<PAGE>
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): October 3, 1995
------------------------------
IMCO Recycling Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
1-7170 75-2008280
- ------------------------------------ -----------------------------------
(Commission File Number) (IRS Employer Identification No.)
5215 North O'Connor Blvd., Suite 940, Irving, Texas 75039
- --------------------------------------------------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (214) 869-6575
----------------------
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
Item 7(a). Financial Statements of business acquired
Independent Auditors' Report
Balance Sheets at March 31, 1995 and September 30, 1995
(unaudited)
Statements of Income and Retained Earnings for the year
ended March 31, 1995 and the six months ending Sept. 30,
1995 (unaudited)
Statement of Cash Flows for the year ended March 31, 1995
Notes to Financial Statements
Item 7(b). Pro forma financial information
- Condensed Consolidated pro forma Statement of Earnings for the
year ended December 31, 1994
- Condensed Consolidated pro forma Statement of Earnings for the
six months ended June 30, 1995
- Condensed Consolidated pro forma Balance Sheet at June 30, 1995
- Notes to pro forma Financial Statements
Item 7(c) Exhibits:
**10.1 Agreement and Plan of Merger, dated as of October 1, 1995,
among IMCO Recycling Inc., IMCO Recycling of Illinois
Inc., Alumar Associates, Inc. and the Shareholders.
**10.2 Registration Rights Agreement, dated as of October 1,
1995, among IMCO Recycling Inc. and the Shareholders.
*23.1 Consent of Altschuler, Melvoin and Glasser LLP
- --------------------
* To be filed by amendment.
** Previously filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
IMCO RECYCLING INC.
By: /s/ Robert R. Holian
-------------------------
Robert R. Holian
Vice President and Controller
Date: December 15, 1995
<PAGE>
[ALTSCHULER, MELVOIN AND GLASSER LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Alumar Associates, Inc.
We have audited the accompanying consolidated balance sheet of ALUMAR
ASSOCIATES, INC. AND SUBSIDIARIES as of March 31, 1995, and the related
consolidated statements of income and retained earnings, and of cash flows for
the fiscal year then ended. These financial statements are the responsibility of
the Corporation's management. Our responsibility is to express an opinion on
these financial statements based on our audit. We did not audit the financial
statements of Marport Smelting LLC, an unconsolidated affiliate accounted for by
the equity method of accounting. The investment in Marport Smelting LLC was
$354,357 as of March 31, 1995 and the equity in its net income was $189,784 for
the fiscal year then ended. The financial statements of Marport Smelting LLC,
for the year ended December 31, 1994, were audited by other auditors whose
report thereon has been furnished to us and our opinion, insofar as it relates
to the amounts included for Marport Smelting LLC, is based on the report of the
other auditors.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform our audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, based on our audit, the consolidated financial statements
referred to above present fairly, in all material respects, the consolidated
financial position of Alumar Associates, Inc. and Subsidiaries as of March 31,
1995, and the consolidated results of their operations and of their cash flows
for the fiscal year then ended, in conformity with generally accepted accounting
principles.
