===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
AMENDMENT NO. 1
AMENDMENT TO CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 10, 1997
KUHLMAN CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-7695 58-2058047
(State or other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
3 Skidaway Village Square, Savannah, Georgia 31411
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (912) 598-7809
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
===============================================================================
Item 7.Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired
See Index to Financial Statements and Pro Forma Financial
Information on page F-1 and pages referenced thereon.
(b) Pro Forma Financial Information
See Index to Financial Statements and Pro Forma Financial
Information on page F-1 and pages referenced thereon.
(c) Exhibits
(2)(a) Asset Purchase Agreement among Kuhlman Corporation, Transpro
Group, Inc., Kysor Industrial Corporation, and certain
subsidiaries of Kysor Industrial Corporation dated as of
February 2, 1997 [Incorporated by reference to Exhibit 2 to
Schedule 14D-9 of Kysor Industrial Corporation dated
February 7, 1997 (SEC File No. 1-8973)].
(23)(a) Consent of Coopers and Lybrand LLP
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
KUHLMAN CORPORATION
(Registrant)
By: /s/ Robert S. Jepson, Jr.
------------------------------
Robert S. Jepson, Jr.
Chairman and Chief Executive Officer
Dated: May 15, 1997
<PAGE>
KUHLMAN CORPORATION
INDEX TO FINANCIAL STATEMENTS
AND PRO FORMA FINANCIAL INFORMATION
KYSOR TRANSPORTATION PRODUCTS GROUP
Index . . . . . . . . . . . . . . . . . . . . . F-2
Independent Auditors' Report. . . . . . . . . . F-3
Combined Balance Sheet as of December 31, 1996. F-4
Combined Statement of Income for the
year ended December 31, 1996. . . . . . . . F-5
Combined Statement of Cash Flows for the
year ended December 31, 1996. . . . . . . . F-6
Notes to Combined Financial Statements . . . . F-7 through F-19
KUHLMAN CORPORATION AND SUBSIDIARIES AND KYSOR TRANSPORTATION
PRODUCTS GROUP
Transaction Summary . . . . . . . . . . . . . . F-20
Unaudited Pro Forma Condensed Combined
Balance Sheet as of December 31, 1996 . . . F-21
Unaudited Pro Forma Condensed Combined
Statement of Income for the year ended
December 31, 1996 . . . . . . . . . . . . . F-22
Notes to Unaudited Pro Forma Condensed
Combined Financial Statements . . . . . . . F-23 through F-24
F-1
<PAGE>
Kysor Transportation Products Group
Index
Pages
Report of Independent Accountants. . . . . . . . . . . . . . . 1
Financial Statements:
Combined Balance Sheet. . . . . . . . . . . . . . . . . . . 2
Combined Statement of Income. . . . . . . . . . . . . . . . 3
Combined Statement of Cash Flows. . . . . . . . . . . . . . 4
Notes to Combined Financial Statements. . . . . . . . . .5-17
F-2
<PAGE>
Report of Independent Accountants
To the Board of Directors of
Scotsman Industries, Inc.:
We have audited the accompanying combined balance sheet of Kysor
Transportation Products Group (a former segment of Kysor
Industrial Corporation, as described in basis of presentation,
Note 1) as of December 31, 1996 and the related combined
statements of income 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 from 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 combined financial
position of Kysor Transportation Products Group as of December
31, 1996 and the combined results of their operations and their
cash flows for the year then ended in conformity with generally
accepted accounting principles.
As discussed in Note 13, Kysor Industrial Corporation's common
and preferred stock were acquired in March 1997 in a purchase
transaction for an aggregate price of approximately $309
million. Concurrent with this transaction, Kysor Transportation
Products Group was sold by the acquirer to a third party for an
aggregate price of approximately $86 million plus the assumption
of certain liabilities.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
February 3, 1997
F-3
<PAGE>
Kysor Transportation Products Group
Combined Balance Sheet
as of December 31, 1996
(amounts in thousands)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . $ 1,443
Accounts receivable, less $743 allowance
for doubtful accounts . . . . . . . . . . . . . . . . . 15,670
Inventory . . . . . . . . . . . . . . . . . . . . . . . 12,859
Prepaid expenses . . . . . . . . . . . . . . . . . . . . 701
Deferred income taxes . . . . . . . . . . . . . . . . . . 3,104
--------
Total current assets . . . . . . . . . . . . . . . . 33,777
--------
Property, plant and equipment, net . . . . . . . . . . . . . 27,986
Other assets:
Goodwill, patents and other intangibles
(net of amortization of $2,783) . . . . . . . . . . . 2,084
Cash value of officers' life insurance . . . . . . . . . 735
Deferred income taxes . . . . . . . . . . . . . . . . . . 2,510
Prepaid pension and other assets . . . . . . . . . . . . 3,384
--------
Total other assets . . . . . . . . . . . . . . . . . 8,713
--------
Total assets . . . . . . . . . . . . . . . . . . . . $ 70,476
========
LIABILITIES AND KYSOR INDUSTRIAL
CORPORATION NET INVESTMENT AND ADVANCES
Current liabilities:
Current maturities of long-term debt . . . . . . . . . . $ 1,069
Accounts payable . . . . . . . . . . . . . . . . . . . . 5,897
Accrued expenses and contingent liabilities . . . . . . . 11,069
--------
Total current liabilities. . . . . . . . . . . . . . 18,035
Long-term debt, less current maturities . . . . . . . . . . . 498
Accumulated post-retirement benefit obligation . . . . . . . 11,642
Other long-term liabilities . . . . . . . . . . . . . . . . . 1,645
--------
Total liabilities . . . . . . . . . . . . . . . . . 31,820
Kysor Industrial Corporation net investment and advances. . . 38,656
--------
Total liabilities and Kysor Industrial Corporation
net investment and advances . . . . . . . . . . $ 70,476
========
</TABLE>
The accompanying notes are an integral part of the combined financial
statements.
