SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A #1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): December 17, 1993
WILLCOX & GIBBS, INC.
(Exact name of registrant as specified in its charter)
New York
(State or other jurisdiction of incorporation)
1-5731 13-1474527
(Commission File Number) (IRS Employer Identification No.)
530 Fifth Avenue - 22nd Floor, New York, New York 10036
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 869-1800
<PAGE>
Item 7 of the Company's Report on Form 8-K dated December 17, 1993, is
amended and restated to read in its entirety as follows:
ITEM 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(a)Financial statements of businesses acquired. The following financial
statements are filed herewith on the pages subsequent hereto:
Summers Group, Inc.
Report of Independent Auditors
Balance Sheets at December 31, 1992, 1991 and 1990
Statements of Income for the years ended
December 31, 1992, 1991 and 1990
Statements of Shareholder's Equity for the years
ended December 31, 1992, 1991 and 1990
Statements of Cash Flows for the years ended
December 31, 1992, 1991 and 1990
Notes to Financial Statements
Balance Sheet at September 30, 1993
Statements of Income for the nine months ended
September 30, 1993 and 1992
Statements of Cash Flows for the nine months ended
September 30, 1993 and 1992
<PAGE>
The financial statements of Summers Group, Inc. for the years ended
December 31, 1992, 1991 and 1990 included herein are incorporated by reference
into certain registration statements on Form S-8 of Willcox & Gibbs, Inc. and
have been so incorporated by reference in reliance on the report of Ernst &
Young, independent accountants, given on the authority of said firm as experts
in auditing and accounting.
(b) Pro forma financial information. The following pro forma
financial information is filed herewith on the pages subsequent hereto:
Willcox & Gibbs, Inc. Pro Forma Condensed
Consolidated Balance Sheet as of
September 30, 1993 and Notes thereto.
Willcox & Gibbs, Inc. Pro Forma Condensed
Consolidated Statements of Income for
the year ended December 31, 1992 and
for the nine months ended September 30,
1993 and Notes thereto.
(c) Exhibits. The Index to Exhibits to this Report is incorporated
herein by reference.
<PAGE>
LOGO ERNST & YOUNG
Suite 500 Phone: 214 969 8000
212 San Jacinto Street Fax: 214 969 8587
Dallas, Texas 75201 Telex: 6710375
Report of Independent Auditors
Shareholder and Board of Directors
Summers Group, Inc.
We have audited the balance sheets of Summers Group, Inc. as of December 31,
1992, 1991, and 1990, and the related statements of income, shareholder's
equity, and cash flows for each of the three years in the period ended December
31, 1992. 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 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 financial
statement presentation. We believe that our audits provide 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 Summers Group, Inc. at
December 31, 1992, 1991, and 1990, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1992,
in conformity with generally accepted accounting principles.
/s/ Ernst & Young
-------------------------------
Ernst & Young
November 12, 1993
<PAGE>
Summers Group, Inc.
Balance Sheets
<TABLE>
<CAPTION>
DECEMBER 31
1992 1991 1990
(In Thousands)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash $ 6,448 $3,474 $9,608
Due from affiliates (Note 2) - - 15,414
Trade accounts receivable, net of allowances of $369 in
1992, $328 in 1991, and $364 in 1990 49,652 48,768 43,502
Inventories 37,670 31,163 31,608
Other current assets 4,656 4,693 4,428
Total current assets 98,426 88,098 104,560
Property, plant, and equipment, net (Note 3) 19,139 19,230 15,710
Intangible assets, net of amortization of $1,179 in 1992, $771
in 1991, and $371 in 1990 7,805 6,952 7,352
Deferred tax asset (Note 4) - 527 1,435
Other noncurrent assets 667 683 1,055
Total assets $126,037 $115,490 $130,112
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable $56,151 $49,139 $45,493
Accrued compensation and benefits 6,740 5,135 5,352
Other accrued liabilities 2,625 1,881 4,158
Due to affiliates (Note 2) 8,151 11,777 -
Income taxes payable (Note 4) 2,518 3,725 4,714
Current portion of capitalized lease obligations (Note 5) 62 99 90
Total current liabilities 76,247 71,756 59,807
Deferred taxes (Note 4) 320 - -
Long-term portion of capitalized lease obligations (Note 5) 469 531 135
Other noncurrent liabilities 1,855 1,908 2,221
Contingencies (Note 9)
Shareholder's equity:
Common stock, $1 par value, 20,000 shares authorized,
10,000 shares issued, 10,000 shares outstanding in 1992
and 1991 and 9,040 shares outstanding in 1990 10 10 10
Less 960 treasury shares - - (1)
Additional paid-in capital 35,365 35,365 53,366
Retained earnings 11,771 5,920 14,574
Total shareholder's equity 47,146 41,295 67,949
Total liabilities and shareholder's equity $126,037 $115,490 $130,112
See accompanying notes.
