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): July 31, 1998
WOODHEAD INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-5971 36-1982580
- --------------------------------------------------------------------------------
(State or other jurisdiction of (Commission File No.) (IRS Employer
incorporation or organization) Identification Number)
Three Parkway North, Suite 550, Deerfield, Illinois 60015
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 236-9300
------------------------------
N/A
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
1
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
- ------ ------------------------------------------------------------------
A. Financial Statements of Business Acquired
Financial Statements
1. Auditor's Report
2. Balance Sheet as of December 31, 1997.
3. Statement of Income and Parent's Equity in Division for the
Year Ended December 31, 1997.
4. Statement of Cash Flows for the Year Ended December 31, 1997.
5. Notes to Financial Statements.
6. Unaudited Condensed Balance Sheet as of June 30, 1998.
7. Unaudited Condensed Statement of Income and Parent's Equity in
Division for the Six Months Ended June 30, 1998.
8. Unaudited Condensed Statement of Cash Flows for the Six Months
Ended June 30, 1998.
9. Notes to Unaudited Condensed Financial Statements.
B. Pro Forma Financial Information
Pro Forma Financial Statements (Unaudited)
1. Pro Forma Balance Sheet as of June 27, 1998.
2. Pro Forma Income Statement for the Nine Months Ended June 27,
1998 for Woodhead Industries, Inc. and June 30, 1998 for SST
Division of S-S Technologies Inc.
3. Pro Forma Income Statement for the Year Ended September 27,
1997 for Woodhead Industries, Inc. and December 31, 1997 for
SST Division of S-S Technologies Inc.
4. Notes to Pro Forma Financial Statements.
2
<PAGE>
SST DIVISION OF S-S TECHNOLOGIES INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1997
TOGETHER WITH AUDITORS' REPORT
3
<PAGE>
- --------------------------------------------------------------------------------
AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Shareholder of
S-S Technologies Inc.:
We have audited the balance sheet of SST DIVISION OF S-S TECHNOLOGIES INC. as of
December 31, 1997 and the statements of income and parents equity in division
and cash flows for the year then ended. These financial statements are the
responsibility of the Division's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with Canadian generally accepted auditing
standards which are in substantial agreement with those in the United States of
America. Those standards require that we plan and perform the audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Division as of December 31,
1997 and the results of its operations and its cash flows for the year then
ended in conformity with accounting principles generally accepted in the United
States of America.
Mississauga, Canada.
October 9, 1998.
4
<PAGE>
SST DIVISION OF S-S TECHNOLOGIES INC.
BALANCE SHEET
DECEMBER 31, 1997
(in Canadian dollars)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Accounts receivable
Trade $ 2,484,113
Other 325,495
Inventories (Note 2) 2,539,102
Due from affiliates (Note 5) 23,276
Prepaid expenses and deposits 93,998
Due from parent (Note 5) 2,235,650
------------
7,701,634
PROPERTY, PLANT AND EQUIPMENT, net (Note 3) 1,457,501
------------
$ 9,159,135
============
LIABILITIES AND PARENT'S EQUITY IN DIVISION
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 1,493,984
Due to affiliates (Note 5) 329,999
------------
1,823,983
------------
PARENT'S EQUITY IN DIVISION 7,335,152
------------
$ 9,159,135
============
</TABLE>
The accompanying notes are an integral part of this balance sheet.
5
<PAGE>
SST DIVISION OF S-S TECHNOLOGIES INC.
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(in Canadian dollars)
<TABLE>
<CAPTION>
<S> <C>
SALES $ 14,531,415
COST OF SALES (Note 5) 4,336,994
------------
GROSS PROFIT 10,194,421
------------
OPERATING EXPENSES
Engineering and product development 1,509,889
Marketing and sales 2,917,465
General and administrative (Note 5) 2,951,575
------------
7,378,929
------------
INCOME BEFORE PROVISION FOR INCOME TAXES 2,815,492
PROVISION FOR INCOME TAXES (Note 4) 771,291
-----------
NET INCOME $ 2,044,201
===========
</TABLE>
The accompanying notes are an integral part of this statement.
