<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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) August 4, 1999
--------------
AUTOMOTIVE PERFORMANCE GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
0-23705 86-0938742
(Commission File Number) (IRS Employer Identification No.)
7341 Anaconda Avenue, Garden Grove, California 92841
(Address of Principal Executive Offices) (Zip Code)
(714) 373-2837
Registrant's Telephone Number, Including Area Code
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Effective July 31, 1999, Permatex, Inc., a wholly owned subsidiary of PBT
Brands, Inc. (PBT), acquired certain assets and assumed certain liabilities of
Loctite Corporation's North American Automotive Aftermarket Business.
On August 4, 1999, Automotive Performance Group, Inc. (APG) announced it
purchased 22% of the common stock of PBT. This purchase was made pursuant to the
terms of the APG Subscription Agreement dated as of July 30, 1999 by and among
APG and PBT. In addition, APG has purchased $3.25 million of Class B junior
redeemable preferred stock of PBT plus $990,000 of Class D junior redeemable
preferred stock of PBT and will have the option to invest up to 22% of the
equity in subsequent opportunities for PBT. A copy of the press release, dated
August 4, 1999, relating to the purchase is filed hereto as Exhibit 99.1 and is
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired:
1. Audited Statement of Net Assets Sold by Loctite Corporation
North American Automotive Aftermarket Business as of July 31,
1999 and Audited Statements of Revenues and Operating Expenses
for the years ended December 31, 1998, 1997, and 1996 (with
Independent Auditors' Report Thereon). (See pages a1.1 through
a1.12.)
2. Unaudited Interim Statements of Revenues and Operating
Expenses for the six months ended June 30, 1999 and 1998. (See
page a2.1 through a2.2.)
3. Schedules of Net Assets Acquired as of June 30, 1999 and 1998.
(See pages a3.1 through a3.2.)
(b) Pro forma financial information:
Pro forma combined condensed financial statements. (See pages b.1
through b.5.)
(c) Exhibits:
2.1 APG Subscription Agreement, dated as of July 30, 1999, by and
among Automotive Performance Group, Inc., a Delaware
corporation, and PBT Brands, Inc. Pursuant to Item 601(b)(2)
of Regulation S-K, APG agrees to furnish
<PAGE> 3
supplementally a copy of any schedule or similar attachment to
the Commission upon request. Incorporated by reference to
Exhibit 2.2 filed with the Quarterly Report on Form 10-QSB
filed for the quarter ended September 30, 1999.
10.1 APG Agreement among Automotive Performance Group, Inc., PBT
Brands, Inc., and the APG Parties Named Herein dated August 2,
19991. (This exhibit is also referred to as Document "M" on
page 3 of Exhibit 2.1.) Pursuant to Item 601(b)(2) of
Regulation S-K, APG agrees to furnish supplementally a copy of
any schedule or similar attachment to the Commission upon
request. Incorporated by reference to Exhibit 10.20 filed with
the Quarterly Report on Form 10-QSB filed for the quarter
ended September 30, 1999.
10.2 Employment and Non-Interference Agreement, dated as of July
31, 1999, by and between Dean Willard and PBT Brands, Inc. (a
Delaware corporation). (This exhibit is also referred to as
Document "P" on page 4 of Exhibit 2.1.) Incorporated by
reference to Exhibit 10.21 filed with the Quarterly Report on
Form 10-QSB filed for the quarter ended September 30, 1999.
23.1 Consent of Accountants.
99.1 Text of Press Release, dated August 4, 1999, of Automotive
Performance Group, Inc.
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.
AUTOMOTIVE PERFORMANCE GROUP, INC.
(Registrant)
Date: June 23, 2000 By: /s/ George Barraza
------------- ----------------------------
George Barraza
Chief Financial Officer
<PAGE> 4
a1. AUDITED STATEMENT OF NET ASSETS SOLD BY LOCTITE CORPORATION NORTH AMERICAN
AUTOMOTIVE AFTERMARKET BUSINESS AS OF JULY 31, 1999 AND AUDITED STATEMENTS OF
REVENUES AND OPERATING EXPENSES FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND
1996 (WITH INDEPENDENT AUDITORS' REPORT THEREON).
