<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JANUARY 6, 1998
BOLT TECHNOLOGY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
COMMISSION FILE NUMBER 0-10723
CONNECTICUT 06-0773922
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATON NO.)
FOUR DUKE PLACE
NORWALK, CONNECTICUT 06854
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(203) 853-0700
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
(1)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of business acquired.
The following financial statements of Custom Products Corporation are included
herein:
Independent Auditors' Report
Balance Sheets - December 31, 1997 and 1996
Statements of Income and Retained Earnings for the years ended December 31, 1997
and 1996
Statements of Cash Flows for the years ended December 31, 1997 and 1996
Notes to the Financial Statements
(b) Pro Forma Financial Information.
The following pro forma financial information of Bolt Technology Corporation is
included herein:
Introduction
Pro forma Consolidated Balance Sheets - December 31, 1997 (unaudited)
Pro forma Consolidated Statements of Income for the year ended June 30, 1997
(unaudited)
Pro forma Consolidated Statements of Income for six months ended December 31,
1997 (unaudited)
(2)
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders
of Custom Products Corporation
We have audited the accompanying balance sheet of Custom Products
Corporation (an S-Corporation) as of December 31, 1997 and 1996 and
the related statements of operations, retained earnings, and cash
flows for the years then ended. These financial statements are the
responsibility of the Corporation's management. Our responsibility
is to express an opinion on these financial statements based on our
audits.
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 Custom
Products Corporation 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.
Thomas J. Demchak, CPA, P.C.
Hamden, CT
February 23, 1998
(3)
<PAGE>
CUSTOM PRODUCTS CORPORATION
---------------------------
BALANCE SHEET
-------------
ASSETS
------
December 31,
------------
1997 1996
---- ----
CURRENT ASSETS:
- --------------
Cash and cash equivalents $ 206,119 $ 82,666
Accounts receivable 220,968 323,791
Inventories - raw materials 447,884 401,671
Prepaid expenses 8,000 19,588
---------- ----------
Total Current Assets 882,971 827,716
---------- ----------
PROPERTY, PLANT & EQUIPMENT:
- ---------------------------
Property, plant & equipment, less
accumulated depreciation of $214,793
in 1997 and $201,489 in 1996 (Note 4) 64,214 38,524
---------- ----------
OTHER ASSETS:
- ------------
Marketable securities - (Note 5) - 56,790
Other Investments, net (Note 6) 112,340 109,065
Refundable deposits 5,274 5,274
Note receivable from stockholder - 237,115
Note and mortgage receivable
from related parties (Note 7) 121,965 127,187
---------- ----------
Total Other Assets 239,579 535,431
---------- ----------
Total Assets $1,186,764 $1,401,671
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
- -------------------
Accounts payable-trade $ 51,118 $ 31,500
Accrued salaries and bonus 6,104 11,146
Accrued money purchase plan 150,388 106,274
Accrued expenses 8,574 39,669
Current portion-note payable 84,020 77,580
---------- ----------
Total Current Liabilities 300,204 266,169
---------- ----------
LONG-TERM DEBT:
- --------------
Note payable (Note 8) 191,705 275,215
---------- ----------
Total Liabilities 491,909 541,384
---------- ----------
STOCKHOLDERS' EQUITY:
- --------------------
Common stock, par value, $10 per share
authorized 5,000 shares, issued and
outstanding 3,422 shares 45,000 45,000
Less: treasury stock ( 3,169) ( 3,169)
----
Additional paid-in capital 8,645 8,645
---------- ----------
Total capital 50,476 50,476
---------- ----------
Valuation allowance - 7,200
Retained earnings 644,379 802,611
---------- ----------
Total Stockholders' Equity 694,855 860,287
---------- ----------
Total Liabilities and Stockholders' Equity $1,186,764 $1,401,671
========== ==========
The accompanying notes are an integral
part of the financial statements
(4)
<PAGE>
CUSTOM PRODUCTS CORPORATION
---------------------------
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
----------------------------------------------
For the Year Ended
------------------
December 31,
-----------
1997 1996
---- ----
REVENUE
- -------
Sales $3,317,956 $2,956,550
COST OF GOODS SOLD 1,747,494 1,603,331
---------- ----------
GROSS PROFIT 1,570,462 1,353,219
---------- ----------
