<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported): JUNE 4, 1997
CENTRUM INDUSTRIES, INC.
------------------------------------------------------
(Exact Name of Registrant as specified in its Charter)
<TABLE>
<S> <C> <C>
Delaware 0-9607 34-1654011
- -----------------------------------------------------------------------------------------
(State or other juris- (Commission File Number) (IRS Employer
diction of incorporation) Identification No.)
</TABLE>
6135 Trust Drive, Suite 104A, Holland, Ohio 43528
- --------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code:
(419) 868-3441
<PAGE> 2
ITEM 7. - FINANCIAL STATEMENTS AND EXHIBITS.
(a) The audited financial statements of Taylor Forge International,
Inc. as of June 4, 1997 and March 31, 1997 and for the period from April 1,
1997 to June 4, 1997 and for the year ended March 31, 1997, are filed herewith
as Exhibit 7(a).
(b) Pro forma financial statements of the Registrant on a consolidated
basis, after giving effect to the acquisition of substantially all of the
assets of Taylor Forge International, Inc., are filed herewith as Exhibit 7(b).
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CENTRUM INDUSTRIES, INC.
(Registrant)
August 14, 1997 By: /s/ Timothy M. Hunter
-----------------------------
Timothy M. Hunter
Chief Financial Officer and
Treasurer
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Exhibit Page
<S> <C> <C>
7(a) The audited financial statements of Taylor Forge
International, Inc. as of June 4, 1997 and March 31, 1997
and for the period from April 1, 1997 to June 4, 1997 and
for the year ended March 31, 1997, are filed herewith as
Exhibit 7(a).
7(b) Pro forma financial statements of the Registrant on a
consolidated basis, after giving effect to the
acquisition of substantially all of the assets of Taylor
Forge International, Inc., are filed herewith as Exhibit
7(b).
</TABLE>
<PAGE> 1
EXHIBIT 7(a)
The audited financial statements of Taylor Forge International, Inc. as of June
4, 1997 and March 31, 1997 and for the period from April 1, 1997 to June 4,
1997 and for the year ended March 31, 1997, are filed herewith as Exhibit 7(a).
<PAGE> 2
[PRICE WATERHOUSE LLP LOGO]
TAYLOR FORGE
INTERNATIONAL, INC.
(A WHOLLY OWNED SUBSIDIARY OF TFI, INC.)
FINANCIAL STATEMENTS
MARCH 31, 1997
JUNE 4, 1997
<PAGE> 3
[PRICE WATERHOUSE LLP LETTERHEAD]
REPORT OF INDEPENDENT ACCOUNTANTS
August 5, 1997
To the Board of Directors and
Stockholders of Taylor Forge International, Inc.
In our opinion, the accompanying balance sheet and the related statements of
operations, of changes in stockholder's equity and of cash flows present
fairly, in all material respects, the financial position of Taylor Forge
International, Inc. (a wholly owned subsidiary of TFI, Inc.) at June 4, 1997
and March 31, 1997, and the results of its operations and its cash flows for
the period from April 1, 1997 through June 4, 1997 and for the year ended March
31, 1997 in conformity with generally accepted accounting principles. 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 of these statements in accordance with
generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
As discussed in Notes 1 and 11, the Company was acquired by Centrum Industries,
Inc. after the close of business on June 4, 1997.
PRICE WATERHOUSE LLP
<PAGE> 4
2
TAYLOR FORGE INTERNATIONAL, INC.
(A WHOLLY OWNED SUBSIDIARY OF TFI, INC.)
