- --------------------------------------------------------------------------------
FORM 8-K/A
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: July 27, 1999
Commission file number: 0-27992
ELAMEX, S.A. de C.V.
(Exact name of registrant as specified in its charter)
Mexico Not Applicable
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
Avenida Insurgentes No. 4145-B Ote.
Cd. Juarez, Chihuahua Mexico C.P. 32340
(Address of principal executive offices) (Zip code)
(915) 774-8252
Registrant's telephone number, including area code
in El Paso, Texas
Form 8-K shall be used for current reports under Section 13 or 15(d) of the
Securities Exchange Act of 1934, filed pursuant to Rule 13a-11 [17 CFR
240.13a-11] or Rule 15d-11 [17 CFR 240.15d-11].
<PAGE>
<TABLE>
<CAPTION>
ELAMEX, S.A. de C.V.
INDEX
<S> <C> <C> <C> <C> <C>
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Precision Tool, Die and Machine Company, Inc.
Independent Auditors' Report 1
Financial Statements
Balance Sheets as of July 02, 1999 (unaudited) and March 31, 1999 2
Statements of Operations for the Year Ended March 31, 1999 and the
the Three Months Ended July 02, 1999 (unaudited) and June 28, 1998
(unaudited) 3
Statement of Stockholders' Equity for the Year Ended March 31, 1999
and the Three Months ended July 02, 1999 (unaudited) 4
Statements of Cash Flows for the Year Ended March 31, 1999 and the
Three Months ended July 02, 1999 (unaudited) and June 28, 1998
(unaudited) 5
Notes to the Financials Statements 6
(b) Pro Forma Consolidated Financial Information for Elamex, S.A. de C.V. (Unaudited)
Pro Forma Consolidated Financials Statements 12
Pro Forma Consolidated Balance Sheet as of July 02, 1999 13
Pro Forma Consolidated Statement of Earnings for the Year Ended
December 31, 1998 14
Pro Forma Consolidated Statement of Earnings for the Six Months ended
July 02, 1999 15
Notes to Pro Forma Consolidated Financial Statements 16
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholder of
Precision Tool, Die and Machine Company, Inc.
Louisville, Kentucky
We have audited the accompanying balance sheet of Precision Tool, Die and
Machine Company, Inc. (Company) as of March 31, 1999, and the related statements
of operations, stockholders' equity and cash flows for the year then ended.
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, such financial statements present fairly, in all material
respects, the financial position of the Company as of March 31, 1999, and the
results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
July 30, 1999
Louisville, Kentucky
1
<PAGE>
<TABLE>
<CAPTION>
PRECISION TOOL, DIE AND MACHINE COMPANY, INC.
BALANCE SHEETS
July 02, March 31,
1999 1999
(Unaudited)
---------------- ----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 436,982 240,170
Restricted cash 53,558 128,433
Accounts receivable 10,326,551 11,814,515
Inventories 3,853,219 3,470,818
Income taxes receivable 530,787 199,683
Deferred tax assets 58,348 43,391
Prepaid expenses and other 447,313 98,148
---------------- ----------------
Total current assets 15,706,758 15,995,158
PROPERTY, PLANT AND EQUIPMENT, net 8,761,156 8,128,481
NOTES RECEIVABLE FROM STOCKHOLDERS 253,928 253,928
OTHER ASSETS 402,560 410,156
---------------- ----------------
TOTAL $ 25,124,402 24,787,723
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Borrowings under bank lines of credit $ 3,300,000 2,650,000
Accounts payable 10,689,533 10,959,709
Accrued expenses 463,653 195,708
Current portion of long-term debt and capitalized lease obligations 597,942 597,942
---------------- ----------------
Total current liabilities 15,051,128 14,403,359
LONG-TERM DEBT AND CAPITALIZED LEASE OBLIGATIONS 3,243,013 3,470,252
DEFERRED INCOME TAX LIABILITY 57,117 60,885
---------------- ----------------
Total liabilities 18,351,258 17,934,496
---------------- ----------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $1 par value; 7,000 shares authorized,
2,850 shares issued and outstanding 2,850 2,850
Retained earnings 6,770,294 6,850,377
---------------- ----------------
Total stockholders' equity 6,773,144 6,853,227
---------------- ----------------
TOTAL $ 25,124,402 24,787,723
================ ================
<FN>
See notes to financial statements.
