<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Amendment No. 1 to Form 8-K (Dated December 16, 1998)
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
DECEMBER 9, 1998
- -----------------------------------------------------------------------------
Date of Report (Date of earliest event reported)
QUIXOTE CORPORATION
- -----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE
- -----------------------------------------------------------------------------
(State of Other Jurisdiction of Incorporation)
0-7903 36-2675371
- ----------------------- --------------------------------
(Commission File Number) (IRS Employer Identification No.)
One East Wacker Drive Chicago, Illinois 60601
- ------------------------------------------------- -----------------
(Address of Principal Executive Offices) (Zip Code)
(312) 467-6755
- -----------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired
Audited financial statements of Nu-Metrics, Inc. for the years
ended December 31, 1997 and 1996.
Unaudited condensed financial statements of Nu-Metrics, Inc. for
the nine months ended September 30, 1998 and 1997.
(b) Pro Forma Financial Information
Unaudited Pro Forma Combined Condensed Statements of Operations
for the year ended June 30, 1998 and for the three months ended
September 30, 1998.
Unaudited Pro Forma Combined Condensed Balance Sheet as of
September 30, 1998.
(c) Exhibits
2.1. Stock Purchase Agreement by and among Quixote Corporation
and Nu-Metrics, Inc. and Harry Sampey, Ph.D., Brenda J.
Auer, Christine C. Sampey, Kim A. Sampey, Vicki L. Sampey
and Karen Singo dated as of November 30, 1998 (incorporated
by reference to the identically numbered exhibit to the Form
8-K filed by the registrant on December 16, 1998).
2.2. Press release dated December 11, 1998 (incorporated by
reference reference to the identically numbered exhibit to
the Form 8-K filed by the registrant on December 16, 1998).
23. Consent of Independent Auditors (filed herein).
The financial statements identified in Item 7 and attached hereto are hereby
filed with the Commission in accordance with the above-referenced item.
<PAGE>
(a) Financial Statements of Business Acquired
NU-METRICS, INC.
AUDITED
FINANCIAL STATEMENTS
YEARS ENDED
DECEMBER 31, 1997 AND 1996
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Nu-Metrics, Inc.
University Drive
P.O. Box 518
Uniontown PA 15401
We have audited the accompanying balance sheets of Nu-Metrics, Inc. (an S
corporation) as of December 31, 1997 and 1996, and the related statements of
income, retained earnings, and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to in the first paragraph
present fairly, in all material respects, the financial position of Nu-Metrics,
Inc. as of December 31, 1997 and 1996, and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
/s/ Smith, Lewis, Chess & Company
March 25, 1998
1
<PAGE>
NU-METRICS, INC.
BALANCE SHEET
DECEMBER 31,
ASSETS
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash $1,046,049 $ 596,409
Trade receivables, net 822,819 557,433
Other receivables 5,145 10,020
Inventory 542,116 590,059
Trading investments 183,694 108,603
---------- ----------
TOTAL CURRENT ASSETS 2,599,823 1,862,524
PROPERTY, PLANT AND EQUIPMENT:
Land 87,878 254,501
Land improvements 110,444 110,444
Buildings 936,298 936,298
Furniture and fixtures 293,470 290,188
Machinery and equipment 905,370 816,229
Airplane 466,537 465,451
Vehicles 103,164 62,424
Leasehold improvements 32,388 31,767
---------- ----------
2,935,549 2,967,302
Less: accumulated depreciation (1,223,266) (1,054,315)
---------- ----------
NET PROPERTY, PLANT AND EQUIPMENT 1,712,283 1,912,987
OTHER ASSETS:
Goodwill 5,000 5,000
Loan fees 12,600 17,013
---------- ----------
TOTAL OTHER ASSETS 17,600 22,013
---------- ----------
TOTAL ASSETS $4,329,706 $3,797,524
========== ==========
</TABLE>
The Accompanying Notes are an Integral Part of These Financial Statements.
