AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 27, 1999.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 13, 1998
DELCO REMY INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-13683 35-1909253
(State or other jurisdiction of (Commission file number) (IRS employer identification
incorporation) number)
2902 ENTERPRISE DRIVE
ANDERSON, INDIANA 46013
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (765) 778-6499
NOT APPLICABLE
(Former name or former address, if changed since last report)
1
This report on Form 8-K/A amends the report on Form 8-K dated November 13, 1998
and filed November 24, 1998. Included in this amendment are Item 2, financial
statements of business acquired (Item 7(a)) and pro forma financial information
(Item 7(b)).
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On November 13, 1998, Reman Holdings, Inc., a wholly owned subsidiary of Delco
Remy International, Inc. (the "Company"), purchased 100% of the Common Stock of
Williams Technologies, Inc. ("Williams") from The W.W. Williams Company for
$40,000,000 in cash, less Williams' intercompany and third-party debt and
subject to working capital and other adjustments. The purchase was funded
through proceeds from the Company's Senior Credit Facility.
Williams is a remanufacturer of automatic transmissions and torque converters
for automotive and medium and heavy duty truck applications. Its primary market
is the dealer network of major North American and foreign original equipment
vehicle manufacturers. The Company does not currently anticipate any significant
changes in the operation of the business of Williams.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired
The following financial statements and accompanying notes of Williams
Technologies, Inc. are filed with this report:
Independent Auditors' Report Page F-1
Balance Sheets as of December 31, 1997 and 1996 Page F-2
Statements of Income and Stockholders' Equity
for the Years Ended December 31, 1997, 1996 and 1995 Page F-3
Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995 Page F-4
Notes to Financial Statements Page F-5
Unaudited Condensed Balance Sheets as of September 30, 1998 and 1997 Page F-8
Unaudited Condensed Statements of Income for the Nine Months
Ended September 30, 1998 and 1997 Page F-9
Unaudited Condensed Statements of Cash Flows for the Nine Months
Ended September 30, 1998 and 1997 Page F-10
Unaudited Notes to Condensed Financial Statements for the Nine Months
Ended September 30, 1998 and 1997 Page F-11
2
(b) Pro Forma Financial Information
The following unaudited pro forma condensed consolidated financial information
of the Company is filed with this report:
Pro Forma Condensed Consolidated Balance Sheet as of October 31, 1998 Page F-12
Pro Forma Condensed Consolidated Statements of Operations for the Three
Months Ended October 31, 1998 and the Year Ended July 31, 1998 Page F-13
Notes to Pro Forma Condensed Consolidated Financial Information Page F-15
The unaudited pro forma consolidated financial information of the Company,
included in Item 7(b) of this Form 8-K/A, is based on and should be read in
conjunction with the audited financial statements and notes thereto appearing in
the Company's annual report on Form 10-K for the year ended July 31, 1998 and
the unaudited financial statements and notes thereto appearing in the Company's
Form 10-Q for the three month period ended October 31, 1998. The pro forma
condensed consolidated balance sheet of the Company as of October 31, 1998
reflects the financial position of the Company after giving effect to the
acquisition of Williams and assumes the acquisition took place on October 31,
1998. The pro forma condensed consolidated statements of operations for the
fiscal year ended July 31, 1998 and the three months ended October 31, 1998
assume that the acquisition occurred on August 1, 1997.
The unaudited pro forma condensed consolidated financial statements have been
prepared by the Company based upon available information and certain assumptions
that management believes are reasonable in the circumstances. The unaudited pro
forma information presented herein is shown for illustrative purposes only and
is not necessarily indicative of the future financial position or future results
of operations of the Company, or the financial position or results of operations
of the Company that would have actually occurred had the acquisition been in
effect as of the date or for the periods presented. The Company's financial
statements will reflect the acquisition only from November 13, 1998.
(c) Exhibits
23.1 Consent of Deloitte & Touche LLP
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.
