<PAGE> 1
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) April 14, 1999
-----------------------
EAGLE-PICHER HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 333-49957-01 13-3989553
- ------------------------------ ---------------- ----------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
250 East Fifth Street, Suite 500, Cincinnati, Ohio 45202
- --------------------------------------------------------------------------------
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code 513-721-7010
------------------------------
(Not Applicable)
- --------------------------------------------------------------------------------
(Former Name Or Former Address, If Changed Since Last Report)
<PAGE> 2
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
Jurisdiction of IRS Employer
Incorporation or Commission File Identification
Name Organization Number Number
---- ------------ ------ ------
<S> <C> <C> <C>
Eagle-Picher Industries, Inc. Ohio 333-49957 31-0268670
Daisy Parts, Inc. Michigan 333-49957-02 38-1406772
Eagle-Picher Development Co., Inc. Delaware 333-49957-03 31-1215706
Eagle-Picher Far East, Inc. Delaware 333-49957-04 31-1235685
Eagle-Picher Fluid Systems, Inc. Michigan 333-49957-05 31-1452637
Eagle-Picher Minerals, Inc. Nevada 333-49957-06 31-1188662
Eagle-Picher Technologies, LLC Delaware 333-49957-09 31-1587660
Hillsdale Tool & Manufacturing Co. Michigan 333-49957-07 38-0946293
Michigan Automotive Research Corp. Michigan 333-49957-08 38-2185909
</TABLE>
2
<PAGE> 3
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On April 14, 1999, Hillsdale Tool & Manufacturing Co. ("Hillsdale"), an
indirectly wholly-owned subsidiary of Eagle-Picher Holdings, Inc. (the
"Company"), acquired all of the outstanding capital stock of Charterhouse
Automotive Group, Inc., a Delaware corporation ("Charterhouse"), the indirect
parent corporation of Carpenter Enterprises Limited, a Michigan corporation
("Carpenter"). The acquisition was made pursuant to a Stock Purchase Agreement
dated April 8, 1999, which was held in escrow until April 14, 1999, and is
effective as of March 1, 1999 for accounting purposes. The total consideration
paid for Charterhouse was approximately $72.0 million, consisting of $37.9
million for the stock of Charterhouse, a $3.1 million payment to the former
president of Carpenter under a phantom stock plan which was triggered by the
transaction, and $31.0 million of existing indebtedness of Carpenter.
Carpenter is a supplier of precision machined components to the
automotive industry. Charterhouse was a holding company whose only asset was the
stock of Charterhouse-Carpenter Holdings, Inc., a Delaware corporation
("Carpenter Holdings"), another holding company whose only asset was the stock
of Carpenter. Immediately following the acquisition, Carpenter Holdings was
dissolved and Charterhouse was merged into Carpenter.
A copy of the press release announcing the completion of this
transaction is attached hereto as Exhibit 99.1 and incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
The Company acquired the capital stock of Charterhouse, however Carpenter is
the only operating entity. Therefore, the results of operations and cash flows
of Carpenter approximate those of Charterhouse and their financial statements
are substantially similar. In addition, the financial statements of Carpenter
represent the business acquired on a proforma basis. Therefore, the financial
information presented herein is that of Carpenter.
(a) Financial Statements of Businesses Acquired
Number Description
------ -----------
F-1 Condensed Statements of Income for the six months ended
December 31, 1998 and 1997.
F-2 Condensed Statements of Cash Flow for the six months ended
December 31, 1998 and 1997
F-3 Condensed Balance Sheet as of December 31, 1998
F-4 Report of Independent Auditors
F-5 Balance Sheet as of June 30, 1998
F-7 Statement of Operations and Retained Earnings for the year
ended June 30, 1998
F-8 Statement of Cash Flows for the year ended June 30, 1998
F-9 Notes to Financial Statements
(b) Pro Forma Financial Information
Number Description
------ -----------
P-1 Pro Forma Condensed Combined Financial Statements-Summary
P-2 Pro Forma Condensed Combined Balance Sheet as of
February 28, 1999
P-3 Notes to Pro Forma Condensed Combined Balance Sheet
P-4 Pro Forma Condensed Combining Statement of Income (Loss)
for the Nine Months Ended November 30, 1998
P-5 Pro Forma Condensed Combining Statement of Income (Loss)
for the three Months Ended February 28, 1998
P-6 Notes to Pro Forma Condensed Combining Statements of Income
(Loss)
(c) Exhibits:
2.1 - Stock Purchase Agreement dated April 8, 1999 between Hillsdale
Tool & Manufacturing Co., Charterhouse Automotive Group, Inc.
and the shareholders of Charterhouse Automotive Group, Inc.
23.1 - Consent of Ernst & Young LLP
99.1 - Press release dated April 14, 1999 announcing the completion of
the acquisition.
3
<PAGE> 4
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 thereunto duly authorized.
EAGLE-PICHER HOLDINGS, INC.
