUTH, INDUSTRIAL PARK DRIVE
BELMONT, MISSISSIPPI 38827 (601) 454-9217
-------------------------- --------------
(Address, including zip code of principal executive (Registrant's telephone number, including area code)
offices)
2
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
This Current Report on Form 8-K/A amends the Current Report on Form 8-K
filed by Belmont Homes, Inc., a Mississippi corporation (the "Company") on
November 12, 1996. On October 25, 1996, the Company consummated its acquisition
of all of the outstanding capital stock of Bellcrest Homes, Inc., a Georgia
corporation ("Bellcrest"). This Current Report on Form 8-K/A is filed to comply
with the disclosure requirements of the Securities and Exchange Commission
regarding the financial statements of businesses acquired. The Company is filing
herewith the following audited and pro forma financial statements:
(a) Financial Statements of Business Acquired
See F-1 through F-16.
(b) Pro Forma Financial Information
See F-17 through F-19.
3
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.
BELMONT HOMES, INC.
By:/s/ William M. Kunkel
William M. Kunkel
Its: Executive Vice President and
Chief Financial officer
Date: November 13, 1997
4
BELLCREST HOMES, INC.
CONDENSED STATEMENT OF INCOME (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
($ IN THOUSANDS)
1996 1995
---- ----
Net sales $ 29,883 $21,183
Cost of sales 26,193 18,778
-------- -------
Gross profit 3,690 2,405
Selling, general and administrative 2,407 1,628
-------- -------
Income from operations 1,283 777
Other income and (expense):
Interest expense (87) (32)
Interest income 29 16
-------- -------
Income before income taxes 1,225 761
Income taxes 468 289
-------- -------
Net income $ 757 $ 472
-------- -------
See Notes to Condensed Financial Statements.
F-1
5
BELLCREST HOMES, INC.
CONDENSED BALANCE SHEETS
($ IN THOUSANDS)
(Unaudited)
September 30 December 31
1996 1996
------------ ----------
Assets
Current assets:
Cash $2,355 $ 1,854
Accounts receivable 884 114
Inventories 2,217 1,062
Prepaid expenses and taxes 281 197
------ --------
Total current assets 5,737 3,227
Property, plant and equipment, net 3,612 2,429
Other 213 67
------ --------
Total assets 9,562 5,723
------ --------
Liabilities And Shareholders' Equity
Current liabilities:
Current portion of long-term debt 109 122
Trade accounts payable 1,475 458
Accrued expenses 2,980 1,670
------ --------
Total current liabilities 4,564 2,250
Long-term debt, capital leases and deferred taxes 1,764 462
------ --------
Total liabilities 6,328 2,712
------ --------
Shareholders's equity:
Common stock 1 1
Paid-in capital in excess of par value 274 274
Retained earnings 3,544 2,787
Treasury stock (585) (50)
------ --------
Total shareholders' equity 3,234 3,011
------ --------
Total liabilities and equity $9,562 $ 5,723
------ --------
See Notes to Condensed Financial Statements
F-2
6
Bellcrest Homes, Inc.
Condensed Statements Of Cash Flows (Unaudited)
Nine Months Ended September 30, 1996 AND 1995
($ In Thousands)
1996 1995
---- ----
Cash flows from operations activities:
Net income $ 757 $ 472
Adjustments to reconcile net income to net cash
provided by operating activities:
Deprecation 228 144
Changes in operating assets and liabilities:
Accounts receivable (770) (293)
Inventories (1,155) (430)
Prepaid and other (229) 18
Accounts payable 1,017 641
Accrued expenses 1,310 74
------- -------
Net cash provided by operating activities 1,158 626
------- -------
Cash flows from investing activities:
Purchase of property and equipment, including
construction in process (1,411) (306)
------- -------
Net cash used in investing activities (1,411) (306)
------- -------
Cash flows from financing activities:
Borrowings of debt and capital leases 1,352 --
Payments on debt and capital leases (63) (87)
Purchase of treasury stock (535) --
------- -------
Net cash provided (used) by financing 754 (87)
------- -------
Net increase (decrease) in cash 501 233
Cash at beginning of year 1,854 1,346
------- -------
Cash at end of year $ 2,355 $ 1,579
------- -------
See Notes to Condensed Financial Statements
F-3
7
Bellcrest Homes, Inc.