BALANCE SHEET
<TABLE>
<CAPTION>
JUNE 4, MARCH 31,
1997 1997
<S> <C> <C>
ASSETS
Current assets:
Cash $ 325 $ 562
Trade accounts receivable, less allowance
for doubtful accounts of $60,000 1,011,167 1,351,109
Receivables from related companies 2,847,489 2,812,481
Inventories 1,459,755 1,193,277
Prepaid expenses and other 79,717 103,695
----------- -----------
Total current assets 5,398,453 5,461,124
----------- -----------
Property, plant, and equipment:
Land 137,595 137,595
Buildings 2,416,327 2,415,829
Machinery and equipment 10,072,093 9,790,985
Tooling and dies 320,000 320,000
----------- -----------
12,946,015 12,664,409
Less - allowances for depreciation 6,692,070 6,541,640
----------- -----------
Total property, plant and equipment 6,253,945 6,122,769
----------- -----------
Other assets 35,999 18,500
----------- -----------
Total assets $11,688,397 $11,602,393
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Bank line of credit $3,065,049 $2,944,475
Shareholder loans 274,831 303,184
Accounts payable 2,182,811 1,984,748
Accrued expenses and other liabilities 290,498 232,324
Current portion of long-term debt 277,392 274,943
----------- -----------
Total current liabilities 6,090,581 5,739,674
Long-term debt 3,599,948 3,625,070
Long-term capital lease obligations 204,479 153,453
Other liabilities 16,718 16,349
Commitments and contingencies (Note 10) - -
Stockholder's equity
Common stock, par value $1 per share;
2,000 shares authorized; 1,000 shares
issued and outstanding 1,000 1,000
Additional paid-in capital 3,850,428 3,850,428
Accumulated deficit (2,074,757) (1,783,581)
----------- -----------
Total stockholder's equity 1,776,671 2,067,847
----------- -----------
Total liabilities and stockholder's equity $11,688,397 $11,602,393
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
3
TAYLOR FORGE INTERNATIONAL, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 1, 1997 YEAR ENDED
THROUGH MARCH 31,
JUNE 4, 1997 1997
<S> <C> <C>
Net sales $1,208,115 $9,222,775
Cost of goods sold (exclusive of
depreciation shown separately below) 1,087,568 8,066,689
------------- ------------
Gross profit 120,547 1,156,086
Depreciation 150,430 847,372
Selling, general, and administrative expense 179,341 1,285,899
------------- ------------
Operating loss (209,224) (977,185)
Interest expense (70,077) (448,258)
Other income (expense), net (11,875) 26,277
------------- ------------
Loss before income taxes (291,176) (1,399,166)
Provision for income taxes - 43,427
------------- ------------
Net loss $(291,176) $(1,442,593)
============= ============
Net loss per common share $(291.18) $(1,442.59)
============= ============
Weighted average shares outstanding 1,000 1,000
============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
4
TAYLOR FORGE INTERNATIONAL, INC.
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Additional Total
Common Paid-in Accumulated Stockholder's
Stock Capital Deficit Equity
------ ---------- ------------ -------------
<S> <C> <C> <C> <C>
Balance at March 31, 1996 $1,000 $3,850,428 $(340,988) $3,510,440
Net loss (1,442,593) (1,442,593)
------ ---------- ------------ -------------
Balance at March 31, 1997 1,000 3,850,428 (1,783,581) 2,067,847
Net loss (291,176) (291,176)
------ ---------- ------------ -------------
Balance at June 4, 1997 $1,000 $3,850,428 $(2,074,757) $1,776,671
====== ========== ============ =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 7
5
TAYLOR FORGE INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 1, 1997 YEAR ENDED
THROUGH MARCH 31,
JUNE 4, 1997 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(291,176) $(1,442,593)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 150,430 847,372
Write off of excess and obsolete inventory 13,531 410,550
Gain on sale of property, plant and equipment - (13,308)
Changes in assets and liabilities:
Trade accounts receivable 339,942 598,080
Accounts receivable from related parties (35,008) (371,926)
Inventories (280,009) 925,800
Prepaid expenses and other 6,479 128,360
Accounts payable 198,063 495,665
Other accrued expenses 58,543 (212,289)
------------- ------------
Net cash provided by operating activities 160,795 1,365,711
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment - 20,695
Capital expenditures (281,606) (886,743)
------------- ------------
Net cash used in investing activities (281,606) (866,048)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) on line of credit 120,574 (335,685)
Payments on long-term obligations - (163,890)
------------- ------------
Net cash provided by (used for) financing activities 120,574 (499,575)
------------- ------------
Net increase (decrease) in cash (237) 88
Cash at beginning of year/period 562 474
------------- ------------
Cash at end of year/period $325 $562
============= ============
Cash paid for interest $76,536 $478,496
============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 8
6
TAYLOR FORGE INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
Taylor Forge International, Inc. (Taylor Forge or the Company), a wholly
owned subsidiary of TFI, Inc., produces seamless steel rolled rings for
bearing and special machine manufacturers. Sales of the Company's products
are made to both domestic and international customers. For financial
reporting purposes, the Company is considered to operate in a single
reporting segment.
