SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------------------
AMENDMENT NO. 1 ON FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported):
July 5, 1998
----------------------------------------
METRIKA SYSTEMS CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 1-13085 33-0733537
(State or other juris- (Commission (I.R.S. Employer
diction of incorporation) File Number) Identification
Number)
5788 Pacific Center Boulevard 92121
San Diego, California (Zip Code)
(Address of principal
executive offices)
(781) 622-1000
(Registrant's telephone number
including area code)
-------------------------------------------
<PAGE>
Item 2. Acquisition or Disposition of Assets
On July 5, 1998, Metrika Systems Corporation (the Company) acquired all of
the outstanding capital stock (the Stock) of Honeywell-Measurex Data Measurement
Corporation (DMC) from Honeywell-Measurex Corporation for approximately
$29,000,000 in cash (the Purchase Price). The Purchase Price is subject to a
post-closing adjustment equal to the amount by which DMC's shareholders equity
as of the closing, as adjusted pursuant to a Stock Purchase Agreement dated as
of May 6, 1998 (the Agreement), by and between the Company and
Honeywell-Measurex Corporation, is greater than or less than, as the case may
be, certain target amounts set forth in the Agreement.
The acquisition was made pursuant to the Agreement. The Purchase Price was
funded entirely from cash on hand. DMC, based in Gaithersburg, Maryland,
manufactures and sells computerized non-contact thickness, coating and other
measurement systems for use in flat-metal processing industries, including
steel, aluminum, tin, copper, brass, and other rolled products (the DMC
Business).
The consideration paid for the DMC Business was based primarily on the
Company's determination of the fair market value of the DMC Business, and the
terms of the Agreement were determined by arms-length negotiation among the
parties.
The Company has no present intention to use the assets of the DMC Business
for purposes materially different from the purposes for which such assets were
used prior to the acquisition. However, the Company will review the DMC Business
and its assets, corporate structure, capitalization, operations, properties, and
policies, and, upon completion of this review, may develop alternative plans or
proposals, including mergers, transfers of a material amount of assets or other
transactions or changes relating to such business.
2
<PAGE>
Item 7. Financial Statements, Pro Forma Combined Condensed Financial
Information and Exhibits
(a) Financial Statements of Business Acquired
Attached hereto.
3
<PAGE>
HONEYWELL-MEASUREX DATA
MEASUREMENT CORPORATION
Consolidated Financial Statements for the
Ten-Month Period Ended December 31, 1997 and
Independent Auditors' Report
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Honeywell-Measurex Data Measurement Corporation
We have audited the accompanying consolidated balance sheet of
Honeywell-Measurex Data Measurement Corporation (the Company), a wholly owned
subsidiary of Honeywell-Measurex Corporation Inc., as of December 31, 1997 and
the related consolidated statements of operations, cash flows, and stockholders'
deficit for the ten-month period then ended. These consolidated 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company at December 31, 1997 and the results of its operations and its cash
flows for the ten months then ended, in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
June 26, 1998
Washington, D.C.
2
<PAGE>
HONEYWELL-MEASUREX DATA MEASUREMENT CORPORATION
CONSOLIDATED BALANCE SHEET
- ------------------------------------------------------------------------------
DECEMBER 31, 1997
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 425,337
Accounts receivable:
Trade, net of allowance 13,560,675
Affiliates 2,230,881
Inventories 10,398,317
Prepaid expenses and other assets 365,153
Refundable income taxes 1,079,578
Deferred income taxes 2,359,000
-------------
Total current assets 30,418,941
-------------
PROPERTY, PLANT, AND EQUIPMENT, net 1,480,252
-------------
DEFERRED INCOME TAXES 3,592,500
-------------
GOODWILL 4,431,000
-------------
INTANGIBLES AND OTHER ASSETS 2,060,599
-------------
Total assets $ 41,983,292
=============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 1,081,268
Accounts payable - affiliates 26,076,944
Accrued warranty 8,844,000
Advance payments on contracts 2,724,199
Accrued expenses 4,531,100
-------------
Total current liabilities 43,257,511
-------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT:
Common stock ($1 par value, 1,000 shares
authorized, issued, and outstanding) 1,000
Additional capital 616,900
Retained deficit (1,940,574)
Cumulative translation adjustment 48,455
-------------
Total stockholders' deficit (1,274,219)
-------------
Total liabilities and stockholders' deficit $ 41,983,292
=============
See notes to consolidated financial statements.
