<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 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) May 15, 1998
------------------------
BMC INDUSTRIES, INC.
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
MINNESOTA 1-8467 41-0169210
- ----------------------------- -------------------------- ---------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
ONE MERIDIAN CROSSINGS
SUITE 850
MINNEAPOLIS, MINNESOTA 55423
- ---------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 851-6000
-------------------
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
On May 15, 1998, Vision-Ease Lens Azusa, Inc., f/k/a VIS-ORC, Inc. (the
"Company") (a wholly-owned subsidiary of Vision-Ease Lens, Inc., in turn a
wholly-owned subsidiary of BMC Industries, Inc. ("BMC")) acquired substantially
all of the assets, properties and rights (the "Assets") of Monsanto Company, a
Delaware corporation ("Monsanto"), used in the Orcolite business unit (the
"Business"), an operating division of Monsanto, for the cash purchase price of
$101,000,000. This acquisition occurred pursuant to the Asset Purchase Agreement
between the Company and Monsanto dated as of March 25, 1998 (previously filed
with BMC's Current Report on Form 8-K dated March 25, 1998, File No. 1-8467), as
amended pursuant to Amendment No. 1 to Asset Purchase Agreement dated as of May
15, 1998 between Monsanto and the Company (previously filed with BMC's Current
Report on 8-K dated May 15, 1998, (File No. 1-8467). This Form 8-K/A includes
the following financial information required under Item 7 that was not contained
in the previously filed Form 8-K dated May 15, 1998 (File No. 1-8467).
<TABLE>
<CAPTION>
PAGE
(a) FINANCIAL STATEMENTS --------
<S> <C>
Audited Financial Statements of the Orcolite Business Unit
Report of Ernst & Young LLP, Independent Auditors 4
Balance Sheet as of March 31, 1998 5
Statement of Earnings for the Year Ended March 31, 1998 6
Statement of Cash Flows for the Year Ended March 31, 1998 7
Notes to Financial Statements 8-11
(b) PRO FORMA FINANCIAL INFORMATION
Pro Forma Information 12
Unaudited Pro Forma Condensed Combined Balance Sheet as of
March 31, 1998 13
Unaudited Pro Forma Condensed Combined Statement of Earnings for the
Year Ended March 31, 1998 14
Unaudited Pro Forma Condensed Combined Statement of Earnings for the
Three Month Period Ended March 31, 1998 15
Notes to Unaudited Pro Forma Condensed Combined Financial Statements 16-17
2
<PAGE>
(c) EXHIBITS
See exhibit index 18
</TABLE>
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.
BMC Industries, Inc.
Date: July 29, 1998 By: /s/Jeffrey J. Hattara
---------------------------------
Jeffrey J. Hattara
Vice President of Finance and
Administration, Chief Financial Officer
3
<PAGE>
Report of Independent Auditors
The Board of Directors and Stockholders
BMC Industries, Inc.
We have audited the accompanying balance sheet of the Orcolite business unit, an
operating division of Monsanto Company, as of March 31, 1998 and the related
statements of earnings and cash flows for the year then ended. These financial
statements are the responsibility of Orcolite's management. Our responsibility
is to express an opinion on these financial statements based on our audit.