6
<PAGE>
SST DIVISION OF S-S TECHNOLOGIES INC.
STATEMENT OF PARENT'S EQUITY IN DIVISION
FOR THE YEAR ENDED DECEMBER 31, 1997
(in Canadian dollars)
<TABLE>
<CAPTION>
<S> <C>
PARENT'S EQUITY IN DIVISION, beginning of year $ 5,290,951
ADD: Net income 2,044,201
-----------------
PARENT'S EQUITY IN DIVISION, end of year $ 7,335,152
=================
</TABLE>
The accompanying notes are an integral part of this statement.
7
<PAGE>
SST DIVISION OF S-S TECHNOLOGIES INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997
(in Canadian dollars)
<TABLE>
<CAPTION>
<S> <C>
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Net income $ 2,044,201
Adjustments to reconcile net income to net cash provided by
operating activities-
Depreciation and amortization 184,627
------------
2,228,828
Change in assets and liabilities-
Increase in trade accounts receivables (869,208)
Increase in other receivables (215,484)
Increase in inventories (1,955,301)
Decrease in due from affiliates 12,481
Increase in prepaid expenses and deposits (77,964)
Increase in accounts payable and accrued liabilities 780,393
Increase in due to affiliates 115,722
------------
CASH PROVIDED BY OPERATING ACTIVITIES 19,467
------------
INVESTMENT ACTIVITY
Purchases of property, plant and equipment (1,399,377)
------------
CASH USED IN INVESTMENT ACTIVITIES (1,399,377)
------------
FINANCING ACTIVITY
Decrease in due from parent 1,379,910
------------
CASH PROVIDED BY FINANCING ACTIVITY 1,379,910
------------
INCREASE IN CASH -
CASH, beginning of year -
------------
CASH, end of year $ -
============
SUPPLEMENTAL DISCLOSURES
Cash paid during the year for:
Income taxes $ -
============
Interest $ -
============
</TABLE>
The accompanying notes are an integral part of this statement.
8
<PAGE>
SST DIVISION OF S-S TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(in Canadian dollars)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These financial statements have been prepared in connection with the
acquisition by Woodhead Industries, Inc. of the SST Division (the
"Division") of S-S Technologies Inc. (the "Parent").
The Division develops and markets communication technology products
that provide an interface between different industrial communication
protocols.
These financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of
America.
Accounting Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets,
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenues
and expenses during the period. Actual results could differ from those
estimates.
Foreign Currency Translation
Assets and liabilities that are denominated in a foreign currency have
been translated at the rate of exchange prevailing at the balance
sheet date. Foreign currency revenues and expenses have been
translated at the rates prevailing on the transaction date. Gains and
losses on monetary assets and liabilities resulting from translation
of foreign currencies are recognized in the statement of income during
the year in which they arise.
9
<PAGE>
SST DIVISION OF S-S TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(in Canadian dollars)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
Revenue Recognition
The Division recognizes revenues as products are shipped to its
customers.
Research and Development
Research and development expenses are charged to the statement of income
as incurred.
Income Taxes
Taxable income of the Division is included in the tax return of S-S
Technologies Inc. The Division has provided for income taxes in these
financial statements using the liability method. The provision for
income taxes is computed on pre-tax income based on current tax laws.
The Division accounts for the tax benefit of research and development
expenditures in the year in which they are incurred and includes such
benefit in the determination of the provision for income taxes.
Inventories
Inventories are recorded at the lower of cost and net realizable value.
Cost is determined on a first-in, first-out basis.
Property, Plant and Equipment
Property, plant and equipment are stated at cost, net of accumulated
depreciation. The Division provides for depreciation on the declining
balance basis at the following annual rates:
Computer equipment 30%
Furniture and equipment 20%
Vehicles 30%
Leasehold improvements are stated at cost net of accumulated
amortization. The Division provides for amortization on the straight
line basis over the lesser of the estimated useful life and the term of
the lease.
