SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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 21, 1998
STANDARD AUTOMOTIVE CORPORATION
----------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 001-13657 59-2018007
-------- --------- ----------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation File Number) Identification No.)
321 Valley Rd., Hillsborough, NJ 08876-4056
- -------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, (908) 369-5544
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<PAGE>
Item 7. Financial Information, Pro Forma Financial Information and Exhibits
(a) Pro Forma Financial Information
The Unaudited Pro Forma Combined Balance Sheet of Standard Automotive
Corporation ("SAC") at June 30, 1998 and the Unaudited Pro Forma Combined
Statements of Income of SAC for the fiscal year ended March 31, 1998 and the
three months ended June 30, 1998 which are set forth below, give effect to the
acquisition of R/S Truck Body Co., Inc. on July 21, 1998, based upon the
assumptions set forth below, and in the notes to such statements. The
acquisition has been accounted for as a "purchase".
The unaudited pro forma financial information has been included pursuant
to the requirements set forth in applicable rules of the SEC and is provided for
comparative purposes only. The unaudited pro forma financial information
presented does not purport to be indicative of the financial position or
operating results which would have been achieved had the acquisitions taken
place at the date indicated and should not be construed as representative of the
Company's financial position or results of operations far any future date or
period.
The unaudited pro forma adjustments are based on available information and
certain assumptions that the Company believes are reasonable under the
circumstances; however the actual recording of the R/S acquisition (which
recording management does not expect to vary materially) will be based on
independent appraisals, evaluations and estimates of fair values.
<PAGE>
R & S TRUCK BODY COMPANY, INC.
AUDITED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1997
<PAGE>
William E. Bottoms, P.S.C.
CERTIFIED PUBLIC ACCOUNTANTS
Junction U.S. 23 and Route 80
P.O. Box 849
Prestonsburg, Kentucky 41653
WILLIAM E. BOTTOMS, C.P.A. Members:
(606) 874-8025 KENTUCKY SOCIETY OF C.P.A.
AMERICAN INSTITUTE C.P.A.
February 12, 1998
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
R & S Truck Body Company, Inc.
We have audited the accompanying balance sheets of R & S Truck Body
Company, Inc. (a Kentucky corporation) as of December 31, 1996 and 1997, and the
related statements of income, retained earnings, and cash flows for the years
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, the financial statements referred to above present fairly,
in all material respects, the financial position of R & S Truck Body Company,
Inc. as of December 31, 1996, and 1997, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.
/s/ William E. Bottoms, P.S.C., C.P.A.
<PAGE>
R & S TRUCK BODY CO., INC.
Balance Sheets
December 31, 1997 and 1996
1997 1996
ASSETS
CURRENT ASSETS
Cash $ 2,386,350 $ 2,322,383
Accounts Recievable (Note 2) 1,265,646 1,350,415
Less Allowance for Doubtful Accounts (266,142) (288,583)
----------- -----------
Accounts Recievable - Net 999,504 1,061,832
Inventory - at lower of cost (FIFO)
or Market - (Note 3) 2,473,041 2,417,122
Prepaid Expenses 7,324 9,438
----------- -----------
Total Current Assets 5,866,219 5,810,775
PROPERTY, PLANT AND EQUIPMENT - (Note 4)
Equipment and Leasehold Improvements 3,784,182 3,518,494
Less Accumulated Depreciation (2,723,972) (2,260,363)
----------- -----------
Property, Plant and Equipment - Net 1,060,210 1,258,131
OTHER ASSETS
Cash Surrender Value - Life Insurance 24,745 25,740
Unamortizated Legal & Finance Costs 163,223 177,162
Davidson Project 955,545 70,003
Total Assets $ 8,069,942 $ 7,341,811
=========== ===========
See accountant's report and notes to financial statements.
Page 4
<PAGE>
R & S TRUCK BODY CO., INC.
Balance Sheets
December 31, 1997 and 1996
1997 1996
LIABILITIES AND
STOCKERHOLDERS' EQUITY
CURRENT LIABILITIES
Notes Payable - Current Maturities 4,221 4,000
Accounts Payable - Trade 242,605 589,997
Payroll and Payroll Taxes 1,124,333 943,475
Accrued Expenses 37,703 290,671
Provision for Warranty Repairs 56,000 56,000
----------- -----------
Total Current Liabilities 1,464,862 1,884,143
LONG - TERM LIABILITIES
Notes Payable - (Note 5) 902,153 95,483
Less Current Maturities (4,221) (4,000)
----------- -----------
Long-Term Libilities - Net 897,932 91,483
----------- -----------
Total Liabilities 2,362,794 1,975,626
STOCKHOLDERS' EQUITY
Common Stock $100 Par Value
Authorized 800 shares: Issued
and Outstanding, 360 Shares 36,000 36,000
Retained Earnings 5,671,148 5,330,185
----------- -----------
Total Stockholders' Equity 5,707,148 5,366,185
----------- -----------
Total Liabilities and
Stockholders' Equity $ 8,069,942 $ 7,341,811
=========== ===========
See accountant's report and notes to financial statements.