- a1.1 -
<PAGE> 5
LOCTITE CORPORATION
NORTH AMERICAN AUTOMOTIVE
AFTERMARKET BUSINESS
Statement of Net Assets Sold
July 31, 1999
Statements of Revenues and Operating Expenses
Years ended December 31, 1998, 1997 and 1996
(With Independent Auditors' Report Thereon)
- a1.2 -
<PAGE> 6
LOCTITE CORPORATION
NORTH AMERICAN AUTOMOTIVE
AFTERMARKET BUSINESS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Independent Auditors' Report 1
Statement of Net Assets Sold as of July 31, 1999 2
Statements of Revenues and Operating Expenses for the years ended December 31,
1998, 1997 and 1996 3
Notes to Financial Statements 4
</TABLE>
- a1.3 -
<PAGE> 7
[KPMG LLP letterhead]
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Loctite Corporation:
We have audited the accompanying special purpose statement of net assets sold of
the Loctite Corporation North American Automotive Aftermarket Business as of
July 31, 1999 and the related statements of revenues and operating expenses of
the product lines and brands included in and serving the Loctite Corporation
North American Automotive Aftermarket Business for the years ended December 31,
1998, 1997 and 1996. These financial statements are the responsibility of
Loctite Corporation'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 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 presentation of the financial
statements. We believe that our audits provide a reasonable basis for our
opinion.
As described in Note 1, the accompanying financial statements were prepared
solely for the purpose of complying with the filing instructions of the
Securities and Exchange Commission (for inclusion in Form 8-K of Automotive
Performance Group, Inc. (APG)) and are intended to present the net assets sold
of the Automotive Aftermarket Business of Loctite Corporation pursuant to the
provisions of the Asset Purchase Agreement between Permatex, Inc. and Loctite
Corporation described in Note 1, and the related revenues and operating expenses
of the product lines and brands included in the North American Automotive
Aftermarket Business. The financial statements are not intended to be a complete
presentation of Loctite Corporation's financial position or results of
operation.
In our opinion, the financial statements referred to above present fairly, in
all material respects, net assets sold of the Loctite Corporation North American
Automotive Aftermarket Business, pursuant to the Asset Purchase Agreement
discussed in Note 1, as of July 31, 1999 and the related revenues and operating
expenses of the product lines and brands included in the Loctite Corporation
North American Automotive Aftermarket Business for the years ended December 31,
1998, 1997 and 1996 pursuant to the Asset Purchase Agreement described in Note
1, and in accordance with generally accepted accounting principles.
/s/ KPMG LLP
Hartford, Connecticut
June 1, 2000
- a1.4 -
<PAGE> 8
LOCTITE CORPORATION
NORTH AMERICAN AUTOMOTIVE
AFTERMARKET BUSINESS
Statement of Net Assets Sold
July 31,1999
<TABLE>
<CAPTION>
(DOLLARS IN
THOUSANDS)
----------
<S> <C>
Assets:
Trade accounts receivable, net of allowance of $620 $23,340
Inventory 7,172
Employee advances 19
Employee loans 6
Prepaid expenses 185
-------
Total current assets 30,722
Property, plant and equipment, net of accumulated depreciation of $11,077 20,661
-------
Total assets 51,383
-------
Liabilities:
Accounts payable 3,012
Accrued expenses 1,539
-------
Total current liabilities 4,551
-------
Net assets sold $46,832
=======
</TABLE>
See accompanying notes to financial statements.
2
-a1.5-
<PAGE> 9
LOCTITE CORPORATION
NORTH AMERICAN AUTOMOTIVE
AFTERMARKET BUSINESS
Statements of Revenues and Operating Expenses
Years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales $107,045 109,315 108,772
Cost of sales 60,133 62,186 63,439
-------- ------- -------
Gross margin 46,912 47,129 45,333
Direct expenses 17,419 18,921 16,837
-------- ------- -------
Contribution margin 29,493 28,208 28,496
-------- ------- -------
Allocated expenses:
Indirect marketing 5,799 5,239 5,146
Freight 3,204 3,265 3,251
General and administrative 4,549 3,899 3,813
Research and development 150 145 140
-------- ------- -------
Total allocated expenses 13,702 12,548 12,350
-------- ------- -------
Operating earnings $15,791 15,660 16,146
======== ======= =======
</TABLE>
See accompanying notes to financial statements.
