<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 8-K/A
----------------------------------
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 2, 1996
---------------
DANAHER CORPORATION
----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 1-8089 59-1995548
--------------------- -------------- ----------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1250 24th Street, N.W. Washington, D.C. 20037
------------------------------------------ -----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 202-828-0850
--------------
--------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE>
Item 2. Acquisition of Assets
On July 2, 1996, Danaher Corporation acquired controlling interest (100%
ownership will be completed in 1996) of Acme-Cleveland Corporation. The total
cost of acquisition will be approximately $210 million, inclusive of acquisition
costs. The acquisition will be accounted for as a purchase.
Acme-Cleveland is an Ohio corporation with its principal executive offices
located at 30100 Chagrin Blvd., Suite 100, Pepper Pike, OH 14124-5705. The
following description of the Company's business has been taken from
Acme-Cleveland's 1995 10-K.
Acme-Cleveland has two major business segments: (i) Telecommunication and
Electronic Products and (ii) Precision Products.
The Telecommunication and Electronic Products business segment is
comprised of product businesses that are based largely on applied electronic
technology. Products in this segment are used in the construction, maintenance,
and operation of telecommunication networks, and in industrial process
applications to collect and transmit information regarding the presence,
location, and physical attributes of various objects or materials.
The Precision Products business segment is comprised of product businesses
that are based on, or relate to, precision measurement and analysis and other
technologies having precision needs and requirements. This segment includes
quality assurance products and system, motion and positioning components and
systems, precision gauges, metal and punch form tooling, and specialty gears.
Purchases of quality assurance products and systems and certain motion and
positioning components are typically made as part of capital expenditure
programs and can be deferred; the other products in this segment are usually
purchased used in the course of day-to-day operations, and the purchase of such
items cannot ordinarily be deferred.
Item 7. Exhibits
(a) Attachment 1 contains financial statements of Acme-Cleveland as
specified under Rule 3.05(b)
1. Years ended September 30, 1995, 1994, 1993
2. Three Months Ended March 31, 1996
(b) Attachment 2 contains pro-forma financial statements and explanatory
notes as per Article 11.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
DANAHER CORPORATION
By: /s/ C. Scott Brannan
------------------------
C. Scott Brannan
Vice President and Controller
<PAGE>
<TABLE>
<CAPTION>
Year Ended September 30
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales......................................................... $120,716 $ 77,200 $81,510
Cost of products sold............................................. 71,352 49,921 52,692
-------- -------- -------
Gross profit 49,364 27,279 28,818
Selling, general, and administrative expense...................... 30,282 21,281 19,152
Research and development expense.................................. 3,949 1,945 1,306
Amortization of goodwill and intangibles.......................... 1,210 259 225
-------- -------- -------
35,441 23,485 20,683
-------- -------- -------
Earnings from operations 13,923 3,794 8,135
Other income (expense):
Interest income.................................................. 1,743 986 684
Interest expense................................................. (144) (166) (205)
Other income..................................................... 618 901 1,496
Other expense.................................................... (563) (899) (1,993)
Purchased research and development write-off..................... (5,693) -0- -0-
-------- -------- -------
(4,039) 822 (18)
-------- -------- -------
Earnings from continuing operations before income
taxes, minority interest, extraordinary item, and
cumulative effect of accounting changes 9,884 4,616 8,117
Income taxes...................................................... 6,245 1,989 3,325
Minority interest................................................. 152 (116) -0-
-------- -------- -------
Earnings from continuing operations before
extraordinary item and cumulative
effect of accounting changes 3,791 2,511 4,792
Discontinued operations before extraordinary item and
cumulative effect of accounting changes:
Earnings from operations, net of income taxes.................... 13,985 3,989 438
Net gain on sale (less income taxes of $1,500)................... 24,727 -0- -0-
-------- -------- -------
38,712 3,989 438
Extraordinary item-utilization of tax benefit carryforwards....... -0- -0- 1,900
Cumulative effect of accounting changes:
From continuing operations....................................... -0- 3,389 -0-
From discontinued operations..................................... -0- (33,310) -0-
-------- -------- -------
-0- (29,921) -0-
-------- -------- -------
Net earnings (loss) $ 42,503 $(23,421) $ 7,130
======== ======== =======
Earnings (loss) per common share:
Continuing operations before extraordinary item and
cumulative effect of accounting changes......................... $ .56 $ .35 $ .71
Discontinued operations before extraordinary item and
cumulative effect of accounting changes:
Earnings from operations, net of income taxes................... 2.07 .63 .06
Net gain on sale................................................ 3.67 -0- -0-
-------- -------- -------
5.74 .63 .06
Extraordinary item............................................... -0- -0- .30
Cumulative effect of accounting changes:
From continuing operations...................................... -0- .54 -0-
From discontinued operations.................................... -0- (5.29) -0-
-------- -------- -------
-0- (4.75) -0-
-------- -------- -------
Net earnings (loss) per common share $ 6.30 $ (3.77) $ 1.07
======== ======== =======
</TABLE>
See notes to consolidated financial statements.
20
<PAGE>
<TABLE>
<CAPTION>
Foreign
Currency
Preferred Common Other Pension Translation Retained
Shares Shares Capital Adjustment Adjustments Earnings
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT OCTOBER 1, 1992........................ $ 3,631 $ 6,291 $53,651 $(3,952) $ 343 $ 4,580
Net earnings...................................... 7,130
Cash dividends:
Series A preferred shares, $1.80................. (290)
Common shares, $.41.............................. (2,580)
Foreign currency translation adjustments.......... (1,416)
Pension adjustment................................ (2,565)
------- ------- ------- ------- ------- -------
BALANCE AT SEPTEMBER 30, 1993..................... 3,631 6,291 53,651 (6,517) (1,073) 8,840
Net loss.......................................... (23,421)
Common shares issued under stock
option plan...................................... 9 66
Cash dividends:
Series A preferred shares, $1.80................. (290)
Common shares, $.44.............................. (2,770)
Foreign currency translation adjustments.......... 218
Pension adjustment................................ (4,922)
------- ------- ------- ------- ------- -------
BALANCE AT SEPTEMBER 30, 1994..................... 3,631 6,300 53,717 (11,439) (855) (17,641)
Net earnings...................................... 42,503
Common shares issued under stock
option plan...................................... 105 879
Tax benefit from exercise of stock
options.......................................... 552
Cash dividends:
Series A preferred shares, $1.80................. (290)
Common shares, $.47.............................. (2,967)
Foreign currency translation adjustments.......... 2,703
Pension adjustment................................ 7,703
------- ------- ------- ------- ------- -------
BALANCE AT SEPTEMBER 30, 1995..................... $ 3,631 $ 6,405 $55,148 $(3,736) $ 1,848 $21,605
======= ======= ======= ======= ======= =======
</TABLE>
See notes to consolidated financial statements.