After the close of business on June 4, 1997, the Company was acquired by
Centrum Industries, Inc. in a purchase transaction. The accompanying
financial statements do not reflect any adjustments associated with this
transaction. See Note 11.
INVENTORIES
Inventories are valued at the lower of cost (first-in, first out method) or
market.
REVENUE RECOGNITION
Revenue is recognized at the time title of goods sold passes to customers,
which generally occurs when goods are shipped.
PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment is recorded at cost. Provisions for
depreciation of plant and equipment are computed using straight-line and
accelerated methods over the estimated useful lives of the assets. The
useful lives of property used in arriving at the annual amount of
depreciation provided are as follows: buildings, 30 years; machinery and
equipment, 7 to 20 years; furniture, fixtures and vehicles, 5 years; and
tooling and dies 10 years.
INCOME TAXES
Taylor Forge is a member of a group of companies, owned by TFI, Inc., that
files a consolidated federal income tax return. TFI, Inc., Taylor Forge and
other consolidated subsidiaries of TFI, Inc. are not subject to state or
local income taxes. The members of the group do not record separate
provisions for income taxes, nor do members of the group record income taxes
receivable/payable to other members of the group or TFI, Inc. The amount of
income tax expense, current income tax payable/receivable, and deferred
income tax amounts recorded in these financial statements represent
management's estimate of the amount of income taxes attributable to Taylor
Forge as determined on a separate return basis. Under this approach,
current tax liabilities and assets are recognized for the estimated taxes
payable or refundable on the tax returns for the current year. Deferred tax
liabilities or assets are recognized for the estimated future tax effects
attributable to temporary differences and carryforwards that result from
events that have been recognized in either the financial statements or the
tax returns, but not both. The measurement of current and deferred tax
liabilities and assets is based on provisions of enacted tax laws. Deferred
tax assets are reduced, if necessary, by the amount of any tax benefits that
are not expected to be realized.
<PAGE> 9
7
TAYLOR FORGE INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
related notes to financial statements. Changes in such estimates may affect
amounts reported in future periods. The most significant estimates made by
management include the allowance for doubtful accounts, the valuation of
inventories, depreciable lives of fixed assets, the allocation of common
expenses and the deferred income tax asset valuation allowance.
ENVIRONMENTAL LIABILITIES AND EXPENDITURES
The Company expenses environmental expenditures related to existing
conditions resulting from past or current operations and from which no
current or future benefit is discernible. The Company determines its
liability on a site-by-site basis and records a liability at the time when
it is probable and can be reasonably estimated. Unasserted claims are not
included in the estimated liability. The Company's estimated liability is
reduced to reflect the anticipated participation of other potentially
responsible parties in those instances where it is probable that such
parties are legally responsible and financially capable of paying their
respective shares of the relevant costs. The estimated liability of the
Company is not discounted or reduced for possible recoveries from insurance
carriers. Insurance recoveries are only recorded if probable of receipt.
No environmental liabilities were recorded at June 4, 1997 or March 31, 1997
since no conditions which would result in a liability being recorded were
known to exist.
EARNINGS PER SHARE
Earnings per share is computed using the weighted average number of shares
outstanding during the year end period. There are no common stock
equivalents.