</FN>
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PRECISION TOOL, DIE AND MACHINE COMPANY, INC.
STATEMENTS OF OPERATIONS
Year Ended Three Months Ended
------------------------------------
March 31, July 02, June 28,
1999 1999 1998
(Unaudited) (Unaudited)
----------------- ----------------- -----------------
<S> <C> <C> <C>
NET SALES $ 60,974,934 17,042,446 15,615,239
COST OF SALES 55,744,099 15,707,329 14,091,325
----------------- ----------------- -----------------
GROSS PROFIT 5,230,835 1,335,118 1,523,914
OPERATING EXPENSES 3,480,301 1,324,525 1,169,031
----------------- ----------------- -----------------
OPERATING INCOME 1,750,534 354,883
10,592
----------------- ----------------- -----------------
OTHER INCOME (EXPENSE):
Interest expense (389,804) (116,744) (107,304)
Loss on disposals of property, plant and equipment (14,700) - (14,808)
Other 35,236 9,475 19,702
----------------- ----------------- -----------------
Other expense, net (369,268) (107,269) (102,410)
----------------- ----------------- -----------------
INCOME (LOSS) BEFORE INCOME TAXES 1,381,266 (96,676) 252,473
INCOME TAX EXPENSE (BENEFIT) 615,258 (16,593) 118,951
----------------- ----------------- -----------------
NET INCOME (LOSS) $ 766,008 (80,083) 133,522
================= ================= =================
<FN>
See notes to financial statements
</FN>
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PRECISION TOOL, DIE AND MACHINE COMPANY, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
YEAR ENDED MARCH 31, 1999 AND THE THREE MONTHS ENDED JULY 02, 1999 (UNAUDITED)
Total
Common Stock Retained Stockholders'
---------------------------
Shares Amount Earnings Equity
<S> <C> <C> <C> <C> <C>
BALANCE, APRIL 1, 1998 2,850 $ 2,850 $ 6,084,369 $ 6,087,219
Net income for the year - - 766,008 766,008
------------ ------------ ----------------- -----------------
BALANCE, MARCH 31, 1999 2,850 2,850 6,850,377 6,853,227
Net loss for the period (unaudited) - - (80,083) (80,083)
------------ ------------ ----------------- -----------------
BALANCE, JULY 02, 1999 (unaudited) 2,850 $ 2,850 $ 6,770,294 $ 6,773,144
============ ============ ================= =================
<FN>
See notes to financial statements.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PRECISION TOOL, DIE AND MACHINE COMPANY, INC.
STATEMENTS OF CASH FLOWS
Year Ended Three Months Ended
-----------------------------------
March 31, July 02, June 28,
1999 1999 1998
(Unaudited) (Unaudited)
----------------- ----------------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 766,008 (80,083) 133,522
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 1,089,989 251,976 259,572
Deferred taxes (25,598) (18,725) (36,683)
Loss on disposals of property, plant and equipment 14,700 - -
Changes in assets and liabilities:
Accounts receivable (2,198,618) 1,487,964 (476,567)
Inventories 81,806 (382,401) (319,601)
Income taxes receivable (511,225) (331,104) 472,342
Prepaid expenses and other assets 274,123 (341,569) 90,945
Accounts payable and accrued expenses 2,532,909 (2,231) 794,666
----------------- ----------------- ----------------
Net cash provided by operating activities 2,024,094 583,827 918,196
----------------- ----------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, plant and equipment (2,351,223) (884,651) (57,349)
Proceeds from disposals of property, plant, and equipment 4,747 - -
----------------- ----------------- ----------------
Net cash used in investing activities (2,346,476) (884,651) (57,349)
----------------- ----------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under bank lines of credit 2,900,000 650,000 -
Principal payments of borrowing under bank lines of credit (1,950,000) - (700,000)
Principal payments of long-term debt and capital lease obligations (662,323) (227,239) (241,566)
Change in restricted cash (1,716) 74,875 74,822
----------------- ----------------- ----------------
Net cash provided by (used in) financing activities 285,961 497,636 (866,744)
----------------- ----------------- ----------------
NET (DECREASE) INCREASE IN CASH (36,421) 196,812 (5,897)
CASH, BEGINNING OF PERIOD 276,591 240,170 403,308
----------------- ----------------- ----------------
CASH, END OF PERIOD $ 240,170 436,982 397,411
================= ================= ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 394,629 116,744 107,304
================= ================= ================
Income taxes $ 1,076,346 240,400 118,951
================= ================= ================
<FN>
See notes to financial statements.
