<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
AMENDED REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 2, 1996
------------
AMERICAN PRECISION INDUSTRIES INC.
----------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-5601 16-1284388
------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer-
of incorporation) File Number) Identification No.)
2777 Walden Avenue, Buffalo, New York 14225
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area Code (716) 684-9700
- --------------------------------------------------------------------------------
Not applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
TOTAL PAGES -42
<PAGE> 2
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.
American Precision Industries Inc.
----------------------------------
(Registrant)
Date: July 2, 1996 /s/John M. Murray
-----------------
John M. Murray
Vice President - Finance
<PAGE> 3
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
-----------------------------------------------------------------
<TABLE>
<CAPTION>
Page in
Document
--------
<S> <C> <C>
(a) Financial Statements of Businesses Acquired
-------------------------------------------
Audited combined financial statements of Gettys
Corporation and Gettys Property Corporation (Wholly-Owned
Subsidiaries of Daimler-Benz Capital, Inc.) for the year
ended December 31, 1995.
Audited combined financial statements of Gettys
Corporation and Gettys Property Corporation (Wholly-Owned
Subsidiaries of Daimler-Benz Capital, Inc.) for the years
ended December 31, 1994 and 1993.
(b) Pro Forma Financial Information
-------------------------------
Pro Forma Balance Sheet (Unaudited) as of
December 29, 1995.
Pro Forma Statement of Earnings (Unaudited)
for the year ended December 29, 1995.
(c) Exhibits
(23) Consent of Independent Accountants dated July 2, 1996.
</TABLE>
<PAGE> 4
GETTYS CORPORATION AND
GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES
OF DAIMLER-BENZ CAPITAL, INC.)
COMBINED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
<PAGE> 5
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
CONTENTS
================================================================================
<TABLE>
<CAPTION>
<S> <C>
INDEPENDENT AUDITORS' REPORT 3
COMBINED FINANCIAL STATEMENTS
Balance sheet 4
Statement of operations 5
Statement of stockholder's deficit 6
Statement of cash flows 7 - 8
SUMMARY OF ACCOUNTING POLICIES 9 - 10
NOTES TO COMBINED FINANCIAL STATEMENTS 11 - 14
2
</TABLE>
<PAGE> 6
BDO Seidman, LLP
330 East Kilbourn Avenue
Milwaukee, Wisconsin 53202
Telephone (414) 272-5900
INDEPENDENT AUDITORS' REPORT
Gettys Corporation and Gettys Property Corporation
Racine, Wisconsin
We have audited the accompanying combined balance sheet of Gettys Corporation
and Gettys Property Corporation, wholly-owned subsidiaries of Daimler-Benz
Capital, Inc., as of December 31, 1995, and the related combined statements of
operations, stockholder's deficit, and cash flows for the year then ended. These
financial statements are the responsibility of the Companies' 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.
The Companies' combined financial statements are presented on the going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As described in Note 6 the
Companies intend to sell all their assets and certain liabilities during 1996.
The financial statements do not include any adjustments to reflect the possible
future effects on the amounts and classification of the liabilities not assumed
in the purchase that may result from the possible inability of the Companies to
continue as a going concern.
3
<PAGE> 7
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Gettys Corporation
and Gettys Property Corporation as of December 31, 1995, and the results of
their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.
February 7, 1996, except
for Note 6 which is as of
March 18, 1996
4
<PAGE> 8
================================================================================
<TABLE>
<CAPTION>
December 31, 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
CURRENT ASSETS
Cash $ 720,899
Accounts receivable, other than related
parties, less allowance for doubtful
accounts of 168,443 (Note 5) 1,327,029
Accounts receivable from related parties
(Note 4) 517,020
Inventories (Note 1) 2,425,859
Prepaid expenses and other current assets 75,099
Current portion of valuation allowance (674,728)
- -------------------------------------------------------------------------------------------------------------------
Total current assets 4,391,178
- -------------------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Land and improvements 180,723
Building 2,542,466
Machinery and equipment 7,537,071
Furniture and fixtures 2,205,074
- -------------------------------------------------------------------------------------------------------------------
12,465,334
Less accumulated depreciation 9,579,334
- -------------------------------------------------------------------------------------------------------------------
Net property and equipment 2,886,000
- -------------------------------------------------------------------------------------------------------------------
INTANGIBLE ASSETS, net of accumulated
amortization of $290,882 49,123
VALUATION ALLOWANCE, less current portion (2,935,123)
- -------------------------------------------------------------------------------------------------------------------
$ 4,391,178
===================================================================================================================
</TABLE>
<PAGE> 9
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
COMBINED BALANCE SHEET
================================================================================
<TABLE>
<CAPTION>
December 31, 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
LIABILITIES AND STOCKHOLDER'S DEFICIT
CURRENT LIABILITIES
Note payable to related party (Note 2) $ 16,500,000
Accounts payable (Note 4) 780,906
Due to related parties (Note 4) 3,261,582
Accrued compensation and commissions 177,324
Taxes payable other than income 119,624
Accrued profit sharing and pension (Note 3) 142,975
Other current liabilities 306,994
- -------------------------------------------------------------------------------------------------------------------
Total current liabilities 21,289,405
- -------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
(NOTES 6 AND 8)
STOCKHOLDER'S DEFICIT
Common stock, $.01 par value, 2,000
shares authorized; 200 shares
issued and outstanding 2
Preferred stock, nonvoting, $1,000 par
value, 200 shares authorized, issued
and outstanding (Note 7) 200,000
Deficit, beginning January 1, 1994 (17,098,229)
- -------------------------------------------------------------------------------------------------------------------
Total stockholder's deficit (16,898,227)
- -------------------------------------------------------------------------------------------------------------------
$ 4,391,178
===================================================================================================================
</TABLE>
See accompanying summary of accounting policies and notes to combined financial
statements.
