SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
AMENDMENT NO. 2 ON
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
June 11, 1999
ROLLER BEARING COMPANY OF AMERICA, INC.
(Exact name of Registrant as specified in Charter)
Delaware 333-33085 13-3426227
- --------------------------------------------------------------------------------
(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification
Number)
60 Round Hill Road, Fairfield, Connecticut 06430
- --------------------------------------------------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number including area code (203) 255-1511
------------------------------
Not Applicable
- --------------------------------------------------------------------------------
(Former name and former address, as changed since last report)
<PAGE>
This Amendment No. 2 corrects the line item for Raw Materials (1998) set forth
in Note 5 to the Notes to Financial Statements for Glasgow Taper Roller Bearing
Business of SKF USA Inc.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
Financial Statements of Glasgow Taper Roller Bearing Business of SKF USA Inc. as
of December 31, 1998 and 1997
(b) Pro Forma Financial Statements
Pro Forma Condensed Income Statements for Roller Bearing Company of America,
Inc. for the year ended April 3, 1999
(c) Exhibits.
None
<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.
Roller Bearing Company of America, Inc.
(the Registrant)
Dated: August 24, 1999 By: /s/ Anthony S. Cavalieri
------------------------------------
Name: Anthony S. Cavalieri
Title: Chief Financial Officer and
Assistant Secretary
<PAGE>
GLASGOW TAPER ROLLER BEARING
BUSINESS OF SKF USA INC.
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998 AND 1997
TOGETHER WITH AUDITORS' REPORT
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Management of SKF USA Inc.:
We have audited the accompanying statements of net assets of the Glasgow Taper
Roller Bearing Business of SKF USA Inc. (the "Business") as of December 31, 1998
and 1997, and the related statements of revenues and expenses for each of the
three years in the period ended December 31, 1998. These financial statements
are the responsibility of the Business's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Note 2, the accompanying financial statements were prepared to
present the net assets and the revenues and expenses of the Business, which does
not have a separate legal status or existence, and are not intended to be a
complete presentation of the assets and liabilities or the results of operations
of the Business.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets of the Business as of December 31, 1998
and 1997, and the revenues and expenses for each of the three years in the
period ended December 31, 1998, in conformity with generally accepted accounting
principles.
Philadelphia, Pa.,
August 16, 1999
<PAGE>
<TABLE>
GLASGOW TAPER ROLLER BEARING
----------------------------
BUSINESS OF SKF USA INC.
------------------------
STATEMENTS OF NET ASSETS
------------------------
<CAPTION>
December 31
---------------------------------- March 31,
1998 1997 1999
---- ---- ----
(unaudited)
<S> <C> <C> <C>
ASSETS:
Current assets-
Cash $ 4,000 $ 4,000 $ 4,000
Inventories 7,298,026 5,817,004 6,780,060
Prepaids and other current assets 31,705 63,320 487
---------------- ----------------- -----------------
Total current assets 7,333,731 5,884,324 6,784,547
---------------- ----------------- -----------------
Plant and equipment, net 7,104,741 12,791,362 6,663,408
---------------- ----------------- -----------------
Total assets 14,438,472 18,675,686 13,447,955
---------------- ----------------- -----------------
LIABILITIES:
Current liabilities-
Accounts payable 811,721 1,704,106 890,501
Accrued expenses and other current liabilities 1,508,511 2,900,857 1,597,277
Accrued workers' compensation 1,918,000 2,111,000 1,918,000
Accrued taxes 35,338 40,281 95,471
---------------- ----------------- -----------------
Total current liabilities 4,273,570 6,756,244 4,501,249
---------------- ----------------- -----------------
NET ASSETS $ 10,164,902 $ 11,919,442 $ 8,946,706
================ ================= =================
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
GLASGOW TAPER ROLLER BEARING
----------------------------
BUSINESS OF SKF USA INC.