</TABLE>
<PAGE>
Summers Group, Inc.
Statements of Income
<TABLE>
<CAPTION>
Year ended December 31
1992 1991 1990
(In Thousands)
<S> <C> <C> <C>
Revenue $395,121 $374,095 $362,196
Cost of sales 315,704 292,237 285,465
Gross profit 79,417 81,858 76,731
Selling, general, and administrative
expenses 70,775 69,064 61,323
Operating income 8,642 12,794 15,408
Parent company charge (Note 2) (257) (230) (213)
Other income, net 1,086 636 -
Interest expense (127) (172) (155)
Income before income taxes 9,344 13,028 15,040
Income tax provision (Note 4) 3,493 4,682 5,466
Net income $ 5,851 $ 8,346 $ 9,574
See accompanying notes.
</TABLE>
<PAGE>
Summers Group, Inc.
Statements of Shareholder's Equity
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED TREASURY
STOCK CAPITAL EARNINGS STOCK TOTAL
(In Thousands)
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1990 $10 $53,366 $ 5,000 $(1) $58,375
Net income - - 9,574 - 9,574
Balance at December 31, 1990 10 53,366 14,574 (1) 67,949
Cancellation of treasury shares (1) (1) - 1 (1)
Issuance of 960 shares of SGDHC 1 - - - 1
Return of capital to Parent (Note 2) - (18,000) - - (18,000)
Cash dividends declared - - (17,000) - (17,000)
Net income - - 8,346 - 8,346
Balance at December 31, 1991 10 35,365 5,920 - 41,295
Net income - - 5,851 - 5,851
Balance at December 31, 1992 $10 $35,365 $11,771 $- $47,146
See accompanying notes.
</TABLE>
<PAGE>
Summers Group, Inc.
Statements of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1992 1991 1990
(In Thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 5,851 $ 8,346 $ 9,574
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,582 2,998 1,546
Deferred income tax 847 908 321
Gain on sale of land and building (1,086) (636) -
Changes in operating assets and liabilities,
net of effect of acquisition and sale
of net assets:
(Increase) decrease in trade
accounts receivable (128) (5,266) 5,350
(Increase) decrease in
inventories (4,754) 445 5,288
(Increase) decrease in other current
assets 37 (265) (303)
Increase in accounts payable and
accrued liabilities 9,267 1,152 6,768
Decrease in income taxes payable (1,207) (989) (1,802)
Total adjustments 6,558 (1,653) 17,168
Net cash provided by operating activities 12,409 6,693 26,742
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (3,283) (6,361) (3,961)
Cost of acquisitions (3,577) - (18,020)
Proceeds from sale of net assets 1,587 879 -
Other investing activities 16 372 (10)
Net cash used in investing activities (5,257) (5,110) (21,991)
CASH FLOWS FROM FINANCING ACTIVITIES
(Increase) decrease in due from/to affiliates (3,626) 27,191 46
Dividends paid - (17,000) -
Return of capital - (18,000) -
Other financing activities (552) 92 (820)
Net cash used in financing activities (4,178) (7,717) (774)
Net increase (decrease) in cash 2,974 (6,134) 3,977
Cash at beginning of year 3,474 9,608 5,631
Cash at end of year $6,448 $3,474 $9,608
See accompanying notes.