DELCO REMY INTERNATIONAL, INC.
------------------------------
(Registrant)
Date: January 27, 1999 By: /s/ David L. Harbert
---------------------
David L. Harbert
Executive Vice President and
Chief Financial Officer
Date: January 27, 1999 By: /s/ David E. Stoll
-------------------
David E. Stoll
Vice President and Controller
Chief Accounting Officer
4
INDEPENDENT AUDITORS' REPORT
To the Stockholder and Directors of
Williams Technologies, Inc.
We have audited the accompanying balance sheets of Williams Technologies, Inc.
(a wholly owned subsidiary of The W. W. Williams Company) as of December 31,
1997 and 1996, and the related statements of income, stockholders' equity, and
cash flows for each of the three years in the period ended December 31, 1997.
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, such financial statements present fairly, in all material
respects, the financial position of the Company at December 31, 1997 and 1996,
and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 1997 in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
Columbus, Ohio
March 26, 1998
F-1
WILLIAMS TECHNOLOGIES, INC.
BALANCE SHEETS
DECEMBER 31
1997 1996
---- ----
(thousands)
ASSETS:
Current Assets:
Cash............................................................. $ 5 $ 5
Accounts receivable - less allowance for doubtful
accounts: 1997 - $50; 1996 - $25................................ 9,301 4,300
Inventories:
Finished goods.................................................. 1,682 1,819
Parts for remanufacturing....................................... 11,169 7,589
Prepaid expenses and other....................................... 67 64
Deferred income taxes............................................ 305 407
------- -------
Total current assets......................................... 22,529 14,184
------- -------
Property and Equipment - at cost:
Leasehold improvements........................................... 293 166
Equipment........................................................ 8,580 7,088
------- -------
Total............................................................ 8,873 7,254
Less accumulated depreciation ................................... 4,348 3,425
------- -------
Property and equipment - net................................... 4,525 3,829
------- -------
Total.......................................................... $27,054 $18,013
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts payable - trade......................................... $ 9,262 $ 8,095
Accrued liabilities.............................................. 1,129 1,223
Current portion of long-term debt................................ 160 160
------- -------
Total current liabilities...................................... 10,551 9,478
------- -------
Long-Term Debt:
Parent company................................................... 9,375 3,005
Equipment - net of current portion............................... 320 480
------- -------
Net long-term debt............................................. 9,695 3,485
------- -------
Commitments and Contingencies (Note 4)
Stockholders' Equity:
Common stock: $1 par value; authorized and outstanding
100,000 shares.................................................. 100 100
Retained earnings................................................ 6,708 4,950
------- -------
Total stockholders' equity......................................... 6,808 5,050
------- -------
Total........................................................ $27,054 $18,013
======= =======
See Notes to Financial Statements
F-2
WILLIAMS TECHNOLOGIES, INC.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31
1997 1996 1995
---- ---- ----
(thousands)
Gross revenue...................................... $ 49,424 $ 36,894 $ 23,420
Cost of purchased parts sold....................... 22,493 14,076 7,259
-------- -------- --------
Net revenue........................................ 26,931 22,818 16,161
Labor and other direct remanufacturing costs....... 20,784 17,133 13,447
-------- -------- --------
Gross margin....................................... 6,147 5,685 2,714
Selling, general and administrative expenses....... 2,759 2,082 1,504
-------- -------- --------
Income from operations............................. 3,388 3,603 1,210
Interest expense................................... (692) (337) (236)
-------- -------- --------
Income before income taxes......................... 2,696 3,266 974
Income tax provision............................... 938 1,142 351
-------- -------- --------
Net income......................................... $ 1,758 $ 2,124 $ 623
======== ======== ========
See Notes to Financial Statements
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
COMMON STOCK
SHARES $1.00 PAR RETAINED
OUTSTANDING VALUE EARNINGS TOTAL
----------- ----- -------- -----
(thousands)
Balance December 31, 1994.......... 100,000 $ 100 $ 3,239 $ 3,339
Net income......................... 623 623