3
<PAGE>
HONEYWELL-MEASUREX DATA MEASUREMENT CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
TEN MONTHS ENDED DECEMBER 31, 1997
Net sales $ 28,662,325
Cost of sales 22,898,569
------------
GROSS PROFIT 5,763,756
------------
Selling, general, and administrative expenses 6,635,663
Research and development expenses 2,232,988
------------
OPERATING LOSS (3,104,895)
Other income 93,321
------------
LOSS BEFORE INCOME TAXES (3,011,574)
INCOME TAX BENEFIT 1,071,000
------------
Net loss $ (1,940,574)
============
See notes to consolidated financial statements.
4
<PAGE>
HONEYWELL-MEASUREX DATA MEASUREMENT CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
- ------------------------------------------------------------------------------
TEN MONTHS ENDED DECEMBER 31, 1997
Common Stock Cumulative Total
------------- Additional Retained Translation Stockholders'
Shares Amount Capital Deficit Adjustment Deficit
BALANCE AT
MARCH 1,1997 1,000 $1,000 $616,900 $617,900
Net loss $(1,940,574) (1,940,574)
Cumulative
translation
adjustment $48,455 48,455
------ ------- --------- ------------ ----------- ------------
BALANCE AT
DECEMBER 31,
1997 1,000 $ 1,000 $ 616,900 $(1,940,574) $ 48,455 $(1,274,219)
====== ======= ========= =========== =========== ===========
See notes to consolidated financial statements.
5
<PAGE>
HONEYWELL-MEASUREX DATA MEASUREMENT CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
- ------------------------------------------------------------------------------
TEN MONTHS ENDED DECEMBER 31, 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,940,574)
Adjustments to reconcile net loss to net cash flows
used in operating activities:
Loss on disposal of assets 3,017
Depreciation and amortization 715,419
Deferred income taxes (196,000)
Changes in assets and liabilities:
Increase in receivables (4,393,976)
Decrease in inventories 540,458
Decrease in prepaid expenses and other assets (43,270)
Decrease in accounts payable (546,300)
Decrease in accrued expenses (452,034)
Decrease in advance payments on contracts (628,276)
------------
Net cash flows used in operating activities (6,941,536)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets 363,598
Capital expenditures (295,169)
------------
Net cash flows provided by investing activities 68,429
CASH FLOWS FROM FINANCING ACTIVITIES:
Accounts payable - affiliates 5,187,127
------------
Net cash flows provided by financing activities 5,187,127
EFFECT OF EXCHANGE RATE CHANGES ON CASH (12,818)
------------
DECREASE IN CASH AND CASH EQUIVALENTS (1,698,798)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,124,135
------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 425,337
============
SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION -
Cash paid during the period for interest $ 48,000
============
See notes to consolidated financial statements.
6
<PAGE>
HONEYWELL-MEASUREX DATA MEASUREMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
TEN MONTHS ENDED DECEMBER 31, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - Honeywell-Measurex Data Measurement Corporation (DMC
or the Company) is a wholly owned subsidiary of Honeywell-Measurex
Corporation (Honeywell-Measurex), which is a wholly owned subsidiary of
Honeywell Inc. (Honeywell). On March 1, 1997, Honeywell Inc. purchased
Measurex Corporation (Measurex), which included 100% of the common stock of
DMC. On May 6, 1998, Honeywell-Measurex entered into a definitive Stock
Purchase Agreement (the Agreement) with Metrika Systems Corporation (the
Buyer) to sell 100% of DMC's outstanding common stock to the Buyer. The sale
is expected to close on or about July 5, 1998. Pursuant to the Agreement,
certain assets and liabilities will be excluded including various hardware,
software and other assets, all goodwill and intellectual property, warranty
claims made outside of the Company's standard past practices, and deferred
tax asset amounts in excess of an amount specified in the Agreement.
The accompanying financial statements have been prepared for the purpose of
presenting the consolidated balance sheet of the Company as of December 31,
1997 and the consolidated statements of operations and cash flows for the
ten-month period then ended (i.e., from the date Honeywell purchased
Measurex through December 31, 1997). The consolidated financial statements
have been prepared as if DMC had operated as an independent, stand-alone
entity for the periods presented. Such financial statements have been
prepared using the historical basis of accounting and include the assets,
liabilities, revenues, expenses, and income taxes of DMC, including goodwill
and intangibles resulting from the March 1, 1997 acquisition of the Company
by Honeywell.
Consolidation - The consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries, DMC (U.K.) Limited, DMC
Mess- & Regeltechnik (Germany) GmbH, and the transactions recorded at
various Honeywell wholly owned subsidiaries that related to the sales and
service of DMC products. All intercompany transactions have been eliminated.
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires the Company to make
estimates and assumptions that affect the reported amounts 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 period. Actual results may differ from these
estimates.
Cash and Cash Equivalents - The Company considers all temporary investments
with an original maturity of three months or less to be cash equivalents.