<PAGE>
- --------------------------------------------------------------------------------
Acme-Cleveland Corporation and Subsidiaries
In thousands
<TABLE>
<CAPTION>
Year Ended September 30
1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Earnings from operations before extraordinary item and
cumulative effect of accounting changes:
Continuing ............................................................. $ 3,791 $ 2,511 $ 4,792
Discontinued ........................................................... 38,712 3,989 438
Adjustments to reconcile earnings to net cash provided by operating activities:
Depreciation and amortization .......................................... 4,091 2,884 2,437
(Gain)loss on sale of property, plant, and equipment ................... (287) (265) 119
Purchased research and development write-off ........................... 5,693 -0- -0-
Undistributed loss of minority equity investments ...................... 505 274 404
Deferred income tax .................................................... (10,690) 1,402 109
Gain on sale of subsidiary ............................................. (24,727) -0- -0-
Cash provided by discontinued operations ............................... 560 2,589 4,025
Extraordinary item - utilization of tax benefit carryforwards .......... -0- -0- 1,900
Changes in operating assets and liabilities excluding the effects of
acquisitions and divestitures:
(Increase) decrease in trade receivables ............................... (5,035) (80) (353)
(Increase) decrease in inventories ..................................... (4,619) (3,132) 3,794
(Increase) decrease in other current assets ............................ 242 (350) 489
Increase (decrease) in payable to banks ................................ (232) (492) 425
Increase (decrease) in accounts payable ................................ 1,943 (1,112) (41)
Increase (decrease) in other accrued liabilities ....................... (1,294) 1,559 (1,691)
Increase (decrease) in accrued compensation ............................ 2,067 (1,091) 1,949
Increase (decrease) in income taxes payable ............................ 2,044 284 (301)
Increase (decrease) in postemployment benefits other than pensions ..... (1,515) 54 -0-
Increase (decrease) in unfunded pension costs .......................... 503 (284) (554)
Other, net ............................................................. (1,196) (548) (686)
------- ------- -------
Net cash provided by operating activities 10,556 8,192 17,255
</TABLE>
<PAGE>
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended September 30
1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investing activities
Capital expenditures ..................................................... $ (4,233) $ (2,657) $ (1,873)
Proceeds from sale of property, plant, and equipment ................. 1,031 793 51
Redemption of securities, net ............................................. 208 415 415
Net proceeds from sale of subsidiary ...................................... 38,624 -0- -0-
Acquisitions-net of cash acquired ......................................... (35,816) -0- -0-
Cash used for discontinued operations ..................................... (287) (1,742) (3,361)
-------- -------- --------
Net cash used by investing activities (473) (3,191) (4,768)
Financing activities
Principal payments on long-term debt and notes payable............... (1,611) (282) (250)
Principal borrowings on long - term debt and notes payable ......... 95 97 92
Exercise of stockoptions .................................................. 1,536 75 -0-
Dividends paid ........................................................... (3,257) (3,060) (2,870)
Cash used for discontinued operations ................................. (858) (759) (869)
-------- -------- --------
Net cash used by financing activities (4,095) (3,929) (3,897)
Effect of exchange rate changes on cash ................................... 315 98 (12)
-------- -------- --------
Increase in cash and cash equivalents 6,303 1,170 8,578
Cash and cash equivalents at beginning of year ............................ 38,355 37,185 28,607
-------- -------- --------
Cash and cash equivalents at end of year $ 44,658 $ 38,355 $ 37,185
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
- -------------------------------------------------------------------------------
Acme-Cleveland Corporation and Subsidiaries
In thousands, except share data
<TABLE>
<CAPTION>
September 30
Assets 1995 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets
Cash and cash equivalents ..................................... $ 44,658 $ 38,355
Marketable securities ......................................... -0- 208
Trade receivables less allowance of $602 ($1,063 in 1994) ..... 18,633 14,745
Inventories:
Finished goods .............................................. 5,231 7,550
Work in process ............................................. 8,430 4,581
Raw materials ............................................... 11,855 6,992
-------- --------
Total inventories .......................................... 25,516 19,123
Other current assets .......................................... 814 892
Deferred income taxes ......................................... 6,377 3,613
Net assets of discon tinued operations ........................ -0- 3,324
-------- --------
Total current assets 95,998 80,260
Property, plant, and equipment -- at cost
Land .......................................................... 1,622 2,224
Buildings ..................................................... 13,917 18,728
Machinery and equipment ....................................... 28,500 40,073
-------- --------
44,039 61,025
Less accumulated depreciation ................................. 28,044 45,256
-------- --------
Net property, plant, and equipment 15,995 15,769
Goodwill and intangibles ....................................... 24,456 2,059
Minority equity investments .................................... -0- 505
Other assets ................................................... 3,534 2,834
Deferred income taxes .......................................... 270 4,220
-------- --------
Total assets $140,253 $105,647
======== ========
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
September 30
Liabilities and Shareholders' Equity 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities
Payable to banks................................................................................. $ 1,620 $ 1,634
Current portion of long-term debt................................................................ 306 630
Accounts payable................................................................................. 5,995 3,918
Other accrued expenses........................................................................... 8,857 6,200
Advance payments from customers.................................................................. 238 1,522
Accrued compensation............................................................................. 9,593 9,610
Postemployment benefits other than pensions...................................................... 401 3,567
Other accrued taxes.............................................................................. 1,665 1,686
Income taxes payable............................................................................. 4,470 1,896
Net liabilities of discontinued operations....................................................... 13,140 -0-
-------- --------
Total current liabilities 46,285 30,663
Long-term debt.................................................................................... 687 1,219
Postemployment benefits other than pensions....................................................... 3,431 28,138
Unfunded pension costs............................................................................ 3,857 10,965
Other long-term liabilities....................................................................... 808 754
Deferred income taxes............................................................................. 284 195
Shareholders' equity
Serial Preferred Shares, without par value:
Authorized - 936,285 shares;
issued and outstanding Series A, $1.80
cumulative, convertible 161,374 shares......................................................... 3,631 3,631
Common Shares, par value $1 per share:
Authorized - 10,000,000 shares;
issued and outstanding, excluding
115,056 held in treasury....................................................................... 6,405 6,300
Other capital.................................................................................... 55,148 53,717
Pension adjustment............................................................................... (3,736) (11,439)
Foreign currency translation adjustments......................................................... 1,848 (855)
Retained earnings................................................................................ 21,605 (17,641)
-------- --------
Total shareholders' equity 84,901 33,713
-------- --------
Total liabilities and shareholders' equity $140,253 $105,647
======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
Notes To Consolidated Financial Statements
- --------------------------------------------------------------------------------
Acme-Cleveland Corporation and Subsidiaries
Note A -- Accounting Policies
Acme-Cleveland Corporation and its subsidiaries accounting and reporting
policies conform to generally accepted accounting principles and to industry
practices. Significant accounting policies and practices are described below:
Consolidation -- The consolidated financial statements include the accounts of
the Company and its majority owned subsidiaries. In addition, minority equity
investments in other companies are stated at cost plus the Company's equity in
undistributed earnings. Upon consolidation, all significant intercompany items
are eliminated.
Foreign Currency Translation -- Financial statements for the Company's
subsidiaries outside the United States are translated into U.S. dollars at
year-end exchange rates for assets and liabilities and weighted average exchange
rates for income and expenses. The resulting translation adjustments are
recorded as a separate component of shareholder's equity.
Fair Values of Financial Instruments -- The carrying amount reported in the
balance sheets for cash and cash equivalents approximates their fair value. All
highly liquid investments with a maturity of three months or less when purchased
are considered to be cash equivalents.
Cash Flow Information -- Payments for interest and income taxes were (in
thousands):
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Interest............................... $ 194 $ 332 $ 430
Income Taxes........................... 8,120 1,960 2,980
</TABLE>
Inventories -- Inventories are priced at the lower of cost or market.
Inventories are principally valued on the first-in, first-out (FIFO) method.
Inventories not valued by the FIFO method are valued using the last-in, first-
out (LIFO) method which comprised 9% and 46% of consolidated inventories at
September 30, 1995 and 1994, respectively.
Goodwill and Intangibles -- Goodwill is the difference between the purchase
price and the fair market value of net assets acquired in business combinations
treated as purchases. Goodwill is amortized on a straight-line basis over the
periods benefited, principally 10 to 40 years. The carrying value of goodwill is
assessed for impairment on an ongoing quarterly basis and adjusted when
appropriate. Other acquired intangible assets, to which acquisition cost has
been allocated based on fair market value, include research and development,
customer lists, trade names, assembled workforce, drawings and manuals, and
patents. All other intangibles are amortized on a straight-line basis over the
periods benefited, generally 5 to 20 years. The accumulated amortization of
goodwill and intangibles at September 30, 1995 and 1994 was $2,378,000 and
$1,168,000, respectively.
Other Income -- Other income included a litigation settlement of $1,225,000 in
1993 and gains from sales of assets of $131,000 in 1995 and $202,000 in 1993.
Depreciation -- Depreciation is generally computed using the straight-line
method over the estimated useful lives of assets.
Research and Development Expense -- Research and development expenditures are
charged to continuing operations as incurred. Amounts expensed, portions of
which were included in cost of products sold, were $5,343,000, $3,201,000, and
$2,553,000, in 1995, 1994, and 1993, respectively.
Provision for Warranty Claims -- Estimated warranty costs are provided at the
time of sale of the warranted products.
Income Taxes -- The Company adopted Statement of Financial Accounting Standards
(SFAS) No. 109, "Accounting for Income Taxes," effective October 1, 1993. The
Company has elected not to restate the financial statements of years prior to
1994. This accounting statement requires the use of the liability
<PAGE>
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Acme-Cleveland Corporation and Subsidiaries
method for income taxes rather than the previously used deferred method. Under
the liability method, deferred tax assets and liabilities are determined by the
differences between the financial statement amounts of existing assets and
liabilities and their respective tax bases. These differences are measured using
the current enacted tax rates. Under the deferred method, deferred income taxes
are provided on items recognized in different periods for financial reporting
purposes than for income tax purposes. These differences were measured at the
effective tax rate in the year of origination.
The Company's subsidiaries outside the U.S. compute taxes at rates in effect in
the various countries in which they operate. Earnings of these subsidiaries may
also be subject to additional income and withholding taxes, when they are
distributed as dividends. These additional taxes, net of applicable tax credits,
are accrued currently, except with respect to earnings which are not expected to
be remitted because they are permanently reinvested. Undistributed earnings of
non-U.S. subsidiaries deemed to be permanently reinvested were approximately
$1,800,000 at September 30, 1995.
Net Earnings (Loss) per Common Share - Net earnings per common share are based
on the weighted average number of common shares outstanding during the period,
the dilutive effect of stock options and other common stock equivalents, and, if
dilutive, the assumed conversion of the Series A Preferred Shares. Net loss per
common share is based on the weighted average number of common shares
outstanding after increasing the amount of the loss by the dividend requirements
on the Series A Preferred Shares.
