<PAGE>
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UNITED STATES 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): JUNE 3, 1996
COMMISSION FILE NUMBER: 0-10095
UNIT INSTRUMENTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 33-0077406
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NUMBER)
22600 SAVI RANCH PARKWAY, YORBA LINDA, CALIFORNIA 92887
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (714) 921-2640
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<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
------------------------------------
This filing is an amendment to the prior 8-K filing of June 3, 1996 regarding
the Control Systems, Inc. ("CSI") acquisition in order to present the required
financial statements.
On June 3, 1996, Unit Instruments, Inc. ("Unit") completed its previously
announced acquisition of CSI through a wholly-owned subsidiary, CSI Acquisition
Corporation. CSI was a privately held company based in Rio Rancho, New Mexico.
Total consideration was $1.2 million in cash and 289,308 shares of Unit Common
Stock valued at approximately $4 million. Funds for this acquisition were
obtained from the Registrant's cash balances. The acquisition will be accounted
for as a purchase.
CSI was founded in 1991 and manufacturers gas isolation boxes, gas panels and
other ultra high purity gas delivery systems for the semiconductor industry.
CSI will operate as a wholly-owned subsidiary under its current name. To the
best knowledge of the Registrant, there is no material relationship between the
sellers and the Registrant or any of its affiliates, any director or officer of
the Registrant, or any associate of any such director or officer.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
(a) Financial statements of business acquired.
(1) Financial statements of business acquired for year ended December
31, 1995
Report of independent accountants for year
ended December 31, 1995
Balance sheet
Statement of earnings
Statement of stockholder equity
Statement of Cash Flow
Notes to Financial Statements
(2) Unaudited interim statements
Balance sheets for the years ended May 31, 1996
and December 31, 1995
Statement of earnings for the five month periods ended
May 31, 1996 and May 31, 1995
Statement of cash flows for the five month periods ended
May 31, 1996 and May 31, 1995
Notes to unaudited interim financial statements
(b) Unaudited pro forma financial information
Pro forma balance sheet as of May 31, 1996
Pro forma statement of earnings for the year
ended May 31, 1996
<PAGE>
FINANCIAL STATEMENTS AND
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
CONTROL SYSTEMS, INC.
DECEMBER 31, 1995
<PAGE>
C O N T E N T S
<TABLE>
<CAPTION>
Page
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS......................... 1
FINANCIAL STATEMENTS
BALANCE SHEET............................................................ 2
STATEMENT OF EARNINGS.................................................... 3
STATEMENT OF STOCKHOLDERS' EQUITY........................................ 4
STATEMENT OF CASH FLOWS.................................................. 5-6
NOTES TO FINANCIAL STATEMENTS............................................7-13
</TABLE>
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Control Systems, Inc.
We have audited the balance sheet of Control Systems, Inc. as of December 31,
1995 and the related statements of earnings, stockholders' equity, and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Control Systems, Inc. as of
December 31, 1995 and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.
ATKINSON & CO., LTD.
Albuquerque, New Mexico
June 17, 1996
-1-
<PAGE>
Control Systems, Inc.
BALANCE SHEET
December 31, 1995
ASSETS
<TABLE>
<S> <C> <C>
CURRENT ASSETS
Cash (note B1) $ 13,412
Accounts receivable
Trade (notes B2 and H) $ 855,335
Due from employees 7,030 862,365
Note receivable from stockholder
(note D) 143,347
Costs and estimated earnings in excess
of billings on uncompleted contracts
(notes B4 and E) 214,424
Inventory (notes B3 and H) 1,782,541
----------
Total current assets 3,016,089
PROPERTY AND EQUIPMENT
(notes B5 and H)
Leasehold improvements 477,442
Machinery and equipment 468,457
Office equipment 175,112
Vehicle 13,000
----------
1,134,011
Less accumulated depreciation
and amortization 198,493 935,518
----------
OTHER ASSETS
Deposits 10,700
----------
Total assets $3,962,307
==========
</TABLE>
-2-
<PAGE>
Control Systems, Inc.