ALLOCATION OF COMMON EXPENSES
Common expenses incurred within the consolidated group of TFI, Inc.
companies are allocated to the individual companies on a specific
identification basis, if possible. When it is not possible or practical to
do so, common expenses are allocated based upon sales volume, total assets
or the level of intercompany borrowings. Management considers these methods
to be reasonable.
FINANCIAL INSTRUMENTS
The carrying amount of the Company's financial instruments, which include
cash and cash equivalents, accounts receivable, accounts payable, and
long-term debt, approximate their fair market values at June 4, 1997 and
March 31, 1997.
<PAGE> 10
8
TAYLOR FORGE INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
2. INVENTORIES
Inventories consist of the following:
JUNE 4, MARCH 31,
1997 1997
Raw materials $ 905,002 $ 806,994
In-process products 978,834 796,833
Reserve for excess and obsolete material (424,081) (410,550)
---------- ----------
$1,459,755 $1,193,277
========== ==========
During the year ended March 31, 1997, management revised its estimate
regarding the net realizable value of certain inventory and recorded a
charge of approximately $411,000 to write these inventories down.
3. BANK LINE OF CREDIT
TFI, Inc. has an outstanding line of credit with a bank. The Company, as
part of the consolidated group of TFI, Inc. has access to the line of
credit. At June 4, 1997 and March 31, 1997, the Company had taken net
advances against the line of credit of $3,065,049 and $2,944,475,
respectively. At June 4, 1997, TFI, Inc. (and the Company, as part of TFI,
Inc.) had approximately $900,000 of available credit.
The line of credit expires in September 1997 and bears interest at the bank
prime rate (8.5% at June 4, 1997). The line of credit is collateralized by
accounts receivable and inventories of the TFI, Inc. companies.
The accounts receivable from related parties of $2,847,489 and $2,812,481 at
June 4, 1997 and March 31, 1997, respectively, relate primarily to amounts
paid by the Company on behalf of the affiliated TFI, Inc. companies
utilizing the bank line of credit. Interest is charged to the related
parties at the same rate as the line of credit. Such interest is netted
against interest expense in the accompanying statement of operations.
The bank line of credit was paid in full after the close of business on
June 4, 1997.
4. SHAREHOLDER LOANS
At June 4, 1997 and March 31, 1997, the Company had unsecured notes payable
to relatives of shareholders of TFI, Inc. of $274,831 and $303,184,
respectively. These notes bear interest at the prime rate (8.5% at June 4,
1997) plus 1.25% and are payable on demand. Interest expense relating to
these loans was $5,257 and $32,166 for the period from April 1, 1997 to June
4, 1997 and for the year ended March 31, 1997, respectively.
<PAGE> 11
9
TAYLOR FORGE INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
5. LONG-TERM DEBT
<TABLE>
<CAPTION>
Long-term obligations consist of the following:
JUNE 4, MARCH 31,
1997 1997
<S> <C> <C>
Notes payable to NationsBank payable in monthly
installments of $38,615 including interest at prime (8.5%
at June 4, 1997) plus 1% through 1998 with remainder
payable in full in 1999. The note is secured by real estate,
furnishings, fixtures, equipment and other personal
property, corporate stock of TFI, Inc. and its subsidiaries
and the personal guarantees of certain stockholders of TFI,
Inc. $ 3,511,002 $ 3,525,013
Notes payable to NationsBank, payable in monthly installments of
$8,333, including interest of 8.37%, through January 2001, secured by
real estate, furnishings, fixtures, equipment and other personal
property, corporate stock of TFI, Inc. and its subsidiaries and the
personal guarantees of certain stockholders of TFI, Inc. 366,338 375,000
---------- ----------
3,877,340 3,900,013
Less:current portion of long-term debt 277,392 274,943
---------- ----------
Total long-term debt $3,599,948 $3,625,070
========== ==========
</TABLE>
All of the long-term debt was paid in full after the close of business on
June 4, 1997.