2
<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CURRENT LIABILITIES:
Trade payables $ 190,063 $ 124,062
Notes payable 45,168 42,226
Mortgages payable 52,279 51,334
Accrued bonuses 44,900 65,100
Accrued expenses 6,129 5,287
---------- ----------
TOTAL CURRENT LIABILITIES 338,539 288,009
LONG-TERM DEBT:
Notes payable 329,658 373,745
Mortgages payable 647,920 700,930
---------- ----------
TOTAL LONG-TERM DEBT 977,578 1,074,675
SHAREHOLDERS' EQUITY:
Capital stock, $1 par value, 2,000,000 shares authorized
366,233 shares issued and outstanding 366,233 366,233
Retained earnings 2,647,356 2,068,607
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 3,013,589 2,434,840
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,329,706 $3,797,524
========== ==========
</TABLE>
The Accompanying Notes are an Integral Part of These Financial Statements.
<PAGE>
NU-METRICS, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1997 1996
---- ----
AMOUNT % AMOUNT %
--------- ---- --------- -----
<S> <C> <C> <C> <C>
INCOME:
Sales, net $5,531,756 100.00 $5,341,191 100.00
DIRECT MANUFACTURING COSTS 1,306,091 23.61 1,178,322 22.06
---------- ------ ---------- ------
4,225,665 76.39 4,162,869 77.94
EXPENSES:
Flight department 165,117 2.99 196,701 3.67
Manufacturing 485,700 8.78 423,873 7.92
Engineering 310,495 5.61 397,469 7.46
Selling 839,574 15.18 785,625 14.72
Administrative 806,123 14.57 833,894 15.60
Freight out 128,311 2.32 127,274 2.38
---------- ------- ---------- -------
TOTAL EXPENSES 2,735,320 49.45 2,764,836 51.75
---------- ------- ---------- -------
1,490,345 26.94 1,398,033 26.19
OTHER INCOME (DEDUCTIONS):
Interest income 27,777 0.50 19,661 0.37
Dividend income 9,749 0.17 3,208 0.06
Miscellaneous income 378 0.01 831 0.02
Bad debts recovered 54 77
Gain (loss) on sale of assets (19,081) (0.34) 1,585 0.03
Unrealized gain on trading securities 4,769 0.09 2,125 0.04
Flight department 286 0.01 14,671 0.27
Interest expense (71,662) (1.30) (73,769) (1.38)
Gain on sale of trading securities 36,134 0.65
---------- --------
TOTAL OTHER INCOME
(DEDUCTIONS) (11,596) (0.21) (31,611) (0.59)
---------- -------- ---------- --------
NET INCOME 1,478,749 26.73 1,366,422 25.60
======= =======
RETAINED EARNINGS-JANUARY 1, 2,068,607 1,352,185
DISTRIBUTIONS (900,000) (650,000)
---------- ----------
RETAINED EARNINGS-DECEMBER 31, $2,647,356 $2,068,607
========== ==========
</TABLE>
The Accompanying Notes are an Integral Part of These Financial Statements.
3
<PAGE>
NU-METRICS, INC.
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,478,749 $1,366,422
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation 168,951 153,748
Amortization 4,413 4,413
Trading investments purchased (143,069) (122,230)
Trading investments sold 107,945 37,859
(Gain) loss on sale of assets 19,081 (1,585)
Unrealized (gain) on trading securities (4,769) (2,125)
(Gain) loss on sale of trading securities (36,134)
(Increase) decrease in:
Trade receivables (264,448) (203,603)
Inventory 47,943 (137,543)
Other receivables 4,875 (7,230)
Increase (decrease) in:
Trade payables 66,001 (9,097)
Accrued expenses (19,358) 59,275
--------- ----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 1,430,180 1,138,304
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash used for additions to building and equipment (134,872) (156,264)
Cash used to purchase land (166,623)
Sale proceeds-real estate 147,542
---------- -----------
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES 12,670 (322,887)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction of other long-term debt (93,210) (90,602)
Dividends paid (900,000) (650,000)
---------- -----------
NET CASH (USED) BY
FINANCING ACTIVITIES (993,210) (740,602)
---------- -----------
NET INCREASE IN CASH 449,640 74,815
CASH AT BEGINNING OF YEAR 596,409 521,594
---------- ----------
CASH AT END OF YEAR $1,046,049 $ 596,409
========== ==========
</TABLE>
The Accompanying Notes are an Integral Part of These Financial Statements.
4
<PAGE>
NU-METRICS, INC.
