SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-KA
AMENDMENT TO
FORM 8-K
(Initial Report Date July 30, 1997)
AMENDMENT TO CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Amended Report:
September 29, 1997
PACER TECHNOLOGY
(Exact name of registrant as specified in its charter)
California
(State or other jurisdiction of Incorporation or Organization)
0-8864 77-0080305
Commission File No. IRS Employer
Identification No.
9420 Santa Anita Avenue, Rancho Cucamonga, California 91730
(Address of principal executive office) (Zip Code)
909-987-0550
(Registrant's telephone number, including area code)
<PAGE>
The following items supersede previously submitted information to
the extent such is inconsistent therewith.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
Independent Auditors' Report
Audited Balance Sheet as of June 30, 1997
Audited Statement of Earnings and Retained Earnings for the
year ended June 30, 1997
Audited Statement of Cash Flows for the year ended June 30,
1997
Notes to Financial Statements for the year ended June 30, 1997
(b) Pro Forma Financial Information
Unaudited Pro Forma Combined Balance Financial Information
Unaudited Pro Forma Combined Balance Sheet of Pacer Technology
and Subsidiaries at June 30, 1997
Unaudited Pro Forma Combined Statement of Income of Pacer
Technology and Subsidiaries for the year ended June 30, 1997
Notes to Unaudited Pro Forma Combined Financial Data as of
June 30, 1997
(c) Exhibits:
None
<PAGE>
CALIFORNIA CHEMICAL SPECIALTIES, INC.
Financial Statements
June 30, 1997
(With Independent Auditors' Report Thereon)
INDEPENDENT AUDITORS' REPORT
The Board of Directors
California Chemical Specialties, Inc.:
We have audited the accompanying balance sheet of California
Chemical Specialties, Inc. as of June 30, 1997 and the related
statements of earnings and retained earnings and cash flows for the
year 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 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
California Chemical Specialties, Inc. as of June 30, 1997 and the
results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
August 11, 1997
<PAGE>
CALIFORNIA CHEMICAL SPECIALTIES, INC.
Balance Sheet
June 30, 1997
Assets
Current assets:
Cash $ 293,752
Investments 79,069
Accounts receivable 193,700
Inventories (note 2) 128,946
$ 695,467
=========
Liabilities and Shareholder's Equity
Current liabilities:
Accounts payable and accrued expenses $ 115,894
Unearned revenue 2,855
Total liabilities $ 118,749
Shareholder's equity:
Capital stock, 50,000 shares authorized,
1,000 shares issued $ 1,000
Retained earnings $ 575,718
Total shareholder's equity $ 576,718
Subsequent event (note 4)
$ 695,467
=========
See accompanying notes to financial statements.
<PAGE>
CALIFORNIA CHEMICAL SPECIALTIES, INC.
Statement of Earnings and Retained Earnings
Year ended June 30, 1997
Net sales $ 2,773,145
Cost of sales 1,791,050
Gross profit 982,095
Sales and marketing expenses 29,401
General and administrative expenses 202,922
Earnings from operations 749,772
Other expense - interest 3,944
Earnings before income tax expense 745,828
Income tax expense (note 3) 13,000
Net earnings 732,828
Retained earnings at beginning of year 679,537
Distributions to shareholder (836,647)
Retained earnings at end of year $ 575,718
=========
See accompanying notes to financial statements.
<PAGE>
CALIFORNIA CHEMICAL SPECIALTIES, INC.
Statement of Cash Flows
Year ended June 30, 1997
Cash flows from operating activities:
Net earnings $ 732,828
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Changes in assets and liabilities:
Increase in accounts receivable (100,460)
Increase in inventories (580)
Decrease in accounts payable and
accrued expenses (10,368)
Increase in unearned revenue 2,855
Net cash provided by operating activities 624,275
Cash flows used in financing activities -
distributions to shareholder (836,647)
Net decrease in cash (212,372)
Cash at beginning of year 506,124
Cash at end of year $ 293,752
=========
See accompanying notes to financial statements.
<PAGE>
CALIFORNIA CHEMICAL SPECIALTIES, INC.
Notes to Financial Statements
June 30, 1997
(1) Description of Business and Summary of Significant Accounting
Policies
California Chemical Specialties, Inc. (CCSI or the Company) is
organized as an S Corporation in the State of California.
CCSI is a producer of proprietary sculptured acrylic nail
liquids and powders and related products for the nail care
industry.
