<PAGE>
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 19, 1999
Commission File Number 0-29024
BENTHOS, INC.
--------------------------------------------------
(Exact name of registrant as specified in charter).
Massachusetts 04-2381876
- -------------------------------- --------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
49 Edgerton Drive
North Falmouth, Massachusetts 02556
------------------------------------
(Address of principal executive offices,
including zip code)
Registrant's telephone number, including area code: (508) 563-1000
--------------
This Current Report on Form 8-K/A amends the Current Report on Form 8-K
filed by Benthos, Inc. (the "Company") on August 27, 1999 (the "Initial Report")
to include certain financial information omitted pursuant to Item 7(a)(4) of
Form 8-K and the consent of independent certified public accountants with
respect to the audited financial statements.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Datasonics, Inc.
Report of Independent Public Accountants.
Balance Sheets as of September 30, 1997 and 1998 and as of
June 30, 1999.
Statements of Income for the years ended September 30, 1997
and 1998 and for the nine months ended June 30, 1998 and
1999.
Statements of Stockholders' Equity as of September 30, 1996,
1997 and 1998 and as of June 30, 1999.
Statements of Cash Flow for the years ended September 30,
1997 and 1998 and the nine months ended June 30, 1998 and
1999.
Notes to Financial Statements.
<PAGE>
(b) Pro Forma Financial Information.
Pro Forma Condensed Consolidated Financial Statements.
Pro Forma Condensed Consolidated Balance Sheet as of June
30, 1999.
Pro Forma Condensed Consolidated Statement of Operations for
the period ended September 30, 1998,
Pro Forma Condensed Consolidated Statement of Operations for
the nine months ended June 30, 1999.
(c) The following exhibits are furnished in accordance with the
provisions of Item 601 of Regulation S-B:
2.1 Asset Purchase Agreement among Benthos, Inc., Datasonics,
Inc. and William L. Dalton and David W. Porta, dated August
18, 1999 (filed as an exhibit to the Initial Report).
23. Consent of Arthur Andersen LLP
In accordance with Item 601 of Regulation S-B, the schedules and
attachments to said agreement are omitted. Said schedules and attachments are
listed in the table of contents to said agreement and will be provided to the
Commission upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BENTHOS, INC.
By: /s/ FRANCIS E. DUNNE, JR.
--------------------------------
Francis E. Dunne, Jr.,
Chief Financial Officer and
Treasurer
November 1, 1999
<PAGE>
Report of Independent Public Accountants
To the Board of Directors of
Datasonics, Inc.:
We have audited the accompanying balance sheets of Datasonics, Inc. (a
Massachusetts S corporation) as of September 30, 1997 and 1998, and the related
statements of income, stockholders' equity and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our 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 Datasonics, Inc. as of
September 30, 1997 and 1998, and the results of its income and its cash flows
for the years then ended, in conformity with generally accepted accounting
principles.
Arthur Andersen LLP
Boston, Massachusetts
September 20, 1999
F-1
<PAGE>
DATASONICS, INC.
Balance Sheets
<TABLE>
<CAPTION>
Assets
September 30, June 30,
1997 1998 1999
(unaudited)
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 55,799 $ 115,024 $ 28,457
Accounts receivable (less reserves of $20,000, $45,000 and
$45,000, respectively) 1,123,963 1,122,175 1,562,484
Inventories 1,086,829 1,588,314 1,240,682
Prepaid expenses and other current assets 20,157 20,170 8,482
Loan receivable 1,375 - 24,374
------------ ------------ ------------
Total current assets 2,288,123 2,845,683 2,864,479
Property and Equipment--Net 297,445 252,303 229,589
Other Assets 295,208 467,248 526,887
------------ ------------ ------------
Total $ 2,880,776 $ 3,565,234 $ 3,620,955
============ ============ ============
Liabilities and Stockholders' Equity
Current Liabilities:
Line of credit $ 770,000 $ 900,000 $ 840,000
Accounts payable 655,627 1,111,696 836,424
Accrued expenses 362,897 451,257 346,161
Customer deposits - 137,500 12,324
Due to officers 3,709 18,683 14,054
Current maturities of notes payable 104,763 57,143 319,444
------------ ------------ ------------
Total current liabilities 1,896,996 2,676,279 2,368,407
Notes Payable--Net of current maturities 68,254 11,111 -
Commitments (Note 10)
Stockholders' Equity:
Common stock, no par value-
Authorized--12,500 shares
Issued and outstanding--100 shares 1,000 1,000 1,000
Retained earnings 914,526 876,844 1,251,548
------------ ------------ ------------
Total stockholders' equity 915,526 877,844 1,252,548
------------ ------------ ------------
Total $ 2,880,776 $ 3,565,234 $ 3,620,955
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
DATASONICS, INC.