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $71,662 $73,769
======= =======
Income taxes $ 0 $ 0
======= =======
</TABLE>
DISCLOSURE OF ACCOUNTING POLICY:
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with an initial maturity of three months or
less to be cash equivalents.
The Accompanying Notes are an Integral Part of These Financial Statements.
5
<PAGE>
NU-METRICS, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
This summary of significant accounting policies of Nu-Metrics, Inc.
(the Company) is presented to assist in understanding the Company's
financial statements. The financial statements and notes are
representations of the Company's management, who is responsible for
their integrity and objectivity. These accounting policies conform to
generally accepted accounting principles and have been consistently
applied in the preparation of the financial statements.
BUSINESS ACTIVITY:
The Company manufactures and sells computer measuring instruments to
entities in the highway transportation industry. The Company's
products are marketed on a world-wide basis.
ACCOUNTING BASIS:
The books and records of the Company are maintained on the accrual
basis for financial reporting and income tax purposes. The
accompanying financial statements represent the transactions of the
Company for the years ended December 31, 1997 and 1996, on the accrual
basis.
TRADE RECEIVABLES:
Trade receivables totalled $827,819 and $562,433 at December 31, 1997
and 1996, respectively. An allowance for doubtful accounts of $5,000
was established for the years ended December 31, 1997 and 1996 based
on recent historical experience. Bad debt expense amounted to $8,470
and $13,994 for the years ended December 31, 1997 and 1996,
respectively.
INVENTORIES:
Inventories at December 31, consisted of the following:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Raw materials $327,507 $369,638
Work-in-process 144,405 139,914
Finished goods 70,204 80,507
-------- --------
$542,116 $590,059
======== ========
</TABLE>
Inventories are stated at the lower of cost or market. Cost is
determined by the average cost method.
PROPERTY AND EQUIPMENT:
Property and equipment are recorded at cost. Depreciation for assets
acquired prior to January 1, 1981, is provided on the straight-line
and declining balance methods over the estimated useful lives of the
respective assets. Depreciation for assets acquired after December 31,
1980, is provided under the accelerated cost recovery system (ACRS)
and modified ACRS, whereby recovery of cost is made using
6
<PAGE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
accelerated methods of cost recovery over statutory recovery periods.
Depreciation for assets acquired after December 31, 1992, is provided
using the straight-line method over the following estimated useful
lives:
<TABLE>
<CAPTION>
YEARS
--------
<S> <C>
Buildings and improvements 40
Office furniture and equipment 7
Computer equipment 5
Warehouse equipment 10
Automobiles 3
Other vehicles 5 to 7
Other assets 7 to 10
</TABLE>
RESEARCH AND DEVELOPMENT:
Research and development expenses are expensed as incurred.
LOAN FEES:
Loan fees are amortized on the straight-line basis over the loan term.
CORPORATE STATUS:
The Company, with the consent of its shareholders, has elected under
the Internal Revenue Code to be an S corporation. In lieu of
corporation income taxes, the shareholders of an S corporation are
taxed on their proportionate share of the Company's taxable income.
Therefore, no income tax expense or liability for federal and state
income taxes has been included in these financial statements.
USE OF ESTIMATES:
The presentation of financial statements under generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities,
revenue and expenses. Actual results could differ from those
estimates.
2. TRADING INVESTMENTS:
Trading investments at December 31, consist of marketable equity
securities. The investments are carried at fair market value and
aggregate unrealized gains are as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Aggregate fair market value $183,694 $108,603
Aggregate cost 176,800 106,478
-------- --------
Unrealized gain 6,894 2,125
Less gain previously recorded (2,125) 0
-------- --------
$ 4,769 $ 2,125
======== ========
</TABLE>
The 1997 and 1996 unrealized gains of $4,769 and $2,125 have been
included in earnings under "OTHER INCOME (DEDUCTIONS)."