7
<PAGE>
Retainages and Unbilled Receivables - The Company expects to realize
substantially all contract retainages and unbilled receivables within one
year.
Revenue Recognition - The Company manufactures gauging systems, pinhole
detectors, and other industrial instruments pursuant to specific contract
orders. Revenues related to the production of these items are recognized
either using the percentage of completion method or upon completion and
shipment of units to customers. Revenues related to the installation and
service of equipment at customers' locations are recognized when the
installation or service work is performed. Losses on contracts in process
are recorded when known.
Accrued Warranty - The Company provides, through charges to income, an
amount it estimates will be needed to cover future warranty obligations for
products sold during the period. Total amount estimated for ongoing warranty
and parts at December 31, 1997 is $1,053,000. Additionally, the Company has
provided an amount it estimates will be needed to repair or replace systems
that were shipped prior to Honeywell's acquisition of Measurex, which were
previously not recorded by the Company.
Foreign Currency Translation - Gains or losses resulting from translating
foreign currency financial statements are accumulated in a separate
component of stockholders' deficit. Gains or losses resulting from foreign
exchange transactions (transactions denominated in a currency other than the
entity's local currency) are included in determining net income. The Company
recorded a net loss of $87,465 on foreign currency transactions for the
ten-month period ended December 31, 1997.
Inventories - Material and parts inventories are stated at the lower of cost
or market. Cost is determined using the weighted first-in, first-out (FIFO)
method. Market is based on net realizable value. Work-in-process inventory
represents accumulated labor, material, and overhead costs related to
specific uncompleted contracts. Provisions are made to reduce accumulated
costs on uncompleted contracts to net realizable value when losses are
anticipated.
Property - Property is carried at cost and depreciated using the
straight-line method using the following estimated useful lives:
Building and improvements 5-40 years
Machinery and equipment 3-7 years
Software 3 years
Capital leases Lesser of the lease term or 5-7 years
Goodwill - Goodwill associated with Honeywell's acquisition of Measurex on
March 1, 1997 has been allocated to DMC. Goodwill is amortized on a
straight-line basis over a 40-year period.
8
<PAGE>
Intangibles and Other Assets - Identified intangibles associated with
Honeywell's acquisition of Measurex on March 1, 1997 have been allocated to
DMC. Identified intangibles are amortized on a straight-line basis over a
12-year period.
Income Taxes - The Company provides for federal and state income taxes at
the statutory rates in effect on taxable income in accordance with
Honeywell's Corporate policy which provides for allocating a benefit to a
subsidiary without a valuation allowance provided the benefit may be
utilized at the consolidated level. Income tax expense or benefit has not
been provided for the undistributed earnings or loss of the Company's
subsidiaries, DMC (U.K.) Ltd. and DMC Mess- & Regeltechnik GmbH, because the
Company intends to continue these operations and reinvest the undistributed
earnings indefinitely.
Derivatives - Derivative financial instruments are used to manage foreign
currency exchange risks. These financial exposures are managed in accordance
with Honeywell's Corporate policies and procedures. Honeywell does not hold
or issue derivative financial instruments for trading purposes. Foreign
exchange contracts are accounted for as hedges to the extent they are
designated as, and are effective as, hedges of firm foreign currency
commitments. Other such foreign exchange contracts are marked-to-market on a
current basis and are included in selling, general, and administrative
expenses on the income statement.
Long-Lived Assets - The Company evaluates the carrying value of long-lived
assets using discounted cash flows when events and circumstances warrant
such a review.
2. ACCOUNTS RECEIVABLE
Receivables include approximately $1,789,000 at December 31, 1997 that was
billed to customers but not paid pursuant to contract retainage provisions.
The balances are due upon completion of the contracts, generally within one
year. DMC recognizes unbilled receivables for shipments made directly to
customers and invoiced to Honeywell sales and service offices but for which
the sales and service offices have not issued invoices to the customers.
Unbilled receivables at December 31, 1997 amount to $2,995,023. Receivables
are recorded net of an allowance for doubtful accounts of approximately
$1,592,000.
3. INVENTORIES
December 31,
1997
Work-in-process $ 3,561,900
Materials and parts 6,836,417
-------------
Total $ 10,398,317
=============
9
<PAGE>
4. PROPERTY, PLANT, AND EQUIPMENT
December 31,
1997
Buildings and improvements $ 533,849
Machinery and equipment 3,576,095
Software 85,162
Capital leases 158,802
-------------
Total Property, Plant, and Equipment 4,353,908
Accumulated depreciation (2,873,656)
-------------
Net Property, Plant, and Equipment $ 1,480,252
=============
The Company maintains a capital lease for certain operating equipment, of
which the gross value and accumulated amortization at December 31, 1997 was
$158,802 and $137,827, respectively. The lease expires in July 1998 and
includes a bargain purchase option of $1 at the end of the lease term. The
present value of the minimum lease payments under the lease was $22,888 at
December 31, 1997. Amortization expense was $11,643 for the ten months ended
December 31, 1997.
