1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO CURRENT REPORT ON FORM 8-K
ON
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): December 19, 1997
ROBBINS & MYERS, INC.
(Exact name of Registrant as specified in its charter)
Ohio 0-288 31-0424220
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
1400 Kettering Tower, Dayton, OH 45423
(Address of principal executive offices) (Zip code)
937-222-2610
(Registrant's telephone number including area code)
Not applicable
(Former name and former address, if changed since last report)
2
STATEMENT
Robbins & Myers, Inc. (the "Company") filed with the Commission a Current Report
on Form 8-K on January 5, 1998. At Item 7 of such Report the Company indicated
that it would file audited historical financial statements of businesses
acquired and pro-forma financial information on or before March 6, 1998. Set
forth below is Item 7 of such Report restated to include the audited historical
financial statements of businesses acquired and pro-forma financial information
being filed with this amendment.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a.) Financial Statements of Business Acquired.
1. Independent Auditors' Report.
2. Consolidated Balance Sheet of Flow Control Equipment, Inc.
and Subsidiary as of December 19, 1997.
3. Consolidated Statement of Operations of Flow Control
Equipment, Inc. and Subsidiary for the eleven month and
nineteen day period ended December 19, 1997.
4. Consolidated Statement of Stockholder's Equity of Flow
Control Equipment, Inc., for the eleven month and nineteen
day period ended December 19, 1997.
5. Consolidated Statement of Cash Flows of Flow Control
Equipment, Inc. for the eleven month and nineteen day period
ended December 19, 1997.
6. Notes Consolidated Financial Statements.
(b.) Pro-forma Financial Information.
1. Pro-forma Condensed Consolidated Balance Sheet at November
30, 1997
2. Pro-forma Condensed Consolidated Income Statement for the
three month period ended November 30, 1997
3. Pro-forma Condensed Consolidated Income Statement for the
year ended August 31, 1997.
4. Notes to Pro-forma Condensed Consolidated Financial
Information
(c.) See Index to Exhibits
3
Independent Auditors' Report
----------------------------
The Board of Directors
Flow Control Equipment, Inc.:
We have audited the accompanying consolidated balance sheet of Flow Control
Equipment, Inc. and subsidiary (the Company) as of December 19, 1997 and the
related consolidated statements of operations, stockholder's equity and cash
flows for the period from January 1, 1997 through December 19, 1997. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company as of December 19, 1997, and the results of their operations and their
cash flows for the period from January 1, 1997 through December 19, 1997, in
conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Houston, Texas
February 6, 1998
4
FLOW CONTROL EQUIPMENT, INC. AND SUBSIDIARY
Consolidated Balance Sheet
December 19, 1997
(in thousands)
Assets
------
Current assets:
Cash and cash equivalents $ 3,256
Receivables, net 9,352
Inventories, net 9,813
Other current assets 87
--------
Total current assets 22,508
--------
Property, plant and equipment, net of accumulated
depreciation 7,342
Intangible assets, net 1,958
Other noncurrent assets 81
--------
Total assets $ 31,889
========
Liabilities and Stockholder's Equity
------------------------------------
Accounts payable $ 1,154
Accrued expenses 4,637
--------
Total current liabilities 5,791
Deferred income taxes 194
Stockholder's equity:
Preferred stock, $0.10 par value. 10,000 shares authorized;
no shares issued or outstanding; --
Common stock, $0.10 par value. 100,000 shares authorized;
1,000 shares issued and outstanding 1
Additional paid-in capital 19,369
Retained earnings 6,651
Foreign currency translation adjustment (117)
--------
Total stockholder's equity 25,904
Commitments and contingencies
--------
Total liabilities and stockholder's equity $ 31,889
========
See accompanying notes to consolidated financial statements.
5
FLOW CONTROL EQUIPMENT, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
For the period from January 1, 1997 through December 19, 1997
(in thousands)
Revenue:
Net sales $56,933
Other income, net 163
-------
Total revenue 57,096
-------
Costs and expenses:
Costs and operating expenses 32,440
Selling, general and administrative expenses 11,515
Depreciation and amortization 1,774
Royalties 331
Interest 287
Research and development 97
Loss on sale of assets 46
Other expense 127
-------
Total costs and expenses 46,617
-------
Income from operations 10,479
Income tax expense 3,840
-------
Net income $ 6,639
=======
See accompanying notes to consolidated financial statements.