7
<PAGE>
3. LONG-TERM DEBT:
Long-term debt at December 31, consisted of the following:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
$826,000 construction note payable to bank. This note was obtained
to finance the construction of a new facility which, effective
January, 1995, houses all Company manufacturing and administrative
operations. The note bears interest at prime plus .25%, and
repayment is as follows:
1) $460,000 on the date pre-approved loan proceeds
of a like amount are received from the Pennsylvania
Industrial Development Authority (PIDA) and
2) $366,000 via 180 monthly principal payments of $2,033.33 plus
interest at prime plus .25%, beginning August 1, 1995 and
continuing through June 1, 2010. Note is secured by the real
estate and the personal guarantee of
the Company shareholder. $ 305,718 $ 330,449
The PIDA loan funds described in (1) above were received by the
Company on June 16, 1995. This loan bears interest at 2% and is
repayable in 180 monthly installments of $2,960 through July,
2010. Note is secured by a $366,000 first mortgage shared with the
bank described in (2) above, and a $94,000 second mortgage. 394,481 421,816
Under amended terms (effective 11/15/95) requiring seventy-six
(76) monthly installments of $4,761.90, including interest at
prime plus 1/4%, through March, 2002. Note is secured
by the Company aircraft. 332,967 359,530
$75,000 installment note payable to Business
Development Council. Note is repayable in
sixty (60) monthly installments of $1,381,
including interest at 4%, through August,
2000. Note is secured by machinery and
equipment. 41,859 56,440
---------- ----------
1,075,025 1,168,235
Less current portion 97,447 93,560
---------- ----------
Total long-term debt $ 977,578 $1,074,675
========== ==========
</TABLE>
8
<PAGE>
3. LONG-TERM DEBT (continued):
Maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------
<S> <C>
1998 $ 97,447
1999 101,279
2000 99,829
2001 92,669
2002 96,684
Thereafter 587,117
----------
$1,075,025
==========
</TABLE>
4. INCOME TAXES:
As of September 30, 1991, a loss carry forward of $35,586 was
available to offset future federal taxable income of Sampey
Scientific, Ltd.
However, with election of Subchapter S, (effective October 1, 1991)
the loss carry forward is suspended for a period of fifteen years and
can only be used if the Company reverts back to a "C" corporation.
5. CONCENTRATION OF CREDIT RISK:
a) Bank Deposits
The Company maintains its cash in bank deposit accounts at
high quality financial institutions. The balances, at times,
may exceed federally insured limits. At December 31, 1997 and
1996, the Company exceeded the insured limit by approximately
$754,799 and $496,079, respectively.
b) Geographic Areas of Operations:
Approximately 18% of the Company's sales were to customers
located outside of the United States. The Company also engages
foreign vendors to perform various manufacturing and assembly
functions. $162,323 was paid to these suppliers during 1997.
6. ADVERTISING COSTS:
Nondirect response advertising is expensed as incurred, rather than
when the first advertising takes place. The total advertising cost
expensed was $345,330 and $327,619 for the years ended December 31,
1997 and 1996, respectively.
7. PROFIT SHARING PLAN:
The Company established a profit sharing plan (with 401(k) element) in
1997 which is funded through employee pre-tax contributions and
Company matching contributions. Plan eligibility requirements include
completion of six-months of service, including service performed prior
to plan adoption. Company matching contributions are at the rate of
50% of the individual employee's first 4% contributed. Company
matching contributions are 100% vested after the completion of three
years of service.
9
<PAGE>
NU-METRICS, INC.
UNAUDITED
FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 AND 1997
<PAGE>
Nu-Metrics, Inc.
University Drive, P.O. Box 518
Uniontown PA 15401
We have compiled the accompanying balance sheets of Nu-Metrics, Inc. (an S
corporation) as of September 30, 1998 and 1997, and the related statements of
income and retained earnings, and cash flows for the nine months then ended, and
the accompanying supplementary information contained in Schedules I through
XIII, which is presented only for supplementary analysis purposes, in accordance
with Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting, in the form of financial statements and
supplementary schedules, information that is the representation of management.
We have not audited or reviewed the accompanying financial statements and
supplementary schedules and, accordingly, do not express an opinion or any other
form of assurance on them.
Management has elected to omit substantially all of the disclosures required by
generally accepted accounting principles. If the omitted disclosures were
included in the financial statements, they might influence the user's
conclusions about the Company's financial position, results of operations, and
cash flows. Accordingly, these financial statements are not designed for those
who are not informed about such matters.
The Company, with the consent of its shareholders, has elected under the
Internal Revenue Code and appropriate state regulations to be an S corporation.