5. FOREIGN SUBSIDIARIES
The following is a summary of financial data pertaining to foreign
subsidiaries:
Ten Months Ended
December 31, 1997
Net loss $ (126,066)
As of December 31, 1997
Assets $ 4,211,375
Liabilities 2,374,656
---------------
Net Assets $ 1,836,719
===============
Insofar as can be reasonably determined, there are no foreign-exchange
restrictions that materially affect the financial position or the operating
results of the Company.
6. FOREIGN CURRENCY
DMC has entered into various foreign currency exchange contracts
(consisting of Deutsche Marks, Pounds Sterling, French Francs and Japanese
Yen) designed to manage DMC's exposure to exchange rate fluctuations on
foreign currency transactions. Foreign exchange contracts reduce DMC's
overall exposure to exchange rate movements, since the gains and losses on
these contracts offset gains and losses on the transactions being hedged.
DMC hedges a significant portion of all known foreign exchange exposures
from committed transactions. The notional amount of DMC's outstanding
foreign currency contracts, consisting of forwards, was approximately
$3,776,000 at December 31, 1997. These contracts have a term of less than
one year.
10
<PAGE>
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
All financial instruments are held for purposes other than trading. The
estimated fair values of all non-derivative financial instruments
approximate their carrying amounts in the statement of financial position
at December 31, 1997. The estimated fair value of the foreign currency
contracts, which is the net unrealized market gain or loss, is based
primarily on quotes obtained from various financial institutions that deal
in these types of instruments. The notional amount, carrying value, and
fair value of DMC's foreign currency contracts at December 31, 1997 are
$3,776,000, $0, and $(25,000), respectively.
DMC is exposed to credit risk to the extent of nonperformance by the
counterparties to the foreign currency contracts discussed above. However,
the credit ratings of the counterparties, which consist of a diversified
group of financial institutions, are regularly monitored and risk of
default is considered remote.
8. EMPLOYEE BENEFIT PLANS
The Company participates in the Honeywell-Measurex Profit Sharing and
401(k) Plan (the Plan), which covers substantially all employees.
Contributions to the plan are determined based on profit sharing measures
for Honeywell Inc. and Company matches against employee contributions up to
certain salary percentages and pre-determined dollar amounts. The Company
contributed approximately $507,000 to the Plan for the ten-month period
ended December 31, 1997. On January 1, 1998, the Company terminated the
Plan and enrolled all participants in the Honeywell Inc. 401(k) Plan.
9. INCOME TAXES
The (benefit) for income taxes is composed of the following:
December 31, 1997
Current:
Federal $ (776,000)
State (91,000)
Foreign (8,000)
---------------
(875,000)
---------------
Deferred:
Federal (219,000)
State (26,000)
Foreign 49,000
---------------
(196,000)
---------------
Total $ (1,071,000)
===============
11
<PAGE>
The (benefit) for income taxes differs from that computed by applying the
statutory federal income tax rate to (loss) before income taxes due to the
following:
December 31, 1997
Statutory rate 35.0%
Difference in effective rates on earnings
of foreign subsidiaries and other (3.3)
State income taxes (benefit), net of
federal income tax benefit 3.9
-------------
35.6%
=============
The approximate tax effect of each type of temporary difference and
carryforward that gave rise to the Company's deferred tax assets
(liabilities), as of December 31, 1997 is as follows:
December 31, 1997
CURRENT DEFERRED TAX ASSET:
Inventory reserves $ 1,177,000
Bad debt reserves 502,000
Profit sharing accrual 212,000
Vacation expense 143,000
Inventory capitalization 141,000
Warranty expense 184,000
---------------
$ 2,359,000
===============
December 31,1997
NONCURRENT DEFERRED TAX ASSET:
Accelerated depreciation $ ( 105,000)
Warranty expense 3,361,000
U.S. net operating loss carryforward 336,500
---------------
$ 3,592,500
===============
10. COMMITMENTS
The Company is obligated under various operating agreements, primarily for
office space, a manufacturing facility, and certain office equipment
through 2002. The Company entered into a lease for office and manufacturing
space in the United States during 1987 which, with options, extends until
November 2002 and contains an escalation clause related to increases in the
Consumer Price Index.
