<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-KA
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Original Report: May 23, 1997
Date of Amendment: August 6, 1997
CYBEX INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
New York 0-4538 11-1731581
(State or other (Commission File No.) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
10 Trotter Drive, Medway, Massachusetts 02053
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (508) 533-4300
<PAGE>
Item 7: Financial Statements and Exhibits
This amendment supplements the Report on Form 8-K dated May 23, 1997 by the
addition of the following attached financial statements:
(1) The Company - Unaudited Pro Forma Combined Financial Statements; and
(2) Historical Unaudited Consolidated Financial Statements of Trotter, Inc.
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.
DATED: August 6, 1997 CYBEX INTERNATIONAL, INC.
By: /s/ Peter C. Haines
----------------------------
Peter C. Haines, President
2
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
THE COMPANY -- UNAUDITED PRO FORMA COMBINED
FINANCIAL STATEMENTS:
Basis Of Presentation.............................................. F-2
Unaudited Pro Forma Combined Balance Sheet - March 31, 1997........ F-3
Unaudited Pro Forma Combined Statement Of Operations -
Three Months Ended March 31, 1997................................. F-4
Notes To Unaudited Pro Forma Combined Financial Statements......... F-5
HISTORICAL UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS OF TROTTER INC:
Unaudited Consolidated Balance Sheet - March 31, 1997............. F-9
Unaudited Consolidated Statements Of Operations -
Three Months Ended March 31, 1997 and 1996....................... F-10
Unaudited Consolidated Statements Of Cash Flows -
Three Months Ended March 31, 1997 and 1996....................... F-11
Notes To Unaudited Consolidated Financial Statements.............. F-12
</TABLE>
F-1
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The accompanying unaudited pro forma combined financial statements give
effect to the merger of CYBEX International, Inc. ("CYBEX") and Trotter Inc.
("Trotter") as described in Note 2 of Notes to Unaudited Pro Forma Combined
Financial Statements. The unaudited pro forma combined financial statements have
been prepared assuming the merger transaction had occurred as of March 31, 1997,
in the case of the unaudited pro forma combined balance sheet, or as of January
1, 1997, in the case of the unaudited pro forma combined statement of
operations. CYBEX and Trotter, on a combined basis, are referred to herein as
the "Company."
The unaudited pro forma combined financial statements have been
prepared by management and should be read in conjunction with the historical
financial statements of CYBEX and Trotter. These statements are based on certain
assumptions and preliminary estimates which are subject to change. They do not
purport to be indicative of the financial positions or results of operations
that might have occurred, and do not purport to be indicative of future results.
F-2
<PAGE>
THE COMPANY
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
MARCH 31, 1997
(In thousands)
<TABLE>
<CAPTION>
CYBEX Trotter Pro Forma Combined
ASSETS Historical Historical Adjustments Pro Forma
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents .......................... $ 5,266 $ 3,707 $ -- $ 8,973
Accounts receivable, net ........................... 17,378 6,792 -- 24,170
Inventories ........................................ 9,136 2,427 (5,286)(a) 6,277
Lease receivables .................................. 2,018 -- -- 2,018
Deferred income taxes .............................. 1,812 665 4,996 (b) 10,773
3,300 (c)
Refundable income taxes ............................ 2,938 -- -- 2,938
Prepaid expenses and other ......................... 3,159 879 -- 4,038
-------- -------- -------- --------
Total current assets ......................... 41,707 14,470 3,010 59,187
Property and equipment, net ............................. 9,892 4,591 (1,357)(d) 13,126
Net assets held for sale ................................ 3,011 -- 2,489 (e) 5,500
Goodwill ................................................ -- 2,419 4,151 (f) 9,420
(1,486)(g)
4,336 (h)
Lease receivables ....................................... 4,144 -- -- 4,144
Other assets ............................................ 1,763 478 (507)(i) 1,734