In lieu of corporate income taxes, the shareholders of an S corporation are
taxed on their proportionate share of the Company's taxable income. Therefore,
no provision or liability for federal and state income taxes has been included
in these financial statements.
/s/ Smith, Lewis, Chess & Company
October 22, 1998
1
<PAGE>
NU-METRICS, INC.
BALANCE SHEET
SEPTEMBER 30,
ASSETS
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash $1,880,976 $ 769,767
Trade receivables, net 742,332 555,317
Other receivables 5,520 4,770
Inventory 888,801 524,881
---------- ----------
TOTAL CURRENT ASSETS 3,517,629 1,854,735
PROPERTY, PLANT AND EQUIPMENT:
Land and improvements 206,850 198,321
Buildings-hangar 944,798 936,298
Furniture and fixtures 190,240 293,470
Machinery and equipment 378,879 842,716
Airplane 466,538 466,538
Vehicles 111,915 103,164
Leasehold improvements 32,388 32,388
Construction in progress 182,182
---------- ----------
2,513,790 2,872,895
Less: accumulated depreciation (701,893) (1,176,835)
----------- ---------
NET PROPERTY, PLANT AND EQUIPMENT 1,811,897 1,696,060
OTHER ASSETS:
Goodwill 5,000 5,000
Investments 129,007 257,818
Loan fees 11,020 13,702
---------- ----------
TOTAL OTHER ASSETS 145,027 276,520
---------- ----------
TOTAL ASSETS $5,474,553 $3,827,315
========== ==========
</TABLE>
See Accountant's Report.
2
<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
CURRENT LIABILITIES
Trade payables $ 90,461 $ 98,285
Notes payable 93,286 40,939
Mortgage payable 73,087 51,849
Accrued expenses 15,164 3,162
Line of credit 144,000
---------- ---------
TOTAL CURRENT LIABILITIES 415,998 194,235
LONG-TERM DEBT:
Notes payable 238,737 343,056
Mortgage note payable 845,377 661,463
---------- ----------
TOTAL LONG-TERM DEBT 1,084,114 1,004,519
SHAREHOLDERS' EQUITY:
Capital stock, $1 par value, 2,000,000 shares authorized,
366,233 shares issued and outstanding 366,233 366,233
Retained earnings 3,608,208 2,262,328
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 3,974,441 2,628,561
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,474,553 $3,827,315
========== ==========
</TABLE>
See Accountant's Report.
<PAGE>
NU-METRICS, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
1998 1997
AMOUNT % AMOUNT %
------ - ------ -
<S> <C> <C> <C> <C>
INCOME:
Sales, net $5,811,244 100.00 $4,060,083 100.00
DIRECT MANUFACTURING COSTS 1,309,654 22.54 922,988 22.73
---------- ------- ---------- -------
4,501,590 77.46 3,137,095 77.27
EXPENSES:
Flight department 136,466 2.35 126,656 3.11
Manufacturing 552,837 9.51 320,823 7.91
Engineering 293,388 5.04 257,631 6.34
Selling 688,035 11.85 639,194 15.75
Administrative 682,186 11.73 579,350 14.29
Freight out 99,114 1.71 92,101 2.27
---------- ------- ---------- -------
TOTAL EXPENSES 2,452,026 42.19 2,015,755 49.67
---------- ------- ---------- -------
2,049,564 35.27 1,121,340 27.60
OTHER INCOME (DEDUCTIONS):
Interest income 20,647 0.35 17,985 0.44
Dividend income 3,255 0.05 2,963 0.07
Miscellaneous income 1,144 0.02 290 0.01
Bad debts recovered 47
(Loss) on sale of assets (8,414) (0.14) (19,081) (0.47)
Unrealized gain (loss) on investments (2,286) (0.04) 20,868 0.51
Flight department 286 0.01
Interest expense (53,058) (0.91) (50,977) (1.26)
----------- --------- ----------- --------
TOTAL OTHER INCOME
(DEDUCTIONS) (38,712) (0.67) (27,619) (0.69)
----------- --------- ----------- --------
NET INCOME 2,010,852 34.60 1,093,721 26.91
======= =======
RETAINED EARNINGS-JANUARY 1, 2,647,356 2,068,607
DISTRIBUTIONS (1,050,000) (900,000)
---------- -----------
RETAINED EARNINGS-SEPTEMBER 30, $3,608,208 $2,262,328
========== ==========
</TABLE>
See Accountant's Report.