12
<PAGE>
Rental expense was $946,932 for the ten-month period ended December 31,
1997. The following is a schedule by years of future minimum rental payments
required under operating leases that have initial or remaining noncancelable
lease terms in excess of one year as of December 31, 1997:
Years ending:
1998 $ 959,724
1999 704,520
2000 443,196
2001 443,196
2002 406,263
-----------
$ 2,956,899
===========
11. RELATED PARTIES
Intercompany Sales - After Honeywell's acquisition of Measurex, DMC's
business was fully integrated into Honeywell. As a result, sales for a
portion of the ten-month period ended December 31, 1997 were billed and
collected by various Honeywell sales and service affiliates. Accordingly,
all external sales and related costs, accounts receivable, and advance
payments to these affiliates have been recorded in the consolidated
financial statements and all intercompany amounts have been eliminated.
During the ten-month period ended December 31, 1997, the Company recorded
intercompany revenues of $12,124,301. Related cost of sales were $9,456,956
during this period. In addition, the Company has recorded accounts
receivable of $2,230,881 and accounts payable of $26,076,944 at December 31,
1997 in relation to these transactions.
Administrative Expenses - During the ten-month period ended December 31,
1997, the Company paid approximately $370,000 to various affiliates for
reimbursement of expenses related to administrative services.
12. SEGMENT DATA
Geographic area results were as follows (in thousands):
Ten Months Ended December 31, 1997
------------------------------------------------------
United Elimina- Consolid-
States Europe Asia Other tions ated
Net Sales to
Unaffiliated
Customers $ 12,734 $ 7,565 $6,599 $1,764 - $ 28,662
Intercompany
sales 4,500 4,217 2,987 420 $ (12,124) -
-------- -------- ------ ------ ---------- ---------
Total sales $ 17,234 $ 11,782 $9,586 $2,184 $ (12,124) $ 28,662
======== ======== ====== ====== ========== =========
Operating loss $ 1,319 $ 1,366 $ 413 $ 7 $ - $ 3,105
======== ======== ====== ====== ========== =========
Identifiable
Assets
At December 31 $ 39,793 $ 7,045 $1,703 $ 460 $ (7,018) $ 41,983
======== ======== ====== ====== ========== =========
13
<PAGE>
Export sales to geographic areas outside the United States, excluding
intercompany transactions, were as follows for the ten-month period ended
(in thousands):
December 31, 1997
From the United States $ 13,045
From DMC (U.K.) Limited in the United Kingdom 761
From DMC Mess- & Regeltechnik GmbH in West Germany 2,122
------------
$ 15,928
============
The Company does not believe it is dependent upon any single customer on a
continuing basis, although in any one year one customer may account for a
material portion of the Company's sales. During 1997, no customer accounted
for 10% or more of sales.
13. CONTINGENCIES
The Company is a party to various other legal proceedings, of which
management believes that any losses in connection with these matters will
not have a material effect on the Company's net income, financial position,
or liquidity.
14
<PAGE>
HONEYWELL-MEASUREX DATA
MEASUREMENT CORPORATION
Consolidated Interim Financial Statements
<PAGE>
HONEYWELL-MEASUREX DATA MEASUREMENT CORPORATION
CONSOLIDATED BALANCE SHEET (unaudited)
- --------------------------------------------------------------------------------
July 4,
1998
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 870,778
Accounts receivable:
Trade, net of allowance 9,064,316
Affiliates 2,301,870
Inventories 11,324,870
Prepaid expenses and other current assets 250,564
Deferred income taxes 3,621,754
-----------
Total current assets 27,434,152
-----------
PROPERTY, PLANT, AND EQUIPMENT, net 1,330,924
-----------
DEFERRED INCOME TAXES 3,742,400
-----------
GOODWILL 4,374,000
-----------
INTANGIBLES AND OTHER ASSETS 1,962,848
-----------
Total assets $38,844,324
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Bank overdraft $ 32,537
Accounts payable 1,173,328
Accounts payable - affiliates 26,080,904
Advance payments on contracts 1,960,384
Accrued expenses 12,013,335
-----------
Total current liabilities 41,260,488
-----------
STOCKHOLDERS' DEFICIT:
Common stock ($1 par value, 1,000 shares
authorized, issued, and outstanding) 1,000
Additional capital 616,900
Retained deficit (3,080,741)
Cumulative translation adjustment 46,677
-----------
Total stockholders' deficit (2,416,164)
-----------
Total liabilities and stockholders' deficit $38,844,324
===========
See accompanying note.