SELLING EXPENSES
- ----------------
Salaries - Officers 401,515 348,238
Taxes - Payroll 8,979 7,753
Money Purchase Pension Plan 16,168 15,654
Commissions 94,560 87,204
Advertising - Puljak 2,276 3,199
Advertising - Polyclutch 15,603 20,836
Travel & Entertainment 3,502 6,498
Travel & Entertainment - meals - 951
Delivery 2,734 2,619
Bad Debts 2,743 -
---------- ----------
TOTAL SELLING EXPENSES 548,080 492,952
---------- ----------
GENERAL AND ADMINISTRATIVE EXPENSES
- -----------------------------------
Salaries - Officers 894,721 643,257
Salaries - Office 77,920 72,380
Taxes - Payroll 24,350 19,669
Employee Benefits - Cafeteria 2,563 2,039
Money Purchase Pension Plan 56,688 21,329
Automobile 439 13
Depreciation - furniture 2,590 1,587
Telephone 5,833 5,436
Professional fees 46,484 12,784
Computer Supplies 34,740 872
Publishing expenses 11,296 -
Dues and subscriptions 1,083 1,018
Expendable office equipment 445 -
Office supplies 3,047 3,795
Office postage 2,255 1,842
Bank charges 333 152
Investment management fees - 50
Miscellaneous 115 1,372
Biennial Report 75 75
---------- ----------
TOTAL GENERAL & ADMINISTRATIVE EXPENSES 1,164,977 787,670
---------- ----------
The accompanying notes are an integral
part of the financial statements
(5)
<PAGE>
CUSTOM PRODUCTS CORPORATION
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
For the Year Ended
------------------
December 31,
-----------
1997 1996
---- ----
CHRISTMAS TREE OPERATION EXPENSES
- ---------------------------------
General and Administrative $ 10,502 $ 13,772
Property Taxes 1,061 1,047
Depreciation - 6,955
Interest - 637
---------- ----------
TOTAL CHRISTMAS TREE OPERATION EXPENSES 11,563 22,411
TOTAL OPERATING EXPENSES 1,724,620 1,303,033
INCOME (LOSS) FROM OPERATIONS ( 154,158) 50,186
OTHER INCOME
- ------------
Purchase discounts 1,755 1,855
Interest earned 7,195 6,137
Dividend income 4,626 2,466
Gain on sale of investments 19,402 4,132
Misc. other income/make ready 8,054 924
Sale of Scrap 566 677
---------- ----------
TOTAL OTHER INCOME 41,598 16,191
---------- ----------
OTHER EXPENSES
- --------------
Cash discounts allowed 12,571 7,978
Charitable contributions 3,004 2,350
Interest expense 26,111 31,874
---------- ----------
TOTAL OTHER EXPENSES 41,686 42,202
---------- ----------
INCOME BEFORE TAXES ( 154,246) 24,175
STATE TAX PROVISION 3,986 2,629
---------- ----------
NET INCOME (LOSS) ( 158,232) 21,546
RETAINED EARNINGS - BEGINNING OF THE YEAR 802,611 781,065
---------- ----------
RETAINED EARNINGS - END OF THE YEAR $ 644,379 $802,611
========== ==========
The accompanying notes are an
integral part of the financial statements
(6)
<PAGE>
CUSTOM PRODUCTS CORPORATION
---------------------------
STATEMENT OF CASH FLOWS
-----------------------
For the Year Ended
------------------
December 31,
-----------
1997 1996
---- ----
Operating Activities
- --------------------
Net Income (Loss) $(158,232) $ 21,546
Adjustments to reconcile net
income (loss) net cash provided by
operating activities:
Depreciation and Amortization 13,304 17,806
Analysis of efforts of past and future
receipts and payments:
(Increase) Decrease in accounts receivable-trade 102,823 ( 45,395)
(Increase) Decrease in inventory ( 46,213) ( 67,885)
(Increase) Decrease in prepaid expenses 11,588 ( 2,856)
Increase (Decrease) in accounts payable 19,618 ( 15,686)
Increase (Decrease) in accrued expenses 7,977 17,398
--------- ---------
Net cash used in operating activities ( 49,135) ( 75,072)
--------- ---------
Investing Activities:
- --------------------
Investment in Related Party Note and Mortgage
Receivable - (128,900)
Payments received on Related Party Note and
Mortgage Receivable 5,222 1,713
Capital additions, net of disposals ( 38,994) ( 7,329)
Sale of marketable securities 49,590 15,562
Purchase of marketable securities - ( 20,883)
Other Investments, net in Christmas Tree
Operation ( 3,275) ( 3,169)
--------- ---------
Net cash provided by (used in) investing
activities 12,543 ( 143,006)
--------- ---------
Financing Activities
- --------------------
Repayment of loan receivable from officer 237,115 158,876
Repayment of long term debt ( 77,070) ( 71,005)
--------- ---------
Net cash provided by financing activities 160,045 87,871
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 123,453 (130,207)
CASH AND CASH EQUIVALENTS AT THE BEGINNING 82,666 212,873
OF YEAR
--------- ---------
CASH AND CASH EQUIVALENTS AT THE END OF YEAR $206,119 $ 82,666
========= =========
SUPPLEMENTAL DISCLOSURES:
Interest paid $ 26,111 $ 31,874
========= =========
Income taxes paid $ 3,986 $ 2,629
========= =========
The accompanying notes are an
integral part of the financial statements
(7)
<PAGE>
CUSTOM PRODUCTS CORPORATION
---------------------------
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
DECEMBER 31, 1997 and 1996
--------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
- ---------------------------------------------------
This summary of significant accounting policies of Custom Products
Corporation (the Corporation) is presented to assist in understanding the
Corporation's financial statements. These accounting policies conform to
generally accepted accounting principles and have been consistently applied in
the preparation of the financial statements.
Nature of Operations
- --------------------
The Corporation, located in North Haven, Connecticut, manufactures and
sells miniature precision clutches and fence stretching jacks, under the
tradenames of "Polyclutch" and "Puljaks".
Cash and Cash Equivalents:
- -------------------------
The Corporation considers all highly liquid debt instruments with a
maturity of three months or less when purchased to be cash equivalents.
Inventories:
- -----------
Inventories are valued at the lower of cost or market as determined by the
"first-in, first-out" (FIFO) method.
Marketable Securities:
- ---------------------
The Corporation's marketable securities consist of equity securities that
have a readily determinable fair market value. Management determines the
appropriate classification of its investments at the time of purchase and re-
evaluates such determinations at each balance sheet date. The Corporation has
classified marketable securities as "non-current assets" and accordingly, are
carried at fair value, with unrealized gains and losses, reported as a separate
component within the stockholders' equity section of the balance sheet. Realized
gains and losses on all marketable securities are determined by specific
identification and are charged or credited to current earnings.
(8)
<PAGE>
Fixed Assets:
- ------------
Machinery, tools, office furniture and equipment are recorded at cost and
are depreciated on a straight line basis over the estimated useful lives of the
related assets. Leasehold improvements are recorded at cost and are amortized
over the lesser of the terms of the related lease or useful lives of the assets.
Expenditures incurred for repairs and maintenance are charged against income in
the period in which incurred.
Income Taxes:
- ------------
The corporation is not liable for federal income taxes as provided by the
stockholder's election of Subchapter S Corporation status, defined under section
1361 of the Internal Revenue code. Accordingly, there is no provision for
Federal Income Taxes reflected in the accompanying financial statements. The net
income (loss) is included in the taxable income of the stockholders. However,
the corporation remains liable for state income taxes and, as such, appropriate
provisions have been made.
Pension Plan:
- ------------
The Corporation has a defined contribution - money purchase plan covering
substantially all of its employees. The benefits are based on years of service
and the employee's compensation for plan participants who were participants in
the prior year for the "computation" period. For employees who were not plan
participants in the prior year, the "computation" period is twelve months
commencing with the date of employment. For plan participants, years of service
is credited for vesting. The corporations funding policy is to contribute
annually the maximum amount that can be deducted for federal income tax
purposes. Contributions are intended to provide not only for benefits attributed
to service to date, but also for those expected to be earned in the future.
Under the plan, Custom Products Corporation expenses and funds 15% of covered
payroll, the total expenses funded by the Corporation for 1997 and 1996 amounted
to $150,368 and $106,274 respectively.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
NOTE 2 - LEASE INDENTURE:
- ------------------------
A lease was entered into on May 1, 1993 requiring payments of $1,333 to be paid
through July of 1993, at that point the terms of the lease were reformulated
whereby an addition was made to the building and rent was increased to $2,462
per month through December 31, 1998. Rent expense incurred for 1997 and 1996
amounted to $29,544 and $29,544, respectively.