4
<PAGE> 10
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
COMBINED STATEMENT OF OPERATIONS
================================================================================
<TABLE>
<CAPTION>
Year ended December 31, 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
NET SALES (NOTES 4 AND 5) $ 12,483,524
COST OF SALES 10,393,448
- -------------------------------------------------------------------------------------------------------------------
GROSS PROFIT 2,090,076
- -------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Engineering, research and development 1,431,106
Selling 2,095,864
General and administrative 1,311,700
- -------------------------------------------------------------------------------------------------------------------
Total operating expenses 4,838,670
- -------------------------------------------------------------------------------------------------------------------
LOSS FROM OPERATIONS (2,748,594)
- -------------------------------------------------------------------------------------------------------------------
OTHER EXPENSES
Interest (Note 2) 1,159,611
Other 27,810
- -------------------------------------------------------------------------------------------------------------------
Total other expenses 1,187,421
- -------------------------------------------------------------------------------------------------------------------
NET LOSS $ (3,936,015)
===================================================================================================================
</TABLE>
See accompanying summary of accounting policies and notes to combined financial
statements.
5
<PAGE> 11
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
COMBINED STATEMENT OF STOCKHOLDER'S DEFICIT
================================================================================
<TABLE>
<CAPTION>
Total
Common Stock Preferred Stock Stock-
-------------- ------------------ holder's
Shares Amount Shares Amount Deficit Deficit
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1994 200 $ 2 200 $ 200,000 $(13,162,214) $ (12,962,212)
Net loss for 1995 - - - - (3,936,015) (3,936,015)
- -------------------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1995 200 $ 2 200 $ 200,000 $(17,098,229) $ (16,898,227)
=========================================================================================================================
</TABLE>
See accompanying summary of accounting policies and notes to combined financial
statements.
6
<PAGE> 12
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
COMBINED STATEMENT OF CASH FLOWS
================================================================================
<TABLE>
<CAPTION>
Year ended December 31, 1995
====================================================================================================================
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C>
Net loss $ (3,936,015)
- -------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization 681,507
Provision for doubtful accounts 171,652
Provision for inventory obsolescence 459,827
Changes in assets and liabilities:
Accounts receivable, other than related parties 553,090
Accounts receivable from related parties (19,694)
Inventories 1,311,005
Prepaid expenses and other current assets 75,814
Accounts payable (120,502)
Due to related parties 1,242,192
Accrued compensation and commissions (297,898)
Taxes payable other than income 5,610
Accrued profit sharing and pension 35,525
Other current liabilities 63,814
- -------------------------------------------------------------------------------------------------------------------
Total adjustments 4,161,942
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 225,927
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 13
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
COMBINED STATEMENT OF CASH FLOWS
================================================================================
<TABLE>
<CAPTION>
Year ended December 31, 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment $ (428,560)
Proceeds from sale of property and equipment 28,750
- -------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (399,810)
- -------------------------------------------------------------------------------------------------------------------
Net decrease in cash (173,883)
CASH, beginning of year 894,782
- -------------------------------------------------------------------------------------------------------------------
CASH, end of year $ 720,899
===================================================================================================================
===================================================================================================================
</TABLE>
See accompanying summary of accounting policies and notes to combined financial
statements.
8
<PAGE> 14
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
SUMMARY OF ACCOUNTING POLICIES
================================================================================
DESCRIPTION Gettys Corporation and Gettys Property Corporation
OF BUSINESS ("Companies") design, manufacture and sell precision motion
control products used by various industries. The Companies'
customers are located primarily in North America, Western
Europe and India. The Companies are wholly-owned
subsidiaries of Daimler-Benz Capital, Inc. ("DBCI").
CASH For purposes of the statements of cash flows, the Companies
EQUIVALENTS consider all highly liquid debt instruments with original
maturities of three months or less to be cash equivalents.
PRINCIPLES OF The combined financial statements include the accounts of
COMBINATION Gettys Corporation and Gettys Property Corporation. All
material intercompany accounts and transactions are
eliminated.
INVENTORIES Inventories are stated at the lower of cost or market. Cost
is determined using the first-in, first-out (FIFO) method.
PROPERTY AND Property and equipment are stated at cost. Depreciation is
EQUIPMENT calculated on the straight-line method over the estimated
useful lives of the assets.
INTANGIBLE Intangible assets include software, demo equipment and
ASSETS patents. The software and demo equipment are amortized over
five years while the patents are amortized over their
respective lives.
ACCOUNTING The preparation of financial statements in conformity with
ESTIMATES generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
9
<PAGE> 15
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
SUMMARY OF ACCOUNTING POLICIES
================================================================================
INCOME TAXES For federal income tax purposes, the Companies file their
income tax returns as part of the consolidated Daimler-Benz
North America group of which DBCI is an affiliate. In
accordance with the tax allocation agreement, each
subsidiary records its current federal income tax provision
as if it filed on a separate return basis. The Companies
account for income taxes under the liability method
specified by Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes". The Companies file
separate state income tax returns and the resultant net
operating losses can be used to offset future state taxable
income. These carryforwards aggregate approximately
$14,500,000 and expire at various dates through 2010. No
deferred tax asset is recorded for these state net operating
losses as future benefit is uncertain and a valuation
allowance would be recorded at 100%.
10
<PAGE> 16
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
================================================================================
1. INVENTORIES Inventories consist of the following:
<TABLE>
<CAPTION>
December 31, 1995
---------------------------------------------
<S> <C>
Raw materials $1,550,022
Work-in-process 573,871
Finished goods 301,966
---------------------------------------------
$2,425,859
=============================================
</TABLE>
Inventories stated above are net of an allowance for
obsolescence of $1,678,972 at December 31, 1995.
The allowance is based on historical demand and management's
intention to discontinue certain product lines. It is
reasonably possible that the reserve could change in the
near term due to technological changes or revisions in
management's business plan.
2. NOTE Note payable to related party consists of the following:
PAYABLE
TO RELATED
PARTY
<TABLE>
<CAPTION>
December 31, 1995
-------------------------------------------------------
<S> <C>
Note payable, Daimler-Benz
Capital, Inc., 6.04%, noncol-
lateralized, due on demand $16,500,000
=======================================================
</TABLE>
The Companies expensed approximately $990,000 for interest
on the note payable in 1995. The unpaid interest charges are
included in due to related parties at year end. Total
intercompany interest charged was approximately $1,160,000
in 1995. No interest payments were made during 1995.
The fair value of the Companies' note payable is equal to
its face value, as it is due upon demand.