Page 5
<PAGE>
R & S TRUCK BODY CO., INC.
Income Statements
For the years ended December 31, 1997 and 1996
1997 1996
SALES NET $20,146,681 $21,952,644
COST OF SALES
Materials Cost 10,345,307 11,325,397
Plant Expense (Schedule A) 4,516,432 4,770,895
Cost of Goods Sold 14,861,739 16,096,292
----------- -----------
Gross Profit 5,284,942 5,856,352
General and Selling
Expenses (Schedule B) 3,663,462 3,947,950
----------- -----------
Operating Income 1,621,480 1,908,402
Other Income (Expense) (Schedule C) 247,640 73,37l
----------- -----------
Net Income $ 1,869,120 $ 1,981,773
=========== ===========
See accountant's report and notes to financial statements.
Page 6
<PAGE>
R & S TRUCK BODY CO., INC.
Statement of Cash Flows
For the years ended December 31, 1997 and 1996
1997 1996
Cash flows from operating activities:
Net Income $ 1,869,120 $ 1,981,773
----------- -----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 463,609
Net Change to Accumulated Deprn. for disposal (286,242)
(Increase) decrease in accounts receivable 84,769 434,505
(Increase) decrease in prepaid expenses 2,114 23,011
(Increase) decrease in inventories (55,919) (225,251)
(Increase) decrease in other assets (870,608) 15,067
Increase (decrease) in accounts payable (347,392) l37,933
Increase (decrease) in accrued liabilities (72,110) 187,720
----------- -----------
Total adjustments (795,537) 286,743
----------- -----------
Net cash provided (used) by operating
activities 1,073,583 2,268,516
----------- -----------
Cash flows from investing activities:
Cash payments for the purchase of property (265,688)
Provision for losses on accounts receivable (22,441) 88,583
Net Change to Fixed Assets (519,594)
----------- -----------
Net cash provided (used) by investing activities (288,129) (431,011)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 806,670
Principal payments on long-term debt (1,496)
Dividends paid (1,528,157) (1,096,233)
----------- -----------
Net cash provided (used) by financing activities (721,487) (1,097,729)
----------- -----------
Net increase (decrease) in cash and equivalents 63,967 739,776
Cash and equivalents, beginning of year 2,322,383 1,582,607
----------- -----------
Cash and cash equivalents, end of year $ 2,386,350 $ 2,322,383
=========== ===========
See accountant's report and notes to financial statements.
Page 7
<PAGE>
R & S TRUCK BODY CO., INC.
Retained Earnings
For the years ended December 31, 1997 and 1996
1997 1996
Retainings Earnings Beginning $ 5,330,195 $ 4,444,645
Net Income 1,869,120 1,981,773
Distributions of Current Earnings (1,528,165) (1,096,223)
----------- -----------
Retained Earnings Ending $ 5,671,150 $ 5,330,195
=========== ===========
See Accountant's Report.
Page 8
<PAGE>
R & S TRUCK BODY COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
R & S Truck Body Company, Inc. is a Kentucky corporation engaged in
the manufacture and sales of truck bodies for a variety of applications.
The Corporation also manufactures suspensions for truck bodies. The
Corporation currently operates a single plant site, Allen Kentucky.
The accounting records of the Corporation are maintained using the
accrual method of accounting for both financial reporting purposes as well
as for income tax purposes.
Accounts receivable represent amounts due from trade customers as
well as employees. Provision for doubtful accounts was made using the
reserve method of accounting for bad debt expense.
Inventories are stated at the lower of cost (determined on a
first-in, first-out basis; FIFO) or market and included material, labor
and factory overhead.
Equipment and leasehold improvements are stated at cost. The
provision for depreciation is computed using both the straight line and
declining balance methods. Depreciation amounts are the same for both
financial statements and tax purposes for assets acquired prior to January
1, 1981. The Economic Recovery Act of 1981 requires that, for the federal
tax purposes, the Accelerated Cost Recovery System guidelines for
depreciation be used for assets. Maintenance and repairs are charged to
expense as incurred. Costs of improvements and renewals are capitalized
and property replaced is accounted for as a replacement.
