<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
(Amendment No. 3)
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 10, 1997
---------------
BEC GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-14360 13-3868804
-------- ------- ----------
(State of (Commission (IRS Employer
Incorporation) File Number) Identification No.)
Suite B-302, 555 Theodore Fremd Avenue, Rye, New York 10580
- ----------------------------------------------------- -----
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: (914) 967-9400
----------------
Not Applicable
--------------
(Former name or former address, if changed from last report)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
The following Financial Statements, pro forma financial information and
exhibits are filed as part of this Report.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED: The financial statements
of Bolle France for the year ended December 31, 1996, the six
months ended June 30, 1997 and the three months ended September 30,
1997, required to be provided by Rule 3-05(b) of Regulation S-X,
together with the report of Befec - Price Waterhouse, Bolle
France's Independent Accountants, dated November 26, 1997.
(b) PRO FORMA FINANCIAL INFORMATION: Pro forma financial information
required to be provided pursuant to Article 11 of Regulation S-X.
2
<PAGE>
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.
Dated: February 4, 1998 BEC GROUP, INC.
/s/ Ian G.H. Ashken
-------------------------------
By: Ian G.H. Ashken
Title: Chief Financial Officer
3
<PAGE>
INDEX TO FINANCIAL STATEMENTS
-----------------------------
Document Page
- -------- ----
Audited financial statements of Bolle France Filed electronically
and the year ended December 31, 1996, the six herewith
months ended June 30, 1997 and the three months ended
September 30, 1997, required to be provided by
Rule 3-05(b) of Regulation S-X, together with the
report of Befec - Price Waterhouse, Bolle France's
Independent Accountants, dated November 26, 1997.
Pro Forma financial information required Filed electronically
to be provided pursuant to Article 11 of herewith
Regulation S-X.
4
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
November 26, 1997
To the Board of Directors and
Shareholders of Holdings BF SA
In our opinion, the accompanying combined balance sheets and the related
combined statements of operations and stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of Holding
BF SA and its subsidiaries at December 31, 1996, June 30, 1997 and September
30, 1997 and the results of their operations and their cash flows for the
year, six months and three months then ended in conformity with accounting
principles generally accepted in the United States of America. 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 of these statements in accordance with
auditing standards generally accepted in the United States of America which
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, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for the opinion expressed above.
Befec - Price Waterhouse
Lyon, France
/s/ Olivier Auscher
- -----------------------------
Olivier Auscher
F-1
<PAGE>
HOLDING BF S.A. AND SUBSIDIARIES
COMBINED BALANCE SHEET
DECEMBER 31, 1996, JUNE 30, 1997 AND SEPTEMBER 30, 1997
(AMOUNTS IN THOUSANDS OF FRENCH FRANCS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, SEPTEMBER 30,
ASSETS 1996 1997 1997
------------- ------------ ---------------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents ..................... FF 17,884 FF 7,610 FF 8,115
Trade receivables, less allowance for doubtful
accounts of FF 1,556, FF 2,414 and FF 3,094 . 64,185 55,524 46,382
Inventories ................................... 29,697 36,268 32,756
Other current assets .......................... 2,918 2,282 8,629
------------- ------------ ---------------
Total current assets ......................... 114,684 101,684 95,882
Investments ................................... 191 690 570
Property and equipment, net ................... 11,038 12,498 26,180
Trademark, net ................................ -- -- 235,308
Goodwill, net ................................. -- -- 50,753
Other assets .................................. 545 375 403
------------- ------------ ---------------
Total assets ................................. FF 126,458 FF 115,247 FF 409,096
============= ============ ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short term debt................................ FF 11,886 FF 1,032 FF 991
Indebtedness to Bolle Inc...................... -- -- 212,138
Accounts payable............................... 25,312 32,422 22,053
Accrued liabilities............................ 24,085 20,560 25,580
------------- ------------ ---------------
Total current liabilities..................... 61,283 54,014 260,762
Long term liabilities........................... 949 1,084 5,415
Accrued reorganization liabilities.............. 5,050 5,650 6,050
------------- ------------ ---------------
Total liabilities............................. 67,282 60,748 272,227
------------- ------------ ---------------