11
<PAGE> 17
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
================================================================================
3. EMPLOYEE The Companies have a two-part employee investment savings
RETIREMENT and retirement plan sponsored by a related party which
PLAN covers substantially all employees. The Companies contribute
3% of wages plus an additional 3% for earnings over the
Social Security wage base to a non-contributory defined
contribution retirement plan. In addition, the Companies
have a 401(k) plan under which an employee may contribute up
to 10% of wages and the Companies match 50% of the first 6%
of wages contributed. The Companies may make additional
voluntary contributions to either part of the two-part plan.
The Companies' expense under the two-part plan approximated
$211,000 in 1995.
4. RELATED Sales to affiliates under common control approximated
PARTY $2,546,000 in 1995.
TRANSACTIONS
Accounts receivable from affiliates under common control was
$376,066 at December 31, 1995. Accounts receivable from
other related parties totaled $140,954 at December 31, 1995.
Accounts payable to affiliates under common control was
$3,261,582 at December 31, 1995. Other related party
payables of $90,550 are included in accounts payable at
December 31, 1995.
A related party moved one of its divisions to the Companies'
facility during 1995. The related party provided management
services and billed the Companies approximately $358,000
during 1995. The Companies provided facilities and incurred
operating expenses on behalf of the related party. The
Companies were reimbursed for these expenses through
billings of approximately $501,000 to the related party
during 1995.
5. BUSINESS The Companies place their cash with high credit quality
AND CREDIT institutions. At December 31, 1995 cash on deposit was
CONCENTRATIONS approximately $870,000, in excess of FDIC insurance limits.
12
<PAGE> 18
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
================================================================================
5. BUSINESS The Companies routinely extend credit to their customers.
AND CREDIT Certain foreign customers are required to provide
CONCENTRATIONS irrevocable letters of credit. The Companies establish an
(CONTINUED) allowance for doubtful accounts based upon factors
surrounding the credit risk of specific customers and
historical trends.
One of the Companies' affiliates accounted for approximately
15% of sales during 1995.
Foreign sales were approximately $2,718,000 for 1995.
Accounts receivable from foreign customers was approximately
$416,000 at December 31, 1995.
6. MANAGEMENT The Companies are operating under a Management Agreement
AGREEMENT, with American Precision Industries, Inc. (API). Under the
ASSET WRITE- Agreement, API will manage the Companies from January 1,
DOWN AND 1995 through December 31, 1996 for a management fee. During
SUBSEQUENT the management period, API will loan the Companies up to
EVENT $2,000,000 for capital expenditures and for working capital
purposes. No amounts have been loaned to date. In addition,
the Companies will not be required to repay the $16,500,000
due to DBCI. The Companies have an irrevocable option to
sell and API has an irrevocable option to acquire certain
assets of the Companies at specified dates during the
management period.
The purchase price as of December 31, 1994, per the
Management Agreement, was approximately $5,583,000. The net
book value of assets to be sold, as defined in the
Management Agreement, was reduced to $5,583,000 at December
31, 1994 to properly reflect net realizable value. The
Companies informed API that they intend to exercise their
put option effective January 1, 1996. Subsequent to December
31, 1995 the purchase price was renegotiated to $4,777,000.
The net book value of assets to be sold, as defined in the
Management Agreement, was approximately $2,807,000 at
December 31, 1995. Accordingly, no charge to operations was
necessary for the year ended December 31, 1995.
13
<PAGE> 19
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
================================================================================
7. PREFERRED The holders of preferred stock are entitled to receive
STOCK dividends of 6% per annum, when declared. The dividends
are non-cumulative. The preferred stock has a preferred
liquidation value of $1,000 per share. No dividends were
declared for the year ended December 31, 1995.
8. COMMITMENTS Royalty fees of 8% of the selling price of certain products
will be paid until the related patents expire. Royalty
expense was approximately $39,000 in 1995.
The Companies have various operating leases for office,
computer and communication equipment. The following are the
future minimum rental payments under these leases: 1996 -
$95,863; 1997 - $60,491; 1998 - $37,648.
Rental expense for all operating leases was approximately
$145,000 in 1995.
14
<PAGE> 20
GETTYS CORPORATION AND
GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES
OF DAIMLER-BENZ CAPITAL, INC.)
COMBINED FINANCIAL STATEMENTS
Years Ended December 31, 1994 and 1993
<PAGE> 21
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
<TABLE>
<CAPTION>
CONTENTS
==============================================================================================================
<S> <C>
INDEPENDENT AUDITORS' REPORT 3
COMBINED FINANCIAL STATEMENTS
Balance sheets 4
Statements of operations 5
Statements of stockholder's deficit 6
Statements of cash flows 7 - 8
SUMMARY OF ACCOUNTING POLICIES 9 - 10
NOTES TO COMBINED FINANCIAL STATEMENTS 11 - 16
</TABLE>
2
<PAGE> 22
BDO Binder KPMG Peat Marwick LLP
330 East Kilbourn Avenue 777 East Wisconsin Avenue
Milwaukee, WI 53202 Milwaukee, WI 53202
Telephone (414) 272-5900 Telephone (414) 276-4200
INDEPENDENT AUDITORS' REPORT
Gettys Corporation and Gettys Property Corporation
Racine, Wisconsin
We have audited the accompanying combined balance sheets of Gettys Corporation
and Gettys Property Corporation (together, the Companies), wholly-owned
subsidiaries of Daimler-Benz Capital, Inc., as of December 31, 1994 and 1993,
and the related combined statements of operations and stockholder's deficit,
and cash flows for the years then ended. These financial statements are the
responsibility of the Companies' management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits 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 audits provide a reasonable basis
for our opinion.