<PAGE>
Kysor Transportation Products Group
Combined Statement of Income
for the year ended December 31, 1996
(amounts in thousands)
<TABLE>
<S> <C>
Sales and revenues:
Net sales . . . . . . . . . . . . . . . . . . . . . . . . $ 136,154
Interest and other revenues . . . . . . . . . . . . . . . . 75
---------
Total sales and revenues . . . . . . . . . . . . . . . 136,229
---------
Costs and expenses:
Cost of sales . . . . . . . . . . . . . . . . . . . . . . 104,735
Selling and administrative expenses . . . . . . . . . . . . 24,863
Interest expense . . . . . . . . . . . . . . . . . . . . . 978
Other expenses . . . . . . . . . . . . . . . . . . . . . . 328
---------
Total costs and expenses . . . . . . . . . . . . . . . 130,904
---------
Income before income taxes . . . . . . . . . . . . . . 5,325
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . 1,600
---------
Net income . . . . . . . . . . . . . . . . . . . . . . $ 3,725
=========
</TABLE>
The accompanying notes are an integral part of the combined financial
statements.
<PAGE>
Kysor Transportation Products Group
Combined Statement of Cash Flows
for the year ended December 31, 1996
(amounts in thousands)
<TABLE>
<S> <C>
Cash flows provided (used) by operating activities:
Net income from continuing operations . . . . . . . . . . . $ 3,725
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . 5,133
Provision for losses on accounts receivable . . . . . . . 151
Gain on sale of fixed assets . . . . . . . . . . . . . . 144
Deferred income taxes . . . . . . . . . . . . . . . . . (262)
Unrealized translation gain . . . . . . . . . . . . . . 208
Changes in assets and liabilities providing
(consuming) cash:
Accounts receivable . . . . . . . . . . . . . . . (1,624)
Inventory . . . . . . . . . . . . . . . . . . . . 2,135
Prepaid expenses . . . . . . . . . . . . . . . . . 339
Accounts payable . . . . . . . . . . . . . . . . . (1,212)
Accrued expenses and contingent liabilities . . . 1,773
---------
Net cash provided by operating activities . . . . . . . . 10,510
---------
Cash flows provided (used) by investing activities:
Additions to property, plant and equipment . . . . . . . . (11,608)
Proceeds from sales of property and equipment . . . . . . . 32
Decrease in other long-term assets . . . . . . . . . . . . 1,133
---------
Net cash used by investing activities . . . . . . . . . . (10,443)
---------
Cash flows provided (used) by financing activities:
Current borrowings . . . . . . . . . . . . . . . . . . . . 398
Principal payments against long-term debt . . . . . . . . . (143)
Kysor Industrial Corporation net investment and
advances, net . . . . . . . . . . . . . . . . . . . . . . (76)
---------
Net cash provided by financing activities . . . . . . . . 179
---------
Net increase in cash and cash equivalents . . . . . . . . . . . 246
Cash and cash equivalents, beginning of year . . . . . . . . . 1,197
---------
Cash and cash equivalents, end of year . . . . . . . . . . . . $ 1,443
=========
</TABLE>
The accompanying notes are an integral part of the combined financial
statements.