Statements of Income
<TABLE>
<CAPTION>
Nine Months Ended
Years Ended September 30, June 30,
1997 1998 1998 1999
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Sales $6,609,782 $7,317,588 $5,577,030 $6,479,075
Cost of Goods Sold 4,249,329 4,720,137 3,552,099 4,254,755
---------- ---------- ---------- ----------
Gross profit 2,360,453 2,597,451 2,024,931 2,224,320
---------- ---------- ---------- ----------
Operating Expenses:
Research and development 485,466 710,407 381,344 386,366
Selling, general and administrative 1,401,820 1,448,784 1,017,274 1,184,389
---------- ---------- ---------- ----------
Total operating expenses 1,887,286 2,159,191 1,398,618 1,570,755
---------- ---------- ---------- ----------
Operating Income 473,167 438,260 626,313 653,565
Interest Expense (103,010) (95,797) (70,278) (77,915)
Other Income 4,131 19,951 2,461 14,496
---------- ---------- ---------- ----------
Income before provision for state 374,288 362,414 558,496 590,146
income taxes
Provision for State Income Taxes 5,000 1,000 1,000 -
---------- ---------- ---------- ----------
Net income $ 369,288 $ 361,414 $ 557,496 $ 590,146
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
DATASONICS, INC.
Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Common Stock Total
Number of Retained Stockholders'
Shares Value Earnings Equity
<S> <C> <C> <C> <C>
Balance, September 30, 1996 (unaudited) 100 $ 1,000 $ 675,716 $ 676,716
Distributions to stockholders - - (130,478) (130,478)
Net income - - 369,288 369,288
---------- ---------- ---------- ----------
Balance, September 30, 1997 100 1,000 914,526 915,526
Distributions to stockholders - - (399,096) (399,096)
Net income - - 361,414 361,414
---------- ---------- ---------- ----------
Balance, September 30, 1998 100 1,000 876,844 877,844
Distributions to stockholders - - (215,442) (215,442)
Net income - - 590,146 590,146
---------- ---------- ---------- ----------
Balance, June 30, 1999 (unaudited) 100 $ 1,000 $1,251,548 $1,252,548
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
DATASONICS, INC.
Statements of Cash Flows
<TABLE>
<CAPTION>
Nine Months Ended
Years Ended September 30, June 30,
1997 1998 1998 1999
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities-
Net income $ 369,288 $ 361,414 $ 557,496 $ 590,146
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation 135,549 64,582 39,907 59,164
Changes in assets and liabilities-
Accounts receivable (334,991) 1,788 (371,023) (440,309)
Inventories 271,907 (501,485) (145,987) 347,632
Prepaid expenses and other current
assets 32,531 (13) (42,398) 11,688
Loan receivable (549) 1,375 225 (24,374)
Accounts payable (3,382) 456,069 324,088 (275,580)
Accrued expenses 45,951 88,360 (23,727) (105,096)
Customer deposits - 137,500 - (125,176)
--------- --------- --------- ---------
Net cash provided by operating
activities 516,304 609,590 338,581 38,095
--------- --------- --------- ---------
Cash Flows from Investing Activities:
Purchase of property and equipment (24,644) (19,441) - (36,142)
Other assets (93,476) (172,040) (106,620) (59,639)
--------- --------- --------- ---------
Net cash used in investing activities (118,120) (191,481) (106,620) (95,781)
--------- --------- --------- ---------
Cash Flows from Financing Activities:
Net (repayments of) proceeds from line of
credit (180,000) 130,000 260,000 (60,000)
Borrowings from notes payable 100,000 - - 300,000
Repayments of notes payable (93,651) (104,762) (78,570) (48,810)
Net (repayments of) proceeds due to
officers (50,911) 14,974 7,116 (4,629)
Distributions to stockholders (130,478) (399,096) (298,202) (215,442)
--------- --------- --------- ---------
Net cash used in financing activities (355,040) (358,884) (109,656) (28,881)
--------- --------- --------- ---------
Net Increase (Decrease) in Cash and
Cash Equivalents 43,144 59,225 122,305 (86,567)
Cash and Cash Equivalents, beginning of
period 12,655 55,799 55,799 115,024
--------- --------- --------- ---------
Cash and Cash Equivalents, end of period $ 55,799 $ 115,024 $ 178,104 $ 28,457
========= ========= ========= =========
Supplemental Disclosure of Cash Flow
Information:
Interest paid during year $ 109,298 $ 95,952 $ 70,394 $ 75,905
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
DATASONICS, INC.