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C>
CURRENT LIABILITIES
Current maturities of long-term debt
(notes B5 and H) $ 23,637
Accounts payable 2,862,112
Payroll taxes withheld and accrued 14,996
Other accrued expenses 11,129
Note payable (note G) 50,000
Deferred income taxes (notes B6 and F) 319,329
Deferred revenue (note B4) 129,538
----------
Total current liabilities 3,410,741
LONG-TERM DEBT, less current maturities
(notes B5 and H) 77,673
DEFERRED INCOME TAXES
(notes B6 and F) 25,026
----------
Total liabilities 3,513,440
COMMITMENTS (note I)
STOCKHOLDERS' EQUITY
Common stock; $1 par value; 500,000
shares authorized, 20,000 shares issued
and outstanding 20,000
Retained earnings 428,867
----------
Total stockholders' equity 448,867
----------
Total liabilities and stockholders' equity $3,962,307
==========
</TABLE>
The accompanying notes are an integral part of this statement.
-3-
<PAGE>
Control Systems, Inc.
STATEMENT OF EARNINGS
For the year ended December 31, 1995
<TABLE>
<S> <C>
Sales (notes B4 and B7) $10,388,435
Cost of goods sold (note B4) 8,366,917
-----------
Gross profit on sales 2,021,518
Estimated earnings on contracts
(notes B4 and E) 457,270
General and administrative expenses 1,334,537
-----------
Earnings from operations 1,144,251
Other income (expense)
Interest expense (94,981)
Miscellaneous income 3,562
-----------
Earnings before income taxes 1,052,832
Provision for income tax
(notes B6 and F) 463,355
-----------
NET EARNINGS $ 589,477
===========
</TABLE>
The accompanying notes are an integral part of this statement.
-4-
<PAGE>
Control Systems, Inc.
STATEMENT OF STOCKHOLDERS' EQUITY
For the year ended December 31, 1995
<TABLE>
<CAPTION>
Additional Retained
Shares Common Paid-In Earnings Treasury
Issued Stock Capital (Deficit) Stock Total
-------- -------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balances - December 31, 1994,
as previously reported 25,000 $25,000 $ 26,000 $(130,960) $ - $ (79,960)
Prior period adjustment - - - 39,350 - 39,350
------ ------- -------- --------- --------- ---------
Balances - December 31, 1994,
as restated 25,000 25,000 26,000 (91,610) - (40,610)
Purchase of 5,000 shares of
treasury stock at $20 per
share - - - - (100,000) (100,000)
Retirement of treasury
stock (5,000) (5,000) (26,000) (69,000) 100,000 -
Net earnings for the year - - - 589,477 - 589,477
------ ------- -------- --------- --------- ---------
Balances - December 31, 1995 20,000 $20,000 $ - $ 428,867 $ - $ 448,867
====== ======= ======== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of this statement.
-5-
<PAGE>
Control Systems, Inc.
STATEMENT OF CASH FLOWS
For the year ended December 31, 1995
Increase (decrease) in cash
<TABLE>
<S> <C>
Cash flows from operating activities
Collections from customers and others $11,456,080
Payments to suppliers, employees, and
others (9,346,129)
Cash paid for interest (94,981)
-----------
Net cash (used) provided by operating activities 2,014,970
-----------
Cash flows from investing activities
Purchases of property and equipment (698,659)
Loans to stockholders (138,331)
-----------
Net cash used in investing activities (836,990)
-----------
Cash flows from financing activities
Repayment of notes payable (1,050,000)
Payments on long-term debt (24,015)
Purchase of treasury stock (50,000)
-----------
Net cash used in financing activities (1,124,015)
-----------
Net increase in cash 53,965
Net cash overdraft, December 31, 1994 (40,553)
-----------
Cash, December 31, 1995 $ 13,412
===========
</TABLE>
The accompanying notes are an integral part of this statement.
-6-
<PAGE>
Control Systems, Inc.