3
<PAGE>
NU-METRICS, INC.
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $2,010,852 $1,093,721
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation 138,125 122,520
Amortization 3,330 3,311
Reinvested dividends (2,437)
Loss on sale of assets 8,414 19,081
Reinvested dividends (2,385)
Unrealized (gain) loss on investments 2,286 (20,868)
(Increase) decrease in:
Trade receivables 80,513 2,116
Inventory (346,685) 65,178
Other receivables (375) 5,250
Increase (decrease) in:
Trade payables (99,602) (25,780)
Accrued expenses (35,865) (66,285)
----------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,758,556 1,195,859
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash used to purchase fixed assets (64,347) (72,217)
Cash used to purchase investments (126,898)
Sale proceeds-real estate 147,542
Sale proceeds-investments 55,188
Cash expended on construction in progress (182,182)
----------- ---------
NET CASH (USED) BY INVESTING ACTIVITIES (191,341) (51,573)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash borrowed-line of credit 144,000
Cash borrowed-building addition 225,000
Reduction of long-term debt (49,538) (70,928)
Dividends paid (1,050,000) (900,000)
Cash expended-loan fees (1,750)
----------- ---------
NET CASH (USED) BY FINANCING ACTIVITIES (732,288) (970,928)
----------- ----------
NET INCREASE IN CASH 834,927 173,358
CASH AT BEGINNING OF PERIOD 1,046,049 596,409
---------- ---------
CASH AT END OF PERIOD $1,880,976 $ 769,767
========== =========
</TABLE>
See Accountant's Report.
4
<PAGE>
NU-METRICS, INC.
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 45,415 $50,977
======== =======
NON-CASH FINANCING AND INVESTING ACTIVITIES:
1) Reinvested dividend $ 2,437
========
2) Obsolete assets abandoned
Cost $668,287
Accumulated depreciation 659,498
--------
Loss on abandonment $ 8,789
========
</TABLE>
DISCLOSURE OF ACCOUNTING POLICY:
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with an initial maturity of three
months or less to be cash equivalents.
See Accountant's Report.
5
<PAGE>
(b) PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma combined condensed statements of operations
for the year ended June 30, 1998 and for the three months ended September 30,
1998 and the unaudited pro forma combined condensed balance sheet as of
September 30, 1998, gives effect to the purchase of Nu-Metrics, Inc.
On December 9, 1998, Quixote Corporation ("Quixote") purchased all of the
outstanding stock of Nu-Metrics, Inc. ("Nu-Metrics") from its six shareholders.
Nu-Metrics is based in Uniontown, Pennsylvania, and is engaged in the business
of developing and manufacturing electronic measuring instruments for the highway
transportation industry. Nu-Metrics' traffic sensing and distance measuring
devices are sold worldwide.
The purchase price of $14,900,000 (less adjustments of $1,020,000 based on tax
holdbacks and changes in the net assets of Nu-Metrics from June 30, 1998, to
September 30, 1998) was paid in cash. A final determination of the purchase
price based on the value of the net assets as of November 30, 1998, will be made
in February 1999. In January 1999, Quixote paid $100,000 to the principal
shareholder of Nu-Metrics in connection with his covenants to refrain from
competition. When acquired, Nu-Metrics had long-term debt of approximately
$981,000, of which the Registrant repaid approximately $465,000. Quixote
borrowed funds on its line of credit to make this acquisition.
Quixote intends to continue the Nu-Metrics business operations in Uniontown,
Pennsylvania. The Registrant has transferred all of the Nu-Metrics stock to its
wholly-owned subsidiary, TranSafe Corporation.
The pro forma information is based upon the historical financial statements of
the Company giving effect to the acquisition described above and adjustments
described in the accompanying notes to these unaudited pro forma financial
statements.
The unaudited pro forma combined condensed financial statements have been
prepared by the management of the Company based upon the assumptions outlined
in the accompanying notes and may not be indicative of the results that
actually would have occurred if the acquisition had occurred on the
particular date noted on each pro forma combined condensed financial
statement. The pro forma financial statements should be read in conjunction
with the related notes contained herein.