<PAGE>
Kysor Transportation Products Group
Notes to Combined Financial Statements
1. Basis of Presentation:
The accompanying combined financial statements include Kysor
Industrial Corporation's Transportation Products Group ("TPG"),
a segment of Kysor Industrial Corporation ("Kysor"). TPG
includes certain Kysor Industrial Corporation subsidiaries and
divisions whose operations consist of the design, manufacture
and sale of engine-performance systems, engine-protection
systems and components and accessories for heavy-duty trucks,
other commercial vehicles and marine equipment. The principal
markets for TPG's products include the United States, Europe and
the Pacific Rim and customers include original equipment
manufacturers and related suppliers. During the year ended
December 31, 1996, TPG had sales to a major customer aggregating
approximately $26 million.
The accompanying combined financial statements reflect the
"carved-out" financial position, results of operations and cash
flows of the TPG for the period presented. The combined
financial statements have been prepared as if the TPG had
operated as a stand-alone entity for the period presented, and
include those assets, liabilities, revenues and expenses
directly attributable to the TPG operations, as well as certain
corporate general and administrative expenses of Kysor which
have been allocated to TPG.
The financial information included herein does not necessarily
reflect, and it is not practicable for management to estimate
what the financial position and results of operations of the TPG
would have been had it operated as a stand-alone entity during
the period covered, and may not be indicative of future
operations or financial position.
2. Summary of Significant Accounting Policies:
a. Principles of Combination: The accompanying combined
financial statements include the accounts and transactions of
TPG. All significant intra-division accounts and transactions
have been eliminated in the preparation of the combined
financial statements.
b. Use of Estimates in the Preparation of Financial Statements:
The preparation of financial statements in conformity with
generally accepted accounting principles requires TPG to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
2. Summary of Significant Accounting Policies, continued:
c. Cash and Cash Equivalents: TPG considers all highly liquid
investments with an original maturity of three months or less to
be cash and equivalents. TPG participates in a centralized cash
management program, managed by Kysor Industrial Corporation.
d. Foreign Currency Translation: The financial position and
results of operations of TPG's foreign entities are measured
using the local currency as the functional currency. Assets and
liabilities of these subsidiaries are translated at the balance
sheet date exchange rate and statement of income accounts are
translated in the average rate prevailing during the year.
Accumulated translation adjustments, which are included as a
component of Kysor's net investments and advances in the
accompanying combined balance sheet, approximate a $691,000
credit at December 31, 1996.
e. Inventory: Inventories are generally stated at the lower of
first-in, first-out ("FIFO") cost or market. TPG has one
subsidiary utilizing the last-in, first-out ("LIFO") method of
valuing inventory, the inventory value of which was $847,000
lower than it would have been under FIFO at December 31, 1996.
f. Property, Plant and Equipment: Property, plant and
equipment, including significant betterments to existing
facilities, are recorded at cost. Upon retirement or disposal,
the cost and accumulated depreciation are removed from the
accounts, and any gain or loss is included in income.
Maintenance and repair costs are charged to expense as incurred.
Depreciation is computed by the straight-line method based on
the estimated useful lives of the assets which range from 3 to
40 years.
g. Goodwill: Goodwill, resulting from the excess of cost over
the net assets of purchased companies, is amortized on a
straight-line basis over periods not exceeding 20 years.
h. Income Taxes: The results of TPG's U. S. operations were
included in Kysor Industrial Corporation's consolidated U. S.
federal and applicable state income tax returns. Income taxes
recorded in the accompanying financial statements are
attributable to the income taxes that TPG would have incurred on
a stand-alone basis calculated on a basis consistent with
Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes."
Deferred tax assets and liabilities are determined based on the
difference between the financial statement and tax bases of
assets and liabilities using enacted tax rates in effect for the
years in which the differences are expected to reverse.
2. Summary of Significant Accounting Policies, continued:
i. Financial Instruments: TPG has cash and equivalents,
accounts receivable, accounts payable and long-term debt which
are considered financial instruments. The fair values of these
financial instruments, as determined through information
obtained from banking sources and management estimates,
approximate their carrying values.
j. Pension and Retirement Plans: Annual provisions for pension
and retirement plan costs recognize amortization of prior
service costs over the expected service period of active
employees. Accrued pension costs are funded annually to the
extent deductible for federal income tax purposes.
Post-retirement health and life insurance benefits are
accounted for in accordance with Statement of Financial
Accounting Standards No. 106, "Employers Accounting for
Postretirement Benefits Other Than Pensions."
k. Environmental Costs: Environmental expenditures that relate
to an existing condition caused by past operations, and do not
contribute to current or future revenues, are expensed as
incurred. Liabilities are recorded when environmental
assessments and/or clean-ups are probable and the costs can be
reasonably estimated.
l. Recent Professional Accounting Standards: TPG adopted the
provisions of Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets To Be Disposed Of" effective
January 1, 1996. This adoption did not have a material impact
on the financial position or the results of operations of TPG.