3
-a1.6-
<PAGE> 10
LOCTITE CORPORATION
NORTH AMERICAN AUTOMOTIVE
AFTERMARKET BUSINESS
Notes to Financial Statements
(dollars in thousands)
As of July 31, 1999 and for the years ended
December 31, 1998, 1997 and 1996
(1) BACKGROUND AND BASIS OF PRESENTATION
Effective July 31, 1999, Permatex, Inc. (Permatex), acquired certain
assets and assumed certain liabilities of Loctite Corporation's (Loctite)
North American Automotive Aftermarket Business (AAM). AAM primarily
consists of Loctite's automotive aftermarket division, including the
automotive service parts business and selected heavy duty truck customer
accounts, (as those terms are used by Loctite), together with the
products sold under the "Permatex" and "Fast Orange" trademarks.
AAM is a manufacturer, distributor, and marketer of functional chemical
products to the automotive maintenance and repair markets in North
America. The sale was structured as a sale of assets for cash and
includes the brand names, customer lists, and selected products and
certain manufacturing operations of AAM. Major product lines include
anaerobic threadlockers and liquid gaskets, silicone gasketing material,
aerosol cleaners, waterless hand cleaners and a wide range of
do-it-yourself fix-and-repair chemical products. Loctite will retain the
right to sell the same and similar products under other Loctite owned
brand names to markets other than the automotive aftermarket including
the general industrial market, automotive original equipment
manufacturers, and non-automotive retail markets. Furthermore, the sale
addresses the North American business; excluded are Loctite's European,
Pacific, and Latin American Automotive Aftermarket Businesses.
The special purpose statements of net assets sold as of July 31, 1999 and
revenues and operating expenses of AAM for the years ended December 31,
1998, 1997 and 1996 include the accounts related to AAM within Loctite,
on a carve-out basis, and exclude the effects of product lines and
customers to be retained by Loctite. Accordingly, the statements include
sales and related expenses of the following brands in both the automotive
aftermarket and consumer markets: Permatex (excluding sales to other than
the thirty largest customers within the consumer market); DL/Permatex and
Fast Orange hand cleaners; Rear View Mirror; Alumaseal; and Loctite brand
products sold within the automotive aftermarket. Excluded from the
accompanying statements are the effects of sales and related expenses
within the industrial market (including automotive original equipment),
sales of Loctite brand products within the consumer market, and sales
outside of North America.
The special purpose statements of net assets sold and revenue and
operating expenses are not intended to be a complete presentation of the
results of operations, cash flows, or statements of financial position of
Loctite Corporation in accordance with generally accepted accounting
principles.
4 (Continued)
- a1.7 -
<PAGE> 11
LOCTITE CORPORATION
NORTH AMERICAN AUTOMOTIVE
AFTERMARKET BUSINESS
Notes to Financial Statements
(dollars in thousands)
As of July 31, 1999 and for the years ended
December 31, 1998, 1997 and 1996
AAM does not maintain stand-alone corporate support functions. Therefore,
corporate general and administrative expenses, and certain other expenses
have been allocated to AAM for the purpose of this financial statement as
set forth in Note 6. Allocations are based upon assumptions that Loctite
management believes are reasonable. It is impracticable to determine
whether such costs are comparable to those that would have been incurred
on a stand-alone basis. Goodwill and related amortization expense
resulting from the January 15, 1997, acquisition of Loctite by Henkel
KGaA and previous business acquisitions have not been allocated to AAM.
Also excluded from the financial statement are interest expense, income
taxes, and the costs related to legal, treasury, tax, employee benefit
administration, and internal audit corporate support activities.
All purchases of inventory, payroll, capital and other expenditures were
funded directly by Loctite. Remittances from sales to customers were
collected by Loctite. Accordingly, AAM has no cash on a stand-alone
basis. Trade accounts receivable represent the amounts due from specified
customers at July 31, 1999. Accounts payable represents an estimated
liability to suppliers that Permatex agreed to pay to Loctite who has
retained the obligation to the supplier.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Revenue Recognition - Revenue is recognized when products are
shipped to customers. Sales are net of customer allowances,
discounts and rebates allocated on a basis proportional to sales.
(b) Cost of Sales - Cost of sales includes raw material, labor, and
overhead as determined on the lower of standard cost (which
approximates first-in, first-out method) or market basis.
Manufacturing variances generated by Loctite's primary
manufacturing facilities relating to AAM products, Kansas City,
Missouri, and Solon, Ohio, have been included in cost of sales on
a basis proportional to the cost of sales of related products.