Notes to Unaudited Condensed Financial Statements
Note 1 - Organization, Business And Acquisition
Bellcrest Homes, Inc. builds manufactured homes for sale to independent dealers.
On August 22, 1996 the Company announced that its shareholders had entered into
an agreement in principal for the sale of all outstanding stock to Belmont
Homes, Inc.
The condensed financial statements of Bellcrest Homes, Inc. have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with Generally
Accepted Accounting Principles have been omitted. The condensed financial
statements should be read in conjunction with the audited financial statements
and notes thereto included elsewhere herein.
In the opinion of management, all adjustments, consisting only of normal
recurring adjustments that are necessary for a fair presentation, have been
included in the condensed financial statements for the interim periods ended
September 30, 1996 and 1995. The results of operation for the nine months ended
September 30, 1996 are not necessarily indicative of the results of operations
to be expected for the full year ending December 31, 1996 or any other period.
Note 2 - Inventories
September 30, December 31,
1996 1995
---- ----
Raw materials $1,626 $ 946
Work-in-process 229 116
Finished homes 362 --
------ ------
$2,217 $1,062
====== ======
F-4
8
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of Bellcrest Homes, Inc.
Millen, Georgia
We have audited the accompanying balance sheets of Bellcrest Homes, Inc. as of
December 31, 1995, and the related statements of income and retained earnings,
and cash flows for the years ended December 31, 1995. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bellcrest Homes, Inc. as of
December 31, 1995, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
/s/ Alday, Tillman, Wright & Giles, P.C.
Alday, Tillman, Wright & Giles, P.C.
January 23, 1996
F-5
9
BELLCREST HOMES, INC.
BALANCE SHEET
December 31, 1995
ASSETS
CURRENT ASSETS
Cash $ 1,854,413
Accounts receivable - trade 107,792
Other receivables 4,498
Inventories 1,061,667
Prepaid expense 58,258
Income taxes receivable 17,441
Deferred tax asset 122,333
-------------
TOTAL CURRENT ASSETS 3,226,402
PROPERTY AND EQUIPMENT, net of
2,429,290
-------------
67,294
-------------
$ 5,722,986
-------------
See accompanying notes and independent auditors' report.
F-6
10
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Line-of-credit, bank $ 1,000
Current portion of long-term debt 84,782
Current portion of obligation under
capital lease 36,491
Income taxes payable 121,666
Accounts payable 458,435
Accrued expenses 1,546,710
-----------
TOTAL CURRENT LIABILITIES 2,249,084
LONG-TERM DEBT, less current portion 235,617
OBLIGATION UNDER CAPITAL LEASE, less
current portion 74,168
DEFERRED INCOME TAXES 152,289
-----------
2,711,158
-----------
STOCKHOLDERS' EQUITY
Common stock - 7,500 shares
authorized, $1.00 par
value, 1,000 shares issued 1,000
Paid-in capital in excess of par value 274,000
Retained earnings 2,786,828
Less treasury stock, 96 shares,
at cost (50,000)
3,011,828
-----------
$ 5,722,986
-----------
F-7
11
BELLCREST HOMES, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
Year Ended December 31, 1995
NET SALES $28,259,925
COST OF SALES 24,608,993
-----------
GROSS PROFIT 3,650,932
SELLING, GENERAL AND ADMINISTRATIVE 2,264,304
-----------
INCOME FROM OPERATIONS 1,386,628
OTHER INCOME AND (EXPENSE):
INTEREST EXPENSE (46,257)
INTEREST INCOME 28,340
-----------
INCOME BEFORE INCOME TAXES 1,368,711
INCOME TAXES 508,169
-----------
NET INCOME 860,542
RETAINED EARNINGS, BEGINNING 1,926,286
-----------
RETAINED EARNINGS, ENDING $ 2,786,828
-----------
See accompanying notes and independent auditors' report.