Minority interests.............................. 11,820 395 --
Commitments and contingencies .................. -- -- --
Stockholders' equity:
Common stock--par value FF 1,000............... 16,500 53,600 53,600
Capital surplus................................ -- -- 81,058
Cumulative translation adjustment.............. (78) (78) 259
Retained earnings.............................. 30,934 582 1,952
------------- ------------ ---------------
Total stockholders' equity.................... 47,356 54,104 136,869
------------- ------------ ---------------
Total liabilities and stockholders' equity ... FF 126,458 FF 115,247 FF 409,096
============= ============ ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
HOLDING BF S.A. AND SUBSIDIARIES
COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996, THE SIX MONTHS ENDED JUNE 30, 1997
AND THE THREE MONTHS ENDED SEPTEMBER 30, 1997
(AMOUNTS IN THOUSANDS OF FRENCH FRANCS)
<TABLE>
<CAPTION>
SIX MONTHS THREE MONTHS
YEAR ENDED ENDED ENDED
DECEMBER 31, JUNE 30, SEPTEMBER 30,
1996 1997 1997
-------------- ------------ ---------------
<S> <C> <C> <C>
Net sales:
Sales to Bolle America............................. FF 66,251 FF 17,391 FF 17,461
Third party sales ................................. 183,442 88,641 35,124
-------------- ------------ ---------------
Total net sales: .................................. 249,693 106,032 52,585
-------------- ------------ ---------------
Costs and expenses:
Costs of sales ................................... 153,233 65,798 34,411
Selling, general and administrative expenses ..... 57,716 29,885 12,238
Interest expense ................................. 2,417 993 2,349
Other expenses, net .............................. 1,281 (2,043) (493)
-------------- ------------ ---------------
Total costs and expenses ........................ 214,647 94,633 48,505
-------------- ------------ ---------------
Income before income taxes and minority interests 35,046 11,399 4,080
Provision for income taxes ........................ 9,133 6,783 2,523
-------------- ------------ ---------------
Net income before minority interests .............. 25,913 4,616 1,557
Minority interests ................................ (8,250) (265) 395
-------------- ------------ ---------------
Net income ........................................ FF 17,663 FF 4,351 FF 1,952
============== ============ ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
HOLDING BF S.A. AND SUBSIDIARIES
COMBINED STATEMENT OF STOCKHOLDERS' EQUITY
DECEMBER 31, 1996, JUNE 30, 1997 AND SEPTEMBER 30, 1997
(AMOUNTS IN THOUSANDS OF FRENCH FRANCS)
<TABLE>
<CAPTION>
COMMON STOCK
--------------------- RETAINED TRANSLATION CAPITAL
SHARES PAR VALUE EARNINGS ADJUSTMENT SURPLUS TOTAL
-------- ----------- ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
1996
Balance--beginning of
year..................... 100 FF 16,500 FF14,568 FF FF FF 31,068
Translation adjustments .. (78) (78)
Dividend to stockholders . (1,297) (1,297)
Net income................ 17,663 17,663
-------- ----------- ----------- ------------- ------------ ------------
Balance--December 31,
1996..................... 100 16,500 30,934 (78) 47,356
1997
Acquisition of minority
interests................ 37,100 (23,100) 14,000
Dividend to stockholders . (9,972) (9,972)
Investment in new
subsidiary............... (1,631) (1,631)
Net income................ 4,351 4,351
-------- ----------- ----------- ------------- ------------ ------------
Balance--June 30, 1997 ... 100 FF 53,600 FF 582 (78) FF 54,104
- -----------------------------------------------------------------------------------------------------
Adjustments to reflect
purchase by Bolle Inc. . (582) 337 81,058 80,813
Net income................ 1,952 1,952
-------- ----------- ----------- ------------- ------------ ------------
Balance--September 30,
1997..................... 100 FF 53,600 FF 1,952 FF 259 FF 81,058 FF 136,869
======== =========== =========== ============= ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
HOLDING BF S.A. AND SUBSIDIARIES
COMBINED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996, SIX MONTHS ENDED JUNE 30, 1997
AND THREE MONTHS ENDED SEPTEMBER 30, 1997
(AMOUNTS IN THOUSANDS OF FRENCH FRANCS)
<TABLE>
<CAPTION>
SIX MONTHS THREE MONTHS
YEAR ENDED ENDED ENDED
DECEMBER 31, JUNE 30, SEPTEMBER 30,
1996 1997 1997
-------------- ------------ ---------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income ...................................... FF 17,663 FF 4,351 FF 1,952
Adjustments to reconcile net income to cash
provided by operating activities:
Minority interests .............................. 8,250 265 (395)
Depreciation and amortization ................... 4,486 2,275 3,403
Bad debt expense ................................ 1,241 858 680
Loss on sale of property and equipment ......... 69 -- 262
Changes in current assets and liabilities:
Accounts receivable ............................. (158) 7,798 8,462
Other current assets ............................ (392) 170 (6,347)
Inventories ..................................... (8,603) (6,571) 3,512
Other assets .................................... (1,888) 641 (403)