(c) Inventories - Inventories are stated at the lower of standard cost
(which approximates first-in, first-out method) or market.
(d) Property, Plant and Equipment - Property, plant and equipment is
recorded at cost and is depreciated using both straight-line and
accelerated methods. Estimated lives used to compute depreciation
are: land improvements, 5 to 40 years; building and improvements,
5 to 40 years; and machinery and equipment 3 to 10 years.
5 (Continued)
- a1.8 -
<PAGE> 12
LOCTITE CORPORATION
NORTH AMERICAN AUTOMOTIVE
AFTERMARKET BUSINESS
Notes to Financial Statements
(dollars in thousands)
As of July 31, 1999 and for the years ended
December 31, 1998, 1997 and 1996
(e) Consolidation - The statement of net assets sold and the
statements of revenues and operating expenses include certain
accounts of the North American automotive aftermarket business of
Loctite Corporation's North American Group (U.S.), Loctite Canada,
and Loctite Mexico, after the elimination of intercompany accounts
and transactions. Intercompany transactions with other Loctite
divisions have not been eliminated in the accompanying statements.
(f) Translation of Foreign Currencies - Assets and liabilities of
Loctite Canada and Loctite Mexico are translated at exchange rates
prevailing on the date of the statement of net assets acquired;
revenues and expenses are translated at average exchange rates
prevailing during the period.
(g) Non-Operating Expenses - Interest expense and income, gains and
losses on the sale of assets, and other non-operating income and
expenses have been excluded from the accompanying financial
statement.
(h) Use of Estimates - The preparation of the financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses, including allocations necessary to present AAM on a
carve-out basis, during the reporting period. Actual results could
differ from those estimates.
(3) INVENTORY
Inventory consists of the following at July 31, 1999:
<TABLE>
<S> <C>
Finished goods $ 5,564
Work in process 317
Raw materials 1,291
---------
$ 7,172
=========
</TABLE>
6 (Continued)
- a1.9 -
<PAGE> 13
LOCTITE CORPORATION
NORTH AMERICAN AUTOMOTIVE
AFTERMARKET BUSINESS
Notes to Financial Statements
(dollars in thousands)
As of July 31, 1999 and for the years ended
December 31, 1998, 1997 and 1996
(4) PROPERTY PLANT AND EQUIPMENT
Property, plant and equipment consists of the following at July 31,
1999:
<TABLE>
<S> <C>
Land and land improvements $ 998
Buildings 13,624
Machinery and equipment 14,787
Furniture and fixtures 984
Computers 745
Lab 142
Tooling 458
-----------
31,738
Less accumulated depreciation 11,077
-----------
$ 20,661
===========
</TABLE>
Aggregate depreciation expense charged to income was $1,848 in 1998,
$1,560 in 1997 and $1,311 in 1996. Depreciation expense attributable to
the two manufacturing facilities related to AAM amounted to $1,101 in
1998, $915 in 1997 and $735 in 1996. Additional depreciation expenses of
$747 in 1998, $645 in 1997 and $576 in 1996 related to selling, general
and administrative functions of AAM has been allocated on a basis
proportionate to sales.
(5) ACCRUED EXPENSES
Accrued expenses consists of the following at July 31, 1999:
<TABLE>
<S> <C>
Real estate and personal property taxes $ 246
Advertising and promotion 625
Commissions 375
Bonuses and other personnel costs 218
Other 75
----------
$ 1,539
==========
</TABLE>
7 (Continued)
- a1.10 -
<PAGE> 14
LOCTITE CORPORATION
NORTH AMERICAN AUTOMOTIVE
AFTERMARKET BUSINESS
Notes to Financial Statements
(dollars in thousands)
As of July 31, 1999 and for the years ended
December 31, 1998, 1997 and 1996
(6) DIRECT AND ALLOCATED EXPENSES
(a) Direct expenses include all sales, marketing, and research and
development expenses directly identified with the AAM business.
(b) Indirect marketing, general and administrative expenses are shared by
the AAM business with other Loctite businesses. Allocation of these
costs were made to the AAM business based primarily on a basis
proportional to sales of the AAM business to the other Loctite
businesses. Excluded from the accompanying financial statement are
costs related to legal, treasury, tax, employee benefit
administration, and internal audit corporate support activities.