F-8
12
BELLCREST HOMES, INC.
STATEMENT OF CASH FLOWS
Year Ended December 31, 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 860,542
Adjustments to reconcile net
income to net cash provided (used)
by operating activities
Depreciation 203,930
Deferred income tax (benefit) 11,945
Loss on sale of property and
equipment 49,236
(Increase) decrease in
Accounts receivable - trade 474,905
Other receivables 5,193
Inventories (142,371)
Prepaid expenses (25,661)
Income taxes receivable 6,367
Other assets (67,294)
Increase (decrease) in
Accounts payable (20,376)
Accrued expenses 45,678
Income taxes payable 103,128
-----------
NET CASH PROVIDED
BY OPERATING ACTIVITIES 1,505,222
-----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and
equipment, including construction-
in-process (886,902)
Proceeds from sale of property and
equipment 10,125
-----------
NET CASH USED BY
INVESTING ACTIVITIES (876,777)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principle payments on long-term debt (88,765)
Payments on capital lease obligations (31,278)
-----------
NET CASH USED BY
FINANCING ACTIVITIES (120,043
-----------
NET INCREASE IN CASH 508,402
CASH AT BEGINNING OF YEAR 1,346,011
-----------
CASH AT END OF YEAR $ 1,854,413
===========
See accompanying notes and independent auditors' report.
F-9
13
BELLCREST HOMES, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Bellcrest Homes, Inc. was incorporated December 12, 1986, in Jenkins County,
Georgia. The Company's first assets were acquired on January 15, 1987 and
production began at that time. The Company builds manufactured homes in its
plant in Millen, Georgia for sale to retail outlets.
Accounts Receivable
Trade receivables arising from sales to customers are not collateralized and as
a result management continually monitors the financial conditions of these
customers to reduce the risk of loss. All trade receivables at December 31, 1995
are considered to be collectible, and no provision has been made for losses on
uncollectible accounts.
Inventories
Inventories are stated at the lower of cost or market using the first-in
first-out (FIFO) method. Inventories consisted of the following at December 31,
1995:
Raw Materials $ 946,279
Work in Process 115,388
Finished Goods --
------------
$ 1,061,667
Property and Equipment
Property and equipment is recorded at cost. The cost of property and equipment
is depreciated over the useful lives of the related assets. Depreciation is
computed on the straight-line method for financial reporting and on the modified
accelerated and accelerated cost recovery method for income tax purposes.
Maintenance and repairs are charged to operations when incurred. When property
or equipment is retired/disposed of, its cost and the related accumulated
depreciation are eliminated from the respective accounts, and gains or losses
arising from the disposition are included in income for that period.
The useful lives of property, plant, and equipment for purposes of computing
depreciation are:
YEARS
Buildings and improvements 15 - 30
Office furniture and fixtures 5 - 7
Machinery and equipment 5 - 7
Autos and trucks 5
F-10
14
BELLCREST HOMES, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Prepaid Loan Cost and Deferred Start-Up Cost
The prepaid loan cost is capitalized and amortized over the life of the loan.
The deferred start-up cost relating to the start of production in a second plant
will be amortized over a three year period beginning in 1996.
Warranty Obligations
Provisions for expected costs relating to warranty obligations are made at the
time of sale of manufactured homes. At December 31, 1995, the Company had
included in accrued expenses $308,470, an amount which management feels is
sufficient to cover any unsubmitted warranty claims on homes sold as of December
31, 1995.
Income Taxes
Deferred income taxes are provided on timing differences between financial
statement and income tax reporting, principally from the use of different
methods of depreciation for income tax and financial statement purposes and the
non-deductibility of certain accruals/reserves until the expense is actually
paid.