In our report dated January 20, 1995, we expressed an opinion that the 1994 and
1993 financial statements did not fairly present the financial position,
results of operations, and cash flows in conformity with generally accepted
accounting principles because of a departure from such principles: the
Companies did not reduce the unamortized cost of intangible assets and the
carrying amount of other assets which had been permanently impaired. As
described in Note 10, the Companies have changed their method of accounting for
these items and restated their 1994 and 1993 financial statements to conform
with generally accepted accounting principles. Accordingly, our present
opinion on the 1994 and 1993 financial statements, as presented herein, is
different from that expressed in our previous report.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Gettys Corporation
and Gettys Property Corporation as of December 31, 1994 and 1993, and the
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
January 20, 1995 January 20, 1995
3
<PAGE> 23
<TABLE>
<CAPTION>
1994 1993
December 31, (Restated) (Restated)
==============================================================================================================
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 894,782 $ 246,797
Accounts receivable, other than related
parties, less allowance for doubtful
accounts of $340,095 in 1994 and
$296,429 in 1993 2,051,771 1,357,964
Accounts receivable from related parties,
less allowance for doubtful accounts
of $112,847 in 1994 (Note 4) 497,326 1,589,570
Inventories (Note 1) 4,196,691 5,917,969
Prepaid expenses and other current assets 150,913 128,736
Current portion of valuation allowance (Note 7) (393,031) -
- --------------------------------------------------------------------------------------------------------------
Total current assets 7,398,452 9,241,036
- --------------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Land and improvements 180,723 176,807
Building 2,342,686 2,342,686
Machinery and equipment 7,451,851 7,277,186
Furniture and fixtures 2,161,782 2,092,807
- --------------------------------------------------------------------------------------------------------------
12,137,042 11,889,486
Less accumulated depreciation 8,999,831 8,371,834
- --------------------------------------------------------------------------------------------------------------
Net property and equipment 3,137,211 3,517,652
- --------------------------------------------------------------------------------------------------------------
INTANGIBLE ASSETS, net of accumulated amor-
tization of $260,296 and $213,371 79,609 101,546
VALUATION ALLOWANCE, less current portion (Note 7) (3,216,820) -
- --------------------------------------------------------------------------------------------------------------
$ 7,398,452 $ 12,860,234
==============================================================================================================
</TABLE>
<PAGE> 24
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
1994 1993
December 31, (Restated) (Restated)
==============================================================================================================
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S DEFICIT
CURRENT LIABILITIES
Note payable to related party (Note 2) $ 16,500,000 $ 16,500,000
Accounts payable 901,408 2,066,327
Due to related parties (Note 4) 2,019,390 1,035,527
Accrued compensation and commissions 475,222 256,012
Taxes payable other than income 114,014 122,913
Accrued profit sharing and pension (Note 3) 107,450 134,981
Other current liabilities 243,180 302,406
- --------------------------------------------------------------------------------------------------------------
Total current liabilities 20,360,664 20,418,166
- --------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
(NOTES 7 AND 9)
STOCKHOLDER'S DEFICIT (NOTE 8)
Common stock, $.01 par value, 2,000
shares authorized; 200 shares
issued and outstanding 2 2
Preferred stock, nonvoting, $1,000 par
value, 200 shares authorized, issued
and outstanding 200,000 200,000
Deficit, beginning January 1, 1994 (13,162,214) (7,757,934)
- --------------------------------------------------------------------------------------------------------------
Total stockholder's deficit (12,962,212) (7,557,932)
- --------------------------------------------------------------------------------------------------------------
$ 7,398,452 $ 12,860,234
==============================================================================================================
See accompanying summary of accounting policies and notes to combined financial statements.
</TABLE>
4
<PAGE> 25
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
1994 1993
Year ended December 31, (Restated) (Restated)
==============================================================================================================
<S> <C> <C>
NET SALES (NOTES 4 AND 5) $ 14,689,402 $ 13,570,673
COST OF SALES 10,140,272 9,368,947
- --------------------------------------------------------------------------------------------------------------
GROSS PROFIT 4,549,130 4,201,726
- --------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES (NOTE 3)
Engineering, research and
development 1,198,129 980,575
Selling 1,880,331 1,777,038
General and administrative 1,468,084 1,440,051
Provision for permanently
impaired assets (Notes 7 and 11) 3,609,851 9,795,149
- --------------------------------------------------------------------------------------------------------------
Total operating expenses 8,156,395 13,992,813
- --------------------------------------------------------------------------------------------------------------
LOSS FROM OPERATIONS (3,607,265) (9,791,087)
- --------------------------------------------------------------------------------------------------------------
OTHER EXPENSES
Interest 824,378 584,404
Amortization of goodwill and
premium paid on fixed assets - 826,000
Other (Note 6) 972,637 507,788
- --------------------------------------------------------------------------------------------------------------
Total other expenses 1,797,015 1,918,192
- --------------------------------------------------------------------------------------------------------------
NET LOSS $ (5,404,280) $ (11,709,279)
==============================================================================================================
See accompanying summary of accounting policies and notes to combined financial statements.
</TABLE>
5
<PAGE> 26
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
COMBINED STATEMENTS OF STOCKHOLDER'S DEFICIT
<TABLE>
<CAPTION>
Additional Total
Paid-In Stock-
Common Stock Preferred Stock Capital/ holder's
-------------- ------------------ (Transferred Equity
Shares Amount Shares Amount Deficit) Deficit (Deficit)
==============================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1993 100 $ 1 - $ - $16,321,069 (12,169,723) $ 4,151,347
Net loss for 1993 (restated) - - - - - (11,709,279) (11,709,279)
Reorganization (restated)
(Note 8) (100) (1) - - (16,321,069) 23,879,002 7,557,932
Reorganization (restated)
(Note 8) 200 2 200 200,000 - (7,757,934) (7,557,932)
- --------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1993
(restated) 200 2 200 200,000 - (7,757,934) (7,557,932)
Net loss for 1994 (restated) - - - - - (5,404,280) (5,404,280)
- --------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1994
(restated) 200 $ 2 200 $ 200,000 $ - (13,162,214) (12,962,212)
==============================================================================================================
See accompanying summary of accounting policies and notes to combined financial statements.
</TABLE>
6
<PAGE> 27
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
1994 1993
Year ended December 31, (Restated) (Restated)
==============================================================================================================
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (5,404,280) $ (11,709,279)
- --------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 771,319 1,665,319
Loss on disposal of equipment 10,448 43,693
Provision for permanently impaired assets 3,609,851 9,795,149
Increase in allowance for doubtful accounts 156,513 69,728
Increase in inventory obsolescence reserve 274,100 74,005
Changes in assets and liabilities:
Accounts receivable, other than
related parties (737,473) 1,240,184
Accounts receivable from related parties 979,397 (400,042)
Inventories 1,447,178 (1,589,790)
Prepaid expenses and other current assets (22,177) (28,358)
Accounts payable (1,164,919) 956,094
Due to related parties 983,863 219,200
Accrued compensation and commissions 219,210 (72,452)
Taxes payable other than income (8,899) (18,500)
Accrued profit sharing and pension (27,531) (7,204)
Other current liabilities (59,226) 30,435
- --------------------------------------------------------------------------------------------------------------
Total adjustments 6,431,654 11,977,461
- --------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,027,374 268,182
- --------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 28
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
1994 1993
Year ended December 31, (Restated) (Restated)
==============================================================================================================
<S> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment $ (354,401) $ (191,082)
Purchase of intangible assets (24,988) (21,122)
- --------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (379,389) (212,204)
- --------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 647,985 55,978
CASH AND CASH EQUIVALENTS, beginning of year 246,797 190,819
- --------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, end of year $ 894,782 $ 246,797
==============================================================================================================
SUPPLEMENTAL CASH FLOW DISCLOSURE
Cash paid during the year for interest $ 786,499 $ 589,584
==============================================================================================================
See accompanying summary of accounting policies and notes to combined financial statements.