6
FLOW CONTROL EQUIPMENT, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
For the period from January 1, 1997 through December 19, 1997
(in thousands)
Foreign
Preferred Common Additional exchange Total
stock stock paid-in Retained translation stockholder's
amount amount capital earnings adjustment equity
------ ------ ------- -------- ---------- ------
January 1, 1997 $ -- 1 19,369 1,534 69 20,973
Dividends -- -- -- (1,522) -- (1,522)
Net income -- -- -- 6,639 -- 6,639
Foreign currency translation -- -- -- -- (186) (186)
-------- --- ------ ----- ---- ------
December 19, 1997 $ -- 1 19,369 6,651 (117) 25,904
======== === ====== ===== ==== ======
See accompanying notes to consolidated financial statements.
7
FLOW CONTROL EQUIPMENT, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period from January 1, 1997 through December 19, 1997
(in thousands)
Cash flows from operating activities:
Net income $ 6,639
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 1,774
Loss on sale of assets 46
Deferred income taxes (41)
Changes in assets and liabilities:
Increase in receivables (1,642)
Increase in inventories (556)
Decrease in other current assets 124
Decrease in accounts payable (827)
Increase in accrued expenses 2,290
Decrease in intercompany payable (190)
Other 7
-------
Net cash provided by operating activities 7,624
-------
Cash flows from investing activities:
Purchase of equipment (906)
Proceeds from disposal of equipment 141
-------
Net cash used in investing activities (765)
-------
Cash flows from financing activities:
Dividends (1,522)
Repayment of notes payable to affiliates (3,978)
-------
Net cash used in financing activities (5,500)
-------
Effect of exchange rate changes on cash and cash equivalents (52)
-------
Net increase in cash 1,307
Cash and cash equivalents at beginning of year 1,949
-------
Cash and cash equivalents at end of year $ 3,256
=======
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 359
Cash paid during the year for income tax 3,169
=======
See accompanying notes to consolidated financial statements
8
FLOW CONTROL EQUIPMENT, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the period from January 1, 1997 through December 19, 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL INFORMATION
Flow Control Equipment, Inc. (FCE or the Company) is a wholly-owned
subsidiary of J.M. Huber Corporation. Flow Control Equipment Ltd. (FCE
Ltd.), the Company's Canadian operation, is a wholly-owned subsidiary
of FCE.
The Company is a manufacturer and distributor of products and services
to the natural gas, oil field and industrial markets. The Company
serves the North American market through two production facilities in
Borger and Tomball, Texas, two facilities in Edmonton, Alberta, Canada
and ten rod guide shops across the United States.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of FCE and
FCE Ltd. for the period ended December 19, 1997. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
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 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.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of
three months or less to be cash equivalents.
INVENTORIES
The Company values its inventories at the lower of cost or market. Cost
is determined using the weighted-average method, except for the Borger
facility and rod guide shops, which uses a costing method that
approximates the first-in-first-out (FIFO) method. The difference in
methods is not significant.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost and are depreciated
using the straight-line method over the estimated useful lives of the
assets. The Company groups and evaluates property, plant and equipment
based on the ability to identify separate cash flows therefrom. No
impairment charges were recorded during the period from January 1, 1997
through December 19, 1997.
(Continued)
9
FLOW CONTROL EQUIPMENT, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OTHER NONCURRENT ASSETS
The Company classifies spare parts as noncurrent inventory. These parts
are carried on hand in the case of equipment failure or future projects
which will require their use. This inventory is carried at cost and the
specific identification method is used to capitalize or expense the
part when used. Spare parts inventory is $64,000 as of December 19,
1997.
INTANGIBLE ASSETS
Intangible assets principally consist of the excess of the acquisition
cost over the fair value of the net assets of a business acquired
(goodwill). Goodwill is amortized on a straight-line basis over 15
years. Other intangible assets are amortized on a straight-line basis
over their estimated useful lives. Accumulated amortization of
intangible assets is $260,000 at December 19, 1997.
INCOME TAXES
The Company applies the asset and liability method of accounting for
income taxes. Under the asset and liability method, deferred tax assets
and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment
date.