3. Inventory:
Components of inventory are as follows at December 31, 1996:
<TABLE>
<CAPTION>
(amounts in thousands)
<S> <C>
Finished goods . . . . . . . . . . . . . . . . . $ 1,127
Raw materials . . . . . . . . . . . . . . . . . 8,591
Work in process . . . . . . . . . . . . . . . . 3,141
---------
$ 12,859
=========
</TABLE>
4. Property, Plant and Equipment:
Components of property, plant and equipment are as follows at
December 31, 1996:
<TABLE>
<CAPTION>
(amounts in thousands)
<S> <C>
Land and improvements . . . . . . . . . . . . . . . $ 677
Buildings . . . . . . . . . . . . . . . . . . . . . . 11,702
Machinery and equipment . . . . . . . . . . . . . . . 54,384
---------
. . . . . . . . . . . . . . . . . . . . . . 66,763
Less accumulated depreciation . . . . . . . . . 38,777
---------
$ 27,986
=========
</TABLE>
5. Accrued Expenses and Contingent Liabilities:
Components of accrued expenses and contingent liabilities are as
follows at December 31, 1996:
<TABLE>
<CAPTION>
(amounts in thouands)
<S> <C>
Workers' compensation and liability insurance . . . . $ 5,028
Compensation . . . . . . . . . . . . . . . . . . . . 2,419
Warranty . . . . . . . . . . . . . . . . . . . . . . 1,257
Environmental costs . . . . . . . . . . . . . . . . 1,200
Other . . . . . . . . . . . . . . . . . . . . . . . 1,165
---------
Total accrued expenses and contingent liabilities. $ 11,069
=========
</TABLE>
6. Financing:
<TABLE>
<CAPTION>
(amounts in thousands)
<S> <C>
Notes payable, principal payments due in
monthly installments, plus interest
at rates ranging from 5.0 percent
to 9.2 percent. . . . . . . . . . . . . . . $ 1,567
Less current maturities . . . . . . . . . . . 1,069
----------
Total long-term debt . . . . . . . . . . . $ 498
==========
</TABLE>
1997 1998
Maturities of long-term debt $ 1,069 $ 498
Interest paid on total debt was approximately $100,000 for the
year ended December 31, 1996.
Interest expense in the accompanying combined statement of
income includes an allocation for interest on corporate debt
that was attributable to the operating segments of Kysor. The
interest was allocated based on the ratio of net assets of TPG
to the sum of total net assets of Kysor plus Kysor's'
consolidated debt.
7. Pension and Retirement Plans:
TPG has several noncontributory defined benefit pension plans
and defined contribution plans covering substantially all of its
domestic employees. The defined benefit plans provide benefits
based on the participant's years of service and compensation or
stated amounts for each years' service. TPG's funding policy is
to make annual contributions as required by contract or
applicable regulations.
Pension cost components were:
<TABLE>
<CAPTION>
1996
(amounts in
thousands)
<S> <C>
Defined benefit plans:
Service cost benefits earned during period . . . . . $ 996
Interest cost on projected benefit obligation . . . 1,792
Actual investment return on plan assets . . . . . . (3,479)
Net amortization and deferral . . . . . . . . . . . 1,167
--------
Net periodic pension cost . . . . . . . . . . . $ 476
========
Assumptions were:
Discount rates . . . . . . . . . . . . . . . . . . . 7.5%
Rates of increase in compensation levels . . . . . . 4.8%
Expected long-term rate of return on assets. . . . . 8.0%
</TABLE>
The following table sets forth the funded status and amounts
recognized in TPG's statement of financial position for defined
benefit plans:
<TABLE>
<CAPTION>
Year Ended Dec 31, 1996
-----------------------
Plans in Which
-----------------------
Assets Accumulated
Exceed Benefits
Accumulated Exceed
Benefits Assets
----------- -----------
(amounts in thousands)
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation . . . . . . . . . $ (19,664) $ (672)
--------- ---------
Accumulated benefit obligation . . . . . . $ (21,137) $ (1,670)
--------- ---------
Projected benefit obligation. . . . . . . . $ (25,257) $ (2,430)
Plan assets at fair market value . . . . . 31,292 ---
--------- ---------
Projected benefit obligation
(in excess of) or less than plan assets . 6,035 (2,430)
Unrecognized net (gain) or loss . . . . . . (3,863) 660
Prior service cost not yet recognized
in net periodic pension cost . . . . . . 940 56
Unrecognized net (asset) obligation . . . . (683) 69
--------- ---------
Pension asset (liability) recognized in
the statement of financial position . . . $ 2,429 $ (1,645)
========= =========
</TABLE>
At December 31, 1996, 100 percent of plan assets was invested in
publicly traded stocks, bonds and money market investments.