STATEMENTS OF CASH FLOWS - CONTINUED
For the year ended December 31, 1995
Increase (decrease) in cash
<TABLE>
<S> <C>
Reconciliation of net earnings to net cash
provided by operating activities
Net earnings $ 589,477
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 109,639
Provision for deferred income taxes 463,355
Changes in operating assets and liabilities
Decrease in trade accounts receivable 453,663
Decrease in other accounts receivable 24,091
Net increase in costs and estimated earnings
in excess of billings on uncompleted contracts (297,575)
Increase in inventory (514,855)
Increase in deposits (4,690)
Increase in accounts payable 1,075,979
Decrease in payroll taxes withheld and accrued (23,793)
Increase in other accrued expenses 10,141
Increase in deferred revenue 129,538
----------
Net cash (used) provided by operating activities $2,014,970
==========
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES
<TABLE>
<S> <C>
Purchase of treasury stock $ 100,000
Cash paid 50,000
----------
Note payable $ 50,000
==========
</TABLE>
The accompanying notes are an integral part of this statement.
-7-
<PAGE>
Control Systems, Inc.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE A - ORGANIZATION
Control Systems, Inc. (CSI and the Company) was incorporated on July 15, 1991
in the State of New Mexico for the purpose of designing, manufacturing, and
certifying Ultra High Purity gas distribution systems used primarily by
manufacturers of microelectronic devices. The work is performed under sales
agreements and a short-term fixed-price contract.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Cash
----
For purposes of the statement of cash flows, the Company includes in cash all
balances on hand and in demand deposit accounts.
2. Accounts Receivable
-------------------
Management considers all accounts receivable to be collectible; therefore, no
allowance for doubtful accounts is necessary to present accounts receivable at
net realizable value.
Trade accounts receivable are due primarily from one international semi-
conductor manufacturing company. Collateral has not been required on such
receivables.
3. Inventories
-----------
Inventories, consisting primarily of raw materials and subassemblies, are
stated at the lower of (average) cost or market.
4. Revenue and Cost Recognition
----------------------------
The Company manufactures gas distribution systems according to customer
specification under sales agreements, primarily with one customer. Revenues
are earned and billed as systems are shipped to the customer. Deferred
revenue, representing advances on sales contracts, is earned as systems are
shipped.
-8-
<PAGE>
Control Systems, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1995
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
4. Revenue and Cost Recognition - Continued
----------------------------------------
The Company also provides installation services under a construction-type
contract that is accounted for on the percentage-of-completion method. Under
this method, the amount of revenues recognized is that portion of the total
contract amount that the actual cost expended bears to the anticipated final
total cost based on current estimates of cost to complete the project (cost-
to-cost method). It is not related to the progress billings to customers.
However, when it becomes known that the anticipated final total cost will
exceed the contract amount, the excess of cost over contract amount is
immediately recognized as a loss on the contract. Recognition of profit
commences on an individual project only when cost to complete the project can
reasonably be estimated and after there has been some meaningful performance
achieved on the project (greater than 10 percent complete). Changes in job
performance, job conditions, and estimated profitability, including those
arising from contract penalty provisions (when applicable), and final contract
settlements may result in revisions to costs and income and are recognized in
the period in which the revisions are determined.
Costs of goods sold and contract costs include direct costs consisting of
labor and related taxes and benefits, materials, and subcontracts, plus an
allocation of indirect costs related to manufacturing and contract
performance, consisting of personnel, facilities, depreciation, and other
manufacturing support costs. Indirect costs are allocated to manufacturing
projects and the contract based on a percentage of actual direct costs
expended. Operating expenses, consisting of selling, general and
administration expenses are charged to operations as incurred.
5. Property, Equipment and Depreciation
------------------------------------
Property and equipment are carried at cost. Major additions and improvements
to property and equipment are capitalized and maintenance and repairs,
including the replacement of minor items, are expensed as incurred.
Depreciation and amortization are provided by the Company using straight-line
and accelerated methods over the estimated useful lives of 3 to 31.5 years.
-9-
<PAGE>
Control Systems, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1995
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
6. Income Taxes
------------
As discussed in note E, CSI accounts for income taxes under the provisions of
Statement of Financial Accounting Standards (SFAS) No. 109 Accounting for
Income Taxes. Under the liability method specified by SFAS 109, deferred tax
assets and liabilities are determined based on the differences between the
financial statement and income tax bases of assets and liabilities as measured
by the enacted tax rates that are expected to be in effect when these
differences reverse. Deferred income tax expense is based on the changes in
the deferred assets and liabilities from period to period.
