<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): February 17, 1998
---------------------
Hickok Incorporated
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Ohio 0-147 34-0288470
- ----------------------------- ---------------------- ----------------------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification Number)
10514 Dupont Avenue Cleveland, Ohio 44108
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (216) 541-8060
------------------
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 17, 1998, a wholly owned subsidiary of Hickok Incorporated,
an Ohio corporation ("Hickok") acquired substantially all of the assets of the
automotive aftermarket business (the "Business") of Waekon Industries, Inc., a
Pennsylvania corporation (the "Seller"). Hickok's subsidiary, Waekon
Corporation, an Ohio corporation ("Waekon"), acquired the Business pursuant to
the terms of an Asset Purchase Agreement dated February 6, 1998 (the
"Agreement"). Waekon also assumed certain liabilities of the Seller, including
$684,000 of the Seller's bank debt, as well as certain trade accounts payable
and accrued expenses incurred in the ordinary course of business to the extent
reflected or reserved for on the Closing Balance Sheet as defined in the
Agreement. The Seller used the acquired assets in the manufacture of a variety
of testing equipment used by automobile technicians in the automobile
aftermarket business. Waekon intends to use the acquired assets in the same
manner.
As consideration for the acquisition of the Business, Waekon paid a
purchase price of $1,500,000, subject to certain closing adjustments. In
addition to the purchase price Waekon will pay an additional annual
consideration to the Seller based on the operations of the Business for the
five-year period following the closing (the "Earn Out Period"). The minimum
annual payment during the Earn Out Period is $150,000. Hickok's available cash
was used for the acquisition.
The purchase price and the other terms of the Agreement were determined
through arms-length negotiations. There are no material relationships between
the Seller, and Hickok and Waekon, or any of their affiliates, directors or
officers.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Waekon Industries, Inc. Financial Statements for Year Ended December
31, 1997
Independent Auditors' Report
Balance Sheet
Statement of Income
Statement of Changes in Stockholders' Equity
Statement of Cash Flows
Notes to Financial Statements
Other Financial Information
<PAGE> 3
(b) PRO FORMA FINANCIAL INFORMATION.
Hickok Incorporated Pro Forma Combined Condensed Consolidated Financial
Statements (Unaudited)
Unaudited Pro Forma Combined Condensed Balance Sheet as of
December 31, 1997
Unaudited Pro Forma Combined Condensed Income Statement for the
Fiscal Year Ended September 30, 1997
Unaudited Pro Forma Combined Condensed Income Statement for the
Three Months Ended December 31, 1997
Notes to Pro Forma Combined Condensed Financial Statements
(c) Exhibits.
EXHIBIT NO. DESCRIPTION
----------- -----------
2.1 Asset Purchase Agreement, dated February 6, 1998, by
and among Waekon Industries, Inc., a Pennsylvania
corporation, Peter Vinci, and Waekon Corp., an Ohio
corporation.*
23.1 Consent of Independent Public Accountants.
* Previously filed.
<PAGE> 4
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 thereunto duly authorized.
HICKOK INCORPORATED
By:/s/ Eugene T. Nowakowski
-------------------------
Eugene T. Nowakowski
Chief Financial Officer
Date: March 30, 1998
<PAGE> 5
American Institute of [Letterhead]
Certified Public Accountants ROSS BUEHLER FALK& COMPANY, LLP
Pennsylvania Institute of certified public accountants
Certified Public Accountants
Private Companies
Practice Section, AICPA
INDEPENDENT AUDITORS' REPORT
Waekon Industries, Inc.