10
<PAGE>
SST DIVISION OF S-S TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(in Canadian dollars)
2. INVENTORIES
Inventories by major category were as follows at December 31:
<TABLE>
<CAPTION>
<S> <C>
Components $ 923,902
Finished goods 1,615,200
-----------
$2,539,102
===========
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment by major classification were as follows at
December 31:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Accumulated
Depreciation/ Net Book
Cost Amortization Value
------------- --------------- ------------
Computer equipment $ 1,099,904 $ 296,332 $ 803,572
Furniture and equipment 197,923 21,093 176,830
Leasehold improvements 537,781 71,704 466,077
Vehicles 18,526 7,504 11,022
------------ --------- ----------
$ 1,854,134 $ 396,633 $1,457,501
============ ========= ==========
</TABLE>
4. INCOME TAXES
<TABLE>
<CAPTION>
<S> <C>
The components of the provision for income taxes were as follows at
December 31:
Current $ 771,291
-----------
Total provision for income taxes $ 771,291
===========
A reconciliation of income tax expense using the Canadian statutory
income tax rate compared with the Division's actual income tax expense
at December 31 follows:
Tax at Canadian statutory rate $ 1,171,245
Tax benefit of research and development expenditures (394,840)
Other (5,114)
-----------
Total provision for income taxes $ 771,291
===========
Effective tax rate 27%
===========
</TABLE>
11
<PAGE>
SST DIVISION OF S-S TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(in Canadian dollars)
5. RELATED PARTY TRANSACTIONS
Related parties comprise all companies and divisions owned by the
Parent or the Parent's shareholders and include entities over which the
Parent has the ability to exercise significant influence. The Division
had the following transactions with related parties:
<TABLE>
<CAPTION>
1997
-------------
<S> <C>
Purchases of inventory from SAF Drive Systems Ltd. $ 4,598,077
Purchases of services from Parent 161,228
Management fees paid to S-S Technologies Holdings Ltd. 156,000
Rent paid to SAF Drive Systems Ltd. 41,200
</TABLE>
Amounts due to/from affiliates at December 31 are shown separately on
the balance sheet.
6. COMMITMENTS
Operating Leases
The Division is committed under an agreement, which expires in 2002, to
lease office premises for approximate minimum annual lease payments as
follows:
<TABLE>
<CAPTION>
<S> <C>
1998 $ 219,150
1999 219,150
2000 219,150
2001 219,150
2002 109,575
-----------
$ 986,175
===========
</TABLE>
7. ACQUISITION BY WOODHEAD INDUSTRIES INC.
On July 31, 1998, certain assets of the Division were purchased by
Woodhead Industries Inc. for a total purchase price of $51 million as
detailed in the Asset Purchase Agreement dated July 2, 1998.
12
<PAGE>
SST DIVISION OF S-S TECHNOLOGIES INC.
UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1998
13
<PAGE>
SST DIVISION OF S-S TECHNOLOGIES INC.
UNAUDITED CONDENSED BALANCE SHEET
JUNE 30, 1998
(in Canadian dollars)
ASSETS
<TABLE>
<CAPTION>
<S> <C>
CURRENT ASSETS
Accounts receivable
Trade $ 2,421,367
Other 198,378
Due from affiliate 144,986
Inventories 4,268,511
Prepaid expenses and deposits 98,012
-------------
7,131,254
PROPERTY, PLANT AND EQUIPMENT 1,938,071
-------------
$ 9,069,325
=============
LIABILITIES AND PARENT'S EQUITY IN DIVISION
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 810,766
Due to affiliate 232,032
Due to parent 379,453
------------
1,422,251
------------
PARENT'S EQUITY IN DIVISION 7,647,074
------------
$ 9,069,325
============
</TABLE>
The accompanying notes are an integral part of this unaudited
condensed balance sheet.
14
<PAGE>
SST DIVISION OF S-S TECHNOLOGIES INC.