</FN>
</TABLE>
5
<PAGE>
PRECISION TOOL, DIE AND MACHINE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Precision Tool, Die and Machine Company, Inc. (Company)
manufactures and sells, generally on an unsecured basis, stamped metal
components for the appliance industry; the heating, venting and air
conditioning industry; and the automotive industry throughout the
southeastern United States. The Company has one operating segment.
Investments - Investments are classified as available for sale and are
recorded at fair value.
Inventories - Inventories are stated at the lower of cost (first-in,
first-out method) or market.
Property, Plant and Equipment - Property, plant and equipment are stated at
cost. Buildings and the fixed assets financed by two industrial revenue
bonds are depreciated using the straight-line method over the useful lives
of the related assets. All other fixed assets are depreciated using
accelerated methods over the useful lives of the related assets. Estimated
lives are 30-40 years for buildings, and 3-15 years for machinery,
equipment, office furniture and vehicles. Leased equipment is amortized
using accelerated methods over the term of their respective leases or the
estimated useful lives of the assets, whichever is shorter.
Recent Accounting Pronouncements - In June 1998, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting Standard
No. 133 (SFAS 133), "Accounting for Derivative Instruments and Hedging
Activities." This statement is effective for all fiscal quarters of fiscal
years beginning after June 15, 2000. The impact of adoption of this
pronouncement is not expected to be material to the Company's financial
position or results of operations.
Use of Estimates - Financial statements prepared in conformity with
generally accepted accounting principles require management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the
dates of the financial statements, and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from
these estimates.
2. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
July 02, March 31,
1999 1999
(unaudited)
<S> <C> <C>
Raw materials $1,835,883 $1,725,572
Work in process 917,177 1,021,961
Finished goods 1,100,159 723,285
---------- ------------
Total $3,853,219 $3,470,818
========== ==========
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
July 02, March 31,
1999 1999
(unaudited)
<S> <C> <C>
Land $ 318,808 $ 300,914
Building 4,154,902 4,169,262
Machinery and equipment 8,449,274 8,391,447
Office furniture and equipment 736,289 699,922
Vehicles 141,219 141,219
Construction in progress 2,643,627 1,831,964
----------- -----------
Total 16,444,119 15,534,728
Less accumulated depreciation 7,682,963 7,406,247
----------- -----------
Net $ 8,761,156 $ 8,128,481
=========== ===========
</TABLE>
At July 02, 1999 and March 31, 1999, the Company had outstanding purchase
commitments relating to the expansion of its production facility totaling
approximately $5,606,000 (unaudited) and $7,461,000, respectively.
