<PAGE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
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): March 23, 1999
HUSSMANN INTERNATIONAL, INC.
----------------------------
(Exact name of registrant as specified in its charter)
COMMISSION FILE NUMBER: 01-13407
--------
Delaware 43-1791715
- -------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12999 St. Charles Rock Road, Bridgeton, Missouri 63044-2483
- -------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(314) 291-2000
- -------------------------------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE>
<PAGE>
HUSSMANN INTERNATIONAL, INC.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
As reported in Item 2 of its Form 8-K dated March 23, 1999 filed with
the Securities and Exchange Commission, Hussmann International, Inc.
("Hussmann") completed the acquisition of Koxka C.E., S.A. ("Koxka") by
means of a tender offer in accordance with applicable Spanish securities
market regulations. Approximately 99.8% of the outstanding shares of
Koxka were tendered. This Form 8-K/A sets forth the financial
statements and pro forma financial information required to be filed in
connection with this acquisition.
Hussmann paid approximately US$145.0 million in cash which includes
approximately US$10.3 million to settle a foreign currency instrument
used by Hussmann to lock in the US dollar purchase price. Hussmann
financed the acquisition by borrowing from its five-year unsecured
revolving credit facility dated as of January 23, 1998. The acquisition
will be accounted for under the purchase method of accounting.
Koxka manufactures a complete line of commercial and industrial
refrigeration products at five manufacturing facilities located
throughout Spain. The tangible assets of Koxka consist primarily of
accounts receivable, inventories, and property and equipment. Hussmann
intends to continue to use such assets in the operation of the
businesses formerly operated by Koxka.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired.
The audited consolidated balance sheet of Koxka at December 31, 1998 and
the related consolidated statements of operations, stockholders' equity
and comprehensive income, and cash flows for the year then ended.
(b) Pro forma financial information.
Introduction to Unaudited Condensed and Pro Forma Consolidated Financial
Statements.
Unaudited Condensed Consolidated Balance Sheet as of March 31, 1999.
Unaudited Pro Forma Consolidated Statement of Operations for the three
months ended March 31, 1999.
Unaudited Pro Forma Consolidated Statement of Operations for the year
ended December 31, 1998.
Notes to Unaudited Condensed Consolidated Balance Sheet and Pro Forma
Consolidated Statements of Operations.
<PAGE>
<PAGE>
(c) Exhibits
Exhibit
Number
- ------
2 Share Purchase Agreement dated January 6, 1999 between Hussmann
International, Inc. and Vicente Guibert Azcue, Ramon Guibert
Encio, Inigo Guibert Encio, Jose Iriondo Murua, Juan Felix
Iriondo Altuna, Maria Elena Iriondo Altuna, Maria Teresa
Iriondo Altuna, and Florita Iriondo Altuna (incorporated by
reference to Exhibit 2.2 to Hussmann International, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1998
(File No. 01-13407)).
23 Consent of Independent Auditors - Ernst & Young as independent
auditors for Koxka C.E., S.A.
99 Press Release dated March 30, 1999 (incorporated by reference
to Exhibit 99 to Hussmann International, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 1998 (File No.
01-13407)).
SIGNATURE
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.
HUSSMANN INTERNATIONAL, INC.
/s/ Thomas G. Korte
-------------------
Thomas G. Korte
Vice President
Corporate Controller
Dated: June 4, 1999
<PAGE>
<PAGE>
HUSSMANN INTERNATIONAL, INC.
INDEX
Item 7. (a)
Financial Statements of Business Acquired
Koxka C.E., S.A.:
Consolidated Balance Sheet as of December 31, 1998
Consolidated Statement of Operations for the year ended
December 31, 1998
Consolidated Statement of Stockholders' Equity and
Comprehensive Income for the year ended December 31, 1998
Consolidated Statement of Cash Flows for the year ended
December 31, 1998
Notes to Consolidated Financial Statements
Item 7.(b)
Pro Forma Financial Information
Introduction to Unaudited Condensed and Pro Forma
Consolidated Financial Statements
Unaudited Condensed Consolidated Balance Sheet as of March
31, 1999
Unaudited Pro Forma Consolidated Statement of Operations for
the three months ended March 31, 1999
Unaudited Pro Forma Consolidated Statement of Operations for
the year ended December 31, 1998
Notes to Unaudited Condensed Consolidated Balance Sheet and
Pro Forma Consolidated Statements of Operations
<PAGE>
<PAGE>
KOXKA C.E., S.A.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
- - Consolidated Balance Sheet as of December 31, 1998
- - Consolidated Statement of Operations for the year
ended December 31, 1998
- - Consolidated Statement of Stockholders' Equity
and Comprehensive Income for the year ended
December 31, 1998
- - Consolidated Statement of Cash Flows for the year
ended December 31, 1998
- - Notes to Consolidated Financial Statements
<PAGE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
TO THE STOCKHOLDERS AND BOARD OF
DIRECTORS OF KOXKA C.E., S.A.