2
<PAGE>
HONEYWELL-MEASUREX DATA MEASUREMENT CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS (unaudited)
- --------------------------------------------------------------------------------
Two Months Four Months Six Months
Ended Ended Ended
----------- ----------- -----------
Feb. 28, June 30, July 4,
1997 1997 1998
(Predecessor) (Successor) (Successor)
----------- ----------- -----------
Net sales $ 5,415,000 $13,014,968 $14,293,541
Cost of sales 5,115,000 9,866,924 11,784,900
----------- ----------- -----------
GROSS PROFIT 300,000 3,148,044 2,508,641
Selling, general, and
administrative expenses 1,524,863 2,676,563 3,006,698
Research and development
expenses 513,137 900,699 1,011,793
----------- ----------- -----------
OPERATING LOSS (1,738,000) (429,218) (1,509,850)
Other income (expense) (3,000) 21,941 36,607
----------- ----------- -----------
LOSS BEFORE INCOME TAXES (1,741,000) (407,277) (1,473,243)
INCOME TAX BENEFIT 619,100 144,828 333,076
----------- ----------- -----------
Net loss $(1,121,900) $ (262,449) $(1,140,167)
=========== =========== ===========
See accompanying note.
3
<PAGE>
HONEYWELL-MEASUREX DATA MEASUREMENT CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
- --------------------------------------------------------------------------------
Two Months Four Months Six Months
Ended Ended Ended
------------- ----------- -----------
Feb. 28, June 30, July 4,
1997 1997 1998
------------- ----------- -----------
(Predecessor) (Successor) (Successor)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net cash flows provided by
operating activities $ 2,298,826 $ 639,319 $ 593,761
----------- ----------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures (239,419) (178,096) (203,472)
Proceeds from sale of assets - - 19,845
----------- ----------- -----------
Net cash flows used in
investing activities (239,419) (178,096) (183,627)
----------- ----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from bank overdraft - - 32,537
Accounts payable - affiliates (1,486,532) (1,713,370) 3,620
----------- ----------- -----------
Net cash flows provided by
(used in) financing
activities (1,486,532) (1,713,370) 36,157
----------- ----------- -----------
EFFECT OF EXCHANGE RATE CHANGES
ON CASH - - (850)
----------- ----------- ------------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 572,875 (1,252,147) 445,441
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,551,260 2,124,135 425,337
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 2,124,135 $ 871,988 $ 870,778
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH
INFORMATION:
Cash paid during the period for
Interest $ - $ 6,000 $ -
=========== =========== ===========
See accompanying note.
4
<PAGE>
HONEYWELL-MEASUREX DATA MEASUREMENT CORPORATION
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------
1. General
The interim consolidated financial statements presented have been prepared
by Honeywell-Measurex Data Measurement Corporation without audit and, in the
opinion of management, reflect all adjustments of a normal recurring nature
necessary for a fair statement of the financial position at July 4, 1998, and
the results of operations and cash flows for the six month period ended July 4,
1998 (Successor), the two months ended February 28, 1997 (Predecessor), and the
four months ended June 30, 1997 (Successor). The Predecessor period represents
the period prior to Honeywell Inc.'s acquisition of Honeywell-Measurex Data
Measurement Corporation, which occurred on March 1, 1997. Interim results are
not necessarily indicative of results for a full year.
5
<PAGE>
Item 7. Financial Statements, Pro Forma Combined Condensed Financial
Information and Exhibits
(b) Pro Forma Combined Condensed Financial Information
The following unaudited pro forma combined condensed financial statements
set forth the results of operations for the year ended January 3, 1998, and the
six-month period ended July 4, 1998, as if the acquisition of DMC by the Company
had occurred at the beginning of 1997, and the financial position as of July 4,
1998, as if the acquisition of DMC by the Company had occurred at July 4, 1998.
The acquisition has been accounted for using the purchase method of
accounting. The pro forma results of operations are not necessarily indicative
of future operations or the actual results that would have occurred had the
acquisition of DMC been consummated at the beginning of 1997. The financial
statements of DMC filed under part (a) of this item should be read in
conjunction with the pro forma combined condensed financial statements.