</TABLE>
<PAGE>
Notes to Financial Statements
December 31, 1992, 1991, and 1990
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Summers Group, Inc. (Summers or the Company), a Delaware corporation, is a
wholly owned subsidiary of SGDHC, Inc. (SGDHC) and an indirect, wholly owned
subsidiary of BTR Dunlop, Inc. (the Parent), a company incorporated in the
United States. The Parent is an indirect, wholly owned subsidiary of BTR plc
(BTR), a company incorporated in the United Kingdom. The Company has
significant transactions with SGDHC, the Parent, BTR, and their affiliates,
which transactions are recorded on the bases determined by the parties (Notes 2
and 4).
The Company is a wholesale distributor selling electrical equipment and
supplies to commercial building contractors, public utilities and industrial
companies in various locations in the United States and operating under
numerous trade names.
Prior to January 1, 1990, the operations of the Company were conducted by
Summers Electric Company (and its wholly owned subsidiary, Summers Electric of
Oklahoma), Glasco Electric Company, and ESD (collectively referred to hereafter
as the Predecessor Companies). Each of the Predecessor Companies was a wholly
owned subsidiary of SGDHC. Effective January 1, 1990, the Company was formed
and issued, in the aggregate, 9,040 shares of its common stock to the
Predecessor Companies in exchange for the net operating assets of the
Predecessor Companies and 960 shares to Summers Electric of Oklahoma in
exchange for its net assets. Effective December 31, 1990, each of the
Predecessor Companies was liquidated into SGDHC and Summers Electric of
Oklahoma was liquidated into the Company. As a result of these transactions,
at December 31, 1990, SGDHC held 9,040 shares of the Company's common stock and
the remaining 960 shares, previously held by Summers Electric of Oklahoma, were
held in treasury by the Company. In March 1991, the treasury shares were
canceled and the Company issued 960 new shares of its common stock to SGDHC.
Accordingly, subsequent to March 1991, all 10,000 shares of the Company's
common stock are held by SGDHC.
ACCOUNTS RECEIVABLE
Accounts receivable represent amounts due from customers related to the sale of
electrical equipment and supplies. Credit is extended based upon an evaluation
of the customer's financial condition, and generally, collateral is not
required. Concentrations of credit risk with respect to accounts receivable
are limited because of the large number of customers in the Company's customer
base and their dispersion across geographic areas. The Company provides
allowances for potentially uncollectible accounts and cash discounts expected
to be taken by its customers.
<PAGE>
Summers Group, Inc.
Notes to Financial Statements (continued)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORIES
Inventories are valued at the lower of cost or market, with cost being
determined on a last-in, first-out (LIFO) basis. For purposes of the LIFO
calculation, the current cost of the Company's inventories is measured by
invoice cost less allowances for cash and volume purchase discounts earned.
Replacement cost exceeded the carrying value of the Company's inventories by
$8,897,000, $9,607,000, and $10,669,000 at December 31, 1992, 1991, and 1990,
respectively.
PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment are stated at cost less accumulated
depreciation. Additions to and major improvements of property, plant, and
equipment are capitalized. Maintenance and repair costs are expensed as
incurred. When assets are retired or otherwise disposed of, the cost of the
assets and the related accumulated depreciation are removed from the accounts
and any gain or loss is reflected in other income for the period. Net gains on
disposals of property, plant and equipment included in other income totaled
$1,086,000 and $636,000 in 1992 and 1991, respectively.
Depreciation is computed on a straight-line basis over the estimated useful
lives of the Company's assets (20 to 30 years for buildings, 5 to 10 years for
computer equipment and software, and 5 to 10 years for fixtures and equipment).
Amortization of leasehold improvements is based on the shorter of the lives of
the respective leases or the estimated useful lives of the improvements.
INTANGIBLE ASSETS
Intangible assets consist primarily of goodwill and noncompete agreements and
are amortized on a straight-line basis over terms that do not exceed 40 years.
INCOME TAXES
Income tax expense is provided on transactions recognized for financial
reporting purposes regardless of when such items are reported for tax purposes.
Deferred taxes are provided for the tax effects of timing differences between
financial statement reporting and income tax reporting of certain income and
expense items.
<PAGE>
Summers Group, Inc.