We have audited the accompanying consolidated balance sheet of Koxka
C.E., S.A. and subsidiaries as of December 31, 1998 and the related
consolidated statements of operations, stockholders' equity and
comprehensive income, and cash flows for the year then ended expressed
in U.S. dollars. 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 in the United States. 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, expressed in
U.S. dollars, present fairly, in all material respects, the consolidated
financial position of Koxka C.E., S.A. and subsidiaries at December 31,
1998 and the consolidated results of their operations and their cash
flows for the year then ended in conformity with generally accepted
accounting principles in the United States.
/s/ Ernst & Young
Pamplona, Spain
February 13, 1999
<PAGE>
<PAGE>
KOXKA C.E., S.A.
<TABLE>
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1998
(in thousands of U.S. dollars
except share data)
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,255
Receivables, net of allowance for doubtful
accounts of $3,496 50,122
Inventories 24,517
Other current assets 34
---------
Total current assets 79,928
Property and equipment, net 25,109
Deferred tax assets 740
Other assets 554
---------
Total assets $ 106,331
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Factoring with recourse of accounts receivable $ 19,726
Accounts payable 25,110
Income taxes payable 3,829
Accrued expenses 833
---------
Total current liabilities 49,498
Other liabilities 329
---------
Total liabilities 49,827
Minority interests 981
Stockholders' equity:
Common stock, 1,000 pesetas ($7.02), 1,230,000 shares
authorized and issued, 1,217,763 outstanding 8,108
Retained earnings:
Restricted 14,073
Unrestricted 30,798
Treasury stock, at cost: 12,237 shares (725)
Accumulated other comprehensive income 3,269
---------
Total stockholders' equity 55,523
---------
Total liabilities and stockholders' equity $ 106,331
=========
</TABLE>
<PAGE>
<PAGE>
KOXKA C.E., S.A.
<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(in thousands of U.S. dollars
except share data)
<S> <C>
Sales and revenues $ 134,012
Cost of goods sold 93,289
----------
Gross profit 40,723
Selling, general and administrative expenses 22,829
----------
Operating income 17,894
Interest expense, net 224
----------
Income before income tax and minority interests 17,670
Income tax expense 4,878
----------
Income before minority interests 12,792
Minority interests 321
----------
Net income $ 12,471
=========
Earnings per share $ 10.23
Weighted average shares 1,218,909
</TABLE>
<PAGE>
<PAGE>
KOXKA C.E., S.A.
<TABLE>
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
YEAR ENDED DECEMBER 31, 1998
(in thousands of U.S. dollars
except share data)
<CAPTION>
COMMON ACCUMULATED
STOCK RETAINED RETAINED OTHER TREASURY
NO. OF COMMON EARNINGS EARNINGS COMPREHENSIVE STOCK,
SHARES STOCK (RESTRICTED) (UNRESTRICTED) INCOME AT COST TOTAL
------ ----- ------------ -------------- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1998 1,218,763 $ 8,108 $ 11,269 $ 22,960 $ (598) $ 41,739
Comprehensive income:
Net income 12,471 12,471
Cumulative translation
adjustment 3,269 3,269
---------
Total comprehensive
income 15,740
Other 128 (128)
Special investment
reserve 2,676 (2,676)
Dividends declared and
paid (1,829) (1,829)
Repurchase of common
stock (1,000) (127) (127)
--------- -------- --------- --------- -------- ------- ---------
BALANCE AT DECEMBER 31, 1998 1,217,763 $ 8,108 $ 14,073 $ 30,798 $ 3,269 $ (725) $ 55,523
========= ======== ========= ========= ======== ======= =========
Dividends declared and
paid per share: $ 1.50
</TABLE>
<PAGE>
<PAGE>
KOXKA C.E., S.A.
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1998
(in thousands of U.S. dollars)
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
Net income $ 12,471
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 4,369
Provision for deferred income taxes 266
Other 78
Changes in assets and liabilities, net of acquisitions:
Receivables, net (14,713)
Inventories (4,478)
Accounts payable 6,893
Income taxes payable 1,758
Other current assets (22)
Accrued expenses 540
----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 7,162
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
Purchases of property and equipment (7,301)
Proceeds from sales of property and equipment 1,404
Purchases of businesses, net of cash acquired 1,434
Other (63)
----------
NET CASH USED IN INVESTING ACTIVITIES (4,526)
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------
Factoring with recourse of accounts
receivable, net 1,331
Dividends paid (1,829)
Acquisition of treasury stock (127)
----------
NET CASH USED IN FINANCING ACTIVITIES (625)
EFFECTS OF FOREIGN EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS 173
----------
NET CHANGE IN CASH AND CASH EQUIVALENTS 2,184
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 3,071
----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 5,255
==========
</TABLE>
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF U.S. DOLLARS UNLESS OTHERWISE INDICATED)
(1) NATURE OF BUSINESS
KOXKA C.E., S.A. was incorporated on April 26, 1966. Koxka and its
subsidiaries ("Koxka" or the "Company") manufacture, sell, install and
service merchandising and refrigeration systems for the commercial food
industry. Koxka is located in Poligono de Landaben, calle A, s/n,
Pamplona (Navarra), Spain. Subsidiaries are located principally in other
areas of Spain.