4
<PAGE>
FORM 8-K/A
METRIKA SYSTEMS CORPORATION
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
Year Ended January 3, 1998
(Unaudited)
Historical Pro Forma
------------------------- -------------------
DMC
---------------
Metrika Pred- Succ- Adjust-
Systems ecessor essor ments Combined
------- ------- ------- ------- --------
(In thousands except per share amounts)
Revenues $56,714 $ 5,415 $28,662 $ - $90,791
------- ------- ------- ------- -------
Costs and Operating Expenses:
Cost of revenues 29,928 5,115 22,898 - 57,941
Selling, general, and
administrative expenses 14,367 1,525 6,636 464 22,992
Research and development
expenses 3,815 513 2,233 - 6,561
------- ------- ------- ------- -------
48,110 7,153 31,767 464 87,494
------- ------- ------- ------- -------
Operating Income (Loss) 8,604 (1,738) (3,105) (464) 3,297
Interest and Other Income
(Expense), Net 1,175 (3) 93 (1,697) (432)
------- ------- ------- ------- -------
Income (Loss) Before Income
Taxes 9,779 (1,741) (3,012) (2,161) 2,865
Income Tax (Provision) Benefit (3,920) 619 1,071 815 (1,415)
------- ------- ------- ------- -------
Net Income (Loss) $ 5,859 $(1,122) $(1,941) $(1,346) $ 1,450
======= ======= ======= ======= =======
Basic and Diluted Earnings
per Share $ .82 $ .20
======= =======
Weighted Average Shares:
Basic 7,143 7,143
======= =======
Diluted 7,147 7,147
======= =======
See notes to pro forma combined condensed financial information.
5
<PAGE>
FORM 8-K/A
METRIKA SYSTEMS CORPORATION
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
Six Months Ended July 4, 1998
(Unaudited)
Historical Pro Forma
------------------- -----------------
Metrika Adjust-
Systems DMC ments Combined
------- ------- ------- --------
(In thousands except per share amounts)
Revenues $29,096 $14,294 $ - $43,390
------- ------- ------- -------
Costs and Operating Expenses:
Cost of revenues 15,902 11,785 - 27,687
Selling, general, and
administrative expenses 7,060 3,007 166 10,233
Research and development
expenses 1,621 1,012 - 2,633
------- ------- ------- -------
24,583 15,804 166 40,553
------- ------- ------- -------
Operating Income (Loss) 4,513 (1,510) (166) 2,837
Interest and Other Income
(Expense), Net 1,155 37 (828) 364
------- ------- ------- -------
Income (Loss) Before Income
Taxes 5,668 (1,473) (994) 3,201
Income Tax (Provision) Benefit (2,219) 333 377 (1,509)
------- ------- ------- -------
Net Income (Loss) $ 3,449 $(1,140) $ (617) $ 1,692
======= ======= ======= =======
Basic and Diluted Earnings
per Share $ .42 $ .20
======= =======
Weighted Average Shares:
Basic 8,268 8,268
======= =======
Diluted 8,278 8,278
======= =======
See notes to pro forma combined condensed financial information.
6
<PAGE>
FORM 8-K/A
METRIKA SYSTEMS CORPORATION
PRO FORMA COMBINED CONDENSED BALANCE SHEET
July 4, 1998
(Unaudited)
Historical Pro Forma
------------------- -------------------
Metrika Adjust-
Systems DMC ments Combined
-------- -------- -------- --------
(In thousands)
Assets
Current Assets:
Cash and short-term
investments $ 44,951 $ 871 $(29,000) $ 16,822
Available for sale
investments, at quoted
market value 6,178 - - 6,178
Accounts receivable, net 11,796 9,064 - 20,860
Accounts receivable from
affiliates - 2,302 (2,302) -
Inventories 7,887 11,325 (1,068) 18,144
Unbilled contract costs
and fees 4,385 - - 4,385
Prepaid income taxes and
other current assets 2,898 3,872 1,713 8,483
-------- -------- -------- --------
78,095 27,434 (30,657) 74,872
-------- -------- -------- --------
Property, Plant, and
Equipment, at Cost, Net 10,014 1,331 - 11,345
-------- -------- -------- --------
Deferred Income Taxes - 3,742 (3,742) -
-------- -------- -------- --------
Other Assets 632 1,963 - 2,595
-------- -------- -------- --------
Cost in Excess of Net
Assets of Acquired
Companies 12,758 4,374 4,316 21,448
-------- -------- -------- --------
$101,499 $ 38,844 $(30,083) $110,260
======== ======== ======== ========
Liabilities and Shareholders'
Investments
Current Liabilities:
Notes payable and current
maturities of long-term
obligations $ 5,693 $ 33 $ - $ 5,726
Accounts payable 2,629 1,173 - 3,802
Accounts payable to
affiliates 4,163 26,081 (26,081) 4,163
Other accrued expenses 13,383 13,973 (6,418) 20,938
-------- -------- -------- --------
25,868 41,260 (32,499) 34,629
-------- -------- -------- --------
Accrued Pension Costs 4,477 - - 4,477
-------- -------- -------- --------
Long-term Obligation 3,513 - - 3,513
-------- -------- -------- --------
Shareholders' Investment 67,641 (2,416) 2,416 67,641
-------- -------- -------- --------
$101,499 $ 38,844 $(30,083) $110,260
======== ======== ======== ========
See notes to pro forma combined condensed financial information.