Notes to Financial Statements
(Including data applicable to unaudited periods)
(1) Operations
Datasonics, Inc. (the Company) develops, manufactures and sells acoustical
oceanographic equipment.
The Company is subject to a number of risks common to companies in similar
stages of development, including dependence on key individuals, competition
from substitute products and larger companies, the need for adequate
financing to fund future operations and for successful development and
marketing of the Company's products.
(2) Significant Accounting policies
The accompanying financial statements reflect the application of certain
significant accounting policies, as described in this note and elsewhere in
these notes to the financial statements.
(a) Use of Estimates in the Preparation of Financial Statements
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 and
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 reporting period. Actual results could differ
from those estimates.
(b) Interim Unaudited Financial Statements
The accompanying balance sheet as of June 30, 1999, the statements of
income and cash flows for the nine-month periods ended June 30, 1998
and 1999 and the statement of stockholders' equity for the nine month
period ended June 30, 1999 are unaudited. In the opinion of
management, these financial statements include all adjustments,
consisting of normal recurring adjustments, necessary for a fair
presentation of results for these interim periods. The results of
operations for the nine month periods ended June 30, 1998 and 1999 are
not necessarily indicative of the results to be expected for the
entire fiscal year.
(c) Concentrations of Credit Risk
Statement of Financial Accounting Standards (SFAS) No. 105, Disclosure
of Information About Financial Instruments with Off-Balance-Sheet Risk
and Financial Instruments with Concentrations of Credit Risk, requires
disclosure of any significant off-balance-sheet and credit risk
concentrations. Financial instruments that subject the Company to
credit risk consist primarily of cash equivalents and trade accounts
receivable. The Company has not experienced any significant losses
related to its accounts receivable and maintains an allowance for
potential credit losses.
F-6
<PAGE>
DATASONICS, INC.
Notes to Financial Statements
(Including data applicable to unaudited periods)
(Continued)
The Company had a total of seven customers whose accounts receivable
balances individually represented a significant percentage of total
accounts receivable in certain or all years or periods, as follows:
Nine Months
Ended
June 30,
Years Ended September 30, 1999
1997 1998 (unaudited)
C&C Technology 16% -% -%
RJE International 27 12 -
Accusonic Technology - 12 -
Communication Technology - 9 12
Naval Oceanographic Office - 23 -
University of Alabama - 11 -
Defense Supply Center-Richmond - - 53
The Company had a total of four customers whose revenues individually
represented a significant percentage of total revenue in certain or all
years or periods, as follows:
Nine Months Ended
Years Ended September 30, June 30,
1997 1998 1998 1999
(unaudited)
RJE International 29% 24% 24% 16%
Communication Technology - 12 12 -
Defense Finance-U.S.
Government - 18 16 26
ORE International - 11 - -
(d) Cash and Cash Equivalents
The Company considers highly liquid investments purchased with an original
maturity of 90 days or less at the time of acquisition to be cash
equivalents. Cash equivalents consist of money market investments and
checking accounts carried at cost, which approximates fair market value.
F-7
<PAGE>
DATASONICS, INC.
Notes to Financial Statements
(Including data applicable to unaudited periods)
(Continued)
(e) Depreciation
Property and equipment are stated at cost and depreciated using the
straight-line method over the estimated useful lives of the related assets,
as set forth below:
Estimated
Asset Classification Useful Life
Machinery and equipment 5 years
Furniture and fixtures 5 years
Leasehold improvements 10 years
(f) Income Taxes
The Company has elected to be taxed as an S Corporation under the
provisions of the Internal Revenue Code. For federal tax purposes, the
shareholders of the S Corporation report their proportionate share of the
Corporation's income, expenses and tax credits. Therefore, no provision has
been made for federal income rates. A provision for state taxes has been
recorded relative to states that do not fully recognize S Corporation
status.