Dividends to Parent................ (151) (151)
------- ------ ------- -------
Balance, December 31, 1995......... 100,000 100 3,711 3,811
Net income......................... 2,124 2,124
Dividends to Parent ............... (885) (885)
------- ------ ------- -------
Balance, December 31, 1996......... 100,000 100 4,950 5,050
Net income......................... 1,758 1,758
------- ------ ------- -------
Balance, December 31, 1997......... 100,000 $ 100 $ 6,708 $ 6,808
======= ===== ======= =======
See Notes to Financial Statements
F-3
WILLIAMS TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
1997 1996 1995
---- ---- ----
(thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................................... $ 1,758 $ 2,124 $ 623
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization...................... 934 766 490
Deferred income taxes.............................. 102 (111) 76
Gain on sale of assets............................. (2) (6) -
Change in assets and liabilities:
Accounts receivable................................ (5,001) (413) (2,153)
Inventories........................................ (3,443) (5,926) (1,900)
Prepaid expenses and other......................... (3) (39) -
Accounts payable - trade........................... 1,167 3,745 2,667
Accrued liabilities................................ (94) 494 (75)
-------- -------- --------
Net cash provided (used) by operating activities...... (4,582) 634 (272)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions.................... (1,633) (1,519) (1,719)
Proceed from sale of property and equipment......... 5 7 -
-------- -------- --------
Net cash used by investing activities................. (1,628) (1,512) (1,719)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt........................ - - 800
Payments of long-term debt.......................... (160) (160) -
Net change in debt to Parent company................ 6,370 1,923 1,339
Dividends........................................... - (885) (151)
-------- -------- --------
Net cash provided by financing activities............. 6,210 878 1,988
-------- -------- --------
NET INCREASE (DECREASE) IN CASH....................... - - (3)
CASH AT BEGINNING OF YEAR............................. 5 5 8
-------- -------- --------
CASH AT END OF YEAR................................... $ 5 $ 5 $ 5
======== ======== ========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid....................................... $ 683 $ 337 $ 236
Income taxes paid to Parent......................... 1,017 1,023 341
Income taxes paid to (refunded by) state and
local governments.................................. (79) 119 10
See Notes to Financial Statements
F-4
WILLIAMS TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The Company is a wholly-owned subsidiary of The W.W. Williams Company
("Parent"). The Company remanufactures transmissions, parts and components
on a contract basis for original equipment manufacturers primarily for use
in the United States. The Company is incorporated in South Carolina with
100,000 shares of $1 par value stock that is authorized, issued, and
outstanding.
BASIS OF PRESENTATION
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.
INVENTORIES
Inventories are valued at the lower of cost or market. The cost of
inventory is determined using the first-in, first-out (FIFO) method.
REVENUE RECOGNITION
The Company recognizes revenue at the time product is shipped or service is
completed. During 1997, 1996 and 1995, approximately 94%, 97% and 99%
respectively, of gross revenue consisted of sales to four customers.
PARENT ALLOCATIONS
Records of the Company are maintained separately from the Parent company;
however, costs incurred by the Parent for employee pension and group self-
insurance plans, on the Company's behalf, are allocated to the Company,
based on the number of employees for pension and actual net cost for group
insurance. Amounts allocated to the Company for such expenses were
$1,046,000, $949,000, and $864,000 in 1997, 1996 and 1995, respectively. In
addition, the Company was charged $118,000, $118,000, and $106,000 during
1997, 1996 and 1995, respectively, for certain administrative functions
performed for it by the Parent. Allocation of such costs are based on
underlying costs or comparative volumes. The Company is not charged for any
of the Parent company's executive officers cost. Interest expense of
$653,000, $287,000, and $236,000 in 1997, 1996 and 1995, respectively, was
charged on Parent
F-5
company debt. The Company leases its manufacturing facility from its
Parent. The lease is for a 10 year term commencing January 1, 1995, and
includes annual escalators tied to the Consumer Price Index. Rent expense
of $458,000, $438,000, and $425,000 in 1997, 1996 and 1995, respectively,
was charged by the Parent. Management believes the manner of allocating
costs to the Company by the Parent is reasonable.
