<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(AMENDMENT NO. 2)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
MARCH 6, 1998
Date of Report (Date of earliest event reported)
NORTHWEST PIPE COMPANY
(Exact name of registrant as specified in its charter)
OREGON 0-27140 93-0557988
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
12005 N. BURGARD (503)285-1400
PORTLAND, OREGON 97203
(Address of principal executive offices) (Registrant's telephone number,
including area code)
<PAGE>
NORTHWEST PIPE COMPANY
FORM 8-K/A
(AMENDMENT NO. 2)
INDEX
<TABLE>
<CAPTION>
Item Description Page
---- ----------- ----
<C> <S> <C>
7 Financial Statements and Exhibits 3
</TABLE>
2
<PAGE>
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Companies Acquired -- See pages F-1 through F-10
The combined financial statements of Southwestern Pipe, Inc. and P&H
Tube Corporation as of September 30, 1997 and for the period from May 1,
1997 (date of inception) to September 30, 1997 were included in
Amendment No. 1, filed on May 15, 1998.
(b) Pro Forma Financial Statements -- See pages PF-1 through PF-5
(c) Exhibits
Number Description
------ -----------
2.1 Stock Purchase Agreement dated March 6, 1998, by and among
Northwest Pipe Company, Southwestern Pipe, Inc., P&H Tube
Corporation, Lewis Family Investments Partnership, Ltd., Philip
C. Lewis, Hosea E. Hederson, Don S. Brzowski, William H. Cottle,
Barry J. Debroeck, Horace M. Jordan and William B. Stuessy (the
"Stock Purchase Agreement") (certain schedules to the Agreement
and its exhibits are omitted). Incorporated by reference to
Exhibit 2.1 to the Company's Report on Form 8-K filed with the
Securities and Exchange Commission on March 20, 1998.
3
<PAGE>
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.
Dated: August 21, 1998
NORTHWEST PIPE COMPANY
By: /s/ BRIAN W. DUNHAM
----------------------------
Brian W. Dunham, President
4
<PAGE>
SOUTHWESTERN PIPE, INC. AND
P&H TUBE CORPORATION
REPORT ON AUDIT OF COMBINED FINANCIAL STATEMENTS
FOR THE PERIOD FROM OCTOBER 1, 1997 TO FEBRUARY 28, 1998
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Southwestern Pipe, Inc. and P&H Tube Corporation
We have audited the combined balance sheet of Southwestern Pipe, Inc. and P&H
Tube Corporation (the Company) as of February 28, 1998 and the related
combined statements of income, changes in stockholders' equity and cash flows
for the period from October 1, 1997 to February 28, 1998. 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 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 financial statements referred to above present fairly, in
all material respects, the combined financial position of Southwestern Pipe,
Inc. and P&H Tube Corporation as of February 28, 1998, and the results of
their combined operations and their cash flows for the period from October 1,
1997 to February 28, 1998 in conformity with generally accepted accounting
principles.
As discussed in Note 3 of Notes to Combined Financial Statements, the
combined financial statements as of February 28, 1998 and for the period from
October 1, 1997 to February 28, 1998 have been restated.
PriceWaterhouseCoopers LLP
Portland, Oregon
April 10, 1998
F-2
<PAGE>
SOUTHWESTERN PIPE, INC. AND P&H TUBE CORPORATION
COMBINED BALANCE SHEET
(RESTATED)
FEBRUARY 28, 1998
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash $ 624,617
Accounts receivable, less allowance for doubtful accounts of $213,000 4,221,513
Inventories 6,321,355
Prepaid expenses and other current assets 37,001
Deferred income taxes 323,000
-----------
Total current assets 11,527,486
Property, plant and equipment, net 5,170,053
Other assets 230,000
-----------
Total $16,927,539
-----------
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,416,197
Accrued liabilities 1,248,605
Revolving line of credit 1,229,778
Revolving term loan 2,799,600
-----------
Total current liabilities 7,694,180
Deferred income taxes 52,600
-----------
Total liabilities 7,746,780
-----------
Commitments (Note 9)
Stockholders' equity:
Common stock 3,745
Additional paid-in capital 7,619,786
Retained earnings 1,557,228
-----------
Total stockholders' equity 9,180,759
-----------
$16,927,539
-----------
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE COMBINED FINANCIAL
STATEMENTS.