Kirkwood, Pennsylvania
We have audited the accompanying balance sheet of WAEKON INDUSTRIES,
INC. (a Pennsylvania corporation) as of December 31, 1997, and the related
statements of income, 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 Waekon Industries,
Inc. as of December 31, 1997, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
Our audit was conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The other financial information in
Exhibits F and G is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/s/ Ross Buehler Falk & Company, LLP
January 22, 1998 ROSS BUEHLER FALK & COMPANY, LLP
<PAGE> 6
WAEKON INDUSTRIES, INC. Exhibit "A"
----------------------- -----------
BALANCE SHEET
-------------
DECEMBER 31, 1997
-----------------
<TABLE>
<CAPTION>
ASSETS
- ------
<S> <C>
CURRENT
Cash 77,966
Accounts receivable, net of allowance for doubtful accounts of $35,577 279,037
Inventories 607,152
Prepaid insurance 5,288
Prepaid taxes 1,954
----------
Total Current Assets 971,397
----------
PROPERTY AND EQUIPMENT, At cost
Leasehold improvements 145,759
Equipment 217,634
Automobiles 144,026
Furniture and fixtures 136,862
----------
Totals 644,281
Less depreciation taken to date 249,618
----------
Net Property and Equipment 394,663
----------
OTHER
Intangibles, net of accumulated amortization of $3,496 40,053
Deposits 100
----------
Total Other Assets 40,153
----------
Total Assets 1,406,213
==========
LIABILITIES
- -----------
CURRENT
Notes payable, current 445,152
Accounts payable 208,584
Payroll taxes withheld and accrued 52,192
Accrued salaries and wages 27,253
Other accrued expenses 14,786
----------
Total Current Liabilities 747,967
LONG-TERM
Notes payable, less current portion 104,614
----------
Total Liabilities 852,581
----------
STOCKHOLDERS' EQUITY
- --------------------
Common stock, .10 par, 10,000 shares authorized, 9,755
shares issued and outstanding 976
Contributions in excess of par 40,152
Retained earnings 512,504
----------
Total Stockholders' Equity 553,632
----------
Total Liabilities and Stockholders' Equity 1,406,213
==========
</TABLE>
The accompanying notes arc an integral part of the financial statements.
<PAGE> 7
WAEKON INDUSTRIES, INC. Exhibit "B"
----------------------- -----------
STATEMENT OF INCOME
-------------------
YEAR ENDED DECEMBER 31, 1997
----------------------------
<TABLE>
<CAPTION>
Percentage
of
Net Sales
---------
<S> <C> <C>
SALES 4,957,390 101.73
Less discounts, returns and allowances 84,222 1.73
--------- ------
Net Sales 4,873,168 100.00
COST OF GOODS SOLD 2,986,886 61.29
--------- ------
GROSS MARGIN 1,886,282 38.71
--------- ------
OPERATING EXPENSES
Marketing 282,989 5.81
General and administrative 1,208,251 24.79
--------- ------
Total Operating Expenses 1,491,240 30.60
--------- ------
INCOME FROM OPERATIONS 395,042 8.11
OTHER INCOME
Interest 362 0.01
OTHER EXPENSES
Interest (87,542) (1.80)
--------- ------
NET INCOME 307,862 6.32
========= ======
NET INCOME PER COMMON SHARE 31.30
=========
WEIGHTED AVERAGE SHARES OF COMMON
STOCK OUTSTANDING 9,837
========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 8
WAEKON INDUSTRIES, INC. Exhibit "C"
----------------------- -----------
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
--------------------------------------------
YEAR ENDED DECEMBER 31, 1997
----------------------------
<TABLE>
<CAPTION>
Contributions
Common in Excess Retained Treasury
Stock of Par Earnings Stock Total
--------- ------------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
Balance, beginning of year 1,000 40,152 225,018 (6,400) 259,770
Purchase of treasury stock - - - (14,000) (14,000)
Retirement of treasury stock (24) - (20,376) 20,400 -
Net income - - 307,862 - 307,862
--------- ------------- -------- --------- --------
Balance, end of year 976 40,152 512,504 - 553,632
========= ============= ======== ========= ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 9
WAEKON INDUSTRIES, INC. Exhibit "D"
----------------------- -----------
STATEMENT OF CASH FLOWS
-----------------------
YEAR ENDED DECEMBER 31, 1997
----------------------------
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATIONS:
<S> <C>