TPG provides certain defined health care and life insurance
benefits for retired employees. All salaried and certain hourly
employees may become eligible for these benefits if they reach
retirement age while working for TPG. Retiree benefit payments
under these plans were $594,000 in 1996.
The components of periodic expenses for the post-retirement
benefits were as follows at December 31, 1996:
<TABLE>
<CAPTION>
(amounts in thousands)
<S> <C>
Service cost, benefits earned during the year . . . . $ 372
Interest cost on accumulated post-retirement
benefit obligation . . . . . . . . . . . . . . . 799
Net amortization. . . . . . . . . . . . . . . . . . . (31)
-------
Net periodic benefit costs . . . . . . . . . $ 1,140
=======
</TABLE>
The actuarial and recorded liabilities for those post-retirement
benefits, none of which have been funded, were as follows at
December 31, 1996:
<TABLE>
<CAPTION>
(amounts in thousands)
<S> <C>
Accumulated post-retirement benefit obligation ("APBO"):
Retirees . . . . . . . . . . . . . . . . . . . . . $ 8,319
Fully eligible active plan participants . . . . . 1,208
Other active participants . . . . . . . . . . . . 1,498
--------
Total APBO . . . . . . . . . . . . . . . . . 11,025
Unrecognized net gain . . . . . . . . . . . . . . . . . 617
--------
Accrued post-retirement benefit
liability at December 31 . . . . . . . . $ 11,642
========
</TABLE>
Assumptions used to determine the net periodic post-retirement
benefit cost were as follows:
<TABLE>
<S> <C>
Discount rate 7.5%
Present health care trend rate (decreasing
uniformly to the year 2005):
Under age 65 8.4%
Age 65 and older 7.1%
Ultimate trend rate in 2005 5.0%
</TABLE>
A one percent increase each year in the health care cost trend
rate used would have resulted in a 10.6 percent increase in the
aggregate service and interest components of expense for the
year ended December 31, 1996, and a 8.2 percent increase in the
accumulated post-retirement benefit obligation at December 31,
1996.
8. Lease Commitments:
TPG leases certain real estate and equipment. In most cases,
management expects that in the normal course of business these
leases will be renewed or replaced by other leases. TPG has
future minimum rental payments required through 2001 under
operating leases that have initial or remaining noncancelable
lease terms in excess of one year in the following amounts, for
the years ended December 31 (in thousands):
1997 $ 255
1998 523
1999 493
2000 478
2001 475
In addition to fixed rentals, certain of these leases require
TPG to pay maintenance, property taxes and insurance. Rental
expense charged to operations is as follows for the year ended
December 31, 1996:
(amounts in thousands)
Minimum rentals $ 576
Contingent rentals 110
-------
Total $ 686
=======
9. Income Taxes:
The provision (credit) for income taxes consists of the
following for the year ended December 31, 1996:
<TABLE>
<CAPTION>
(amounts in thousands)
<S> <C>
Provision (credit) for income taxes consists of the following:
Currently payable:
Federal . . . . . . . . . . . . . . . . . $ 1,675
State and local . . . . . . . . . . . . . 187
---------
1,862
---------
Deferred:
Federal . . . . . . . . . . . . . . . . . (231)
State and local . . . . . . . . . . . . . (31)
---------
(262)
---------
$ 1,600
=========
Deferred tax assets:
Postretirement health care . . . . . . . . $ 4,416
Workers' compensation/liability insurance . 1,887
Warranty . . . . . . . . . . . . . . . . . 468
Bad debts . . . . . . . . . . . . . . . . . 280
Vacation pay. . . . . . . . . . . . . . . . 306
Slow-moving inventory . . . . . . . . . . . 214
Environmental costs . . . . . . . . . . . . 436
Other . . . . . . . . . . . . . . . . . . . 440
---------
8,447
=========
Deferred tax liabilities:
Depreciation. . . . . . . . . . . . . . . . 1,381
Pension . . . . . . . . . . . . . . . . . . 860
LIFO reserve at acquisition . . . . . . . . 548
Other . . . . . . . . . . . . . . . . . . . 44
---------
2,833
---------
Net deferred income tax asset $ 5,614
=========
</TABLE>
9. Income Taxes, continued:
The following is a reconciliation of tax computed at the U. S.
federal statutory rate to the provision for income taxes
allocated to income before income taxes for the year ended
December 31, 1996:
<TABLE>
<CAPTION>
(amounts in thousands)
<S> <C>
Tax at U. S. federal statutory rate . . . . . . . . $ 1,811
Utilization of foreign net operating losses
not previously recognized . . . . . . . . . . . (481)
State and local taxes, net of federal tax benefit . 122
Other . . . . . . . . . . . . . . . . . . . . . . . 148
---------
Income taxes . . . . . . . . . . . . . . . . . . $ 1,600
=========
</TABLE>
Earnings of foreign subsidiaries generally become taxable upon
the remittance of dividends and under certain other
circumstances. Provision has not been made for U. S. or
additional foreign taxes as these amounts are expected to be
immaterial.