UNAUDITED CONDENSED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(in Canadian dollars)
<TABLE>
<CAPTION>
<S> <C>
SALES $ 7,681,832
COST OF SALES 2,062,673
------------
GROSS PROFIT 5,619,159
------------
OPERATING EXPENSES
Engineering and product development 1,491,222
Marketing and sales 1,917,058
General and administrative 1,782,544
------------
5,190,824
------------
INCOME BEFORE PROVISION FOR INCOME TAXES 428,335
PROVISION FOR INCOME TAXES 116,413
------------
NET INCOME $ 311,922
============
</TABLE>
The accompanying notes are an integral part of this unaudited condensed
statement.
15
<PAGE>
SST DIVISION OF S-S TECHNOLOGIES INC.
UNAUDITED CONDENSED STATEMENT OF PARENT'S EQUITY IN DIVISION
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(in Canadian dollars)
<TABLE>
<CAPTION>
<S> <C>
PARENT'S EQUITY IN DIVISION, beginning of year $ 7,335,152
ADD: Net income 311,922
-------------
PARENT'S EQUITY IN DIVISION, end of year $ 7,647,074
=============
</TABLE>
The accompanying notes are an integral part of this unaudited condensed
statement.
16
<PAGE>
SST DIVISION OF S-S TECHNOLOGIES INC.
UNAUDITED CONDENSED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(in Canadian dollars)
<TABLE>
<CAPTION>
<S> <C>
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Net income for the year $ 311,922
Adjustments to reconcile net income to net cash provided by
operating activities-
Depreciation and amortization 208,371
----------
520,293
Change in assets and liabilities-
Decrease in trade accounts receivables 62,746
Decrease in other receivables 127,117
Increase in due from affiliates (121,710)
Increase in inventories (1,729,409)
Increase in prepaid expenses and deposits (4,014)
Decrease in accounts payable and accrued liabilities (683,218)
Decrease in due to affiliates (97,967)
-----------
CASH USED IN OPERATING ACTIVITIES (1,926,162)
-----------
INVESTMENT ACTIVITY
Purchases of property, plant and equipment (688,941)
-----------
CASH USED IN INVESTMENT ACTIVITIES (688,941)
-----------
FINANCING ACTIVITY
Increase in due to parent 2,615,103
-----------
CASH PROVIDED BY FINANCING ACTIVITY 2,615,103
-----------
INCREASE IN CASH -
-----------
CASH, beginning of period -
-----------
CASH, end of period $ -
===========
SUPPLEMENTAL DISCLOSURES
Cash paid during the year for
Income taxes $ -
===========
Interest $ -
===========
</TABLE>
The accompanying notes are an integral part of this unaudited condensed
statement.
17
<PAGE>
SST DIVISION OF S-S TECHNOLOGIES INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1998
(in Canadian dollars)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The condensed balance sheet of the SST Division of S-S Technologies Inc.
(the "Division") as of June 30, 1998 and the condensed statements of
income, parent's equity in division and cash flows for the six month
period ended June 30, 1998 are unaudited. In the opinion of
management, all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of these interim
financial statements have been included therein. Interim results are
not necessarily indicative of results for the entire year.
These unaudited condensed financial statements have been prepared in
connection with the acquisition by Woodhead Industries Inc. of the
Division.
The Division develops and markets communication technology products that
provide an interface between different industrial communication
protocols.
The interim condensed financial statements have been prepared in
conformity with accounting principles generally accepted in the United
States of America.
For the purpose of these interim financial statements, certain
information and disclosures normally included in annual statements have
been condensed or omitted. These unaudited condensed financial
statements should be read in conjunction with the Audited Financial
Statements and notes thereto at December 31, 1997.
2. ACQUISITION BY WOODHEAD INDUSTRIES INC.
On July 31, 1998, certain assets of the Division were purchased by
Woodhead Industries Inc. for a total purchase price of $51 million as
detailed in the Asset Purchase Agreement dated July 2, 1998.
18
<PAGE>
WOODHEAD INDUSTRIES, INC.
UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
19
<PAGE>
================================================================================
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
The following tables set forth selected unaudited pro forma consolidated
financial data for Woodhead Industries, Inc. ("Woodhead") for the nine-month
period ended June 27, 1998, and for the fiscal year ended September 27, 1997,
after giving effect to the acquisition, as if it had been consummated, with
respect to the statement of income data, at the beginning of the periods
presented, or, with respect to the balance sheet data, as of the date presented.