We conducted our audit 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 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 Orcolite business unit, an
operating division of Monsanto Company, at March 31, 1998, and the results of
its operations and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
June 15, 1998
4
<PAGE>
MONSANTO COMPANY
ORCOLITE BUSINESS UNIT
BALANCE SHEET
MARCH 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
<S> <C>
ASSETS
CURRENT ASSETS
Cash $ 1
Trade accounts receivable, less allowance of $1,352 6,855
Inventories 12,677
Other current assets 153
- ---------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 19,686
- ---------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, NET 32,485
INTANGIBLE ASSETS, NET 27,747
- ---------------------------------------------------------------------------------
TOTAL ASSETS $79,918
- ---------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 999
Accounts payable 4,943
Accrued compensation and benefits 546
Payable to affiliates, net 12,573
Other current liabilities 146
- ---------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 19,207
- ---------------------------------------------------------------------------------
LONG-TERM DEBT 1,663
PARENT COMPANY INVESTMENT IN BUSINESS UNIT 59,048
- ---------------------------------------------------------------------------------
TOTAL LIABILITIES AND PARENT COMPANY INVESTMENT IN BUSINESS UNIT $79,918
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
MONSANTO COMPANY
ORCOLITE BUSINESS UNIT
STATEMENT OF EARNINGS
YEAR ENDED MARCH 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
<S> <C>
Revenues $37,796
Cost of products sold 28,397
- ------------------------------------------------------------------
Gross margin 9,399
Selling 3,759
General and administrative 3,689
- ------------------------------------------------------------------
Income from operations 1,951
- ------------------------------------------------------------------
Interest expense 164
- ------------------------------------------------------------------
Earnings before income taxes 1,787
Income taxes 680
- ------------------------------------------------------------------
Net earnings $1,107
- ------------------------------------------------------------------
- ------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
MONSANTO COMPANY
ORCOLITE BUSINESS UNIT
STATEMENT OF CASH FLOWS
YEAR ENDED MARCH 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET EARNINGS $ 1,107
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH PROVIDED
BY OPERATING ACTIVITIES
Depreciation and amortization 4,405
Provisions for product returns, uncollectible trade
receivables and inventory reserves 2,498
DECREASE (INCREASE) IN ASSETS
Trade accounts receivable (2,643)
Inventories (5,226)
Other current assets 100
Other noncurrent assets 183
INCREASE (DECREASE) IN LIABILITIES
Accounts payable 2,029
Accrued expenses and other current liabilities (596)
- -----------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,857
- -----------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (7,629)
- -----------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (7,629)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on capitalized leases (879)
Increase in amount payable to affiliates 6,651
- -----------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 5,772
- -----------------------------------------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS -
Cash and cash equivalents at beginning of year 1
- -----------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
MONSANTO COMPANY
ORCOLITE BUSINESS UNIT
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(IN THOUSANDS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION--The operations of the Orcolite business unit (the
"Company"), an operating division of Monsanto Company (the "Parent"), a
Delaware Corporation, are based in Azusa, California.
The Company manufactures and distributes polycarbonate and plastic eyeglass
lenses for the ophthalmic industry on a worldwide basis. Effective May 15,
1998 all of the assets, properties and rights used in the Company were
purchased by Vision-Ease Lens Azusa, Inc., f/k/a VIS-ORC, Inc., a wholly-owned
subsidiary of Vision-Ease Lens, Inc., in turn a wholly-owned subsidiary of
BMC Industries, Inc. ("BMC"). See note 8 to the financial statements.
REVENUE RECOGNITION--The Company recognizes revenue upon shipment of product
to the customer.
INVENTORIES--Stated at the lower of cost or market. Actual cost is used to
value raw materials and supplies. Standard cost, which approximates actual
cost, is used to value finished goods and work in process. The provision for
potentially obsolete or slow-moving inventory is made based on management's
analysis of inventory levels and future sales forecasts.
PROPERTY, PLANT AND EQUIPMENT--Stated at cost or at fair value as of the date
acquired in a business combination accounted for as a purchase, less
accumulated depreciation and amortization. Depreciation is provided on the
straight-line method over estimated useful lives of 3 to 25 years.
Amortization expense of capital leases is included in depreciation expense.
Depreciation of assets included in construction in progress does not begin
until the construction is complete and the assets are placed into service.
INTANGIBLE ASSETS--Consist primarily of goodwill and are stated at cost or at
fair value as of the date acquired in a business acquisition accounted for as
a purchase, less accumulated amortization. Amortization of intangible assets
is computed on a straight-line basis over the estimated useful life of 20
years. Amortization expense for the year ended March 31, 1998 was $1,298.
ACCOUNTING FOR LONG-LIVED ASSETS--The Company follows Statement of Financial
Accounting Standards No. 121 (SFAS No. 121), ACCOUNTING FOR LONG-LIVED ASSETS
AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF. SFAS No. 121 provides guidelines
for recognition of impairment losses related to long-lived assets and certain
intangibles. SFAS No. 121 has not had a material impact on the Company's
financial position, results of operations or cash flows.
INCOME TAXES--The Company's operations are included with Parent for federal
and state income tax reporting purposes. The Company receives a charge or
credit from the parent representing federal and state income taxes on a
stand-alone basis. The state and federal income tax liability is paid to the
Parent on a quarterly basis as an increase to the intercompany account and
therefore is not included on the balance sheet.