/s/ Carroll D. Curless
-----------------------------------
Carroll D. Curless
Vice President and Controller
DATE May 27, 1999
--------------------
4
<PAGE> 5
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 thereunto duly authorized.
EAGLE-PICHER INDUSTRIES, INC.
/s/ Carroll D. Curless
------------------------------------
Carroll D. Curless
Vice President and Controller
DATE May 27, 1999
-------------------------
5
<PAGE> 6
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 thereunto duly authorized.
DAISY PARTS, INC.
/s/ Gary M. Freytag
----------------------------------
Gary M. Freytag
Vice President and Treasurer
DATE May 27, 1999
---------------------
6
<PAGE> 7
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 thereunto duly authorized.
EAGLE-PICHER DEVELOPMENT COMPANY, INC.
/s/ Gary M. Freytag
--------------------------------
Gary M. Freytag
Vice President and Treasurer
DATE May 27, 1999
------------------------
7
<PAGE> 8
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 thereunto duly authorized.
EAGLE-PICHER FAR EAST, INC.
/s/ Gary M. Freytag
--------------------------------
Gary M. Freytag
Vice President and Treasurer
DATE May 27, 1999
----------------------
8
<PAGE> 9
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 thereunto duly authorized.
EAGLE-PICHER FLUID SYSTEMS, INC.
/s/ Gary M. Freytag
------------------------------
Gary M. Freytag
Treasurer
DATE May 27, 1999
---------------------------
9
<PAGE> 10
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 thereunto duly authorized.
EAGLE-PICHER MINERALS, INC.
/s/ Gary M. Freytag
--------------------------------
Gary M. Freytag
Vice President and Treasurer
DATE May 27, 1999
----------------------
10
<PAGE> 11
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 thereunto duly authorized.
EAGLE-PICHER TECHNOLOGIES, LLC
/s/ William E. Long
--------------------------------
William E. Long
President
DATE May 27, 1999
------------------------
11
<PAGE> 12
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 thereunto duly authorized.
HILLSDALE TOOL & MANUFACTURING CO.
/s/ Gary M. Freytag
----------------------------
Gary M. Freytag
Treasurer
DATE May 27, 1999
-------------------------
12
<PAGE> 13
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 thereunto duly authorized.
MICHIGAN AUTOMOTIVE RESEARCH CORPORATION
/s/ Gary M. Freytag
-----------------------------
Gary M. Freytag
Vice President
DATE May 27, 1999
--------------------------
13
<PAGE> 14
EXHIBIT INDEX
-------------
Exhibit No. Description
----------- -----------
2.1 Stock Purchase Agreement dated April 8, 1999 between Hillsdale
Tool & Manufacturing Co., Charterhouse Automotive Group, Inc.
and the shareholders of Charterhouse Automotive Group, Inc.+
23.1 Consent of Ernst & Young LLP*
99.1 Press release dated April 14, 1999 announcing the completion
of the acquisition.+
*Filed herewith.
+Previously filed.
14
<PAGE> 15
CARPENTER ENTERPRISES, LTD.
CONDENSED STATEMENTS OF INCOME
SIX MONTHS ENDED DECEMBER 31
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER 31,
-----------------------------
1998 1997
---- ----
(in thousands of dollars)
<S> <C> <C>
NET SALES $ 63,510 $ 43,374
-------- --------
OPERATING COSTS AND EXPENSES
Cost of goods sold 54,458 36,989
Selling and administrative 905 671
Depreciation 2,861 2,395
Amortization of intangibles 21 21
Loss on disposal of assets 10 --
-------- --------
58,255 40,076
-------- --------
OPERATING INCOME 5,255 3,298
Interest expense (1,235) (1,453)
Other income (expense) 293 354
-------- --------
INCOME BEFORE TAXES 4,313 2,199
INCOME TAXES 1,549 850
-------- --------
NET INCOME $ 2,764 $ 1,349
======== ========
</TABLE>
F-1
<PAGE> 16
CARPENTER ENTERPRISES, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED DECEMBER 31
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER 31,
----------------------------------------
<S> <C> <C>
1998 1997
------- ------
(in thousands of dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,764 $ 1,349
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 2,928 2,461
Loss on sale of equipment 10 -
Changes in assets and liabilities (2,854) (2,119)
------- -------
Net cash provided by operating activities 2,848 1,691
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (4,409) (3,239)
Other 10 -
------- -------
Net cash used in investing activities (4,399) (3,239)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under revolving credit demand
note agreement 10,947 (1,006)
Issuance of new long-term debt - 3,196
Reduction of long-term debt (6,385) (2,575)
------- -------
Net cash provided by (used in) financing activities 4,562 (385)
------- -------
Increase (decrease) in cash and cash equivalents 3,011 (1,933)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1 1,948
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,012 $ 15
======= =======
</TABLE>
F-2
<PAGE> 17
CARPENTER ENTERPRISES, LTD.