F-3
<PAGE>
SOUTHWESTERN PIPE, INC. AND P&H TUBE CORPORATION
COMBINED STATEMENT OF INCOME
(RESTATED)
FOR THE PERIOD FROM OCTOBER 1, 1997 TO FEBRUARY 28, 1998
<TABLE>
<S> <C>
Revenue $13,169,440
Cost of sales 10,971,958
-----------
Gross profit 2,197,482
Selling, general and administrative expenses 1,328,831
Interest expense 99,299
-----------
Income from operations before income taxes 769,352
Provision for income taxes 281,100
-----------
Net income $ 488,252
-----------
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE COMBINED FINANCIAL
STATEMENTS.
F-4
<PAGE>
SOUTHWESTERN PIPE, INC. AND P&H TUBE CORPORATION
COMBINED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(RESTATED)
FOR THE PERIOD FROM OCTOBER 1, 1997 TO FEBRUARY 28, 1998
<TABLE>
<CAPTION>
Additional
Common Paid-In Retained
Stock Capital Earnings Total
-------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance, October 1, 1997 $ 3,745 $7,619,786 $1,068,976 $8,692,507
Net income 488,252 488,252
-------- ---------- ---------- ----------
Balance, February 28, 1998 $ 3,745 $7,619,786 $1,557,228 $9,180,759
-------- ---------- ---------- ----------
-------- ---------- ---------- ----------
</TABLE>
Common stock is comprised of:
Southwestern Pipe, Inc., $.01 par value,
1,000,000 shares authorized, 149,800
shares issued and outstanding
P&H Tube Corporation, $.01 par value,
1,000,000 shares authorized, 224,700
shares issued and outstanding
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE COMBINED FINANCIAL
STATEMENTS.
F-5
<PAGE>
SOUTHWESTERN PIPE, INC. AND P&H TUBE CORPORATION
COMBINED STATEMENT OF CASH FLOWS
(RESTATED)
FOR THE PERIOD FROM OCTOBER 1, 1997 TO FEBRUARY 28, 1998
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income $ 488,252
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 516,247
Deferred income taxes (124,926)
Provision for doubtful accounts 213,000
Changes in operating assets and liabilities:
Accounts receivable 235,883
Inventories 85,065
Prepaid expenses and other current assets (19,090)
Accounts payable and accrued liabilities (756,218)
---------
Net cash provided by operating activities 638,213
---------
Cash flows from investing activities:
Additions to property and equipment (30,145)
---------
Cash flows from financing activities:
Net principal proceeds, revolving line of credit 169,424
Principal repayments, long-term debt (182,400)
---------
Net cash used in financing activities (12,976)
---------
Net increase in cash 595,092
Cash, beginning of period 29,525
---------
Cash, end of period $ 624,617
---------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 95,935
---------
---------
Income taxes $ 589,532
---------
---------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE COMBINED FINANCIAL
STATEMENTS.
F-6
<PAGE>
SOUTHWESTERN PIPE, INC. AND P&H TUBE CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
1. THE ENTITIES:
The combined financial statements include the accounts and operations of
Southwestern Pipe, Inc. and P&H Tube Corporation which are under common
control and ownership (collectively referred to as the Entities). All
material intercompany transactions and balances have been eliminated in
combination.
Southwestern Pipe, Inc. (SPI), formerly a division of SPAX Incorporated
(SPAX), is involved in the manufacturing, fabricating, and finishing of
high quality tubular products through its plant in Houston, Texas.
P&H Tube Corporation (P&H), also formerly a division of SPAX, is involved
in the manufacturing, fabricating, and finishing of high quality tubular
products through its plant in Bossier City, Louisiana.
Effective May 1, 1997, SPAX completed a tax-free reorganization of its
divisions into three separate corporate entities, SPI, P&H and SeaCAT
Corporation (SeaCAT), which is a wholly-owned subsidiary of SPAX. The
tax-free reorganization and incorporation of the divisions of SPAX at May
1, 1997 resulted in the allocation of assets and liabilities from SPAX to
SPI, P&H and SeaCAT. The method of allocation was primarily based upon
specific identification; however, the allocation of the current and
long-term portions of the revolving line of credit was determined in a
manner consistent with the equity ratios of the new entities.