8
<PAGE>
The differences between income taxes at the U.S. Federal Statutory tax rate
and the effective tax rate were as follows for the period ended March 31,
1998:
<TABLE>
<CAPTION>
<S> <C>
Statutory rate 35.0%
State income taxes, net of federal benefit 3.0
- ----------------------------------------------------------------
Effective tax rate 38.0%
- ----------------------------------------------------------------
</TABLE>
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 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.
2. INVENTORIES
The following is a summary of inventories at March 31, 1998:
<TABLE>
<CAPTION>
<S> <C>
Raw materials $ 3,741
Work in process 1,189
Finished goods 7,747
- ----------------------------------------------------------------
Total inventories $12,677
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT, NET
The following is a summary of property, plant and equipment, net at March 31,
1998:
<TABLE>
<CAPTION>
<S> <C>
Land and improvements $ 1,863
Buildings and improvements 3,432
Machinery and equipment 32,058
- ----------------------------------------------------------------
Total 37,353
Less accumulated depreciation and amortization 4,868
- ----------------------------------------------------------------
Total property, plant and equipment, net $32,485
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
4. DEBT
The following is a summary of long-term debt at March 31, 1998:
<TABLE>
<CAPTION>
<S> <C>
Capitalized leases $2,197
Note payable 465
- ----------------------------------------------------------------
2,662
Less amounts due within one year 999
- ----------------------------------------------------------------
Total long-term debt $1,663
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
9
<PAGE>
The Company leases production equipment and land under long-term leases and
has the option to purchase the assets for a nominal cost at the termination
of the lease.
Property under capital leases consists of the following at March 31, 1998:
<TABLE>
<CAPTION>
<S> <C>
Machinery and equipment $2,091
Land 1,573
- ----------------------------------------------------------------
Subtotal 3,664
Less accumulated amortization 465
- ----------------------------------------------------------------
NET CAPITAL LEASED ASSETS $3,199
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
Future minimum rentals for property, plant and equipment under capital leases
are as follows:
<TABLE>
<CAPTION>
<S> <C>
- ----------------------------------------------------------------
1999 $1,102
- ----------------------------------------------------------------
2000 555
- ----------------------------------------------------------------
2001 505
- ----------------------------------------------------------------
2002 229
- ----------------------------------------------------------------
Thereafter -
- ----------------------------------------------------------------
Total minimum lease obligation 2,391
- ----------------------------------------------------------------
Less interest 194
- ----------------------------------------------------------------
NET PRESENT VALUE $2,197
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
Annual maturities of debt for the next five years are $999 in 1999, $500 in
2000, $475 in 2001, $223 in 2002, $0 in 2003 and $465 thereafter.
Interest paid was $164 in 1998.
5. COMMITMENTS
The Company leases the land and building for one manufacturing facility. At
March 31, 1998, the approximate future minimum rental commitments required under
non-cancelable operating leases are as follows:
<TABLE>
<CAPTION>
<S> <C>
- ----------------------------------------------------------------
1999 $143
- ----------------------------------------------------------------
2000 146
- ----------------------------------------------------------------
2001 136
- ----------------------------------------------------------------
Thereafter -
- ----------------------------------------------------------------
TOTAL MINIMUM LEASE PAYMENTS $425
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
Rent expense was $26 in 1998.
10
<PAGE>
6. EMPLOYEE BENEFIT PLANS
The Parent sponsors a 401(k) savings plan covering all of the employees of
the Company. Employees may contribute up to 16% of their compensation on a
before-tax basis, subject to the maximum dollar amount allowed under section
404(a) of the Internal Revenue Code, as amended. Under the terms of the
savings plan, the Company makes an annual contribution, which is invested in
the Parent's stock, equal to 60% of participants' contributions up to 7% of
base. Provisions of the plan include vesting of the Company's contributions
at the rate of 20% per year of continuous service and payment of benefits
upon retirement, total disability, death or termination.
7. RELATED PARTY TRANSACTIONS
The Company has short-term accounts receivable and payables to the Parent
which are shown net in the accompanying balance sheet. These amounts are
related to various intercompany transactions including, among others, sales
of products to affiliates, purchases of products from affiliates, and
allocations of charges for current income taxes and other financial and
administrative services. These amounts are due and payable on demand and do
not bear interest. Management believes that the above allocations are
reasonable and result in costs that are not materially different from those
which would have been incurred on a stand-alone basis.