FOREIGN CURRENCY TRANSLATION
Assets and liabilities of FCE Ltd. are translated at current exchange
rates, and related revenues and expenses are translated at average
exchange rates in effect during the period. Resulting translation
adjustments are reflected in stockholder's equity.
(2) RECEIVABLES
Receivables at December 19, 1997, consisted of the following (in
thousands):
Trade $ 9,328
Goods and services tax 260
Employee advances 18
Other 37
-------
9,643
Less allowance for doubtful accounts (291)
-------
Total $ 9,352
=======
(Continued)
10
FLOW CONTROL EQUIPMENT, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(3) INVENTORIES
The components of inventory at December 19, 1997 consisted of the
following (in thousands):
Raw materials $ 3,303
Work in process 53
Finished goods 6,965
Less reserve for obsolescence (508)
-------
Total $ 9,813
======
(4) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 19, 1997 consisted of the
following (in thousands):
Land $ 128
Buildings 1,570
Machinery and equipment 21,234
Construction in progress 416
---------
23,348
Less accumulated depreciation (16,006)
---------
Total $ 7,342
==========
Estimated useful lives for financial reporting purposes are as follows:
Years
Buildings 20 - 33
Machinery and equipment 3 - 20
(5) RETIREMENT AND PROFIT-SHARING PLANS
The Company has a defined contribution retirement plan that qualifies
under Section 401(k) of the Internal Revenue Code (401(k) Plan). The
plan covers substantially all of the Company's employees. The 401(k)
Plan cost is computed as a percentage of eligible employee compensation
and contributions. Costs related to the 401(k) Plan were $392,000 for
the period from January 1, 1997 through December 19, 1997.
The Company has a defined contribution profit-sharing plan covering
substantially all of the Company's employees. The cost of the defined
contribution profit-sharing plan is allocated as a percentage of
eligible employee base compensation. Costs related to the profit
sharing plan were $1,022,000 for the period from January 1, 1997
through December 19, 1997.
(Continued)
11
FLOW CONTROL EQUIPMENT, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(6) FEDERAL INCOME TAXES
For the period January 1, 1997 to December 19, 1997, income tax expense
(benefit) consisted of the following (in thousands):
U.S. taxes on income:
Current $ 2,814
Deferred (3)
-------
2,811
-------
Canadian taxes on income:
Current 1,067
Deferred (38)
-------
Total taxes on income 1,029
-------
$ 3,840
=======
Income tax expense attributable to income from operations differed from
the amount computed by applying the U.S. federal income tax rate of 34%
to pretax income from operations for the period from January 1, 1997
through December 19, 1997, as a result of the following (in thousands):
Computed "expected" tax expense $ 3,563
Increase (reduction) in tax expense
resulting from:
State income tax 389
Other, net (112)
-------
$ 3,840
=======
The tax effects of temporary differences that comprise the significant
portions of the deferred tax liability of $194,000 at December 19, 1997
are related primarily to property, plant and equipment.
(7) TRANSACTIONS WITH AFFILIATES
The Company purchases from and sells to affiliates of J. M. Huber
Corporation. Transactions are at market prices. The following table
summarizes the transactions between the Company and J. M. Huber
Corporation affiliates for the period ended December 19, 1997 (in
thousands):
Sales to:
Oil & Gas $ 115
Engineered Minerals 24
Chemicals 17
The Company was charged an administrative fee by J. M. Huber
Corporation for such corporate functions as information services,
management, logistics, legal, finance and human resources. These
charges amounted to $939,000 during the period from January 1, 1997
through December 19, 1997. Also, during the same period, the Company
earned interest income from affiliates amounting to $49,000 and
incurred interest expense amounting to $111,000.
(Continued)
12
(8) RENTAL COMMITMENTS
The Company leases various equipment, office, and plant space under
operating lease agreements expiring between 1998 and 2001. Minimum
rental commitments under noncancelable operating leases with an initial
or remaining term in excess of one year at December 19, 1997, are as
follows (in thousands):
Year Amount
---- ------
1998 $ 542
1999 406
2000 119
2001 20
-------
Total $ 1,087
=======
Rental expenses were $569,000 during the period from January 1, 1997
through December 19, 1997.