4. OTHER ASSETS
Other assets consist of the following:
<TABLE>
<CAPTION>
July 02, March 31,
1999 1999
(unaudited)
<S> <C> <C>
Cash surrender value of life insurance, net of related policy
loans $189,911 $189,911
Prepaid tooling fees 135,651 140,473
Loan fees, net of amortization 70,498 73,272
Other 6,500 6,500
------------ -----------
Total $402,560 $410,156
======== ========
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
5. LINES OF CREDIT, LONG-TERM DEBT AND CAPITALIZED LEASE OBLIGATIONS
Borrowings under lines of credit and long-term debt are as follows:
July 02, March 31,
1999 1999
(unaudited)
<S> <C> <C>
Borrowings Under Lines of Credit:
Borrowings under $4,000,000 line of credit agreement with bank expiring
August 25, 1999 bearing interest at the bank's index rate minus .25%
(effective rate of 7.5% at March 31, 1999) $1,250,000 $1,000,000
Borrowings under $3,000,000 line of credit agreement with bank expiring
October 25, 1999 bearing interest at the bank's index rate minus .75%
(effective rate of 7.0% at March 31, 1999) 2,050,000 1,650,000
------------ -----------
Total borrowings under bank lines of credit $3,300,000 $2,650,000
============ ===========
Long-term Debt:
Industrial building revenue bonds, bearing interest at a variable rate
based on the bank's index rate (5.70% at March 31, 1999); Requires monthly
sinking fund payments through March, 2007 $2,240,000 $2,295,000
Note payable to Capital One Funding Corporation; principle Payable in
semi-annual installments plus interest at a variable rate based on the
index rate (5.63% at March 31, 1999) 1,500,000 1,650,000
---------- -----------
Total long-term debt 3,740,000 3,945,000
Capitalized lease obligations 117,427 123,194
----------- ----------
Total long-term debt and capitalized lease obligations 3,857,427 4,068,194
Less current maturities 597,942 597,942
---------- -----------
Long-term debt and capitalized lease obligations $3,259,485 $3,470,252
========== ===========
</TABLE>
The note payable to Capital One Funding Corporation requires the Company to
make monthly deposits to a restricted bank account in amounts sufficient to
pay, when due, the semi-annual principle and interest on the note. At July
02, 1999 and March 31, 1999, cash of $53,558 (unaudited) and $128,433,
respectively, was so restricted.
Borrowings under the bank lines of credit and the long-term debt are
collateralized by substantially all of the Company's assets. The long-term
debt agreements contain a number of affirmative and negative covenants, the
more significant of which precludes the Company from paying dividends
without the prior consent of the lenders, places limitations on additional
borrowings and requires the Company to maintain certain financial ratios.
8
<PAGE>
The maturities of long-term debt for each of the next five years are as
follows:
<TABLE>
<CAPTION>
<S> <C>
Years Ended:
March 31
2000 $ 520,000
2001 540,000
2002 555,000
2003 570,000
2004 590,000
Thereafter 1,170,000
TOTAL $3,945,000
</TABLE>
6. PROFIT SHARING PLAN
The Company has a profit sharing plan under Section 401(k) of the Internal
Revenue Code that provides benefits to substantially all employees. The
Company's contribution, as determined by the board of directors, was
approximately $125,000 for the year ended March 31, 1999.
7. INCOME TAXES
The components of income tax expense for the year ended March 31, 1999 are
as follows:
<TABLE>
<CAPTION>
<S> <C>
Currently payable:
Federal $479,476
State and local 161,380
Total currently payable 640,856
Deferred benefit:
Federal (20,629)
State and local (4,969)
Total currently payable (25,598)
Total $615,258
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at March
31, 1999 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Current deferred tax assets:
Unrealized loss on investment securities available for sale $30,076
Inventories 3,762
Accrued vacation 9,553
--------
Total current deferred tax assets $43,391
Long-term deferred tax liabilities - property, plant and equipment $60,885
=======
</TABLE>
9
<PAGE>
A reconciliation of the Company's effective tax rate with the federal
statutory tax rate follows:
<TABLE>
<CAPTION>
<S> <C>
Federal statutory tax rate 34.0 %
State and local taxes, net of federal income tax benefit 6.9
Nondeductible expenses 3.6
----
Effective tax rate 44.5 %
</TABLE>
8. LEASES
The Company leases various machinery and equipment under capital leases. The
leases require monthly minimum rental payments. The machinery and equipment had
a carrying value of $100,087, net of accumulated amortization of $246,067, at
March 31, 1999.