Accounts payable ................................ 387 5,543 (9,560)
Accrued expenses and other ...................... 12,102 (1,359) 1,065
-------------- ------------ ---------------
Net cash provided by operating activities ..... 33,157 13,971 2,631
-------------- ------------ ---------------
Cash flows from investing activities:
Capital expenditures ............................ (4,640) (3,734) (2,272)
Proceeds from sale of fixed assets .............. 91 -- 105
Investment in unconsolidated subsidiaries ...... (89) (474) 120
-------------- ------------ ---------------
Net cash (used) by investing activities ....... (4,638) (4,208) (2,047)
-------------- ------------ ---------------
Cash flows from financing activities:
Payments on short term debt ..................... (17,514) (10,065) (79)
Cash dividends to stockholders .................. (11,120) (9,972) --
-------------- ------------ ---------------
Net cash (used) by financing activities ....... (28,634) (20,037) (79)
-------------- ------------ ---------------
Net increase (decrease) in cash .................. (115) (10,274) 505
Cash and cash equivalents at beginning of period 17,999 17,884 7,610
-------------- ------------ ---------------
Cash and cash equivalents at end of period ...... FF 17,884 FF 7,610 FF 8,115
============== ============ ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
HOLDING BF S.A. AND SUBSIDIARIES
FOR THE YEAR ENDED DECEMBER 31, 1996, THE SIX MONTHS
ENDED JUNE 30, 1997, AND THE THREE MONTHS ENDED SEPTEMBER 30, 1997
NOTES TO COMBINED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS OF FRENCH FRANCS)
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The combined financial statements of Holding BF SA and subsidiaries (the
"Group") have been prepared in accordance with accounting principles
generally accepted in the United States of America. The combined financial
statements of the Group include the subsidiaries and equity investments owned
by Holding BF SA in addition to certain entities held by the owners of
Holding BF SA. Accordingly, the combined financial statements include the
consolidated accounts of Holding BF SA and its wholly owned and
majority-owned subsidiaries (SNC Bolle 76 %, Bolle Protection Sarl 88%, Bolle
Production Sarl 68.75%), and the accounts of RM Plastiques Sarl and Bolle
Diffusion Sarl at December 31, 1996.
On July 10, 1997, Bolle Inc., a wholly-owned subsidiary of BEC Group Inc.
acquired from the Bolle family, shareholders of Holding BF SA, all of the
shares of Holding BF SA and subsidiaries. Further, in connection with the
purchase agreement, Holding BF SA acquired the minority interests in SNC
Bolle and all of the outstanding stock of RM Plastiques Sarl, Bolle
Protection Sarl and Bolle Production Sarl prior to closing of the transaction
as part of the legal and tax reorganization of the Group. Accordingly the
combined accounts of the Company at June 30, 1997 include Holding BF SA and
its wholly-owned subsidiaries (SNC Bolle 100%, Bolle Protection Sarl 100 %,
Bolle Production Sarl 100 %, RM Plastiques Sarl 100%) and the accounts of
Bolle Diffusion Sarl, all on a pre-acquisition basis.
Bolle Inc. acquired Bolle Diffusion Sarl separately on July 10, 1997.
Bolle Diffusion Sarl was accounted for outside the consolidation of Holding
BF SA at September 30, 1997. Accordingly, the financial statements of Holding
BF SA at September 30, 1997 are presented on a combined basis and include the
accounts of Bolle Diffusion Sarl.
Further, the combined financial statements at September 30, 1997 reflect
the application of push down accounting of Bolle Inc. debt used to fund the
acquisition of the Group and related purchase accounting adjustments.
Business
Holding BF SA and subsidiaries operates in one business segment and
manufactures and sells sunglasses and sport shields, safety and tactical
eyewear and ski goggles. These products are manufactured in the Group's plant
in Oyonnax, France and through subcontractors and are sold to distributors or
direct customers located around the world.
Principles of Consolidation
All significant intercompany transactions, profits and accounts have been
eliminated in consolidation. Investments in companies in which the Group does
not have control, but has the ability to exercise significant influence are
accounted for by the equity method. Bolle Sunglasses Ltd. and Bolle Canada
Inc. are held by majority-owned subsidiaries of Holding BF SA, and therefore
the Group's ownership of each of these entities is 38 %, respectively at
December 31, 1996. Subsequent to the Company's acquisition of the minority
interests described above, Holding BF SA's ownership of Bolle Sunglasses Ltd.
and Bolle Canada Inc. increased to 51%, respectively and continue to be
accounted for under the equity method of accounting in the financial
statements of Holding BF SA at June 30, 1997 and September 30, 1997, as the
Group did not have effective control of these entities.
Revenue Recognition
Revenue is recognized upon shipment or delivery of products with estimates
provided for returns based on management estimates.