The unaudited pro forma consolidated financial statements of Woodhead were
prepared utilizing the accounting policies outlined in its historical financial
statements. The financial statements of the SST Division of S-S Technologies
Inc. ("SST") filed under part (a) of this item should be read in conjunction
with the unaudited pro forma consolidated financial statements presented below.
The acquisition of SST Division of S-S Technologies Inc. was accounted for using
the purchase method of accounting. Accordingly, the unaudited pro forma
consolidated financial statements reflect Woodhead's preliminary allocation of
purchase price of SST which is subject to further adjustments as Woodhead
finalizes the allocation of the purchase price in accordance with generally
accepted accounting principles. The unaudited pro forma consolidated financial
statements do not reflect any cost savings or synergies anticipated by
Woodhead's management as a result of the acquisition. In addition, the unaudited
pro forma consolidated results of operations do not necessarily reflect actual
results which would have occurred if the acquisition had taken place at the
beginning of the earliest period presented or as of the date indicated, nor are
they necessarily indicative of the results of future combined operations.
20
<PAGE>
WOODHEAD INDUSTRIES, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
June 27, 1998
(In thousands of U.S. dollars)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Woodhead SST Adjustments Pro forma
6/27/98 6/30/98 (Note 2) Total
------------ ------------ ------------- ------------
ASSETS
Current Assets
Cash and cash equivalents 5,141 - (81) (c) 5,060
Accounts receivable, net 24,807 1,649 (1,649) (a) 24,807
Due from affiliates - 99 (99) (a) -
Inventories, net 20,391 2,908 (2,908) (a) 20,391
Prepaid expenses and other assets 5,954 203 (136) (a) 6,021
------------ ------------ ------------- ------------
Total current assets 56,293 4,859 (4,873) 56,279
Other assets 203 - 26,434 (b) 26,637
Deferred income taxes 85 - 627 (b) 712
Property, plant and equipment, net 37,902 1,320 39,222
Goodwill, net 28,490 - 992 (b) 29,482
------------ ------------ ------------- ------------
Total assets 122,973 6,179 23,180 152,332
============ ============ ============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable 7,835 553 (553) (a) 7,835
Accrued expenses and liabilities 13,780 - 13,780
Due to affiliates - 158 (158) (a) -
Due to parent - 258 (258) (a) -
Income taxes payable - - -
------------ ------------ ------------- ------------
Total current liabilities 21,615 969 (969) 21,615
Deferred income taxes 2,169 - (2,169) (b) -
Long-term debt 26,000 - 35,000 (c) 61,000
------------ ------------ ------------- ------------
Total liabilities 49,784 969 31,862 82,615
------------ ------------ ------------- ------------
Shareholders' equity
Common stock 10,618 - 10,618
Additional paid-in capital 3,498 - 3,498
Parent's Equity in Division - 5,734 (5,734) (d) -
Cumulative translation adjustment (2,455) (524) 524 (d) (2,455)
Retained earnings 61,528 - (6,268) (b) 58,056
2,796 (b)
------------ ------------ ------------- ------------
Total shareholders' equity 73,189 5,210 (8,682) 69,717
------------ ------------ ------------- ------------
Total liabilities and shareholders' equity 122,973 6,179 23,180 152,332
============ ============ ============= ============
</TABLE>
The accompanying notes are an integral part of this unaudited pro forma
consolidated balance sheet
21
<PAGE>
WOODHEAD INDUSTRIES, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
WOODHEAD SST
NINE NINE
MONTHS MONTHS
ENDED ENDED ADJUSTMENTS PRO FORMA
6/27/98 6/30/98 (NOTE 2) TOTAL
------------- ------------- -------------- -------------
Sales, net 115,855 7,990 123,845
Cost of sales 66,422 2,202 68,624
------------- ------------- -------------- -------------
Gross profit 49,433 5,788 - 55,221
Operating expenses 31,994 5,380 50 (e) 39,627
2,203 (f)
------------- ------------- -------------- -------------
Operating income 17,439 408 (2,253) 15,594
Other (income) expenses 3,804 - 1,549 (g) 5,353
------------- ------------- -------------- -------------
Income before income taxes 13,635 408 (3,802) 10,241
Provision for income taxes 5,773 111 (1,696) (h) 4,188
------------- ------------- -------------- -------------
Net income (loss) 7,862 297 (2,106) 6,053
============= ============= ============== =============
Net income per common share and common share equivalent:
Basic $ 0.74 $ 0.57
Diluted $ 0.70 $ 0.54
Common and common equivalent shares outstanding:
Basic 10,583 10,583
Diluted 11,182 11,182
</TABLE>
The accompanying notes are an integral part of this unaudited pro forma
consolidated statement of income.