/s/ ALTSCHULER, MELVOIN AND GLASSER LLP
Chicago, Illinois
May 31, 1995
<PAGE>
Exhibit A
<TABLE>
<CAPTION>
ALUMAR ASSOCIATES, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
Assets (Note 8)
September 30, 1995
March 31, 1995 (unaudited)
-------------- -----------
<S> <C> <C>
Current Assets:
Cash $ 440,455 $ 584,000
Accounts receivable, trade 9,640,220 11,568,000
Inventories (Note 3) 3,004,042 3,292,000
Income taxes refundable 235,954 --
Deferred income taxes (Note 10) 6,000 128,000
Prepaid expenses and other current assets 40,557 230,000
Due from affiliates (Note 4) 105,471 --
----------- -----------
13,472,699 15,802,000
----------- -----------
Property, Plant and Equipment (at cost, less
accumulated depreciation and amortization-
Notes 1, 5 and 8) 2,298,691 2,949,000
----------- -----------
Other Assets:
Investment in affiliate (Notes 1 and 6) 354,357 939,000
Excess of cost over equity in subsidiary's
paid-in capital (net of amortization--Note 1) 21,386 --
Deferred income taxes (Note 10) 63,000 --
Other 126,085 5,000
----------- -----------
564,828 944,000
----------- -----------
$16,336,218 $19,695,000
----------- -----------
----------- -----------
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 3,266,964 $ 4,549,000
Current portion of long-term liabilities (Note 8) 175,872 84,000
Accrued expenses and other current
liabilities (Note 7) 1,020,235 1,483,000
Due to affiliates (Note 4) 21,174 --
Due to stockholders 110,635 --
----------- -----------
4,594,880 6,116,000
----------- -----------
Long-term Liabilities (net of current portion--Note 8) 7,756,929 8,606,000
----------- -----------
Deferred Income Taxes -- 299,000
Stockholders' Equity:
Common stock ($1 par value; authorized 100,000
shares; issued and outstanding 1,000 shares) 1,000 20,000
Paid-in capital 31,295 171,000
Retained earnings 3,952,114 4,483,000
----------- -----------
3,984,409 4,674,000
----------- -----------
$16,336,218 $19,695,000
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
Exhibit B
<TABLE>
<CAPTION>
ALUMAR ASSOCIATES, INC. AND SUBSIDIARIES
Consolidated Statement of Income
The Six Months
Fiscal Year Ended
Ended September 30, 1995
March 31, 1995 (Unaudited)
-------------- ------------------
<S> <C> <C>
Net Sales (Note 4) $67,172,325 $39,323,000
Cost of Goods Sold (Notes 2 and 4) 60,199,671 31,201,000
----------- -----------
Gross Profit 6,972,654 8,122,000
Operating Expenses (Note 4) 5,805,313 7,220,000
----------- -----------
Income from Operations 1,167,341 902,000
Other Expense (net) (Note 9) (130,678) (429,000)
Equity in Income of Investee Company
(Note 6) 189,784 694,000
----------- -----------
Income before Income Taxes 1,226,447 1,167,000
----------- -----------
Income Tax Provision (Note 10):
Current 327,000 --
Deferred (48,000) --
----------- -----------
279,000 --
----------- -----------
Net Income (to Exhibit C) $ 947,447 $1, 167,000
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
Exhibit C
<TABLE>
<CAPTION>
ALUMAR ASSOCIATES, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
Fiscal Year Ended March 31, 1995
<S> <C>
Cash Flows from Operating Activities:
Net income for fiscal year $ 947,447
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 686,876
Deferred income taxes ( 48,000)
Equity interest in earnings of affiliate ( 189,784)
Changes in assets--decrease (increase) :
Accounts receivable, trade ( 3,791,938)
Inventories ( 1,351,416)
Income taxes refundable ( 190,299)
Prepaid expenses and other current assets 99,782
Due from/to affiliates ( 45,836)
Due to stockholders 42,221
Other assets ( 23,234)
Changes in liabilities--increase (decrease) :
Accounts payable 547,215
Accrued expenses and other current liabilities 326,678
-----------
Net cash used in operating activities ( 2,990,288)
-----------
Cash Flows from Investing Activities:
Acquisitions of property, plant and equipment ( 456,121)
Distributions received from affiliate 295,245
-----------
Net cash used in investing activities ( 160,876)
-----------
Cash Flows from Financing Activities:
Principal payments on long-term debt ( 92,439)
Net proceeds under long-term credit agreement 3,452,336
Principal payments on capitalized lease obligations (175,486)
-----------
Net cash provided by financing activities 3,184,411
-----------
Net Increase in Cash 33,247
Cash, Beginning of Fiscal Year 407,208
-----------
Cash, End of Fiscal Year $ 440,455
-----------
-----------
Supplemental Disclosures of Cash Flow Information:
Cash paid during the fiscal year for:
Interest $ 544,448
-----------
-----------
Income taxes $ 529,775
----------
----------
Supplemental Schedule of Noncash Investing and
Financing Activities:
During fiscal 1995, capital lease obligations
of $25,484 were incurred when the Corporation
entered into leases for new equipment.