Net income 307,862
Adjustments to reconcile net income to net cash:
Depreciation 87,071
Amortization 1,681
Write off of intangibles 35,761
Changes in operating assets and liabilities:
Accounts receivable (2,831)
Inventories (114,236)
Cash overdraft (7,339)
Prepaid expenses (5,086)
Accounts payable (32,172)
Accrued salaries and wages 5,401
Payroll taxes withheld and accrued expenses (35,337)
------------
NET CASH INFLOWS FROM OPERATING ACTIVITIES 240,775
------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (172,436)
Deposits 5,706
------------
NET CASH OUTFLOWS FROM INVESTING ACTIVITIES (166,730)
------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments under line of credit (10,000)
Proceeds from notes payable 151,119
Payments on notes payable (123,198)
Purchase of treasury stock (14,000)
------------
NET CASH INFLOWS FROM FINANCING ACTIVITIES 3,921
------------
NET INCREASE IN CASH 77,966
CASH, BEGINNING OF YEAR -
------------
CASH, END OF YEAR 77,966
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 10
WAEKON INDUSTRIES, INC. Exhibit "E"
---------------------- -----------
NOTES TO FINANCIAL STATEMENTS Page 1 of 4
----------------------------- -----------
NOTE 1: CORPORATE DATA
--------------
The Company was incorporated under the laws of the State of
Pennsylvania on January 9, 1991. The Company develops vehicle testing devices
used primarily by auto service centers, and distributes them nationally.
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
-------------------------------
Concentration of Credit Risk
----------------------------
The Company sells its products primarily to customers in the
United States. The Company extends normal credit terms to its
customers. Customers in the automotive industry (aftermarket
distributors) comprise the customer base, with approximately 77% of
their sales to one customer. The Company establishes an allowance for
doubtful accounts based upon factors surrounding the credit risk of
specific customers, historical trends and other information.
Cash balances are insured up to $100,000 by the Federal
Deposit Insurance Corporation.
Inventories
-----------
Inventories are stated at the lower of cost or market
determined on the first-in, first-out basis. Inventories consisted of
the following at December 31, 1997:
<TABLE>
<CAPTION>
<S> <C>
Raw material 461,915
Work in progress 131,672
Finished goods 13,565
--------
607,152
========
</TABLE>
Depreciation
------------
It is the Company's policy to use the accelerated methods of
depreciation for all depreciable assets. Estimated useful lives of
assets range from 5 to 39 years.
Intangibles
-----------
The costs of patents and trademarks are being amortized on the
straight line method over a life of 15 years. Amortization expense
charged to operations in 1997 was $1,681.
Advertising
-----------
Advertising costs are charged to operations when incurred.
Research and Development
------------------------
Research and development costs are charged to operations when
incurred and are included in operating expenses. The amount charged in
1997 was $481,627.
<PAGE> 11
WAEKON INDUSTRIES, INC. Exhibit "E"
----------------------- ------------
NOTES TO FINANCIAL STATEMENTS Page 2 of 4
----------------------------- ------------
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (Continued)
-------------------------------
Income Taxes - S Corporation
----------------------------
Waekon Industries, Inc. has elected to be treated as an S
Corporation for federal and state income tax purposes. Under these
provisions, the Company does not pay federal and state corporate income
taxes on its taxable income. Instead, the stockholders are liable for
individual federal and state income taxes on the Company's taxable
income. Therefore, no provision or liability for federal or state taxes
has been made.
Income Per Common Share
-----------------------
Income per common share information is computed on the
weighted average number of shares outstanding during each period.
Statement of Cash Flows
-----------------------
For the purpose of reporting cash flows, cash and cash
equivalents include cash on hand and amounts deposited in banks.