7. Major Customer
--------------
During 1995, approximately ninety-eight percent of the Company's revenues were
earned from the delivery of products and services to one customer or its sub-
contractors.
8. Estimates
---------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results may differ from those estimates.
Significant estimates by management include the collectibility of receivables
and the utility and ultimate recoverability of inventory and property and
equipment.
9. Fair Value of Financial Instruments
-----------------------------------
The carrying values of short-term financial instruments approximate fair value
because of their short maturities.
-10-
<PAGE>
Control Systems, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1995
NOTE C - PRIOR PERIOD ADJUSTMENT
Retained earnings as of December 31, 1994 has been restated from the balance
originally reported to reflect the correction of errors in the measurements of
inventories, accounts payable, and accrued and deferred revenues. Inventories
and accounts payable were understated by $192,478 and $179,896, respectively.
Net revenues in the amount of $26,768 were deferred under the percentage-of-
completion method of accounting for certain sales agreements for which
generally accepted accounting principles requires the accrual basis of
accounting with a provision for sales returns, as necessary. The effect of
these corrections was to decrease net income in 1995 by $22,036.
NOTE D - NOTES RECEIVABLE
The Company has a promissory note receivable due from its major stockholder in
the amount of $143,347. The note bears interest at 6.0% per annum, and is due
in full on December 31, 1996.
-11-
<PAGE>
Control Systems, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1995
NOTE E - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACT
Costs, estimated earnings, and billings on the uncompleted contract are as
follows:
<TABLE>
<S> <C>
Costs incurred on uncompleted contract $116,432
Estimated earnings 97,992
--------
214,424
Less billing to date -
--------
Cost and estimated earnings in excess
of billings $214,424
========
</TABLE>
NOTE F - INCOME TAXES
The components of the provision for income tax expense are as follows:
<TABLE>
<S> <C>
Currently payable $ -
Deferred 463,355
--------
$463,355
========
</TABLE>
Significant components of the Company's deferred tax asset and liabilities
include: net operating losses available to offset future taxable income,
differences in revenue recognition on sales agreements and contracts for
financial and income tax reporting purposes, and property and equipment basis
differences resulting from differences between financial statement and income
tax depreciation methods and lives.
The Company's effective tax rate differs from the federal statutory rate due
to expenses which have been recorded for financial reporting purposes but are
not deductible for income tax purposes, and the effects of state income tax
expense, net of the federal benefit.
For income tax reporting purposes, the Company has a net operating loss carry
forward of approximately $206,000 which, if not applied to offset taxable
income, will expire in 2009.
-12-
<PAGE>
Control Systems, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1995
NOTE G - NOTE PAYABLE
As of December 31, 1995, the Company was obligated in the amount of $50,000 to
a former stockholder under a promissory note agreement, bearing interest at
10%. The entire balance plus accrued interest was paid on February 15, 1996.
Subsequent to December 31, 1995, the Company entered into borrowing
arrangements with a local commercial bank as follows:
<TABLE>
<S> <C>
Short-term note payable to bank, due on demand
after March 31, 1996; interest at Norwest Bank
Base Lending Rate plus 3.0% (11.5% as of
January 3, 1996); secured by substantially all
Company assets; personally guaranteed by the
Company's stockholders. $500,000
Long-term note payable to bank, due in monthly
payments of $9,907, including interest through
December 31, 1998; interest at Norwest Bank
Base Lending Rate plus 3.0% (11.5% as of
January 3, 1996); secured by substantially all
Company assets; personally guaranteed by the
Company's stockholders. 300,000
--------
$800,000
========
</TABLE>
Future principal reduction requirement by year on subsequent bank borrowings:
<TABLE>
<S> <C>
1996 $581,164
1997 98,815
1998 120,021
--------
$800,000
========
</TABLE>
-13-
<PAGE>
Control Systems, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1995
NOTE H - LONG-TERM DEBT
<TABLE>
<S> <C>
Note payable to bank; due in monthly payments
of $2,820, including interest at 2.75% above
the Chase Manhattan prime rate (11.25% as of
December 31, 1995), through April 30, 1999;
secured by furniture, equipment, accounts receivable,
inventories, contract rights, and general intangibles. $101,310
Less current maturities 23,637
--------
Total long-term debt, less current maturities $ 77,673
========
</TABLE>
Future maturities of long-term debt are as follows:
<TABLE>
<S> <C>
1996 $ 23,637
1997 26,437
1998 29,570
1999 21,666
--------
Total $101,310
========
</TABLE>
NOTE I - COMMITMENTS
CSI leases office and manufacturing space in Albuquerque, New Mexico and
Chandler, Arizona under noncancellable operating leases which expire through
November 1999. Minimum lease payments are subject to scheduled increases over
the lives of the leases.