PENSION PLAN
The Company's employees participate in the Parent's pension plan. The plan
is a defined benefit pension plan covering full-time employees. Benefits
are based on years of service and the employees' highest consecutive five
years' average compensation. Contributions to the plan are made to the
extent deductible for Federal income tax purposes.
The projected benefit obligation was determined using an assumed long-term
rate of return on assets of 8%, future salary increases of 4%, and a
discount rate of 6.5% for 1997, 1996 and 1995.
The Company recorded pension expense of $265,000, $263,000, and $269,000
during 1997, 1996 and 1995, respectively.
DEPRECIATION
Depreciation on property and equipment (1997 - $936,000; 1996 - $767,000;
1995- $490,000) is computed based on the estimated useful lives of the
assets using accelerated and straight-line methods for financial reporting
purposes.
2. INCOME FROM OPERATIONS
During 1997, the Company incurred a $500,000 charge to fully reserve certain
parts variance receivables due to a contract dispute with a customer. In 1998,
the Company and the customer amended the contract which management believes
includes terms more favorable to the Company. During 1996, a special project
added $1,253,000 to income from operations.
3. LONG-TERM DEBT
Equipment debt matures in 2000 and bears interest at variable rates with an
effective interest rate of 7.0% and 6.8% for 1997 and 1996, respectively, and
7.0% as of December 31, 1997. Equipment debt is guaranteed by the Parent and is
collateralized by certain equipment of the Company. Long-term debt maturities
are $160,000 per year in 1998, 1999 and 2000.
4. COMMITMENTS AND CONTINGENCIES
The Company has operating leases for its manufacturing and warehouse facilities
through December 31, 2004 and March 31, 2002, respectively. The warehouse has a
lease purchase option and a renewal option. Future annual rental amounts
(including amounts to Parent), subject to annual escalators tied to the Consumer
Price Index, are as follows:
F-6
1998 - $926,000; 1999 - $940,000; 2000 - $954,000; 2001 - $969,000; 2002 -
$638,000; thereafter - $1,093,000. Annual rental expense (including amounts to
Parent) was approximately $744,000, $671,000 and $563,000 in 1997, 1996 and
1995, respectively.
5. INCOME TAXES
The income tax provision (benefit) consists of the following:
1997 1996 1995
---- ---- ----
(Dollars in Thousands)
Current:
Federal ....................... $ 836 $ 1,207 $ 261
State ......................... -- 43 17
----- ------- -----
Subtotal ...................... 836 1,250 278
----- ------- -----
Deferred (Federal and state)..... 102 (108) 73
----- ------- -----
Total income tax provision....... $ 938 $ 1,142 $ 351
===== ======= =====
Company results are included in the Parent's consolidated Federal Income Tax
return. The Company computes its income tax provision as if it filed a separate
income tax return. The effective income tax rate differs from the federal
statutory rate due to the effect of state income taxes, net of state tax
credits, and certain nondeductible expenses. Unused state tax credits at
December 31, 1997 amounted to $45,000.
The net deferred tax asset of $305,000 and $407,000 at December 31, 1997 and
1996, includes deferred tax assets of $404,000 and $450,000 and deferred tax
liabilities of $99,000 and $43,000, respectively. Deferred taxes related
primarily to valuation and other reserves, and depreciation.
F-7
WILLIAMS TECHNOLOGIES, INC.