(9)
<PAGE>
NOTE 3 - NOTE RECEIVABLE FROM STOCKHOLDER:
- -----------------------------------------
The Corporation holds a note receivable from its stockholder bearing no
stated interest.
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT:
- --------------------------------------
Property, plant and equipment at December 31, 1997 and 1996 consists of the
following:
1997 1996
---- ----
Machinery and equipment $194,077 $182,324
Poly and puljak tooling 7,427 7,427
Office furniture and equipment 41,747 31,521
Automobile 17,015 -
Patents 10,000 10,000
Leasehold improvements 8,741 8,741
-------- --------
279,007 240,013
Less accumulated depreciation
and amortization (214,793) (201,489)
-------- --------
$ 64,214 $ 38,524
======== ========
NOTE 5 - MARKETABLE SECURITIES - NON-CURRENT ASSETS:
- ---------------------------------------------------
At December 31, 1997 and 1996, marketable securities consist of the
following:
Aggregate Cost: 1997 1996
-------------- ---- ----
Common Stocks $ - $ 49,590
Aggregate Market Value - 56,790
Gross Unrealized Gains - 12,033
Gross Unrealized Losses - 4,833
Net realized gain included
in earnings 19,402 4,132
Change in valuation allowance
included in equity section ( 7,200) 7,200
NOTE 6 - OTHER INVESTMENTS, NET:
- -------------------------------
During 1994, the corporation started a new operation in upstate New York
which involves the farming and harvesting of Christmas Trees. As of December 31,
1997 and 1996, Other Investments, net consists of the following accounts:
1997 1996
---- ----
Current Assets:
- --------------
Inventory - Christmas Tree Seedlings $ 3,328 $ 3,328
Fixed Assets:
Property and Dwellings 104,593 104,593
Farm Equipment 23,397 23,397
-------- --------
127,990 127,990
Less: accumulated depreciation ( 17,808) ( 17,808)
-------- --------
Fixed Assets, net 110,182 110,182
-------- --------
Total Assets $113,510 $113,510
-------- --------
(10)
<PAGE>
Current and Long-Term Liabilities:
- ---------------------------------
Note payable - Farm Equipment 1,170 4,445
-------- --------
Total Current and Long-Term liabilities 1,170 4,445
-------- --------
Other investments, net $112,340 $109,065
======== ========
The Christmas tree farm operation incurred expenses totalling approximately
$11,500 and $22,400 during 1997 and 1996, respectively which are reflected in
the Corporation's Statement of Operations. However, no revenue is expected from
the Christmas Tree operation for period of three to five years until the
Christmas Trees are grown and harvested.
NOTE 7 - RELATED PARTY TRANSACTIONS:
- -----------------------------------
The company had the following note and mortgage receivable balances with
children related to the Company's sole stockholders at December 31, 1997 and
1996.
1997 1996
---- ----
3.3% mortgage note receivable, payable
$390 monthly, including interest,
collateralized by certain real estate,
maturing on June 1, 2026 $ 86,235 $ 88,026
3.5% uncollateralized note receivable,
payable $395 monthly, including interest,
maturing on August 31, 2006 35,730 39,161
-------- --------
$121,965 $127,187
======== ========
NOTE 8-LONG TERM DEBT:
- ---------------------
On April 5, 1990, the Company borrowed $1,000,000 under a ten year
installment note agreement. The proceeds for this note were used to payoff the
Stockholders' obligation incurred connected with the acquisition of the
Company's common stock. Under the terms of the installment note agreement, equal
installments of approximately $14,000, including interest at 9 1/2% (which
represents the bank's base rate plus 1% at December 31, 1993 and 1992) were
required through April 2000. All of the Company's accounts receivable,
inventory, furniture and equipment and certain marketable securities were
pledged as collateral towards the note.