Estimates
---------
The process of preparing financial statements in conformity
with generally accepted accounting principles requires the use of
estimates and assumptions regarding certain types of assets,
liabilities, revenues, and expenses. Such estimates primarily relate to
unsettled transactions and events as of the date of the financial
statements. Accordingly, upon settlement, actual results may differ
from estimated amounts.
NOTE 3: NOTES PAYABLE
-------------
A breakdown of notes payable at December 31, 1997 is as
follows:
<TABLE>
<CAPTION>
Portion Due
Within One
Total Year
---------- ------------
<S> <C> <C>
Note payable, bank, $600,000 line-of-credit, demand,
interest at bank's prime plus 1.25% (9.75% at
December 31, 1997), secured by accounts receivable,
equipment and inventory. See Note A 310,000 310,000
Note payable, bank, $100,000 term loan, sixty principal
payments of $1,667, plus interest at bank's prime plus
1.75% (10.25% at December 31, 1997), secured by
accounts receivable, equipment and inventory, surety of
majority stockholder 73,545 20,000
Note payable, bank, term loan, sixty payments
of $2,132, including interest at 10%, secured by a
second lien interest in accounts receivable, equipment
and inventory. See Note B 49,585 21,803
</TABLE>
<PAGE> 12
WAEKON INDUSTRIES, INC. Exhibit "E"
----------------------- -----------
NOTES TO FINANCIAL STATEMENTS Page 3 of 4
----------------------------- -----------
NOTE 3: NOTES PAYABLE (Continued)
-------------
<TABLE>
<CAPTION>
Portion Due
Within One
Total Year
---------- -----------
<S> <C> <C>
Note payable, bank, term loan, monthly payments of $788,
which include principal and interest at 8.25%, secured
by accounts receivable, equipment and inventory, general
intangibles, guaranty of majority stockholder, limited to
$25,000 13,311 8,682
Note payable, bank, monthly payments of $856, which
include principal and interest at 9.5% secured by
equipment and vehicle 25,156 8,285
Note payable, bank, monthly payments of $308, which
include principal and interest at 8.5%, secured by 5,171 3,384
Note payable, stockholder, demand, non-interest bearing,
unsecured 72,998 72,998
---------- -----------
Total 549,766 445,152
===========
Less portion due within one year 445,152
----------
Long-Term 104,614
==========
</TABLE>
Note A: Personally guaranteed by the majority stockholder,
including a mortgage on the stockholder's personal residence.
Note B: Personally guaranteed by the majority stockholder,
including a second-lien interest in property owned by the
stockholder, subject to a prior lien held by an individual.
Maturities of long-term debt payments for each of the five years
succeeding December 31, 1997 are as follows:
<TABLE>
<CAPTION>
<S> <C>
December 31, 1998 135,152
December 31, 1999 59,609
December 31, 2000 31,459
December 31, 2001 13,546
December 31.2002 -
</TABLE>
The weighted average interest rate on short-term financing was 9.4% for
the year ended December 31, 1997.
NOTE 4: TREASURY STOCK
--------------
During the year, the Company acquired 180 shares of its previously
issued stock for the treasury at a cost of $14,000. This acquisition brought
the total number of shares in treasury to 245 shares with a total cost of
$20,400. During November 1997, the stockholders elected to retire their
treasury stock which generated a charge to retained earnings of $20,376.
<PAGE> 13
WAEKON INDUSTRIES, INC. Exhibit "E"
----------------------- -----------
NOTES TO FINANCIAL STATEMENTS Page 4 of 4
----------------------------- -----------
NOTE 5: OPERATING LEASE
---------------
The Company leases its operating facilities from a stockholder
under an operating lease, on a month to month basis, currently at
$7,417 per month. Rental expense charged to operations for the year
ended December 31, 1997 was $89,000.
NOTE 6: RELATED PARTY
-------------
Waekon Industries, Inc. and Innovative Products of America
(IPA) are related through common ownership. During the year ended
December 31, 1997, Waekon Industries, Inc. had $83,781 of sales to IPA.
At December 31, 1997, accounts receivable includes $36,297 due from
IPA.