(g) Research and Development
Research and development costs are charged to operations when incurred and
are included in operating expenses.
(h) Revenue Recognition and Warranty Costs
The Company recognizes revenue upon shipment and provides for estimated
warranty costs at that time. Amounts received from customers for future
delivery are shown as customer deposits in the accompanying consolidated
balance sheets. The Company also does work under government contracts that
is subject to audit. Revenue under these contracts is recognized upon
shipment of product or under the percentage-of-completion method when there
are partial or no deliveries of products.
(i) Comprehensive Income
In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive Income.
Comprehensive income is defined as the change in equity of a business
enterprise during a period from transactions and other events and
circumstances from nonowner sources. The Company did not have any
components of comprehensive income in addition to its reported net income.
F-8
<PAGE>
DATASONICS, INC.
Notes to Financial Statements
(Including data applicable to unaudited periods)
(Continued)
(j) Financial Instruments
The estimated fair value of the Company's financial instruments, which
include cash and cash equivalents, accounts receivable and debt,
approximate their carrying value.
(3) Inventories
Inventories are stated at the lower of cost or market. Cost is determined
by the first-in, first-out method and consists of the following:
September 30, June 30,
1997 1998 1999
(unaudited)
Raw materials $ 457,222 $ 750,448 $ 529,311
Work-in-process 377,409 483,786 613,055
Finished goods 252,198 354,080 98,316
---------- ---------- ----------
Total $1,086,829 $1,588,314 $1,240,682
========== ========== ==========
(4) Property and Equipment
Property and equipment consist of the following:
September 30, June 30,
1997 1998 1999
(unaudited)
Machinery and equipment $ 832,778 $ 824,063 $ 857,590
Furniture and fixtures 141,461 158,460 161,075
Leasehold improvements 111,985 123,142 123,142
---------- ---------- ----------
1,086,224 1,105,665 1,141,807
Less--Accumulated
depreciation 788,779 853,362 912,218
---------- ---------- ----------
Property and
equipment, net $ 297,445 $ 252,303 $ 229,589
========== ========== ==========
F-9
<PAGE>
DATASONICS, INC.
Notes to Financial Statements
(Including data applicable to unaudited periods)
(Continued)
(5) Other Assets
Other assets consist of the following:
<TABLE>
<CAPTION>
September 30, June 30,
1997 1998 1999
(unaudited)
<S> <C> <C> <C>
Cash surrender value of officers'
life insurance $ 270,034 $ 414,336 $ 457,219
Deposits 25,174 52,912 69,668
---------- ---------- ---------
Total $ 295,208 $ 467,248 $ 526,887
========== ========== =========
</TABLE>
(6) Line of Credit
The Company has a $1,000,000 line-of-credit agreement with a bank at
September 30, 1997, 1998 and June 30, 1999. Interest is charged at the
bank's prime rate (8.25% at September 30, 1998), plus 1%. The line of
credit is secured by all assets of the Company.
At September 30, 1997, 1998 and June 30, 1999, the unused portion of the
line of credit amounted to $230,000, $100,000 and $160,000, respectively.
F-10
<PAGE>
DATASONICS, INC
Notes to Financial Statements
(Including data applicable to unaudited periods)
(Continued)
(7) Notes Payable
Notes payable consists of the following:
<TABLE>
<CAPTION>
September 30, June 30,
1997 1998 1999
<S> <C> <C> <C>
(unaudited)
Note payable to a bank, secured
by property and equipment, payable
in monthly installments of $2,778
plus interest at the bank's prime
rate (8.25% at September 30, 1998)
plus 1.25% per annum, due January
2000. $ 77,779 $ 44,444 $ 19,444
Note payable to a bank, secured
by property and equipment,
payable in monthly installments
of $5,952 plus interest at the
bank's prime rate (8.25% at
September 30, 1998) plus 1.25%
per annum, due January 1999. 95,238 23,810 -
-------- -------- -------
Total 173,017 68,254 19,444
Less--Current maturities 104,763 57,143 19,444
-------- -------- -------
Notes payable--Net $ 68,254 $ 11,111 $ -
======== ======== =======
</TABLE>
On February 23, 1999, the Company entered into a note payable with a bank for
$300,000 with interest at the bank's prime rate (7.75% at June 30, 1999) plus
0.5% per annum. This note was repaid on July 24, 1999.