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers all
investment instruments purchased, including certificates of deposit with a
maturity of three months, to be cash equivalents. At December 31, 1995, there
were no cash equivalents.
Additionally, at times, the Company maintains deposits in federally insured
financial institutions in excess of federally insured limits. Management
monitors the soundness of these financial institutions and feels the Company's
risk is negligible.
For the year ended December 31, 1995, the Company paid interest and income taxes
as follows:
Interest paid $ 46,257
Income taxes paid 386,729
Non-cash financing:
Capital lease 70,464
F-11
15
BELLCREST HOMES, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31, 1995:
Land $ 54,131
Building and improvements 1,479,228
Office furniture and
equipment 165,644
Machinery and equipment 945,999
Autos and trucks 87,847
Construction in process 499,912
------------
3,232,761
Accumulated depreciation (803,471)
------------
TOTAL $ 2,429,290
============
Depreciation expense on property and equipment, including that acquired under
capital lease, for the year ended December 31, 1995, was $203,930.
NOTE 3 - LINE-OF-CREDIT, BANK
The Company has a line-of-credit with First Union National Bank of Florida which
expires annually each April 30. The line-of-credit is to be used for general
short-term working capital requirements which occur in the normal course of
business. The maximum amount of the line-of-credit is the lesser of $1,000,000
or 80% of eligible accounts receivable plus 30% of raw materials, finished goods
inventories plus 50% of the net book value of machinery, furniture and fixtures
and is cross-collateralized with the long-term debt in Note 4. The line bears a
rate of prime plus one-half percent and is secured by accounts receivable,
inventories, and machinery, furniture and fixtures. At December 31, 1995, the
Company had drawn $1,000 on the line.
Certain restrictions apply to the terms of the debt disclosed above. The more
significant restrictions are as follows:
1. The Company must maintain a minimum net worth of at least $982,000
throughout 1995, plus 100% of each subsequent years' earnings, and
a debt-to-worth ratio not to exceed 3.9:1.
2. There will be no changes in majority ownership of the Company.
3. The Company is not to incur any additional debt, except in the
ordinary course of business, without the express written consent
of the lender.
Currently, the Company is operating within the restrictions as set forth in the
debt agreement.
F-12
16
BELLCREST HOMES, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE 4 - LONG-TERM DEBT
Long-term debt consisted of the following at December 31, 1995:
Note payable to First Union
National Bank of Florida,
prime plus one-half percent,
due in monthly installments of
$6,662 plus interest through
January 31, 1999. The note
is collateralized by a first
mortgage on real estate and is
cross-collateralized with the
line-of-credit in Note 3. A
shareholder of the Company has
guaranteed the debt. See debt
restrictions at Note 3 on
Page 8 $253,716
Note payable to First Union
National Bank of Florida, 9.80%
Due in monthly installments of
$934 including interest through
December 2004, collateralized
by a first mortgage on real
estate 66,683
--------
320,399
LESS CURRENT PORTION 84,782
--------
$235,617
--------
Maturities of long-term debt are as follows:
1996 $ 84,782
1997 85,283
1998 85,835
1999 20,384
2000 7,172
Thereafter 36,943
------------
$ 320,399
------------
F-13
17
BELLCREST HOMES, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE 5 - CAPITAL LEASES
The Company has entered into various leases for machinery and equipment
originating in 1992, 1994 and 1995, with terms of up to five years. Based on the
provisions of Statement No. 13, issued by the Financial Accounting Standards
Board, the leases meet the criteria of capital leases and, accordingly, have
been recorded as such. These assets are stated on the balance sheet at their
capitalized cost of $208,204. Depreciation of $80,129 has been recognized to
date.