The Company also has non-cancelable operating leases for various machinery and
equipment. Future minimum annual commitments under capital leases and
non-cancelable operating leases are as follows at March 31, 1999:
<TABLE>
<CAPTION>
<S> <C> <C>
Year Ended Capital Operating
March 31 Leases Leases
2000 $ 88,541 $ 94,737
2001 55,850 75,508
2002 46,407
2003 28,778
2004 10,320
Thereafter 4,300
Total minimum lease payments 144,391 $260,050
========
Less imputed interest (21,197)
--------
Present value of net minimun lease
payments (included in long-term obligations) $123,194
</TABLE>
Rental expense for operating lease was approximately $67,000 for the year
ended March 31, 1999.
9. RELATED PARTY TRANSACTIONS
The Company has established an unfunded, non-qualified arrangement
providing a pension benefit to a stockholder. The benefit includes monthly
payments of $1,800 continuing until the death of the stockholder or a
change in ownership or control of the Company. The expense under this
arrangement for the year ended March 31, 1999, was $21,600.
At March 31, 1999, the Company had notes receivable from stockholders of
$253,928. The notes were payable in full on the earlier of December 19,
2007, or the effective date of a change in control of the Company. The
notes were paid upon the acquisition of the Company on July 27, 1999 (see
note 13).
Accounts receivable at March 31, 1999 included $33,091 of bonus advances to
officers.
10
<PAGE>
10. MAJOR CUSTOMERS/SUPPLIER
The Company had sales of approximately $44,468,000 and $10,956,000
(unaudited) to two customers, or approximately 73% and 64% of total net
sales for the year ended March 31, 1999 and the three months ended July 02,
1999, respectively. In addition, the Company had accounts receivable
totaling approximately $8,730,000 and $7,443,759 (unaudited) at March 31,
1999 and July 02, 1999, respectively, from these customers.
The Company purchased approximately $15,958,000 and $4,179,000 (unaudited)
and had approximately $4,411,000 and $2,955,000 (unaudited) in outstanding
accounts payable as of and for the year ended March 31, 1999 and the three
months ended July 02, 1999 from one supplier, respectively. The major
supplier is also one of the Company's major customers.
11. COMMITMENTS/CONTINGENCIES
The Company has an agreement with General Electric Appliances (G.E.A.)
covering the purchase of home refrigeration selected minor-fab parts. The
initial term of the agreement extends through February 2001 and may be
extended thereafter from year-to-year. G.E.A. may terminate the agreement
at anytime during this period without cause or breach on part of the
Company and without further responsibility except for the obligation to pay
termination charges. The termination charges are equal to the undepreciated
and unamortized portions of the Company's actual capital expenditures for
equipment, real property, and improvements necessary to manufacture G.E.A.
products. The termination charges can not exceed $3,000,000.
A complaint has been brought against the Company by a former sales
representative alleging breach of contract, breach of good faith and unjust
enrichment and seeking a declaratory judgement. The Plaintiff contends it
is entitled to recover commissions for all orders placed by a certain
customer during the operative period of the agreement, including purchase
orders placed after termination of the agreement. Both parties have agreed
to refer the matter to binding arbitration and to stay all proceedings
pending resolution of the arbitration. Management is unable to determine
the likelihood of prevailing at arbitration or the amount of loss in the
event of an adverse outcome.
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of the Company's financial instruments approximates
their fair value.
13. SUBSEQUENT EVENT
On July 27, 1999, Elamex S.A. de C.V. acquired 100% of the Company's common
stock for approximately $20,300,000 in cash.
11
<PAGE>
Elamex, S.A. de C.V. and Subsidiaries
Pro Forma Consolidated Financial Statements
(Unaudited)
As previously reported on Form 8-K dated July 27, 1999, Elamex, S.A. de C.V.
