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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM 8-K/A
AMENDMENT NO. 1 TO CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): October 31, 1997*
Cade Industries, Inc.
(Exact name of registrant as specified in its charter)
Wisconsin 0-12808 39-1371038
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
2365 Woodlake Drive, Suite 120, Okemos, MI 48864
(Address of principal executive offices) (Zip Code)
(517) 347-1333
(Registrant's telephone number, including area code)
____________________
5640 Enterprise Drive, Lansing, MI 48911
(Former Address)
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*This Amendment is filed pursuant to the provisions of paragraph (a)(4) of Item
7 of Form 8-K.
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INTRODUCTION
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report, dated as of
November 12, 1997 on Form 8-K (the "11/12/97 8-K") as set forth in the pages
attached hereto to furnish the required information.
Pursuant to the provisions of paragraph (a)(4) of Item 7 of Form 8-K, Item 7 of
the 11/12/97 8-K is hereby amended to file the pro forma financial information
required to be filed pursuant to Item 7(b) in connection with the acquisition of
Central Engineering Company reported in Item 2 of the 11/12/97 8-K.
ITEM 2 Acquisition of Assets
On October 31, 1997, Cade Industries, Inc. ("Cade" or the "Company")
entered into a Stock Purchase Agreement to acquire Central Engineering Company,
a Minnesota corporation. Central Engineering Company manufactures engine test
cells and associated ground support equipment. Pursuant to the Stock Purchase
Agreement, Cade acquired all of the issued and outstanding shares of Central
Engineering Company, a closely held company, and its related real estate for
approximately $8.5 million. The purchase price consisted of 250,000 shares of
Cade's Common Stock and approximately $7,750,000 in cash. The cash portion of
the purchase price was financed through additional bank borrowings, pursuant to
which the Company's existing credit facility was increased from approximately
$10.3 million to $19.8 million. The acquired real estate was used in the
operation of Central Engineering Company and Cade intends to continue that use.
A copy of the November 3, 1997 press release announcing the acquisition is
attached as Exhibit 99.3.
ITEM 7 Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
Consolidated Balance Sheets as of June 30, 1997 and 1996
Consolidated Statements of Operations for the years ended June 30,
1997 and 1996
Consolidated Statements of Retained Earnings for the years ended June
30, 1997 and 1996
Consolidated Statements of Cash Flows for the years ended June 30,
1997 and 1996
Notes to Consolidated Financial Statements
Independent Auditor's Report
Consolidated Balance Sheet of September 30, 1997
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Consolidated Statement of Earnings for the three months ended
September 30, 1997
Consolidated Statement of Cash Flow for the three months ended
September 30, 1997
Notes to Financial Statements
(b) Pro Forma Financial Information
The following unaudited pro forma condensed consolidated financial
statements of Cade Industries, Inc. and subsidiaries, reflecting the
acquisition of Central Engineering Company are filed herewith:
Introduction to Pro Forma Consolidated Financial Statements of
Cade Industries, Inc. and Central Engineering Company
(unaudited).
Cade Industries, Inc. and Central Engineering Company Pro Forma
Consolidated Balance Sheet as of September 30, 1997 (unaudited)
and the related Pro Forma Consolidated Statement of Operations
for the nine months then ended on September 30, 1997 (unaudited).
Notes to Pro Forma Consolidated Financial Statements (unaudited).
(c) Exhibits
See the Exhibit Index
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Incorporated Herein Filed
Description By Reference To Herewith
-------------- --------------- --------
<S> <C> <C>
Exhibit 2 Stock Purchase Agreement,
dated October 31, 1997 *
Exhibit 4.1 Credit Agreement, dated
October 31, 1997, by and between
Cade Industries, Inc. and Bank *
Exhibit 4.2 Line of Credit Note *
Exhibit 4.3 Term Note A *
Exhibit 4.4 Term Note B *
Exhibit 4.5 Term Note C *
Exhibit 23 Consent of Independent Accountants *
Exhibit 99.1 Financial Statements of Central
Engineering Company *
Exhibit 99.2 Financial Statements of Central
Engineering Company for the three
months ended September 30, 1997 *
Exhibit 99.3 Press Release dated November 3, 1997 *
</TABLE>
* Previously filed with the 11/12/97 8-K
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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.