Future minimum lease payments under the capital leases, together with the
present value of minimum lease payments subsequent to December 31, 1995, are as
follows:
1996 $ 45,706
1997 42,161
1998 20,530
1999 18,227
2000 3,587
------------
130,211
Less amount representing
interest, assuming an
implicit effective rates of
13.25% and 10.50% 19,552
------------
Present value of minimum
lease payments 110,659
Less current portion 36,491
------------
$ 74,168
NOTE 6 - INCOME TAXES
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes.
Deferred taxes are recognized for differences between the basis of assets and
liabilities for financial statement and income tax purposes. The differences
relate primarily to depreciable assets and various accrued liabilities. The
deferred tax assets and liabilities represent the future tax return consequences
of those differences, which will either be taxable or deductible when the assets
and liabilities are recovered or settled.
Income tax expense for the year ended December 31, 1995, is made up of the
following components:
Current tax expense $ 496,224
Deferred income tax (benefit) 11,945
------------
$ 508,169
------------
F-14
18
BELLCREST HOMES, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE 6 - INCOME TAXES
The source and tax effect of the components of deferred income tax expense for
the year ended December 31, 1995 is as follows:
Difference in tax and book depreciation,
including recognition of deferred taxable
gain/loss on extinguishment of debt $ 3,790
Warranty expense deductible when paid (4,086)
Other reserves and accruals taxable 12,241
---------
$ 11,945
---------
The Company's total deferred tax assets and total deferred tax liabilities at
December 31, 1995 are as follows:
Total deferred tax assets $ 122,333
Total deferred tax liabilities (152,289)
---------
Net deferred tax liability $ (29,956)
=========
These amounts have been presented in the Company's financial statements as
follows at December 31, 1995:
Current deferred tax asset $ 122,333
Non-current deferred tax liability (152,289)
---------
Net deferred tax liability $ (29,956)
=========
The Company has not recorded a valuation allowance for the deferred tax assets
as they feel that it is more likely than not that they will ultimately be
realized.
NOTE 7 - RELATED PARTY TRANSACTIONS
The debt to First Union National Bank of Florida, as disclosed in Notes 3 and 4,
is guaranteed by a shareholder of the Company.
The Company has an incentive bonus plan for officers/shareholders and various
key employees. Payments under the plan are based on production goals, sales
goals and profitability. Total bonuses paid or accrued under the plan were
$763,591 for the year ended December 31, 1995.
F-15
19
BELLCREST HOMES, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE 8 - STOCK OPTIONS
The Company has issued stock options to an officer/shareholder and to two key
employees totaling 54 shares. The employee's options vest ratably over eight
years while the officer/shareholder option is fully vested. The option price is
$835.45 per share. There were no options exercised as of December 31, 1995.
NOTE 9 - CONTINGENT LIABILITIES AND OTHER MATTERS
It is a customary practice for companies that build manufactured housing to
enter into repurchase agreements with lending institutions which have provided
wholesale floor plan financing to dealers. A majority of the Company's sales are
made pursuant to these agreements. These agreements generally provide for
repurchase of the Company's products from the lender for the balance due them in
the event of repossession upon a dealer's default. Amounts under repurchase
agreements as of December 31, 1995, approximate $4,500,000. Such contingency is
reduced by the resale value of the products which are required to be
repurchased. The Company has recorded an allowance of $9,637 for losses related
to repurchases that may occur. The Company did not sustain any significant
losses on repurchased homes for the year ended December 31, 1995, and it is
management's opinion that exposure is not significant.
The majority of the Company's sales are to dealers in the Southeast.
Additionally, virtually all sales to dealers are financed by third party floor
planners. A downturn in the economy could adversely affect available financing
for dealers and the resulting sales. The Company carefully monitors the economy
and is constantly seeking out additional markets for their sales.
The Company has two major customers, each accounting for over 10% of sales for
1995.
The Company is a party to litigation and claims arising in the normal course of
business. Management, after consultation with legal counsel, believes that the
liabilities, if any, arising from such litigation and claims will not be
material to the Company's financial position.