------------------------
STATEMENTS OF REVENUES AND EXPENSES
-----------------------------------
<CAPTION>
For the Years Ended For the Three Months
December 31 Ended March 31
------------------------------------------------------ -------------------------------
1998 1997 1996 1999 1998
--------------- -------------- -------------- -------------- --------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
NET SALES $ 50,630,264 $ 51,359,801 $ 52,073,285 $ 9,743,676 $ 13,774,050
--------------- -------------- -------------- --------------- --------------
COSTS AND EXPENSES:
Cost of goods sold 51,161,479 42,486,913 46,138,432 10,520,492 12,819,528
Selling, general and administrative 4,302,404 5,732,816 5,773,273 1,081,916 1,062,063
Other income, net (2,144) (27,342) (1,829) -- (580)
--------------- -------------- -------------- --------------- --------------
Total costs and expenses 55,461,739 48,192,387 51,909,876 11,602,408 13,881,011
--------------- -------------- -------------- --------------- --------------
EXCESS/(SHORTFALL) OF
REVENUES OVER EXPENSES $ (4,831,475) $ 3,167,414 $ 163,409 $ (1,858,732) $ (106,961)
=============== ============== ============== =============== ==============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
GLASGOW TAPER ROLLER BEARING
-----------------------------
BUSINESS OF SKF USA INC.
------------------------
NOTES TO FINANCIAL STATEMENTS
------------------------------
1. ORGANIZATION AND BUSINESS:
-------------------------
The Glasgow Taper Roller Bearing Business (the "Business") is a division of SKF
USA Inc. ("SKF"), which is a majority owned subsidiary of AB SKF. The Business
is principally engaged in the manufacture of taper roller bearings which are
sold primarily to the automotive industry. The Business's fiscal year-end is
December 31.
2. BASIS OF PRESENTATION:
---------------------
The accompanying financial statements present, on a historical cost basis, the
net assets and the statements of revenues and expenses of the Business. The
Business was part of SKF through March 31, 1999, and does not have a separate
legal status or existence. The Business's net assets, revenues and expenses have
historically been commingled with SKF's. These statements are presented as if
the Business had existed as a separate entity during the periods presented. The
accompanying financial statements are not intended to be a complete presentation
of the assets, liabilities or revenues and expenses of the Business on a
stand-alone basis.
The Business incurred significant losses in 1998, including the non-cash charges
of approximately $4,800,000 associated with the decision to dispose of the
Business (see Note 11). The working capital required to sustain the operations
of the Business was provided by SKF through the date of the purchase (see Note
12).
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
------------------------------------------
Inventory
- ---------
Inventories, consisting of material, labor and overhead, are stated at the lower
of first-in, first-out ("FIFO") cost or market.
<PAGE>
Plant and Equipment
- -------------------
Plant and equipment is stated at cost. The straight-line method of depreciation
is used for financial reporting and estimated useful lives are as follows:
Buildings and improvements 33-1/4 years
Machinery and equipment 12 years
Tooling 5 years
Furniture, fixtures and automobiles 4 years
Maintenance and repairs are charged to expense as incurred. Major repairs and
improvements, which extend the lives of the related assets, are capitalized and
depreciated at applicable straight-line rates. The cost and accumulated
depreciation of items of plant and equipment retired, or otherwise disposed of,
are removed from the related accounts, and any residual values are charged or
credited to operating income.
Accrued Workers' Compensation
- -----------------------------
Accrued workers' compensation has been allocated to the Business by SKF based on
the estimated unpaid portion of open claims outstanding at period end for those
employees injured while working for the Business.