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
ALUMAR ASSOCIATES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
March 31, 1995
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
A summary of significant accounting policies followed by the Corporation is
as follows:
CONSOLIDATION--The consolidated financial statements include the
accounts of Alumar Associates, Inc. and its subsidiaries (the
"Corporation"--Note 2). All significant intercompany accounts and
transactions have been eliminated in consolidation. The Corporation's
50% investment in Marport Smelting LLC (Note 6) is carried at cost
plus the Corporation's cumulative share of earnings (based on the
calendar year whose year-end falls within the Corporation's accounting
period) less cumulative distributions received.
DEPRECIATION AND AMORTIZATION--Provisions for depreciation and
amortization of property, plant and equipment are computed, for
financial reporting purposes, over the estimated useful lives of the
respective assets, under the straight-line method. For income tax
reporting purposes, provisions for depreciation and amortization are
computed using accelerated methods and statutory lives, as prescribed
by the Internal Revenue Code, with deferred taxes provided for the
resultant temporary differences.
PROPERTY RETIREMENTS--When assets become fully depreciated, are
retired, or are otherwise disposed of, the cost of the assets and the
related accumulated depreciation are removed from the accounts, and
any gain or loss on disposition is reflected as other income or
expense.
MAINTENANCE AND REPAIRS--Costs of maintenance and repairs are charged
to expense. Costs of renewals and betterments, where significant in
amount, are capitalized.
EXCESS OF COST OVER EQUITY IN SUBSIDIARY'S PAID-IN CAPITAL--The net
excess of the Corporation's investment in a subsidiary over the
underlying equity is being amortized over 20 years, under the
straight-line method.
INVENTORIES--Inventories are stated at the lower of cost or market
with cost determined under the last-in, first-out (LIFO) method.
Management believes the LIFO method results in a better matching of
current costs with current revenue. Such LIFO valuation is computed
under the "double extension" method, with all inventories constituting
a single pool.
<PAGE>
ALUMAR ASSOCIATES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
March 31, 1995
NOTE 2--NATURE OF ACTIVITIES:
Alumar Associates, Inc. and its wholly owned subsidiaries are engaged in
the business of processing aluminum dross and slag for customers located
primarily in the Midwest who are manufacturers of aluminum products.
Approximately 21% of fiscal 1995 consolidated purchases were made from two
major suppliers. No other single supplier accounted for more than 10% of
consolidated purchases.
NOTE 3--INVENTORIES:
Inventories, consisting of aluminum dross and recycled secondary ingot,
amounted to $3,004,042 (net of a LIFO reserve of $1,829,667) at March 31,
1995.
If March 31, 1995 inventories had been determined under the first-in,
first-out (FIFO) method of valuation, pretax income would have been
$1,513,973 higher for the fiscal year than the amounts reported herein.
NOTE 4--BALANCES WITH AFFILIATES AND RELATED-PARTY TRANSACTIONS:
<TABLE>
<CAPTION>
Balances with affiliates, at March 31, 1995, consisted of the following:
<S> <C>
Due from affiliates:
Marport Smelting LLC
("MSLLC"--see Note 6) $97,689
Other affiliate (see below) 7,782
----------
$ 105,471
----------
----------
Due to affiliates:
Marport Smelting LLC $ 21,174
----------
----------
</TABLE>
<TABLE>
<CAPTION>
Transactions with affiliates and related parties, during the fiscal year,
consisted of the following:
<S> <C>
Marport Smelting LLC (see below):
Sales $940,562
Purchases and processing fees 2,101,898
Lab fees 16,598
Other affiliate (see below):
Sales 315,409
Purchases 346,388
</TABLE>
The Corporation is affiliated to another company by virtue of the
stockholders of Alumar Associates, Inc. owning 14.25% of that company's
common stock.
<PAGE>
ALUMAR ASSOCIATES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
March 31, 1995
NOTE 4--BALANCES WITH AFFILIATES AND RELATED-PARTY TRANSACTIONS,
CONTINUED:
The Corporation holds a 50% interest in MSLLC which processes aluminum
dross and slag for the Corporation and other customers (see Note 6).
Operations between the Corporation and MSLLC are governed by an
operation agreement which continues until termination by either party
upon not less than six months prior notice. Under the agreement, (a)
the Corporation sells MSLLC feed stock at the Corporation's cost plus
related freight costs; (b) the Corporation purchases all processed
metal from MSLLC at the same price at which the Corporation invoices
its customers (MSLLC may also sell processed metal to other parties
with the Corporation's consent) ; and (c) the Corporation pays MSLLC
on a per pound basis in those instances in which the Corporation is so
paid by its customers.