F-11
<PAGE>
DATASONICS, INC.
Notes to Financial Statements
(Including data applicable to unaudited periods)
(Continued)
(8) Accrued Expenses
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
September 30, June 30,
1997 1998 1999
(unaudited)
<S> <C> <C> <C>
Salaries and related expenses $118,951 $133,790 $137,176
Accrued warranty 105,000 105,000 105,000
Other 138,946 212,467 103,985
-------- -------- --------
Total $362,897 $451,257 $346,161
======== ======== ========
</TABLE>
(9) Retirement Plans
The Company has a 401(k) profit sharing plan covering substantially all
employees. The plan allows the Company to match 50% of each employee's
contribution to the extent that the employee's contribution does not exceed
4% of the employee's compensation. The Company's contribution to the plan
for the years ended September 30, 1997 and 1998 amounted to $29,982 and
$131,673, respectively, and $23,526 and $24,409 for the nine month periods
ended June 30, 1998 and 1999, respectively.
(10) Related Party Lease
The Company leases manufacturing and office space from its stockholders
under an operating lease agreement. Monthly lease payments are $11,100. The
original lease agreement expired on December 31, 1998, however the Company
extended the lease effective January 1, 1999 through December 31, 2002.
Total rent expense was $133,200 for each of the years ended September 30,
1997 and 1998, and $99,900 for each of the nine month periods ended June
30, 1998 and 1999.
(11) Sale of Assets
On August 19, 1999, the Company sold substantially all of its assets to
Benthos, Inc., pursuant to the Asset Purchase Agreement dated August 18,
1999, for approximately $6.65 million in cash, plus the assumption of
certain liabilities.
F-12
<PAGE>
Pro Forma Condensed Consolidated Financial Statements
On August 19, 1999, Benthos, Inc. (the Company) acquired substantially all of
the assets and assumed certain liabilities of Datasonics, Inc. (Datasonics) for
approximately $6.7 million. The purchase price is subject to adjustment,
primarily depending upon the determination of the "net asset value" of the
acquired assets and assumed liabilities. The purchase price was negotiated at
arm's length with Datasonics, which had a limited relationship as a customer
with the Company in the past. The source of funds for the acquisition was a
combination of the Company's available cash as well as a $5.5 million note
payable entered into with a bank. The note is secured by substantially all the
assets of the Company and is due in 84 monthly installments with interest at
prime less .25% or 7.75% for the first year. After the first year, or at any
time during the during the term of the note, the Company may elect to fix the
interest rate at 2.25% above the Federal Home Loan Bank of Boston Rate, as
defined, or the Company can continue to pay interest at prime less .25%.
Payments under this note end in August 2006.
The acquisition was accounted for using the purchase method of accounting. The
net purchase price, plus acquisition costs, was allocated to tangible assets and
intangible assets. A significant portion of the purchase price was identified
in an appraisal as intangible assets, including approximately $750,000 of
acquired in-process research and development (see discussion in Note 1 to
September 30, 1998 and June 30, 1999 Pro Forma Condensed Consolidated Statements
of Operations).
The accompanying Pro Forma Statements of Operations for the year ended September
30, 1998 and the nine months ended June 30, 1999, assume that the acquisition
took place on October 1, 1997. The accompanying Pro Forma Condensed Consolidated
Balance Sheet as of June 30, 1999, assumes that the acquisition took place on
June 30, 1999. The notes to the pro forma financial statements describe the pro
forma amounts and adjustments presented below.
The Pro Forma Condensed Consolidated Statements of Operations do not include the
effects of any non-recurring write-offs directly attributable to the acquisition
and are not necessarily indicative of the actual results that would have been
achieved had the acquisition occurred at the beginning of the respective
periods, nor do they purport to indicate the results of future operations of the
Company. The accompanying Pro Forma Condensed Consolidated Financial Statements
should be read in conjunction with the Company's and Datasonics's historical
financial statements and related notes thereto.
1
<PAGE>
BENTHOS, INC.