Litigation -- The Company is subject to legal proceedings and claims which have
arisen in the ordinary course of its business that have not been finally
adjudicated. These actions, when ultimately concluded and determined, will not,
in the opinion of management, have a material adverse effect upon the financial
position or results of operations of the Company.
Environmental Costs - Environmental expenditures that relate to current
operations are expensed or capitalized as appropriate. Remediation costs that
relate to an existing condition caused by past operations are accrued when it is
probable that these costs will be incurred and can be reasonably estimated.
Reclassifications -- Certain prior year amounts have been reclassified to
conform with the current year presentation.
Note B -- Discontinued Operations and Sale of Subsidiary Subsequent to Year-End
On November 1, 1994 the Company sold all of the common shares of its
wholly-owned subsidiary. The Cleveland Twist Drill Company (CTD). This sale
resulted in a net gain of $24,727,000, or $3.67 per common share. Under the
terms of the stock purchase agreement, the Purchaser paid $45,200,000 in cash
and assumed substantially all liabilities related to the business. The purchase
agreement provides for the Company to make contingent payments up to 20% of the
purchase price, less a $750,000 deductible, for costs associated with a breach
of any representation or warranty contained in the agreement. The contingency
period ranges between 15 and 24 months subsequent to the sale date. The Company
does not anticipate any material charges related to this contingency. CTD
manufactured cutting tools used in a wide range of industrial, specialty
aerospace, and special tool applications. CTD had operations in the United
States, Mexico, and Canada.
On October 23, 1995, subsequent to year-end, the Company sold all of the common
shares of its wholly-owned second tier subsidiary. The National Acme Company
(National Acme). This sale will result in an estimated net gain of $17,000,000,
or $2.50 per common share; year-end shareholders' equity of $84,901,000
increasing, after recording the gain and related adjustments, to approximately
$105,000,000; and cash increasing to over $50,000,000. Under the terms of the
stock purchase agreement, the
<PAGE>
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Acme-Cleveland Corporation and Subsidiaries
Purchaser paid $9,600,000 in cash and assumed all liabilities related to the
business. The purchase agreement provides for the Company to make contingent
payments up to $3,000,000, less a $300,000 deductible, for costs associated with
a breach of any representation or warranty contained in the agreement. The
contingency period ranges between 18 and 24 months subsequent to the sale date.
The Company does not anticipate any material charges related to this
contingency. National Acme manufactures and sells multiple spindle bar and
chucking machines and related parts and services.
Accounting standards require that the results of a major line of business sold
be condensed and shown separately as a discontinued operation in the
consolidated statements of operations for all reported periods.
The Company's consolidated results prior to such restatement are as follows (in
thousands):
<TABLE>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Net sales............................ $164,117 $176,445 $174,928
======== ======== ========
Earnings before income taxes,
minority interest, extraordinary
item, and cumulative effect of
accounting changes.................. $ 14,858 $ 10,371 $ 10,045
Income taxes (credit)................ (2,766) 3,755 4,815
Minority interest.................... 152 (116) -0-
-------- -------- --------
Earnings before extraordinary
item and cumulative effect of
accounting changes.................. 17,776 6,500 5,230
Extraordinary item................... -0- -0- 1,900
Net gain on sale of subsidiary....... 24,727 -0- -0-
Cumulative effect of
accounting changes.................. -0- (29,921) -0-
-------- -------- --------
Net earnings (loss).................. $ 42,503 $(23,421) $ 7,130
======== ======== ========
Earnings (loss) per
common share........................ $ 6.30 $ (3.77) $ 1.07
======== ======== ========
</TABLE>
Operational results of CTD (for one month in 1995) and National Acme, which are
condensed and shown as discontinued operations in the accompanying consolidated
statements of operations, are as follows (in thousands):
<TABLE>
CTD Results
-----------------------------------
1995 1994 1993
-------- ------- -------
<S> <C> <C> <C>
Net sales............................ $ 5,764 $68,577 $65,777
======== ======= =======
Earnings before
income taxes........................ $ 261 $ 4,708 $ 2,151
Income taxes......................... 120 1,615 1,625
-------- -------- -------
Earnings from discontinued
operations.......................... $ 141 $ 3,093 $ 526
======== ======== =======
Earnings per common share............ $ .02 $ .49 $ .08
======== ======== =======
<CAPTION>
National Acme Results
-----------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Net sales............................ $37,637 $30,668 $27,641
======= ======= =======
Earnings (loss) before
income taxes........................ $ 4,713 $ 1,047 $ (223)
Income taxes (credit) (includes
$10.981 benefit related to
change in valuation allowance
in 1995)............................ (9,131) 151 (135)
------- ------- -------
Earnings (loss) from
discontinued operations............. $13,844 $ 896 $ (88)
======= ======= =======
Earnings (loss) per
common share (includes
$1.63 related to tax
benefits in 1995)................... $ 2.05 $ .14 $ (.02)
======= ======= =======
</TABLE>
Net (liabilities) of National Acme at September 30, 1995 and assets of CTD at
September 30, 1994 were (in thousands):
<TABLE>
1995 1994
-------- --------
<S> <C> <C>
Net receivables...................... $ 5,594 $ 7,793
Net inventories...................... 5,093 4,733
Other current assets................. 50 321
Net property, plant, and equipment... 2,298 17,835
Other assets......................... 169 1,174
Current deferred income taxes........ 2,474 (815)
Other current liabilities............ (9,627) (11,507)
Long-term debt....................... -0- (211)
Postemployment benefits other
than pensions....................... (24,247) (12,004)
Unfunded pension costs............... (6,006) (3,667)
Deferred income taxes................ 11,062 (328)
-------- -------
Net (liabilities) assets............ $(13,140) $ 3,324
======== =======
</TABLE>
At September 30, 1995, shareholders' equity includes a debit of $3,557,000 for
the National Acme pension adjustment. Included in shareholders' equity at
September 30, 1994 is a debit of $3,433,000 for foreign currency translation
adjustments related to CTD and debits of $4,486,000 and $6,283,000 for pension
adjustments related to CTD and National Acme, respectively.
<PAGE>
Notes to Consolidated Financial Statements
- -----------------------------------------------------------------------------
Acme-Cleveland Corporation and Subsidiaries
Note C -- Acquisitions
On November 1, 1994, the Company acquired all of the outstanding shares of
common stock of Ball Screw & Actuators Co., Inc. (BSA) for a cash price of
$6,500,000. Two payments of $750,000 each become payable if certain sales goals
are achieved by BSA in calendar years 1995 and 1996. BSA, located in San Jose,
California, develops, manufactures, and distributes motion and positioning
system components including precision ball screws and nuts, lead screws,
actuators, linear guides, and associated products.
On November 21, 1994, the Company acquired for cash all of the outstanding
shares of common stock of TxPort, Inc. (TxPort) for $26,250,000. TxPort, located
near Huntsville, Alabama, develops, manufactures, and sells digital data access
products that are used to connect high speed digital data equipment.
The BSA and TxPort acquisitions were recorded under the purchase method of
accounting: and accordingly, the results of operations of BSA and TxPort for the
periods from November 1, 1994 and November 21, 1994, respectively, are included
in the accompanying consolidated financial statements. The purchase prices have
been allocated to assets acquired and liabilities assumed based on fair market
value at the dates of acquisition. The fair value of assets acquired and
liabilities assumed, after giving effect to the write-off of certain purchased
research and development, is summarized as follows (in thousands):
<TABLE>
<CAPTION>
BSA TxPort
------- --------
<S> <C> <C>
Current assets ................. $1,661 $7,511
Property, plant, and equipment.. 595 517
Intangibles .................... 850 3,360
Goodwill........................ 5,475 13,823
Current liabilities............. (2,018) (2,594)
Long-term liabilities........... (63) (1,200)
------- --------
$6,500 $21,417
======= ========
</TABLE>
Also on November 21, 1994, the Company acquired for cash the product lines,
assets, and related rights of Phoenix Microsystems, Inc. (Phoenix) located in
Huntsville, Alabama, for $3,000,000. Phoenix manufactures and sells test
instrumentation for the digital telecommunication and data market, primarily for
the telephone operating companies.
In connection with the Company's acquisition of TxPort and Phoenix, certain
research and development projects acquired were determined to have no
alternative future use. Accordingly, $5,693,000 of purchased research and
development was expensed in the first quarter of 1995 as a nonrecurring cost.
BSA is included within the Precision Products segment; TxPort and Phoenix are
included within the Telecommunication and Electronic Products segment.