All companies maintain a December 31 year-end.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Koxka maintains its statutory accounting records and prepares its
underlying statutory annual accounts in pesetas and in accordance with
accounting principles and criteria generally accepted in Spain. However,
for U.S. reporting purposes these financial statements have been
translated to U.S. dollars and prepared in conformity with accounting
principles generally accepted in the United States ("U.S. GAAP") which
differ, in certain respects, from those used for local purposes in
Spain. The principal effects of these differences are summarized in Note
9 on segment reporting.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include accounts of Koxka and its
wholly and majority-owned subsidiaries. Investments of less than 50% are
accounted for using the equity method. All significant intercompany
transactions have been eliminated. All subsidiaries have used the same
methods of valuation for assets, liabilities, income and expenses as
Koxka.
ACQUISITIONS
During the year the Company made several small acquisitions. These
acquisitions were immaterial individually and in the aggregate to the
consolidated results of the Company.
<PAGE>
<PAGE>
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of deposits with banks and financial
institutions which are unrestricted as to withdrawal or use, and which
have original maturities of three months or less.
FINANCIAL INSTRUMENTS
Concentrations of credit risk
Financial instruments that potentially subject the Company to
significant concentrations of credit risk consist principally of cash
investments and trade accounts receivable.
The Company maintains cash and cash equivalents with various financial
institutions. These financial institutions are located throughout Spain
and the Company's policy is designed to limit exposure to any one
institution.
Concentrations of credit risk with respect to trade accounts receivable
are mostly limited due to the large number of entities comprising the
Company's customer base. However, as of December 31, 1998, the Company's
receivable from one customer was $7,130. The Company does not require
collateral for trade accounts receivable, but may purchase credit
insurance when considered necessary.
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying amount reported in the balance
sheet for cash and cash equivalents approximates its fair value.
Accounts receivable and accounts payable: The carrying amounts reported
in the balance sheet for accounts receivable and accounts payable
approximate their fair value.
INVENTORIES
Inventories are valued at the lower of cost or market (principally
determined on the first-in, first-out or average methods). Cost includes
material, direct labor and other general manufacturing costs.
The value of installations undertaken at customers' premises, pending
final closing procedures at year end, are recorded as finished goods and
include costs of the materials sent, as well as the costs incurred to
install the product.
<PAGE>
<PAGE>
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred. These costs
amounted to $676 in 1998.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Depreciation is computed
using the straight-line method. Expenditures for maintenance and repairs
are expensed as incurred. The ranges of annual depreciation rates are 4%
to 10% for buildings and improvements and installations, and 10% to 30%
for machinery and equipment which approximate the useful lives.
CARRYING VALUES OF LONG-LIVED ASSETS
Koxka evaluates the carrying values of long-lived assets used in the
business whenever events and circumstances indicate the carrying amount
of an asset may not be recoverable. Recoverability of the asset is
measured by a comparison of the carrying amount of the asset to the
future net cash flows expected to be generated. If such asset is
considered to be impaired, the impairment to be recognized is measured
by the amount by which the carrying amount exceeds the fair value of the
asset. Assets to be disposed of are reported at the lower of the
carrying amount or fair value, less disposal costs.
FACTORING OF ACCOUNTS RECEIVABLE
The Company has factored, with recourse, accounts receivable with
banks. The average discount rate is between 4.25% - 4.75%.
The Company has an available limit with banks to factor up to $35,579
of accounts receivable.
INCOME TAX
Income taxes are accounted for using the asset and liability method
under which deferred income taxes are recognized for the estimated tax
consequences for temporary differences between the financial statement
carrying amounts and the tax basis of assets and liabilities.
The Company does not file a consolidated tax return. Each subsidiary
prepares its own separate tax return.
<PAGE>
<PAGE>
FOREIGN CURRENCY TRANSLATION
The accompanying financial statements have been translated to U.S.
dollar equivalents in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 52, "Foreign Currency Translation" ("SFAS 52"). Under
this Statement, all assets and liabilities are translated at the
exchange rate at the end of the period, revenues and expenses are
translated at the average exchange rate for the period, and equity
accounts normally are translated at the historical exchange rate on the
date of the transaction. Resulting translation adjustments are made
directly to accumulated other comprehensive income within stockholders'
equity.
The Company was formed in 1966, however 1998 is the first year for which
it has had any need to prepare U.S. GAAP financial statements. The
Company's functional currency and historically, its primary reporting
currency, is the Spanish peseta. Accordingly, it has not been
practicable to calculate the opening balance in U.S. dollars on the
accumulated other comprehensive income within stockholders' equity,
which would have resulted from having applied SFAS 52 since its
effective date in 1982.
This has no effect on total stockholders' equity at either December 31,
1998 or January 1, 1998, giving rise to a possible reclassification
between the cumulative translation adjustment and other components of
stockholders' equity.