For income tax purposes certain items of income and expense are
recognized in different periods from those in which such items are
recognized for financial statement purposes. These items include MACRS and
ACRS depreciation.
The Corporation filed an election with the Internal Revenue Service
to be taxed as an S Corporation for the fiscal year beginning October 1,
1986. Income from S Corporations is not generally taxed at the corporate
level but is passed through to the stockholders. This election resulted in
the Corporation having to adopt a calendar year in order to comply with
Internal Revenue Service regulations.
9
<PAGE>
R & S TRUCK BODY COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997
NOTE 2 - ACCOUNTS RECEIVABLE AND PROVISION FOR DOUBTFUL ACCOUNTS:
Accounts receivable consists of the following:
1997 1996
Trade Accounts $ 1,258,715 $ 1,349,978
Other 6,930 437
----------- -----------
Less: Allowance for 1,265,645 1,350,415
Doubtful Accounts 266,142 288,583
----------- -----------
Accounts Receivable - Net $ 999,503 $ 1,061,832
=========== ===========
The Tax Reform Act of 1986 required that the reserve method no
longer be used for income tax purposes.
NOTE 3 - INVENTORIES
Inventories consist of the following:
1997 1996
Raw Materials
Steel & Aluminum $ 382,548 $ 480,689
Parts & Distributor Goods 1,138,231 1,136,951
----------- -----------
1,520,779 1,617,640
Work-In-Process 81,551 30,895
Finished Goods 870,711 768,587
----------- -----------
Total Inventory $ 2,473,041 $ 2,417,122
=========== ===========
10
<PAGE>
R & S TRUCK BODY COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997
NOTE 4 - EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements at December 31, 1996 consisted
of the following:
Accumulated Book
Costs Depreciation Value
----- ------------ -----
Shop Equipment $2,092,287 $1,060,482 $1,031,805
Automotive Equip 146,578 138,223 8,355
Leasehold Improvements 387,034 387,034 -0-
Office Equipment 447,271 322,713 124,558
Aircraft 445,324 351,911 93,413
---------- ---------- ----------
$3,518,494 $2,260,363 $1,258,131
========== ========== ==========
Equipment and leasehold improvements at December 31, 1997 consisted
of the following:
Accumulated Book
Costs Depreciation Value
----- ------------ -----
Shop Equipment $2,200,139 $1,386,821 $ 813,318
Automotive Equip 285,628 163,134 122,494
Leasehold Improvements 387,034 387,034 -0-
Office Equipment 466,057 372,797 93,260
Aircraft 445,324 414,186 31,138
---------- ---------- ----------
$3,784,182 $2,723,972 $1,060,210
========== ========== ==========
NOTE 5 - NOTES PAYABLE
December 31, 1996
Notes Payable consist of the following:
Star Bank - 25 year term loan $ 95,483
--------
Total $ 95,483
Less: Current Maturities 4,000
--------
Long-Term Liabilities $ 91,483
========
December 31, 1997
Notes Payable consist of the following:
Star Bank - 25 year term loan $ 93,084
Star Bank - 20 yr Construction loan 809,069
--------
Total $902,153
Less: Current Maturities $ 4,221
--------
Long Term Liabilities $897,932
========
11
<PAGE>
R & S TRUCK BODY COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997, 1996
NOTE 5 - NOTES PAYABLE (CONTINUED)
The Corporation has a $2,500,000 working capital line of credit with
Star Bank NA of Cincinnati. None of this credit was used at December 31,
1997.
To finance its expansion project, the Corporation has a $2,500,000
term loan line of credit with Star Bank NA to use for equipment purchases.
This term loan is to be repaid over 7 years, with principal payments
beginning at May 1, 1999. There is an additional $100,000 term loan line
of credit with Star Bank NA to finance its project. This term loan is to
be repaid over 25 years beginning June 30, 1996. All of this credit line
has been used at December 31, 1997.
Future Payment Obligations
1998 $ 4,221
1999 4,221
2000 4,221
2001 4,221
2002 4,221
--------
Over 7 Years 71,979
========
To finance its building project, the Corporation has a $4,000,000
construction loan line of credit with Star Bank NA. The construction loan
is to be repaid over 20 years beginning at May 1, 1999. $809,069 of this
credit line has been advanced at December 31, 1997.