22
<PAGE>
WOODHEAD INDUSTRIES, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
WOODHEAD SST
YEAR YEAR
ENDED ENDED ADJUSTMENTS PRO FORMA
9/27/97 12/31/97 (NOTE 2) TOTAL
------------- ------------- -------------- -------------
Sales, net 156,265 10,496 166,761
Cost of sales 88,513 3,133 91,646
------------- ------------- -------------- -------------
Gross profit 67,752 7,363 - 75,115
Operating expenses 44,820 5,330 66 (e) 53,153
2,937 (f)
------------- ------------- -------------- -------------
Operating income 22,932 2,033 (3,003) 21,962
Other (income) expenses 3,951 - 2,065 (g) 6,016
------------- ------------- -------------- -------------
Income before income taxes 18,981 2,033 (5,068) 15,946
Provision for income taxes 8,171 557 (2,260) (h) 6,468
------------- ------------- -------------- -------------
Net income (loss) 10,810 1,476 (2,808) 9,478
============= ============= ============== =============
Net income per common share and common share equivalent:
Basic $ 0.98 $ 0.86
Diluted $ 0.97 $ 0.85
Common and common equivalent shares outstanding:
Basic 11,002 11,002
Diluted 11,123 11,123
</TABLE>
The accompanying notes are an integral part of this unaudited pro forma
consolidated statement of income.
23
<PAGE>
WOODHEAD INDUSTRIES, INC.
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 27, 1998
(in thousands of U.S. dollars)
1. BASIS OF PRESENTATION
The financial data of the SST Division of S-S Technologies Inc. ("SST")
has been presented in the unaudited pro forma consolidated financial
statements in accordance with the accounting principles generally
accepted in the United States of America.
The SST balance sheet has been translated at the exchange rate in effect
at the balance sheet date and the statement of income has been
translated at the average exchange rate in effect for the period for
purposes of inclusion in the unaudited pro forma consolidated financial
statements.
The financial data of Woodhead Industries, Inc. (the "Company") for the
fiscal year ended September 27, 1997 has been presented in the
unaudited pro forma consolidated financial statements consistently
with the presentation shown in the Form 8-K/A filing dated May 13,
1998. Accordingly, the statement of income reflects the effects of the
acquisition by the Company of The MPM Group ("MPM") on February 27,
1998, including the effects of pro forma adjustments.
For purposes of the unaudited pro forma consolidated statement of income
for the nine-month period ended June 27, 1997, an unaudited pro forma
consolidated statement of income of the Company has been presented
such that pro forma adjustments related to the MPM acquisition have
been applied to the Company's statement of income as if the acquisition
took place as of the beginning of the period.
The allocation of the purchase price is based on an estimate of the fair
market value of the net assets acquired on July 31, 1998, and is
subject to adjustment. To date, no information has been gathered that
would cause the Company to believe that the final allocation of the
purchase price will be materially different than the preliminary
estimate. The Company's preliminary analysis resulted in an estimated
allocation of $6,268 to in-process research and development relating
to projects that have economic value that cannot be capitalized for
purposes of generally accepted accounting principles, which, under
generally accepted accounting principles, will be expensed immediately
after the Acquisition is completed.
24
<PAGE>
WOODHEAD INDUSTRIES, INC.