The Company also leases vehicles and office equipment under various long-term
operating leases expiring through December 1996. Lease expense in 1995 totaled
$132,945.
Future minimum lease payments required by long-term operating leases in the
years subsequent to 1995 are as follows:
<TABLE>
<S> <C>
1996 $121,938
1997 88,310
1998 45,369
1999 49,824
</TABLE>
-14-
<PAGE>
Control Systems, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1995
The Company also leases a residence in Chandler from its principle
stockholder. Monthly rentals are $2,000, and rent expense in 1995 totaled
$12,000.
NOTE J - RELATED PARTY TRANSACTIONS
The Company's principle stockholder owns a controlling interest in BCR
Commissioning, Inc., which he purchased in order to utilize its construction
license. CSI has used this construction license to perform services under the
construction type contract (see notes B4 and D).
From time to time the Company purchases training services from an entity owned
by a stockholder.
NOTE K - SUBSEQUENT EVENT
Subsequent to December 31, 1995, Unit Instruments, Inc., acquired all of CSI's
outstanding common stock in exchange for cash and shares of Unit's common
stock.
-15-
<PAGE>
Interim Period Financial Statements
- -----------------------------------
Item 7(a)(2)
UNAUDITED INTERIM STATEMENTS
CONTROL SYSTEMS, INC.
STATEMENT OF EARNINGS
FOR THE 5 MONTH PERIOD ENDING MAY 31, 1996 AND 1995
(Amounts in thousands)
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Net sales $5,132 $4,603
Operating costs and expenses:
Cost of goods sold 3,257 3,622
Selling, general and administrative 1,889 388
------ ------
Operating income (14) 594
Interest income - 3
Interest expense (49) (47)
------ ------
Income before income taxes (63) 550
Provision for income taxes - 247
------ ------
Net income (loss) $ (63) $ 303
====== ======
</TABLE>
-16-
<PAGE>
Item 7 (a) (2)
UNAUDITED INTERIM STATEMENTS
CONTROL SYSTEMS, INC.
BALANCE SHEETS
(Amounts in thousands)
<TABLE>
<CAPTION>
May 31 December 31
1996 1995
-------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and equivalents $ 71 $ 13
Accounts receivable 1,359 1,005
Inventories 1,875 1,783
Prepaid expenses and other 1 214
------ ------
Total current assets 3,306 3,022
Property, plant and equipment 1,375 1,134
Accumulated depreciation 281 198
------ ------
Net property, plant and equipment 1,094 578
Other assets 11 11
------ ------
Total $4,411 $3,962
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,503 $2,912
Accrued compensation and benefits 71 15
Current installments of long-term debt 611 23
Deferred income taxes 319 319
Other current liabilities 155 141
------ ------
Total current liabilities 2,659 3,303
Long-term debt 1,279 78
Other 86 25
------ ------
Total liabilities 4,024 3,386
Shareholders' equity:
Common stock, $1 par value; 500,000 shares
authorized, 20,000 shares issued and
outstanding 20 20
Additional paid-in capital -- --
Retained earnings 367 429
------ ------
Total shareholders' equity 387 449
------ ------
Total $4,411 $3,962
====== ======
</TABLE>
-17-
<PAGE>
Item 7 (a) (2)
UNAUDITED INTERIM STATEMENTS
CONTROL SYSTEMS, INC.