Sales of products to affiliates totaled approximately $5,880 for the year
ended March 31, 1998. Purchases of product from affiliates were immaterial
for the year ended March 31, 1998.
The Company's cash is managed as part of the Parent's cash management system.
The net cash collected or disbursed by the Company is transferred to the
Parent on a daily basis through the intercompany account. Transactions such
as the reimbursement of expenses incurred by the Parent on behalf of the
Company are also recorded through the intercompany account.
8. SUBSEQUENT EVENT
On March 25, 1998, the Parent entered into an agreement to sell the assets of
the Company to Vision-Ease Lens, Inc. for $100,000 plus the assumption of
liabilities and subject to post-closing adjustments. The closing date
purchase price was subsequently adjusted to $101,000 based on the estimated
unaudited working capital on May 15, 1998.
11
<PAGE>
BMC INDUSTRIES, INC.
UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information
gives effect to the Orcolite Business Unit acquisition as if it had occurred
at the beginning of the periods presented for purposes of the unaudited pro
forma condensed combined statements of operations and as of March 31, 1998
for purposes of the unaudited pro forma condensed combined balance sheet.
The acquisition is accounted for using the purchase method of accounting and,
accordingly, the purchase price of $101 million has initially been allocated
based on the estimated fair values of assets acquired and liabilities assumed
on the date of acquisition. The excess of the purchase price over the
estimated fair value of net tangible assets acquired has been recorded as
intangibles which are being amortized on a straight-line basis over periods
ranging from 7 to 30 years. In addition, as a result of the acquisition, an
$11.0 million (pre-tax) charge will be taken immediately related to the
write-off of acquired in-process research and development. The actual
allocation of the purchase price may differ from that reflected in the
unaudited pro forma condensed combined financial information and is therefore
subject to change based upon final valuations. However, BMC Industries, Inc.
(the "Company") does not expect that the final allocation of the purchase
price for the acquisition will differ materially from the allocations in the
accompanying pro forma financial information.
THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION IS NOT
NECESSARILY INDICATIVE OF WHAT ACTUAL RESULTS WOULD HAVE BEEN HAD THE
ORCOLITE BUSINESS UNIT ACQUISITION OCCURRED AT THE DATES INDICATED NOR DOES
IT PURPORT TO PROJECT THE FUTURE FINANCIAL POSITION OR THE RESULTS OF FUTURE
OPERATIONS OF THE COMPANY.
The unaudited pro forma condensed combined financial information should be
read in conjunction with the accompanying notes and the audited financial
statements of Orcolite Business Unit, including the notes thereto, included
elsewhere in this Form 8-K, the audited financial statements of the Company,
and the notes thereto, included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1997, and the unaudited financial statements
of the Company, and the notes thereto, included in the Company's Quarterly
Report on Form 10-Q for the three months ended March 31, 1998.
12
<PAGE>
BMC INDUSTRIES, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
MARCH 31, 1998
(UNAUDITED)
(IN THOUSANDS)
The unaudited pro forma condensed combined balance sheet as of March 31, 1998
has been prepared by combining the historical consolidated balance sheet of the
Company as of March 31, 1998 with the balance sheet of Orcolite Business Unit as
of March 31, 1998, and gives effect to the pro forma adjustments as described in
the notes hereto.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
BMC ORCOLITE
INDUSTRIES, BUSINESS PRO FORMA PRO FORMA
ASSETS INC. UNIT ADJUSTMENTS COMBINED
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 2,238 $ 1 $ (1) (a) $ 2,238
Trade accounts receivable, net 35,893 6,855 - 42,748
Inventories, net 78,957 12,677 (2,121) (a) 89,513
Deferred income taxes 6,171 - 4,070 (b) 10,241
Other current assets 9,173 153 - 9,326
- -------------------------------------------------------------------------------------------
Total Current Assets 132,432 19,686 1,948 154,066
- -------------------------------------------------------------------------------------------
Property, plant and equipment,
net 180,850 32,485 (12,259) (a) 201,076
Deferred income taxes 1,229 - - 1,229
Intangible assets, net 2,920 27,747 36,838 (a),(b) 67,505
Other assets, net 11,190 - - 11,190
- -------------------------------------------------------------------------------------------
TOTAL ASSETS $328,621 $79,918 $ 26,527 $ 435,066
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS'
EQUITY
- -------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Current portion of long-term debt $ 1,222 $ 999 $ - $ 2,221
Accounts payable 23,540 4,943 - 28,483
Income taxes payable 3,495 - - 3,495
Accrued expenses and other
current liabilities 18,826 692 4,078 (a) 23,596
Payable to affiliates, net - 12,573 (12,573) (a) -
- -------------------------------------------------------------------------------------------
Total Current Liabilities 47,083 19,207 (8,495) 57,795
Long-term debt 95,571 1,663 101,000 (a) 198,234
Other liabilities 17,430 - - 17,430
Deferred income taxes 2,824 - - 2,824
Stockholders' Equity 165,713 59,048 (65,978) (a),(b) 158,783
- -------------------------------------------------------------------------------------------
Total Liabilities and
Stockholders' Equity $328,621 $79,918 $ 26,527 $ 435,066
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
BMC INDUSTRIES, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The unaudited pro forma condensed combined statement of operations for the year
ended December 31, 1997 has been prepared by combining the consolidated
statement of earnings for the Company for the year ended December 31, 1997 with
the statement of earnings for Orcolite Business Unit for the year ended March
31, 1998 and gives effect to the pro forma adjustments as described in the notes
hereto.