On March 6, 1998, SPI and P&H entered into a Stock Purchase Agreement with
Northwest Pipe Company, a publicly-held company headquartered in Portland,
Oregon, under which Northwest Pipe Company agreed to acquire 100% of the
outstanding stock of the Entities for a purchase price of approximately $40
million, subject to adjustment.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
INVENTORIES
Inventories are stated at the lower of last-in, first-out (LIFO) cost or
market. The excess amount of current cost over the stated LIFO value was
$442,644 at February 28, 1998. Cost of sales for the period from October 1,
1997 to February 28, 1998 would have increased by $444,922 if the first-in,
first-out (FIFO) cost method had been used.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation is computed
principally using the straight-line method over the estimated useful lives
of the related assets. Maintenance, repairs and minor renewals are expensed
as incurred. Gains or losses resulting from the sale or retirement of
assets are included in income.
INCOME TAXES
The Entities record deferred income tax assets and liabilities based upon
the difference between the financial statement and income tax bases of
assets and liabilities using enacted income tax rates. Valuation allowances
are established when necessary to reduce deferred income tax assets to the
amount expected to be realized. Income tax expense is the tax payable for
the period and the change during the period in net deferred income tax
assets and liabilities.
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.
F-7
<PAGE>
SOUTHWESTERN PIPE, INC. AND P&H TUBE CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Entities to
concentrations of credit risk consist principally of trade receivables.
Trade receivables are with a large number of customers, including
municipalities, manufacturers, distributors and contractors, dispersed
across a wide geographic base.
During the period from October 1, 1997 to February 28, 1998, sales to two
customers represented 36% of total P&H sales and sales to one customer
represented 11% of total SPI sales.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of financial instruments are the amounts at which the
instrument could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale. The carrying amounts
reflected in the combined balance sheets for cash and cash equivalents,
trade receivables, other current assets and current liabilities approximate
fair value because of the short maturity for these instruments. The
carrying value approximates the fair value of the Entities' borrowings
under its long-term arrangements based upon interest rates available for
the same or similar loans.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS
No. 130, REPORTING COMPREHENSIVE INCOME, which establishes requirements for
disclosure of comprehensive income. The objective of SFAS 130 is to report
a measure of all changes in equity that result from transactions and
economic events other than transactions with owners. Comprehensive income
is the total of net income and all other non-owner changes in equity. SFAS
130 is effective for fiscal years beginning after December 15, 1997.
Also in June 1997, the FASB issued SFAS No. 131, DISCLOSURES ABOUT SEGMENTS
OF AN ENTERPRISE AND RELATED INFORMATION. This Statement will change the
way public companies report information about segments of their business in
their annual financial statements and requires them to report selected
segment information in their quarterly reports issued to shareholders. It
also requires entity-wide disclosures about the products and services an
entity provides, the material countries in which it holds assets and earns
revenues and its major customers. This Statement is effective for fiscal
years beginning after December 15, 1997.
In February of 1998, the FASB issued SFAS No. 132, EMPLOYERS' DISCLOSURE
ABOUT PENSION AND OTHER POSTRETIREMENT BENEFITS. This statement revises
employers' disclosures about pension and other postretirement benefit
plans. It does not change the measurement or recognition of those plans.
The statement suggests combined formats for presentation of pension and
other postretirement benefit disclosures. The statement also permits
reduced disclosures for nonpublic entities. This statement is effective for
fiscal years beginning after December 15, 1997.
The Entities' management has studied the implications of SFAS 130, SFAS 131
and SFAS 132 and based on the initial evaluation, expects the adoption to
have no impact on the Entities' financial condition or results of
operations, but will require revised disclosures when the respective
statements become effective.
3. RESTATEMENT:
The Company has restated the combined financial statements as of February
28, 1998 and for the period from October 1, 1997 to February 28, 1998 to
(i) increase the allowance for doubtful accounts by $133,000, (ii) increase
capitalized inventory costs by $179,790, (iii) reclassify $230,000 of
inventory to a noncurrent asset, (iv) accrue warranty costs of $358,000 and
(v) accrue additional liabilities of $71,268. These adjustments reduced
retained earnings at October 1, 1997 by $222,500 and reduced net income in
the period October 1, 1997 to February 28, 1998 by $16,578.