</TABLE>
8
<PAGE> 29
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
SUMMARY OF ACCOUNTING POLICIES
================================================================================
<TABLE>
<S> <C>
DESCRIPTION Gettys Corporation and Gettys Property Corporation ("Companies") design,
OF BUSINESS manufacture and market precision motion control products. The Companies are
wholly-owned subsidiaries of Daimler-Benz Capital, Inc. ("DBCI").
CASH For purposes of the statements of cash flows, the Companies consider all highly
EQUIVALENTS liquid debt instruments with original maturities of three months or less to be
cash equivalents.
PRINCIPLES OF The combined financial statements include the accounts of Gettys Corporation and
COMBINATION Gettys Property Corporation. All material intercompany accounts and transactions
are eliminated.
INVENTORIES Inventories are stated at the lower of cost or market. Cost is determined using
the first-in, first-out (FIFO) method.
PROPERTY AND Property and equipment are stated at cost. Depreciation is calculated on the
EQUIPMENT straight-line method over the estimated useful lives of the assets.
INTANGIBLE Intangible assets include software, demo equipment and patents. The software and
ASSETS demo equipment are amortized over five years while the patents are amortized over
their respective lives.
INCOME TAXES For federal income tax purposes, the Companies file their income tax returns as
part of the consolidated Daimler-Benz North America group of which DBCI is an
affiliate. In accordance with the tax allocation agreement, each subsidiary
records its current federal income tax provision as if it filed on a separate
return basis. The Companies adopted
</TABLE>
9
<PAGE> 30
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
SUMMARY OF ACCOUNTING POLICIES
================================================================================
<TABLE>
<S> <C>
INCOME TAXES Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes,
(CONTINUED) as of December 31, 1993. The adoption of the Statement had no effect on the com-
bined financial statements as the parent company absorbs and accounts for all tax
benefits and disbenefits that arise on a consolidated basis. The Companies file
separate state income tax returns and the resultant net taxable losses can be
used to offset future state taxable income. These carryforwards aggregate
approximately $1,500,000 which expires in 2009. No deferred tax asset is
recorded for these state net operating losses as future benefit is uncertain and
a valuation allowance would be recorded at 100%.
RECLASSIFICATIONS Certain 1993 amounts have been reclassified to conform to the 1994 presentation.
</TABLE>
10
<PAGE> 31
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
================================================================================
<TABLE>
<S> <C>
1. INVENTORIES Inventories consist of the following:
December 31, 1994 1993
=============================================================================
Raw materials $2,454,026 $3,562,969
Work-in-process 1,343,017 1,530,000
Finished goods 399,648 825,000
-----------------------------------------------------------------------------
$4,196,691 $5,917,969
=============================================================================
Inventories stated above are net of an allowance for obsolescence of $1,219,145
and $945,045 at December 31, 1994 and 1993, respectively.
2. NOTE Note payable to related party consists of the following:
PAYABLE
TO RELATED December 31, 1994 1993
PARTY =============================================================================
Note payable, Daimler-Benz
Capital, Inc., 6.17%,
noncollateralized, due
March 1, 1995. $16,500,000 $16,500,000
=============================================================================
The Companies expect to renew the note and extend the due date until June 1,
1995. The Companies expensed approximately $734,000 and $554,000 for interest on
the note payable in 1994 and 1993, respectively. These interest charges are
included in due to related parties at year end. Total intercompany interest
charged was approximately $824,000 in 1994 and $584,000 in 1993.
3. EMPLOYEE The Companies have a two-part employee investment savings and retirement plan
RETIREMENT sponsored by a related party which covers substantially all of their employees.
PLAN The Companies contribute 3% of wages plus an additional 3% for earnings over the
Social Security wage base to a non- contributory defined contribution retirement
plan. In addition, the Companies have a 401(k) plan under which an employee may
contribute
</TABLE>
11
<PAGE> 32
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
================================================================================
<TABLE>
<S> <C>
3. EMPLOYEE up to 10% of wages and the Companies match 50% of the first 6% of wages
RETIREMENT contributed. The Companies may make additional voluntary contributions to either
PLAN part of the two-part plan. The Companies' expense under the two-part plan
(CONTINUED) approximated $198,000 and $166,000 in 1994 and 1993, respectively.
4. RELATED Sales to affiliates under common control approximated $2,908,000 and $4,846,000
PARTY in 1994 and 1993, respectively.
TRANSACTIONS
Accounts receivable from affiliates under common control approximated $497,000
and $1,590,000 at December 31, 1994 and 1993, respectively.
Accounts payable to affiliates under common control approximated $2,019,000 and
$1,036,000 at December 31, 1994 and 1993, respectively. An administrative
allocation charge of $132,000 is in accounts payable at December 31, 1994.
American Precision Industries, Inc. has expressed its intent to provide financial
support to the Companies through its management period. The Companies are depen-
dent on such future financial support.
5. MAJOR One of the Companies' affiliates accounted for 15% and 27% of sales during 1994
CUSTOMERS and 1993, respectively.
AND FOREIGN
SALES Foreign sales were approximately $1,119,000 and $1,427,000 for 1994 and 1993,
respectively.