Property, Plant and Equipment
All property, plant and equipment have been fully depreciated
and written off prior to July 1, 1996. No Depreciation
expense was recorded for the year ended June 30, 1997.
Inventories
Inventories are stated at the lower of cost (first-in,
first-out) or market (net realizable value).
Investments
Investments consist of an eight-month certificate of deposit
maturing in December 1997.
Revenue Recognition
Revenue is recognized at the time of shipment.
Income Taxes
The Company has elected to be taxed for Federal income tax
purposes as a Subchapter S Corporation under the Internal
Revenue Code. Accordingly, no provision has been made for
Federal income taxes in the accompanying financial statements.
For state tax purposes, the Company is also taxed as an S
Corporation.
<PAGE>
Use of Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect 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.
Fair Value of Financial Instruments
The carrying value of cash and cash equivalents, accounts
receivable, investments, accounts payable and accrued expenses
are measured at cost which approximates their fair value given
their short-term maturities.
(2) Inventories
Inventories are summarized as follows:
Raw materials $ 115,066
Finished goods 13,879
$ 128,946
=======
(3) Income Taxes
The Company has elected to be treated as an S Corporation
under the Internal Revenue Code. As such, the net earnings
and any tax credits of the Company are included in the
personal income tax returns of the Company's shareholders.
Accordingly, no provision has been made for Federal income
taxes. The Company is also taxed as an S Corporation in
California at a statutory tax rate of 1.5% in 1997. State tax
expense amounted to $13,000 for the yar ended June 30, 1997.
Deferred income taxes are immaterial to the Company's
financial statements.
(4) Subsequent Event (Unaudited)
On July 15, 1997, Pacer Technology acquired all the assets of
the Company. The assets purchased primarily consisted of
trade accounts receivable, inventory, and proprietary
formulas. In addition, Pacer Technology assumed the liability
for trade accounts payable as the closing date. The total
purchase price consisted of approximately $2,550,000 cash,
including transaction costs. The acquisition was accounted
for as a purchase.
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial
information presents the pro forma combined Balance Sheet at
June 30, 1997, giving effect to the acquisition of California
Chemical Specialties, Inc. (CCSI) as if the transaction had
been consummated on July 1, 1996. Also presented is the pro
forma combined statement of income for the fiscal year ended
June 30, 1997 as if the transaction had been consummated on
July 1, 1996.
The pro forma data is based on the historical combined
statements of Pacer Technology and CCSI, giving effect to such
acquisition under the purchase method of accounting and the
assumptions and adjustments (which the Company believes to be
reasonable) described in the accompanying notes to unaudited
pro forma combined financial data.
The pro forma data is provided for comparative purposes only.
It does not purport to be indicative of the results that
actually would have occurred if the acquisition of CCSI had
been consummated on the date indicated or that may be obtained
in the future. The unaudited pro forma combined financial
information should be read in conjunction with the notes
thereto.
<PAGE>
PACER TECHNOLOGY AND SUBSIDIARIES
Pro Forma Combined Balance Sheet
(Unaudited)
June 30, 1997
Pro Forma
Historical Adjust. Adjust.