Notes to Financial Statements (continued)
2. RELATED PARTIES
The Company is involved in a combined cash management program with other BTR
subsidiaries located in the United States. The amounts due (to) from
affiliates under these arrangements were ($8,151,000), ($11,777,000), and
$15,414,000 at December 31, 1992, 1991, and 1990, respectively. The advances
due (to) from affiliates fluctuate based upon the cash inflows and requirements
of the Company, but are repayable upon demand and do not bear interest.
In 1991, the Company distributed $35 million to SGDHC. This distribution was
recorded by increasing the balance of the Company's advances payable to
affiliate and, at the instruction of the Parent, represented a $17 million
dividend and a $18 million return of capital charged against the additional
paid-in capital of the Company.
The parent company charge represents an allocation of various costs from the
Parent and BTR.
3. PROPERTY, PLAN, AND EQUIPMENT
Property, plant, and equipment costs of the following:
[CAPTION]
DECEMBER 31
1992 1991 1990
(In Thousands)
[S] [C] [C] [C]
Land $ 1,657 $ 1,856 $ 1,917
Buildings and leasehold
improvements 9,390 9,870 8,770
Computer equipment and
software 13,097 12,501 8,488
Fixtures and equipment 10,964 10,265 9,301
35,108 34,492 28,476
Less accumulated depreciation
and amortization 15,969 15,262 12,766
$19,139 $19,230 $15,710
4. INCOME TAXES
The Company's operations are included in the consolidated federal income tax
return of the BTR Dunlop Holdings, Inc. (Holdings), a U.S. corporation that is
the immediate parent company of the Parent. The Company's federal tax
provisions are
<PAGE>
Summers Group, Inc.
Notes to Financial Statements (continued)
4. INCOME TAXES (CONTINUED)
computed as though the Company were filing separate returns utilizing the tax
elections made by Holdings and in accordance with the provisions of Accounting
Principles Board Opinion No. 11, "Accounting for Income Taxes." An amount
equal to the provision as computed is remitted to the Parent annually through
intercompany advances.
The provision for income taxes includes the following components:
[CAPTION]
YEAR ENDED DECEMBER 31
1992 1991 1990
(In Thousands)
[S] [C] [C] [C]
Current $2,646 $3,774 $5,145
Deferred 847 908 321
$3,493 $4,682 $5,466
The recorded tax provisions exceed the amounts resulting from the
multiplication of consolidated income before income taxes by the 34% statutory
federal income tax rate primarily due to state income taxes.
The deferred tax provision is attributable primarily to excess tax over book
depreciation and amortization of the Company's fixed assets. The tax effects
of such differences were $742,000, $404,000, and $273,000 in 1992, 1991, and
1990, respectively.
In February 1992, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes,"
which the Company will be required to adopt as of January 1, 1993. SFAS No.
109 requires a change from the deferred to the liability method of computing
income taxes. Under the liability method, deferred taxes are provided on
differences in the bases of assets and liabilities for financial reporting and
tax reporting purposes and are adjusted for enacted changes in tax rates and
laws. The Company has not yet implemented SFAS No. 109, and the impact of
adoption, if any, on the Company's financial statements has not been
determined.
5. CAPITALIZED LEASE OBLIGATIONS
The Company leases certain buildings under capital leases that expire at
various dates through 2003. The present value of the Company's obligations
under capital lease arrangements, based upon imputed interest rates ranging
from 8.0% to 10.2%,
<PAGE>
Summers Group, Inc.
Notes to Financial Statements (continued)
5. CAPITALIZED LEASE OBLIGATIONS (CONTINUED)
aggregated $531,000, $630,000, and $225,000 at December 31, 1992, 1991, and
1990, respectively. The carrying value of buildings held under capital lease
arrangements and included in the Company's balance sheet aggregated $519,000,
$576,000, and $139,000 at December 31, 1992, 1991, and 1990, respectively.
6. OPERATING LEASE COMMITMENTS
The Company leases its corporate office and most of its branch warehouse
operational space under noncancelable operating leases. In addition, the
Company leases certain transportation, computer, and office equipment. Rental
expense under operating leases was $3,217,000, $3,330,000, and $3,338,000 in
1992, 1991, and 1990, respectively.