Pro Forma Condensed Consolidated Balance Sheet
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, 1999
-----------------------------------------------------------------------
Historical Historical Pro Forma Pro Forma
Benthos Datasonics Adjustments Consolidated
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 4,413 $ 28 $ (511)/(1)/ $ 3,930
Accounts receivable, net 842 1,562 - 2,404
Inventories 3,769 1,241 - 5,010
Prepaid expenses and other current assets 62 33 (9)/(2)/ 86
Deferred tax asset 651 - - 651
------------ ------------- ------------- ------------
Total current assets 9,737 2,864 (520) 12,081
Property and equipment, net 1,625 230 (49)/(2)/ 1,806
Other assets 344 527 4,106 /(1)/ 4,450
(527)/(2)/
------------ ------------- ------------- ------------
$ $11,706 $ 3,621 $ 3,010 $ 18,337
============ ============= ============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Line of credit $ - $ 840 $ (840)/(2)/ $ -
Accounts payable 609 836 - 1,445
Accrued expenses 1,390 361 725 /(1)/ 2,423
(53)/(2)/
Customer deposits 205 12 - 217
Current maturities of long-term notes
payable - 319 786 /(1)/ 786
(319)/(2)/
------------ ------------- ------------- ------------
Total current liabilities 2,204 2,368 299 4,871
Long-Term Notes Payable, net of current
portion - - 4,714 /(1)/ 4,714
Stockholders' Equity 9,502 1,253 (2,630)/(1)/ 8,752
627 /(2)/
------------ ------------- ------------- ------------
Total liabilities and stockholders'
equity $ 11,706 $ 3,621 $ 3,010 $ 18,337
============ ============= ============= ============
</TABLE>
2
<PAGE>
Note 1: For the purposes of this Pro Forma Condensed Consolidated Balance Sheet,
the purchase of substantially all of the assets and the assumption of certain
liabilities of Datasonics is assumed to have occurred on June 30, 1999.
Note 2: The following is a description of each of the pro forma adjustments.
(1) Record the purchase of substantially all of the assets and the assumption
of certain liabilities of Datasonics, as of June 30, 1999. The purchase
price of approximately $6.7 million was financed through a $5.5 million
note with a bank and the Company's available cash. In addition, the
purchase price includes approximately $725,000 for the estimated
professional fees and expenses related to the acquisition. This amount
has been recorded as an adjustment to accrued expenses and other assets
(goodwill).
(2) Eliminate Datasonics assets not acquired by the Company, including prepaid
expenses of $9,000, leasehold improvements of $49,000 and other assets of
$527,000, and eliminate Datasonics liabilities not assumed by the Company,
including accrued expenses of $53,000 and borrowings under the line of
credit and notes payable totaling $1,159,000.
3
<PAGE>
BENTHOS, INC.
Pro Forma Condensed Consolidated Statement of Operations
(In Thousands, Except Share and Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
For The Period Ended September 30, 1998
------------------------------------------------------------------------------
Historical Historical Pro Forma Pro Forma
Benthos Datasonics Adjustments Consolidated
<S> <C> <C> <C> <C>
Revenue:
Sales $ 14,038 $ 7,317 $ - $ 21,355
Cost of sales 7,529 4,720 - 12,249
--------------- --------------- --------------- ---------------
Gross profit 6,509 2,597 - 9,106
Operating Expenses:
Research and development 1,239 710 - 1,949
Selling, general and administrative 4,374 1,449 462 /(1)/ 6,274
(11)/(2)/
--------------- --------------- --------------- ---------------
Total expenses 5,613 2,159 451 8,223
--------------- --------------- --------------- ---------------
Operating income 896 438 (451) 883
Other Income (Expenses):
Interest expense (41) (96) (399)/(3)/ (440)
96 /(4)/
Other income 165 20 - 185
--------------- --------------- --------------- ---------------
Total other income (expenses) 124 (76) (303) (255)
--------------- --------------- --------------- ---------------
Income before taxes 1,020 362 (754) 628
Provision for Income Taxes 305 1 (118)/(5)/ 188
--------------- --------------- --------------- ---------------
Net income $ 715 $ 361 $ (636) $ 440
=============== =============== =============== ===============
Basic Earnings Per Share $ 0.54 $ 0.34
=============== ===============
Diluted Earnings Per Share $ 0.52 $ 0.32
=============== ===============
Weighted Number of Shares Outstanding 1,314,323 1,314,323
=============== ===============
Weighted Number of Shares Outstanding,
assuming dilution 1,387,130 1,387,130
=============== ===============
</TABLE>
4
<PAGE>
Note 1: For the purposes of this Pro Forma Condensed Consolidated Statements of
Operations, the acquired in-process research and development was assumed to have
been written-off prior to the period presented herein, so that the statements of
operations includes only recurring costs.