(9) RELATED PARTIES
FCE's Chief Executive Officer, Bruce MacRae, is affiliated with The
Parthenon Group, which has two members on FCE's Board of Directors. The
Parthenon Group receives an annual management fee paid by FCE and is
eligible to receive, from J.M. Huber Corporation, a performance based
fee if the Company meets certain objectives. Bruce MacRae will receive
a share of this performance fee. The management fee included in the
consolidated statement of operations amounted to $242,000 for the
period from January 1, 1997 through December 19, 1997.
(10) GEOGRAPHIC SEGMENT DATA
The Company has operations in the United States and Canada. The
following table sets forth by geographic segment the revenue, income
before taxes and net income for the period from January 1, 1997 through
December 19, 1997, and the identifiable assets at December 19, 1997 (in
thousands).
United
States Canada Eliminations Total
------ ------ ------------ -----
Net sales $ 46,818 15,343 (5,228) 56,933
Income before taxes 7,535 2,983 (39) 10,479
Net income 4,724 1,954 (39) 6,639
Identifiable assets 27,676 7,068 (2,855) 31,889
======== ====== ====== ======
(11) CONTINGENCIES
The Company is involved in claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on
the Company's consolidated financial position, results of operations or
liquidity.
(12) SALE OF COMPANY
On December 19, 1997, the Company's parent entered into a definitive
agreement to sell the Company to Robbins & Myers, Inc.
13
Pro-forma Condensed Consolidated Financial Statements (Unaudited)
Robbins & Myers, Inc. and Subsidiaries and Flow Control Equipment, Inc. and
Subsidiary
The pro-forma financial information included herein reflects the pro-forma
effects of Robbins & Myers, Inc.'s acquisition of Flow Control Equipment, Inc.
and Subsidiary. The pro-forma condensed consolidated balance sheet for Robbins &
Myers, Inc. is presented as if such transaction had occurred on November 30,
1997. The pro-forma condensed statements of consolidated operations for the year
ended August 31, 1997 and for the three months ended November 30, 1997 for
Robbins & Myers, Inc. and the Flow Control Equipment, Inc. are presented as if
such transaction had occurred September 1, 1996. The pro-forma information is
based on the historical financial statements of Robbins & Myers, Inc. and Flow
Control Equipment, Inc. giving effect to the transaction under the purchase
method of accounting and the assumptions and adjustments in the accompanying
notes to the pro-forma condensed consolidated financial statements.
The pro-forma statements have been prepared by Robbins & Myers, Inc. management
based on the audited financial statements of Robbins & Myers, Inc. for the
fiscal year ended August 31, 1997 audited by Ernst & Young LLP, the unaudited
financial statements of Robbins & Myers, Inc. as of November 30, 1997 and the
three months then ended, and the historical financial data of Flow Control
Equipment, Inc. for the same periods.
These pro-forma statements may not be indicative of the results that would have
occurred if the combination had been in effect on the dates indicated or which
may be obtained in the future. Additionally, the pro-forma financial statements
are based on preliminary estimates of values and transaction costs. The actual
recording of the transaction will be based on the final values and transaction
costs. Accordingly, the actual recording of the transactions can be expected to
differ from these pro-forma financial statements. The pro-forma financial
statements should be read in conjunction with the audited financial statements
and notes thereto of Flow Control Equipment, Inc. contained elsewhere herein and
Robbins & Myers, Inc. contained in its Form 10-K for the year ended August 31,
1997 and Form 10-Q for the quarter ended November 30, 1997.