Future minimum lease payments under noncancelable operating leases, including
certain leases for properties abandoned by the Company, as of December 31,
1992, are as follows (in thousands):
1993 $ 3,199
1994 2,416
1995 1,853
1996 1,222
1997 1,106
Thereafter 3,230
$13,026
When a property is vacated or abandoned by the Company prior to the expiration
of its lease term, the present value of future minimum lease payments is
accrued in the period of abandonment. Accruals for abandoned leases are
included in other noncurrent liabilities and totaled $1,255,000, $1,335,000,
and $1,434,000 at December 31, 1992, 1991, and 1990, respectively.
7. EMPLOYEE BENEFITS
RETIREMENT AND SAVINGS PLAN
The Company has a retirement and savings plan (the Plan). All full-time
employees with at least one year of qualifying continuous service are eligible
to participate in the Plan. Participating employees are permitted to make
voluntary contributions to the Plan on a pretax salary reduction basis in
accordance with the provisions of Section 401(k) of the Internal Revenue Code.
Under the provisions of the Plan, the Company matches 50% of the employees'
contributions,
<PAGE>
Summers Group, Inc.
Notes to Financial Statements (continued)
7. EMPLOYEES BENEFITS (CONTINUED)
up to 3% of each employee's compensation. Company matching contributions to
the Plan were $1,161,000, $1,183,000, and $1,024,000 in 1992, 1991, and 1990,
respectively.
POSTRETIREMENT BENEFITS
In December 1990, the Financial Accounting Standards Board issued SFAS No. 106,
"Employer's Accounting for Postretirement Benefits Other Than Pensions," which
the Company will be required to implement in 1993. SFAS No. 106 requires
recognition of a liability for postretirement benefits as the employees render
service. While the Company has not yet completed the analysis required to
calculate the impact of adoption of SFAS No. 106, it does not believe that such
adoption will have a material impact on the Company's future financial position
or results of operations.
8. ACQUISITIONS
On September 25, 1992, the Company acquired the inventory, trade accounts
receivable, and fixed assets of Sterett Supply, Inc., which operates electrical
and utility supply houses throughout south Central Texas. The total
consideration paid was $3,577,000. The acquisition was recorded as a purchase,
and the excess of purchase price over the estimated fair value of the assets
acquired ($861,000) has been recorded as goodwill and is being amortized on a
straight-line basis over 40 years.
On March 27, 1990, the Company acquired the inventory, trade accounts
receivable, and fixed assets of Southern Electric, which operates electrical
supply houses throughout northwest Arkansas. The total consideration paid was
$4,209,000. The acquisition was recorded as a purchase, and the excess of
purchase price over the estimated fair value of the assets acquired ($373,000)
has been recorded as goodwill and is being amortized on a straight-line basis
over 40 years.
On December 1, 1990, the Company acquired the inventory, fixed assets, and
certain trade accounts receivable of Cummins Supply, Inc., which operates
electrical and utility supply houses throughout Texas. The total consideration
paid was $13,573,000. The acquisition was recorded as a purchase, and the
excess of purchase price over the estimated fair value of the assets acquired
($5,132,000) has been recorded as goodwill and is being amortized on a straight-
line basis over 40 years.
<PAGE>
Summers Group, Inc.
Notes to Financial Statements (continued)
9. CONTINGENCIES
In March 1993, a competitor filed suit against the Company and one of the
Predecessor Companies (collectively Companies) in the District Court in Dallas
County, Texas. The suit asserts that the Companies interfered with existing
contracts, prospective contracts, and business relations of the competitor,
which prevented the competitor from becoming an authorized distributor for a
supplier. The competitor is seeking $2,057,000 in actual damages and
$15,000,000 in punitive damages, and the trial is currently scheduled for
January 24, 1994. The Company, after consultation with legal counsel, believes
that the suit is without merit and is vigorously defending its position.
Certain other claims and legal proceedings arising in the ordinary course of
the Company's business are pending against the Company. Management believes
that neither the aforementioned suit nor these other claims or lawsuits,
individually or in the aggregate, will have a material adverse effect on the
Company's financial position or results of operations; therefore, no provision
has been recorded in the financial statements.
<PAGE>
<TABLE>
<CAPTION>
SUMMERS GROUP, INC.