(the "Company") consummated the purchase of all of the common stock of Precision
Tool, Die and Machine Company, Inc., a Kentucky corporation ("Precision"). The
Company acquired the stock from the shareholders of the privately held company
for U.S. $20.3 million in cash. The purchase price was financed with cash on
hand of the Company in the amount of U.S. $5.3 million and a loan agreement with
General Electric Capital Corporation and Comerica Bank. Precision is a metal
stamping business located in Louisville, Kentucky.
The following unaudited pro forma consolidated statements of operations for the
year ended December 31, 1998 and the six months ended July 02, 1999 give effect
to the purchase by the Company of the capital stock of Precision as if the
acquisitions and related financings occurred on January 01, 1998 (the beginning
of fiscal 1998). The following unaudited pro forma consolidated balance sheet as
of July 02, 1999 gives effect to the purchase of Precision as if the acquisition
and related financing occurred as of that date. Precision's unaudited historical
cost basis balance sheet as of July 02, 1999 was used to prepare the unaudited
pro forma consolidated balance sheet.
The pro forma financial information is based on the historical consolidated
financial statements of the Company and the unaudited historical financial
statements of Precision and should be read in conjunction with the Company's
consolidated financial statements and accompanying notes. The purchase method of
accounting was used to prepare the pro forma financial statements using
estimated fair values of the assets and liabilities of Precision. The purchase
accounting adjustments to reflect the fair values of the assets and liabilities
of Precision were based on management's evaluation as of this filing date and
are subject to change pending final evaluation of the fair values of the assets
and liabilities.
The pro forma financial information does not purport to be indicative of either
a) the results of operations which would have actually been obtained if the
acquisition had occurred on the dates indicated, or b) the results of operations
which will be reported in the future.
12
<PAGE>
<TABLE>
<CAPTION>
ELAMEX, S.A. DE C.V. AND SUBSIDIARIES
Pro Forma Consolidated Balance Sheet
As of July 02, 1999
(In U. S. Dollars)
(Unaudited)
<S> <C> <C> <C> <C>
Pro Forma
---------------------------------------
Elamex Precision Adjustments Combined
------------------- ---------------- ------------------ ------------------
Assets
Current assets:
Cash and cash equivalents $ 11,158,388 490,540 (5,343,102)(3) 6,305,826
Receivables
Trade accounts, net 15,625,501 10,580,479 26,205,980
Other receivables 2,743,359 - 2,743,359
Related party note receivable 7,992 - 7,992
------------------- ---------------- ------------------ ------------------
Total receivables 18,376,852 10,580,479 - 28,957,331
------------------- ---------------- ------------------ ------------------
Inventories, net 15,304,981 3,853,219 (50,000)(1) 19,108,200
Refundable income taxes 484,423 530,787 1,015,210
Prepaid expenses and other 835,036 505,661 (220,000)(5) 1,120,697
------------------- ---------------- ------------------ ------------------
Total current assets 46,159,680 15,960,686 (5,613,102) 56,507,264
Property, plant and equipment, net 33,709,570 8,761,156 6,295,261 (1) 48,765,987
Goodwill - - 10,196,896 (1) 10,196,896
Other assets, net 486,733 402,560 220,000 (5) 1,109,293
------------------- ---------------- ------------------ ------------------
$ 80,355,983 25,124,402 11,099,055 116,579,440
=================== ================ ================== ==================
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ - 3,300,000 15,000,000 (3) 18,300,000
Accounts payable 8,866,602 10,689,533 19,556,135
Accrued expenses 3,183,016 278,476 480,000 (2) 3,941,492
Current installments of long-term debt - 597,942 597,942
Current obligations of capital leases 173,469 - 173,469
Taxes payable 1,698,812 185,178 1,883,990
Deferred income taxes, net 2,619,450 - 2,619,450