REVENUE RECOGNITION
Revenue is recognized when products are shipped or when services are
performed. Revenue for installation projects is generally recognized
upon the completion of the project and acceptance by the customer.
Generally, products sold carry a one-year warranty. Koxka estimates and
records provisions for warranties in the period the sale is reported
based on historical experience.
USE OF ESTIMATES
The preparation of the consolidated 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 consolidated financial statements, and
the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
<PAGE>
<PAGE>
EARNINGS PER SHARE
Koxka adopted the provisions of SFAS No. 128, "Earnings Per Share"
("SFAS 128"), effective January 1, 1998. In accordance with SFAS 128,
basic earnings per share is calculated using the weighted average
number of common shares outstanding during the period. Diluted earnings
per share is not presented because the Company has a simple capital structure.
COMPREHENSIVE INCOME
Effective January 1, 1998, Koxka adopted SFAS No. 130, "Reporting
Comprehensive Income" ("SFAS 130"). SFAS 130 establishes standards for
reporting and presentation of comprehensive income and its components in
a full set of financial statements. This statement requires Koxka to
report separately the translation adjustments of SFAS 52 as components
of comprehensive income. Management has chosen to disclose the
requirement of this statement within the consolidated statement of
stockholders' equity and comprehensive income.
(3) INVENTORIES
Inventories consist of the following at December 31:
1998
----
Raw materials and work in process $ 12,796
Finished goods 11,721
--------
$ 24,517
========
(4) ACCOUNTS RECEIVABLE
Accounts receivable consist of the following at December 31:
1998
----
Trade receivables $ 52,446
Other 1,172
Allowance for doubtful accounts (3,496)
--------
$ 50,122
========
<PAGE>
<PAGE>
(5) PROPERTY AND EQUIPMENT, NET
Property and equipment, net consist of the following at December 31:
1998
----
Land $ 1,700
Buildings and improvements 12,784
Machinery and equipment 44,071
Construction in progress 146
--------
Total property and equipment 58,701
Accumulated depreciation (33,592)
--------
$ 25,109
========
(6) OTHER FINANCIAL INFORMATION
Other financial information at December 31 is as follows:
1998
----
Interest paid $ 1,174
Income taxes paid 3,021
Interest income 706
Interest expense 930
(7) INCOME TAXES
Income tax expense for the year ended December 31 consists of the
following:
1998
----
Current $ 4,612
Deferred 266
-------
$ 4,878
=======
The items which give rise to differences between the income tax expense
in the consolidated statement of operations and income taxes computed at
the local rate (of 35%) are summarized as follows:
1998
----
Income tax expense computed at
local statutory rate $ 6,184
Investment tax credit (421)
Other tax credits (741)
Other (144)
-------
$ 4,878
=======
<PAGE>
<PAGE>
The investment tax credit relates to amounts invested in specific fixed
assets for which a deduction is allowed.
Other tax credits relate to various tax credits for Koxka subsidiaries
mostly related to investments in fixed assets and employment tax
credits.
Significant components of the Company's deferred tax assets and
liabilities at December 31 are as follows:
1998
----
Deferred tax assets attributable to:
Depreciation difference on statutory
revaluation $ 859
Allowance for doubtful accounts 246
Intercompany profit in inventory 217
Other 33
-------
1,355
Deferred tax liabilities attributable to:
Accelerated depreciation basis
differences $ (119)
Other (9)
-------
(128)
Net deferred tax assets $ 1,227
=======
(8) STOCKHOLDERS' EQUITY
As of December 31, 1998, 1,230,000 shares of common stock have been
issued at 1,000 pesetas par value and there are 1,217,763 shares
outstanding. The amount of retained earnings available for distribution
to stockholders is $16,301, as calculated in accordance with Spanish
Generally Accepted Accounting Principles and Spanish Law.
During the third quarter of fiscal year 1998, the Company's Board of
Directors authorized the repurchase of 1,500 shares of Koxka common
stock. As of December 31, 1998, 12,237 shares of Koxka common stock have
been repurchased into treasury.
Restricted retained earnings is comprised of the following:
- Legal Reserve $ 1,706
- Special Reserve for Investments L.F. 12/93 5,376
- Special Reserve for Investments L.F. 24/96 6,421
- Other 570
--------
$ 14,073
========
<PAGE>
<PAGE>
- - Legal reserve
In accordance with Spanish law, a sum equivalent to 10% of the net
income in the financial year is allocated to this reserve until it
reaches a minimum of 20% of the capital stock. This reserve, provided
it does not exceed the indicated limit, may only be allocated for
compensation of losses if there are no other reserves available for
this purpose. The legal reserve may also be used to increase capital
under certain conditions.
- - Special Reserve for Investments L.F. 12/93.
The Company receives a deduction for income taxes for amounts
contributed to this reserve in the financial years from 1993 to 1995
(Navarra tax law). These amounts may be allocated to the elimination
of accumulated losses or the increase of capital, once 5 financial
years have passed since the qualifying investments were made.
- - Special Reserve for Investments L.F. 24/96.