Revenue Recognition
- -------------------
The Company recognizes revenues at the time the product is shipped to the
customer. The accounts receivable related to the revenue generated by the
Business are reflected in the net asset balance. These receivables are
commingled with other SKF business' receivables and cannot be separately
identified.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
<PAGE>
4. SELECTED CASH FLOW INFORMATION:
------------------------------
<TABLE>
December 31 March 31
-------------------------------------------- -------------------------------
1998 1997 1996 1999 1998
------------- ------------ ------------ --------------- -------------
(unaudited) (unaudited)
Provision/(reversal) for excess
<S> <C> <C> <C> <C> <C>
and obsolete inventory $ (40,597) $ 18,331 $ (177,672) $ 99,552 $ (42,758)
Capital expenditures 778,084 1,378,858 1,573,832 -- 134,781
Depreciation 1,646,292 1,535,913 1,380,201 322,951 409,031
Write-down of plant & equipment 4,800,000 -- -- -- --
</TABLE>
As a plant of SKF, the Business's cash receipts and disbursements are made by
SKF. The provision for writedown of plant and equipment in 1998 consists of
the special charges as discussed in Note 11.
5. INVENTORIES:
----------
Inventories consist of the following at December 31, 1998 and 1997 and March 31,
1999:
<TABLE>
December 31
----------------------------------- March 31,
1998 1997 1999
---- ---- ----
(unaudited)
<S> <C> <C> <C>
Raw materials $ 700,875 $ 720,391 $ 922,953
Work-in-process 1,582,622 1,433,221 1,249,256
Finished goods 5,014,529 3,663,392 4,607,851
---------------- ------------------ -----------------
Total inventories $ 7,298,026 $ 5,817,004 $ 6,780,060
================ ================== =================
</TABLE>
<PAGE>
6. PLANT AND EQUIPMENT:
-------------------
Plant and equipment consist of the following at December 31, 1998 and 1997 and
March 31, 1999:
<TABLE>
December 31
----------------------------------- March 31,
1998 1997 1999
---- ---- ----
(unaudited)
<S> <C> <C> <C>
Buildings and improvements $ 4,334,074 $ 4,180,260 $ 4,334,074
Machinery and equipment 30,123,984 34,141,438 30,099,613
Other 1,296,278 1,226,926 1,296,278
Construction-in-progress 745,278 1,020,840 626,896
----------------- ------------------ -----------------
36,499,614 40,569,464 36,356,861
Less- Accumulated depreciation (29,394,873) (27,778,102) (29,693,453)
----------------- ------------------ -----------------
Plant and equipment, net $ 7,104,741 $ 12,791,362 $ 6,663,408
================= ================== =================
</TABLE>
7. RELATED-PARTY TRANSACTIONS:
---------------------------
The Business receives certain support services from SKF and AB SKF including;
treasury, tax, legal, accounting, technical services, data processing, risk
management, environmental and human resources. Charges of $3,613,793, $3,961,473
and $4,301,160 for such services in the years ended December 31, 1998, 1997 and
1996, respectively, and $977,337 (unaudited) and $861,487 (unaudited) for the
three months ended March 31, 1999 and 1998, respectively, are reflected in
selling, general, and administrative expenses in the accompanying statement of
revenues and expenses. Allocation of these charges to the Business are based on
various factors including production levels and labor.
SKF maintains insurance coverage for general liability, property damage, auto
insurance, special crimes, pollution and other incidental coverages. The cost of
such insurance coverage is allocated to the Business on the basis of, where
applicable, past loss experiences, expected future losses and values of property
at risk. Charges of $147,780, $180,264 and $174,036 for insurance coverage for
the years ended December 31, 1998, 1997 and 1996, respectively, and $22,590
(unaudited) and $41,586 (unaudited) for the three months ended March 31, 1999
and 1998, respectively, are reflected in cost of goods sold in the accompanying
statement of revenues and expenses.
The Business sells certain products to other SKF businesses and divisions.
Revenues recorded for these sales were approximately at $22,871,149, $23,196,273
and $20,273,334 for the years ended December 31, 1998, 1997 and 1996,
respectively, and $4,869,478 (unaudited) and $6,329,286 (unaudited) for the
three months ended March 31, 1999 and 1998, respectively. The selling prices
associated with these revenues averaged a 10% to 15% mark-up on SKF's internal
standard cost.
<PAGE>
8. PENSION AND POSTRETIREMENT BENEFITS:
-----------------------------------
As of December 31, 1998, 1997 and 1996, substantially all employees are covered
under either the SKF Salaried Pension Plan or the SKF Hourly Pension Plan.