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 27, 1998
(in thousands of U.S. dollars)
2. PRO FORMA ADJUSTMENTS TO THE UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
The pro forma adjustments with respect to the SST acquisition have been
applied to the unaudited pro forma consolidated balance sheet as if
the acquisition had taken place on June 27, 1998, or as of the
beginning of the periods presented in the case of the unaudited pro
forma consolidated statements of income for the nine-month period
ended June 27, 1998 and the fiscal year ended September 27, 1997. The
adjustments are based upon currently available information and certain
estimates and assumptions are discussed below.
The following is a summary of reclassifications and adjustments
reflected in the unaudited pro forma consolidated balance sheet:
(a) Represents the elimination of assets and liabilities not acquired by
the Company, as detailed in the Asset Purchase Agreement dated July
2, 1998.
(b) Represents the preliminary estimate of the excess of purchase price
over the fair value of the SST assets acquired after allocation of
fair value to software and inprocess research and development, as
follows:
<TABLE>
<CAPTION>
<S> <C>
Purchase price $ 35,081
-------
Assets acquired:
Prepaid expenses and deposits 67
Property, plant and equipment 1,320
------
Assets acquired 1,387
------
33,694
Excess allocated to:
Software (26,434)
In-process research and development (6,268)
-------
Excess of purchase price over fair value
of assets acquired $ 992
allocated to goodwill -------
</TABLE>
25
<PAGE>
WOODHEAD INDUSTRIES, INC.
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 27, 1998
(in thousands of U.S. dollars)
2. PRO FORMA ADJUSTMENTS TO THE UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS (Cont'd)
The pro forma consolidated statement of income for the year ended
September 27, 1997 and the nine months ended June 27, 1998 do not
include the estimated $6,268 write-off of in-process research and
development, as it is a non-recurring charge (see Note 1, above).
Accordingly, the full amount has been charged to retained earnings,
net of taxes of $2,796, in the pro forma consolidated balance sheet.
The charge will be included in the actual consolidated statement of
income of the Company in the fiscal quarter in which the Acquisition
closes.
(c) Represents use of cash to finance the Acquisition as follows:
Proceeds from debt facility $ 35,000
Acquisition of SST assets 35,081
--------
Net reduction in cash $ (81)
========
The purchase price was primarily funded through a $35.0 million
debt facility obtained by Woodhead Canada Ltd., a subsidiary of the
Company, at Harris Trust and Savings Bank. This debt bears interest
at approximately 5.9% per annum, and has been reflected as long-term
debt in the accompanying unaudited pro forma consolidated financial
statements.
(d) Represents the reversal of SST historical equity.
The following is a summary of reclassifications and adjustments
reflected in the unaudited pro forma consolidated statements of income:
(e) Represents the amortization over fifteen years of goodwill resulting
from the Acquisition.
(f) Represents the amortization over nine years of software acquired.
(g) Represents the interest expense on the debt incurred on behalf of
the Company to finance the Acquisition.
26
<PAGE>
WOODHEAD INDUSTRIES, INC.
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 27, 1998
(in thousands of U.S. dollars)
2. PRO FORMA ADJUSTMENTS TO THE UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS (Cont'd)
(h) Represents the tax effect of the unaudited pro forma income
adjustments based upon the estimated effective tax rate of 44.6%.
The pro forma results have been prepared for comparative purposes only
and do not purport to indicate what necessarily would have occurred had
the entities been acquired at the beginning of the periods presented,
or as of the dates indicated, nor what results may be in the future.
27
<PAGE>
CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS
As independent chartered accountants, we hereby consent to the use of our report
for the SST Division of S-S Technologies Inc. dated October 8, 1998, included in
or made a part of this Form 8-K/A.
/s/ ARTHUR ANDERSEN & CO.
-----------------------
ARTHUR ANDERSEN & CO.
Mississauga, Canada.
October 13, 1998.
28
<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.
October 14, 1998 Woodhead Industries, Inc.
By: /s/ C. Mark DeWinter
------------------
C. Mark DeWinter
Chairman, President and
Chief Executive Officer
29