UNAUDITED BALANCE SHEETS
SEPTEMBER 30, 1998 AND 1997
1998 1997
---- ----
(thousands)
ASSETS:
Current Assets:
Cash................................................... $ 5 $ 5
Accounts receivable - less allowance for doubtful
accounts of $50...................................... 9,842 10,640
Inventories:
Finished goods........................................ 2,092 1,789
Parts for remanufacturing............................. 8,508 8,014
Prepaid expenses and other............................. 80 65
Deferred income taxes.................................. 291 305
-------- --------
Total current assets................................. 20,818 20,818
-------- --------
Property and Equipment - at cost:
Leasehold improvements................................. 319 282
Equipment.............................................. 9,462 8,179
-------- --------
Total.................................................. 9,781 8,461
Less accumulated depreciation.......................... 5,174 4,103
-------- --------
Property and equipment - net......................... 4,607 4,358
-------- --------
Total................................................ $ 25,425 $ 25,176
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts payable - trade............................... $ 6,140 $ 10,392
Accrued liabilities.................................... 1,437 1,469
Current portion of long-term debt...................... 160 160
-------- --------
Total current liabilities............................ 7,737 12,021
-------- --------
Long-Term Debt:
Parent company......................................... 9,008 6,650
Equipment - net of current portion..................... 240 360
-------- --------
Net long-term debt................................... 9,248 7,010
-------- --------
Stockholders' Equity..................................... 8,440 6,145
-------- --------
Total................................................ $ 25,425 $ 25,176
======== ========
See Notes to Unaudited Financial Statements
F-8
WILLIAMS TECHNOLOGIES, INC.
UNAUDITED STATEMENTS
OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
1998 1997
---- ----
(thousands)
Gross revenue............................................. $ 49,263 $ 34,907
Cost of purchased parts sold.............................. 25,158 15,765
-------- --------
Net revenue............................................... 24,105 19,142
Labor and other direct remanufacturing costs.............. 18,533 15,265
-------- --------
Gross margin.............................................. 5,572 3,877
Selling, general and administrative expenses.............. 2,314 1,688
-------- --------
Income from operations.................................... 3,258 2,189
Interest expense.......................................... (748) (505)
-------- --------
Income before income taxes................................ 2,510 1,684
Income tax provision...................................... 878 589
-------- --------
Net income................................................ $ 1,632 $ 1,095
======== ========
See Notes to Unaudited Financial Statements
F-9
WILLIAMS TECHNOLOGIES, INC.
UNAUDITED STATEMENTS
OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
1998 1997
---------- ----------
(thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................................... $ 1,632 $ 1,095
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization.......................... 813 678
Deferred income taxes.................................. 14 102
Gain on sale of assets................................. 22 (2)
Change in assets and liabilities:
Accounts receivable.................................... (541) (6,340)
Inventories........................................... 2,251 (395)
Prepaid expenses and other............................ (13) (1)
Accounts payable - trade.............................. (3,122) 2,297
Accrued liabilities................................... 308 246
---------- ----------
Net cash provided (used) by operating activities........... 1,364 (2,320)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions......................... (944) (1,208)
Proceed from sale of property and equipment ............. 27 3
---------- ----------
Net cash used by investing activities...................... (917) (1,205)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt............................... (80) (120)
Net change in debt to Parent company .................... (367) 3,645
---------- ----------
Net cash provided by financing activities.................. (447) 3,525
---------- ----------
NET INCREASE (DECREASE) IN CASH ........................... - -
CASH AT BEGINNING OF PERIOD ............................... 5 5
---------- ----------
CASH AT END OF PERIOD...................................... $ 5 $ 5
========== ==========
See Notes to Unaudited Financial Statements
F-10
WILLIAMS TECHNOLOGIES, INC.
UNAUDITED NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
1. INTERIM FINANCIAL STATEMENTS
The interim financial statements are unaudited but, in the opinion of
management, reflect all adjustments necessary for a fair presentation of the
results of operations and financial position for such periods. All such
adjustments reflected in the interim financial statements are considered to be
of a normal recurring nature. The results of operations for any interim period
are not necessarily indicative of results for the full year. Accordingly, these
financial statements should be read in conjunction with the Company's financial
statements and notes thereto for the years ended December 31, 1997, 1996 and
1995.