F-16
20
(b) Pro Forma Financial Information
Belmont Homes, Inc. And Subsidiaries
Pro Forma combined Balance Sheet (Unaudited)
September 30, 1996
The following unaudited pro forma financial statements give effect to
the acquisition by Belmont of Bellcrest in a transaction accounted for as a
purchase. The unaudited pro forma balance sheet is based on the individual
balance sheets of Belmont and Bellcrest as of September 30, 1996 and has been
prepared to reflect the acquisition by Belmont of Bellcrest as of September 30,
1996. The unaudited pro forma statements of income of Belmont and Bellcrest and
the results of operations of Belmont and Bellcrest for the nine months ended
September 30, 1996 and the year ended December 31, 1995 as if the acquisition
had occurred on January 1, 1995. The pro forma statements include allocations
of purchase price to assets and liabilities based on fair values and the
payment by Belmont of $9.5 million in cash at closing for 100% of the stock of
Bellcrest Homes, Inc. No amounts have been reflected for the $3.5 million in
potential future cash payments due over the next three years if certain
earning targets are achieved. These future contingent payments if earned and
paid will be recorded as additional goodwill. These unaudited pro forma
financial statements should be read in conjunction with the historical
financial statements and notes thereto of Belmont and Bellcrest.
Pro Forma (1)
-------------------------
Belmont Bellcrest Acquisition
Homes, Inc. Homes, Inc. Adjustments Combined
----------------------------------------------------
Assets
Current assets:
Cash and certificates of deposit $ 15,437 $ 2,355 ($ 4,928)(a,b) $ 12,864
Accounts receivable, net 11,137 884 12,021
Inventories 11,256 2,217 13,473
Prepaid expenses and taxes 1,526 281 1,807
----------------------------------------------------
Total current assets 39,356 5,737 (4,928) 40,165
Property, plant and equipment, net 18,781 3,612 22,393
Goodwill and other, net 12,541 213 6,604 (d,e) 19,358
----------------------------------------------------
Total assets 70,678 9,562 1,676 81,916
----------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt 2,403 109 2,512
Trade accounts payable 6,820 1,475 8,295
Accrued expenses 9,821 2,980 338(d) 13,139
----------------------------------------------------
Total current liabilities 19,044 4,564 338 23,946
Long-term debt and deferred taxes 660 1,764 4,572 (a,b) 6,996
-------- -------- -------- --------
Total liabilities 19,704 6,328 4,910 30,942
----------------------------------------------------
Shareholders' equity:
Common stock and additional paid-in capital:
Belmont Homes, Inc. 28,023 28,023
Bellcrest Homes, Inc. 275 (275)(c)
Retained earnings 26,444 3,544 (3,544)(c) 26,444
Adjustment to predecessor basis/treasury stock (3,493) (585) 585 (c) (3,493)
----------------------------------------------------
Total shareholders' equity 50,974 3,234 (3,234) 50,974
----------------------------------------------------
Total liabilities and equity $ 70,678 $ 9,562 $ 1,676 $ 81,916
----------------------------------------------------
Note 1 - The pro forma balance sheet has been prepared to reflect the
acquisition of Bellcrest by Belmont for an aggregate price of $9,500.
Pro forma adjustments are made to reflect:
a. Payment of $9,500 at closing for 100% of the stock of Bellcrest Homes,
Inc. of which $5,000 was borrowed at 8% under a bank line of credit.
b. Payment of a $428 Bellcrest note.
c. The elimination of the common shareholders' equity accounts for Bellcrest
Homes, Inc.
d. The net assets of Bellcrest Homes, Inc. at estimated fair value at
acquisition date.
e. The excess of acquisition cost over the fair value of net assets acquired
(goodwill) of $6,817.