Amortization of prior service cost and current service costs related to these
pension plans are charged to the Business. In addition to providing pension
benefits, the Business also provides certain health care and life insurance
benefits to eligible retired employees. Active employees, hired prior to 1994,
may become eligible for these benefits if they reach retirement age while
working for the Business. SKF accounts for the cost of providing postretirement
benefits during the active service periods of the employees. The component of
net periodic postretirement benefit costs allocated to the Business represent
current service cost and interest on the unfunded accumulated postretirement
benefit obligation based on current employment levels. The costs related to the
pension and postretirement benefits amounted to $685,576, $692,020 and $749,174
in the years ended December 31, 1998, 1997 and 1996, respectively and $98,608
(unaudited) and $180,816 (unaudited) in the three months ended March 31, 1999
and 1998, respectively.
No liability for unfunded pension or healthcare and life insurance benefits,
other than the amounts discussed above, have been reflected in these statements.
In connection with the disposition of the Business (see Notes 11 and 12)
eligible participants under the Plans, including the post-retirement welfare
plan, are expected to retire under the Plans. The estimated one-time curtailment
cost associated with this is approximately $6,000,000 and will be borne by SKF.
9. INCOME TAXES:
------------
The Business is a division of SKF. Income taxes are determined for SKF and are
not allocated to the divisions. Therefore, these financial statements do not
include a provision or accrual for income taxes.
10. COMMITMENTS AND CONTINGENCIES:
-----------------------------
During the normal course of business, the Business is party to certain
environmental and legal matters, none of which management believes will have a
material effect on its net assets or on its results of operations.
The Business has lease obligations for facilities and equipment. The future
minimum lease commitments at December 31, 1998 were as follows:
1999 $ 134,775
2000 23,096
--------------
$ 157,871
============
Rent expense was approximately $332,477, $284,865 and $233,352 in the years
ended December 31, 1998, 1997 and 1996, respectively, and $91,001 (unaudited)
and $53,778 (unaudited) for the three months ended March 31, 1999 and 1998,
respectively.
In addition, SKF entered into a lease for the land and the improvements thereon
in Glasgow, Kentucky that the Business is located on with the SKF Hourly Pension
Plan. This lease has been accounted for as a capital lease by SKF and the
Business is charged for the lease payments. Annual lease payments under this
arrangement are $37,232 and the lease expires in 2005.
<PAGE>
11. SPECIAL CHARGES:
---------------
In 1998, AB SKF announced a worldwide restructuring plan to curtail costs by
closing certain plants and production channels. During 1998, the Board of
Directors of AB SKF authorized the disposition of the Business. In connection
with this decision, the Business recorded a charge of approximately $4,800,000
to write-down the plant and equipment of the Business to their estimated net
realizable value. The above noted charges included in cost of sales in the
accompanying statement of revenues and expenses.
12. SUBSEQUENT EVENT:
----------------
On June 11, 1999, Tyson Bearing Company, Inc. ("Tyson"), a wholly owned
subsidiary of the Roller Bearing Company of America, Inc. ("RBC") acquired
substantially all of the assets, and assumed certain liabilities of the Business
from SKF for $10,200,000 in cash, subject to upward adjustments for new
business, as defined. In connection with the acquisition, Tyson entered into a
sublease for a portion of SKF's facility in Glasgow, Kentucky, as well as an
option agreement whereby Tyson would have the option to enter into a lease
(containing an option to extend the term of such lease to 2015) with the owner
of the Glasgow facility following the expiration of the sublease. SKF also
entered into long-term supply agreements with Tyson. Under the terms of these
supply agreements, SKF agreed under certain terms and conditions to purchase its
requirements for those products described in the supply agreement. Such
requirements represented 45.2%, 45.2% and 38.9% of the Business's net sales in
1998, 1997 and 1996, respectively.