2. SALE OF COMPANY
On November 13, 1998, Reman Holdings, Inc., a wholly-owned subsidiary of Delco
Remy International, Inc. (the "Company"), purchased 100% of the Common Stock of
WTI from the W.W. Williams Company for $40,000,000 in cash, less WTI
intercompany and third-party debt and subject to working capital and other
adjustments.
3. NEW OPERATING AGREEMENT
On September 30, 1998, WTI executed an operating agreement with the South
Carolina Department of Corrections to build a manufacturing facility on the
premises of a prison. In return, WTI will receive labor hours from prison
inmates at below market rates. Total building costs are estimated at
approximately $1,200,000.
F-11
DELCO REMY INTERNATIONAL, INC. AND SUBSIDIARES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF OCTOBER 31, 1998
WILLIAMS (F)
TECHNOLOGY
AS OF PRO FORMA
HISTORICAL OCT. 31, 1998 ADJUSTMENTS PRO FORMA
---------- ------------- ----------- ---------
(thousands)
ASSETS:
Current Assets:
Cash and cash equivalents................................ $ 8,493 $ 5 $ - $ 8,498
Trade accounts receivable, net........................... 150,401 9,402 - 159,803
Inventories.............................................. 198,871 11,431 - 210,302
Other current assets..................................... 45,454 177 - 45,631
--------- -------- -------- ---------
Total current assets................................... 403,219 21,015 - 424,234
--------- -------- -------- ---------
Property and equipment..................................... 214,181 9,922 - 224,103
Less accumulated depreciation.............................. 54,370 5,299 (5,299) (g) 54,370
--------- -------- -------- ---------
Property and equipment, net.............................. 159,811 4,623 5,299 169,733
--------- -------- -------- ---------
Goodwill, less accumulated amortization.................... 115,283 - 19,261 (h) 134,544
Other assets............................................... 43,833 - - 43,833
--------- -------- -------- ---------
Total assets............................................ $ 722,146 $ 25,638 $ 24,560 $ 772,344
========= ======== ======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts payable......................................... $ 92,717 $ 6,639 $ - $ 99,356
Other liabilities and accrued expenses................... 72,398 3,406 - 75,804
Current portion of long-term debt........................ 3,386 - - 3,386
--------- -------- -------- ---------
Total current liabilities.............................. 168,501 10,045 - 178,546
Long-term debt, less current portion....................... 423,066 - 40,153 (i) 463,219
Other noncurrent liabilities............................... 30,318 - - 30,318
Minority interests in subsidiaries......................... 11,209 - - 11,209
Intercompany liabilities................................... - 6,945 (6,945) (j) -
Stockholders' equity:
Common stock:
Class A shares......................................... 182 100 (100) (j) 182
Class B shares......................................... 63 - - 63
Paid-in capital.......................................... 106,392 1,469 (1,469) 106,392
Retained deficit......................................... (10,806) 7,079 (7,079) (j) (10,806)
Cumulative translation adjustment........................ (4,804) - - (4,804)
Stock purchase plan...................................... (1,975) - - (1,975)
--------- -------- -------- ---------
Total stockholders' equity............................. 89,052 8,648 (8,648) 89,052
--------- -------- -------- ---------
Total liabilities and stockholders' equity............. $ 722,146 $ 25,638 $ 24,560 $ 772,344
========= ======== ======== =========
See Notes to Pro Forma Financial Information
F-12
DELCO REMY INTERNATIONAL, INC. AND SUBSIDIARES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED OCTOBER 31, 1998
WILLIAMS (A)
TECHNOLOGY
THREE MONTHS
ENDED PRO FORMA
HISTORICAL OCT. 31, 1998 ADJUSTMENTS PRO FORMA
---------- -------------- ----------- ---------
(thousands)
Net sales ................................................... $ 232,785 $8,794 $ - $ 241,579
Cost of goods sold........................................... 191,013 2,909 - 193,922
--------------------------------------------- ---------
Gross profit................................................ 41,772 5,885 - 47,657
Selling, engineering, and administrative expenses .......... 23,224 4,641 138 (c) 28,003