F-6
<PAGE>
HOLDING BF S.A. AND SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Concentration of Credit Risk and Major Customers
In the opinion of management, concentration of credit risk varies
significantly on a country-by-country basis. The Group sells to customers in
twenty countries, with the majority of sales to customers in the United
States, Europe, Australia and Canada.
Credit is generally extended based on an evaluation of the customer's
financial condition and on-going relationship with the Group, and collateral
is generally not required. Credit risk is affected by conditions or
occurrences in the local economies and relative strength of the retail
environment in each of the countries where the Group's customers operate. The
Group establishes an allowance for doubtful accounts based on factors
surrounding the credit risk of specific customers, historical trends and
other information.
The Group sells its products to three related party distributors, Bolle
Sunglasses UK Ltd. and Bolle Canada, Inc., which were both 51% owned by SNC
Bolle as of June 30, 1997, and Bolle America, Inc. which is a sister company
owned 100% by Bolle Inc. For the year ended December 31, 1996, and the six
months and three months ended June 30, 1997 and September 30, 1997,
respectively, Bolle America, Inc. represented 27%, 16% and 33% of the Group's
net sales, respectively. Specific cost of sales related to Bolle America or any
other single customer cannot be calculated. Sales to Bolle Sunglasses UK Ltd.
and Bolle Canada did not exceed 10%, respectively in any of the periods
presented.
Foreign Currency Translation
For non-French subsidiaries which operate in a local currency environment,
assets and liabilities are translated into French Francs at period-end
exchange rates. Income and expense items are translated at average rates
prevailing during the year. Translation adjustments for these subsidiaries
are accumulated in a separate component of stockholders' equity.
In the normal course of business, operations (mainly sales) of the Group
is not exposed to fluctuations in currency values. Accordingly, the Group
does not enter into any type of financial instrument with respect to balance
sheet exposure arising from foreign exchange risk.
Up until July 10, 1997, the Group, however, had entered into a series of
agreements with Bolle America, Inc. providing a series of fixed exchange
rates on the French franc/U.S. dollar exchange rate for sales to that
customer. Therefore, foreign currency transaction losses amounting to FF 114
for the year ended December 31, 1996 and FF 0 for the six months June 30,
1997 are included in other income.
Cash and Cash Equivalents
Cash and cash equivalents represent investments with maturities of three
months or less from the time of purchase, and are carried at cost which
approximates fair value because of the short maturity of those instruments.
Cash paid for interest and income taxes was FF 1,232 and FF 7,852 for the
year ended December 31, 1996; FF 290 and FF 3,966 for the six months ended
June 30, 1997, and FF 73 and FF 9,840 for the three months ended September
30, 1997, respectively.
Property and Equipment
Buildings are valued at cost and depreciated over 30 years on a
straight-line basis.
F-7
<PAGE>
HOLDING BF S.A. AND SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Other property and equipment are recorded at fair value and depreciated
over their estimated useful life calculated, on a straight-line method (see
below):
Fittings and fixtures ..... 5 years
Machinery and equipment .... 7-10 years
Motor vehicles.............. 5 years
Office furniture............ 3-5 years
Impairment of Long-Lived Assets
At each balance sheet date, the Group evaluates the realizability of
long-lived assets based on expectations of undiscounted cash flows. Should
this review indicate that the cost of long-lived assets may be impaired, an
evaluation of recoverability would be performed. If an evaluation is
required, the estimated future undiscounted cash flows associated with the
asset would be compared to the asset's carrying amount to determine whether a
write-down to market value is required.
Warranties
Certain sales are subject to warranty against material defects. Potential
future warranty costs are provided on the balance sheet.
Pensions and Post Retirement Indemnity
A provision is recorded for legal employees' lump sum termination
indemnities. These indemnities are due to all employees which leave the Group
at retirement age (65) and depend upon the length of employees' service and
salary level. The obligation, which is not funded, is calculated using an
actuarial method (weighted-average discount rate of 6.19 %, salary increase
of 2.5 %) and takes into account staff turnover and mortality statistics
until retirement age. There are no other pensions, post-retirement or post
employment obligations to the company as such employee benefits are provided
by the French social security system.
Research and Development
Research, development and engineering expenditures which amounted to FF
3,045, FF 1,752, and FF 931 for the year ended December 31, 1996, the six
months ended June 30, 1997 and the three months ended September 30, 1997,
respectively, are expensed as incurred. Substantially all engineering and
development costs are related to developing new products or designing
significant improvements to existing products.
Income Taxes
Taxable income/loss of the various companies comprising the Group was
included in the tax returns of the appropriate taxable entity. Accordingly,
consolidated income tax returns were not prepared for the Group. Deferred
income taxes are provided on the difference in basis of assets and
liabilities between financial reporting and tax returns using enacted tax
rates. A valuation allowance is recorded when realization of deferred tax
assets is not assured.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires Group management to make estimates
and assumptions that effect 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 these estimates.