NOTE 5--PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment and accumulated depreciation and
amortization, at the balance sheet date, consisted of the following:
<TABLE>
<CAPTION>
<S> <C>
Land $ 212,153
Buildings 894,241
Leasehold improvements 1,361,215
Machinery and equipment 1,395,426
Office furniture and equipment 150,827
Capitalized lease equipment 747,537
----------
4,761,399
Less accumulated depreciation and
amortization (including accumulated
depreciation of capitalized lease
equipment of $530,139) 2,462,708
----------
Net book value $2,298,691
----------
----------
</TABLE>
Depreciation of property, plant and equipment amounted to $684,652 for
fiscal 1995.
<PAGE>
ALUMAR ASSOCIATES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
March 31, 1995
NOTE 6--INVESTMENT IN AFFILIATES:
<TABLE>
<CAPTION>
The carrying value of the Corporation's investment in MSC consists of the
following:
<S> <C>
Carrying value of investment in MSLLC
at March 31, 1994 $459,818
Distributions received during fiscal 1995 ( 295,245)
Equity in 1994 income of MSLLC 189,784
----------
Carrying value of investment in MSLLC
at March 31, 1995 $ 354,357
----------
----------
Summarized financial data for MSLLC, for the year ended December 31, 1994,
is as follows:
Assets $2,827,027
Liabilities 2,058,327
----------
Partners' Equity $ 768,700
----------
----------
Revenue $8,397,954
Expenses 8,018,387
----------
Net income $ 379,567
----------
----------
NOTE 7--ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:
Accrued expenses and other current liabilities, at the balance sheet date,
consisted of the following:
Wages, bonuses and payroll taxes $767,957
Other 252,278
----------
$1,020,235
----------
----------
</TABLE>
<PAGE>
ALUMAR ASSOCIATES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
March 31, 1995
<TABLE>
<CAPTION>
NOTE 8--LONG-TERM LIABILITIES:
Long-term liabilities, at March 31, 1995, consisted of the following:
<S> <C>
Loan payable to Fremont Financial
Corporation ("FFC") pursuant to loan and
security agreement dated October 4, 1993,
expiring September 30, 1998 (see below) $7,705,640
Demand note payable to the First National
Bank of the Mid-South ("Mid-South") (for
purchase of property) (in absence of
demand payable in monthly installments
of $2,284, inclusive of interest at
Mid-South's "reference rate" plus 2 1/2%
per annum; final payment due June 3, 1998
- - see below) 77,155
Capital improvements note payable to
Mid-South (payable in monthly installments
of $6,225, inclusive of interest at
Mid-South's "reference rate" plus 2 1/2%
per annum; final payment due August 16,
1996--see below) 23,924
Capitalized equipment leases (see Note 12) 126,082
----------
Total long-term liabilities 7,932,801
Less current portion 175,872
----------
Long-term portion $7,756,929
----------
----------
</TABLE>
On March 31, 1995, the Corporation amended the existing loan and security
agreement with FFC to increase maximum borrowings to $10,000,000 (from the
previous $7,000,000), based on up to 80% of eligible accounts receivable (as
defined) and the sum of 50% of raw materials and finished goods inventories
(subject to certain limitations)
<PAGE>
ALUMAR ASSOCIATES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
March 31, 1995
NOTE 8--LONG-TERM LIABILITIES, CONTINUED:
Borrowings from FFC bear interest at the prime rate plus 1 1/2% per annum.
Most of the assets of the Corporation (except real property) are pledged to
secure borrowings under the agreement. The agreement contains certain
restrictive administrative and financial covenants, including limitation of
annual capital expenditures and maintenance of specified levels of net
worth.
Capital improvements note borrowings are secured by a subsidiary's
equipment and a parcel of land, while the demand note borrowings are
secured by the land and buildings the subsidiary acquired with the
proceeds. In addition, repayment of both notes is guaranteed by the
Corporation pursuant to the terms of an inter-creditor agreement, dated
July 27, 1992, between the Corporation, Mid-South and FFC.