(c) Freight costs have been included in the accompany financial statement
as a percentage of sales determined based upon 1998 experience;
direct identification of freight costs to the AAM market was not
determinable for prior periods. Management is not aware of any reason
why freight costs incurred in 1997 and 1996 would materially differ
from 1998 experience.
(d) Research and development expenses include estimated direct and
indirect costs incurred in to support existing AAM products. Excluded
are research and development efforts primarily directed at the
industrial market and non-AAM consumer and automotive aftermarket
products, whether or not those efforts may lead to aftermarket
applications, and exploratory efforts expended on products not yet in
production. Also excluded are costs allocable to international
operations. Total direct and indirect research and development
expense charged AAM was $350 in 1998, $335 in 1997, and $325 in 1996.
(7) COMMITMENTS AND CONTINGENCIES
The Company is involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management, the
ultimate disposition of these matters will not have a material adverse
effect on AAM's financial position or results of operations.
(8) PENSION AND POST RETIREMENT PLANS
Expenses related to Loctite sponsored employee benefit plans have been
allocated to AAM and are classified in the accompanying statement of
revenues and operating expenses together with related payroll expenses.
8 (Continued)
- a1.11 -
<PAGE> 15
LOCTITE CORPORATION
NORTH AMERICAN AUTOMOTIVE
AFTERMARKET BUSINESS
Notes to Financial Statements
(dollars in thousands)
As of July 31, 1999 and for the years ended
December 31, 1998, 1997 and 1996
(9) CONCENTRATIONS
For the years ended December 31, 1997 and 1996, no customer amounted to
greater than 10% of sales. For the year ended December 31, 1998, one
customer accounts for 11% of sales. At July 31, 1999, one customer
amounted to approximately 23% of outstanding accounts receivable.
Credit risk is concentrated in customers in businesses related to the
automotive aftermarket. Concentrations of credit risk with respect to
trade accounts receivable are mitigated by the large number of customers
comprising AAM's customer base and their dispersion across different
geographic areas.
AAM manufacturers products for sale by other Loctite Divisions. These
transfers are made at standard manufacturing cost. Included in the
statement of revenue and expenses are sales and cost of sale, to other
Loctite divisions of $6,516 in 1998, $6,750 in 1997, and $7,544 in 1996.
(10) FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of the Company's financial instruments, which include
trade accounts receivable and accounts payable, approximates fair value
due to the relatively short maturity of such instruments.
9
- a1.12 -
<PAGE> 16
a2. UNAUDITED INTERIM STATEMENTS OF REVENUES AND OPERATING EXPENSES FOR THE SIX
MONTHS ENDED JUNE 30, 1999 AND 1998.
- a2.1 -
<PAGE> 17
LOCTITE CORPORATION
NORTH AMERICAN AUTOMOTIVE
AFTERMARKET BUSINESS
Interim Statements of Revenues and Operating Expenses
For the six months ended June 30, 1999 and 1998
(Unaudited)
(Amounts in thousands)
<TABLE>
<CAPTION>
For the Six For the Six
Months ended June Months ended June
30, 1999 30, 1998
-------- --------
<S> <C> <C>
Net sales $48,881 $49,813
Cost of sales 25,919 28,223
------- -------
Gross margin 22,962 21,590
Direct expenses 6,902 8,681
------- -------
Contribution margin 16,060 12,909
Allocated expenses:
Indirect marketing 2,974 3,060
Freight 1,424 1,478
General and administrative 2,269 2,353
Research and development 70 70
------- -------
Total allocated expenses 6,737 6,961
------- -------
Operating earnings $ 9,323 $ 5,948
======= =======
</TABLE>
These interim statements are prepared on a basis believed consistent with the
Audited Statements of Revenues and Operating Expenses for the years ended
December 31, 1998, 1997, and 1996 in section a1. See the notes in section a1 for
the basis upon which those interim statements have been prepared.
The applicable notes in section a1 are an integral part of these interim
statements.
- a2.2 -
<PAGE> 18
a3. SCHEDULES OF NET ASSETS SOLD AS OF JUNE 30, 1999 AND 1998.