Deferred income taxes ................................... -- 215 -- 215
-------- -------- -------- --------
$ 60,517 $ 22,173 $ 10,636 $ 93,326
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt .................. $ 3,610 $ 1,409 $ -- $ 5,019
Accounts payable ................................... 5,613 2,785 -- 8,398
Accrued expenses and other ......................... 12,368 3,141 7,989 (j) 23,498
Accrued income taxes ............................... -- 1,384 -- 1,384
-------- -------- -------- --------
Total current liabilities .................... 21,591 8,719 7,989 38,299
Long-term debt .......................................... 1,721 9,960 -- 11,681
Accrued warranty obligation ............................. -- 798 -- 798
Deferred income taxes ................................... 1,584 -- -- 1,584
-------- -------- -------- --------
Total liabilities ............................ 24,896 19,477 7,989 52,362
-------- -------- -------- --------
Stockholders' equity
Common stock ....................................... 451 38 390 (k) 879
Additional paid-in capital ......................... 17,606 -- 25,274 (k) 42,880
Retained earnings (deficit) ........................ 19,290 2,658 (1,689)(l) (1,531)
(2,500)(m)
(19,290)(k)
Treasury stock, at cost ............................ (1,517) -- 253 (k) (1,264)
Unearned compensation expense ...................... (209) -- 209 (k) --
-------- -------- -------- --------
Total stockholders' equity ................... 35,621 2,696 2,647 40,964
-------- -------- -------- --------
$ 60,517 $ 22,173 $ 10,636 $ 93,326
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements
F-3
<PAGE>
THE COMPANY
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
CYBEX Trotter Pro Forma Combined
Historical Historical Adjustments Pro Forma
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales .............................. $ 18,297 $ 15,541 $ (1,398)(n) $ 32,440
Cost of sales .......................... 10,863 8,965 (1,202)(o) 18,626
--------- -------- -------- --------
Gross profit ...................... 7,434 6,576 (196) 13,814
(288)(p)
Selling, general and ................... (154)(q)
administrative expenses ............. 7,537 4,208 71 (r) 11,374
--------- -------- -------- --------
Operating income (loss) ........... (103) 2,368 175 2,440
Interest income (expense), net ......... 99 (183) -- (84)
Income from joint venture .............. 50 -- -- 50
--------- -------- --------- --------
Income before income taxes ............. 46 2,185 175 2,406
Income tax expense ..................... 8 885 130 (s) 1,023
--------- -------- -------- --------
Net income ............................. $ 38 $ 1,300 $ 45 $ 1,383
========= ======== ======== ========
Net income per share ................... $ .01 $ .16
========= ========
Shares used in computing net
income per share...................... 4,383 8,746
========= ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
1. HISTORICAL
The historical balances represent the financial position and results of
operations for the indicated periods for each company as reported in the
respective consolidated financial statements.
2. MERGER TRANSACTION
The merger agreement provides for the Trotter common stockholder to
exchange its shares for the number of CYBEX common shares which, upon issuance,
shall equal 50.001% of all CYBEX common shares issued and outstanding
immediately after the merger, on a fully diluted basis as defined in the merger
agreement; which assumes all common shares subject to dilutive options were
issued immediately prior to the merger and the proceeds received from the
exercise of such options were used to repurchase shares for treasury, and a
price of $9.75 per share. Excluding the impact of dilutive stock options, the
former Trotter stockholder will own 4,273,056 of the total 8,654,611 common
shares of the Company outstanding immediately after the merger.
In addition, Trotter option holders will receive options to purchase the
number of shares of the Company's common stock equal to the number of Trotter
common shares issuable under their Trotter options multiplied by the same
equivalent exchange ratio as the common share exchange discussed above. This
will result in the former Trotter option holders receiving options to purchase
436,920 common shares of the Company immediately after the merger.