Maturities of the foregoing obligations, at March 31, 1995 (exclusive of
the capitalized equipment leases--see Note 12), are as follows:
Fiscal Year
Ended March 31,
----------------
1996 $ 101,079
1997 0
1998 0
1999 7,705,640
----------
$7,806,719
----------
----------
Subsequent to the fiscal year-end, the Corporation entered into a
promissory note agreement with Heritage Olympia Bank to provide borrowings
to fund certain capital improvements. The agreement provides for aggregate
borrowings of $300,000 to bear interest at the prime rate plus 1 1/2% per
annum and to be secured by certain real property and matures August 1,
2000.
<PAGE>
ALUMAR ASSOCIATES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
March 31, 1995
NOTE 9--OTHER EXPENSES (NET):
Other expense, for fiscal 1995, consisted of the following:
<TABLE>
<S> <C>
Interest expense ($ 583,669)
Gain from metal hedging 380,164
Interest income 12,768
Laboratory fees (see Note 4) 16,598
Sundry (net) 43,461
-----------
($ 130,678)
-----------
-----------
</TABLE>
NOTE 10--INCOME TAXES:
Alumar Associates, Inc. and all of its subsidiaries file a consolidated
federal income tax return. Following is a tabulation of the principal
items accounting for the difference between the tax provision if computed
at statutory rates and the tax provision as provided herein:
<TABLE>
<S> <C>
Federal income tax provision, based
on 34% of income before income
taxes $ 417,000
State income taxes (net of federal
tax benefit) 59,000
Change in valuation allowance--see below ( 148,000)
Utilization of AMT carryforward ( 11,000)
Other items ( 38,000)
----------
Income tax provision $ 279,000
----------
----------
</TABLE>
During the current fiscal year, the Corporation utilized a capital loss
carryforward of approximately $380,000 to offset a capital gain from metal
hedging transactions (see Note 9). Such capital loss carryforward had been
fully provided for in the Corporation's valuation allowance at March 31,
1994.
Deferred income taxes are provided for temporary differences, which are
differences between the tax basis of an asset or liability and the amounts
reported in the financial statements, that will result in taxable or
deductible amounts in future years when the reported amount of the asset or
liability is recovered or settled. Such differences are principally
depreciation and certain accrued expenses.
At March 31, 1995, the Corporation's net deferred tax assets consisted of:
<TABLE>
<S> <C>
Gross deferred tax assets $ 114,000
Gross deferred tax liabilities ( 45,000)
----------
Net deferred tax assets $ 69,000
----------
----------
</TABLE>
<PAGE>
ALUMAR ASSOCIATES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
March 31, 1995
NOTE 11--EMPLOYEE BENEFIT PLAN:
The Corporation maintains a defined contribution plan which is designed as
a qualified cash deferred arrangement pursuant to Section 401(k) of the
Internal Revenue Code. Eligible participants (all nonunion employees) may
make contributions from their gross pay (limited to 15%) on a pre-tax basis
with the Corporation matching such contributions at the rate of 50 cents
for each $1.00 contributed by the employee, to the extent of the first 5%
of compensation. Such matching employer contributions amounted to $35,161
for fiscal 1995.
NOTE 12--LEASE COMMITMENTS:
The Corporation is obligated under various equipment leases including
short-term and month-to-month leases. Following is a summary of future
minimum payments to be made as of March 31, 1995, under capital lease
obligations and noncancellable operating leases:
<TABLE>
Fiscal Year Capital Operating
Ended March 31, Leases Leases
--------------- ---------- ---------
<S> <C> <C>
1996 $ 86,574 $ 151,746
1997 35,232 58,359
1998 21,972 17,120
1999 3,666 3,000
---------- ---------
Total minimum lease payments 147,444 $ 230,225
---------
---------
Less amount representing interest 21,362
----------
Present value of net minimum lease
payments (Note 8) $ 126,082
----------
----------
</TABLE>
Total rent expense under operating leases was $286,111 in the current
fiscal year.