The following unaudited pro forma financial information for the Company gives
effect to the BSA and TxPort acquisitions as if they had occurred on October 1,
1993. These pro forma results have been prepared for comparative purposes only
and do not purport to be indicative of the results of operations which actually
would have resulted had the acquisitions occurred on the date indicated, or
which may result in the future. The 1995 pro forma information excludes the
write-off of certain purchased research and development of $5,383,000, or $.80
per common share, and includes an additional $181,000, or $.02 per common share,
for TxPort (for two months), and $58,000 or $.01 per common share, for BSA (for
one month). The 1994 pro forma information includes the write-off of certain
purchased research and development of $5,383,000, or $.85 per common share, and
full year earnings of $1,087,000, or $.17 per common share, for TxPort, and
$599,000, or $.10 per common share, for BSA. The 1995 and 1994 pro forma
information includes sales of
<PAGE>
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Acme-Cleveland Corporation and Subsidiaries
$3,358,000 and $16,441,000, respectively, for TxPort and $715,000 and
$7,282,000, respectively, for BSA. The pro forma results follow (in thousands,
except per share data):
<TABLE>
<CAPTION>
Year Ended
September 30
-------------------
1995 1994
-------- --------
<S> <C> <C>
Net Sales ............................. $124,789 $100,923
======== ========
Earnings from continuing operations
before cumulative effect of
accounting changes ................... $ 9,413 $ (1,186)
======== ========
Net earnings (loss) ................... $ 48,125 $(27,118)
======== ========
Per share data:
Earnings from continuing operations
before cumulative effect of
accounting changes .................. $ 1.39 $ (.23)
======== ========
Net earnings (loss) .................. $ 7.13 $ (4.35)
======== ========
</TABLE>
Note D -- Income Taxes
As discussed in Note A, the Company adopted SFAS No. 109, "Accounting for Income
Taxes," as of October 1, 1993. The cumulative effect from the adoption of this
standard increased 1994 earnings from continuing operations by $5,631,000, or
$.89 per common share, and earnings from discontinued operations by $3,369,000,
or $.54 per common share. On October 1, 1993, a valuation allowance of
$20,400,000 was recorded due to the uncertainty of realizing temporary
differences, principally related to deferred compensation and employee benefits,
foreign and certain state and local net operating loss carryforward, capital
loss carryforwards, and foreign tax credit carryforwards.
The components of earnings from continuing operations before income taxes and
minority interest are (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Domestic ......................... $9,106 $4,240 $8,908
Foreign .......................... 778 376 (791)
------ ------ ------
$9,884 $4,616 $8,117
====== ====== ======
</TABLE>
Income taxes from continuing operations before extraordinary item included in
the statements of consolidated operations are as follows (in thousands):
<TABLE>
<CAPTION>
Deferred
Liability Method Method
----------------- ------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Federal:
Current .................... $7,222 $1,600 $1,233
Deferred ................... (2,061) 67 -0-
------ ------ ------
5,161 1,667 1,233
Foreign:
Current .................... 167 204 (40)
Deferred ................... 88 (54) 12
------ ------ ------
255 150 (28)
State and local:
Current .................... 881 300 220
Deferred ................... (52) (128) -0-
------ ------ ------
829 172 220
Charge in lieu of
income taxes ............... -0- -0- 1,900
------ ------ ------
$6,245 $1,989 $3,325
====== ====== ======
</TABLE>
The 1993 provision for income taxes included charges in lieu of federal and
state and local taxes representing taxes which have been provided in the absence
of net operating loss and tax credit carryforwards from prior years. Income tax
benefits resulting from the utilization of carryforwards for financial reporting
purposes in 1993 are presented as an extraordinary item.
For continuing operations, as September 30, 1995, the Company had available for
federal income tax purposes foreign tax credit carryforwards of $215,000 which
expire in 1998 through 2000 and $2,250,000 of net operating loss carryforwards
available at certain foreign subsidiaries of which $306,000 expires in 2000 and
$1,944,000 has no expiration date.
A reconciliation of the statutory federal income tax rate for continuing
operations and the effective rate follows:
<TABLE>
<CAPTION>
Deferred
Liability Method Method
---------------- ------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Statutory federal income
tax rate .................... 34.0% 34.0% 34.0%
Effect of:
Foreign income taxes ........ 2.3 .5 3.0
State income taxes .......... 5.9 2.6 2.2
Goodwill .................... 1.8 1.7 (.4)
Purchased R&D ............... 16.6 -0- -0-
Tax exempt interest ......... (2.2) (.4) -0-
Minority equity investments . 1.7 .1 .8
Change in valuation allowance (2.4) -0- -0-
Other items ................. 5.5 4.6 1.4
----- ----- -----
63.2% 43.1% 41.0%
===== ===== =====
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Acme-Cleveland Corporation and Subsidiaries
For 1993 the provision for deferred income taxes was based on the tax effects of
the differences in the timing of income and expense recognition between
financial reporting purposes and tax reporting purposes. The components of
deferred income tax expense from continuing operations are summarized as follows
(in thousands):
Accelerated depreciation for tax purposes....................... $(16)
Inventory, employee benefits, and other reserves deducted for
tax returns in periods different than for financial reporting
purposes....................................................... 31
Elimination of deferred items due to loss carryforwards......... (3)
----
$ 12
====
Components of the Company's deferred tax assets and liabilities for continuing
operations as of September 30, 1995 and 1994 are as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
------- ------
<S> <C> <C>
Deferred tax assets:
Postretirement health care benefits.............. $ 1,283 $ 906
Pensions......................................... 927 973
Inventory........................................ 1,095 974
Compensation and other related accounts.......... 2,065 1,508
Tax credits and foreign losses not currently
utilizable...................................... 1,265 2,904
State and local temporary differences and
loss carryforwards, net of federal taxes........ 633 582
Other............................................ 3,347 1,761
------- ------
Subtotal........................................ 10,615 9,608
Deferred tax liabilities:
Tax over book depreciation....................... (1,892) (836)
Foreign currency translation..................... (952) (876)
Other............................................ (124) (124)
------- ------
Subtotal........................................ (2,968) (1,836)
Valuation allowance............................... (1,284) (2,923)
------- ------
Net deferred tax asset........................... $ 6,363 $4,849
======= ======
</TABLE>
During 1995, the valuation allowance decreased by $14,149,000, of which
$1,639,000 relates to continuing operations. The reduction in the valuation
allowance resulted in an increase in net earnings from continuing operations of
$235,000, or $.03 per common share, and $10,981,000, or $1.63 per common share,
for discontinued operations. The remainder of the decrease in the valuation
allowance did not impact net earnings and was principally related to expiring
foreign tax credit carryforwards.
Note E -- Credit Agreements and Borrowings Short-Term Borrowings -- The Company
maintained agreements with several foreign banks providing lines of credit in
the amounts of $852,000 and $1,201,000 in 1995 and 1994, respectively. These
agreements are renewable annually or upon periodic review by the lending
institutions.
Long-Term Borrowings -- At September 30, 1995, the Company had a credit
agreement with certain banking institutions which permitted borrowings up to
$12,000,000 through November, 1997. Of such amount, $2,000,000 was for standby
and commercial letters of credit and $1,000,000 was for foreign exchange
transactions. The revolving credit notes permit borrowings at the base lending
rate of the agent bank, or, alternatively at the Company's option, at 1.75%
above an adjusted London Interbank Offered Rate (LIBOR). Such adjustment is
defined in the agreement as the published LIBOR rate increased by the reserve
percentage prescribed by the Board of Governors of the Federal Reserve System,
or any successor. The credit agreement is secured by a first security interest
in all domestic accounts receivable, inventory, and equipment. The agreement
requires, among other terms, minimum amounts, as defined, of working capital and
net worth, and minimum ratios of current assets to current liabilities and total
indebtedness to net worth. There were no cash borrowings against the credit
agreement at September 30, 1995 or 1994. At September 30, 1995 standby letters
of credit of $288,000 were outstanding related to international shipments.
<PAGE>
Notes to Consolidated Financial Statements
- -------------------------------------------------------------------------------
Acme-Cleveland Corporation and Subsidiaries
Long-term debt at September 30 consisted of the following (in thousands):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
7.125% Industrial Revenue
Bonds, annual installments
through 1996 ............................... $ -0- $ 365
7.4% to 8.25% notes and
mortgages, annual installments
through 1999 ............................... 687 854
----- ------
$ 687 $1,219
===== ======
</TABLE>
Annual debt installments are $306,000 in 1996, $301,000 in 1997, $254,000 in
1998, and $132,000 in 1999.
Note F -- Pension and Profit Sharing
The Company has non-contributory defined benefit plans covering certain United
States employees. Plans for salaried employees typically provide pay-related
benefits based on years of service. Plans for hourly and certain salaried
employees provide benefits based on flat-dollar amounts and years of service.
The Company's current policy is to fund these plans in an amount that falls
between the minimum contribution required by ERISA and the maximum tax
deductible contribution. Plan assets include equity, fixed income, and money
market funds, and individually managed fixed income securities.