NOTE 7: CONTINGENCIES
-------------
The Company is the defendant in certain claims and litigation
arising from the ordinary course of business. It is the opinion of
management that any material claims with merit are adequately covered
by insurance.
NOTE 8: STATEMENT OF CASH FLOWS
-----------------------
The Company disbursed cash for interest in the amount of
$87,542 for the year ended December 31, 1997.
NOTE 9: SUBSEQUENT EVENT
----------------
The Company is in the process of negotiating the sale of the
majority of the Company's assets, for an amount in excess of book
value. The proposed pending sale has been approved by the stockholders
of the Company.
<PAGE> 14
WAEKON INDUSTRIES, INC. Exhibit "F"
----------------------- -----------
OTHER FINANCIAL INFORMATION
---------------------------
COST OF GOODS SOLD
------------------
MANUFACTURING COST
<TABLE>
<CAPTION>
Percentage
of
Net Sales
----------
<S> <C> <C> <C>
Direct material and services
Raw materials inventory, January 1 421,229 8.64
Outside work and purchased operations 2,340,336 48.03
------------ ----------
Total Direct Material and Services 2,761,565 56.67
Less raw material inventory, December 31 461,915 9.48
------------ ----------
Total Cost of Material and Services 2,299,650 47.19
------------ ----------
Direct Labor 465,115 9.54
------------ ----------
Manufacturing expenses:
Salaries, supervision 50,357 1.03
Payroll taxes 53,384 1.10
Freight 40,150 0.82
Production supplies 42,238 0.87
Utilities 7,719 0.16
Repairs on machinery and equipment 15,264 0.31
Insurances 12,172 0.25
Rent, building 44,500 0.91
Rent, equipment 1,120 0.02
Depreciation 25,304 0.52
Amortization 1,681 0.04
Taxes, other 1,782 0.04
------------ ----------
Total Manufacturing Expenses 295,671 6.07
------------ ----------
Total Manufacturing Costs 3,060,436 62.80
Add inventory, work in process, January 1 56,443 1.16
Less inventory, work in process, December 31 131,672 2.70
------------ ----------
Cost of Goods Manufactured 2,985,207 61.26
Add inventory, finished goods, January 1 15,244 0.31
Less inventory, finished goods, December 31 13,565 0.28
------------ ----------
COST OF GOODS SOLD 2,986,886 61.29
============ ==========
</TABLE>
<PAGE> 15
WAEKON INDUSTRIES, INC. Exhibit "G"
----------------------- -----------
OTHER FINANCIAL INFORMATION
---------------------------
OPERATING EXPENSES
------------------
<TABLE>
<CAPTION>
Percentage
of
MARKETING EXPENSES Net Sales
----------
<S> <C> <C>
Advertising 144,814 2.97
Commissions 13,637 0.28
Meals 8,578 0.18
Sales promotions 37,601 0.77
Sales shows 32,869 0.67
Travel 45,490 0.94
---------- ----------
Total Marketing Expenses 282,989 5.81
========== ==========
GENERAL AND ADMINISTRATIVE EXPENSES
Salaries, office and administrative 392,219 8.05
Tax, payroll 90,929 1.87
Freight 2,784 0.06
Depreciation 61,767 1.27
Fees 12,886 0.26
Insurance 13,171 0.27
Research and development 481,627 9.88
Office 19,792 0.41
Computer expense 2,203 0.04
Postage 7,646 0.16
Professional fees 17,063 0.35
Rent, building 44,500 0.91
Repairs and maintenance 2,791 0.06
Tax, other 2,101 0.04
Telephone 17,606 0.36
Utilities 7,719 0.16
Miscellaneous 31,447 0.64
---------- ----------
Total General and Administrative Expenses 1,208,251 24.79
========== ==========
</TABLE>
<PAGE> 16
HICKOK INCORPORATED
PRO FORMA COMBINED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following unaudited pro forma combined condensed financial
information of Hickok Incorporated (the "Company") adjusts the historical
financial statements of the Company to give pro forma effect to the Company's
purchase of Waekon Industries, Inc. ("Waekon") on February 12, 1998. The
acquisition has been accounted for as an asset purchase and the purchase price
has been allocated on a preliminary basis to the respective assets acquired and
liabilities assumed based upon their estimated fair values as of the acquisition
date.