CADE INDUSTRIES, INC.
By: /s/: Edward B. Stephens
------------------------------------------
Edward B. Stephens
Vice President and Chief Financial Officer
Date: January 12, 1998.
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PRO FORMA FINANCIAL STATEMENTS
The accompanying pro forma unaudited consolidated balance sheet as of September
30, 1997 has been prepared on the basis of combining the historical consolidated
balance sheet of Cade Industries, Inc. ("Cade") with the consolidated balance
sheet of Central Engineering Company and its subsidiaries ("Cenco") and reflects
the combination of the two companies as of that date. The accompanying pro forma
unaudited consolidated statements of operations for the year ended December 31,
1996 and for the nine-month period ended September 30, 1997 have been prepared
on the basis of combining the historical consolidated results of operations of
Cade with the consolidated operations of Cenco, as if Cenco had been acquired at
the beginning of 1996 and its results of operations were included in the
consolidated results for all of 1996 and the nine-month period ended September
30, 1997. The historical amounts of Cade and Cenco have been adjusted to reflect
amounts recorded under the purchase method of accounting as described in the
related notes to the pro forma unaudited balance sheet and statements of
operations. Since Cenco did not have reporting periods that coincided with
Cade's respective twelve-month and nine-month periods, reported results for
Cenco have been adjusted to conform with Cade's reporting period and updated as
appropriate to include either later interim periods in the year of acquisition
or the complete year of acquisition. These pro forma unaudited statements do not
include any potential favorable effect on sales, marketing and administrative
expenses resulting from the projected reduction in expenses, primarily salaries,
employee benefits and other outside office costs, upon consolidation of certain
sales, marketing and administrative functions. The impact of these reductions is
estimated to be approximately $245,000 per year prior to any income tax impact.
The pro forma unaudited consolidated financial statements should be read in
conjunction with Cade's historical consolidated financial statements and the
notes thereto, included in the Company's annual report on Form 10-K for the year
ended December 31, 1996 and Form 10-Q for the quarter ended September 30, 1997,
and with the historical consolidated financial statements of Cenco and notes
thereto, included in the Company's Form 8-K dated October 31, 1997, which are
incorporated herein by reference.
The following pro forma unaudited consolidated statements of operations are not
necessarily indicative of the combined operating results as they may be in the
future or as they might have been for the periods indicated had the acquisition
of Cenco been consummated at the beginning of the respective periods. The
results of operations for the nine-month period ended September 30, 1997, should
not necessarily be taken as indicative of the results of operations that may be
expected for the entire 1997 year.
The accompanying pro forma unaudited consolidated financial statements contain
forward-looking statements that involve a number of risks and uncertainties.
Among the factors that could cause actual results to differ materially from
those which are anticipated are the following: business conditions generally and
conditions specifically in the aircraft and aerospace industries; timing of
receipt and delivery of orders; price fluctuations for raw materials and labor;
competitive factors, including price competition from other suppliers of similar
products and overhaul and repair services; foreign currency; risk of
obsolescence of tooling inventory before full amortization on project costs;
risks associated with the integration of Cenco; and cancellation of orders.