--------------------------------------------- ---------
Operating income ........................................... 18,548 1,244 (138) 19,654
Interest expense ........................................... 10,403 269 484 (d) 11,156
--------------------------------------------- ---------
Income before income taxes, minority interest
in income of subsidiaries and income from
unconsolidated joint ventures............................. 8,145 975 (622) 8,498
Income taxes ............................................. 3,177 339 (243) (e) 3,273
Minority interest in income of subsidiaries ................ 761 - - 761
Income from unconsolidated joint ventures .................. (1,181) - - (1,181)
--------------------------------------------- ---------
Net income.................................................. $ 5,388 $ 636 $(379) $ 5,645
============================================= =========
See Notes to Pro Forma Financial Information
F-13
DELCO REMY INTERNATIONAL, INC. AND SUBSIDIARES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1998
WILLIAMS (B)
TECHNOLOGY
TWELVE MONTHS
ENDED PRO FORMA
HISTORICAL DEC. 31, 1997 ADJUSTMENTS PRO FORMA
---------- ------------- ----------- ---------
(THOUSANDS)
Net sales............................................. $815,313 $26,931 $ - $842,244
Cost of goods sold.................................... 657,862 20,784 - 678,646
---------------------------- -------------- ------------
Gross profit.......................................... 157,451 6,147 - 163,598
Selling, engineering, and administrative expenses..... 90,351 2,759 550 (c) 93,660
Restructuring charges................................. 26,515 - - 26,515
---------------------------- -------------- ------------
Operating income...................................... 40,585 3,388 (550) 43,423
Non-operating expense................................. (428) (428)
Interest expense...................................... 40,291 692 2,320 (d) 43,303
---------------------------- -------------- ------------
Income before income taxes, minority interest
in income of subsidiaries, income from
unconsolidated joint ventures, preferred
dividend requirement of subsidiary and deemed
dividend on preferred stock conversion.............. (134) 2,696 (2,870) (308)
Income taxes.......................................... (52) 938 (1,119) (e) (233)
Minority interest in income of subsidiaries........... 2,389 - - 2,389
Income from unconsolidated joint ventures............. (2,568) - - (2,568)
Preferred dividend requirement of subsidiary.......... 645 - - 645
Deemed dividend on preferred stock conversion......... 1,639 - - 1,639
---------------------------- -------------- ------------
Income (loss) before extraordinary item............... $ (2,187) $ 1,758 $(1,751) $ (2,180)
============================ ============== ============
See Notes to Pro Forma Financial Information
F-14
DELCO REMY INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following adjustments give effect to the acquisition of Williams as of the
dates indicated under item 7(b). The acquisition is accounted for by the
purchase method. Accordingly, the total purchase price is allocated to tangible
and intangible assets and liabilities based upon the Company's estimate of their
respective fair values at the date of acquisition.
(a) To reflect the historical results of Williams for the three month period
ended October 31, 1998.
(b) To reflect the historical results of Williams for the twelve month period
ended December 31, 1997. It is not practicable to determine the
historical results of Williams for the twelve month period ended July 31,
1998. The period presented approximates the results for such period.
(c) To reflect increased depreciation expense and amortization of goodwill
incurred as a result of the acquisition.
(d) To reflect interest expense associated with debt incurred to finance the
acquisition.
(e) To reflect the income tax effect of the pro forma adjustments at the
Company's consolidated effective rate.
(f) To reflect the balance sheet of Williams at October 31, 1998.
(g) To restate the historical assets of Williams to their estimated fair
value.
(h) To reflect the goodwill recorded by the Company as a result of the
acquisition.
(i) To reflect the debt incurred by the Company to finance the acquisition.
(j) To eliminate the intercompany debt and equity of Williams.
F-15