<PAGE>
QUIXOTE CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1998
(Dollar amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Historical Nu-Metrics Adjustments Combined
========== ========== =========== ===========
<S> <C> <C> <C> <C>
Net sales................... $ 55,988 $ 6,984 $ 62,972
Cost of sales............... 30,445 2,368 32,813
------------ --------- ----------- ----------
Gross profit................ 25,543 4,616 30,159
Operating expenses:
Selling & administrative.. 15,420 1,921 $ 492 (1) 17,833
Research & development.... 1,570 347 1,917
------------ --------- ----------- ----------
16,990 2,268 492 19,750
Operating profit............ 8,553 2,348 (492) 10,409
Other income (expense):
Interest income........... 540 26 (11)(2) 555
Interest expense.......... (357) (69) (938)(3) (1,364)
Other..................... 16 35 (7)(2,4) 44
------------ --------- ----------- ----------
199 (8) (956) (765)
------------ --------- ----------- ----------
Earnings from continuing
operations before income
taxes..................... 8,752 2,340 (1,448) 9,644
Provisions for income taxes. 2,605 936(5) (579)(5) 2,962
------------ --------- ----------- ----------
Earnings from continuing
operations................ $ 6,147 $ 1,404 $ (869) $ 6,682
=========== ======== =========== ==========
Basic earnings per share:
Earnings from continuing
operations.............. $ .77 $ .84
=========== ==========
Weighted average common
shares outstanding...... 7,943,653 7,943,653
=========== ==========
Diluted earnings per share:
Earnings from continuing
operations.............. $ .76 $ .83
=========== ==========
Weighted average common
shares outstanding...... 8,088,354 8,088,354
=========== ==========
</TABLE>
See Notes to Combined Condensed Financial Statements.
<PAGE>
QUIXOTE CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1998
EXPLANATION OF PRO FORMA ADJUSTMENTS:
(1) To reduce depreciation expense of $7,000 for assets excluded from the
purchase; to reduce amortization expense of $8,000 for deferred costs relating
to debt retired; to amortize goodwill of $631,000 related to the purchase (over
a twenty year life); to eliminate aircraft flight department expenses of
$154,000 relating to assets excluded from the purchase; to increase travel
expenses of $30,000 for commercial airline costs to replace flight department.
(2) To eliminate dividend and interest income related to marketable
securities that were excluded from the purchase.
(3) To record interest expense related to funds borrowed for the purchase
net of interest eliminated on the aircraft related debt.
(4) To eliminate the loss on investment related to marketable securities that
were excluded from the purchase.
(5) To provide an incremental income tax of 40%.
<PAGE>
QUIXOTE CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998
(Dollar amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Historical Nu-Metrics Adjustments Combined
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Net sales..................... $ 16,063 $ 1,499 $ 17,562
Cost of sales................. 8,827 571 9,398
----------- ----------- ------------ -----------
Gross profit.................. 7,236 928 8,164
Operating expenses:
Selling & administrative.... 4,288 494 $ 104 (1) 4,886
Research & development...... 293 101 394
----------- ----------- ------------ -----------
4,581 595 104 5,280
Operating profit.............. 2,655 333 (104) 2,884
Other income (expense):
Interest income............. 39 13 (1)(2) 51
Interest expense............ (168) (22) (237)(3) (427)
Other....................... (22) 13 (2,4) (9)
----------- ----------- ------------ -----------
(129) (31) (225) (385)
----------- ----------- ------------ -----------
Earnings from continuing
operations before income
taxes....................... 2,526 302 (329) 2,499
Provisions for income taxes... 884 121(5) (132)(5) 873
----------- ----------- ------------ -----------
Earnings from continuing
operations.................. $ 1,642 $ 181 $ (197) $ 1,626
========== ========== =========== ==========
Basic earnings per share:
Earnings from continuing
operations................ $ .21 $ .21
========== ==========
Weighted average common
shares outstanding........ 7,920,690 7,920,690
========== ==========
Diluted earnings per share:
Earnings from continuing
operations................ $ .20 $ .20
========== ==========
Weighted average common
shares outstanding........ 8,217,267 8,217,267
========== ==========
</TABLE>
See Notes to Combined Condensed Financial Statements.