F-8
<PAGE>
HOLDING BF S.A. AND SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Fair value
At December 31, 1996, June 30, 1997 and September 30, 1997, the carrying
value of financial instruments such as trade receivables, accounts payable
and short term debt approximated their fair values based on the short term
maturities of these instruments.
Trademark and Goodwill
The fair value of the worldwide Bolle(Registered Trademark) trademark of
the Group (FF 236,788) has been established by an independent appraisal and
is reflected in the Group's combined balance sheet as a result of the
revaluation of assets recorded in connection with the acquisition of the
Group by Bolle Inc. Both the trademark and goodwill are being amortized over
40 years.
NOTE 2 -- RELATED PARTY TRANSACTIONS
As disclosed in Note 1, the Group sells to related parties (Bolle UK,
Bolle Japan). Such transactions are realized at conditions equivalent to
those prevailing for unrelated parties.
As disclosed in Note 5, prior to July 10, 1997 the Group borrowed from
certain stockholders (Bolle family). Interest expense and balances are
disclosed in the statement of operations and on the balance sheet,
respectively.
Certain stockholders of the Group owned 100 % of RM Plastique Sarl prior
to July 10, 1997, a company with which the Group subcontracts certain
assembly tasks. Services rendered by RM Plastique Sarl, amounting to FF
1,385, FF 1,053 and FF 165 for the year ended December 31, 1996, the six
months ended June 30, 1997 and the three months ended September 30, 1997, are
invoiced at cost on an arm's length basis.
The minority stockholders in SNC Bolle referred to in Note 8 were also the
majority stockholders of the Group before July 10, 1997.
The Indebtedness to Bolle Inc., as of September 30, 1997 consists
primarily of debt incurred in conjunction with the purchase of the Group by
Bolle Inc. and short term working capital financing provided by Bolle Inc.
During the three months ended September 30, 1997, Bolle Inc. charged an
average annualized interest rate of 5.5% on the balance.
NOTE 3 -- INVENTORIES
Inventories consist of the following at:
DECEMBER 31, JUNE 30, SEPTEMBER 30,
1996 1997 1997
------------ -------- -------------
Raw materials ... FF 13,076 FF 12,047 FF 10,402
Work in progress 10,580 23,341 20,153
Finished goods .. 10,741 5,580 6,901
Reserves ......... (4,700) (4,700) (4,700)
--------- --------- ---------
FF 29,697 FF 36,268 FF 32,756
========= ========= =========
F-9
<PAGE>
HOLDING BF S.A. AND SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 4 -- PROPERTY AND EQUIPMENT
Property and equipment consists of the following at:
DECEMBER 31, JUNE 30, SEPTEMBER 30,
1996 1997 1997
------------ -------- -------------
Land .......................... FF -- FF -- FF 2,500
Buildings and fixtures ........ 11,193 11,625 13,205
Machinery and equipment ...... 56,257 58,142 8,356
Motor vehicles ................ 2,579 2,637 406
Office furniture............... 3,827 5,187 2,855
Less: accumulated
depreciation.................. (62,818) (65,093) (1,142)
--------- --------- ---------
FF 11,038 FF 12,498 FF 26,180
========= ========= =========
Depreciation expense for the year ended December 31, 1996 amounted to FF
4,486 and FF 2,275 and FF 1,519 for the six and three months ended June 30,
and September 30, 1997, respectively.
NOTE 5 -- SHORT TERM DEBT AND INDEBTEDNESS TO BOLLE INC.
DECEMBER 31, JUNE 30, SEPTEMBER 30,
1996 1997 1997
------------ -------- -------------
Short term debt ..........
Bank debt ............... FF 559 FF 509 FF 431
Bank overdraft .......... 5,704 158
Other ................... 5,623 523 402
--------- -------- ------
Total short term debt .... FF 11,886 FF 1,032 FF 991
========= ======== ======
The Group benefits from bank overdraft facilities which extend through
October 31, 1997 totaling FF 8,200 at an interest of Pibor + 1.5. The rate of
interest for the year ended December 31, 1996 and the six and three months
ended June 30, and September 30, 1997 averaged 4.9%.
Short term related party debt represents dividends declared by the Group
payable to the Bolle family and interest accrued on such undistributed
dividends at a variable rate of interest, which averaged 6.4% during the year
ended December 31, 1996 and 6.0% for the six months ended June 30, 1997.