A summary of the components of net periodic pension cost are as follows (in
thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Service cost-benefits
earned during the period ........... $ 846 $ 1,588 $ 1,420
Interest cost on projected
benefit obligation ................. 3,334 5,191 5,199
Actual return on plan
assets ............................. (4,892) (743) (5,993)
Net amortization and
deferral ........................... 2,491 (4,010) 1,168
------ ------ ------
Net pension cost of
defined benefit plans .............. $ 1,779 $ 2,026 $ 1,794
======= ======= =======
Related to continuing ................ $ 511 $ 468 $ 356
======= ======= =======
Related to discontinued .............. $ 1,268 $ 1,558 $ 1,438
======= ======= =======
</TABLE>
The following table sets forth the funded status and amounts recognized in the
Company's balance sheet for its defined benefit plans at September 30 (in
thousands):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Actuarial present value of:
Vested accumulated benefit
obligation ................................. $ 39,294 $ 63,906
======== ========
Nonvested accumulated
benefit obligation ......................... $ 1,069 $ 3,184
======== ========
Projected benefit obligation ................ $ 41,450 $ 69,152
Fair value of plan assets .................... 32,702 54,175
-------- --------
Excess of projected benefit
obligation over fair value
of plan assets .............................. 8,748 14,977
Unrecognized net asset at
transition to SFAS No. 87, net
of amortization ............................. 175 987
Unrecognized net loss ........................ (6,348) (13,783)
Unrecognized prior service
cost ........................................ (168) (481)
Additional minimum liability ................. 5,825 11,952
-------- --------
Accrued pension cost ......................... $ 8,232 $ 13,652
======== ========
Related to continuing ........................ $ 1,169 $ 1,241
======== ========
Related to discontinued ...................... $ 7,063 $ 12,411
======== ========
</TABLE>
The assumptions used to determine the projected benefit obligation for all
periods presented follow:
<TABLE>
<S> <C>
Discount rate .............................................. 7.75%
Rate of increase in future
compnsation levels ........................................ 4.50%
Long-term rate of return on
plan assets ............................................... 9.00%
</TABLE>
The Company's minimum additional pension liability of $5,825,000 and $11,952,000
consists of intangible assets of $164,000 and $513,000 and reductions of
shareholders' equity of $3,736,000 (net of tax) and $11,439,000 at September 30,
1995 and 1994, respectively. Included in unfunded pension costs is the
additional minimum pension liability of $272,000 and $6,650,000 at September 30,
1995 and 1994, respectively; the remainder is in net liabilities and assets of
discontinued operations. Included in other assets is the intangible asset of
$1,000 and $225,000 at September 30, 1995 and 1994, respectively; the remainder
is in net liabilities and assets of discontinued operations.
<PAGE>
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Acme-Cleveland Corporation and Subsidiaries
The Company has defined contribution retirement plans that cover its eligible
employees. The purpose of these defined contribution plans is generally to
provide additional financial security during retirement by providing employees
with an incentive to make regular savings. The Company matches up to 6% of an
employee's covered compensation in accordance with the formulas set forth in the
plans. Matching contributions to the plans of continuing operations were
$419,000, $272,000 and $234,000 in 1995, 1994, and 1993, respectively. Matching
contributions to the plans of discontinued operations were $131,000, $433,000
and $398,000 in 1995, 1994, and 1993, respectively.
Note G -- Nonpension Postretirement and Postemployment Benefits
In addition to providing pension benefits, the Company provides health care
insurance benefits for certain active eligible and retired employees.
Effective October 1, 1993, the Company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." Under SFAS No. 106,
the Company is required to accrue the estimated cost of retiree benefit payments
other than pensions during employees' active service periods. The Company
previously expensed the cost of these benefits as claims were paid. Costs
charged to continuing operations were $273,000 and to discontinued operations
were $3,595,000 in 1993.
The Company elected to recognize this change in accounting on the immediate
recognition basis. The cumulative effect of adopting SFAS No. 106 was an
increase in accrued postemployment benefits and a decrease in 1994 earnings from
continuing operations of $2,050,000, or $.32 per common share, and from
discontinued operations of $36,364,000, or $5.78 per common share. In addition
to the cumulative effect. the Company's 1995 and 1994 postretirement health
care costs were accounted for under the new method and consisted of the
following components (in thousands):
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Service cost ................................. $ 40 $ 111
Interest cost................................. 1,663 3,296
Net amortization and deferral................. (809) -0-
------ ------
Net periodic postretirement benefit costs..... $ 894 $3,407
====== ======
Related to continuing......................... $ 217 $ 287
====== ======
Related to discontinued....................... $ 677 $3,120
====== ======
</TABLE>
The net amortization and deferral is related to a change in actuarial
assumptions and is amortized over the remaining lives of retirees using the
corridor approach.
The Company continues to fund these benefit costs on a pay-as-you-go basis, with
the retiree in most instances paying a portion of the costs.
Summary information for the Company's plans is as follows at September 30, 1995,
and 1994 (in thousands):
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Accumulated Postretirement
Benefit Obligation (APBO):
Retirees..................................... $20,121 $39,717
Active participants eligible to
receive benefits............................ 399 741
Other active plan participants............... 1,351 3,082
------- -------
APBO......................................... 21,871 43,540
Unamortized gain............................. 7,944 1,129
------- -------
Accrued cost................................. $29,815 $44,669
======= =======
Related to continuing......................... $ 3,485 $ 3,611
======= =======
Related to discontinued....................... $26,330 $41,058
======= =======
</TABLE>
The discount rate used in determining the APBO was 7.75% in 1995 and 1994. The
assumed health care cost trend rate used in measuring the APBO was an average of
11.5% in 1995, declining to an ultimate rate of 6% in 2004 and thereafter. A
1% annual increase in these assumed cost trend rates would increase the
accumulated postretirement benefit obligation at September 30, 1995 by
approximately 4% and the aggregate of the service and interest cost components
of net periodic postretirement benefit cost of 1995 by approximately 4%.
Effective October 1, 1993 the Company adopted SFAS No. 112, "Employers'
Accounting for Post-employment Benefits." This statement establishes
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Acme-Cleveland Corporation and Subsidiaries
financial accounting and reporting for the cost of benefits provided to former
or inactive employees after employment but before retirement. Prior to 1994, the
cost of such benefits was recorded at the time paid. The adoption resulted in a
cumulative effect charge of $192,000 to earnings of continuing operations, or
$.03 per common share, and $315,000 to earnings of discontinued operations, or
$.05 per common share. At September 30, 1995 and 1994, accruals for continuing
operations of $347,000 and $311,000, respectively, were included in
postemployment benefits other than pensions. At September 30, 1995 and 1994,
accruals for discontinued operations of $71,000 and $196,000, respectively were
included in current (liabilities) assets of discontinued operations.
Note H - Company Stock Plans
With the adoption in 1994 of the Acme-Cleveland Corporation Performance and
Equity Incentive Plan (the 1994 Plan) there will be no additional grants of
stock options or stock appreciation rights under the Amended 1985 Employees
Stock Option and Stock Appreciation Rights Plan. The 1994 Plan provides for the
granting of director options, stock options, stock appreciation rights, stock
awards, or cash awards. The number of common shares available for grant of
awards is 1% of the number of common shares outstanding as of the first day of
each fiscal year, plus up to an additional .5% consisting of shares available,
but not granted, in prior years. At September 30, 1995, there were 21,860 shares
available for grant under the 1994 Plan.
Stock Options - The Company may grant nonqualified stock options to directors
and non-qualified or incentive stock options to certain key employees of the
Company. The aggregate number of common shares that may be issued upon exercise
of incentive stock options is 360,000. Directors options granted during 1995
totaled 8,000 shares. No other options were granted during 1995. Summarized
transactions are as follows (in thousands, except per share data):
<TABLE>
<CAPTION>
Number of Exercise Price
Options Range Per Share
--------- ---------------
<S> <C> <C>
Outstanding at
Oct. 1, 1993................................. 436 $5.00 to $17.25
Granted....................................... 8 $10.3125
Exercised..................................... (9) $5.00 to $10.625
Canceled or expired........................... (8) $12.875
---
Outstanding at
Sept. 30, 1994............................... 427 $5.00 to $17.25
Granted....................................... 8 $15.25
Exercised..................................... (105) $5.00 to $14.125
Canceled or expired........................... (14) $5.00 to $17.25
-----
Outstanding at
Sept. 30, 1995............................... 316 $5.00 to $15.25
=====
Exercisable at
Sept. 30, 1995............................... 298
===
</TABLE>
Stock Awards - The Company may grant stock awards to certain key employees. Such
awards may be made in common shares, restricted stock, or stock equivalent
units, and may be subject to certain conditions, restrictions, and risks of
forfeiture, as established by the Board of Directors. Such performance stock
awards will vest 3 years from the date of grant and will be considered earned
upon the achievement of predetermined financial objectives at the end of the
designated three-year period. The value of these awards is charged to expense
over the designated performance period. In 1995, 49,500 performance stock awards
were granted relating to the three-year performance period ending September 30,
1997. Of the 42,500 performance stock awards issued in 1994, 4,000 were canceled
in 1995, leaving 38,500 to cover the performance period ending September 30,
1996.
Note 1 - Capital Stock
Preferred Shares - The Series A Preferred Shares have voting rights on a share-
for-share basis with the common shares, and the right to convert the shares on a
share-for-share basis into common shares at any time. Liquidation preference is
$26 per share. The Company has the right to redeem the shares at a price of $26
per share.