14
PRO-FORMA
CONDENSED CONSOLIDATED BALANCE SHEET
Robbins & Myers, Inc. and Subsidiaries (Unaudited)
Flow Control Equipment Inc. and Subsidiary (Unaudited)
November 30, 1997
(in thousands)
Flow
Control
Robbins & Equipment Pro-Forma
Myers, Inc. Inc. Adjustments Pro-Forma
---------- --------- ----------- ---------
ASSETS
Current Assets
Cash and cash equivalents $ 6,583 $ 3,256 (3,256)(a) $ 6,583
Accounts receivable, less allowances 69,449 9,352 -- 78,801
Inventories 49,688 9,813 1,250(b) 609,751
Other current assets 9,068 87 525(d)(f) 9,680
--------- --------- --------- ---------
Total Current Assets 134,788 87 (1,481) 9,680
Goodwill 124,505 1,958 67,175(c) 193,638
Other Intangible Assets 19,604 -- -- 19,604
Other Assets 4,517 81 712(d) 5,310
Net Property, Plant and Equipment 93,737 7,342 15,277(b) 116,356
--------- --------- --------- ---------
$ 377,151 $ 31,889 $ 81,683 $ 490,723
========= ========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 24,557 $ 1,154 -- $ 25,711
Accrued expenses 48,254 4,637 1,537(d) 54,428
Current portion long-term debt 3,098 -- -- 3,098
--------- --------- --------- ---------
Total Current Liabilities 75,909 4,791 1,537 83,237
Long-Term Debt - Less Current Portion 111,662 -- 106,244(e) 217,906
Other Long-Term Liabilities 54,283 194 (194)(f) 54,283
Shareholders' Equity
Common Stock 31,280 19,370 (19,370)(g) 31,280
Retained earnings 101,371 6,651 (6,651)(g) 101,371
Equity adj. for for. currency trans 2,975 (117) 117(g) 2,975
Equity adj. to recognize min. pension
liability (329) -- -- (329)
--------- --------- --------- ---------
135,297 25,904 (25,904) 135,297
--------- --------- --------- ---------
$ 377,151 $ 31,889 $ 81,683 $ 490,723
========= ========= ========= =========
SEE NOTES TO UNAUDITED PRO-FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION.
15
PRO-FORMA
CONDENSED CONSOLIDATED INCOME STATEMENT
Robbins & Myers, Inc. and Subsidiaries (Unaudited)
Flow Control Equipment Inc. and Subsidiary (Unaudited)
Year ended November 30, 1997
(in thousands, except per share data)
Flow
Control
Robbins & Equipment Pro-Forma
Myers, Inc. Inc. Adjustments Pro-Forma
---------- --------- ----------- ---------
Net sales $104,158 $ 14,994 -- $ 119,152
Cost of sales 65,680 8,793 294 (h) 74,767
--------- --------- --------- ---------
Gross profit 38,478 6,201 (294) 44,385
Operating expenses 24,326 3,207 117 (i) 27,650
Other (income) expense (472) 82 -- (390)
--------- --------- --------- ---------
Operating income 14,624 2,912 (411) 17,125
Interest expense 2,218 (12) 1,668 (j) 3,874
--------- --------- --------- ---------
Income before income taxes 12,406 2,924 (2,079) 13,251
Income taxes 4,218 1,111 (790)(k) 4,539
--------- --------- --------- ---------
Net income $ 8,188 $ 1,813 ($ 1,289) $ 8,712
========= ========= ========= =========
Income per share:
Basic: $0.74 $0.79
========= =========
Diluted: $0.63 $0.67
========= =========
Weighted average shares outstanding:
Basic: 10,996 10,966
========= =========
Diluted: 13,960 13,660
========= =========
SEE NOTES TO UNAUDITED PRO-FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION.
16
PRO-FORMA
CONDENSED CONSOLIDATED INCOME STATEMENT
Robbins & Myers, Inc. and Subsidiaries (Audited)
Flow Control Equipment Inc. and Subsidiary (Unaudited)
Year ended August 31, 1997
(in thousands, except per share data)
Flow
Control
Robbins & Equipment Pro-Forma
Myers, Inc. Inc. Adjustments Pro-Forma
---------- --------- ----------- ---------
Net sales $385,663 $ 55,854 -- $ 441,517
Cost of sales 246,882 35,845 1,175(h) 283,902
--------- --------- --------- ---------
Gross profit 138,781 20,009 (1,175) 157,615
Operating expenses 89,772 12,561 379(i) 102,712
Other (income) expense (512) 653 -- 141
--------- --------- --------- ---------
Operating income 49,521 6,795 (1,554) 54,762
Interest expense 6,437 283 6,342(j) 13,062
--------- --------- --------- ---------
Income before income taxes 43,084 6,512 (7,896) 41,700
Income taxes 14,218 2,475 (3,001)(k) 13,692
--------- --------- --------- ---------
Net income $ 28,866 $ 4,037 ($ 4,895) $ 28,008
========= ========= ========= =========
Income per share:
Basic: $2.67 $2.59
========= =========
Diluted: $2.29 $2.22
========= =========
Weighted average shares outstanding:
Basic: 10,806 10,806
========= =========
Diluted: 13,663 13,663
========= =========
SEE NOTES TO UNAUDITED PRO-FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION.