------------------- ---------------- ------------------ ------------------
Total current liabilities 16,541,349 15,051,128 15,480,000 47,072,477
Long-term debt, excluding current installments - 3,125,586 3,125,586
Capital lease obligations, excluding current obligations - 117,427 117,427
Other liabilities 408,991 - 408,991
Deferred income taxes, net 853,166 57,117 2,392,199 (1) 3,302,482
------------------- ---------------- ------------------ ------------------
Total liabilities 17,803,506 18,351,258 17,872,199 54,026,963
Minority Interest 2,203,968 - 2,203,968
Stockholders' equity:
Common stock 35,060,468 2,850 (2,850)(4) 35,060,468
Retained earnings 27,806,173 6,770,294 (6,770,294)(4) 27,806,173
Treasury stock (2,518,132) - (2,518,132)
------------------- ---------------- ------------------ ------------------
Total stockholders' equity 60,348,509 6,773,144 (6,773,144) 60,348,509
------------------- ---------------- ------------------ ------------------
Commitments and contingencies - - - -
$ 80,355,983 25,124,402 11,099,055 116,579,440
=================== ================ ================== ==================
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
ELAMEX, S.A. DE C.V. AND SUBSIDIARIES
Pro Forma Consolidated Statement of Earnings
Year Ended December 31, 1998
(In U. S. Dollars)
(Unaudited)
<S> <C> <C> <C> <C>
Pro Forma
------------------------------------
Elamex Precision Adjustments Combined
---------------- ---------------- ---------------- ----------------
Net sales $ 128,890,407 59,755,080 188,645,487
Cost of sales 114,256,837 54,232,578 271,497 (1) 168,760,912
---------------- ---------------- ---------------- ----------------
Gross profit 14,633,570 5,522,502 (271,497) 19,884,575
---------------- ---------------- ---------------- ----------------
Operating expenses:
General and administrative 7,208,912 2,890,533 62,845 (1) 10,162,290
Selling 1,721,387 488,723 2,210,110
Research and development 2,072,983 - 2,072,983
---------------- ---------------- ---------------- ----------------
Total operating expenses 11,003,282 3,379,256 62,845 14,445,383
---------------- ---------------- ---------------- ----------------
Operating income 3,630,288 2,143,246 (334,342) 5,439,192
---------------- ---------------- ---------------- ----------------
Other income (expense):
Interest income 973,618 - 973,618
Interest expense (154,108) (364,835) (1,277,929)(2) (1,796,872)
Other, net 1,711,524 (3,427) 1,708,097
---------------- ---------------- ---------------- ----------------
Total other income (expense) 2,531,034 (368,262) (1,277,929) 884,843
---------------- ---------------- ---------------- ----------------
Income before income taxes and
minority interest 6,161,322 1,774,984 (1,612,271) 6,324,035
Income tax provision 2,082,108 803,541 (418,922)(3) 2,466,727
---------------- ---------------- ---------------- ----------------
Income before minority interest 4,079,214 971,443 (1,193,349) 3,857,308
Minority interest 234,130 - 234,130
---------------- ---------------- ---------------- ----------------
Net income $ 4,313,344 971,443 (1,193,349) 4,091,438
================ ================ ================ ================
Basic and diluted income per
common share $ 0.59 - - 0.56
Weighted average shares outstanding 7,310,148 - - 7,310,148
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
ELAMEX, S.A. DE C.V. AND SUBSIDIARIES
Pro Forma Consolidated Statement of Earnings
Six Months Ended July 02, 1999
(In U. S. Dollars)
(Unaudited)
<S> <C> <C> <C> <C>
Pro Forma
Elamex Precision Adjustments Combined
---------------- ---------------- ---------------- ---------------
Net sales $ 63,695,983 32,705,380 96,401,363
Cost of sales 57,317,731 30,050,081 135,749 (1) 87,503,561
---------------- ---------------- ---------------- ---------------
Gross profit 6,378,252 2,655,298 (135,749) 8,897,801
---------------- ---------------- ---------------- ---------------
Operating expenses:
General and administrative 3,873,756 1,845,169 (195,578) (1) 5,523,347
Selling 920,075 235,392 1,155,467
Research and development 1,003,145 - 1,003,145