<PAGE>
Item 7(b). Pro forma financial information
On October 3rd, 1995, the Company purchased all of the outstanding stock
of Alumar Associates Inc. which owned Metal Mark Inc., the owner and operator
of three aluminum recycling plants located in Chicago Heights, Il., Sikeston,
Mo., and Pittsburg, Ks. Metal Mark also owns a 50% interest in another aluminum
recycling plant located in East Chicago, In. The value of the transaction was
approximately $8,500,000, with $4,000,000 paid in cash and the balance
consisting of 208,213 shares of IMCO Recycling Inc. common stock. In addition,
at closing, the Company also repaid certain of the long-term debt of Alumar in
the amount of approximately $8,245,000.
The unaudited condensed consolidated pro forma statements of earnings
for the year ended December 31, 1994 and the six months ending June 30, 1995
have been derived from historical consolidated financial statements of both
the Company and Alumar. The Company's year end is December 31, and Alumar's
fiscal year end is March 31. Thus, for the pro forma financial statements, the
Company's year ended December 31, 1994, is combined with Alumar's year ended
March 31, 1995 to present a full year of operations. Likewise, the Company's
operations for the six months ended June 30, 1995 is combined with Alumar's
operations for the six months ended September 30, 1995 to present a six
month interim period of operations. The condensed consolidated pro forma
statements of earnings have been prepared assuming the acquisition occurred
as of the beginning of each period.
The unaudited pro forma condensed consolidated balance sheet as of June 30,
1995 has been prepared as if the acquisition of Alumar had occurred on that
date and reflects the adjustments as shown in the footnotes following the pro
forma statements.
In the opinion of the Company this information reflects all adjustments
necessary to present fairly such pro forma data; however such statements should
not be considered indicative of the actual results that would have been achieved
had the acquisition been completed on the dates or periods indicated, and they
do not purport to indicate the results of earnings as of any future date or for
any future periods.
The acquisition has been accounted for by the purchase method.
Accordingly, the assets and liabilities of Alumar have been adjusted to their
estimated fair values, as determined by the management of the Company, to
reflect the allocation of the costs of the acquisition by the Company.
<PAGE>
<TABLE>
<CAPTION>
IMCO RECYCLING INC
CONDENSED CONSOLIDATED PRO FORMA STATEMENTS OF EARNINGS
(IN THOUSANDS EXCEPT PER SHARE INFORMATION)
IMCO ALUMAR
FOR THE YEAR ENDED FOR THE YEAR ENDED PRO FORMA PRO FORMA
DEC. 31, 1994 MARCH 31, 1995 ADJUSTMENTS TOTALS
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES $101,116 $67,172 $168,288
Cost of Sales 78,478 62,078 $ 105 (b) 140,661
-------------------------------------------------------------------------------------------
GROSS PROFIT 22,638 5,094 (105) 27,627
Selling, general and 94 (d)
administrative 6,440 3,927 (1,305) (a) 9,156
Other (Income)
expenses 1,635 (440) 1,195
Equity income (190) (190)
973 c
Interest Exp 1,014 584 (584) (c) 1,987
Interest Inc (154) (13) (167)
-------------------------------------------------------------------------------------------
INCOME BEFORE TAX 13,703 1,226 717 15,646
Provision (benefit)
for tax 5,232 279 498 (e) 6,009
-------------------------------------------------------------------------------------------
NET EARNINGS $8,471 $947 $219 $9,637
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Weighted average Common
and Common equivalent
shares outstanding 11,643,846 208,213 11,852,059
Net Earnings per share $0.73 $0.81
--------------- -------------
--------------- -------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED PRO FORMA
FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
IMCO RECYCLING INC
CONDENSED CONSOLIDATED PRO FORMA STATEMENTS OF EARNINGS
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE INFORMATION)
IMCO ALUMAR
FOR THE SIX MONTHS FOR THE SIX MONTHS
ENDED ENDED PRO FORMA PRO FORMA
JUNE 30, 1995 SEPTEMBER 30, 1995 ADJUSTMENTS TOTALS
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES $60,471 $39,323 $99,794
Cost of Sales 45,721 36,290 $ 53 (b) 82,064
-------------------------------------------------------------------------------------------
GROSS PROFIT 14,750 3,033 (53) 17,730
Selling, general and 47 (d)
administrative 4,647 2,131 (515) (a) 6,310