</TABLE>
12
<PAGE> 33
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
================================================================================
<TABLE>
<S> <C>
6. Other Expense Other expense consists of the following:
--------------------------------------------------------------------------------
Year ended December 31, 1994 1993
Allocated costs from related parties $ 144,719 $ 106,418
Intercompany receivable writeoff - 142,000
Loss on disposal of assets 10,448 43,693
Personnel costs and employee benefits 15,794 33,729
Insurance claims 42,557 -
Royalties 41,935 41,886
Consulting fees 94,375 102,005
Other 55,174 38,057
Asset sale adjustments:
Intercompany receivable reserve 112,847 -
Worker's compensation 105,000 -
Inventory obsolescence 200,000 -
Bonus - accrual 149,788 -
--------------------------------------------------------------------------------
$ 972,637 $ 507,788
================================================================================
7. Management The Company has entered into a Management Agreement with American Precision
Agreement Industries, Inc. (API). Under the Agreement, API will manage the Companies from
January 1, 1995 through December 31, 1996 for a management fee. During the
management period, API will loan the Companies up to $2,000,000 for capital
expenditures and for working capital purposes. In addition, the Companies will
not be required to repay the $16,500,000 due to related party. The Companies
have an irrevocable option to sell and API has an irrevocable option to acquire
certain assets and assume certain liabilities of the Companies at net book value
at specified dates during the management period. The net book value of assets to
be sold, as defined in the management agreement, was reduced through the estab-
lishment of a valuation allowance to $5,583,000 at December 31, 1994 to
properly reflect net realizable value. The purchase price may change based on
operations of the Companies during the management period. The Management
Agreement will expire upon execution of either option.
</TABLE>
13
<PAGE> 34
<TABLE>
<CAPTION>
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
================================================================================
<S> <C>
8. REORGANIZATION On December 20, 1993, Gettys Corporation changed its name to Gettys II
Corporation ("Old Gettys"). Two new corporations were formed, Gettys Corporation
("New Gettys") and Gettys Property Corporation.
On December 31, 1993, Old Gettys purchased 100 shares of New Gettys' common stock
and 100 shares of New Gettys' preferred stock. In consideration, Old Gettys
transferred to New Gettys all of its assets and liabilities other than those
listed below.
On December 31, 1993, Old Gettys also purchased 100 shares of Gettys Property
Corporation's common stock and 100 shares of Gettys Property Corporation's
preferred stock. In consideration, Old Gettys transferred to Gettys Property
Corporation its real property, including improvements, and the related
liabilities.
The holders of preferred stock are entitled to receive dividends of 6% per annum,
when declared. The dividends are non-cumulative. The preferred stock has a
preferred liquidation value of $1,000 per share.
The accumulated deficit was eliminated to the extent of additional paid-in
capital.
Old Gettys was then merged into Daimler-Benz Capital, Inc. ("DBCI"), with DBCI
being the surviving corporation. DBCI is a wholly-owned subsidiary of Daimler-
Benz North America Corporation.
9. COMMITMENTS Royalty fees (Note 6) of 8% of the selling price of certain products will be paid
until the related patents expire.
The Companies have various operating leases for office, computer and
communication equipment. The following are the future minimum rental payments
under these leases: 1995 - $21,400; 1996 - $2,000; 1997 - $1,400.
</TABLE>
14
<PAGE> 35
<TABLE>
<CAPTION>
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
================================================================================
<S> <C>
9. COMMITMENTS Rental expense for all operating leases was approximately $124,850 and $144,750
(CONTINUED) in 1994 and 1993, respectively.
10. RETROACTIVE During 1995 the Companies changed their method of accounting for intangible and
RESTATEMENT other assets that have been permanently impaired. The Companies now reduce the
carrying amount of such assets. The change was made to comply with generally
accepted accounting principles. The following is a summary of the effects of the
restatement.
Previously
December 31, 1994 Reported Restated
================================================================================
Goodwill, net of accumulated
amortization $ 7,640,325 $ -
Premium paid on acquisition
of machinery and equipment,
net of accumulated depreciation 1,433,824 -
Valuation allowance (Note 7) - (3,609,851)
Stockholder's deficit (2,515,429) (13,162,214)
Net loss (2,515,429) (5,404,280)
=================================================================================
Previously
December 31, 1993 Reported Restated
=================================================================================
Goodwill, net of accumulated
amortization $ 8,101,325 $ -
Premium paid on acquisition
of machinery and equipment,
net of accumulated depreciation 1,693,824 -
Stockholder's deficit - (7,757,934)
Net loss (1,914,130) (11,709,279)
=================================================================================
</TABLE>
15
<PAGE> 36
GETTYS CORPORATION AND GETTYS PROPERTY CORPORATION
(WHOLLY-OWNED SUBSIDIARIES OF
DAIMLER-BENZ CAPITAL, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
================================================================================
<TABLE>
<S> <C>
11. PERMANENT At December 31, 1993 substantial doubt existed about the realization of future
IMPAIRMENT benefit from the unamortized portion of goodwill and the premium paid on
acquistion of machinery and equipment due to the declining financial position of
the Companies. Accordingly, the remaining goodwill and the premium paid on
acquisition of machinery and equipment was fully amortized resulting in a charge
of $8,101,325 and $1,693,824, respectively, to 1993 operations.
</TABLE>
16
<PAGE> 37
On April 1, 1996, API Ketema Inc., a newly created, wholly-owned
subsidiary of American Precision Industries Inc. ("API") acquired certain
assets and assumed certain liabilities of the Heat Transfer Division ("HTD") of
Ketema, Inc. in a transaction accounted for as a purchase. The effect of this
transaction was previously reported on Form 8-K/A dated June 12, 1996.
On April 19, 1996, API Gettys Inc., a newly created, wholly-owned
subsidiary of API acquired certain assets and assumed certain liabilities of
Gettys Corporation and Gettys Property Corporation ("Gettys"), wholly-owned
subsidiaries of Daimler-Benz Capital, Inc. in a transaction accounted for as a
purchase.
The following unaudited pro forma financial statements give effect to
these acquisitions. The unaudited pro forma balance sheet is based on the
individual balance sheets of API as of December 29, 1995, HTD as of February
29, 1996, and Gettys as of December 31, 1995 and has been prepared to reflect
these acquisitions as of December 29, 1995. The unaudited pro forma statement
of income is based on the individual statements of income for API for the year
ended December 29, 1995, HTD for the year ended February 29, 1996, and Gettys
for the year ended December 31, 1995 as if these acquisitions had occurred at
the beginning of that period.