6. CAPITAL LEASE OBLIGATIONS
The Company leases equipment under capital leases expiring in various years
through 2002. The assets and liabilities under capital leases are recorded
at the lower of the present values of the minimum lease payments or the fair
values of the assets. The assets are included in machinery and equipment
and are amortized over their estimated useful lives. The cost of assets
recorded under capital leases was $293,788 and at June 4, 1997 and
accumulated depreciation totaled $75,951. Depreciation expense for assets
related to capital leases was $7,594 and $45,564 for the period ended June
4, 1997 and the year ended March 31, 1997, respectively.
<PAGE> 12
10
TAYLOR FORGE INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
6. CAPITAL LEASE OBLIGATIONS (CONTINUED)
Minimum future lease payments under capital leases are:
March 31
--------
1998 $75,659
1999 90,153
2000 83,135
2001 30,189
2002 29,281
Thereafter -
--------
Total minimum future lease payments 308,417
Less: Amount representing interest (28,279)
--------
Net minimum lease payments 280,138
Less: Current portion (75,659)
--------
Long-term portion $204,479
========
The current portion of the capital lease obligation is included in accrued
expenses and other liabilities.
7. SIGNIFICANT CONCENTRATIONS
Sales to customers which exceeded 10% of total sales for the period ended
June 4, 1997 and the year ended March 31, 1997 were as follows:
FOR THE PERIOD FROM
APRIL 1, 1997
TO FOR THE YEAR ENDED
JUNE 4, 1997 MARCH 31, 1997
Customer A 16% 13%
Customer B 11% 5%
Accounts receivable related to customer A, which is a railroad locomotive
manufacturer, were 12% of total accounts receivable at June 4, 1997 and
March 31, 1997. Accounts receivable related to customer B, which is a
construction equipment manufacturer, were 5% at June 4, 1997 and were not
significant at March 31, 1997.
<PAGE> 13
11
TAYLOR FORGE INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
7. SIGNIFICANT CONCENTRATIONS (CONTINUED)
The Company does not require collateral or other form of security from these
customers, or any of its other customers, except for certain export
customers who are required to furnish letters of credit prior to shipment;
accordingly, all domestic trade accounts receivable are fully subject to
credit risks at June 4, 1997 and March 31, 1997.
8. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Income tax
expenses have not previously been determined on a separate company basis.
Had income taxes been determined on a separate basis, the assets and
liabilities would have consisted of the following:
JUNE 4, MARCH 31,
1997 1997
Deferred tax liabilities:
Tax over book depreciation $360,672 $ 371,821
-------- ---------
Total deferred tax liabilities 360,672 371,821
-------- ---------
Deferred tax assets:
Net operating loss carryforward 677,684 632,338
Alternative minimum tax credit carryforward 93,013 93,013
Other, net 12,888 13,279
-------- ---------
Total deferred tax assets 783,585 738,630
Valuation allowance for deferred tax assets 422,913 366,809
-------- ---------
Net deferred tax assets 360,672 371,821
-------- ---------
Net deferred taxes $ - $ -
======== =========
At June 4, 1997, TFI, Inc. had unused federal net operating loss
carryforwards which were generated by the Company. Management has
established a valuation allowance with respect to the deferred tax assets in
an amount equal to that required to establish a net deferred tax balance of
zero due to its evaluation of the Company's future tax paying position.
<PAGE> 14
12
TAYLOR FORGE INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
8. INCOME TAXES (CONTINUED)
The following schedule reconciles the statutory federal
income tax rate to the Company's effective tax rate:
PERIOD FROM
APRIL 1, 1997 YEAR ENDED
THROUGH MARCH 31,
JUNE 4, 1997 1997
Statutory federal income tax rate 35% 35%
Effect of graduated rates (15) (15)
Change in valuation allowance (20) (22)
Other items, net - (1)
------------- ----------
0% (3)%
============= ==========
9. RELATED PARTY TRANSACTIONS
The Company enters into various related party transactions, primarily with
members of the consolidated group of TFI, Inc. companies. The more
significant related party transactions were as follows:
* The Company leased space in its manufacturing facility to a related
company for $1,000 per month.