On December 22, 1993 the above note was refinanced and the balance of the
note was paid off with the proceeds from the sale of a investment portfolio held
by the Trust department at Branford Savings Bank and from a Commercial loan with
the Chase Manhattan Bank of Connecticut (Chase). The Chase note is in the amount
of $550,000, of which $461,122 was paid to Branford Savings Bank and the balance
of the note was used for working capital purposes. The terms of this loan
consist of eighty-four monthly payments of $8,572 which includes interest at 8%
(11)
<PAGE>
commencing on January 22, 1994. Chase holds first priority security interest in
all business assets of the borrower; marketable securities acceptable to the
bank which have a cumulative value of $80,000 as of the date of the loan closing
and a second mortgage position on the residence of the company's sole
stockholders.
The note payable at December 31, 1997, is scheduled to mature as follows:
1998 $ 84,020
1999 $ 90,994
2000 $100,201
NOTE 9 - CONCENTRATION OF CREDIT RISK:
- -------------------------------------
The Corporation maintains its cash in bank deposits accounts, which, at times,
may exceed federally insured limits. The Corporation has not experienced any
losses in such accounts. Management believes the Corporation is not exposed to
any significant credit risk related to cash.
NOTE 10 - SALE OF BUSINESS:
- --------------------------
On November 14, 1997 the Corporation's stockholders entered into an Asset
Purchase Agreement with Bolt Technology Corporation, whereby it agreed to sell
substantially all the assets of the Corporation. Under the terms of the Asset
Purchase Agreement, the Corporation's stockholders received approximately
$5,000,000 in cash and $900,000 in Bolt Technology common stock. Also, the
stockholders could earn an additional $4,000,000 in cash if the Corporation
achieves certain sales goals over the next five calendar year from 1998 to 2002.
The Asset Purchase Agreement with Bolt Technology was consummated on January 6,
1998.
(12)
<PAGE>
BOLT TECHNOLOGY CORPORATION
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
( UNAUDITED)
Introduction
- ------------
On November 14, 1997, the Company entered into an asset purchase agreement with
Custom Products Corporation ("Custom") of North Haven, Connecticut, pursuant to
which the Company agreed to purchase substantially all of the assets of Custom.
Custom is a privately held manufacturer of miniature precision mechanical and
pneumatic slip clutches sold under the "Polyclutch" trade name. In order to
facilitate the acquisition, the Company formed a wholly-owned subsidiary which
assumed the Custom Products Corporation name.
On January 6, 1998, the purchase was completed. In consideration of the
purchase of the assets of Custom, the Company delivered to the seller (i)
$4,971,000 in cash; (ii) 135,000 shares of common stock of the Company valued at
$881,000 and (iii) contingent cash payments. Such payments could total
$4,000,000 and are dependent on annual increases in the net sales of Custom for
the period January 1, 1998 to December 31, 2003.
In connection with the purchase, the Company established a $3,500,000 unsecured
line of credit with Fleet National Bank. The term of the loan, which bears
interest at the prime rate, is five years. The Registrant borrowed $800,000
under the credit line for the purchase of Custom.
The accompanying unaudited pro forma consolidated balance sheets of the Company
as of December 31, 1997 gives effect to the acquisition of Custom completed as
of January 6, 1998 and the financing of the acquisition, as if the transaction
had occurred on December 31, 1997.
The accompanying unaudited pro forma consolidated statements of income for the
year ended June 30, 1997 and the six months ended December 31, 1997 give effect
to the acquisition of Custom and the financing thereof, as if the transaction
had occurred on July 1, 1996.
The pro forma consolidated financial statements are based upon certain
assumptions and estimates which are subject to change. These statements are not
necessarily indicative of the actual results of operations that might have
occurred, nor are they necessarily indicative of expected results in the future.
The pro forma consolidated financial statements should be read in conjunction
with the Company's historical consolidated financial statements and notes
included in the Company's annual report on Form 10-K for the year ended June 30,
1997.