10. Contingent Liabilities:
As previously reported, TPG has been involved in ongoing
proceedings relating to environmental contamination at the
Cadillac Industrial Park in Cadillac, Michigan (the "Site"). A
U. S. Environmental Protection Administration administrative
order was issued in 1995 to Kysor Industrial Corporation and
other potentially responsible parties ("PRPs") requiring soil
and groundwater remediation at the Site. It is intended that
the remediation will be conducted through a joint effort
involving other PRPs and a local development finance authority
established by the City of Cadillac ("LDFA"), which has sold
approximately $7 million of nonrecourse bonds to pay the
anticipated capital costs of constructing an area-wide
environmental clean-up facility. TPG believes that the bond
proceeds received by the LDFA will be adequate to cover the
capital costs of the area-wide clean-up facility. If the
proceeds are insufficient to pay the required capital costs, TPG
and the other PRPs would be responsible for the additional costs
pursuant to the pending administrative order. It is anticipated
that operating and maintenance costs of the clean-up facility
will be shared primarily by the PRPs, including TPG, as well as
other parties within the Cadillac Industrial Park pursuant to a
special assessment district proposed by the City of Cadillac.
The extent of any assessment to TPG cannot be determined at the
present time. TPG has reserved its right to seek mixed funding
for certain costs related to the clean-up, and will continue to
pursue insurance coverage for any costs it may incur at the
Site. There has been no determination as to the availability or
extent of such funding or insurance coverage.
Other contingent liabilities include various legal actions,
proceedings and claims which are pending or which may be
instituted or asserted in the future against TPG. For example,
in 1994, Kysor Industrial Corporation settled a lawsuit filed by
the State of Michigan seeking to recover past response costs,
penalties and natural resource damages concerning the Site
described above. That settlement did not affect the State's
right to pursue additional claims for natural resource damages
if certain additional contamination is discovered. To TPG's
knowledge, at this juncture no such additional contamination has
been detected.
Litigation is subject to many uncertainties, the outcome of
individual matters is not predictable with assurance and it is
reasonably possible that some of these other legal actions,
proceedings and claims could be decided unfavorably to TPG.
Although the liability with regard to these matters at December
31, 1996 cannot be ascertained, it is the opinion of management,
after conferring with counsel, that any liability resulting from
these other matters should not materially affect the
consolidated financial position, results of operations or
liquidity of TPG at December 31, 1996.
11. Selling and Administrative Expense Allocations:
The accompanying combined statement of income includes
recognition of expenses for direct expenses specifically
attributable to TPG incurred on its behalf by Kysor for employee
benefit programs, insurance and certain legal matters.
In addition, the accompanying combined statement of income
includes an allocation of indirect corporate expenses incurred
by Kysor relating to officer and corporate administration
salaries and benefits, occupancy expense for corporate
headquarters and other indirect corporate expenses. Because
specific indication of such expense was not practicable, a
proportionate cost allocation was utilized to allocate these
expenses to TPG based on its total revenue to Kysor's
consolidated total revenue. These allocated costs aggregated
approximately $2,742,000 for 1996.
In the opinion of management, these allocations of expenses were
made on a reasonable basis. However, they are not necessarily
indicative of the level of expenses which may have been
experienced on a separate company basis. The amounts that would
have been incurred on a separate company basis could differ
significantly from the allocated amounts due to economies of
scale, differences in management and operational practices or
other factors.
12. Kysor Industrial Corporation Net Investment and Advances:
The following summarizes Kysor's net investment in and advances
to TPG for the year ended December 31, 1996:
<TABLE>
<CAPTION>
(amounts in thousands)
<S> <C>
Balance, beginning of period . . . . . . . . . . $ 34,799
Net income . . . . . . . . . . . . . . . . . . . 3,725
Unrealized translation gain . . . . . . . . . . 208
Net investment, advances and cash transferred. . (76)
----------
Balance, end of period . . . . . . . . . . . . . $ 38,656
==========
</TABLE>
13. Subsequent Event (Unaudited):
In March 1997, the Kysor Industrial Corporation's common and
preferred stock was acquired in a purchase transaction by
Scotsman Industries, Inc. ("Scotsman") for an aggregate price of
$309 million. Concurrent with the transaction, Scotsman sold
TPG (which was formerly reported as a segment of Kysor) to a
third party for an aggregate price of $86 million plus the
assumption of certain liabilities. The accompanying combined
financial statements do not reflect the purchase accounting
adjustments required upon the consummation of the transaction.