CONDENSED BALANCE SHEET
DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
(in thousands
ASSETS of dollars)
<S> <C>
CURRENT ASSETS
Cash and cash equivalents $ 3,012
Receivables, net 12,076
Inventories 5,293
Prepaid expenses 5,486
Deferred income taxes 81
--------
Total Current Assets 25,948
PROPERTY, PLANT AND EQUIPMENT, NET 37,769
GOODWILL, NET 1,201
OTHER ASSETS 2,029
--------
TOTAL ASSETS $ 66,947
========
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable $ 9,333
Long-term debt - current portion 18,553
Income taxes (317)
Other current liabilities 1,054
--------
Total Current Liabilities 28,623
LONG-TERM DEBT, LESS CURRENT PORTION 16,293
DEFERRED INCOME TAXES 2,782
OTHER LIABILITIES 74
--------
Total Liabilities 47,772
--------
SHAREHOLDER'S EQUITY 19,175
--------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 66,947
========
</TABLE>
F-3
<PAGE> 18
Report of Independent Auditors
Board of Directors
Carpenter Enterprises, Limited
We have audited the accompanying balance sheet of Carpenter Enterprises, Limited
as of June 30, 1998, and the related statements of operations 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
an assessment of 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 Carpenter Enterprises, Limited
at June 30, 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
Detroit, Michigan
August 14, 1998
F-4
<PAGE> 19
Carpenter Enterprises, Limited
Balance Sheet
June 30, 1998
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current assets:
Cash $ 1,245
Accounts receivable:
Trade 9,186,727
Tooling 5,109,385
Other 120,033
-----------
14,416,145
Inventories 3,350,902
Customer tooling in progress 123,794
Prepaid expenses and other assets 327,037
Deferred federal income taxes 81,000
-----------
Total current assets 18,300,123
Property, plant and equipment:
Land and land improvements 859,263
Buildings and building improvements 7,260,096
Machinery, equipment and vehicles 44,324,057
Furniture and fixtures 426,592
Construction in process 5,552,755
-----------
58,422,763
Less accumulated depreciation 22,181,828
-----------
36,240,935
Deferred financing costs, net of accumulated
amortization of $179,476 305,431
Long-term tooling receivable 3,486,475
Goodwill, net of accumulated amortization of $469,536 1,221,563
===========
Total assets $59,554,527
===========
</TABLE>
F-5
<PAGE> 20
<TABLE>
<CAPTION>
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 6,595,465
Current portion of obligation under capital leases 619,912
Revolving credit demand note 335,055
Accounts payable 8,296,933
Accrued liabilities:
Wages and vacations 537,364
Employee benefits 466,874
Property, payroll and other taxes 450,487
Interest 136,985
Income taxes payable to parent company 124,497
-----------
1,716,207
-----------
Total current liabilities 17,563,572
Long-term liabilities:
Deferred federal income taxes 2,782,000
Other 66,546
Long-term debt, less current portion 22,571,309
Capital lease obligations, less current portion 160,458
-----------
25,580,313
Stockholders' equity:
Common stock $.001 par value 10,000 shares
authorized, 945 issued and outstanding 1
Paid-in capital 2,688,774
Retained earnings 13,721,867
-----------
Total stockholders' equity 16,410,642
-----------
Total liabilities and stockholders' equity $59,554,527
===========
</TABLE>
See accompanying notes
F-6
<PAGE> 21
Carpenter Enterprises, Limited
Statement of Operations and Retained Earnings
Year ended June 30, 1998
<TABLE>
<CAPTION>
<S> <C>
Net sales $ 99,771,881
Cost and expenses:
Cost of products sold 88,628,194
Selling, general and administrative expenses 2,244,264
------------
8,899,423
Other income (expense):
Interest income 923,342
Interest expense (3,053,491)
Loss on disposal of equipment (676,958)
Other 53,953
------------
Income before income taxes 6,146,269
Income taxes 2,099,700
------------
Net income 4,046,569
Retained earnings beginning of year 9,675,298
------------
Retained earnings end of year $ 13,721,867
============
</TABLE>
See accompanying notes
F-7
<PAGE> 22
Carpenter Enterprises, Limited
Statement of Cash Flows
Year ended June 30, 1998
<TABLE>
<CAPTION>
<S> <C>
OPERATING ACTIVITIES
Net income $ 4,046,569
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization 5,427,208
Loss on disposal of equipment 676,958
Deferred income taxes 153,000
Changes in operating assets and liabilities:
Accounts receivable (8,519,741)
Inventories (418,774)
Prepaid expenses and other assets (249,782)
Customer tooling in progress 12,672,946
Long-term tooling receivable (3,486,475)
Income taxes payable/receivable 396,700
Accounts payable 571,134
Accrued liabilities 754,471
Other 66,546
------------
Net cash provided by operating activities 12,090,760
INVESTING ACTIVITIES
Proceeds from sale of equipment 550,000
Expenditures for property, plant and equipment (5,216,515)
------------
Net cash used in investing activities (4,666,515)
FINANCING ACTIVITIES
Net payments under revolving credit demand note (5,414,945)
Principal payments of obligations under capital leases (586,274)
Proceeds from borrowings under long-term debt 3,195,546
Payments on long-term debt (6,565,522)
------------
Net cash used in financing activities (9,371,195)
------------
Net decrease in cash (1,946,950)
Cash at beginning of year 1,948,195
============
Cash at end of year $ 1,245
============
</TABLE>
See accompanying notes
F-8
<PAGE> 23
Carpenter Enterprises, Limited
Notes to Financial Statements
June 30, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
OWNERSHIP
Carpenter Enterprises, Limited (the "Company") is a 95 percent owned subsidiary
of Carpenter Holdings, Inc. ("Holdings"), which is a wholly owned subsidiary of
Charterhouse Automotive Group, Inc. ("CAGI").