(13)
<PAGE>
BOLT TECHNOLOGY CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
BOLT TECHNOLOGY CUSTOM PRODUCTS PRO FORMA PRO FORMA
CORPORATION CORPORATION (a) ADJUSTMENTS (b) COMBINED
--------------- ---------------- --------------- ---------
ASSETS
CURRENT ASSETS:
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 4,883,000 $206,000 $(4,446,000)(c) $643,000
Accounts receivable, net 2,497,000 221,000 - 2,718,000
Inventories 1,791,000 448,000 90,000 (d) 2,329,000
Deferred income taxes and other
current assets 1,148,000 - 200,000 (e) 1,348,000
----------- --------- --------------- -----------
Total current assets 10,319,000 875,000 (4,156,000) 7,038,000
Plant and equipment, net 129,000 54,000 43,000 (f) 226,000
Goodwill, net - - 4,450,000 (g) 4,450,000
Deferred income taxes 722,000 - 800,000 (e) 1,522,000
Other assets 22,000 15,000 25,000 (h) 62,000
------------ ------------ --------------- ------------
Total Assets $11,192,000 $944,000 $ 1,162,000 $13,298,000
=========== ============ =============== ============
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CURRENT LIABILITIES:
<S> <C> <C> <C> <C>
Accounts payable $ 1,094,000 $ 51,000 - $ 1,145,000
Accrued liabilities 1,231,000 166,000 $208,000 (i) 1,605,000
------------ -------- ------------ ------------
Total current liabilites 2,325,000 217,000 208,000 2,750,000
Long-term debt - 275,000 525,000 (j) 800,000
STOCKHOLDERS' EQUITY:
Common stock 24,682,000 - 881,000 (k) 25,563,000
Accumulated deficit (15,815,000) 452,000 (452,000)(l) (15,815,000)
------------ --------- ------------- ------------
Total stockholders' equity 8,867,000 452,000 429,000 9,748,000
------------ --------- ------------- ------------
Total liabilities and
stockholders' equity $ 11,192,000 $944,000 $1,162,000 $ 13,298,000
============ ======== ============= ============
</TABLE>
(14)
<PAGE>
BOLT TECHNOLOGY CORORATION
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
BOLT TECHNOLOGY CUSTOM PRODUCTS PRO FORMA PRO FORMA
CORPORATION CORPORATION ADJUSTMENTS COMBINED
---------------- --------------- --------------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Sales $10,060,000 $3,121,000 - $13,181,000
Service 471,000 - - 471,000
----------- ---------- -------------- -----------
10,531,000 3,121,000 - 13,652,000
----------- ---------- -------------- -----------
COST AND EXPENSES:
Cost of sales (a) 5,219,000 1,392,000 - 6,611,000
Cost of service 569,000 - - 569,000
Research and development 204,000 - - 204,000
Selling, general and
administrative 2,485,000 1,600,000 (1,168,000) (b) 2,917,000
Interest (income) expense,
net (67,000) 29,000 126,000 (c) 88,000
Amortization of intangibles - - 228,000 (d) 228,000
----------- ---------- -------------- -----------
8,410,000 3,021,000 (814,000) 10,617,000
----------- ---------- -------------- -----------
Income before taxes 2,121,000 100,000 814,000 3,035,000
Provision for income taxes - - - -
----------- ---------- -------------- -----------
Net Income (e) $ 2,121,000 $ 100,000 $ 814,000 $ 3,035,000
=========== ========== ============== ===========
EARNINGS PER SHARE: (f)
Basic earnings per share $0.43 $0.59
Diluted earnings per share $0.41 $0.57
Shares outstanding- basic 4,989,383 5,124,383
Shares outstanding- diluted 5,177,943 5,312,943
</TABLE>
(15)
<PAGE>
BOLT TECHNOLOGY CORORATION
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
BOLT TECHNOLOGY CUSTOM PRODUCTS PRO FORMA PRO FORMA
CORPORATION CORPORATION ADJUSTMENTS COMBINED
---------------- ---------------- -------------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Sales $6,392,000 $1,637,000 - $8,029,000
Service 15,000 - - 15,000
---------- ---------- ------------- ----------
6,407,000 1,637,000 - 8,044,000
---------- ---------- ------------- ----------
COST AND EXPENSES:
Cost of sales (a) 3,410,000 706,000 - 4,116,000
Cost of service 80,000 - - 80,000
Research and development 106,000 - - 106,000
Selling, general and
administrative 1,399,000 953,000 (713,000) (b) 1,639,000
Interest (income) expense,
net (82,000) 16,000 100,000 (c) 34,000
Amortization of intangibles - - 114,000 (d) 114,000
---------- ---------- ------------- ----------
4,913,000 1,675,000 (499,000) 6,089,000
---------- ---------- ------------- ----------
Income (loss) before taxes 1,494,000 (38,000) 499,000 1,955,000
Income tax benefit (e) 358,000 - - 358,000
---------- ---------- ------------- ----------
Net Income $1,852,000 $ (38,000) $ 499,000 $2,313,000
========== ========== ============= ==========
EARNINGS PER SHARE: (f)
Basic earnings per share $0.36 $0.44
Diluted earnings per share $0.36 $0.43
Shares outstanding- basic 5,076,853 5,211,853
Shares outstanding- diluted 5,213,150 5,348,150
</TABLE>
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<PAGE>
PRO FORMA ADJUSTMENTS.