<TABLE>
<CAPTION>
BMC ORCOLITE
INDUSTRIES, BUSINESS PRO FORMA PRO FORMA
INC. UNIT ADJUSTMENTS(c) COMBINED(c)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $312,538 $37,796 $ - $ 350,334
Cost of products sold 244,468 28,397 142 (d),(e) 273,007
- -------------------------------------------------------------------------------------------
Gross margin 68,070 9,399 (142) 77,327
Selling 11,696 3,759 - 15,455
Administrative 4,316 3,689 - 8,005
- -------------------------------------------------------------------------------------------
Income from Operations 52,058 1,951 (142) 53,867
Other Income and (Expenses)
Interest income 233 - - 233
Interest expense (1,298) (164) (7,228)(f) (8,690)
Other income (expense) 209 - - 209
- -------------------------------------------------------------------------------------------
Earnings before Income Taxes 51,202 1,787 (7,370) 45,619
Income Taxes 15,481 680 (2,803)(g) 13,358
- -------------------------------------------------------------------------------------------
NET EARNINGS $ 35,721 $ 1,107 $(4,567) $ 32,261
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
NET EARNINGS PER SHARE
BASIC $ 1.30 $ 1.17
DILUTED 1.25 1.13
- -------------------------------------------------------------------------------------------
NUMBER OF SHARES INCLUDED IN PER
SHARE COMPUTATION
BASIC 27,583 27,583
DILUTED 28,530 28,530
- --------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
BMC INDUSTRIES, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The unaudited pro forma condensed combined statement of operations for the
three-month period ended March 31, 1998 has been prepared by combining the
consolidated statement of earnings for the Company for the three month period
ended March 31, 1998 with the statement of earnings for Orcolite Business Unit
for the three month period ended March 31, 1998 and gives effect to the proforma
adjustments as described in the notes hereto.
<TABLE>
<CAPTION>
BMC ORCOLITE
INDUSTRIES, BUSINESS PRO FORMA PRO FORMA
INC. UNIT ADJUSTMENTS(c) COMBINED(c)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $80,084 $10,739 $ - $90,823
Cost of products sold 68,455 8,410 35 (d),(e) 76,900
- -------------------------------------------------------------------------------------------
Gross margin 11,629 2,329 (35) 13,923
Selling 3,289 1,109 - 4,398
Administrative 1,330 1,088 - 2,418
- -------------------------------------------------------------------------------------------
Income from Operations 7,010 132 (35) 7,107
Other Income and (Expenses)
Interest income 32 - - 32
Interest expense (1,383) (30) (1,807)(f) (3,220)
Other income (expense) (144) - (144)
- -------------------------------------------------------------------------------------------
Earnings before Income Taxes 5,515 102 (1,842) 3,775
Income Taxes 1,706 39 (597)(g) 1,148
- -------------------------------------------------------------------------------------------
NET EARNINGS $ 3,809 $ 63 $(1,245) $ 2,627
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
NET EARNINGS PER SHARE
BASIC $ 0.14 $ 0.10
DILUTED 0.14 0.10
- -------------------------------------------------------------------------------------------
NUMBER OF SHARES INCLUDED IN
PER SHARE COMPUTATION
BASIC 26,994 26,994
DILUTED 27,644 27,644
- -------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
BMC INDUSTRIES, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(in thousands)
a. Pro forma adjustments to reflect the acquisition of the Orcolite
Business Unit of Monsanto Company and the allocation of the estimated
purchase price on the basis of estimated fair values of assets acquired
and liabilities assumed as follows:
<TABLE>
<CAPTION>
<S> <C>
Historical net book value at March 31, 1998 $ 59,048
Elimination of cash balance (1)
Elimination of payable to affiliates, net 12,573
---------
Adjusted book value acquired 71,620
Adjustment of inventories to estimated fair value (2,121)
Adjustment of property, plant and equipment to fair value (12,259)
Acquisition-related liabilities (4,078)
In-process research and development 11,000
Goodwill & other intangible assets 36,838
---------
Purchase price $101,000
---------
---------
</TABLE>
b. In accordance with generally accepted accounting principles, $11,000 of
the purchase price has been allocated to acquired in-process research
and development and immediately written-off resulting in a corresponding
charge to retained earnings of $6,930 (net of deferred taxes of $4,070).