<PAGE>
Notes to Consolidated Financial Statements
- -------------------------------------------------------------------------------
Acme-Cleveland Corporation and Subsidiaries
Reserved Shares -- 631,208 common shares are reserved for issuance under the
Company stock plans and for conversion of the Series A Preferred Shares.
Note J -- Leases
The Company leases certain land, buildings, and equipment which are used in
manufacturing and warehousing operations. Net liabilities of discontinued
operations in 1995 and property, plant, and equipment in 1994 included the
following amounts for capital leases at September 30 (in thousands):
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Land ............................................. $ 98 $ 98
Buildings ........................................ 1,505 1,505
Machinery and equipment .......................... 2,564 2,805
------ ------
4,167 4,408
Less allowances for
depreciation and amortization ................... 3,608 3,725
------ ------
$ 559 $ 683
====== ======
</TABLE>
Future minimum lease payments for continuing operations non-cancelable operating
leases with initial or remaining terms of one year or more consisted of the
following at September 30, 1995 (in thousands):
1996 ...................................................... $1,288
1997 ...................................................... 669
1998 ...................................................... 425
1999 ...................................................... 263
2000 ...................................................... 182
Thereafter ................................................ 9
------
Total minimum lease payments ............................. $2,836
======
Lease amortization is included in depreciation expense. Rental expense for
operating leases charged to continuing operations was $1,793,000, $1,265,000,
and $974,000, in 1995, 1994, and 1993, respectively. Rental expense for
operating leases charged to discontinued operations was $116,000, $383,000, and
$478,000, in 1995, 1994, and 1993, respectively.
Note K -- Business and Geographic
Segment Information
The Company has two business segments under continuing operations:
Telecommunication and Electronic Products and Precision Products. The businesses
in the Telecommunication and Electronic Products segment produce and sell
products used by telephone operating companies, interexchange carriers, Fortune
500 type firms that operate private communication networks, and end-user
customers in the automotive, material handling systems, power generation, and
other industries. Telecommunication products include automated data transmission
analyzers, single and multi-function test equipment, computerized cable test and
data base management systems, digital data access devices, and molded cable
closures and terminals. Electronic products include electronic and photoelectric
sensors, encoders, intelligent laser scanners, and electromechanical limit
switches. The businesses in the Precision Products segment produce and sell
products used in a broad spectrum of industries including aerospace, air
compression, automotive, off road vehicles, power transmission components,
electronics, and medical industries. Such products include quality assurance
products and systems, motion and positioning components and systems, precision
gauges, metal and punch form tooling, and specialty gears.
Identifiable assets are those assets used exclusively in the operation of each
business segment or geographic area. Corporate assets consist primarily of cash
and other investments. Financial information by business segment and geographic
area follows (in thousands):
<PAGE>
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Acme-Cleveland Corporation and Subsidiaries
<TABLE>
<CAPTION>
Business Year Ended September 30
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Net sales
Telecommunications and
electronic products ........ $ 82,940 $ 56,055 $ 58,533
Precision products .......... 37,776 21,145 22,977
-------- -------- --------
$120,716 $ 77,200 $ 81,510
======== ======== ========
Earnings (loss) from
continuing operations
Telecommunications and
electronic products ........ $ 11,752 $ 4,787 $ 8,348
Precision products .......... 5,440 2,717 2,596
Corporate ................... (3,269) (3,710) (2,809)
-------- -------- --------
13,923 3,794 8,135
Net interest ................ 1,599 820 479
Net other ................... 55 2 (497)
Purchased R&D write-off ..... (5,693) -0- -0-
-------- -------- --------
Earnings from continuing
operations before income
taxes, minority, interest,
extraordinary item, and
cumulative effect of
accounting changes ........ $ 9,884 $ 4,616 $ 8,117
======== ======== ========
Identifiable assets
Telecommunications and
electronic products ........ $ 66,374 $ 30,352 $ 23,160
Precision products .......... 26,480 14,771 15,205
Corporate ................... 47,399 32,864 33,278
Discontinued operations ..... -0-/(1)/ 27,660/(2)/ 52,246
-------- -------- --------
$140,253 $105,647 $123,889
======== ======== ========
Depreciation
Telecommunications and
electronic products ........ $ 1,901 $ 1,807 $ 1,162
Precision products .......... 949 788 998
Corporate ................... 31 30 52
Discontinued operations ..... 560 3,187 4,027
-------- -------- --------
$ 3,441 $ 5,812 $ 6,239
======== ======== ========
Capital additions
Telecommunications and
electronic products ........ $ 3,866 $ 1,716 $ 1,128
Precision products .......... 1,144 430 356
Corporate ................... 40 6 30
Discontinued operations ..... 297 2,431 4,187
-------- -------- --------
$ 5,347 $ 4,583 $ 5,701
======== ======== ========
<CAPTION>
Geographic Year Ended September 30
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Net sales
United States
Sales to unaffiliated
customers ................. $106,263 $ 63,705 $ 69,719
Interarea sales ............ 2,093 1,967 1,267
-------- -------- --------
108,356 65,672 70,986
International
Sales to unaffiliated
customers ................. 14,453 13,495 11,791
Interarea sales ............ 2,512 1,816 2,293
-------- -------- --------
16,965 15,311 14,084
Eliminations
Interarea sales ............. (4,605) (3,783) (3,560)
-------- -------- --------
$120,716 $ 77,200 $ 81,510
======== ======== ========
Earnings from continuing
operations before income
taxes, minority interest,
extraordinary item, and
cumulative effect of
accounting changes
United States ............... $ 9,106 $ 4,240 $ 8,908
International ............... 778 376 (791)
-------- -------- --------
$ 9,884 $ 4,616 $ 8,117
======== ======== ========
Identifiable assets
United States ............... $130,522 $ 89,996 $106,337
International ............... 9,731 15,651 17,552
-------- -------- --------
$140,253 $105,647 $123,889
======== ======== ========
</TABLE>
Notes:
(1) Net liabilities of discontinued operations are net of assets of $26,740 at
September 30, 1995.
(2) Amounts are net of liabilities of $28,532 at September 30, 1994.
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
- --------------------------------------------------------------
To the Board of Directors and Shareholders
Acme-Cleveland Corporation
We have audited the accompanying consolidated balance sheets of
Acme-Cleveland Corporation and Subsidiaries as of September 30, 1995 and 1994,
and the related statements of consolidated operations, shareholders' equity, and
cash flows for each of the three years in the period ended September 30, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Acme-Cleveland
Corporation and Subsidiaries at September 30, 1995 and 1994, and the
consolidated results of their operations and cash flows for each of the three
years in the period ended September 30, 1995 in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
Cleveland, Ohio
October 30, 1995
<PAGE>
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
ACME-CLEVELAND CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED OPERATIONS
(in thousands, except per share data)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
March 31 March 31
------------------------------ ------------------------------
1996 1995 1996 1995
-------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
Net Sales $65,744 $56,804 $35,169 $32,113
Cost of products sold 38,859 33,586 20,740 18,595
-------------- --------------- -------------- --------------
Gross profit 26,885 23,218 14,429 13,518
Selling, general and administrative
expense 17,295 14,441 8,398 8,439
Research and development expense 2,421 1,777 1,320 1,052
Amortization of goodwill and intangibles 826 521 469 344
-------------- --------------- -------------- --------------
Operating profit 6,343 6,479 4,242 3,683
Other income (expense)
Interest income 950 1,033 389 545
Interest expense (65) (87) (26) (37)
Other income 512 421 442 188
Other expenses (345) (670) (28) (401)
Purchased research and development
write-off -0- (5,693) -0- -0-
Unsolicited tender offer expenses (1,250) -0- (1,250) -0-
-------------- --------------- -------------- --------------
(198) (4,996) (473) 295
-------------- --------------- -------------- --------------
Earnings from continuing operations
before income taxes 6,145 1,483 3,769 3,978
Income taxes 2,385 2,810 1,450 1,710
-------------- --------------- -------------- --------------
Earnings (loss) from continuing
operations 3,760 (1,327) 2,319 2,268
Discontinued operations:
Earnings from operations,
net of tax benefit of $10,981
for the six months ended
March 31, 1995 -0- 11,668 -0- 387
Gain on sale (less income taxes of
$13,140 and $1,500 for the six months
ended March 31, 1996 and 1995
respectively) 17,025 24,727 -0- -0-
-------------- --------------- -------------- --------------
17,025 36,395 -0- 387
-------------- --------------- -------------- --------------
Net earnings 20,785 $35,068 $2,319 $2,655
============== =============== ============== ==============
Earnings (loss) per common share.