Balance Sheet Adjustments.
a. Represents historical cost of assets and liabilities of Custom at December
31, 1997 acquired pursuant to the Asset Purchase Agreement dated November 14,
1997.
b. The allocation of the acquisition cost to the net assets of Custom is based
on estimated fair values of its assets and liaiblities. The allocation is
subject to revision based upon final determination of fair values of the assets
and liabilities. However, it is expected that any changes would not have a
material effect on the pro forma combined financial statements included herein.
The following table presents the allocation of the purchase price of Custom.
<TABLE>
<CAPTION>
<S> <C>
Cash cost of acquisition $4,971,000
Issuance of common stock 881,000
Other acquisition costs 208,000
----------
$6,060,000
==========
Net assets acquired $ 452,000
Fair value adjustments:
Inventories 90,000
Plant and equipment 43,000
Other assets 25,000
Deferred income taxes 1,000,000
Goodwill 4,450,000
----------
$6,060,000
==========
</TABLE>
c. Records the portion of the cash cost of the acquisition; proceeds received
from borrowings from credit facility and payment of the long-term debt of
Custom.
d. Adjusts the carrying value of inventories to fair maket value.
e. Records the portion of the acquisition cost allocated to deferred income
taxes.
f. Adjusts the carrying value of plant and equipment to fair market value.
g. Records the excess of acquisition cost over the estimated fair value of net
assets acquired.
h. Records the portion of the acquisition cost allocated to non-compete
agreement.
i. Records legal, accounting and investment banking costs associated with the
acquisition.
(17)
<PAGE>
Balance Sheet Adjustments. (cont'd.)
j. Records payment of long-term debt of Custom and portion of acquisition cost
funded by borrowings under the Company's credit facility.
k. Records portion of acquisition cost paid in the form of common stock.
l. Elimination of the stockholders' equity of Custom.
Statement of Income adjustments:
a. The expense recognition of the inventory write-up to fair market value is
expected to result in a charge to cost of sales of $90,000 in the first year
subsequent to the acquisition. This nonrecurring charge is not reflected in the
Pro Forma Consolidated Statement of Income.
b. Adjusts the compensation to former owner of Custom to current levels of
compensation.
c. Eliminates interest expense related to outstanding indebtedness of Custom
which was repaid by Company; records interest expense relating to portion of
purchase price funded through borrowing under Company's credit facility using
rate of 8.5% and reflects reduction in interest income from short-term
investments used for cash portion of purchase price.
d. Records the amortization of excess of cost over net assets acquired using
estimated life of 20 years and other intangible assets over a life of 5 years.
e. There is no tax provision reflected for Custom because it was a Subchapter S
Corporation and, accordingly, the taxable income was included in the tax return
of the sole stockholder. No tax provision has been reflected in the pro forma
consolidated statements of income since the Company has sufficent net operating
loss carry-forwards available to offset taxable income.
f. Earnings per share is calculated by dividing net income by the weighted
average shares outstanding during the period. The weighted average shares
outstanding during the period is calculated as follows:
<TABLE>
<CAPTION>
Year Ended Six Months Ended
June 30, 1997 December 31, 1997
------------- -----------------
<S> <C> <C>
Basic:
Weighted average shares outstanding 4,989,383 5,076,853
Shares issued for acquisition 135,000 135,000
--------- ---------
5,124,383 5,211,853
========= =========
Diluted:
Weighted average shares outstanding 4,989,383 5,076,853
Shares issued for acquisition 135,000 135,000
Common stock equivalents - stock options 188,560 136,297
--------- ---------
5,312,943 5,348,150
========= =========
</TABLE>
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<PAGE>
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.
BOLT TECHNOLOGY
By: /s/ Raymond M. Soto
--------------------
Raymond M. Soto
Chairman and President
March 15, 1998
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