F-8
<PAGE>
SOUTHWESTERN PIPE, INC. AND P&H TUBE CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
4. INVENTORY:
<TABLE>
<S> <C>
Raw materials $ 2,914,041
Slit coil and finished goods 3,849,958
-----------
6,763,999
LIFO reserve 442,644
-----------
$ 6,321,355
-----------
-----------
</TABLE>
5. PROPERTY, PLANT AND EQUIPMENT:
<TABLE>
<S> <C>
Buildings and facilities $ 3,758,756
Machinery and equipment 11,996,815
Furniture and fixtures 379,400
Land 594,122
------------
16,729,093
Less accumulated depreciation 11,559,040
------------
Property, plant and equipment, net $ 5,170,053
------------
</TABLE>
6. DEBT:
SPAX has a revolving line of credit and revolving term loan agreement with
Fleet Capital Corporation (Fleet Capital), collateralized by accounts
receivable, inventories and equipment. Upon the reorganization described in
Note 1, the agreement with Fleet Capital was amended to include SPI and
P&H, in addition to SPAX. All three companies are jointly and severally
liable to Fleet Capital for the amounts outstanding under the line of
credit. Subject to the consummation of the Stock Purchase Agreement
discussed in Note 1, the agreement with Fleet Capital was amended to
release the Entities from any further obligation under the agreement.
The total amount due to Fleet Capital by all entities was $9,909,319 at
February 28, 1998. The interest rate defined by the agreement is a choice
of either the London Interbank Offered Rate (5.6% at February 28, 1998)
plus 2% or the lending institution's prime rate (8.5% at February 28, 1998)
plus 0.5%. Interest expense is allocated based upon the outstanding average
debt balance of the respective entity.
On March 9, 1998, the portions of the revolving line of credit and the
revolving term loan which relate to the Entities were paid in full as part
of the agreement entered into with Northwest Pipe Company, as discussed in
Note 1.
The agreement contains restrictive covenants prohibiting or limiting
certain actions of SPAX, SPI and P&H, including payment of cash dividends,
capital expenditures, investments and incurrences of debt, and requires
certain actions of the entities, including the maintenance of specified
levels of profitability and tangible net worth, as defined. At February 28,
1998, the entities were not in compliance with the restrictive covenant
related to capital expenditures. The lender has waived compliance with this
covenant.
F-9
<PAGE>
SOUTHWESTERN PIPE, INC. AND P&H TUBE CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
7. INCOME TAXES:
The provision for income taxes consisted of the following:
<TABLE>
<S> <C>
Current:
Federal $ 363,000
State 43,026
---------
406,026
Deferred (124,926)
---------
$ 281,100
---------
---------
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities are presented below:
<TABLE>
<S> <C>
Deferred tax assets:
Accounts receivable $ 77,400
Inventories 28,500
Accrued employee benefits 82,900
Accrued warranty 134,200
---------
Total deferred tax assets 323,000
Deferred tax liabilities:
Property, plant and equipment (52,600)
---------
Net deferred tax assets $ 270,400
---------
---------
</TABLE>
No valuation allowance has been established for deferred tax assets as
management believes it is more likely than not that the deferred tax assets
will be realized.
8. RELATED-PARTY TRANSACTIONS:
SeaCAT provides various general and administrative services to SPI and P&H.
For the period from October 1, 1997 to February 28, 1998, SPI and P&H were
billed $84,000 by SeaCAT for general and administrative services. Such
amounts are settled through the current portion of the revolving line of
credit and are included in net selling, general and administrative
expenses.
9. COMMITMENTS:
SPI leases certain office equipment under the terms of a noncancelable
agreement which expires in 1999. Minimum future lease payments under this
operating lease as of February 28, 1998 are as follows:
<TABLE>
<S> <C>
1998 $ 8,947
1999 8,052
-------
$16,999
-------
-------
</TABLE>
Rent expense for all leases with terms exceeding one year was $10,736 for
the period from October 1, 1997 to February 28, 1998.