17
Notes to Unaudited Pro-Forma Condensed Consolidated Financial Information
($ In thousands)
Pro-Forma Adjustments:
1. The following reflects the purchase price, historical book value, and
adjustments to book value as if the acquisition of Flow Control
Equipment, Inc. and Subsidiary ("FCE") had occurred on November 30, 1997:
Purchase price:
Cash to J.M. Huber $108,500 (2)
Cash on FCE's books (3,256) (3)
Costs to complete acquisition $1,000
--------
Net debt incurred $106,244
========
Net assets acquired:
Estimated historical book value, excluding cash $22,648
Write-up of inventory to fair value 1,250
Write-up of property, plant and equipment to fair value 15,277
Record effect of deferred tax asset on purchase entry 594
Record accrued expenses for cost of the acquisition (700)
Write-off of existing goodwill (1,450)
--------
Adjusted book value 37,619
Excess purchase price allocated to goodwill 68,625
--------
$106,244
========
2. Funds were borrowed under the Company's Amended and Restated Credit
Agreement ("Amended Credit Agreement"), dated November 25, 1997. The
Amended Credit Agreement was filed as Exhibit 4 to this report.
3. Cash on FCE's book used to pay down bank borrowings immediately after the
purchase.
18
Specific pro-forma adjustments are explained as follows:
a. Cash on FCE's balance sheet at the date of purchase was used to pay
down borrowings immediately after purchase.
b. Represents adjustments to reflect the estimated fair value.
c. Represents the net effect of writing off goodwill which existed prior
to the acquisition ($1,450) and recording the excess of the purchase
price over the estimated fair value of assets acquired ($68,625). FCE
has existing identified intangible assets of approximately $500 which
remain with the Company.
d. Reflects accrued expenses for costs related to the acquisition. As a
result of the purchase transaction, a royalty agreement through the
year 2002 the Company was party to was accelerated, the resulting
transaction was to record an accrued expense of $837, an other current
asset of $125, and an other asset of $712. The remaining $700 increase
in accrued expenses relates to costs associated with the acquisition.
e. Represents the net debt incurred for the purchase of FCE.
f. Reflects the deferred tax effect of the purchase entries. An asset of
$400 recorded and the liability of $194 reversed.
g. Reflects the elimination of the original net asset value of FCE.
h. Adjustments reflect the estimated increase in depreciation expense
related to the write-up of property, plant and equipment.
Year Ended Quarter Ended
Aug. 31, 1997 Nov. 30, 1997
-------------- -------------
Additional depreciation expenses
relating to PP&E write-up $1,175 $294
============= =============
i. Adjustments reflect the estimated incremental amortization expense
relating to the excess purchase price resulting from the acquisition
(amortized over a 40 year life), elimination of corporate cost
allocations in excess of actual services to be provided and management
fees paid to outside consultants.
19
Year Ended Quarter Ended
Aug. 31,1997 Nov. 30, 1997
------------- --------------
Eliminate existing goodwill
amortization expense $ (291) $ (58)
New goodwill amortization 1,740 435
Eliminate corporate cost allocation
and consulting fees (1,310) (320)
Add in incremental estimated actual
changes for in house legal and
information services fees 240 60
------------- --------------
$ 379 $ 117
============= ==============
j. The net borrowing of approximately 106 million for the acquisition was
assumed to have occurred on September 1, 1996. The pro-forma
adjustments to interest are based on a rate of 6.25% (estimated LIBOR
base rate effective for the period). The existing interest relates to a
payable to an affiliate which was eliminated in the acquisition.
Year Ended Quarter Ended
Aug. 31,1997 Nov. 30, 1997
------------ -------------
Eliminate existing net interest
(expense) income $ (283) $ 12
New interest expense 6,623 1,656
------------ -------------
$ 6,342 $ 1,668
============ =============
k. Reflects tax effect at estimated income tax rate of 38% of pro-forma
adjustments.
20
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, thereunto duly authorized.
ROBBINS & MYERS, INC.
Date: March 5, 1998 By: /s/ Kevin J. Brown
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Kevin J. Brown, Corporate Controller
and Chief Accounting Officer
21
INDEX TO EXHIBITS
23. CONSENT OF EXPERTS AND COUNSEL:
23.1 Consent of KPMG Peat Marwick LLP