DESCRIPTION OF BUSINESS
The Company is a supplier of machined castings and assemblies serving the North
American automotive equipment market's power train, steering and suspension
systems.
INVENTORIES
Inventories are stated at the lower of cost, determined using the first-in,
first-out method, or market.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation is computed on
the straight-line method based upon the estimated useful lives of the respective
assets. Depreciation expense was $5,293,870 for the year ended June 30, 1998.
GOODWILL
Goodwill represents the excess purchase price over the fair value of
identifiable net assets acquired and is amortized using the straight-line method
over 40 years.
DEFERRED FINANCING COSTS
Costs incurred in connection with obtaining financing are amortized using the
straight-line method over the term of the related financing.
F-9
<PAGE> 24
Carpenter Enterprises, Limited
Notes to Financial Statements (continued)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECOVERABLE TOOLING COSTS
Tooling costs associated with significant model changes which are not recovered
from the customer upon completion are recorded as tooling receivable. These
receivables are recovered through increased part prices on units shipped on the
related automotive part program. Upon full recovery of the tooling receivable,
the part price is decreased to reflect normal operational pricing levels.
The estimated amount to be recovered within the subsequent twelve months from
the balance sheet date, based upon projected shipping volumes, is classified as
current tooling receivables in the balance sheet, with the balance classified as
long-term.
INCOME TAXES
The operations of the Company are included in the consolidated federal income
tax return of Charterhouse Automotive Group, Inc. On a separate return basis,
the Company provides for federal income taxes currently payable and deferred in
accordance with Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes". Deferred taxes result from depreciation and other less
significant temporary differences between taxable income and income for
financial reporting purposes.
MANAGEMENT ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
F-10
<PAGE> 25
Carpenter Enterprises, Limited
Notes to Financial Statements (continued)
2. INVENTORIES
Inventories consist of the following at June 30, 1998:
<TABLE>
<CAPTION>
1998
----------
<S> <C>
Raw materials $1,836,563
Work in process 119,815
Finished goods 1,394,524
==========
Total $3,350,902
==========
</TABLE>
3. LONG-TERM DEBT
Long-term debt consists of the following at June 30, 1998:
<TABLE>
<CAPTION>
1998
-----------
<S> <C>
Term loans $13,366,774
Subordinated debt, affiliate 2,000,000
Revenue bonds 13,800,000
-----------
Total debt 29,166,774
Less current portion 6,595,465
===========
Long-term portion $22,571,309
===========
</TABLE>
The Company has a financing agreement (the "Agreement") with a lending
institution to borrow $19,400,000 as follows:
- $9,000,000 under a revolving credit demand note at 0.75% above prime
rate (8.75% at June 30, 1998).
- $3,200,000 under term loans at 9.8% with monthly principal and interest
payments of $33,998 and the remaining balances due July 27, 2000.
- $7,200,000 under term loans at 9.55% with monthly principal and interest
payments of $151,350 and the remaining balances due July 27, 2000.
The Company may prepay the borrowings at anytime.
Substantially all of the Company's assets are pledged as collateral for
repayment of borrowings under the Agreement. The Agreement contains various
restrictive covenants, including maintenance of stipulated levels of working
capital, tangible net worth and total debt, and also limits the payment of
dividends. At June 30, 1998 no retained earnings are available for the payment
of dividends.
F-11
<PAGE> 26
Carpenter Enterprises, Limited
Notes to Financial Statements (continued)
3. LONG-TERM DEBT
Effective September 13, 1996, the Company entered into a master demand note with
a lending institution whereby the Company may borrow up to $9,000,000. The loan
is due on the earlier of demand or October 31, 1997 and bears an interest rate
of 1.25 percent above prime. Effective October 31, 1997, the Company entered
into an agreement which converted the master demand note to a $9,000,000 term
loan at 8.75 percent with monthly principal and interest payments of $307,843
and the remaining balance due June 30, 2000.
Subordinated debt consists of borrowings under a loan agreement with a
stockholder of CAGI with interest payable quarterly at 14.4%. The debt is
subordinated to the Agreement and contains similar covenants. The subordinated
debt requires a final principal payment of $2,000,000 on July 31, 1999. This
final payment was made on July 31, 1998 at no penalty to the Company.