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CADE INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEETS
September 30, 1997
<TABLE>
<CAPTION>
Pro Forma
Cade
Cade Central Industries,
Industries, Inc. Engineering Pro Forma Inc. And
- As Reported Company Adjustments Subsidiaries
---------------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 537,044 $2,004,117 $(2,325,184)-1- $ 215,977
Accounts receivable 7,459,859 4,294,920 (20,000)-2- 11,734,779
Inventories and contracts in process 11,008,942 2,143,150 (125,000)-2- 13,027,092
Deferred income taxes 445,000 223,000 68,000 -2- 736,000
Prepaid expenses and other current
assets 334,110 75,596 (95,395)-3- 314,311
----------- ---------- ------------ -----------
Total Current Assets 19,784,955 8,740,783 (2,497,579) 26,028,159
Property, Plant and Equipment
Land and improvements 509,864 211,500 -4- 721,364
Buildings and improvements 4,923,438 445,178 1,788,500 -4-
(250,396)-5- 6,906,720
Machinery and equipment 10,538,210 2,548,386 (2,008,165)-5- 11,078,431
Tooling 12,084,138 12,084,138
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28,055,650 2,993,564 (258,561) 30,790,653
Less accumulated depreciation and
amortization 13,090,812 2,557,428 (2,557,428)-5- 13,090,812
---------- --------- ----------- ----------
14,964,838 436,136 2,298,867 17,699,841
Intangible and Other Assets
Goodwill, less accumulated amortization of
$726,000 2,933,419 2,799,603 -6- 5,733,022
Other assets 158,569 158,569
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3,091,988 2,799,603 5,891,591
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$37,841,781 $9,176,919 $2,600,891 $49,619,591
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</TABLE>
See notes to pro forma unaudited consolidated balance sheets.
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CADE INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEETS
September 30, 1997
(Continued)
<TABLE>
<CAPTION>
Pro Forma
Cade
Cade Central Industries,
Industries, Inc. Engineering Pro Forma Inc. And
- As Reported Company Adjustments Subsidiaries
--------------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Note payable to bank $ 2,845,000 $ (519,816) -7-
(2,325,184) -1- $ 0
Current portion of long-term debt 1,445,552 1,466,341 -7- 2,911,893
Trade accounts payable 3,056,377 $1,175,488 224,963 -3- 4,456,828
Advances and billings in excess of related
costs 3,777,122 3,777,122
Employee compensation and amounts withheld 1,390,994 457,527 1,848,521
Other current liabilities 1,525,102 231,710 55,000 -2- 1,811,812
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Total Current Liabilities 10,263,025 5,641,847 (1,098,696) 14,806,176
Non-Current Portion Of:
Long-term debt 2,539,129 6,783,659 -7- 9,322,788
Subordinated notes 2,145,780 2,145,780
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4,684,909 6,783,659 11,468,568
Deferred Income Taxes 634,000 634,000
Shareholders' Equity
Common stock 21,978 9,138 250 -8-
(9,138) -9- 22,228
Additional paid-in capital 8,928,599 63,366 450,750 -8-
(63,366) -9- 9,379,349
Retained earnings 13,758,526 3,462,568 (132,000) -2-
(3,330,568) -9- 13,758,526
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22,709,103 3,535,072 (3,084,072) 23,160,103
Less cost of common stock in treasury 449,256 449,256
----------- ---------- ---------- -----------
22,259,847 3,535,072 (3,084,072) 22,710,847
----------- ---------- ---------- -----------
$37,841,781 $9,176,919 $2,600,891 $49,619,591
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</TABLE>
See notes to pro forma unaudited consolidated balance sheets.
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CADE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEETS
September 30, 1997
Pro forma adjustment reflects the following:
1 Use of excess cash to pay down line of credit.
Purchase accounting adjustments reflect the following:
2 Adjustment of accounts receivable and inventory to fair value, accrual
of certain legal and tax expenses, and the related effect on deferred
income taxes.
3 Direct costs of acquisition.
4 Real estate acquired, which was previously leased by Cenco.
5 Adjustment of property, plant and equipment to fair market value.
6 Purchase consideration in excess of real estate and Cenco net assets
acquired.
7 Debt incurred to finance a portion of purchase consideration.
8 Issuance of 250,000 shares of Cade common stock to finance a portion
of purchase consideration.