BALANCE SHEET
SEPTEMBER 30, 1993
(unaudited)
(Dollars in thousands)
<S> <C>
Assets
Cash $ 3,715
Trade accounts receivable 57,281
Inventories 37,386
Other current assets 4,806
Total current assets 103,188
Property, plant and equipment, net 18,926
Intangible assets, net of amortization 7,482
Other noncurrent assets 728
Total assets $130,324
Liabilities and Shareholder's Equity
Current liabilities
Accounts payable $ 52,593
Accrued compensation and benefits 5,314
Other accrued liabilities 4,156
Due to affiliates 9,769
Income taxes payable 3,020
Current portion of capitalized lease obligations 36
Total current liabilities 74,888
Deferred taxes 700
Long-term portion of capitalized lease obligations 444
Other noncurrent liabilities 1,486
Shareholder's Equity
Common stock, $1 par value, 20,000 shares
authorized, 10,000 shares issued, 10,000
outstanding in 1993 and 1992 10
Additional paid-in capital 35,365
Retained Earnings 17,431
Total shareholder's equity 2,806
Total liabilities and shareholder's equity $130,324
</TABLE>
<PAGE>
[CAPTION]
SUMMERS GROUP, INC.
STATEMENTS OF INCOME
(unaudited)
(Dollars in thousands)
NINE MONTHS ENDED
SEPTEMBER 30,
19931992
[S] [C] [C]
Revenue $319,502 $294,704
Cost of sales 252,924 235,664
Gross profit 66,578 59,040
Selling, general and administrative
expenses 56,852 52,029
Operating income 9,726 7,011
Parent company charge (226) (193)
Other income (expense) (689) 878
Interest expense (66) (92)
Income before income taxes 8,745 7,604
Income tax provision 3,085 2,950
Net income $ 5,660 $ 4,654
<PAGE>
<TABLE>
<CAPTION>
SUMMERS GROUP, INC.
STATEMENTS OF CASH FLOW
(unaudited)
(Dollars in thousands)
NINE MONTHS ENDED
SEPTEMBER 30,
1993 1992
<S> <C> <C>
Cash Flows from Operating Activities
Net Income $5,660 $4,654
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,782 2,687
Deferred income tax 380 863
Gain on sale of land and building (1) (878)
Changes in operating assets and liabilities,
net of effect of acquisition and sale of net
assets:
(Increase) in trade accounts receivable (7,629) (4,902)
(Increase) decrease in inventories 284 (1,977)
(Increase) decrease in other current
assets (150) 531
(Increase) decrease in accounts
payable and accrued liabilities (3,453) 932
Increase (decrease) in income taxes
payable 502 (1,673)
Total adjustments (7,285) (4,417)
Net cash (used in) provided by operating
activities (1,625) 237
Cash Flows from Investing Activities
Capital expenditures (2,253) (2,473)
Cost of acquisitions - (3,577)
Proceeds from sale of net assets 8 1,278
Other investing activities (61) (240)
Net cash used in investing activities (2,306) (5,012)
Cash Flows from Financing Activities
Increase in due from/to affiliates 1,618 9,024
Other financing activities (420) (941)
Net cash used in financing activities 1,198 8,083
Net increase (decrease) in cash (2,733) 3,308
Cash at beginning of year 6,448 3,474
Cash at end of year $3,715 $6,782
</TABLE>
<PAGE>
SUMMERS GROUP, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1.The accompanying financial information should be read in conjunction with the
financial statements, including the notes thereto, for the year ended
December 31, 1992.
2.Results from interim periods are not necessarily indicative of the results to
be expected for the year. The accompanying financial information reflects
all adjustments which are, in the opinion of Management, necessary for a
fair statement of the results for the period.
<PAGE>
WILLCOX & GIBBS, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1993
(UNAUDITED)
(DOLLARS IN THOUSANDS)
The following unaudited pro forma condensed consolidated balance sheet has
been prepared to reflect the acquisition of Summers by W&G, and has been
compiled from the unaudited balance sheets of W&G and Summers as of September
30, 1993. The acquisition of Summers has been reflected in accordance with the
purchase method of accounting. Pro Forma adjustments are described in the
notes following such balance sheet. This balance sheet is not necessarily
indicative of the financial position of W&G as it would have been had the
transaction occurred as of such date or of future financial position.