Interest paid to the stockholder of CAGI was $523,000 for the year ended June
30, 1998.
The Company has $13,800,000 of Federally Taxable Variable Rate Demand Limited
Obligation Revenue Bonds. The revenue bonds bear a variable interest rate based
on weekly market conditions (5.65% at June 30, 1998) and have mandatory annual
redemptions of $1,700,000 from October 1998 to 2003 and $1,800,000 for 2004 and
2005. These revenue bonds are collateralized by a letter of credit with a
financial institution which bears a fee of 1.5% annually.
Annual maturities of long-term debt are as follows:
Year ending June 30
-------------------
<TABLE>
<CAPTION>
<S> <C>
1999 $ 6,595,465
2000 9,108,569
2001 4,762,740
2002 1,700,000
2003 1,700,000
Thereafter 5,300,000
-----------
Total long-term debt $29,166,774
===========
</TABLE>
F-12
<PAGE> 27
Carpenter Enterprises, Limited
Notes to Financial Statements (continued)
4. PENSION AND PROFIT-SHARING PLAN
The Company maintains a 401(k) plan for all employees. The Company matches a
portion of the employee contributions in addition to discretionary
contributions. Company contributions are fully vested after five years of
service. Company contributions are determined semiannually and amounted to
$289,000 for the year ended June 30, 1998.
The Company also has a discretionary profit-sharing plan covering all employees.
Company contributions are determined and distributed quarterly and amounted to
$1,130,000 for the year ended June 30, 1998.
5. INTEREST COSTS
Interest costs consisted of the following:
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
1998
----------
<S> <C>
Total interest costs incurred $3,611,629
Less amount capitalized:
Tooling 440,474
Fixed assets 117,664
----------
Interest expense $3,053,491
==========
Interest paid $3,537,209
==========
</TABLE>
6. INCOME TAXES
At June 30, 1997, the Company had an alternative minimum tax credit carryforward
of approximately $454,000 which had been recorded as a reduction of deferred
income tax liabilities. This carryforward will be utilized on the June 30, 1998
corporate income tax return.
Income taxes paid to, or on behalf of, CAGI and affiliates aggregated $1,550,000
for the year ended June 30, 1998.
F-13
<PAGE> 28
Carpenter Enterprises, Limited
Notes to Financial Statements (continued)
6. INCOME TAXES (CONTINUED)
The provision for federal income taxes is summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
1998
-----------
<S> <C>
Currently payable $1,946,700
Deferred expense 153,000
----------
$2,099,700
==========
</TABLE>
The provision for federal income taxes differs from that computed at the
statutory corporate as follows:
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
1998
-----------
<S> <C>
Tax expense at statutory rate of 34% $ 2,089,700
Goodwill amortization 14,300
Other (credit) (4,300)
===========
Total $ 2,099,700
===========
</TABLE>
F-14
<PAGE> 29
Carpenter Enterprises, Limited
Notes to Financial Statements (continued)
6. INCOME TAXES (CONTINUED)
Deferred federal income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred federal income tax assets and liabilities
are as follows:
<TABLE>
<CAPTION>
JUNE 30,
1998
----------
<S> <C>
Deferred federal income tax assets:
Vacation pay $ 89,300
Capitalized leases 36,000
----------
Total deferred federal income tax assets 125,300
Deferred federal income tax liabilities:
Depreciation 1,536,500
Purchase accounting adjustments 821,000
Interest capitalized 460,500
Prepaid insurance 8,300
----------
Total deferred federal income tax liabilities 2,826,300
----------
Net deferred federal income tax liability $2,701,000
==========
</TABLE>
7. COMMITMENTS
The Company has agreements with certain employee stockholders which, under
certain events of termination, would allow those stockholders the right to put
their shares to the Company and require the Company to purchase them at a price
equal to book value per share at the time of the put. The agreements and the
Company's commitment will terminate upon certain conditions, including the
effective date of an initial public offering by the Company. At June 30, 1998,
the value of the 45 shares subject to this agreement aggregated $781,384.
The Company has a Phantom Stock Plan with an officer under which, in the event
of sale of the Company, the officer is to receive a payment equal to 10% of the
sales price in excess of the book value of the Company on July 31, 1993, as
defined.
F-15
<PAGE> 30
Carpenter Enterprises, Limited
Notes to Financial Statements (continued)
8. CONCENTRATION OF CREDIT RISK AND FAIR VALUE OF FINANCIAL INSTRUMENTS
At June 30, 1998 substantially all trade accounts receivable are from major
domestic automotive manufacturers. The Company generally does not require
collateral from its customers. Credit losses from automobile manufacturers have
been within management's expectations.
The carrying amount reported in the balance sheet for cash approximates its fair
value. The fair values of the Company's long-term debt, which approximates the
carrying value at June 30, 1998, are estimated using discounted cash flow
analyses, based on the Company's current incremental borrowing rates for similar
types of borrowing arrangements.