Indebtedness to Bolle Inc. represents debt incurred by Bolle Inc. to
acquire the Group and interest accrued on the balance at an average
annualized rate of 5.5% for the three months ended September 30, 1997.
NOTE 6 -- ACCRUED LIABILITIES
Accrued liabilities consist of the following:
DECEMBER 31, JUNE 30, SEPTEMBER 30,
1996 1997 1997
------------ -------- -------------
Salaries, wages and other
employee benefits ......... FF 5,632 FF 4,543 FF 4,591
Fringe benefits accruals .. 2,667 2,328 1,743
Other taxes ................ 632 993 1,623
Interest payable ........... 2,190 -- --
Income taxes ............... 7,117 7,925 6,994
Deferred taxes ............. 1,154 3,271 3,105
Warranty ................... 3,400 1,500 1,421
Reorganization of the
Group...................... -- -- 5,624
Other....................... 1,293 -- 479
--------- --------- ---------
FF 24,085 FF 20,560 FF 25,580
========= ========= =========
F-10
<PAGE>
HOLDING BF S.A. AND SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 7 -- INCOME TAXES
The provision (benefit) from income taxes consists of the following:
SIX MONTHS THREE MONTHS
YEAR ENDED ENDED ENDED
DECEMBER 31, JUNE 30, SEPTEMBER 30,
1996 1997 1997
------------ -------- -------------
Current ...... FF 12,588 FF 4,741 FF 2,690
Deferred ..... (3,455) 2,042 (167)
--------- -------- --------
Total ........ FF 9,133 FF 6,783 FF 2,523
========= ======== ========
The Company's effective tax rate differs from the statutory rate as follows:
<TABLE>
<CAPTION>
SIX MONTHS THREE MONTHS
YEAR ENDED ENDED ENDED
DECEMBER 31, JUNE 30, SEPTEMBER 30,
1996 1997 1997
------------ -------- -------------
<S> <C> <C> <C>
French statutory rate .......................... 36.7% 41.7% 41.7%
Non-taxable income attributable to minority
stockholders (see Note 8) ..................... (10.5)% -- --
Impact of new statutory rate.................... -- 19.6% --
Non-deductible expenses......................... -- -- 20.1%
Other........................................... (0.2)% (1.7)% --
Effective income tax rate....................... 26.0% 59.6% 61.8%
</TABLE>
Significant components of deferred income taxes are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, SEPTEMBER 30,
1996 1997 1997
------------ -------- -------------
<S> <C> <C> <C>
Pension liability ............... FF (467) FF (375) FF (375)
Accrued liabilities ............. 697 -- --
Inventory and other.............. 624 3,271 3,105
------- -------- --------
Net deferred tax liability .... FF 854 FF 2,896 FF 2,730
======= ======== ========
</TABLE>
At December 31, 1996, June 30, 1997 and September 30, 1997, other assets
include FF 300, FF 375 and FF 375 of deferred tax assets.
Historically, the Company consisted of a number of different tax entities
with different ownership interests. Prior to its acquisition by Bolle Inc.,
such entities' tax returns were prepared and filed on an unconsolidated basis.
The Company's structure is currently being revised in order to allow it to
prospectively file one consolidated tax return in France.
F-11
<PAGE>
HOLDING BF S.A. AND SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8 -- MINORITY INTERESTS
<TABLE>
<CAPTION>
<S> <C>
Minority interests at December 31, 1995 ......................... FF 13,393
Minority interest in net income of consolidated subsidiaries ... 8,250
Dividends paid to minority shareholders ......................... (9,823)
---------
Minority interests at December 31, 1996 ......................... FF 11,820
=========
Minority interest in net income of consolidated subsidiaries ... 265
Acquisition of minority interests by the Group................... (11,690)
---------
Minority interests at June 30, 1997 ............................. FF 395
=========
Minority interest in losses of consolidated subsidiaries ....... (395)
---------
Minority interests at September 30, 1997 ........................ FF --
=========
</TABLE>
At December 31, 1996, minority shareholders had a 24 % interest in SNC
Bolle, a Group consolidated subsidiary which form of incorporation provides
for an allocation of pre-tax income to minority shareholders in the period
earnings are generated. Minority interests in the statement of operations for
the year ended December 31, 1996 include FF 8,011 relating to SNC Bolle. This
amount is on a pre-tax basis as the related income tax is born directly by
the minority stockholders.
As described in Note 1, in connection with the acquisition of the Group by
Bolle Inc., Holding BF SA acquired the minority interests in SNC Bolle and
all of the outstanding stock of RM Plastiques Sarl, Bolle Protection Sarl and
Bolle Production Sarl prior to closing of the transaction. Accordingly, the
only remaining minority interests at June 30, 1997 and September 30, 1997
relate to Bolle Diffusion Sarl. For the three months ended September 30,
1997, Bolle Diffusion Sarl incurred a net loss of FF 1,325, FF 930 of which
was included in the Group's results.