Continuing operations $0.55 ($0.20) $0.34 $0.34
Discontinued operations
Earning from operations, net of taxes -0- 1.75 -0- 0.06
Gain on sale 2.49 3.71 -0- -0-
-------------- --------------- -------------- --------------
2.49 5.46 $0.34 0.06
-------------- --------------- -------------- --------------
Net earnings per common share $3.04 $5.26 -0- $0.40
============== =============== ============== ==============
Number of shares used in computation
of net earnings per common share 6,827 6,666 6,663 8,508
============== =============== ============== ==============
Dividends per share $0.25 $0.23 $0.13 $0.12
============== =============== ============== ==============
</TABLE>
2
<PAGE>
ACME-CLEVELAND CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
March 31 September 30
1996 1996
------------- -------------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents, including restricted cash $ 25,877 $ 44,658
Trade receivables, less allowances of $753
and $802, respectively 23,802 18,633
Inventories:
Finished goods 8,276 5,231
Work in process 9,734 8,430
Raw materials 15,550 11,855
------------- -------------
Total inventories 33,560 25,516
Other current assets 1,044 814
Deferred income taxes 6,600 6,377
------------- -------------
Total current assets 90,883 95,998
Property, plant, and equipment - at cost 47,543 44,039
Less accumulated depreciation 29,388 28,044
------------- -------------
Net property, plant and equipment 18,155 15,995
Goodwill and intangibles 35,376 24,456
Other assets 4,078 3,534
Deferred income taxes 250 270
------------- -------------
Total assets $ 148,742 $ 140,253
============= =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
March 31 September 30
1996 1995
------------- --------------
<S> <C> <C>
Liabilities and Shareholders' Equity
Current liabilities
Payable to banks $1,545 $1,620
Current portion of long-term debt 296 306
Accounts payable 7,550 5,995
Other accrued expenses 11,512 10,760
Accrued compensation 7,509 9,994
Income taxes payable 3,397 4,470
Net liabilities discontinued operations -0- 13,140
------------- --------------
Total current liabilities 31,809 46,285
Long-term debt 524 687
Postemployment benefits other than pensions 3,374 3,431
Undetermined pension costs 3,770 3,857
Other long-term liabilities 1,437 1,092
Shareholders' equity
Series Preferred Shares, without par value:
Authorized - 936,285 shares; issued and
outstanding Series A, $1.80 cumulative,
convertible 161,374 shares, Liquidation
preference $26 per share 3,631 3,631
Common Shares, par value $1 per share:
Authorized - 10,000,000 shares; issued
and outstanding, excluding 115,056
treasury shares 6,425 6,405
Other capital 55,543 55,148
Pension adjustment (179) (3,736)
Foreign currency translation adjustments 1,764 1,848
Retained earnings 40,644 21,605
------------- --------------
Total shareholders' equity 107,828 84,901
------------- --------------
Total liabilities and shareholders' equity $148,742 $140,253
============= ==============
</TABLE>
<PAGE>
ACME-CLEVELAND CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
March 31
------------------------------
1996 1995
------------- ---------------
<S> <C> <C>
Operating activities
Earnings (loss) from operations:
Continuing $3,760 ($1,327)
Discontinued 17,025 36,395
Adjustments to reconcile earnings (loss) to net cash provided by
operating activities:
Depreciation and amortization 2,550 1,963
Cash on sale of property, plant, and equipment (7) (6)
Purchased research and development write-off -0- 5,693
Undistributed earnings of minority equity investments -0- 12
Deferred income tax 87 (10,774)
Gain on sale of subsidiaries (17,025) (24,727)
Cash (used) provided by discontinued operations (100) 416
Changes in current assets and liabilities excluding the effects of
acquisitions and divestitures:
(Increase) decrease in trade receivables (3,188) (2,481)
(Increase) decrease in inventories (6,234) (2,759)
(Increase) decrease in other current assets (213) (86)
Increase (decrease) in payable to banks (51) 190
Increase (decrease) in accounts payable 1,610 1,338
Increase (decrease) in other accrued liabilities (735) 437
Increase (decrease) in accrued compensation (2,487) 580
Increase (decrease) in income taxes payable (1,314) (385)
Increase (decrease) in postemployment benefits
other than pensions (97) 2
Increase (decrease) in unfunded pension costs 342 79
Other, net (888) (387)
---------- ---------
Net cash (used) provided by operating activities (6,965) 4,173
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended
March 31
----------------
1996 1995
-------- ------
<S> <C> <C>
Investing activities
Capital expenditures ($1,436) ($2,947)
Proceeds from sale of property, plant, and equipment 8 9
Purchases of marketable securities, net -0- (46)
Net proceeds from sale of subsidiaries 7,981 41,718
Acquistions - net of cash required (15,719) (35,816)
Cash used for discontinued operations -0- (124)
-------- --------
Net cash (used) provided by investing activities (9,166) 2,794
Financing activities
Principal payments on long-term debt and notes payable (1,378) (1,434)
Principal borrowings on long-term debt and notes payable -0- 28
Exercise of stock options 260 102
Issuance of common stock 155 -0-
Dividends paid (1,746) (1,596)
Cash used for discontinued operations -0- (518)
-------- --------
Net cash used by financing activities (2,709) (3,418)
Effect of exchange rate changes on cash 59 (272)
-------- --------
(Decrease) increase in cash and cash equivalents (18,781) 3,277
Cash and cash equivalents at beginning of period 44,658 38,355
-------- -------
Cash and cash equivalents at end of period $25,877 $41,632
======== =======
</TABLE>
6
<PAGE>
ACME-CLEVELAND CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
Note A - Basis of Presentation
- -----------------------------
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and consistent with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes that would be required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been included and are of a normal and recurring nature. Certain 1995 amounts
were reclassified to conform to the 1996 presentation. Operating results for
the quarter and six months ended March 31, 1996 are not necessarily indicative
of the results that may be expected for the year ended September 30, 1996. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-K for the
year ended September 30, 1995.
Note B - Restricted Cash
- ------------------------
Cash and cash equivalents at March 31, 1996 includes $11.4 million held in a
revocable benefits protection trust; in the event of a change of control, the
trust becomes irrevocable. Trust assets fund certain supplemental pension
benefits to certain employees and provide benefits pursuant to certain other
deferred compensation and executive compensation arrangements.
Note C - Goodwill and Intangibles
- ----------------------------------
Goodwill is the excess of the purchase price over the fair market value of net
assets acquired in business combinations treated as purchases. Goodwill is
amortized on a straight-line basis over the periods benefited, principally 10 to
40 years.
Other acquired intangible assets, to which acquisition cost has been allocated
based on fair market value, include research and development, customer lists,
trade names, assembled workforce, drawings and manuals, and patents. These
intangibles are amortized on a straight-line basis over the periods benefited,
generally 5 to 20 years.
The carrying value of goodwill and intangibles is assessed for impairment on an
ongoing basis and adjusted when appropriate.
Note D - Acquisitions
- ---------------------
On January 24, 1996, the Company acquired all of the common stock of
Dolan-Jenner Industries, Inc., through the purchase of the common stock of its
parent holding company, Dolan-Clarkson Acquisition Corporation (collectively,
Dolan-Jenner) for a cash price of $13.0 million. In a separate transaction, on
January 29, 1996, the Company purchased land and a building from a realty trust
for $2.0 million. Dolan-Jenner, located in Lawrence, Massachusetts, is a
manufacturer of fiber optic photoelectric sensors and controls, measuring and
machine safety devices, as well as fiber optic cable and fiber optic
illumination systems.
On November 21, 1994, the Company acquired all of the common stock of TxPort,
Inc. for a cash price of $26.25 million. TxPort develops, manufactures, and
sells digital data access products that are used to connect high speed digital
data equipment.
7
<PAGE>
ACME-CLEVELAND CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
Also on November 21, 1994, the Company acquired the product lines, assets and
related rights of Phoenix Microsystems, Inc., for a cash price of $3.0 million.
Phoenix manufactures and sells test instrumentation for the digital
telecommunication and data market, primarily for the telephone operating
companies.
On November 1, 1994, the Company acquired all of the common stock of Ball Screws
& Actuators Co., Inc. (BSA) for a cash price of $6.5 million. Two contingent
payments of $.75 million each become payable if certain sales goals are achieved
by BSA in calendar years 1995 and 1996. The goal for 1995 was achieved, and the
payment for that year was made during the second quarter of 1996. BSA develops,
manufactures, and distributes motion and positioning system components including
precision ball screws and nuts, lead screws, actuators, linear guides, and
associated products.
These acquisitions were recorded under the purchase method of accounting; and
accordingly, the results of operations, subsequent to the respective acquisition
dates, were included in the accompanying consolidated financial statements. The
purchase prices have been allocated to assets acquired and liabilities assumed
based on fair market value at the dates of acquisition. Dolan-Jenner, TxPort,
and Phoenix are included within the telecommunication and electronic products
segment; BSA is included within the precision products segment.
The following unaudited pro forma financial information gives effect to the
acquisitions as if they had occurred on October 1, 1994 for Dolan-Jenner and
October 1, 1993 for TxPort (at which date the write-off of certain purchased
research and development is given effect) and BSA. These pro forma results have
been prepared for comparative purposes only and do not purport to be indicative
of the results of operations which actually would have resulted had the
acquisitions occurred on the date indicated, or which may result in the future
(in thousands, except per share data).