9. LEASES
During October 1994, the Company entered into a sale-lease back transaction for
machinery and equipment. The sale-lease back has been accounted for as a capital
lease that extends through October 1999. The Company also leases certain
buildings, machinery and equipment under non-cancelable leases that expire at
various times through 2000.
Machinery and equipment includes the following amounts for leases that have been
capitalized:
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
1998
----------
<S> <C>
Machinery and equipment $3,528,945
Less accumulated amortization 2,532,319
----------
$ 996,626
==========
</TABLE>
Amortization of leased assets included in depreciation expense amounted to
$725,434 for the year ended June 30, 1998.
F-16
<PAGE> 31
Carpenter Enterprises, Limited
Notes to Financial Statements (continued)
9. LEASES (CONTINUED)
Future minimum payments under capital leases and non-cancelable operating leases
with initial terms of one year or more consisted of the following:
<TABLE>
<CAPTION>
CAPITAL OPERATING
YEARS ENDING JUNE 30 LEASES LEASES
----------------------
<S> <C> <C>
1999 $647,822 $191,894
2000 161,956 63,283
2001 -- 21,837
Thereafter -- 9,804
-------- --------
Total minimum lease payments 809,778 $286,818
========
Amounts representing interest 29,408
--------
Present value of net minimum lease payments
(including current portion of $619,912) $780,370
========
</TABLE>
Rent expense aggregated $240,148 for the year ended June 30, 1998.
10. YEAR 2000 COMPLIANCE (UNAUDITED)
The Company is in the process of implementing appropriate action to ensure that
its computer information systems will be able to interpret the calendar year
term "2000". Systems that process transactions based on storing two digits for
the year rather than the full four digits may encounter significant process
inaccuracies and even inoperability in attempting to process year 2000
transactions. The Company does not expect the costs of software to replace
existing year 2000 non-compliant systems to have a material effect on its
financial position or results of operations. Management presently believes that,
with planned modifications to existing software and conversion to new software,
year 2000 compliance will not pose significant operational problems. However, if
such modifications and conversions are not completed on a timely basis, or if
the Company's suppliers have significant unresolved systems problems, there is a
risk that year 2000 compliance could have a material impact on the operations of
the Company.
11. SUBSEQUENT EVENT (UNAUDITED)
On April 8, 1999, CAGI and its shareholders and Hillsdale Tool & Manufacturing
Co. (Hillsdale), a wholly-owned subsidiary of Eagle-Picher Holdings, Inc.
entered into a "Stock Purchase Agreement" whereby Hillsdale would acquire all of
the outstanding capital stock of CAGI.
F-17
<PAGE> 32
Carpenter Enterprises, Limited
Notes to Financial Statements (continued)
11. SUBSEQUENT EVENT (UNAUDITED) (CONTINUED)
The total consideration paid for CAGI was approximately $72.0 million,
consisting of $37.9 million for the stock of CAGI, a $3.1 million payment to the
former president of the Company under a Phantom Stock Plan which was triggered
by the transaction, and $31.0 million of existing indebtedness of the Company.
F-18
<PAGE> 33
EAGLE-PICHER HOLDINGS, INC.
Pro Forma Condensed Combined Financial Statements - Summary
Eagle-Picher Holdings, Inc. ("the Company") consummated its agreement
to purchase the capital stock of Charterhouse on April 14, 1999 ("the
Acquisition"). The total consideration paid was approximately $72.0 million,
consisting of $37.9 million for the stock of Charterhouse, a $3.1 million
payment to the former president of Carpenter under a phantom stock plan and
$31.0 million of existing indebtedness of Carpenter. Approximately $18.6
million of Carpenter's existing debt was repaid in conjunction with the
Acquisition.
The following unaudited pro forma condensed combined balance sheet as
of February 28, 1999 was prepared assuming the sale was consumated as of the
balance sheet date. At this date, Carpenter's indebtedness totaled $34.6
million. The Company's condensed consolidated balance sheet as of February 28,
1999 has been previously reported on Form 10-Q.
The unaudited pro forma condensed combining statements of income have
been prepared as if the acquisition of Carpenter occurred as of December 1, 1997
using the actual amounts of Carpenter debt repaid and corresponding amounts
borrowed on the Company's revolving credit facility. Prior to the Acquisition,
the Company had a previous revolving credit facility with different terms. The
Company also had cash balances in excess of what are considered normal operating
levels. It was assumed for these purposes that the acquisition of Carpenter was
financed by cash and through the previous revolving credit facility.
Eagle-Picher Industries, Inc. was acquired February 24, 1998 by
Granaria Industries B.V. (the "Granaria Acquisition"). The Company was formed
primarily as an acquisition vehicle and its only operating subsidiary is
Eagle-Picher Industries, Inc. As a result of the Granaria Acquisition, the
Company's results for the year ended November 30, 1998 were reported in
Consolidated Statements of Income (Loss) for the nine months ended November 30,
1998 and the three months ended February 28, 1998 because the financial
statements for these periods were not prepared on a comparable basis due to the
implementation of purchase accounting. The pro forma statements of income (loss)
are presented in a similar manner herein.