Other (Income)
expenses 23 23
Equity income (694) (694)
487
Interest Exp 513 406 (406) (c) 1,000
Interest Inc (167) 0 0 (167)
-------------------------------------------------------------------------------------------
INCOME BEFORE TAX 9,757 1,167 334 11,258
Provision (benefit)
for tax 3,904 0 600 (e) 4,504
-------------------------------------------------------------------------------------------
NET EARNINGS $5,853 $1,167 ($266) $6,754
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Weighted average Common
and Common equivalent
shares outstanding 11,966,317 208,213 12,174,530
Net Earnings per share $0.49 $0.55
--------------- -------------------
--------------- -------------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED PRO FORMA
FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
IMCO RECYCLING INC
CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET
AT JUNE 30, 1995
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE INFORMATION)
PRO FORMA PRO FORMA
IMCO ALUMAR ADJUSTMENTS TOTALS
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Accounts Receivable $17,319 $11,568 $14,300 i $28,887
(12,245) g
Other Current Assets 14,874 4,234 917 f 22,080
------------------------------------------------------------------ -------------------
TOTAL CURRENT ASSETS 32,193 15,802 2,972 50,967
PROPERTY & EQUIP NET 62,021 2,949 1,144 f 66,114
OTHER ASSETS NET 6,788 944 1,880 f 9,612
------------------------------------------------------------------ -------------------
TOTAL ASSETS $101,002 $19,695 $ 5,996 $126,693
------------------------------------------------------------------ -------------------
------------------------------------------------------------------ -------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
TOTAL CURRENT LIABILITIES $ 9,137 $ 6,116 $ 1,240 f $ 19,493
3,000 i
11,300 i
LONG-TERM DEBT 11,250 8,509 (8,245) g 22,814
OTHER LONG TERM LIABILITIES 6,635 396 7,031
STOCKHOLDERS EQUITY 73,980 4,674 3,184 h 77,355
(4,483) g,h
------------------------------------------------------------------ -------------------
TOTAL LIABILITIES AND EQUITY $101,002 $19,695 $5,996 $126,693
------------------------------------------------------------------ -------------------
------------------------------------------------------------------ -------------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED PRO FORMA
FINANCIAL STATEMENTS
<PAGE>
NOTES TO PRO FORMA FINANCIAL STATEMENTS
The pro forma adjustments to the historical financial statements are as follows:
(a) To eliminate expenses related to bonus and consulting expenses paid to
the former Alumar owners which would not have been incurred had the
transaction occurred at the beginning of the periods presented.
(b) To reflect additional depreciation expense on the fair value of the assets
acquired. Pro forma depreciation is computed on a straight-line method
over the estimated useful life of the assets.
(c) To reverse interest expense of $584,000 for the year ended March 31, 1995
and $406,000 for the six months ended September 31, 1995 on debt paid off
by the Company at acquisition, and to increase interest expense due to the
Company's borrowings to fund a portion of the purchase. Interest expense
is calculated based upon the actual rate on the funds the Company
borrowed. See note (i).
(d) Goodwill is amortized on a straight-line-basis over a 15 year term.
(e) To reflect the effect upon the income tax provision as if the acquisition
had occurred at the beginning of the periods presented. The rate reflects
the Company's incremental combined federal and state rates.
(f) To record the assets at fair market value at acquisition and record the
difference between fair value and purchase price to goodwill.
(g) To record the payment of the purchase price and pay off of existing Metal
Mark debt.
(h) To record the issuance of capital stock as purchase price.
(i) To reflect additional debt used for the acquisition.
<PAGE>
EXHIBIT INDEX
Exhibit Sequentially
Number Description Numbered Page
- ------------------------------------------------------------------------------
**10.1 Agreement and Plan of Merger, dated as of
October 1, 1995, among IMCO Recycling Inc.,
IMCO Recycling of Illinois Inc., Alumar
Associates, Inc. and the Shareholders.
**10.2 Registration Rights Agreement, dated as of
October 1, 1995, among IMCO Recycling Inc. and
the Shareholders.
*23.1 Consent of Altschuier, Melvoin and Glasser LLP
- ---------------
* To be filed by amendment.
** Previously filed.