Under the provisions of Navarra tax law, companies may allocate the
freely available part of net income obtained in the financial years
from 1996 to 1998 to this reserve. The sum of these allocations must
be invested in certain qualifying new fixed assets within 2 years
from the end of the financial year the profits of which were
allocated. Once 5 financial years have passed from the end of the
qualifying investment period, the balance on the special reserve may
be allocated to the elimination of accumulated losses or to a capital
increase. The Company receives a deduction for income taxes for
amounts contributed to this reserve. At December 31, 1998, the sum
pending investment in qualifying assets in respect of this reserve
was approximately $1,234.
(9) SEGMENT REPORTING
Koxka has two reportable segments: refrigeration containers and
refrigeration components. The refrigeration containers segment sells all
types of refrigerators to supermarkets and smaller food stores. The
components segment makes condensers and evaporators for use in Koxka
refrigeration products, as well as for use in other applications such as
air conditioners. The Company evaluates performance and allocates
resources based on profit and loss from operations after taxes. The
accounting policies of the reportable segments are the same as those
described in the summary of significant accounting policies except that
the Company uses Spanish GAAP for internal purposes, the main
differences with which are that for local statutory purposes, Koxka has
revalued certain fixed assets as allowed by Spanish law and for US GAAP
consolidation purposes, these revaluations are eliminated. Refrigeration
components are sold to the products division at cost plus a mark up that
equals current market prices. Koxka's reportable segments are business
units that offer different products. The reportable segments are each
managed separately because they manufacture and distribute distinct
products with different production processes.
<PAGE>
<PAGE>
As of and for the year ended December 31, 1998
- ----------------------------------------------
<TABLE>
<CAPTION>
Refrigeration Refrigeration
SEGMENT INFORMATION Containers Components Total
---------- ---------- -----
<S> <C> <C> <C>
Sales and revenues $141,999 $17,030 $159,029
Intersegment revenues 18,799 6,218 25,017
- ------------------------------------------------------------------------------------------------
Total outside sales and revenues 123,200 10,812 134,012
- ------------------------------------------------------------------------------------------------
Interest expense 1,037 153 1,190
Depreciation 4,274 816 5,090
Income tax 4,722 60 4,782
Segment profit 11,277 816 12,093
Total assets 110,103 13,532 123,635
Total expenditures for long-lived
assets 6,038 1,263 7,301
</TABLE>
RECONCILIATION OF SEGMENT INFORMATION TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Segment profit
- --------------
Total segment profit $ 12,093
Intercompany eliminations, U.S. GAAP
adjustments and minority interests 378
---------
Net income $ 12,471
=========
Total assets
- ------------
Total segment assets $ 123,635
Intercompany eliminations (12,580)
U.S. GAAP adjustments (4,724)
---------
Total consolidated assets $ 106,331
=========
</TABLE>
<TABLE>
<CAPTION>
Segment Adjustments Consolidated
------- ----------- ------------
Other significant items
- -----------------------
<S> <C> <C> <C>
Interest expense $ 1,190 $ (260) $ 930
Depreciation 5,090 (721) 4,369
Income tax 4,782 96 4,878
<CAPTION>
GEOGRAPHIC INFORMATION Sales and
Revenues
--------
<S> <C>
Spain $ 84,023
France 22,030
Other 27,959
--------
$134,012
========
</TABLE>
MAJOR CUSTOMER
One customer of Koxka represents approximately $ 22,030 of the Company's
consolidated sales and revenues. The supply contract with this customer
has not been renewed since it expired at the end of 1998. Subsequent
sales to this customer are not expected to be significant.
<PAGE>
<PAGE>
(10) YEAR 2000 (UNAUDITED)
The Company relies on both information technology ("IT") and non-IT
computer systems in its operations. The mission-critical IT systems
include the Company's operating and accounting systems, such as IT
software applications that allow the Company to maintain inventory and
customer information and to communicate with its suppliers and
customers. The non-IT systems are primarily telecommunications systems
and the embedded microprocessors that control warehouse and other
building systems, such as inventory control devices, security systems,
lighting, fire and safety systems, hoisting, ventilating and air
conditioning systems.
In 1998, the Company began to address the year 2000 problem (that is,
the fact that some systems may fail or produce inaccurate results using
dates in or around the year 2000). The Company formed a year 2000 task
force under its Chief Information Officer to coordinate and implement
measures designed to prevent disruption in its business operations
related to the year 2000 problem. The Company believes that it completed
the remediation of its mission-critical IT applications software in
December 1998 and is scheduled to complete an end-to-end test of its IT
systems by June 1999. The Company is assessing the effect of the year
2000 problem on its non-IT systems and intends to replace non-IT systems
as necessary to become year 2000 ready by December 1999.
The Company also is working with its customers and suppliers to
determine whether the year 2000 problem will have an adverse effect on
the Company's relationship with them. Beginning with the Company's
products for 1999, the Company's product suppliers have assured the
Company that their products will be year 2000 ready. However, the
Company does not control its suppliers and relies on a variety of
utilities, telecommunications companies and other suppliers in order to
continue its business.