9 Elimination of equity investment in Cenco.
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CADE INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Nine Months Ended September 30, 1997
<TABLE>
<CAPTION> Pro Forma
Cade
Cade Central Industries,
Industries, Inc. Engineering Pro Forma Inc. And
- As Reported Company -1- Adjustments Subsidiaries
---------------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sales and Earned Revenue $38,785,940 $16,060,307 $54,846,247
Cost of Sales and Earned Revenue 29,805,030 13,594,923 $ (108,010) -2- 43,291,943
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8,980,910 2,465,384 108,010 11,554,304
Selling, General and Administrative Expenses 6,035,953 2,008,681 (41,333) -3- 8,003,301
----------- ----------- ----------- -----------
Income from Operations 2,944,957 456,703 149,343 3,551,003
Interest Expense (Income) - Net 578,986 (43,841) 306,973 -4- 842,118
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Income (Loss) before Income Taxes 2,365,971 500,544 (157,630) 2,708,885
Income Tax Expense 730,000 167,000 29,798 -5- 926,798
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Net Income (Loss) $1,635,971 $ 333,544 $ (187,428) $ 1,782,087
============ =========== ============= ===========
Weighted Average Number of Shares
of Common Stock Outstanding 21,683,602 21,933,602
Net Income per Common Share $0.08 $0.08
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</TABLE>
See notes to pro forma unaudited consolidated statements of operations.
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CADE INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31. 1996
<TABLE>
<CAPTION>
Pro Forma
Cade
Cade Central Industries,
Industries, Inc. Engineering Pro Forma Inc. And
- As Reported Company -1- Adjustments Subsidiaries
---------------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Sales and Earned Revenue $34,867,072 $17,249,729 $52,116,801
Cost of Sales and Earned Revenue 26,704,927 14,765,733 $ (142,752) -2- 41,327,908
----------- ----------- ----------- -----------
8,162,145 2,483,996 142,752 10,788,893
Selling, General and Administrative Expenses 6,097,363 2,737,627 (151,797) -3- 8,683,193
----------- ----------- ----------- -----------
Income (Loss) from Operations 2,064,782 (253,631) 294,549 2,105,700
Interest Expense - Net 729,290 47,460 508,331 -4- 1,285,081
----------- ----------- ----------- -----------
Income (Loss) before Income Taxes 1,335,492 (301,091) (213,782) 820,619
Income Tax Expense (Credit) 277,000 (150,000) 40,957 -5- 167,957
----------- ----------- ----------- -----------
Net Income (Loss) $ 1,058,492 $ (151,091) $ (254,739) $ 652,662
=========== =========== =========== ===========
Weighted Average Number of Shares
of Common Stock Outstanding 21,693,479 21,943,479
Net Income per Common Share $0.05 $0.03
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</TABLE>
See notes to pro forma unaudited consolidated statements of operations.
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CADE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1996 and the Nine-Month Period Ended
September 30, 1997
Pro forma adjustments reflect the following:
1. The amounts reported for Cenco in these pro forma unaudited statements
for the: a) nine months ended September 30, 1997 are the audited
results for the year ended June 30, 1997, reduced by the interim
unaudited results for the six months ended December 31, 1996 and
increased by the interim unaudited results for the three months ended
September 30, 1997; and b) year ended December 31, 1996 are the
audited results for the year ended June 30, 1996, reduced by the
interim unaudited results for the six months ended December 31, 1995
and increased by the interim unaudited results for the six months
ended December 31, 1996.
<TABLE>
<CAPTION>
Nine Months
Ended Year Ended
September 30, December 31,
1997 1996
------------ ------------
<S> <C> <C>
2. Eliminates building lease expense. $(193,686) $(256,987)
Reflects depreciation expense on buildings (25 years) acquired which were
previously leased. 53,655 71,540
Reflects depreciation expense on write-up of production equipment (7 years). 32,021 42,695
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$(108,010) $(142,752)
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3. Eliminates costs related to a product line not acquired. $ (72,841) $(277,916)
Eliminates legal and audit expense now at Cade. (87,142) (82,081)
Adjusts owner and new president compensation. 48,660 114,880
Records amortization of goodwill using the straight-line method over a
30 year period. 69,990 93,320
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$ (41,333) $(151,797)
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4. Reflects interest cost on acquisition debt, net of interest saved from use of
excess cash for paydown of line of credit debt. $ 306,973 $ 508,331
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5. Reflects impact of above adjustments on income tax expense. No tax
benefit has been included for nondeductible goodwill amortization. $ 29,798 $ 40,957
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</TABLE>