F-17
21
Belmont Homes, Inc. And Subsidiaries
Pro Forma Combined Statement Of Income (Unaudited)
Nine Months Ended September 30, 1996
Pro Forma (1)
-----------------------------
Belmont Bellcrest Acquisition
Homes, Inc. Homes, Inc. Adjustments Combined
---------------------------------------------------------------
Net sales $ 170,638 $ 29,883 $200,521
Cost of sales 144,289 26,193 335 (a) 170,817
---------------------------------------------------------------
Gross profit 26,349 3,690 (335) 29,704
Selling, general and administrative 11,349 2,407 205 (c) 13,961
---------------------------------------------------------------
Income from operations 15,000 1,283 (540) 15,743
Other income (expense):
Interest expense (75) (87) (300)(b) (462)
Interest income 459 29 (168)(b) 320
---------------------------------------------------------------
Income before income taxes 15,384 1,225 (1,008) 15,601
Income taxes 5,848 468 (305)(d) 6,011
---------------------------------------------------------------
Net income 9,536 757 (703) 9,590
---------------------------------------------------------------
Net income per common share $1.02 $ 1.02
---------------------------------------------------------------
Weighted average common shares
outstanding 9,378 9,378
---------------------------------------------------------------
Note 1 - The above statement gives effect to the following pro forma adjustments
necessary to reflect the acquisition outlined in Note 1 to the pro forma balance
sheet:
a. Compensation expense for exercise of all stock options prior to closing of
the Bellcrest purchase.
b. Adjustment to decrease $168 of interest income for $4,500 of cash used to
acquire Bellcrest and $300 increase in interest expense for $5,000 borrowed at
8% under a bank line of credit.
c. Amortization of goodwill of $6,817 on a straight-line basis over 25 years.
Assuming the $3.5 million in potential future cash payments to the former
Bellcrest shareholders is earned then goodwill amortization during the nine
month period ended September 30, 1996 would be increased by $105 and pro forma
combined net income would be reduced to $9,485 and $1.01 per share.
d. Adjustment of federal income taxes for interest and stock option
compensation.
F-18
22
Belmont Homes, Inc. And Subsidiaries
Pro Forma Combined Statement Of Income (Unaudited)
Year Ended December 31, 1995
Pro Forma (1)
-----------------------
Belmont Bellcrest Acquisition
Homes, Inc. Homes, Inc. Adjustments Combined
-----------------------------------------------------
Net sales $ 150,576 $ 28,260 $ 178,836
Cost of sales 127,165 24,609 335 (a) 152,109
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Gross profit 23,411 3,651 (335) 26,727
Selling, general and administrative 9,333 2,264 273 (c) 11,870
------------------------------------------------------
Income from operations 14,078 1,387 (608) 14,857
Other income (expense):
Interest expense (825) (46) (400)(b) (1,271)
Interest income 511 28 (225)(b) 314
------------------------------------------------------
Income before income taxes 13,764 1,369 (1,233) 13,900
Income taxes 5,154 508 (359)(d) 5,303
------------------------------------------------------
Net income 8,610 861 (874) 8,597
------------------------------------------------------
Preferred stock dividends (33) (33)
------------------------------------------------------
Net income applicable to common stock 8,577 861 (874) 8,564
------------------------------------------------------
Net income per common share $ 1.23 $ 1.23
------------------------------------------------------
Weighted average common shares
outstanding 6,963 6,963
------------------------------------------------------
Note 1 - The above statements gives effect to the following pro forma
adjustments necessary to reflect the acquisition outlined in Note 1 to the pro
forma balance sheet:
a. Compensation expense for the exercise of all stock options prior to the
close of the Bellcrest purchase.
b. Adjustment to decrease interest income $225 for $4,500 of cash used for
purchase of Bellcrest and $400 increase in interest expense for $5,000 borrowed
under a line of credit at 8%.
c. Amortization of goodwill of $6,817 on a straight line basis over 25 years.
Assuming the $3.5 million in potential future cash payments to the former
Bellcrest shareholders is earned then pro forma goodwill amortization for the
year ended December 31, 1995 would be increased by $140 and pro forma combined
net income would be reduced to $8,424 and $1.21 per share.
d. Adjustment for federal income taxes for interest and stock option
compensation.
F-19