- a3.1 -
<PAGE> 19
LOCTITE CORPORATION
NORTH AMERICAN AUTOMOTIVE
AFTERMARKET BUSINESS
Schedules of Net Assets Sold
June 30, 1999 and 1998
(Unaudited)
(Amounts in thousands)
<TABLE>
<CAPTION>
June 30, 1999 June 30, 1998
------------- -------------
<S> <C> <C>
Assets:
Trade accounts receivable, net of allowance of
$531 and $1,038 $24,212 $22,673
Inventory 7,513 9,297
Prepaid expenses 245 156
------- -------
Total current assets 31,970 32,126
Property, plant and equipment, net 20,644 20,157
------- -------
Total assets 52,614 52,283
------- -------
Liabilities:
Accounts payable 3,078 3,104
Accrued expenses 1,101 1,535
------- -------
Total current liabilities 4,179 4,639
------- -------
Net assets sold $48,435 $47,644
======= =======
</TABLE>
These interim statements are prepared on a basis believed consistent with the
Audited Statement of Net Assets Sold as of July 31, 1999 in section a1. See the
notes in section a1 for the basis upon which that interim statement has been
prepared.
The applicable notes in section a1 are an integral part of these interim
statements.
- a3.2 -
<PAGE> 20
b. PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
Automotive Performance Group, Inc. and Subsidiaries
PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
The accompanying unaudited pro forma combined condensed financial statements
have been derived from the historical results of operations of Automotive
Performance Group, Inc. and Subsidiaries (APG) and pro forma results of
operations of PBT Brands, Inc. (PBT) for the year ended December 31, 1998 and
the six months ended June 30, 1999 and financial position as of June 30, 1999.
On August 2, 1999, APG acquired a 22% equity interest in PBT, a new company
formed on July 26, 1999, to acquire the Automotive Aftermarket Business of
Loctite Corporation. Operations of PBT prior to July 26, 1999 have been
estimated on a pro forma basis.
The unaudited pro forma combined condensed financial statements are presented
for informational purposes only and do not purport to be indicative of the
operating results that actually would have occurred if the transaction had been
consummated on January 1, 1999, nor which may result from future operations. The
pro forma adjustments are based on available information and certain assumptions
that APG believes are reasonable. The transaction has been accounted for under
the equity method of accounting. These pro forma financial statements should be
read in conjunction with the historical financial statements and related notes
of APG and the purchase agreement.
-b.1-
<PAGE> 21
Automotive Performance Group, Inc. and Subsidiaries
PRO FORMA COMBINED CONDENSED BALANCE SHEET
(Unaudited)(In Thousands)
<TABLE>
<CAPTION>
Pro Forma
Historical APG Pro Forma Combined
June 30, 1999 Adjustments June 30, 1999
------------- ----------- -------------
<S> <C> <C> <C>
CURRENT ASSETS
Cash $ 124 $ 37(1) $ 161
Restricted cash 3,037 (3,037)(1) --
Prepaid expenses and other 1,482 (529)(1) 953
Net assets of discontinued specialty chemical subsidiary 1,009 -- 1,009
Net assets of discontinued automotive parts and
accessories subsidiaries 2,100 -- 2,100
Purchase option 1,000 (1,000)(1) --
-------- -------- --------
Total current assets 8,752 (4,529) 4,223
PROPERTY, PLANT and EQUIPMENT, net 91 -- 91
OTHER ASSETS
Investment in PBT Brands, Inc. -- 6,328(1) 6,328
Net assets of discontinued specialty chemical subsidiary 51 -- 51
Net assets of discontinued automotive parts and
accessories subsidiaries 1,506 -- 1,506
-------- -------- --------
$ 10,400 $ 1,799 $ 12,199
======== ======== ========
CURRENT LIABILITIES
Notes payable $ 2,023 $ -- $ 2,023
Accounts payable 1,569 -- 1,569
Accrued liabilities 45 -- 45
Net liabilities of discontinued specialty chemical subsidiary
including provision for losses 687 -- 687
Net liabilities of discontinued automotive parts and
accessories subsidiaries including provision for
losses 5,772 -- 5,772
-------- -------- --------
Total current liabilities 10,096 -- 10,096
STOCKHOLDERS' EQUITY 304 1,799(1) 2,103
-------- -------- --------
$ 10,400 $ 1,799 $ 12,199
======== ======== ========
</TABLE>
See notes to pro forma combined condensed financial statements.