Additional costs to be incurred to ensure the Company's systems serve
the needs of the Company are not expected to be significant and will be
expensed as incurred.
The Company has queried its significant suppliers and subcontractors
that do not share information systems with the Company ("external
agents"). To date, the Company is not aware of any external agent with a
Year 2000 issue that would materially impact the Company's results of
operations, liquidity, or capital resources. However, the Company has no
means of ensuring that external agents will be Year 2000 ready. The
inability of external agents to complete their Year 2000 resolution
process in a timely fashion could materially impact the Company. The
effect of non-compliance by external agents is not determinable.
Management of the Company believes it has an effective program in place
to resolve the Year 2000 issue in a timely manner. As noted above, the
Company has not yet completed all necessary phases of the Year 2000
program. In the event that the Company does not complete any additional
phases, the Company would be unable to process transactions, send
invoices, or engage in similar normal business activities. In addition,
disruptions in the economy generally resulting from Year 2000 issues
could also materially adversely affect the Company. The amount of
potential liability and lost revenue cannot be reasonably estimated at
this time.
<PAGE>
<PAGE>
The Company currently has no contingency plans in place in the event it
does not complete all phases of the year 2000 program. The Company plans
to evaluate the status of completion in June 1999 and determine whether
such a plan is necessary. At that time, if it is deemed necessary, the
Company does have an outside support system available to assist in the
modification of the Company's non-compliant systems.
There can be no assurance that year 2000 remediation by the Company or
third parties will be properly and timely completed and failure to do so
could have a material adverse effect on the Company's financial
condition. The Company cannot predict the actual effects to it of the
year 2000 issue, which depends on numerous uncertainties such as (i)
whether major third parties address this issue properly and timely and
(ii) whether broad-based or systemic economic failures may occur. The
Company currently is unaware of any events, trends, or conditions
regarding this issue that may have a material effect on the Company's
results of operations, liquidity, and financial position. If the year
2000 issue is not resolved by January 1, 2000, the Company's results of
operations or financial condition could be materially adversely
affected.
(11) SUBSEQUENT EVENT
On February 10, 1999, the Spanish Securities Commission (CNMV)
authorized a tender offer for 100% of Koxka's common stock by Hussmann
International, Inc.
<PAGE>
<PAGE>
HUSSMANN INTERNATIONAL, INC.
INTRODUCTION TO UNAUDITED CONDENSED AND PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
On March 23, 1999, Hussmann International, Inc. ("Hussmann") consummated
its acquisition of Koxka C.E., S.A. ("Koxka") by means of a tender offer
in accordance with applicable Spanish securities market regulations.
Approximately 99.8% of the outstanding shares of Koxka were tendered.
Hussmann paid approximately US$145.0 million in cash, which includes a
one-time US$10.3 million pre-tax charge to settle a foreign currency
instrument used by Hussmann to lock-in the US dollar purchase price.
Hussmann financed the acquisition by borrowing under its five-year
unsecured revolving credit facility (the "Credit Facility") dated as of
January 23, 1998. This acquisition has been accounted for under the
purchase method of accounting, and accordingly, the purchase price has
been allocated to the assets acquired and the liabilities assumed based
upon their estimated fair market values.
The following unaudited condensed consolidated balance sheet has been
prepared based upon the unaudited consolidated balance sheet of Hussmann
as of March 31, 1999, which included the March 31, 1999 balances of Koxka.
The unaudited historical condensed consolidated balance sheet has been
adjusted to give effect to the application of purchase accounting. The
following unaudited pro forma consolidated statements of operations for
the three months ended March 31, 1999, and for the year ended December
31, 1998, have been prepared based upon the unaudited historical
consolidated statements of operations for the three months ended March
31, 1999 of Hussmann and Koxka, and the audited historical consolidated
statements of operations for the year ended December 31, 1998 of
Hussmann and Koxka, and set forth the unaudited pro forma consolidated
statements of operations giving effect to the acquisition of Koxka as if
such transaction had occurred on January 1, 1998.
The following unaudited pro forma consolidated statements of operations
are for informational purposes only and are not necessarily indicative
of the actual results of operations that would have been reported if the
events described above had occurred at January 1, 1998, nor do they
purport to indicate the results of Hussmann's future operations. The
pro forma results also do not give effect to all cost savings, or
incremental costs that may occur as a result of the integration and the
consolidation of the operations of Koxka into the operations of
Hussmann. Furthermore, the pro forma results do not include the effects
of the loss of Koxka's largest customer as a result of the acquisition
(for additional information regarding this customer see the notes to the
consolidated financial statements for Koxka included herein). The pro
forma adjustments are based upon available information and assumptions
believed to be reasonable in the circumstances. In the opinion of
management, all adjustments necessary to present fairly such pro forma
financial information have been made, however, there can be no
assurances that such information and assumptions will not change from
those reflected in the pro forma financial statements and notes thereto.
The allocation of the Koxka purchase price is preliminary, but is not
expected to differ materially from the purchase price allocation
reflected herein.