NOTE 9 -- COMMITMENTS AND CONTINGENCIES
The Group has various commitments to purchase materials and supplies as
part of the ordinary conduct of business. In the aggregate, such commitments
are not at prices in excess of current market. Management believes that the
settlement of such commitments will not materially affect the financial
position, results of operations or cashflows of the Group. The Group is also
subject to various litigation incidental to its business. The Group does not
believe that exposure on any matter will result in a significant impact on
its financial position, results of operations or cash flows.
F-12
<PAGE>
BEC GROUP, INC.
PRO FORMA COMBINED FINANCIAL DATA
The following unaudited pro forma combined financial data give effect to the
acquisition of BF Holding and related assets (the "Acquisition" of "Bolle
France") under the purchase method of accounting. The pro forma combined
financial statements are based on the historical audited and unaudited year end
and interim financial statements of BEC Group, Inc. ("BEC" or the "Company")
and the audited interim and year end financial statemnets of Bolle France and
the estimates and assumptions set forth below.
Pro forma adjustments are based upon preliminary estimates, available
information and certain assumptions that management deems appropriate.
Management does not expect material changes to the purchase accounting
adjustment upon final allocation of purchase price. The unaudited pro forma
combined financial information presented herein is not necessarily indicative
of the results of operations or financial position that BEC would have obtained
had such events occurred at the beginning of the period, as assumed, or of the
future results of the Company. The pro forma combined financial statements
should be read in conjunction with the other financial statements and notes
thereto included herein.
F-13
<PAGE>
BEC GROUP, INC.
PRO FORMA BALANCE SHEET
AS OF JUNE 30, 1997
(Amounts in thousands)
<TABLE>
<CAPTION>
BOLLE PRO FORMA PRO FORMA
BEC FRANCE ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash & cash equivalents $ 1,613 $ 1,294 $ (422)(a) $ 2,485
Trade receivables, net 13,068 9,441 (1,442)(b) 21,067
Inventories 16,844 6,167 23,011
Other current assets 5,831 388 (1,000)(c) 5,219
--------- ---------- ---------- ----------
Total current assets 37,356 $ 17,290 (2,864) 51,782
Investment in affiliates 10,047 10,047
Property and equipment, net 13,630 2,125 422 (a) 18,001
1,824 (d)
Goodwill, net 11,904 8,642 (e) 20,546
Other intangible assets, net 1,896 40,000 (f) 41,896
Other assets 4,422 181 4,603
--------- ---------- ---------- ----------
Total assets $ 79,255 $ 19,596 $ 48,024 $ 146,875
========= ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short term debt $ 18,645 $ 175 $ 3,000 (g) $ 21,820
Accounts payable 5,402 5,513 (1,442)(b) 9,473
Other accrued expenses 9,327 3,495 1,000 (h) 13,822
--------- ---------- ---------- ----------
Total current liabilities 33,374 9,183 2,558 45,115
Long term debt 3,482 30,000 (g) 33,482
Convertible subordinated notes 22,941 22,941
Long term liabilities 9,656 1,146 750 (h) 11,552
--------- ---------- ---------- ----------
Total liabilities 69,453 10,329 33,308 113,090
Minority interests 67 12,706 (i) 12,773
Stockholders' equity 9,802 9,200 9,294 (j) 21,012
(7,284)(k)
--------- ---------- ---------- ----------
Total liabilities and stockholders' equity $ 79,255 $ 19,596 $ 48,024 $ 146,875
========= ========== ========== ==========
</TABLE>
(1) Represents the balance sheet of Bolle France translated as of June 30,
1997 using 5.8810 French Francs per US Dollar as of the same date.
F-14
<PAGE>
BEC GROUP, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(Amounts in thousands)
<TABLE>
<CAPTION>
(1)
BOLLE PRO FORMA PRO FORMA
BEC FRANCE ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
REVENUES:
Net sales $ 33,642 $ 18,656 $ (3,060)(l) $ 49,238
COSTS AND EXPENSES:
Cost of sales 19,124 11,577 (3,060)(l) 27,641
Selling general and administrative 10,619 5,258 (179)(m) 16,336
638 (n)
Interest expense 1,712 175 908 (o) 2,795
Other income (826) (359) _ (1,185)
---------- -------- -------- ---------
Total costs and expenses 30,629 16,651 (1,693) 45,587
---------- -------- -------- ---------
Income from continuing operations before 3,013 2,005 (1,367) 3,651
income taxes
Provision for income taxes 964 1,193 (519)(p) 1,638
---------- -------- -------- ---------
Income from continuing operations $ 2,049 $ 812 $ (848) 2,013
========== ======== =========
Preferred stock dividends 256
---------
Net income from continuing operations
attributable to common stock $ 1,757
=========
Weighted average shares 17,613 17,613
Earnings per share $0.12 $0.10
</TABLE>
(1) Represents the statement of operations of Bolle France translated using
the average rate of 5.6835 French Francs per US Dollar for the six months
ended June 30, 1997.