Pacer Technology CCSI Inc.(Dec.) (Ref.) Combined
---------------- --------- ----------- -------- ---------
ASSETS
Current Assets:
Cash $ 294,298 293,752 (293,752) a(i) $ 294,298
Investments - 79,069 (79,069) a(i) -
Trade Receivables 4,719,970 193,700 (12,125) a(ii) 4,901,545
Other Receivables 198,855 - - 198,855
Notes Receivables 248,220 - - 248,220
Inventories 4,347,497 128,946 (38,627) a(ii) 4,437,816
Prepaid Expenses 390,331 - - 390,331
Deferred Income
Taxes 621,804 - - 621,804
---------- --------- ---------- -----------
Total Current Assets 10,820,975 695,467 (423,573) 11,092,869
Equipment and
Leasehold Improve-
ments, Net: 1,444,631 - 29,000 a(iii) 1,473,631
Deferred Income Taxes 60,222 - - 60,222
Cost in Excess of Net
Assets Acquired 1,690,878 - 2,276,592 a(iii) 3,967,470
Other Assets 9,344 - - 9,344
----------- -------- ---------- -----------
Total Assets $ 14,026,051 $ 695,467 $ 1,882,019 $ 16,603,537
=========== ======== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Bank Loan $ 792,000 $ - $ 2,547,853 a(iv) $ 3,339,853
Accounts Payable 2,367,245 115,894 (86,261) a(ii) 2,396,878
Accrued Payroll 386,952 - - 386,952
Accrued Liabilities 1,233,439 2,855 (2,855) a(i) 1,233,439
Current Installment of
Long-Term Debt 262,866 - - 262,866
---------- -------- ---------- ----------
Total Current
Liabilities 5,042,502 118,749 2,458,737 7,619,988
Long-Term Liabilities:
Long-Term Debt 221,202 - - 221,202
Total Liabilities 221,202 - - 221,202
Stockholders' Equity:
Notes Receivable
from Directores (571,030) - - (571,030)
Capital Stock - 1,000 (1,000) a(v) -
Common Stock 8,260,973 - - 8,260,973
Retained Earnings 1,072,404 575,718 (575,718) a(v) 1,072,404
--------- -------- --------- ----------
Total Stockholders'
Equity 8,762,347 576,718 (576,718) 8,762,347
Total Liabilities and Stock-
holders' Equity $ 14,026,051 $ 695,467 $ 1,882,019 $ 16,603,537
=========== ========= ========= ===========
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PACER TECHNOLOGY & SUBSIDIARIES
Pro Forma Combined Statement of Income
(Unaudited)
For Year Ended June 30, 1997
Pro Forma
Historical Adjust. Adjust.
Pacer Technology CCSI Inc. (Dec.) (Ref.) Combined
---------------- ------- ----------- --------- ---------
Net Sales $ 25,677,840 2,773,145 - $ 28,450,985
Cost of Sales 16,520,294 1,791,050 4,140 b(i) 18,315,484
----------- ---------- ------- -----------
Gross Profit 9,157,546 982,095 (4,140) 10,135,501
Selling Expenses 3,548,726 29,401 - 3,578,127
General and Administrative
Expenses 3,046,787 202,922 113,830 b(ii) 3,363,539
---------- --------- -------- ----------
Operating
Income 2,562,033 749,772 (117,970) 3,193,835
Interest Expense
& Other 75,752 3,944 218,750 b(iii) 298,446
--------- -------- --------- ----------
Income Before
Taxes 2,486,281 745,828 (336,720) 2,895,389
Income Taxes 1,268,879 13,000 (171,098) b(iv) 1,452,977
---------- --------- ---------- -----------
Net Income $ 1,217,402 732,828 (507,818) $ 1,442,412
========== ======== ========= ==========
<PAGE>
PACER TECHNOLOGY AND SUBSIDIARIES
Notes to Unaudited Pro Forma Combined Financial Data
June 30, 1997
a. The pro forma combined balance sheet has been prepared to
reflect the acquisition of California Chemical Specialties,
Inc. (CCSI) by Pacer Technology for an aggregate cash purchase
price of $2,547,853.
The pro forma combined balance sheet has been adjusted to
reflect the above as follows:
(i) To eliminate assets and liabilities not acquired.
(ii) To adjust trade receivables, inventories, and accounts
payable balances in to reflect the actual assets and
liabilities acquired.
(iii) To record goodwill related to the acquisition for the
difference between the purchase price and the estimated
fair values of the identified net assets acquired.
A summary of the allocation of the purchase price for
CCSI is as follows:
Purchase price $ 2,547,853
less historical cost of
net assets acquired, as
adjusted for net assets not
acquired. $ 242,261
Excess cost $ 2,305,592
=========
Allocation of excess cost:
Property and equipment $ 29,000
Cost in excess of net assets
acquired ("Goodwill") 2,276,592
$ 2,305,592
=========
(iv) To record the indebtedness related to bank borrowings
utilized to finance the acquisition.
(v) To eliminate the equity of CCSI.
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b. The pro forma combined statements of operations give effect to
the following adjustments:
(i) To record the annual depreciation of fixed assets
acquired.
(ii) To adjust selling, general and administrative expenses
to reflect goodwill amortization from July 1, 1996
with such goodwill of $2,276,592 amortized over 20 years
by use of the straight line method.
(iii) To record the annual interest expense related to the
indebtedness of $2,547,853 to finance the acquisition
of CCSI.
(iv) To adjust income taxe expense to reflect Pacer
Technology's effective income tax rate of 45%.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
PACER TECHNOLOGY
/s/Roberto J. Cavazos, Jr.
Roberto J. Cavazos, Jr.
Chief Financial Officer
Date: September 29, 1997