<PAGE>
<PAGE>
<TABLE>
HUSSMANN INTERNATIONAL, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1999
(Dollars in thousands)
<CAPTION>
Purchase
Historical Accounting
Hussmann Adjustments As Adjusted
---------- ----------- -----------
<S> <C> <C> <C>
Current assets
Cash and cash equivalents $ 49,911 $ - $ 49,911
Receivables, net 261,618 - 261,618
Inventories 137,880 - 137,880
Other current assets 11,791 - 11,791
---------- ----------- -----------
Total current assets 461,200 - 461,200
Property and equipment, net 183,079 11,196 a 194,275
Goodwill, net 106,336 (27,636) b 78,700
Other assets 23,897 35,688 c 59,585
---------- ----------- -----------
Total assets $ 774,512 $ 19,248 $ 793,760
========== =========== ===========
Current liabilities:
Short-term debt and current
maturities long-term debt $ 26,360 $ - $ 26,360
Accounts payable 132,104 - 132,104
Income taxes payable 3,852 - 3,852
Accrued expenses 49,593 3,250 d 52,843
---------- ----------- -----------
Total current liabilities 211,909 3,250 215,159
Long-term debt 354,310 - 354,310
Other liabilities 34,094 15,998 e 50,092
---------- ----------- -----------
Total liabilities 600,313 19,248 619,561
Shareholders' equity
Common Stock 51 - 51
Additional paid-in capital 90,984 - 90,984
Retained earnings 159,179 - 159,179
Cumulative translation adjustment (69,167) - (69,167)
Minimum pension liability adjustment, net (2,889) - (2,889)
Treasury stock (3,959) - (3,959)
---------- ----------- -----------
Total shareholders' equity 174,199 - 174,199
---------- ----------- -----------
Total liabilities and shareholders' equity $ 774,512 $ 19,248 $ 793,760
========== =========== ===========
The accompanying notes are an integral part of these financial statements
</TABLE>
<PAGE>
<PAGE>
<TABLE>
HUSSMANN INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(Dollars in thousands)
<CAPTION>
Historical Historical Pro forma
Hussmann Koxka Adjustments As Adjusted
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Sales and revenues $ 271,090 $ 29,588 $ - $ 300,678
Cost of goods sold 226,137 21,402 - 247,539
----------- ---------- ----------- -----------
Gross profit 44,953 8,186 - 53,139
Selling, general and administrative expenses 32,953 5,813 536 g 39,302
----------- ---------- ----------- -----------
Operating income 12,000 2,373 (536) 13,837
Interest expense 4,286 199 1,738 f 6,223
Other income (expense), net (9,864) 384 10,300 h 820
----------- ---------- ----------- -----------
Income before income tax expense
(benefit) and minority interests (2,150) 2,558 8,026 8,434
Income tax expense (benefit) (816) 685 3,230 i 3,099
----------- ---------- ----------- -----------
Net income (loss) before minority interests (1,334) 1,873 4,796 5,335
Minority interests 552 (53) - 499
----------- ---------- ----------- -----------
Net income (loss) $ (782) $ 1,820 $ 4,796 $ 5,834
=========== ========== =========== ===========
- ---------------------------------------------------------------------------------------------------------------------------
Pro forma weighted average shares - Basic 50,791,000 50,791,000
Pro forma basic - EPS ($0.02) $0.04 $0.09 $0.11
Pro forma weighted average shares - Diluted 50,791,000 51,731,000
Pro forma diluted - EPS ($0.02) $0.04 $0.09 $0.11
- ---------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements
</TABLE>
<PAGE>
<PAGE>
<TABLE>
HUSSMANN INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(Dollars in thousands)
<CAPTION>
Historical Historical Pro forma
Hussmann Koxka Adjustments As Adjusted
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Sales and revenues $ 1,221,197 $ 134,012 $ - $ 1,355,209
Cost of goods sold 963,968 93,289 - 1,057,257
----------- ---------- ----------- -----------
Gross profit 257,229 40,723 - 297,952
Selling, general and administrative expenses 135,937 22,829 2,145 g 160,911
Non-recurring charges 1,423 - - 1,423
----------- ---------- ----------- -----------
Operating income 119,869 17,894 (2,145) 135,618
Whitman charges 1,489 - - 1,489
Interest expense 18,779 224 6,953 f 25,956
Other income (expense), net (3,438) - - (3,438)
----------- ---------- ----------- -----------
Income before income tax expense
(benefit) and minority interests 96,163 17,670 (9,098) 104,735
Income tax expense (benefit) 39,039 4,878 (2,734) i 41,183
----------- ---------- ----------- -----------
Net income (loss) before minority interests 57,124 12,792 (6,364) 63,552
Minority interests 376 (321) - 55
----------- ---------- ----------- -----------
Net income (loss) $ 57,500 $ 12,471 $ (6,364) $ 63,607
=========== ========== =========== ===========
- ---------------------------------------------------------------------------------------------------------------------------
Pro forma weighted average shares - Basic 50,841,000 50,841,000
Pro forma basic - EPS $1.13 $0.25 ($0.13) $1.25
Pro forma weighted average shares - Diluted 52,006,000 52,006,000
Pro forma diluted - EPS $1.11 $0.24 ($0.12) $1.22
- ---------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements
</TABLE>
<PAGE>
<PAGE>
NOTES TO UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
AND PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
The historical consolidated balance sheet as of March 31, 1999 for Hussmann
includes the historical balance sheet for Koxka, as the transaction closed
on March 23, 1999. The purchase accounting adjustments column adjusts the
historical balances of Koxka to reflect the application of purchase
accounting. The unaudited pro forma consolidated statements of operations
give effect to the acquisition of Koxka as if it had occurred on January 1,
1998.