For a period of fifteen months, the Registrant operated Gettys on a
day-to-day basis under the Management Agreement dated December 23, 1994. During
this period, the Registrant initiated various changes, including but not
limited to workforce reductions, personnel changes, restructuring of
manufacturing facilities, and development of new products. The impact of these
changes have not yet fully achieved and therefore the operating results of
Gettys reflected in the accompanying unaudited pro forma statement of income
are not indicative of the results management of the Registrant expects to be
achieved by API Gettys Inc. following the acquisition.
<PAGE> 38
<TABLE>
<CAPTION>
AMERICAN PRECISION INDUSTRIES INC.
----------------------------------
PRO FORMA COMBINED BALANCE SHEET (UNAUDITED)
-------------------------------------------
DECEMBER 29, 1995
-----------------
PRO FORMA PRO FORMA
-------------------------- -------------------------------
ACQUISITION ACQUISITION
ADJUSTMENT ADJUSTMENT
API HTD (NOTE 1) COMBINED GETTYS (NOTE 2) COMBINED
--- --- ----------- -------- ------ ----------- --------
Assets
<S> <C> <C> <C> <C> <C> <C> <C>
Current Assets
Cash and cash
equivalents $ 2,486,000 $ 41,000 $ 2,527,000 $ 721,0OO $ (408,000)(a) $ 2,840,000
Accounts receivable,
net 12,691,000 3,275,000 15,966,000 1,844,000 17,810,000
Marketable securities 3,493,000 -- 3,493,000 (1,800,000)(a) 1,693,000
Inventories 10,589,000 3,318,000 13,907,000 2,426,000 16,333,000
Prepaid expenses 967,000 17,000 984,000 75,000 1,059,000
Deferred income tax
benefit 1,389,000 1,389,000 1,389,000
Current portion of
valuation allowance (675,000) 675,000(b) --
----------- ---------- ---------- ----------- ---------- --------- -----------
Total Current Assets 31,615,000 6,651,000 38,266,000 4,391,000 (1,533,000) 41,124,000
----------- ---------- ---------- ----------- ---------- --------- -----------
Investments 6,277,000 6,277,000 6,277,000
Other Assets 7,630,000 7,630,000 (2,886,000) 2,886,000(b) 7,630,000
Goodwill (Preliminary) -- 1,669,000(a) 1,669,000 1,669,000
Property, Plant and
Equipment
Land 211,000 385,000 (35,000)(b) 561,000 181,000 (62,000)(c) 680,000
Buildings and
improvements 6,183,000 1,137,000 1,238,000(b) 8,558,000 2,542,000 (1,008,000)(c) 9,226,000
(866,000)(d)
Machinery, equipment
and furniture 22,265,000 1,641,000 1,674,000(b) 25,580,000 9,742,000 (2,151,000)(d) 27,007,000
(6,164,000)(c)
Construction in process 1,450,000 82,000 -- 1,532,000 -- -- 1,532,000
----------- ---------- ---------- ----------- ---------- ---------- -----------
30,109,000 3,245,000 2,877,000 36,231,000 12,465,000 (10,251,000) 38,445,000
Less accumulated
depreciation (17,840,000) (454,000) 454,000(c) (17,840,000) (9,579,000) 9,579,000(c) (17,840,000)
----------- ---------- ---------- ----------- ---------- ---------- -----------
Net Property, Plant
and Equipment 12,269,000 2,791,000 3,331,000 18,391,000 2,886,000 (672,000) 20,605,000
----------- ---------- ---------- ----------- ---------- ---------- -----------
$57,791,000 $9,442,000 $5,000,000 $72,233,000 $4,391,000 $681,000 $77,305,000
=========== ========== ========== =========== ========== ========== ===========
</TABLE>
<PAGE> 39
<TABLE>
<CAPTION>
AMERICAN PRECISION INDUSTRIES INC.
-----------------------------------
PRO FORMA COMBINED BALANCE SHEET (UNAUDITED)
--------------------------------------------
DECEMBER 29, 1995
-----------------
PRO FORMA PRO FORMA
-------------------------- -------------------------------
ACQUISITION ACQUISITION
ADJUSTMENT ADJUSTMENT
API HTD (NOTE 1) COMBINED GETTYS (NOTE 2) COMBINED
--- --- ----------- -------- ------ ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
----------- ---------- ---------- ----------- ---------- ---------- -----------
<CAPTION>
Liabilities and
Shareholders' Equity
Current Liabilities
Short-term borrowings $ 2,602,000 $ -- $ $ 2,602,000 $ $ $ 2,602,000
Note payable to
related party 16,500,000 (16,500,000)(b) --
Accounts payable 5,136,000 1,844,000 6,980,000 781,000 7,761,000
Due to related parties -- 3,262,000 (3,262,000)(b) --
Accrued comp.
and payroll taxes 3,566,000 486,000 4,052,000 440,000 4,492,000
Other accrued expenses 757,000 274,000 1,031,000 306,000 975,000 (e) 2,312,000
Dividends payable 463,000 463,000 463,000
Current portion of long-
term obligations 628,000 628,000 628,000
----------- ---------- ---------- ----------- ---------- ---------- -----------
Total Current
Liabilities 13,152,000 2,604,000 15,756,000 21,289,000 (18,787,000) 18,258,000
----------- ---------- ---------- ----------- ---------- ---------- -----------
Long-Term Obligations,
less current portion 8,628,000 11,752,000(d) 20,380,000 2,570,000(a) 22,950,000
Deferred Income Taxes 1,251,000 86,000 1,337,000 1,337,000
Other Noncurrent Liabilities 413,000 413,000 413,000
Common stock, par value
$.66-2/3 per share:
Authorized-10,000,000
shares issued -7,502,000 5,001,000 5,001,000 5,001,000
Preferred stock,
nonvoting, $1,000 par
value, 200 shares
authorized, issued
and outstanding 200,000 (200,000)(b) --
Additional paid-in-capital 9,532,000 9,532,000 9,532,000
Intra-Company Account 6,752,000 (6,752,000)(e) --
Retained earnings (deficit) 22,629,000 22,629,000 (17,098,000) 17,098,000(b) 22,629,000
Net unrealized gain on
marketable securities 23,000 23,000 23,000
----------- ---------- ---------- ----------- ---------- ---------- -----------
37,185,000 6,752,000 (6,752,000) 37,185,000 (16,898,000) 16,898,000 37,185,000
Less cost of 374,262
treasury shares 2,838,000 -- -- 2,838,000 -- -- 2,838,000
----------- ---------- ---------- ----------- ---------- ---------- -----------
Total Shareholders'
Equity (Deficit) 34,347,000 6,752,000 (6,752,000) 34,347,000 (16,898,000) 16,898,000 34,347,000
----------- ---------- ---------- ----------- ---------- ---------- -----------
$57,791,000 $9,442,000 $5,000,000 $72,233,000 $4,391,000 $681,000 $77,305,000
=========== ========== ========== =========== ========== ========== ===========
</TABLE>
<PAGE> 40
Note 1 The information relative to the acquisition of HTD by API Ketema Inc.
has been previously filed on Form 8-K/A dated June 12, 1996. The pro
forma balance sheet has been prepared to reflect the acquisition of
HTD by API Ketema Inc. for an aggregate purchase price of $11,752,000.