7
<PAGE>
FORM 8-K/A
METRIKA SYSTEMS CORPORATION
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
(Unaudited)
Note 1 - Basis of Presentation
The allocation of the purchase price is based on an estimate of the fair
market value of the net assets acquired and is subject to adjustment. To date,
no information has been gathered that would cause the Company to believe that
the final allocation of the purchase price will be materially different than the
preliminary estimate.
Note 2 - Pro Forma Adjustments to Pro Forma Combined Condensed
Statements of Income (In thousands, except in text)
Six Months
Year Ended Ended
January 3, July 4,
1998 1998
----------- ----------
Debit (Credit)
Selling, General, and Administrative Expenses
Service fee of 1.0% in 1997 and 0.8% in 1998
of the revenues of DMC for services that
would have been provided under a services
agreement between the Company and Thermo
Electron $ 341 $ 114
Amortization over 40 years of $8,690,000
of cost in excess of net assets of
acquired companies created by the
acquisition of DMC by the Company, net of
historical amortization expense recorded
by DMC 123 52
-------- --------
464 166
-------- --------
Interest and Other Income (Expense), Net
Decrease in interest income earned
attributable to the lower cash
position as a result of the cash
payment of $29,000,000 to acquire
DMC, calculated using the 90-day
Commercial Paper Composite Rate plus
25 basis points, or 5.85% in 1997
and 5.71% in 1998 1,697 828
-------- --------
Income Taxes Provision (Benefit)
Income tax benefit associated with the
adjustments above (excluding the
amortization of cost in excess of
net assets of acquired companies),
calculated at the Company's statutory
rate of 40% (815) (377)
------- -------
8
<PAGE>
Note 3 - Pro Forma Adjustments to Pro Forma Combined Condensed Balance
Sheet (In thousands, except in text)
July 4, 1998
--------------
Debit (Credit)
Cash and Short-term Investments
Cash payment to acquire DMC $(29,000)
--------
Accounts Receivable from Affiliates
Asset not acquired (2,302)
--------
Inventories
Increase in inventories to reflect use of
percentage of completion method on all
contracts 432
Abandonment of product lines (1,500)
--------
(1,068)
--------
Prepaid Income Taxes and Other Current Assets
Reclass long-term deferred taxes to current 686
Record deferred income taxes related to abandonment of
product lines and estimated accrued acquisition expenses 1,027
--------
1,713
--------
Long-term Deferred Income Taxes
Deferred tax asset related to liabilities not assumed (3,056)
Reclass deferred income taxes to current (686)
--------
(3,742)
--------
Cost in Excess of Net Assets of Acquired Companies
Cost in excess of net assets of acquired companies
relating to the acquisition of DMC in excess
of amount recorded at DMC 4,316
--------
Accounts Payable to Affiliates
Liability not assumed 26,081
--------
Other Accrued Expenses
Liabilities not assumed 8,318
Estimated accrued acquisition expenses, primarily
severance and abandoned-facility payments (1,500)
Estimated accrued acquisition expenses for transaction
costs relating to the DMC acquisition (400)
--------
6,418
--------
Shareholders' Investment
Elimination of DMC's equity accounts (2,416)
--------
9
<PAGE>
Item 7. Financial Statements, Pro Forma Combined Condensed Financial
Information and Exhibits
(c) Exhibits
2 Stock Purchase Agreement dated as of May 6, 1998 by and between
Metrika Systems Corporation and Honeywell-Measurex Corporation
(previously filed as Exhibit 2 to the Company's Current Report
on Form 8-K filed with the Commission on July 17, 1998).
Pursuant to Item 601(b)(2) of regulation S-K, schedules and
exhibits to this Agreement have been omitted. The Company
hereby undertakes to furnish supplementally a copy of such
schedules and exhibits to the Commission upon request.
23 Consent of Deloitte and Touche LLP
10
<PAGE>
FORM 8-K/A
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, on this 18th day of September 1998.
METRIKA SYSTEMS CORPORATION
Paul F. Kelleher
------------------------
Paul F. Kelleher
Chief Accounting Officer
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
(No. 333-38371) on Form S-3 and registration statement (No. 333-58255) on Form
S-8 of Metrika Systems Corporation of our report dated June 26, 1998, with
respect to the consolidated balance sheet of Honeywell-Measurex Data Measurement
Corporation, a wholly owned subsidiary of Honeywell-Measurex Corporation Inc. as
of December 31, 1997, and the related consolidated statements of operations,
shareholders' deficit, and cash flows for the ten month period then ended,
appearing in this Ammendment No. 1 on Form 8-K/A of Metrika Systems Corporation.
Deloitte & Touche LLP
September 16, 1998 Washington, D.C.