Note 2: The following is a description of each of the pro forma adjustments.
(1) Record annual amortization of goodwill and other identified intangible
assets related to the Datasonics acquisition, assuming amortization
periods from six to thirteen years. The estimated useful lives are based
on periods of economic benefit.
(2) Elimination of Datasonics amortization expense of $11,000 related to
leasehold improvements, not acquired by the Company.
(3) Record interest expense of $399,000 related to assumed additional
borrowing of approximately $5.5 million to finance the Datasonics asset
purchase, assumed interest rate of 7.75%.
(4) Elimination of Datasonics interest expense of $96,000 related to the
borrowings under the line of credit and notes payable, not assumed by
the Company.
(5) Record an adjustment to the provision for income taxes based on pro
forma consolidated income before taxes using the Company's effective
income tax rate.
5
<PAGE>
BENTHOS, INC.
Pro Forma Condensed Consolidated Statement of Operations
(In Thousands, Except Share and Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
---------------------For The Nine Months Ended June 30, 1999----------------------
Historical Historical Pro Forma Pro Forma
Benthos Datasonics Adjustments Consolidated
<S> <C> <C> <C> <C>
Revenue:
Sales $ 12,926 $ 6,479 $ - $ 19,405
Cost of sales 7,384 4,255 - 11,639
---------------- ----------------- ---------------- -----------------
Gross profit 5,542 2,224 - 7,766
Operating Expenses:
Research and development 961 386 - 1,347
Selling, general and administrative 3,269 1,185 347 (1) 4,792
(9)(2)
---------------- ----------------- ---------------- -----------------
Total expenses 4,230 1,571 338 6,139
---------------- ----------------- ---------------- -----------------
Operating income 1,312 653 (338) 1,627
Other Income (Expenses):
Interest expense - (78) (259)(3) (259)
78 (4)
Other income 118 15 - 133
---------------- ----------------- ---------------- -----------------
Total other income (expenses) 118 (63) (181) (126)
---------------- ----------------- ---------------- -----------------
Income before taxes 1,430 590 (519) 1,501
Provision for Income Taxes 429 - 21(5) 450
---------------- ----------------- ---------------- -----------------
Net income $ 1,001 $ 590 $ (540) $ 1,051
================ ================= ================ =================
Basic Earnings Per Share $ 0.74 $ 0.78
================ =================
Diluted Earnings Per Share $ 0.72 $ 0.75
================ =================
Weighted Number of Shares Outstanding 1,352,721 1,352,721
================ =================
Weighted Number of Shares Outstanding,
assuming dilution 1,394,728 1,394,728
================ =================
</TABLE>
Note 1: For the purposes of this Pro Forma Condensed Consolidated Statements of
Operations, the acquired in-process research and development was assumed to have
been written-off prior to the period presented herein, so that the statements of
operations includes only recurring costs.
Note 2: The following is a description of each of the pro forma adjustments.
6
<PAGE>
(1) Record nine months of amortization of goodwill and other identified
intangible assets relating to the Datasonics acquisition, assuming
amortization periods from six to thirteen years. The estimated useful lives
are based on periods of economic benefit.
(2) Elimination of Datasonics amortization expense of $9,000 related to
leasehold improvements, not acquired by the Company.
(3) Record interest expense of $259,000 related to assumed additional borrowing
of approximately $5.5 million to finance the Datasonics asset purchase,
assumed interest rate of 7.75%.
(4) Elimination of Datasonics interest expense of $78,000 related to the
borrowing under the line of credit and notes payable, not assumed by the
Company.
(5) Record an adjustment to the provision for income taxes based on pro forma
consolidated income before taxes using the Company's effective income tax
rate.
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we consent to the incorporation of our
report included in this Form 8-K/A, into the Company's previously filed
Registration Statements File Nos. 333-19425 and 333-60301.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
November 2, 1999