* As discussed in Note 8, the Company, its parent, and other members of the
consolidated group file a consolidated federal income tax return.
* Taylor Forge paid various expenses for members of the consolidated group
during both periods. When Taylor Forge paid such expenses, an
intercompany receivable and payable were established.
* The members of the consolidated group participated jointly in the use of
a bank line of credit during both periods. Interest expense was
allocated to the members of the consolidated group based upon each
company's relative use of funds and repayments of the line of credit and
the relative amount of each company's intercompany accounts
receivable/payable.
* As discussed in Note 4, the Company had notes payable to family members
of all three common stockholders of TFI, Inc. during both periods.
<PAGE> 1
EXHIBIT 7(b)
Pro forma financial statements of the Registrant on a consolidated basis, after
giving effect to the acquisition of substantially all of the assets of Taylor
Forge International, Inc., are filed herewith as Exhibit 7(b).
<PAGE> 2
CENTRUM INDUSTRIES, INC.
CONDENSED PRO FORMA COMBINED BALANCE SHEET (UNAUDITED)
MARCH 31, 1997
The following condensed pro forma combined balance sheet (unaudited) is based
on the individual historical March 31, 1997 balance sheets of Centrum
Industries, Inc. (Centrum) and Taylor Forge International, Inc. (Taylor
Forge). It has been prepared using the purchase method of accounting to reflect
the acquisition of substantially all of the assets of Taylor Forge by Centrum
as of March 31, 1997, after giving effect to the pro forma adjustments
described in Note 1. This statement should be read in conjunction with the
Taylor Forge historical financial statements and notes thereto included in this
Form 8-K, and the Centrum historical financial statements and notes thereto
included in its Annual Report on Form 10-K for the year ended March 31, 1997.
All amounts are in thousands.
<TABLE>
<CAPTION>
PRO FORMA
-------------------------------------
TAYLOR ADJUSTMENTS
CENTRUM FORGE (NOTE 1) COMBINED
<S> <C> <C> <C> <C>
Assets
Cash and cash
equivalents $ 2,758 $ 1 $ 2,759
Accounts receivable 11,081 1,351 $ (35) (a) 12,397
Receivable from related
parties 2,812 (2,812) (c)
Inventories 9,898 1,193 11,091
Other current assets 518 104 (80) (a) 542
Costs and estimated
earnings in excess of
billings in uncompleted
contracts 1,514 1,514
Property, plant and
equipment 10,628 6,123 598 (a) 17,349
Other assets 669 18 (18) (a) 669
Intangibles 5,935 5,935
----------- ------------ ----------- -------------
$ 43,001 $ 11,602 $ (2,347) $ 52,256
=========== ============ =========== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Line of Credit $ 10,645 $ 2,945 $ (522) (c) $ 13,068
Current portion of
long-term debt 1,608 578 472 (c) 2,658
Accounts payable 6,641 1,985 8,626
Accrued liabilities 3,747 232 3,979
Long-term debt 11,022 3,625 (425) (c) 14,222
Other long-term
liabilities 596 170 (16) (a) 750
----------- ------------ ----------- -------------
34,259 9,535 (491) 43,303
----------- ------------ ----------- -------------
Preferred stock 4 4
Common stock:
Centrum 418 5 (b) 423
Taylor Forge 1 (1) (b)
Additional paid-in
capital 7,918 3,850 (3,644) (b) 8,124
Retained earnings
(accumulated deficit) 402 (1,784) 1,784 (b) 402
----------- ------------ ----------- -------------
8,742 2,067 (1,856) 8,953
----------- ------------ ----------- -------------
$ 43,001 $ 11,602 $ (2,347) $ 52,256
=========== ============ =========== =============
</TABLE>
<PAGE> 3
NOTE 1 - The pro forma balance sheet has been prepared to reflect the
acquisition of substantially all of the assets of Taylor Forge by Centrum for
an aggregate price of $6.9 million which includes the repayment of $4.4 million
of debt existing at Taylor Forge, and includes the issuance of 94,000 shares of
Centrum Common Stock. The purchase price is subject to adjustment through the
issuance of up to 30,000 additional shares, or the return of the issued shares.