This one-time charge is reflected in the unaudited pro forma condensed
balance sheet but not in the pro forma condensed statement of earnings.
The Company will take a charge for this item during the period ended
June 30, 1998.
c. Numerous business synergies are anticipated as a result of the
acquisition, including the following: consolidation of selling,
marketing, distribution, customer service and administrative functions;
consolidation of research and development and technical services
functions; optimization of combined production capacity; and improved
purchasing leverage. THE ANTICIPATED FINANCIAL IMPACT RESULTING FROM
SUCH SYNERGIES HAS NOT BEEN REFLECTED IN THE ACCOMPANYING PRO FORMA
STATEMENTS OF EARNINGS.
d. Represents increased amortization expense related to goodwill and other
intangible assets arising from the acquisition amortized on a
straight-line basis over 30 years for goodwill, 12 years for developed
technology and 7 years for the work force:
- $ 1,461 - Twelve month period ended March 31, 1998
- $ 365 - Three month period ended March 31, 1998
e. Represents reduced depreciation expense related to the write-down of
property, plant and equipment.
- $ 1,319 - Twelve month period ended March 31, 1998
- $ 330 - Three month period ended March 31, 1998
16
<PAGE>
f. Represents increased interest expense related to borrowings to fund the
acquisition purchase price.
- $ 7,228 - Twelve month period ended March 31, 1998
- $ 1,807 - Three month period ended March 31, 1998
g. Represents the adjustment to tax expense required to arrive at a pro
forma tax based on the combined, pro forma tax structure.
17
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
No. Exhibit No. Page
- ---- ------------- ------
<S> <C> <C>
2.1 Asset Purchase Agreement, dated as of March 25, 1998, Incorporated
between Monsanto Company and VIS-ORC, Inc. by Reference (1)
2.2 Amendment No. 1 to Asset Purchase Agreement, dated as of Incorporated
May 15, 1998, between Monsanto Company and Vision-Ease by Reference (2)
Lens Azusa, Inc., f/k/a VIS-ORC, Inc.
23.1 Consent of Ernst & Young LLP. 19
99.1 Press Release of BMC Industries, Inc. dated May 18, 1998. Incorporated
by Reference (2)
</TABLE>
- -----------------
(1) Incorporated by reference to the Registrant's Current Report on Form 8-K
dated March 25, 1998 and filed with the Commission on April 3, 1998.
(File No. 1-8467)
(2) Incorporated by reference to the Registrant's Current Report on Form 8-K
dated May 15, 1998 and filed with the Commission on May 29, 1998 (File
No. 1-8467).
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<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-8, No. 33-2613, No. 33-32389 and No. 33-60937) pertaining to the BMC
Industries, Inc. 1984 Omnibus Stock Program and in the Registration Statement
(Form S-8 No. 33-55089) pertaining to the BMC Industries, Inc. 1994 Stock
Incentive Plan and the related Prospectuses of our report dated June 15, 1998,
with respect to the financial statements of the Orcolite business unit of
Monsanto Company for the year ended March 31, 1998 included in this Current
Report (Form 8-K/A) of BMC Industries, Inc.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
July 24, 1998
19
