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UNITED STATES
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 3, 1995
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CHEMPOWER, INC.
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(Exact name of registrant as specified in its charter)
OHIO
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(State of Incorporation)
0-17575 34-1481970
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(Commission File Number) (I.R.S. Employer Identification No.)
807 EAST TURKEYFOOT LAKE ROAD, AKRON, OHIO 44319
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (216) 896-4202
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ITEM 2. ACQUISITION OF ASSETS.
On May 3, 1995, Chempower, Inc., an Ohio corporation (the
"Registrant") through its wholly-owned subsidiaries, Southwick
Corp., an Ohio corporation, and Brookfield Corp., an Ohio
corporation (collectively, "Buyers"), purchased all of the issued
and outstanding partnership units ("Units"), representing all of the
partnership interests of Controlled Power Limited Partnership, an
Illinois limited partnership ("CPC"). CPC is in the business of
designing, manufacturing and selling electrical metalclad
switchgear, power distribution systems, bus duct systems and
replacement parts for mass transit authorities, utilities, and
chemical and other industrial facilities throughout the country. The
purchase was effected pursuant to a Partnership Unit Purchase and
Sale Agreement (the "Purchase Agreement"), dated as of April 13,
1995. All of the outstanding Units were sold by Canton Power
Corporation, an Illinois corporation, Henry Crown and Company (not
incorporated), an Illinois limited partnership, and The Second
Benture, an Illinois general partnership (collectively, "Sellers").
Through the purchase of the Units, the Buyers took control of CPC's
inventory, accounts receivable, patents, real estate, plant and
equipment. Pursuant to the terms of the Purchase Agreement, the
Buyers made a cash payment of $4,900,000 to the Sellers at closing.
The purchase price was paid from the cash reserves of the Buyers.
The consideration paid by the Buyers in connection with the purchase
was determined on the basis of (i) discussions between the
management of the Registrant and representatives of the Sellers
regarding the business and prospects of CPC. Contemporaneous with
the closing of the purchase, the Buyers offered employment to all
remaining employees of CPC as of the closing date. At the present
time, it is the intention of the Buyers to continue the current
business of CPC and to expand the business of offer sheet metal
fabrication services.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of business acquired:
The financial statements of Controlled Power Limited Partnership
(A Partnership) will be filed as Amendment No. 2.
(b) Pro Forma financial information:
The pro forma financial information required by this Current Report
is included on pages 5 through 9 herein.
(c) Exhibits:
Number
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2.1 Partnership Unit Purchase and Sale Agreement by and
among Canton Power Company, Henry Crown and Company
(not incorporated), The Second Venture, Southwick
Corp., and Brookfield Corp. dated as of April 13,
1995. (incorporated by reference to Exhibit 2.1 to the
Company's 8-K of May 3, 1995)
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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.
CHEMPOWER, INC.
(Registrant)
Date July 14, 1995 /s/ Robert E. Rohr
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Robert E. Rohr
Vice President of Finance and
Treasurer
(on behalf of the Registrant and
as Principal Financial Officer)
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CHEMPOWER, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
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The following unaudited pro forma financial data has been prepared to reflect
the acquisition of Controlled Power Limited Partnership, a partnership, as
if the transaction had been consummated on the dates indicated.
The unaudited Pro Forma Balance Sheet as of March 31, 1995 reflects the payment
to acquire the partnership units of Controlled Power Limited Partnership and
the resulting purchase price adjustments.
The unaudited Pro Forma Statements of Income for the year ended December 31,
1994 and the three months ended March 31, 1995 are based on the two Companies'
historical results of operations adjusted to give effect to (i) the reduction
in depreciation and amortization expense resulting from the new asset basis as
a result of the acquisition, (ii) the reduction in interest expense charged on
related party notes payable which were contributed to capital in March, 1995
(iii) the decrease in interest income associated with the cash required to
purchase the assets, and (iv) the recording of the income tax benefit as a
result of Controlled Power Limited Partnership having been taxed as a
partnership.
The unaudited pro forma financial data is not necesarily indicative of the
Companies' financial position or results of the combined operations had the
transaction reflected therein actually been consummated at the assumed
dates, nor are they necessarily indicative of the Companies' financial
position or of results of combined operations for any future period.
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CHEMPOWER, INC.