These unaudited condensed and pro forma consolidated financial statements
should be read in conjunction with Hussmann's consolidated financial
statements and notes thereto previously filed as part of Hussmann's most
recent annual and quarterly reports on Form 10-K and 10-Q for the periods
ended December 31, 1998 and March 31, 1999, respectively.
The acquisition was accounted for under the purchase method of accounting.
Accordingly, the aggregate consideration paid in connection with the
acquisition of Koxka was allocated to Koxka's assets purchased and
liabilities assumed based on their estimated fair market values, and any
excess treated as goodwill.
The acquisition was financed through Hussmann's existing Credit Facility.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
a) Adjustment reflects the allocation of the purchase price to the fair
value of property and equipment, net.
b) Goodwill recorded on the acquisition was calculated as follows:
Purchase price $ 131,597
Estimated expenses of acquisition 2,982
Fair value of net assets acquired (83,048)
---------
Goodwill 51,531
Amount reflected in historical
financial statements 79,167
---------
Adjustment $ (27,636)
=========
c) Adjustment to reflect the allocation of purchase price to the
trademark (Koxka) and other investments.
d) Adjustment reflects severance to be paid to Koxka personnel and other
accrued expenses associated with the acquisition.
e) Adjustment reflects deferred taxes established on the write-up of net
assets at 35%.
<PAGE>
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
f) Adjustment reflects interest on proceeds from the Credit Facility
used to finance the acquisition at 5.15%. Utilizing the total
assumed proceeds of $135,000, a 1/8 percent change in the interest
rate on the Credit Facility would increase or decrease interest
expense used in the pro forma consolidated statements of operations
by approximately $ 170 per annum.
g) Adjustment reflects amortization of goodwill and trademark over their
estimated useful lives of 40 years. The adjustment also includes
depreciation on Koxka's buildings and improvements over an estimated
useful life of 30 years.
h) Adjustment reflects the elimination of the nonrecurring US$10.3
million charge to settle a foreign currency instrument used by
Hussmann to lock-in the US dollar purchase price of Koxka, which is
directly attributable to the transaction.
i) Adjustment reflects income tax expense at the appropriate statutory
rates.
<PAGE>
<PAGE>
Exhibit Index
-------------
Exhibit
Number
- ------
2 Share Purchase Agreement dated January 6, 1999 between Hussmann
International, Inc. and Vicente Guibert Azcue, Ramon Guibert
Encio, Inigo Guibert Encio, Jose Iriondo Murua, Juan Felix Iriondo
Altuna, Maria Elena Iriondo Altuna, Maria Teresa Iriondo Altuna,
and Florita Iriondo Altuna (incorporated by reference to Exhibit
2.2 to Hussmann International, Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1998 (File No. 01-13407)).
23 Consent of Independent Auditors - Ernst & Young as independent
auditors for Koxka C.E., S.A.
99 Press Release dated March 30, 1999 (incorporated by reference to
Exhibit 99 to Hussmann International, Inc.'s Annual Report on Form
10-K for the year ended December 31, 1998 (File No. 01-13407)).
<PAGE>
Exhibit 23
----------
CONSENT OF INDEPENDENT AUDITORS
TO THE STOCKHOLDERS AND BOARD OF
DIRECTORS OF KOXKA C.E., S.A.
We consent to the incorporation by reference in the Registration Statement
(Form S-3 No. 333-52987) and in the related Prospectus of Hussmann
International, Inc., and in the Registration Statement (Form S-8 No.
333-44623) pertaining to the Hussmann International, Inc. Retirement
Savings Plan for Hourly Employees and the Hussmann International, Inc.
Retirement Savings Plan for Salaried Employees, the Registration Statement
(Form S-8 No. 333-44799) pertaining to the Hussmann International, Inc.
Stock Incentive Plan, and the Post-effective Amendment No. 1 to the
Registration Statement (Form S-8 No. 333-58359) pertaining to the Hussmann
International, Inc. Stock Incentive Plan of our report dated February 13,
1999, with respect to the consolidated financial statements of Koxka C.E.,
S.A. for the year ended December 31, 1998 included in the Current Report on
Form 8-K Amendment No. 1 of Hussmann International, Inc. dated June 4,
1999.
/s/ Ernst & Young
Pamplona, Spain
June 3, 1999