F-10
<PAGE>
NORTHWEST PIPE COMPANY
PRO FORMA CONSOLIDATED BALANCE SHEET
(DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
<TABLE>
<CAPTION>
Dec. 31,
1997
----------- Northwest
Northwest Feb. 28, 1998 Pipe
Pipe ----------------- Company
Company Southwestern and
and and Pro Forma Subsidiaries
Subsidiaries P&H Tube Adjustments Pro Forma
-------------- ----------------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 904 $ 625 - $ 1,529
Trade receivables, net 25,162 4,221 $ 1,062 a 30,445
Cost and estimated earnings
in excess of billings on
uncompleted contracts 19,914 - 19,914
Inventories 20,530 6,321 443 b 27,294
Refundable income taxes 3,307 - - 3,307
Deferred income taxes 447 323 - 770
Prepaid expenses and other 1,402 37 - 1,439
-------------- ----------------- ----------- -----------
Total current assets 71,666 11,527 1,505 84,698
Property and equipment, net 57,447 5,170 7,454 c 70,071
Restricted assets 2,300 - 2,300
Goodwill - - 18,821 d 18,821
Other assets, net 638 230 - 868
-------------- ----------------- ----------- -----------
$ 132,051 $ 16,927 $ 27,780 $ 176,758
-------------- ----------------- ----------- -----------
-------------- ----------------- ----------- -----------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Note payable to financial
institution $ 7,000 $ 1,230 $ (241) e $ 7,989
Current portion of long-term debt 250 2,799 (2,799) e 250
Current portion of capital lease
obligations 2,175 2,175
Accounts payable 8,116 2,416 - 10,532
Accrued liabilities 3,074 1,249 - 4,323
-------------- ----------------- ----------- -----------
Total current liabilities 20,615 7,694 (3,040) 25,269
Long-term debt, less current
portion 38,490 - 40,000 f 78,490
Capital lease obligations, less
current portion 1,454 - - 1,454
Minimum pension liability 294 - - 294
Deferred income taxes 419 53 - 472
-------------- ----------------- ----------- -----------
Total liabilities 61,272 7,747 36,960 105,979
-------------- ----------------- ----------- -----------
Stockholders' equity:
Preferred stock, $.01 par
value, 10,000,000 shares
authorized, none issued or
outstanding Common stock,
$.01 par value, 15,000,000
shares authorized, 6,432,035
issued and outstanding 64 3 (3) g 64
Additional paid-in capital 38,725 7,620 (7,620) g 38,725
Retained earnings 32,277 1,557 (1,557) g 32,277
Minimum pension liability (287) - - (287)
-------------- ----------------- ----------- -----------
Total stockholders' equity 70,779 9,180 (9,180) 70,779
-------------- ----------------- ----------- -----------
-------------- ----------------- ----------- -----------
$ 132,051 $ 16,927 $ 27,780 $ 176,758
-------------- ----------------- ----------- -----------
-------------- ----------------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of
these pro forma consolidated financial statements.
PF-1
<PAGE>
NORTHWEST PIPE COMPANY AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Year ended Ten
Dec. 31, months
1997 ended
----------------- Feb. 28, 1998 Northwest Pipe
Northwest Pipe -------------- Company
Company Southwestern and
and and Pro Forma Subsidiaries
Subsidiaries P&H Tube Adjustments Pro Forma
------------------ ---------------- ------------------ --------------------
<S> <C> <C> <C> <C>
Net sales $ 150,833 $ 31,940 $ 182,773
Cost of sales 119,716 25,995 $ (462) h 145,640
391 i
------------------ ---------------- ------------------ --------------------
Gross profit 31,117 5,945 71 37,133
Selling, general and administrative
expenses 11,382 2,749 - 14,131
------------------ ---------------- ------------------ --------------------
Operating income 19,735 3,196 71 23,002
Interest expense 1,616 274 2,300 j 4,190
Interest expense to related parties 201 - 201
------------------ ---------------- ------------------ --------------------
Income before income taxes 17,918 2,922 (2,229) 18,611
Provision for income taxes 6,818 1,143 (870) k 7,091
------------------ ---------------- ------------------ --------------------
Net income $ 11,100 $ 1,779 $ (1,359) $ 11,520
------------------ ---------------- ------------------ --------------------
------------------ ---------------- ------------------ --------------------
Basic earnings per share $ 1.73 $ 1.80
------------------ --------------------
------------------ --------------------
Diluted earnings per share $ 1.68 $ 1.74
------------------ --------------------
------------------ --------------------
Shares used in per share calculations:
Basic 6,405 6,405
------------------ --------------------
------------------ --------------------
Diluted 6,622 6,622
------------------ --------------------
------------------ --------------------
</TABLE>
The accompanying notes are an integral part of
these pro forma consolidated statements.