The Unaudited Pro Forma Combined Condensed Balance Sheet has been
prepared as if the transaction occurred as of December 31, 1997. The Unaudited
Pro Forma Combined Statements of Income have been prepared as if the transaction
occurred as of the beginning of the periods presented. Waekon's income statement
for the three months ended December 31, 1997 is included both as part of the
fiscal year results and for the subsequent three month interim period. Total
revenue and net income reported in both periods amounted to $1,526,767 and
$76,608 after pro forma adjustments.
The unaudited pro forma combined statements for the periods presented
do not purport to represent what the Company's results of operations or
financial position would actually have been had the transaction occurred on the
aforementioned dates, or to project the Company's results of operations for any
future periods. The unaudited pro forma combined results do not include any
synergies that may be realized as a result of the combining of the entities. The
Company does, however, expect some cost synergies to result in various areas of
the combined businesses. The pro forma adjustments are based upon available
information and upon certain assumptions that the Company's management believes
are reasonable under the circumstances. The adjustments are directly
attributable to the transaction and are expected to have a continuing impact on
the financial position and results of operations of the Company.
The unaudited pro forma combined condensed financial statements should
be read in conjunction with the historical financial statements and related
notes included in Form 8-K filed February 26, 1998 and the Company's Form 10-K
for the year ended September 30, 1997 and Form 10-Q for the period ended
December 31, 1997.
1
<PAGE> 17
HICKOK INCORPORATED
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
HICKOK
INCORPORATED WAEKON PRO FORMA PRO FORMA
AS REPORTED INDUSTRIES ADJUSTMENTS COMBINED
(UNAUDITED) (AUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 2,750,423 $ 77,966 $ (77,966) (1) $ 550,657
(2,199,766) (4)
Trade Accounts Receivable - Net 2,990,140 279,037 - 3,269,177
Inventories 4,971,771 607,152 - 5,578,923
Prepaid and Deferred Expenses 267,347 7,242 - 274,589
----------- ----------- ------------ ------------
TOTAL CURRENT ASSETS 10,979,681 971,397 (2,277,732) 9,673,346
----------- ----------- ------------ ------------
PROPERTY, PLANT AND EQUIPMENt
Land 199,611 - - 199,611
Buildings 1,410,141 111,689 - 1,521,830
Machinery and Equipment 3,921,952 282,974 (14,563) (1) 4,190,363
----------- ----------- ------------ ------------
5,531,704 394,663 (14,563) 5,911,804
Less Allowance for Depreciation 3,322,206 - - 3,322,206
----------- ----------- ------------ ------------
TOTAL PROPERTY - NET 2,209,498 394,663 (14,563) 2,589,598
----------- ----------- ------------ ------------
OTHER ASSETS
Prepaid Rent and Other Deposits 1,750 100 - 1,850
Deferred Charges - Net 98,129 40,053 - 138,182
Goodwill - Net of Amortization 220,209 - 1,774,788 (6) 1,994,997
----------- ----------- ------------ ------------
TOTAL OTHER ASSETS 320,088 40,153 1,774,788 2,135,029
----------- ----------- ------------ ------------
TOTAL ASSETS $13,509,267 $ 1,406,213 $ (517,507) $ 14,397,973
----------- ----------- ------------ ------------
See accompanying notes to Unaudited Pro Forma Combined Condensed Financial Statements.