<TABLE>
<CAPTION>
ASSETS
W&G and W&G
Subsidiaries Summers Pro Forma Pro Forma
(historical) (historical) Adjustment(1) Consolidated
<S> <C> <C> <C> <C>
Current assets:
Cash.................................. $ 7,428 $ 3,715 $ 11,143
Accounts and notes receivable - net... 97,347 57,281 154,628
Inventories........................... 96,381 37,386 $ 9,000 142,767
Income taxes receivable............... 466 - - 466
Prepaid expenses and other
current assets...................... 3,889 4,806 8,695
Total current assets............. 205,511 103,188 9,000 317,699
Investment and noncurrent
receivables......................... 5,048 - 5,048
Property, plant and equipment - net... 32,415 18,926 800 52,141
Other assets.......................... 3,406 728 4,134
Deferred income taxes................. 3,040 - 3,040
Cost in excess of net assets of
acquired businesses - net........... 37,357 7,482 9,655 54,494
Total............................. $286,777 $130,324 $19,455 $436,556
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C> <C> <C>
Current liabilities:
Short-term debt........................ $ 390 - $60,000 $ 60,390
Current installments of long-term debt. 916 36 8,333 9,285
Accounts and notes payable -
trade and other iabilities........... 82,251 71,832 (9,019) 145,064
Income taxes payable................... - 3,020 (3,020) -
Total current liabilities............ 83,557 74,888 56,294 214,739
Long-term debt and other liabilities..... 112,151 1,930 16,667 130,748
Deferred taxes........................... - 700 (700) -
Stockholders' equity:
Common stock............................ 21,214 10 (10) 21,214
Capital surplus......................... 53,818 35,365 (35,365) 53,818
Retained earnings....................... 19,717 17,431 (17,431) 19,717
Cumulative foreign translation
adjustment........................... (1,254) - (1,254)
Treasury stock.......................... (2,426) - (2,426)
Total stockholders' equity........... 91,069 52,806 (52,806) 91,069
Total................................ $286,777 $130,324 $19,455 $436,556
See accompanying Notes to Pro Forma Condensed Consolidated Balance Sheet
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WILLCOX & GIBBS, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1993
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
(1) Purchase of Summers by W&G
Cash paid................................. $ 60,000
Three year note payable to Seller with
interest at 4.375% per annum............. 25,000
Purchase price............................ 85,000
Estimated costs incurred in connection
with the acquisition..................... 750
85,750
Net Assets acquired......................... $ 52,806
Adjustments to reflect fair value changes:
Inventory.................................. $ 9,000
Write-off of Summers historical goodwill... (7,482)
Property, plant and equipment.............. 800
Amount due to affiliate.................... 9,769
Income taxes............................... 3,020
Deferred taxes............................. 700 15,807
Fair value of assets acquired.............. 68,613
Cost in excess of net assets acquired...... $ 17,137
The acquisition will be accounted for as a purchase whereby assets and
liabilities of Summers are adjusted to estimated fair values from appraisals
and/or other information currently available. As additional information
becomes available, it may become necessary to adjust the values of recorded
assets and liabilities.
</TABLE>
<PAGE>
WILLCOX & GIBBS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1993
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The following unaudited pro forma condensed consolidated statement of
income has been prepared to reflect the acquisitions of Sacks and Summers by
W&G and has been compiled from the unaudited condensed consolidated statement
of income of W&G and the unaudited statement of income of Summers for the nine
months ended September 30, 1993 and the unaudited statement of income of Sacks
for the period January 1, 1993 through April 12, 1993, the date of acquisition
of Sacks. Pro forma adjustments are described in the notes accompanying this
statement. This statement is not necessarily indicative of the results of
operations as they would have been had the transactions occurred at the
commencement of the period shown or for any future period.