Pro forma adjustments are made to reflect:
(a) The excess of acquisition cost over the fair value of net assets
acquired (goodwill).
(b) Step-up in bases of fixed assets based upon independent appraisal.
(c) Elimination of accumulated depreciation.
(d) Increase in long-term debt to fund purchase cost.
(e) Elimination of intra-company account.
Note 2 The pro forma balance sheet has been prepared to reflect the
acquisition of Gettys by API Gettys Inc. for an aggregate purchase
price of $4,777,000. Pro forma adjustments are made to reflect:
(a) Reduction of cash and marketable securities and increase of
long-term debt to fund purchase costs.
(b) Elimination of certain assets not acquired and certain liabilities
not assumed in the acquisition.
(d) Step-down in bases of fixed assets based upon appraised values.
(d) Pro rata allocation of remaining purchase to Property, Plant &
Equipment and elimination of accumulated depreciation in
accordance with APB 16 "Accounting for Business Combinations".
Pro rata allocation is based upon appraised values.
(e) Recognition of certain liabilities as a result of the acquisition
of Gettys.
<PAGE> 41
<TABLE>
<CAPTION>
AMERICAN PRECISION INDUSTRIES INC.
----------------------------------
PRO FORMA COMBINED STATEMENT OF EARNINGS (UNAUDITED)
----------------------------------------------------
DECEMBER 29, 1995
-----------------
PRO FORMA PRO FORMA
---------------------------- ---------------------------
ACQUISITION ACQUISITION
ADJUSTMENT ADJUSTMENT
API HTD (NOTE 1) COMBINED GETTYS (NOTE 2) COMBINED
--- --- ----------- -------- ------ ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales $82,403,000 $21,776,000 $ $104,179,000 $12,484,000 $ $116,663,000
Investment Income 257,000 257,000 (158,000)(a) 99,000
---------- ---------- ------- ----------- ---------- ------- -----------
Net Revenues 82,660,000 21,776,000 104,436,000 12,484,000 (158,000) 116,762,000
---------- ---------- ------- ----------- ---------- ------- -----------
Costs and Expenses:
Cost of
products sold 55,289,000 17,480,000 185,000 (a) 72,954,000 10,393,000 (34,000)(b) 83,313,000
Selling and
administrative 18,801,000 3,414,000 (528,000)(b) 21,701,000 4,867,000 (14,000)(b) 26,554,000
14,000 (a)
Research and
product development 1,111,000 1,111,000 1,111,000
Goodwill amortization -- 56,000 (c) 56,000 56,000
Interest and
debt expense 238,000 454,000 715,000 (d) 953,000 1,160,000 (1,160,000)(c) 1,143,000
(454,000)(b) 190,000 (c)
---------- ---------- ------- ---------- ---------- --------- -----------
75,439,000 21,348,000 (12,000) 96,775,000 16,420,000 (1,018,000) 112,177,000
---------- ---------- ------- ---------- ---------- --------- -----------
Earnings before
Income Taxes 7,221,000 428,000 12,000 7,661,000 (3,936,000) 860,000 4,585,000
Federal and State
Income Taxes (Benefit) 2,490,000 164,000 5,000 (e) 2,659,000 -- (1,046,000)(d) 1,613,000
---------- ---------- ------- ---------- ---------- --------- ---------
Net Earnings $4,731,000 $264,000 $7,000 $5,002,000 $(3,936,000) $1,906,000 $ 2,972,000
========== ========== ======= ========== ========== ========= =========
Net Earnings per Share $0.67 $0.71 $0.42
========== ========== =========
Dividends Declared
per Share $0.2575 $0.2575 $0.2575
========== ========== =========
Average Shares
Outstanding 7,090,000 7,090,000 7,090,000
========== ========== =========
</TABLE>
<PAGE> 42
Note 1 The information relative to the a acquisition of HTD by API
Ketema Inc. has been previously filed on Form 8-K/A dated June 12,
1996. The pro forma income statement has been prepared to reflect the
acquisition of HTD by API Ketema Inc. Pro forma adjustments are made
to:
(a) Adjust depreciation based on fair value of assets per appraisal
over estimated lives.
(b) Eliminate certain corporate assessments.
(c) Amortize goodwill over estimated life.
(d) Reflect interest expense on line of credit used to fund purchase
cost.
(e) Reflect income taxes on adjustments.
Note 2 The pro forma income statement has been prepared to reflect the
acquisition of Gettys by API Gettys Inc. Pro forma adjustments are
made to:
(a) Reflect loss of interest income on cash, cash equivalents and
marketable securities used in acquisition.
(b) Adjust depreciation based upon allocation of remaining purchase
price and estimated useful lives.
(c) Reflect interest expense on line of credit used to fund purchase
cost and elimination of interest expense or debt payable to
affiliates.
(d) Reflect income tax impact on acquisition adjustments and tax
benefit of operating loss.
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
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We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 of American Precision Industries Inc. of our report dated
February 7, 1996 for the combined financial statements as of and for the year
ended December 31, 1995 and our report dated January 20, 1995 for the combined
financial statements as of and for the years ended December 31, 1994 and 1993
relating to the combined financial statement of Gettys Corporation and
Gettys Property Corporation which appears in the Amended Report in Form 8-K/A of
American Precision Industries Inc. dated July 2, 1996.
BDO BINDER
Milwaukee, Wisconsin
Buffalo, New York
July 2, 1996