13. UNAUDITED INTERIM INFORMATION:
-----------------------------
The unaudited interim information included herein has been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. The information furnished reflects all adjustments
(consisting of normal recurring adjustments), which are, in the opinion of
management, necessary for a fair statement of the results for the interim
periods. These results are not necessary indicative of the entire year's
results.
<PAGE>
ROLLER BEARING COMPANY OF AMERICA
PRO-FORMA CONDENSED
FINANCIAL STATEMENT
(UNAUDITED)
The following pro-forma income statement for the year ended April 3, 1999 gives
effect to the acquisition by Roller Bearing Company of America ("RBC") of the
taper roller bearing operations of SKF (the "SKF Business") on June 11, 1999, as
if the acquisition had occurred on March 28, 1998, after giving effect to the
pro-forma adjustments described in the accompanying notes. The pro-forma
information is based upon respective historical Financial Statement of RBC and
the SKF Business and does not purport to be indicative of the results which
would actually have resulted if the combination had been in effect on the dates
or for the periods indicated or which may result in the future. The following
pro-forma results reflect the addition of the SKF Business's historical income
statement for the year ended December 31, 1998 with the historical results of
RBC for the year ended April 3, 1999.
<PAGE>
<TABLE>
Pro-Forma Condensed Income Statements
For the Year Ended April 3, 1999
(In thousands)
<CAPTION>
RBC SKF Business Pro-Forma
Historical Historical Pro-Forma Adjustments Combined
---------- ---------- --------------------- --------
<S> <C> <C> <C> <C>
Sales $147,932 $50,630 $ - $198,562
Cost of sales 103,165 51,161 (5,786) (a)(c) 148,540
------- ------ ------ -------
Gross profit 44,767 (531) 5,786 50,022
Selling, general and administrative 23,008 4,302 (3,374) (d) 23,936
Other (income) expense, net 686 (2) - 684
------- ------ ------ -------
Operating income (loss) 21,073 (4,831) 9,160 25,402
Interest expense, net 14,465 - 816 (b) 15,281
------- ------ ------ -------
Income (loss) before taxes 6,608 (4,831) 8,344 10,121
Income tax expense 2,713 - 1,440 (e) 4,153
------- ------ ------ -------
Net income $ 3,895 $ (4,831) $ 6,904 $ 5,968
========== ======== ======== ==========
</TABLE>
<PAGE>
NOTES TO PRO-FORM CONSOLIDATED FINANCIAL STATEMENTS
On June 11, 1999, Roller Bearing Company of America ("RBC") completed the
acquisition of certain selected assets of SKF USA, Inc.'s taper roller bearing
operations (the "SKF Business") whose principal operations are located in
Glasgow, Kentucky. In addition to the assumption of certain selected liabilities
RBC paid $10.2 million.
The acquisition is being accounted for as a purchase with assets acquired and
liabilities assumed recorded at their estimated fair values at the data of
acquisition. At this time, the purchase price allocation related to certain
accruals and reserves is not complete and adjustments may be necessary.
No pro-forma condensed balance sheet as of June 26, 1999 and no pro-forma
condensed income statement for the three months then ended have been included in
this filing. This is due to the fact that both the unaudited balance sheet and
the unaudited income statement filed on the Form 10-Q of RBC for the quarterly
period ended June 26, 1999 include the acquisition and results of operations of
Tyson, which was effective as of April 4, 1999. The following are explanations
of the adjustments reflected on the Pro-Forma financial statements.
(a) Reflects the pro-forma adjustment to depreciation expense based upon the
adjustment to the value assigned to fixed assets acquired.
(b) Reflects the pro-forma adjustment for estimated interest expense as a result
of the $10.2 million in debt incurred related to the acquisition.
(c) Reflects the elimination of the restructuring charge reflected in the
financial statements of the SKF business. This charge ($4,800) was directly
related to the sale of the business and is not considered to be a recurring cost
of the business.
(d) Reflects the elimination of costs charged by SKF USA which will not be
incurred by RBC.
(e) Reflects the pro-forma adjustment to record the tax effect of the
adjustments described above.