F-15
<PAGE>
BEC GROUP, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(Amounts in thousands)
<TABLE>
<CAPTION>
(1)
BOLLE PRO FORMA PRO FORMA
BEC FRANCE ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
REVENUES:
Net sales $ 66,996 $ 48,827 $ (12,955)(l) $ 102,868
COSTS AND EXPENSES:
Cost of sales 37,805 29,965 (12,955)(l) 54,815
Selling general and administrative 20,630 11,286 (123)(m) 33,069
1,276 (n)
Interest expense 2,588 473 1,815 (o) 4,876
Other income (1,453) 250 _ (1,203)
---------- -------- ---------- ----------
Total costs and expenses 59,570 41,974 (9,987) 91,557
---------- -------- ---------- ----------
Income from continuing operations before 7,426 6,853 (2,968) 11,311
income taxes
Provision for income taxes 2,505 1,786 (1,039)(p) 3,252
---------- -------- ---------- ----------
Income from continuing operations $ 4,921 $ 5,067 $ (1,929) $ 8,059
========== ======== ========== ==========
Preferred stock dividends 511
----------
Net income from continuing operations
attributable to common stock $ 7,548
==========
Weighted average shares 17,669 17,669
Earnings per share $0.28 $0.43
</TABLE>
(1) Represents the statement of operations of Bolle France translated using
the average rate of 5.1138 French Francs per US Dollar for the year ended
December 31, 1996.
F-16
<PAGE>
NOTES TO THE PRO FORMA COMBINED FINANCIAL STATEMENTS
(Unaudited)
(In thousands except per share data)
PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS
(a) Adjustment to reflect the use of Bolle France cash on hand to finance the
purchase of the land at fair value.
(b) Adjustment to reflect the elimination of trade receivables and payables
between Bolle France and Bolle America calculated using the same exchange
rate used to translate the Bolle France balance sheet.
(c) Adjustment to reflect the credit of BEC's good faith deposit towards the
cash portion of the purchase price.
(d) Adjustment to reflect the increase in the book value of the buildings to
estimate fair value, depreciated over an estimated 30-year life.
(e) Adjustment to reflect estimated goodwill to be recorded on the Acquisition
and amortized over a 40-year life.
(f) Adjustment to reflect the estimated fair value of the worldwide Bolle(R)
trademark amortized over a 40-year life based upon independent valuation
received by the Company.
(g) Adjustment to reflect borrowings from BEC's credit facility to satisfy the
cash consideration to purchase Bolle France. Such borrowings were
denominated in French Francs.
(h) Adjustment to reflect reserve for Acquisition related liabilities
including the costs of the required legal, operational and tax
reorganization.
(i) Adjustment to reflect the issuance of Bolle Inc. preferred stock and
common stock to Sellers to satisfy a portion of the purchase
consideration.
(j) Adjustment to reflect the issuance of BEC preferred stock to Sellers to
satisfy a portion of the purchase consideration.
(k) Adjustment to reflect the elimination of Bolle France stockholders' equity
balance as the transaction is accounted for as a purchase. Adjustment is
calculated as the net sum of Adjustments (a) through (j).
PRO FORMA COMBINED STATEMENTS OF OPERATIONS ADJUSTMENTS
(l) Adjustment to reflect the elimination of sales from Bolle France to Bolle
America during the period using the same exchange rate used to translate
the statements of operations.
(m) Adjustment to reflect the elimination of Acquisition related expenses at
Bolle France.
(n) Adjustment to reflect the amortization of the goodwill and trademark value
recorded over an estimated useful life of 40 years ($1,216 per annum) and
the adjustment to the value of the buildings over an estimated useful life
of 30 years ($60 per annum).
F-17
<PAGE>
(o) Adjustment to reflect the interest expense resulting from the borrowings
on the credit facility used to satisfy the cash portion of the purchase
price. Interest is assumed at 5.5% per annum based upon the actual
effective interest rate on the borrowings. The effect on pre-tax income
from a 1/8% variance in the interest rate would be $41.
(p) Adjustment to reflect a statutory tax rate of 38% in 1997 and 35% in 1996.
(q) Adjustment to reflect dividend of 5.5% on the preferred stock issued as
per note (j).
F-18