<TABLE>
<CAPTION>
Six Months Ended
March 31,
----------------
1996 1995
---- ----
<S> <C> <C>
Net assets $69,573 $67,951
------- -------
Earnings from continuing operations
before unusual items $4,276 $4,301
------ ------
Net earnings $20,501 $40,696
------- -------
Per share data:
Earnings from continuing
operations before unusual items $ .63 $ .65
----- -----
Net earnings $ 3.00 $ 6.11
------ ------
</TABLE>
8
<PAGE>
ACME-CLEVELAND CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31,1996
NOTE E - Write-Off of Certain Purchased Research and Development
- ----------------------------------------------------------------
In connection with the Company's acquisition of TxPort and Phoenix, certain
research and development projects acquired were determined to have no
alternative future use. Accordingly, $5.7 million was expensed in the first
quarter of 1995 ($5.4 million, or $.81 per common share, on an after tax basis).
NOTE F - Unsolicited Tender Offer Expenses
- ------------------------------------------
During 1996, the Company recorded charges of $1.25 million ($.8 million after
taxes, or $.12 per common share)for costs incurred to date associated with an
unsolicited tender offer to acquire the Company. These costs include investment
banking fees, legal fees and public disclosure expenses. The Company expects to
disburse this amount within 1996. While other costs are anticipated in the
future, the timing and amounts are currently indeterminable.
If no transaction is consummated, the maximum investment banking fee consists of
a retainer, which has been incurred, plus quarterly financial advisory fees. If
a transaction is consummated, the maximum amount of fees payable would be
derived by a formula set forth in the contact between the Company and the
investment banking firm. Components of this formula, which incorporates certain
incentives, include the number of shares outstanding and the stock price at the
time such fees become payable in full.
Note G - Shareholder Rights Plan
- --------------------------------
On March 11, 1996, the Board of Directors of the Company declared a dividend
consisting of one Right for each outstanding common share of the Company. The
distribution was credited March 23, 1996 to the shareholders of record on that
date. Following the date on which a public announcement is given that a person
or group of affiliated or associated persons (Acquiring Person) has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the
common shares then outstanding (Share Acquisition Date), each Right entitles the
registered holder (other than an Acquiring Person)to purchase from the Company
one one-hundredth of a Series B Preferred Share at a price of $81.00, subject to
adjustment, or to acquire one common share for an exercise price of $1.00 per
share subject to antidilution adjustments.
The Rights will expire at the close of business on March 23, 2006, unless
earlier redeemed by the Company, at a price of $.05 per Right prior to the Share
Acquisition Date. The description and terms of the Rights are set forth in a
Rights Agreement between the Company and Society National Bank, as Rights Agent,
adopted by the Company on March 11, 1996, and amended by a First Amendment to
Rights Agreement, dated as of March 20, 1996, between the Company and the Rights
Agent.
Note H - Discontinued Operations
- --------------------------------
On October 23, 1995, the Company sold all of the common shares of its
wholly-owned second tier subsidiary, The National Acme Company, resulting in a
gain on the sale of $17.0 million, or $2.49 per common share. The purchase
agreement provides for the Company to make contingent payments up to $3.0
million, less a $.3 million deductible, for costs associated with a breach of
any representation or warranty contained in the agreement. The contingency
period ranges between
9
<PAGE>
ACME-CLEVELAND CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
18 and 24 months subsequent to the sale date. The Company does not anticipate
any material charges related to this contingency.
On November 1, 1994, the Company sold all of the common shares of its
wholly-owned subsidiary, The Cleveland Twist Drill Company, resulting in a gain
on the sale of $24.7 million, or $3.75 per common share. The purchase agreement
provides for the Company to make contingent payments up to 20% of the purchase
price, less a $.75 million deductible, for costs associated with a breach of any
representation or warranty contained in the agreement. The contingency period
ranges between 15 and 24 months subsequent to the sale date. The Company does
not anticipate any material charges related to this contingency.
Note 1 - Subsequent Event - Acquisition
- ---------------------------------------
On April 1, 1996, the Company acquired product lines, assets, and related rights
of Phoenix Data Communication Corporation (Phoenix DataCom) for a cash price of
$2.7 million plus a future contingency payment which is based on 1998 net sales.
Phoenix DataCom products directly serve the wide area networking segment of the
telecommunication industry using frame relay service.
<PAGE>
ATTACHMENT 2
Pro Forma Income Statement
Year Ended December 31, 1995
(amounts in thousands)
<TABLE>
<CAPTION>
Danaher Acme Adjustments Combined
----------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenues $1,486,769 $126,600 $1,613,369
Cost of sales 1,039,622 $74,480 (600) (f) 1,113,502
Selling, general and
administrative expenses 266,890 $39,200 2,700 (g) 308,790
Other -- $0 --
-------------------------- -----------
Total operating expenses 1,306,512 113,680 1,422,292
Operating profit 180,257 12,920 191,077
Interest (income) expense, net 7,198 (5,249) 12,600 (h) 14,549
-------------------------- -----------
Earnings before income taxes 173,059 18,169 176,528
Income taxes 67,293 9,250 (7,700) (i) 68,843
-------------------------- -----------
Net earnings $105,766 $8,919 $107,685
========================== ===========
</TABLE>
<PAGE>
Pro Forma Income Statement
Three Months Ended March 31, 1996
Unaudited
(amounts in thousands)
<TABLE>
<CAPTION>
Adjust-
Danaher Acme ments Combined
-------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenues $409,557 $35,169 $444,726
Cost of sales 285,264 20,740 (150) (f) 305,854
Selling, general and (1,250) (j)
administrative expenses 77,165 11,023 670 (g) 87,608
---------------------------- -------------
Total operating expenses 362,429 31,763 393,462
Operating profit 47,128 3,406 51,264
Interest (income) expense, net 2,983 (363) 3,150 (h) 5,770
---------------------------- -------------
Earnings before income taxes 44,145 3,769 45,494
Income taxes 17,217 1,450 900 (i) 17,767
---------------------------- -------------
Net earnings $ 26,928 $ 2,319 $ 27,727
============================ =============
</TABLE>
<PAGE>
Pro Forma Balance Sheet
As of March 31, 1996
Unaudited
(amounts in thousands)
<TABLE>
<CAPTION>
Adjust-
Danaher Acme ments Combined
------------------------------------------------------------
ASSETS
------
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $15,867 $25,877 $41,744
Accounts receivable, net 250,398 23,802 274,200
Total inventories 206,773 33,560 1,000 (a) 241,333
Prepaid expenses and other
current assets 36,981 7,644 (5,605) (b) 39,020
----------------------------- -------------
Total current assets 510,019 90,883 596,297
Property, plant and equipment 293,438 18,155 311,593
Other assets 83,594 4,328 87,922
Excess of cost over net assets
of acquired companies, net 616,429 35,376 106,777 (c) 758,582
----------------------------- -------------
Total assets $1,503,480 $148,742 $1,754,394
============================= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Notes payable and current
portion of long-term debt $50,065 1,841 $51,906
Accounts payable 96,757 7,550 104,307
Accrued expenses 347,931 22,418 370,349
----------------------------- -------------
Total current liabilities 494,753 31,809 526,562
Other liabilities 227,269 8,581 235,850
Long-term debt 101,680 524 210,000 (d) 312,204
Stockholders' equity:
Common stock 634 6,425 (6,425) (e) 634
Additional paid-in capital 315,931 58,995 (58,995) 315,931
Retained earnings 409,939 40,644 (40,644) (e) 409,939
Cumulative foreign
translation adjustment 2,873 1,764 (1,764) (e) 2,873
Treasury stock (49,599) - (49,599)
----------------------------- -------------
Total stockholders' equity 679,778 107,828 679,778
----------------------------- -------------
Total liabilities and
stockholders' equity $1,503,480 $148,742 $1,754,394
============================= =============
</TABLE>
EXPLANATORY NOTES TO PRO-FORMA FINANCIAL STATEMENTS:
- ----------------------------------------------------
(A) Represents an increase in inventory amounts to fair value, principally the
elimination of LIFO valuation allowances.
(B) Represents elimination of Acme-Cleveland common stock reflected in the
Danaher balance sheet as securities available for sale.
(C) Represents the excess of cost over net assets of Acme-Cleveland
Corporation.
<PAGE>
(D) Represents borrowings necessary to complete the transaction subsequent to
March 31, 1996.
(E) Represents elimination of historical equity balances for Acme-Cleveland.
(F) Represents the effects to the inventory adjustments discussed in item (A)
above and the change in depreciation associated with establishing new
values and useful lives for the acquired fixed assets.
(G) Represents amortization of the excess of cost over net assets of Acme-
Cleveland.
(H) Represents interest associated with the additional borrowings discussed
in item (D) above.
(I) Represents an adjustment to reflect an appropriate effective tax rate.
(J) Represents elimination of costs of tender offer included in Acme-
Cleveland's income statement.