<TABLE>
<CAPTION>
W&G and W&G
Subsidiaries Sacks Summers Pro Forma Pro Forma
(historical) (historial) (historical) Adjustments Consolidated
<S> <C> <C> <C> <C> <C>
Net Sales.................................. $ 435,497 $ 16,420 $ 319,502 $ 771,419
Cost of goods sold......................... 336,962 12,953 252,924 602,839
Gross profit............................. 98,535 3,467 66,578 168,580
Selling and administrative expenses........ 80,941 2,853 57,078 377(2)(4) 141,249
Operating profit......................... 17,594 614 9,500 (377) 27,331
Interest expense........................... 7,264 - 66 2,845(1) 10,175
Other income (expense) - net............... 632 31 (689) (26)
Income before income taxes............... 10,962 645 8,745 (3,222) 17,130
Provision for income taxes................. 4,714 265 3,085 (1,223)(3) 6,841
Income before cumulative effect of
change in accounting for income taxes. $ 6,248 $ 380 $ 5,660 $ (1,999) $ 10,289
Income per common and common
equivalent share......................... $ 0.30 $ .49
Average number of common and common
equivalent shares........................ 20,949 20,949
See accompanying Notes to Pro Forma Condensed Consolidated Balance Sheet
</TABLE>
<PAGE>
WILLCOX & GIBBS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1992
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The following unaudited pro forma condensed consolidated statement of
income has been prepared to reflect the acquisitions of Sacks and Summers by
W&G and has been compiled from the consolidated statement of income of W&G,
the statement of income of Sacks and the statement of income of Summers for
the year ended December 31, 1992. Pro forma adjustments are described in the
notes accompanying this statement. This statement is not necessarily
indicative of the results of operations as they would have been had the
transactions occurred at the commencement of the period shown or for any
future period.
<TABLE>
<CAPTION>
W&G and W&G
Subsidiaries Sacks Summers Pro Forma Pro Forma
(historical) (historical) (historical) Adjustments Consolidated
<S> <C> <C> <C> <C> <C>
Net Sales.................................. $ 438,057 $ 53,599 $ 395,121 $ 886,777
Cost of goods sold......................... 336,109 41,927 315,704 693,740
Gross profit............................. 101,948 11,672 79,417 193,037
Selling and administrative expenses........ 89,167 9,505 71,032 $ 620(2)(4) 170,324
Restructuring charges...................... 5,586 5,586
Transaction costs.......................... 15,344 15,344
Operating (loss) profit............... (8,149) 2,167 8,385 (620) 1,783
Interest expense........................... 9,353 - 127 4,382(1) 13,862
Other income - net......................... 569 711 1,086 2,366
(Loss) Income from continuing operations
before income taxes................... (16,933) 2,878 9,344 (5,002) (9,713)
Income tax (benefit) provision............. (4,884) 976 3,493 (1,264)(3) (1,679)
(Loss) Income from
continuing operations................. $ (12,049) $ 1,902 $ 5,851 $ (3,738) $ (8,034)
(Loss) income from continuing operations
per common and common equivalent share... $ (.82) $ (.55)
Average number of common and common
equivalent shares........................ 14,629 14,629
See accompanying Notes to Pro Forma Condensed Consolidated Balance Sheet
</TABLE>
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months
Year Ended Ended
December 31, September 30,
1992 1993
<S> <C> <C>
(1) To record an adjustment of
interest expense as follows:
Interest on note issued to seller
$25,000 @ 4.375% $1,094
$25,000 @ 4.375% x 3/4 $ 820
Interest on cash purchase price
at estimated rates of borrowing:
$60,000 @ 5.48% 3,288
$60,000 @ 4.50% x 3/4 2,025
(2) To record amortization of goodwill
attributable to Summers over a
40 year period:
$17,137 /40 428
$17,137 /40 x 3/4 321
(3) To record decrease in provision for
income taxes esulting from
adjustment (1) (1,264) (1,223)
(4) To record amortization of goodwill
attributable to Sacks over a
40 year period:
$7,674 /40 192
$7,674 /40 x 3-1/2 months 56
The Summers acquisition will be accounted for as a purchase whereby assets
and liabilities of Summers are adjusted to estimated fair values from
appraisals and/or other information currently available. As additional
information becomes available, it may become necessary to adjust the values
of recorded assets and liabilities.
</TABLE>
<PAGE>
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.
WILLCOX & GIBBS, INC.
/s/ Allan M. Gonopolsky
By -----------------------------------
Date: March 2, 1994 Allan M. Gonopolsky
Vice President,
Chief Financial Officer
and Corporate Controller