The total acquisition price and refinancing was funded as follows:
<TABLE>
<S> <C>
Draw on bank line of credit $ 2,423
New term loan 4,000
New notes 250
-----------
Net increase in debt 6,673
-----------
The issuance of 94,000 shares
of Centrum Common Stock
for $2.25 per share 212
-----------
$ 6,885
===========
</TABLE>
Pro forma adjustments are made to reflect:
a. Assets or liabilities not purchased and/or fair market value adjustments.
b. The issuance of 94,000 shares of Centrum Common Stock for $2.25 per share,
and the elimination of the common shareholders' equity account of Taylor
Forge.
c. The net changes in debt resulting from $2,423 in proceeds from a line of
credit with interest at prime rate (8.50% at March 31, 1997) plus
0.75%; proceeds from a $4,000, five year term loan with interest at prime
rate plus 1.25%, proceeds of seller financed notes of $250 with interest at
prime plus 1.25%; the repayment of an existing Taylor Forge bank line of
credit of $2,945, the repayment of $2,812 in intercompany receivables; the
repayment of an existing term note in the amount of $3,900 and the
repayment of existing shareholder loans of $303.
<PAGE> 4
CENTRUM INDUSTRIES, INC.
CONDENSED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1997
The following condensed pro forma combined statement of operations (unaudited)
is based on the individual historical statements of operations of Centrum
Industries, Inc. (Centrum) and Taylor Forge International, Inc. (Taylor Forge).
This pro forma statement combines the results of operations of Centrum and
Taylor Forge for the year ended March 31, 1997, using the purchase method of
accounting, as if the transaction had occurred as of the beginning of the fiscal
year, after giving effect to the pro forma adjustments described in Note 1.
This statement should be read in conjunction with the Taylor Forge historical
financial statements and notes thereto included in this Form 8-K and the Centrum
historical financial statements and notes thereto included in its Annual Report
on Form 10-K for the year ended March 31, 1997. All amounts, except for share
and per share amounts, are in the thousands.
<TABLE>
<CAPTION>
TAYLOR ADJUSTMENTS
CENTRUM FORGE (NOTE 1) COMBINED
<S> <C> <C> <C> <C>
Net Sales $ 71,155 $ 9,223 $ $ 80,378
Cost of Sales 54,925 8,914 (197) (a) 63,642
Selling, general
and administrative
expense 12,077 1,286 (218) (b) 13,145
Interest expense 2,750 448 111 (c) 3,309
Other income (274) (26) (300)
----------- ------------ ----------- ------------
Income (loss) before
income taxes 1,677 (1,399) 304 582
Provision (benefit) for
income taxes (773) 43 (372) (d) (1,102)
----------- ------------ ----------- ------------
Net Income (loss) $ 2,450 $ (1,442) $ 676 $ 1,684
=========== ============ =========== ============
Net Income (loss)
per common share $ 0.28 $ (1,442.59) $ .19
=========== ============ ============
Weighted average
common shares
outstanding 8,638,253 1,000 93,000 (e) 8,732,253
=========== ============ =========== ============
</TABLE>
<PAGE> 5
NOTE 1 - The above statement gives effect to the following pro forma
adjustments necessary to reflect the acquisition outlined in Note 1 to the pro
forma balance sheet:
a. Reduction in annual depreciation expense in the amount of $197 due to
the revaluation of property and depreciable lives resulting from
purchase accounting adjustments.
b. Reduction in expense based upon the termination of the outside sales
contracts, utilization of the McInnes internal sales force and
consolidation of certain executive administrative functions.
c. Increase in annual interest charges due to the net additional debt
incurred for the purchase of the Taylor Forge assets by Centrum.
d. Increase in income tax benefit for the effect of including Taylor in
consolidated Centrum provision at a tax rate of 34%.
e. Increase of 94,000 shares outstanding of Centrum's common stock
and retirement of 1,000 shares of Taylor Forge's common stock.