-b.2-
<PAGE> 22
Automotive Performance Group, Inc. and Subsidiaries
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(Unaudited)(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Year ended December 31, 1998
----------------------------
Historical Pro Forma Pro Forma
APG Adjustments Combined
--- ----------- --------
<S> <C> <C> <C>
Revenues $ -- $ -- $ --
Expenses
Selling, general and administrative 338 -- 338
Salaries, payroll taxes and benefits 281 -- 281
Professional expenses 1,788 -- 1,788
Depreciation and amortization 3 -- 3
-------- -------- --------
2,410 -- 2,410
-------- -------- --------
Operating loss (2,410) -- (2,410)
Other income (expense)
Equity in losses of affiliate -- (6,328)(2) (6,328)
Interest expense (297) -- (297)
Gain on sale of affiliate 1,122 -- 1,122
-------- -------- --------
825 6,328) (5,503)
-------- -------- --------
Loss from continuing operations before discontinued
operations and extraordinary item (1,585) (6,328) (7,913)
Discontinued operations
Loss from operations of discontinued venue division and subsidiary (339) -- (339)
Loss from operations of discontinued specialty chemical subsidiary (1,636) -- (1,636)
Loss from operations of automotive parts and accessories subsidiaries (4,713) -- (4,713)
Loss from operations of discontinued race team subsidiary (4,924) -- (4,924)
Loss from disposal of race team subsidiary (925) -- (925)
-------- -------- --------
Loss from discontinued operations (12,537) -- (12,537)
-------- -------- --------
Loss before extraordinary item (14,122) (6,328) (20,450)
Extraordinary item
Gain from extinguishment of debt 258 -- 258
-------- -------- --------
NET LOSS $(13,864) $ (6,328) $(20,192)
======== ======== ========
Loss per common share basic and diluted
Loss before discontinued operations and extraordinary item $ (0.32) $ (1.28) $ (1.60)
Discontinued operations (2.53) -- (2.53)
Extraordinary item 0.05 -- 0.05
-------- -------- --------
$ (2.80) $ (1.28) $ (4.08)
======== ======== ========
</TABLE>
See notes to pro forma combined condensed financial statements.
-b.3-
<PAGE> 23
Automotive Performance Group, Inc. and Subsidiaries
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(Unaudited)(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Six Months ended June 30, 1999
------------------------------
Historical Pro Forma Pro Forma
APG Adjustments Combined
---------- ----------- --------
<S> <C> <C> <C>
Revenues $ -- $ -- $ --
Expenses
Selling, general and administrative 226 -- 226
Salaries, payroll taxes and benefits 306 -- 306
Professional expenses 731 -- 731
Depreciation and amortization 9 -- 9
Write-off of goodwill 3,047 -- 3,047
-------- -------- --------
4,319 -- 4,319
-------- -------- --------
Operating loss (4,319) -- (4,319)
Other income (expense)
Equity in losses of affiliate -- (3,366)(3) (3,366)
Interest expense (249) -- (249)
Interest income 37 -- 37
-------- -------- --------
(212) (3,366) (3,578)
-------- -------- --------
Loss from continuing operations before discontinued
operations (4,531) (3,366) (7,897)
Discontinued operations
Loss from operations of discontinued specialty chemical
subsidiary (1,111) -- (1,111)
Loss from sale of discontinued specialty chemical
subsidiary including provision of $185 for operating
losses during phase-out period (185) -- (185)
Loss from operations of automotive parts and accessories
subsidiaries (1,090) -- (1,090)
Lossfrom sale of automotive parts and accessories
subsidiaries including provision of $267 for operating
losses during phase-out period (1,685) -- (1,685)
-------- -------- --------
Loss from discontinued operations (4,071) -- (4,071)
-------- -------- --------
NET LOSS $ (8,602) $ (3,366) $(11,968)
======== ======== ========
Loss per common share basic and diluted
Loss before discontinued operations and extraordinary item $ (0.72) $ (0.53) $ (1.25)
Discontinued operations (0.64) -- (0.64)
-------- -------- --------
$ (1.36) $ (0.53) $ (1.89)
======== ======== ========
</TABLE>
See notes to pro forma combined condensed financial statements.
-b.4-
<PAGE> 24
Automotive Performance Group, Inc. and Subsidiaries
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(1) To record investment in PBT under the equity method of accounting.
(2) To record equity losses in PBT and amortization of excess cost over
underlying equity in PBT for the year ended December 31, 1998.
(3) To record equity losses in PBT and amortization of excess cost over
underlying equity in PBT for the six months ended June 30, 1999.
-b.5-