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED
TRANSACTION SUMMARY
KUHLMAN CORPORATION AND KYSOR TRANSPORTATION PRODUCTS GROUP
On March 10, 1997, Kuhlman Corporation (the "Company") purchased certain
assets of the Transportation Products Group ("Kysor") of Kysor Industrial
Corporation, a Michigan corporation traded on the New York Stock Exchange. The
purchase price for Kysor was $86,000,000 in cash plus the assumption of
approximately $46,000,000 of certain liabilities.
The unaudited pro forma information included herein presents the
combined financial statements of the Company and Kysor. The unaudited
pro forma condensed combined balance sheet presents the combined company
as of December 31, 1996 assuming the transaction was consummated on
that date. The unaudited pro forma condensed combined statement of income
presents the combined company for the year ended December 31, 1996
assuming the transaction was consummated at the beginning of the period.
F-20
<PAGE>
Item 7(b)Pro Forma Financial Information
KUHLMAN CORPORATION AND SUBSIDIARIES
AND KYSOR TRANSPORTATION PRODUCTS GROUP
UNAUDITED PRO FORMA CONDENSED COMBINED
BALANCE SHEET
<TABLE>
<CAPTION>
Pro Forma Pro Forma
December 31, 1996 Kuhlman Kysor Adjustments Combined
- --------------------------------------------------------------------------------
In thousands (Note 4)
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents . . $ 2,209 $ 1,443 $ --- $ 3,652
Accounts receivable, net . . 70,079 15,670 --- 85,749
Inventories . . . . . . . . . 52,530 12,859 (714)(a) 64,675
Other current assets . . . . 11,312 3,805 (1,560)(b) 13,557
---------------------------------------------
Total current assets . . . . 136,130 33,777 (2,274) 167,633
---------------------------------------------
Plant and equipment - net . . . . 77,864 27,986 13,000(c) 118,850
---------------------------------------------
Intangible assets, net . . . . . 58,326 2,084 50,746(d) 111,156
Other long-term assets . . . . . 5,096 6,629 1,237 (e) 12,962
---------------------------------------------
$ 277,416 $ 70,476 $ 62,709 $ 410,601
=============================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term
debt. . . . . . . . . . . $ 2,295 $ 1,069 $ 5,375(f) $ 8,739
Accounts payable . . . . . . 35,410 5,897 --- 41,307
Accrued liabilities. . . . . 43,833 11,069 12,352(g) 67,254
---------------------------------------------
Total current liabilities. . 81,538 18,035 17,727 117,300
---------------------------------------------
Long-term debt . . . . . . . . . 92,302 498 80,625(f) 173,425
---------------------------------------------
Other long-term liabilities. . . 12,002 13,287 3,013(g) 28,302
---------------------------------------------
Total liabilities. . . . . . 185,842 31,820 101,365 319,027
---------------------------------------------
Total shareholders' equity . . . 91,574 38,656 (38,656)(h) 91,574
---------------------------------------------
$ 277,416 $ 70,476 $ 62,709 $ 410,601
=============================================
</TABLE>
The Notes to Unaudited Pro Forma Condensed Combined
Financial Statements should be read in conjunction
with this balance sheet
F-21
<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES
AND KYSOR TRANSPORTATION PRODUCTS GROUP
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Pro
Pro Forma Forma
Kuhlman Kysor Adjustments Combined
- -------------------------------------------------------------------------------
In thousands (Note 4)
<S> <C> <C> <C> <C>
Net sales. . . . . . . . . . . $ 456,465 $ 136,154 $ --- $ 592,619
Cost of goods sold . . . . . . 355,530 104,735 --- 460,265
--------------------------------------------
Gross Profit . . . . . . . . 100,935 31,419 --- 132,354
Operating expenses:
Selling, engineering, general and
administrative . . . . . . . . 62,524 25,103 (5,201)(i) 82,426
--------------------------------------------
Operating profit . . . . . . 38,411 6,316 5,201 49,928
--------------------------------------------
Other income (expense):
Interest expense, net. . . . (6,981) (978) (5,039)(j) (12,998)
Other, net . . . . . . . . . (2,087) (13) --- (2,100)
--------------------------------------------
Total other income
(expense), net . . . . . (9,068) (991) (5,039) (15,098)
--------------------------------------------
Income before taxes. . . . . 29,343 5,325 162(k) 34,830
Taxes on income. . . . . . . 12,007 1,600 452 14,059
--------------------------------------------
Net income . . . . . . . . . $ 17,336 $ 3,725 $ (290) $ 20,771
============================================
Earnings per share -
fully diluted . . . . . $ 1.21 $ 1.44
========= ========
Weighted average common shares
and common stock equivalents -
fully diluted. . . . . . 14,384 14,384
========= ========
</TABLE>
The Notes to Unaudited Pro Forma Condensed Combined
Financial Statements should be read in conjunction
with this statement
F-22
<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES
AND KYSOR TRANSPORTATION PRODUCTS GROUP
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS
1. On March 10, 1997, Kuhlman Corporation (the "Company") purchased certain
assets of the Transportation Products Group ("Kysor") of Kysor Industrial
Corporation, a Michigan corporation traded on the New York Stock Exchange.