---------------- ---------------- ---------------- ---------------
Total operating expenses 5,796,976 2,080,561 (195,578) 7,681,959
---------------- ---------------- ---------------- ---------------
Operating income 581,276 574,738 59,829 1,215,843
---------------- ---------------- ---------------- ---------------
Other income (expense):
Interest income 491,656 37,168 528,824
Interest expense (209,797) (221,444) (638,964) (2) (1,070,205)
Other, net 518,024 (53,136) 464,888
---------------- ---------------- ---------------- ---------------
Total other income (expense) 799,883 (237,412) (638,964) (76,493)
---------------- ---------------- ---------------- ---------------
Income before income taxes and
minority interest 1,381,159 337,326 (579,135) 1,139,350
Income tax provision 525,875 30,129 (123,201) (3) 432,803
---------------- ---------------- ---------------- ---------------
Income before minority interest 855,284 307,197 (455,934) 706,547
Minority interest 401,333 - 401,333
---------------- ---------------- ---------------- ---------------
Net income $ 1,256,617 307,197 (455,934) 1,107,880
================ ================ ================ ===============
Basic and diluted income per
common share $ 0.18 - - 0.16
Weighted average shares outstanding 6,866,100 - - 6,866,100
</TABLE>
15
<PAGE>
Elamex, S.A. de C.V. and Subsidiaries
Notes to Pro Forma Consolidated Financial Statements
For the Year Ended December 31, 1998 and the Six Months
Ended July 02, 1999
(Unaudited)
Balance Sheet
The pro forma adjustments to the consolidated balance sheet reflect the
following:
(1) Allocation of purchase price of Precision:
<TABLE>
<CAPTION>
<S> <C>
Cash and borrowings $20,343,102
Transaction costs 480,000
--------------
20,823,102
Fair market value of net assets acquired (10,626,206)
Excess purchase price to be allocated to goodwill 10,196,896
</TABLE>
The purchase accounting adjustments to reflect the fair value of assets and
liabilities were based on management's evaluation as of this filing date
and are subject to change pending final evaluation of the assets and
liabilities.
(2) To accrue for additional transaction costs incurred, but not paid as of the
closing of the transactions.
(3) To reflect the borrowing made by the Company of $15,000,000 to finance the
transaction, as well as cash on hand to complete such transaction.
(4) To reflect the elimination of Precision's equity.
(5) To reclassify loan cost expenses recorded as prepaid expenses prior to
closing of the transaction.
Statements of Earnings
(1) To eliminate (a) $346,000 and $259,500 from Precision's results for the
year ended December 31, 1998 and the six months ended July 02, 1999,
respectively, representing bonuses paid to the former owners of Precision,
which would not have been paid had the Company owned Precision, and (b)
$101,000 and $191,000, from Precision's results for the year ended December
31, 1998 and the six months ended July 02, 1999, respectively, for expenses
incurred in the selling of Precision; (c) to record $271,497 and $135,749
for the year ended December 31, 1998 and the six months ended July 02,
1999, respectively for depreciation expense due to the adjustment to fair
market value of property plant and equipment acquired; and to record
goodwill amortization based on the goodwill resulting from the acquisition
on a straight-line basis over a 20-year period.
(2) To record interest expense at 8.31%, which is the effective rate specified
in the loan agreement, and to record the amortization of loan costs on the
$15,000,0000 borrowed to finance the purchase of Precision.
(3) To record tax effect of the taxable pro forma adjustments at the effective
tax rate of 38%.
16
<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, thereunto duly authorized, in Ciudad Juarez, Chihuahua, Mexico.
ELAMEX, S.A. de C.V.
Date: October 07, 1999 By: /s/ Hector Raynal
-----------------
Hector M. Raynal
President and Chief Executive Officer
(Duly Authorized Officer)
Date: October 07, 1999 By: /s/ Carlos Martens
------------------
Carlos D. Martens
Vice-President of Finance and
Chief Financial Officer