The pro forma condensed combined financial statements referred to above
do not purport to represent what the Company's financial position or results of
operations actually would have been if the Acquisition, in fact, occurred on the
dates referred to above or to project the Company's results of operations for
any period. These pro forma condensed combined financial statements and the
accompanying notes should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended November 30, 1998.
P-1
<PAGE> 34
EAGLE-PICHER HOLDINGS, INC.
Unaudited Pro Forma Condensed Combined Balance Sheets
as of February 28, 1999
<TABLE>
<CAPTION>
CARPENTER PRO FORMA
ENTERPRISES PRO FORMA COMBINED
ASSETS REPORTED LTD. ADJUSTMENTS COMPANY
- ------ -------- ---- ----------- -------
(in thousands of dollars)
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 10,325 $ 1 $ - $ 10,326
Receivables, net 127,312 18,495 - 145,807
Inventories 94,405 4,983 - 99,388
Prepaid expenses 10,927 5,706 - 16,633
Deferred income taxes 10,851 81 1,346 b 12,278
-------- -------- -------- --------
Total Current Assets 253,820 29,266 1,346 284,432
PROPERTY, PLANT AND EQUIPMENT, NET 246,688 37,368 6,500 b 290,556
EXCESS OF ACQUIRED NET ASSETS OVER COST, NET 224,889 1,193 17,585 b 243,667
OTHER ASSETS 73,483 1,161 (267)b 74,377
-------- -------- -------- --------
TOTAL ASSETS $798,880 $ 68,988 $ 25,164 $893,032
-------- -------- -------- --------
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable $ 47,905 $ 10,982 $ - $ 58,887
Long-term debt - current portion 19,246 19,277 (17,206)a 21,317
Income taxes 2,365 (182) - 2,183
Other current liabilities 72,713 1,204 950 a,b 74,867
-------- -------- -------- --------
Total Current Liabilities 142,229 31,281 (16,256) 157,254
LONG-TERM DEBT, LESS CURRENT PORTION 457,808 15,397 58,587 a 531,792
DEFERRED INCOME TAXES 7,743 2,782 2,275 b 12,800
OTHER LIABILITIES 25,210 86 - 25,296
-------- -------- -------- --------
Total Liabilities 632,990 49,546 44,606 727,142
11 3/4% CUMULATIVE REDEEMABLE
EXCHANGEABLE PREFERRED STOCK 89,881 - - 89,881
SHAREHOLDER'S EQUITY 76,009 19,442 (19,442)c 76,009
-------- -------- -------- --------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $798,880 $ 68,988 $ 25,164 $893,032
======== ======== ======== ========
</TABLE>
P-2
<PAGE> 35
EAGLE-PICHER HOLDINGS, INC.
NOTES TO CONDENSED COMBINED PRO FORMA BALANCE SHEET
As of February 28, 1999
(In thousands of dollars)
Explanations of specific pro forma adjustments are as follows:
(a) Reflects the sources and uses of funds for the Carpenter Acquisition as
follows, assuming the Carpenter Acquisition occurred as of February 28,
1999:
<TABLE>
<CAPTION>
<S> <C>
Sources of Funds:
Revolving credit facility $ 63,584
Accrued liabilities 250
--------
Total sources of funds $ 63,834
========
Uses of Funds:
Common shareholders of Charterhouse $ 37,910
Payment under a phantom stock plan
to the former president of Carpenter 3,146
Repayment of existing Carpenter long-
term debt - current portion 17,206
Repayment of existing Carpenter long-
term debt - long-term portion 4,997
Fees and expenses 575
--------
Total uses of funds $ 63,834
========
In addition, the Company assumed Carpenter debt totaling $12,471,
which was not repaid at the time of closing.
</TABLE>
(b) The purchase price and preliminary adjustments to historical book value
of Carpenter as a result of the Carpenter Acquisition are as follows,
assuming the Acquisition occurred as of February 28, 1998:
<TABLE>
<CAPTION>
<S> <C>
Purchase price:
Estimated value of consideration $ 63,834
Book value of net assets acquired (19,442)
Carpenter debt repaid (22,203)
--------
Purchase price in excess of net assets
acquired $ 22,189
========
Preliminary allocation of purchase price in excess
Of net assets acquired:
Increase in property, plant and equipment to
estimated fair value $ 6,500
Contingent liabilities (700)
Former Carpenter goodwill and other assets
assigned no fair value (1,460)
Deferred taxes (929)
Excess of acquired net assets over cost 18,778
--------
Total $ 22,189
========
</TABLE>
(c) Represents the elimination of the Carpenter common stock, additional
paid-in capital and pre-Acquisition retained earnings.