STATEMENT OF CASH FLOWS
FOR THE 5 MONTH PERIOD ENDING MAY 31, 1996 AND 1995
(amounts in thousands)
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (63) $ 303
Adjustments to reconcile net income to net cash
provided from operating activities:
Depreciation and amortization 83 19
Deferred income taxes (25) 310
Changes in assets and liabilities:
Accounts receivable (354) (124)
Inventories (92) (78)
Prepaids and other assets 213 (100)
Accounts payable (1,359) 566
Accrued expenses 71 (253)
Other liabilities 86 --
------- -----
Net cash flow (used in) provided from operating
activities (1,440) 643
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (241) (251)
Other -- (3)
------- -----
Net cash provided from (used in) investing
activities (241) (254)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) on long-term debt 1,202 (13)
Change in short-term borrowings, net 537 (214)
------- -----
Net cash provided from (used in) financing
activities 1,739 (227)
Net increase (decrease) in cash and cash
equivalents 58 162
Cash and cash equivalents at beginning of year 13 3
------- -----
Cash and cash equivalents at end of year $ 71 $ 165
</TABLE>
-18-
<PAGE>
CONTROL SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(amounts in thousands)
1. SIGNIFICANT ACCOUNTING POLICIES
The financial statements included herein are based in part on estimates and
include such adjustments (consisting solely of normal, recurring
adjustments) which management believes are necessary for fair presentation
of the Company's financial position at May 31, 1996 and the results of its
operations for the two five-month periods ended May 31, 1996 and May 31,
1995. The financial statements and related notes are condensed and have been
prepared in accordance with generally accepted accounting principles
applicable to interim periods. Consequently, they do not include all
generally accepted accounting disclosures required for complete annual
financial statements. These condensed financial statements should be read in
conjunction with the audited financial statements and the notes thereto for
the year ended December 31, 1995 contained in this report on form 8-K/A.
The results of operations for the periods presented are not necessarily
indicative of results to be expected for any subsequent fiscal year or
interim period thereof. Certain prior year items have been reclassified to
conform to current year presentation.
2. On June 3, 1996, Unit Instruments, Inc. ("Unit") acquired all outstanding
capital stock of Control Systems, Inc. ("CSI") for $1.2 million cash and
289,308 shares of Unit Common Stock valued at approximately $4 million. In
May of 1996, Unit advanced CSI loans in the amount of $1,025,000, which
became intercompany advances as a result of the acquisition.
-19-
<PAGE>
(b) Proforma Financial Information
The unaudited proforma condensed combined statement of income of Unit
Instruments, Inc. (Unit) and Control Systems, Inc. (CSI) for the year ended
May 31,1996 reflects adjustments as if the transaction had occurred on June
1, 1995. The unaudited proforma condensed combined balance sheet is
presented as if the transaction had been consummated May 31, 1996. The
acquisition of CSI was completed on June 3, 1996 and is being accounted for
using the purchase method.
The effect of discontinued operations related to the sale of Autoclave
Engineers Inc. on Unit's statements has been excluded from the proforma
statement of earnings because of the non-recurring nature of that
transaction.
The unaudited proforma condensed combined financial statements reflect
Unit's allocation of the purchase price of approximately $5.18 million,
consisting of $1.2 million in cash and 289,308 shares of Unit's Common
Stock, to the assets and liabilities of CSI based on estimates of the
relative values of assets acquired and liabilities assumed. Transaction
costs are minimal as the acquisition of CSI was a stock purchase with one
seller owning the majority of shares jointly. The final allocation of the
purchase price may vary as additional information is obtained and,
accordingly, the ultimate allocations may differ from those used in the
unaudited proforma condensed combined financial statements.
The unaudited proforma condensed combined financial statements should be
read in conjunction with the separate historical financial statements and
related notes of CSI appearing in answer to Item 7 (a) of this Current
Report on Form 8K/A and historical financial statements, related notes and
Management's discussion and Analysis of Consolidated Financial Condition
and Results of Operations of Unit for the year ended May 31, 1996. The
proforma information is not necessarily indicative of the results that
would have been reported had the acquisition actually occurred on the dates
specified, nor is it necessarily indicative of the future results of the
combined companies.
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<PAGE>
UNIT INSTRUMENTS, INC.
UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF EARNINGS
YEAR ENDED MAY 31, 1996
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Unit Control
Consolidated Systems Proforma Combined
Historical Inc. (CSI) Adjustments Proforma
------------ ---------- ----------- --------
<S> <C> <C> <C> <C>
Net sales $65,568 $10,802 $76,370
Operating costs and expenses: --
Cost of goods sold 39,501 8,426 47,927
Selling, general and
administrative 14,587 1,786 399 (a) 16,772
Restructuring costs 373 373
Research, development and
engineering 3,757 3,757
------- ------- ----- -------
Operating income 7,350 590 (399) 7,541
Interest income 690 (60)(b) 630
Interest expense (112) (97) (209)
Other income (expense) (132) 3 (129)
------- ------- ----- -------
Income before income taxes 7,796 496 (459) 7,833
Provision for income taxes 3,018 198 (24)(c) 3,192
------- ------- ----- -------
Net income (loss) from
continuing operations $ 4,778 $ 298 $(435) $ 4,641
======= ======= ===== =======
Earnings per share from
continuing operations $ 1.09 $ 0.99
------- ------- ----- -------
Average shares used in
computing earnings per share 4,393 N/A 289 4,682
======= ======= ===== =======
</TABLE>
Proforma adjustment reference:
(a) To reflect amortization of one year's worth
of goodwill of $4,479,000 over a 12-year period.
(b) To reflect interest income foregone due
to $1.2 million cash paid for CSI.
(c) To reflect the income tax effect of pro forma
adjustments calculated at applicable federal
and state statutory rates.
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<PAGE>
UNIT INSTRUMENTS, INC.
UNAUDITED PROFORMA CONDENSED COMBINED BALANCE SHEET AS OF MAY 31, 1996
(amounts in thousands)
<TABLE>
<CAPTION>
Unit Control
Consolidated Systems Proforma Combined
Historical Inc. (CSI) Adjustments Proforma
------------ ---------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and equivalents $14,572 $ 71 $(1,200)(a) $13,443
Accounts receivable 10,179 1,359 11,538
Inventories 9,709 1,875 11,584
Deferred taxes and other 1,233 1 1,234
------- ------ ------- -------
Total current assets 35,693 3,306 (1,200) 37,799
Property, plant and equipment 17,490 1,375 18,865
Accumulated depreciation 7,267 281 7,548
------- ------ ------- -------
Net property, plant and
equipment 10,223 1,094 -- 11,317
Goodwill 4,338 4,790 (b) 9,128
Other assets 2,526 11 (1,025)(c) 1,512
------- ------ ------- -------
Total $52,780 $4,411 $ 2,565 $59,756
======= ====== ======= =======
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable $ 1,969 $1,503 $ 3,472
Accrued compensation and
benefits 1,786 71 1,857
Income taxes payable 1,141 -- 1,141
Current installments on
term debt 1,845 611 2,456
Other current liabilities 2,228 474 2,702
------- ------ ------- -------
Total current liabilities 8,969 2,659 -- 11,628
Long-term debt -- 1,279 (1,025)(d) 254
Other 587 86 673
------- ------ ------- -------
Total liabilities 9,556 4,024 (1,025) 12,555
Shareholders' equity:
Common stock 613 20 23 (e) 656
Additional paid-in capital 19,247 3,934 (f) 23,181
Retained earnings 23,673 367 (367)(g) 23,673
Foreign currency translation (309) (309)
------- ------ ------- -------
Total shareholders' equity 43,224 387 3,590 47,201
------- ------ ------- -------
Total $52,780 $4,411 $ 2,565 $59,756
======= ====== ======= =======
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Balance sheet proforma adjustment
(a) Cash purchase price $(1,200)
(b) Purchase price allocated to goodwill 4,790
(c) Intercompany loans to CSI (1,025)
(d) Loans to CSI by Unit (1,025)
(e) Capital stock used for purchase of
CSI - 289,308 shares at $.15 par 43
Elimination of CSI capital stock for
consolidation purposes (20)
-------
23
(f) Additional paid-in capital of 289,308
shares paid for CSI valued at
$13.75 per share on June 3, 1996
of which $13.60 per share is applied
to additional paid-in capital 3,934
(g) Removal of CSI's prior retained earnings (367)
</TABLE>
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<PAGE>
SIGNATURES
Pursuant to requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
UNIT INSTRUMENTS, INC.
Date: August 13, 1996 By /s/ GARY N. PATTEN
-----------------------------
Gary N. Patten
Chief Financial Officer
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