</TABLE>
2
<PAGE> 18
HICKOK INCORPORATED
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
HICKOK
INCORPORATED WAEKON PRO FORMA PRO FORMA
AS REPORTED INDUSTRIES ADJUSTMENTS COMBINED
(UNAUDITED) (AUDITED) (UNAUDITED) (UNAUDITED)
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Notes Payable - Short-term $ 63,550 $ 445,152 $ (445,152) (2) $ 161,762
98,212 (5)
Trade Accounts Payable 487,425 208,584 696,009
Accrued Payroll and Related
Expenses 351,840 79,445 431,285
Dividends Payable 119,625 119,625
Accrued Expenses 91,137 14,786 105,923
Customer Deposits 83,249 - - 83,249
Accrued Income Taxes 246,743 - - 246,743
------------ ------------ ------------- -------------
TOTAL CURRENT LIABILITIES 1,443,569 747,967 (346,940) 1,844,596
------------ ------------ ------------- -------------
DEFERRED INCOME TAXES 174,000 - - 174,000
------------ ------------ ------------- -------------
LONG-TERM DEBT
Notes Payable - less current portion 106,828 104,614 (104,614) (2) 594,507
- - 487,679 (5) -
------------ ------------ ------------- -------------
106,828 104,614 383,065 594,507
------------ ------------ ------------- -------------
STOCKHOLDERS' EQUITY
Capital Stock 1,195,850 976 (976) (3) 1,195,850
Contributed Capital 926,603 40,152 (40,152) (3) 926,603
Retained Earnings 9,662,417 512,504 (512,504) (3) 9,662,417
------------ ------------ ------------- -------------
TOTAL STOCKHOLDERS' EQUITY 11,784,870 553,632 (553,632) 11,784,870
------------ ------------ ------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 13,509,267 $ 140,6213 $ (517,507) $ 14,397,973
------------ ------------ ------------- -------------
See accompanying notes to Unaudited Pro Forma Combined Condensed Financial Statements.
</TABLE>
3
<PAGE> 19
HICKOK INCORPORATED
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30,1997
<TABLE>
<CAPTION>
HICKOK
INCORPORATED WAEKON
AS REPORTED INDUSTRIES PRO FORMA PRO FORMA
SEPT. 30,1997 DEC.31, 1997 ADJUSTMENTS COMBINED
(AUDITED) (AUDITED) (UNAUDITED) (UNAUDITED)
----------- ------------ ----------------- ------------
<S> <C> <C> <C> <C>
NET SALES
Product Sales $ 17,193,552 $ 4,873,168 $ - $ 22,066,720
Service Sales 3,965,546 - - 3,965,546
----------- ------------ ----------------- ------------
Total Net Sales 21,159,098 4,873,168 - 26,032,266
----------- ------------ ----------------- ------------
COSTS AND EXPENSES:
Cost of Products Sold 9,874,129 2,986,886 - 12,861,015
Cost of Services Sold 3,528,069 - - 3,528,069
Product Development 3,263,857 481,627 (50,000) (7) 3,695,484
Operating Expenses 3,691,892 1,009,613 88,740 (8) 4,790,245
Interest Charges 10,966 87,542 (54,977) (9) 95,319
51,788 (10)
45,280 (11)
Other Income (70,132) (362) 56,077 (12) (14,417)
----------- ------------ ----------------- ------------
20,298,781 4,565,306 136,908 25,000,995
----------- ------------ ----------------- ------------
Income before Provision
for Income Taxes 860,317 307,862 (136,908) 1,031,271
PROVISION FOR INCOME TAXES:
Current 305,000 - 120,081 (13) 371,687
(53,394) (14)
Deferred (50,000) - - (50,000)
----------- ------------ ----------------- ------------
255,000 - 66,687 321,687
----------- ------------ ----------------- ------------
NET INCOME $ 605,317 $307,862 $ (203,595) $ 709,584
----------- ------------ ----------------- ------------
Net Income per
Common Share $ 0.51 $ 0.59
----------- ------------
Weighted average Shares of
Common Stock Outstanding 1,193,497 1,193,497
----------- ------------
See accompanying notes to Unaudited Pro Forma Combined Condensed Financial Statements.