The purchase price for Kysor was $86,000,000 in cash plus the assumption
of approximately $46,000,000 of certain liabilities. The acquisition of
Kysor will be accounted for as a purchase and was financed from
borrowings under the Company's existing credit facilities.
2. The Company and Kysor operate and report on a calendar year basis. The
unaudited pro forma combined condensed financial statements present the
financial position and results of operations of the combined businesses
as of and for the year ended December 31, 1996. The unaudited pro forma
combined condensed financial statements should be read in conjunction with
the Company's audited consolidated financial statements as of and for the
three years in the period ended December 31, 1996 included in the Company's
annual report on Form 10-K for 1996 and Kysor's audited financial
statements as of and for the year ended December 31, 1996 included in
this current report on Form 8-K/A.
3. The accompanying unaudited pro forma condensed combined balance sheet as
of December 31, 1996 has been prepared as if the acquisition of Kysor
had been effective on December 31, 1996. The unaudited pro forma
combined statement of income for the year ended December 31, 1996 has
been prepared as if the acquisition of Kysor had been effective
January 1, 1996. In the opinion of management, all adjustments
necessary to present fairly such pro forma financial statements have
been made. The pro forma financial statements are for information
purposes only and are not necessarily indicative of the financial
condition or results of operations that would have occurred if the
acquisition had been consummated as of January 1, 1996.
4. Explanation of Pro Forma Adjustments
(a) A decrease in inventory to reflect its fair market value to the
Company at the date of acquisition. The reduction in value is
attributable to the writedown of inventories associated with
the exit of certain product lines with minimal demand and limited
future prospects and the Company's policy and strategy with respect
to the management of its working capital resources.
(b) A decrease in other current assets to reflect deferred tax assets
that remained with the seller and the write down of deferred
tooling expenditures consistent with Company policy to expense
such activity.
(c) An increase in plant and equipment, net to reflect its fair market
value at the date of acquisition.
(d) An increase to record the excess of purchase price over the fair
market value of the net assets as if the acquisition had been
consummated on December 31, 1996.
F-23
<PAGE>
(e) An increase in long-term assets to reflect the fair market value of
the prepaid pension assets using actuarial assumptions consistent
with similar Company defined benefit plans, net of the
reduction for long-term deferred tax assets not purchased by the
Company.
(f) An increase in debt to reflect the cost of the acquisition.
Borrowings were made under the Company's 364-day credit facility
which is payable in sixteen quarterly installments beginning on
October 1, 1997
(g) An increase in accrued liabilities to record costs associated with
the exit of certain product lines, severance and transaction-related
expenses. Also, additional accruals were established for certain
environmental, product and warranty liabilities consistent with
Company policy for the establishment for such reserves, subject to
adjustment should new facts become available about Kysor. Kysor is
involved in certain proceedings with respect to environmental
matters including sites where Kysor had been identified as a
potentially responsible party under federal and state environmental
laws and regulations. While the ultimate liability under these
matters is subject to many factors, it is not expected to have
a material effect on the Company.
(h) To record Kuhlman's purchase of the net assets of Kysor.
(i) An adjustment to general and administrative expenses of $6,153,000
primarily representing general corporate overhead and related
costs of Kysor Industrial Corporation that were allocated to
Kysor during 1996 and will not continue, partially offset by
$952,000 representing the net change in intangible amortization
expense resulting from the acquisition.
(j) An increase to reflect the incremental interest expense associated
with the carrying cost of the acquisition debt at the Company's
average borrowing rate for the period.
(k) An increase in taxes on income to reflect the pro forma tax impact
of the Kysor acquisition. The increase is the result of the changes
that would have occurred in accounting for a foreign net operating
loss of Kysor's European operation if the acquisition had occurred
on January 1, 1996.
F-24
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Kuhlman Corp. on Form S-8 (File Nos. 333-26371) of our report dated
February 3, 1997 on our audit of the combined financial statements of Kysor
Transportation Products Group as of December 31, 1996 and for the year then
ended, which report is included in Amendment No. 1 to Form 8-K/A dated
May 15, 1997.
/s/ COOPERS & LYBRAND L.L.P.
Detroit, Michigan
May 14, 1997