<PAGE>
QUIXOTE CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998
EXPLANATION OF PRO FORMA ADJUSTMENTS:
(1) To reduce depreciation expense of $1,000 for assets excluded from the
purchase; to reduce amortization expense of $2,000 for deferred costs
relating to debt retired; to amortize goodwill of $158,000 related to
the purchase (over a twenty year life); to eliminate aircraft flight
department expenses of $59,000 relating to assets excluded from the
purchase; to increase travel expenses of $8,000 for commercial airline
costs to replace flight department.
(2) To eliminate dividend and interest income related to marketable
securities that were excluded from the purchase.
(3) To record interest expense related to funds borrowed for the purchase
net of interest eliminated on the aircraft related debt.
(4) To eliminate the loss on investment related to marketable securities that
were excluded from the purchase.
(5) To provide an incremental income tax of 40%.
<PAGE>
QUIXOTE CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF SEPTEMBER 30, 1998
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Historical Nu-Metrics Adjustments Combined
========== ========== ========= =========
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents...........$ 1,555 $ 1,881 $ (1,881)(2) $ 1,555
Accounts receivable, net............ 11,652 742 12,394
Inventories......................... 6,804 889 7,693
Deferred income tax assets.......... 1,642 285 (3) 1,927
Other current assets................ 884 135 (129)(2) 890
-------- ----------- ---------- ----------
Total current assets.................. 22,537 3,647 (1,725) 24,459
-------- ----------- ---------- ----------
Property, plant and equipment, net.... 13,273 1,812 15,085
Intangible assets..................... 12,334 12,355 (4) 24,689
Other assets.......................... 893 16 (11)(1) 898
Assets of discontinued operations..... 5,657 5,657
-------- ----------- ---------- ----------
$ 54,694 $ 5,475 $ 10,619 $ 70,788
======== ========== ========= =========
Current liabilities:
Current portion of long-term debt.. $ 497 $ 310 $ 807
Accounts payable................... 1,459 91 1,550
Accrued expenses................... 3,119 15 $ 714(3) 3,848
Income taxes payable............... 167 167
-------- ----------- ---------- ----------
Total current liabilities............ 5,242 416 714 6,372
-------- ----------- ---------- ----------
Deferred income tax liabilities....... 795 795
Long-term debt, net of current
portion............................. 7,557 1,084 13,880 (4) 22,521
Shareholders' equity:
Common stock........................ 150 366 (366)(4) 150
Capital in excess of par value
of stock.......................... 31,966 31,966
Retained earnings................... 16,966 3,609 (3,609)(4) 16,966
Treasury stock, at cost............. (7,982) (7,982)
-------- ----------- ---------- ----------
Total shareholders' equity............ 41,100 3,975 (3,975) 41,100
-------- ----------- ---------- ----------
$ 54,694 $ 5,475 $ 10,619 $ 70,788
======== ========== ========= =========
</TABLE>
See Notes to Combined Condensed Financial Statements.
<PAGE>
QUIXOTE CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF SEPTEMBER 30, 1998
EXPLANATION OF PRO FORMA ADJUSTMENTS:
(1) To eliminate $5,000 related to prior goodwill and $6,000 related to
deferred loan fees for which the debt has been paid off.
(2) To eliminate cash of $1,881,000 and investments of $129,000 which are not
included in the purchase.
(3) To record purchase accounting accruals for $714,000, consisting principally
of due diligence fees, accounting and legal fees, a non-compete fee and
related deferred taxes of $285,000.
(4) To record the purchase of net assets, creation of goodwill, borrowing of
long-term debt and elimination of Nu-Metrics, Inc. common stock and
retained earnings.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
QUIXOTE CORPORATION
-------------------
Date: February 8, 1999 /s/ Daniel P. Gorey
- ----------------------- ---------------------
By: Daniel P. Gorey
Its: Vice President,
Chief Financial Officer
and Treasurer
<PAGE>
Exhibit 23
Consent of Independent Auditors
We consent to the use of our report dated March 25, 1998 with respect to the
financial statements of Nu-Metrics, Inc. for the year ended December 31, 1997
included in the current report of Form 8-K/A dated February 8, 1999 of Quixote
Corporation filed with the Securities and Exchange Commission.
/s/ Smith, Lewis, Chess and Company
February 8, 1999