</TABLE>
4
<PAGE> 20
HICKOK INCORPORATED
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
HICKOK
INCORPORATED WAEKON
AS REPORTED INDUSTRIES PRO FORMA PRO FORMA
DEC. 31, 1997 DEC. 31, 1997 ADJUSTMENTS COMBINED
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET SALES
Product Sales $ 4,572,810 $ 1,526,767 $ - $ 6,099,577
Service Sales 232,206 - - 232,206
------------- ------------ ------------ ------------
Total Net Sales 4,805,016 1,526,767 - 6,331,783
------------- ------------ ------------ ------------
COSTS AND EXPENSES:
Cost of Products Sold 2,544,998 912,663 - 3,457,661
Cost of Services Sold 188,053 - - 188,053
Product Development 753,515 137,230 (52,885) (7) 837,860
Operating Expenses 898,272 337,721 22,185 (8) 1,258,178
Interest Charges 8,468 23,102 (23,102) (9) 19,245
10,777 (10)
Other Income (44,725) (283) 33,772 (12) (11,236)
------------- ------------ ------------ ------------
4,348,581 1,410,433 (9,253) 5,749,761
------------- ------------ ------------ ------------
Income before Provision
for Income Taxes 456,435 116,334 9,253 582,022
PROVISION FOR INCOME TAXES:
Current 169,000 - 45,370 (13) 217,979
3,609 (14)
Deferred - - - -
------------- ------------ ------------ ------------
169,000 - 48,979 217,979
------------- ------------ ------------ ------------
NET INCOME $ 287,435 $ 116,334 $ (39,726) $ 364,043
------------- ------------ ------------ ------------
Net Income per
Common Share $ 0.24 $ 0.30
------------- ------------
Weighted average Shares of
Common Stock Outstanding 1,195,850 1,195,850
------------- ------------
</TABLE>
See accompanying notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
5
<PAGE> 21
HICKOK INCORPORATED
NOTES TO PROFORMA COMBINED CONDENSED
FINANCIAL STATEMENTS
(UNAUDITED)
1. To eliminate assets not acquired by the Company.
2. To reflect payment of Waekon bank debt by the Company.
3. To eliminate Waekon stockholders equity since the acquisition was an
asset purchase.
4. To eliminate cash paid by the Company for the acquisition.
5. To reflect present value of $150,000 annual minimum earn out due Waekon
over five years and to split the amount between current and long term
debt.
6. To reflect goodwill incurred by the Company in its acquisition of
Waekon.
7. To eliminate excess salary of Waekon employee per terms of employment
agreement with the Company.
8. To reflect amortization of goodwill incurred by the Company in the
acquisition. Amortization based on straight line, twenty year life.
9. To eliminate Waekon interest charges applicable to Waekon debt repaid
at the closing.
10. To reflect interest cost applicable to earn out debt per note 5 above.
11. To reflect interest charges applicable to additional debt Company would
have incurred early in the fiscal year to fund the Waekon acquisition.
12. To eliminate Hickok interest income on cash equivalent used to fund the
acquisition.
13. To set up income tax provision at a 39% combined tax rate on Waekon pre
tax income. Waekon was formerly a sub S corp and had no tax provision.
14. To change current period income tax provision based on increase
(decrease) in pro forma costs and expenses.
6
<PAGE> 1
American Institute of [Letterhead]
Certified Public Accountants ROSS BUEHLER FALK& COMPANY, LLP
Pennsylvania Institute of certified public accountants
Certified Public Accountants
Private Companies
Practice Section, AICPA
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report (and to all references to our Firm) included in or made a part of this
8-K filing.
/s/ Ross Buehler Falk and Company, LLP
ROSS BUEHLER FALK AND COMPANY, LLP
Lancaster, PA
March 26, 1998
1500 Lititz Pike - Lancaster, PA 17601-6531 - (717)393-2700 - FAX (717)393-1743