UNAUDITED PRO FORMA BALANCE SHEET
MARCH 31,1995
(In thousands)
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Historical, As Reported
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Controlled
Power Limited Total
Chempower, Partnership Pro Forma Pro Forma
Inc. (A Partnership) Adjustments Combined
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ASSETS
Current Assets
Cash and cash equilvalents $14,078 $ 604 $ (4,900) (1) $ 9,782
Trade receivables 14,272 6,845 (218) (1) 20,899
Contracts in progress 676 6,823 (1,325) (1) 6,174
Inventories 4,148 1,459 - 5,607
Other 365 - - 365
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Total current assets 33,539 15,731 (6,443) 42,827
Property, Plant and Equipment, net 6,415 5,697 (5,697) (1) 6,415
Other Assets 1,631 4 (4) (1) 1,631
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$41,585 $21,432 $(12,144) $50,873
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LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities
Trade payables $ 2,113 $ 3,889 $ - $ 6,002
Other 5,115 3,592 950 (1) 9,697
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Total current liabilities 7,268 7,481 950 15,699
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Deferred Income Taxes 243 - - 243
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Excess of Net Assets Acquired
Over Cost - - 857 (1) 857
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Partners' Equity - 13,951 (13,951) (1) -
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Shareholders' Equity
Common stock 741 - - 741
Additional paid-in-capital 19,463 - - 19,463
Retained earnings 14,480 - - 14,480
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34,684 - - 34,684
Less cost of common stock
repurchased 610 - - 610
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34,074 - - 34,074
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$41,585 $21,432 $(12,144) $50,873
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CHEMPOWER, INC.
UNAUDITED PRO FORMA STATEMENT OF INCOME
Three Months Ended MARCH 31,1995
(In thousands, except share data)
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Historical, As Reported
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Controlled
Power Limited Total
Chempower, Partnership Pro Forma Pro Forma
Inc. (A Partnership) Adjustments Combined
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Revenues $19,039 $ 6,396 $ $25,435
Cost of revenues 16,688 7,604 441 (2) 23,851
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Gross profit (loss) 2,351 (1,208) 441 1,584
Selling, general, and
adminstrative expenses 2,084 620 - 2,704
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Operating income(loss) 267 (1,828) 441 (1,120)
Financial income (expense) 136 (634) 453 (3) (45)
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Income (loss) before
Income taxes 403 (2,462) 894 (1,165)
Income tax expense (benefit) 141 - (630) (4) (489)
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Net income (loss) $ 262 $(2,462) $1,524 $ (676)
===========================================================================================
Net income (loss) per common
and common equivalent share $ 0.04 $ (0.09)
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Weighted average number of
common and common
equivalent shares outstanding 7,378,986 7,378,986
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CHEMPOWER, INC.
UNAUDITED PRO FORMA STATEMENT OF INCOME
Year Ended December 31, 1994
(In thousands, except share data)
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Historical, As Reported
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Controlled
Power Limited Total
Chempower, Partnership Pro Forma Pro Forma
Inc. (A Partnership) Adjustments Combined
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Revenues $ 64,329 $ 40,500 $ - $ 104,829
Cost of revenues 56,569 48,612 6,723 (2) 98,458
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Gross profit (loss) 7,760 (8,112) 6,723 6,371
Selling, general, and
administrative expenses 7,080 5,379 - 12,459
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Operating income (loss) 680 (13,491) 6,723 (6,088)
Financial income (expense) 432 (1,858) 1,007 (3) (419)
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Income (loss) before
income taxes 1,112 (15,349) 7,730 (6,507)
Income tax expense (benefit) 330 - (3,050) (4) (2,720)
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Net income (loss) $ 782 $ (15,349) $ 10,780 $ (3,787)
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Net income (loss) per common
and common euivalent share $ 0.11 $ (0.51)
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Weighted average number of
common and common
equivalent shares outstanding 7,425,998 7,425,998
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CHEMPOWER, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL DATA
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A - BALANCE SHEET PRO FORMA ADJUSTMENTS
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The pro forma balance sheet assumes that the acquisition occurred on March 31,
1995 to give effect to the adjustments described below:
(1) To adjust the assets acquired and liabilities assumed to their fair
values, determined as follows:
(a) Trade receivables adjustment represents the adjustment to net
present value of amounts expected to be received.
(b) Contracts in progress adjustment represents an adjustment for
a reasonable profit allowance for completing contracts assumed.
(c) The resulting excess of the fair value of net assets acquired
over cost was used to reduce all long-term assets. The
remainder of $860,000 was recorded as excess of net assets
acquired over cost (negative goodwill).
(d) The accrued expenses adjustment represents a $450,000 estimated
cost to fund pension obligations plus $500,000 acquisition
costs.
B - STATEMENTS OF INCOME PRO FORMA ADJUSTMENTS
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The pro forma statements of income give effect to the adjustments described
below:
(2) To eliminate historical depreciation and amortization expense on
long-term assets acquired and to amortize negative goodwill
associated with the purchase.
(3) To eliminate interest expense relating to the related party loans
of the Controlled Power Limited Partnership that were converted
to equity in March 1995 and investment earnings on the $4.9 million
purchase price.
(4) To provide an income tax benefit at a 40% effective rate
on the pro forma loss of Controlled Power Limited Partnership.