P-3
<PAGE> 36
EAGLE-PICHER HOLDINGS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENTS OF INCOME (LOSS)
NINE MONTHS ENDED NOVEMBER 30, 1998
<TABLE>
<CAPTION>
REPORTED CARPENTER
NINE MONTHS NINE MONTHS PRO FORMA
ENDED ENDED PRO FORMA COMBINED
NOVEMBER 30, 1998 SEPTEMBER 30, 1998 ADJUSTMENTS COMPANY
----------------- ------------------ ----------- -------
(in thousands of dollars)
<S> <C> <C> <C> <C>
NET SALES $ 645,984 $ 87,344 $ -- $ 733,328
OPERATING COSTS AND EXPENSES
Cost of products sold 502,973 73,494 -- 576,467
Selling and administrative 58,460 1,359 -- 59,819
Management compensation 26,808 -- -- 26,808
Depreciation 29,926 4,302 579 a 34,807
Amortization of intangibles 12,317 32 907 b 13,256
Loss on sale of assets 30 677 -- 707
--------- --------- --------- ---------
630,514 79,864 1,486 711,864
--------- --------- --------- ---------
OPERATING INCOME 15,470 7,480 (1,486) 21,464
Interest expense (36,313) (2,417) (1,743)c (40,473)
Other income (expense) 1,779 802 -- 2,581
--------- --------- --------- ---------
INCOME (LOSS) BEFORE TAXES (19,064) 5,865 (3,229) (16,428)
INCOME TAXES (BENEFIT) (4,700) 1,807 (813)e (3,706)
--------- --------- --------- ---------
NET INCOME $ (14,364) $ 4,058 $ (2,416) $ (12,722)
========= ========= ========= =========
</TABLE>
P-4
<PAGE> 37
EAGLE-PICHER HOLDINGS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENTS OF INCOME (LOSS)
THREE MONTHS ENDED FEBRUARY 28, 1998
<TABLE>
<CAPTION>
REPORTED CARPENTER
THREE MONTHS THREE MONTHS PRO FORMA
ENDED ENDED PRO FORMA COMBINED
FEBRUARY 28, 1998 DECEMBER 30, 1997 ADJUSTMENTS COMPANY
----------------- ----------------- ----------- -------
(in thousands of dollars)
<S> <C> <C> <C> <C>
NET SALES $ 205,842 $ 25,217 $ -- $ 231,059
OPERATING COSTS AND EXPENSES
Cost of products sold 162,796 21,241 -- 184,037
Selling and administrative 17,141 390 -- 17,531
Management compensation 2,056 -- -- 2,056
Depreciation 8,983 1,430 193 a 10,606
Amortization of intangibles 3,839 10 303 b 4,152
--------- --------- --------- ---------
194,815 23,071 496 218,382
--------- --------- --------- ---------
OPERATING INCOME 11,027 2,146 (496) 12,677
Interest expense (6,940) (899) 330 c (7,509)
Other income (expense) 820 255 (700)d 375
--------- --------- --------- ---------
INCOME (LOSS) BEFORE TAXES 4,907 1,502 (866) 5,543
INCOME TAXES (BENEFIT) 807 568 (197)e 1,178
--------- --------- --------- ---------
NET INCOME $ 4,100 $ 934 $ (669) $ 4,365
--------- --------- --------- ---------
</TABLE>
P-5
<PAGE> 38
EAGLE-PICHER HOLDINGS, INC.
NOTES TO PRO FORMA CONDENSED COMBINING STATEMENTS OF INCOME (LOSS)
For the Nine Months Ended November 30, 1998 and
for the Three Months Ended February 28, 1998
(Dollars in thousands)
Explanations of specific pro forma adjustments are as follows:
(a) To reflect the additional depreciation due to the fair value adjustment
to the Carpenter assets of $6,500.
(b) To reflect the difference in the amortization of excess of acquired net
assets over cost of $1,252 on an annual basis compared to Carpenter's
existing goodwill amortization of $42 on an annual basis.
(c) Pro forma interest expense increased $1,743 for the nine months ended
November 30, 1998 and decreased $330 for the three months ended
February 28, 1998 as follows:
<TABLE>
<CAPTION>
Nine months Three months
Ended Ended
November 30, 1998 February 28, 1998
----------------- -----------------
<S> <C> <C>
Interest associated with Carpenter's existing
debt repaid at the time of closing $(1,788) $ (682)
Interest expense on the Company's previous
revolving credit facility - 352
Interest expense on the Company's current
revolving credit facility 3,531 -
------- --------
Interest expense adjustment $ 1,743 $ (330)
======= =======
</TABLE>
(d) To reflect a reduction in interest income on cash balances in the three
months ended February 28, 1998.
(e) To reflect incremental tax benefits.
P-6
<PAGE> 1
Exhibit 23.1
Consent of Independent Auditors
We consent to the use of our report dated August 14, 1998 with respect to the
financial statements of Carpenter Enterprises, Limited, included in the Current
Report on Form 8-K/A dated May 27, 1999, as amended, of Eagle-Picher Holdings,
Inc.
/s/ Ernst & Young LLP
Detroit, Michigan
May 27, 1999