The Corporation also has a term loan line of credit with Star Bank
NA to finance its building project. This term loan is to be repaid over 10
years with principal payments beginning May 1, 1999. None of this credit
line was used at December 31, 1997.
All of the lines of credit are secured by all accounts receivable,
inventory, equipment, and fixtures. The construction loan will be
additionally secured by a mortgage on the real estate.
NOTE 6 - INCOME TAXES
As stated in Note 1, the Corporation filed an election with the
Internal Revenue Service to be taxed as an S Corporation, accordingly no
current provision for income tax is presented. There are differences
between financial statement income and tax return income as a result of
timing differences (see Note 1) as well as provisions of the Tax Reform
Act of 1986 (see Note 2). Additionally, the provisions of the Tax Reform
Act result in the Corporation being able to deduct for tax purposes 50% of
entertainment expenses.
12
<PAGE>
R & S TRUCK BODY COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997, 1996
NOTE 7 - LEASE ON PLANT SITES
The Corporation has three leases covering the site on which the
Allen plant is located. These leases are as follows:
R & S Lease
Expiration Date - September 11, 1998
Annual Rent - $24,000.00
Total Liability to September 1998 - $16,000
Old Reynolds Lease
Expiration Date - September 11, 1998
Annual Rent - $18,000.00
Total Liability to September 1998 - $12,000
May Lease
Expiration Date - September 11, 1998
Annual Rent - $12,000.00
Total Liability to September 1998 - $ 8,000
Future Payment Obligation:
1998 36,000
Over Five Years -0-
--------
$ 36,000
========
NOTE 8 - NEW FACILITY CONSTRUCTION
At December 31, 1997 the Corporation has purchased land from Floyd
County Development Authority, and signed a construction contract with Gray
Company to build a new manufacturing and office facility. The project is
underway and is estimated to be completed by September 11, 1998.
13
<PAGE>
STANDARD AUTOMOTIVE CORPORATION
Pro forma Balance Sheets
As at June 30, 1998
<TABLE>
<CAPTION>
As at June 30, 1998
-------------------
SAC R/S Combined Adjustments Pro forma
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets (1)
Cash and cash equivalents $ 2,009 $ 2,457 $ 4,466 $ (1,523) (2) $2,943
Accounts receivable, net 3,068 1,777 4,845 - 4,845
Inventory 8,922 2,401 11,323 - 11,323
Prepaid expenses 441 7 448 - 448
Deferred taxes 357 - 357 - 357
---------------------------------------------------------
Total current assets 14,797 6,642 21,439 (1,523) 19,916
Property and equipment, net 1,933 7,019 8,952 - 8,952
Intangable assets 15,380 - 15,380 18,700 (4) 34,080
Capitalized acquisition and financing costs 901 156 1,057 - 1,057
---------------------------------------------------------
$ 33,011 $ 13,817 $ 46,828 $ 17,177 $ 64,005
=========================================================
Liabilities and Shareholders' Equity
Accounts payable $ 2,699 905 $ 3,604 - $3,604
Accrued expenses 758 416 1,174 - 1,174
Income and other taxes payable 272 41 313 - 313
---------------------------------------------------------
Total current liabilities 3,729 1,362 5,091 - 5,091
Note payable (3) 4,453 5,639 10,092 14,251 (6) 24,343
Shareholders' equity:
Preferred stock 1 1 1
Common stock 3 36 39 (36) 3
Common stock subscription receivable (2) (2) - (2)
Additional paid-in capital 24,621 24,621 2,962 27,583
Retained earnings 206 6,780 6,986 - 6,986
Total shareholders' equity (deficit) 24,829 6,816 31,645 2,926 34,571
---------------------------------------------------------
$ 33,011 $ 13,817 $ 46,828 $ 17,177 $ 64,005
=========================================================
(1) Reflects the R/S acquisition for $24,100,000 based on the following:
Cash to Seller $ 13,670
Stock issued to Seller - 95,126 shares at an average of $10.50/share 1,000
Land & Building refinanced 6,441
Fees: Cash - Investment banking, brokers, legal accounting, etc. 1,162
Stock - 185,000 shares @ $9.875/share fair market value 1,827
--------
$ 24,100
========
(2) Reflects the reduction in cash used to pay acquisition costs
(3) SAC's note payable of $4,453,000 was the amount due to the seller of a
previous acquisition. R/S's note payable of $5,639,000 was on the land and
building. Both notes were paid-off and refinanced concurrently with the
acquisition of R/S.