PF-2
<PAGE>
SOUTHWESTERN PIPE, INC. AND P&H TUBE CORPORATION
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Southwestern and P&H Tube Combined
---------------------------------------------------------------------------
Five Months Five Months Ten Months
Ended Ended Ended
Sep. 30, 1997 Feb. 28, 1998 Feb. 28, 1998
---------------------- --------------------- -----------------------
<S> <C> <C> <C>
Net sales $ 18,771 $ 13,169 $ 31,940
Cost of sales 15,023 10,972 25,995
---------------------- --------------------- -----------------------
Gross profit 3,748 2,197 5,945
Selling, general and administrative
expenses 1,420 1,329 2,749
---------------------- --------------------- -----------------------
Operating income 2,328 868 3,196
Interest expense 175 99 274
---------------------- --------------------- -----------------------
Income before income taxes 2,153 769 2,922
Provision for income taxes 862 281 1,143
---------------------- --------------------- -----------------------
Net income $ 1,291 $ 488 $ 1,779
---------------------- --------------------- -----------------------
---------------------- --------------------- -----------------------
</TABLE>
The accompanying notes are an integral part of
these pro forma consolidated financial statements.
PF-3
<PAGE>
NORTHWEST PIPE COMPANY AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AND SHARE AMOUNTS IN THOUSANDS)
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited pro forma consolidated financial statements have
been prepared to present the effect of the acquisition by Northwest Pipe
Company ("the Company") of Southwestern Pipe, Inc. ("Southwestern") and P&H
Tube Corporation ("P&H Tube"). The pro forma consolidated balance sheet has
been prepared based upon the historical financial statements of the Company,
Southwestern and P&H Tube as if the acquisitions had occurred at February 28,
1998. The pro forma consolidated statement of operations for the year ended
December 31, 1997 has been prepared as if the acquisition occurred at the
beginning of the period.
The pro forma consolidated financial statements may not be indicative of the
results of operations that actually would have occurred if the transactions
had been in effect as of the beginning of the period nor do they purport to
indicate the results of future operations of the Company. The pro forma
consolidated financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's 1997 Annual
Report on Form 10-K and the combined audited financial statements and notes
thereto for Southwestern and P&H included elsewhere in this report on Form
8-K/A. Management of the Company believes that all adjustments necessary to
present fairly such pro forma consolidated financial statements have been
made based on the terms and structure of the acquisition transactions.
2. PRO FORMA ADJUSTMENTS
a. To reflect the estimated receivable from the former shareholders of
Southwestern and P&H Tube, resulting from the estimated purchase price
adjustment.
b. Inventories were adjusted to record the effect of a change from LIFO to
FIFO inventory valuation method for Southwestern and P&H Tube.
c. To adjust property to the approximate fair value on the date of
acquisitions.
d. To reflect goodwill related to the acquisitions.
e. To record repayment of note payable to financial institution and repayment
of long-term debt of Southwestern and P&H Tube, net of amounts incurred
related to the acquisitions.
f. To record the issuance of $40.0 million of senior notes which were issued
in April 1998. Proceeds received under the senior notes were used to reduce
amounts outstanding under the Company's note payable to financial
institution, and accordingly, in the accompanying pro forma consolidated
balance sheet, the $40.0 million is classified as long-term debt.
PF-4
<PAGE>
NORTHWEST PIPE COMPANY AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AND SHARE AMOUNTS IN THOUSANDS)
(UNAUDITED)
2. PRO FORMA ADJUSTMENTS, CONTINUED
g. To reflect the elimination of common stock, additional paid-in capital and
retained earnings of Southwestern and P&H Tube.
h. To reflect the decrease in depreciation and amortization expense related to
the adjustment of assets to the estimated fair value at the acquisition
date. Depreciation is computed for a ten month period, consistent with the
period presented for Southwestern and P&H Tube.
i. To reflect amortization of goodwill from the acquisitions, over a period of
40 years. Goodwill amortization is computed for a ten month period,
consistent with the period presented for Southwestern and P&H Tube.
j. To reflect interest expense related to the additional debt resulting from
the acquisition of Southwestern and P&H Tube. Interest expense is computed
using the rates of interest on the $40.0 million of senior notes issued in
April 1998, the proceeds of which were effectively used to pay for the
acquisitions of Southwestern and P&H Tube. Of the total $40.0 million,
$10.0 million bears interest at 6.63% and $30.0 million bears interest at
6.91%. Interest is computed for a ten month period, consistent with the
period presented for Southwestern and P&H Tube.
k. To adjust income taxes to reflect the effect of the acquisitions at the
effective tax rate of the Company for 1997.
PF-5