(4) Reflects the purchase price in excess of net assets acquired recorded at
approximately $18,700,000.
(5) To increase the debt payable to reflect the total debt outstanding at the
close with interest at 8.1%.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fiscal Year Fiscal Year
Ended Year Ended Ended
3/31/98 12/31/97 3/31/98
------------------------- ----------
SAC R/S Combined Adjustments Pro forma
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(1)
Revenues $ 7,936 $ 20,147 $ 28,083 $ - $ 28,083
Cost of revenues 6,094 14,862 20,956 - 20,956
Selling, general and administrative exp. 407 3,663 4,070 (460) (3) 3,610
Amortization of intangibles 130 - 130 468 (2) 598
----------------------------------------------------------------
Total operating costs and expenses 6,631 18,525 25,156 8 25,164
----------------------------------------------------------------
Operating income 1,305 1,622 2,927 (8) 2,919
Bridge Note interest expense (375) - (375) - (375)
Interest expense (75) - (75) (1,500) (4) (1,575)
Other income (expense) (54) 247 193 - . 193
----------------------------------------------------------------
Income before provision for income taxes 801 1,869 2,670 (1,508) 1,162
Provision for income taxes 458 - 458 (43) (5) 415
----------------------------------------------------------------
Net income 343 $ 1,869 $ 2,212 $ (1,465) $ 747
================================================================
Preferred dividend 184 184 - 184
Basic and diluted net income per share $ 0.09 $ 0.26
======== =======
Basic and diluted weighted average
number of shares outstanding 1,846 280 2,126 - 2,126
</TABLE>
- ----------
(1) Reflects the R/S acquisition as if it had occurred at the beginning of the
fiscal year.
(2) Reflects the amortization of purchase price in excess of net assets
acquired recorded at approximately $18,700,000 and assumes useful lives
between 20-40 years. However the actual recording of the R/S acquisition
(which recording management does not expect to vary materially) will be
based on independent appraisals, evaluations and estimates of fair values.
(3) Included in general and administrative expenses are bonuses of $460,000.
(4) Reflects incremental interest expense on approximately $19,900,000 of
additional debt at 8.1%.
(5) Pro forma net income reflects a provision for income taxes since R/S had
been an S Corporation before being acquired. Such provision assumes an
effective tax rate of 40%.
<PAGE>
<TABLE>
<CAPTION>
3 Months Ended June 30, 1998
----------------------------
SAC R/S Combined Adjustments Pro forma
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(1)
Revenues $ 7,880 $ 6,395 $ 14,275 $ - $ 14,275
Cost of revenues 6,153 4,482 10,635 - 10,635
Selling, general and administrative exp. 728 820 1,548 (115) (3) 1,433
Amortization of intangibles 190 - 190 117 (2) 307
-----------------------------------------------------------
Total operating costs and expenses 7,071 5,302 12,373 2 12,375
-----------------------------------------------------------
Operating income 809 1,093 1,902 (2) 1,900
Interest expense (86) - (86) (375) (461)
Other income (expense) (56) 19 (37) - (4) (37)
-----------------------------------------------------------
Income before provision for income taxes 667 1,112 1,779 (377) 1,402
Provision for income taxes 327 - 327 340 667
(5)
-----------------------------------------------------------
Net income 340 $ 1,112 $ 1,452 $ (717) $ 735
===========================================================
Preferred dividend 293 293 - 293
Basic and diluted net income per share $ 0.05 $ 0.17
====== =======
Basic and diluted weighted average
number of shares outstanding 3,095 280 3,375 - 3,375
</TABLE>
- ----------
(1) Reflects the R/S acquisition as if it had occurred at the beginning of the
fiscal year.
(2) Reflects the amortization of purchase price in excess of net assets
acquired recorded at approximately $18,700,000 and assumes useful lives
between 20-40 years. However the actual recording of the R/S acquisition
(which recording management does not expect to vary materially) will be
based on independent appraisals, evaluations and estimates of fair values.
(3) Included in general and administrative expenses are bonuses of $115,000.
(4) Reflects incremental interest expense on approximately $19,900,000 of
additional debt at 8.1%.
(5) Pro forma net income reflects a provision for income taxes since R/S had
been an S Corporation before being acquired. Such provision assumes an
effective tax rate of 40%.
<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.
STANDARD AUTOMOTIVE CORPORATION
-------------------------------
(Registrant)
Date: October 5, 1998 By: /s/ Roy Ceccato
-----------------------------
Name: Roy Ceccato
Title: Chief Financial Officer
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