The merger will be accounted for as a purchase with Trotter deemed the
acquiring company. The estimated total purchase price of CYBEX would be
$44,102,000 which consists of the $42,457,000 market value of CYBEX common stock
(4,381,555 shares outstanding multiplied by the $9.69 per share five day average
share price ending December 31, 1996) and estimated transaction costs of
$1,645,000. Based on the foregoing estimated purchase price, the estimated
amount to be allocated to research and development of $2,500,000 will be charged
to the statement of operations upon the consummation of the merger.
3. FACILITY CLOSURES AND DISCONTINUED PRODUCT LINE
In connection with the merger transaction, the Company will discontinue
CYBEX's commercial treadmill product line thereby eliminating a duplicate
product line, sell certain net assets of CYBEX's isokinetic product line and
Ronkonkoma, New York facility, close CYBEX's Colorado Springs, Colorado
corporate offices, and plans to terminate CYBEX's European joint venture
immediately and close Trotter's Sharpsville, Pennsylvania facility in the third
quarter of 1997. The costs to exit the Sharpsville facility and the write-off of
related intangible assets will be charged to the statement of operations upon
consummation of the merger. Trotter's Sharpsville facility will be consolidated
into CYBEX's Owatonna facility which has a comparable cost structure. The costs
and estimated net loss to exit CYBEX's Colorado Springs facility, sell certain
net assets of CYBEX's isokinetic product line and Ronkonkoma facility,
discontinue CYBEX's commercial treadmill product and terminate CYBEX's European
joint venture will be included in the application of purchase accounting by the
Company. CYBEX's Colorado Springs corporate headquarters and its treadmill
product line will be consolidated into Trotter's Medway facility.
F-5
<PAGE>
The costs and asset write-offs related to the facility closures, the sale
of certain net assets of CYBEX's isokinetic business and Ronkonkoma facility,
the discontinued product line and the termination of the European joint venture
are a direct result of the Company's plans in contemplation of the merger
transaction. The costs and write-offs are not expected to occur if the merger is
not consummated and, therefore, have not been reflected in the historical
financial statements of CYBEX or Trotter.
Revenues and costs related to CYBEX's commercial treadmill product line
have been eliminated in the unaudited Pro Forma Statement of Operations.
Management believes that the revenue and income from the CYBEX treadmill product
line will be replaced by selling Trotter treadmills in equal or greater amounts
through the combined distribution network. However, this is not factually
supportable for purposes of Article 11 of Regulation S-X and, accordingly, has
not been reflected in the unaudited Pro Forma Combined Statement of Operations.
4. PRO FORMA BALANCE SHEET ADJUSTMENTS
a) Reflects decreases in inventory from the following:
<TABLE>
<S> <C>
Discontinuance of CYBEX's commercial treadmill product line...... $ 741,000
Inventories of isokinetic business held for sale................. 4,545,000
----------
$5,286,000
==========
</TABLE>
b) Reflects the income tax benefit of the pro forma adjustments.
c) Reflects the estimated decrease in the valuation allowance on CYBEX's
deferred tax assets.
d) Reflects decreases to fixed assets, as follows:
<TABLE>
<S> <C>
Fixed assets of the isokinetic business held for sale............ $1,114,000
Discontinuance of CYBEX's commercial treadmill product line...... 146,000
Sharpsville closure.............................................. 97,000
----------
$1,357,000
==========
</TABLE>
e) Reflects an adjustment to record management's estimate of fair value
of certain net assets of CYBEX's isokinetic business and the
Ronkonkoma, New York facility, which are held for sale.
f) Reflects a net increase in goodwill resulting from the following:
<TABLE>
<S> <C>
Transaction costs (primarily broker fees)........................ $1,645,000
CYBEX severance and relocation................................... 2,947,000
Professional fees................................................ 766,000
Net realizable value adjustment on net assets held for sale...... 2,332,000
Termination of CYBEX's European joint venture.................... 2,394,000
Discontinuance of CYBEX's commercial treadmill product line...... 887,000
Colorado Springs exit costs...................................... 350,000
Tax benefit...................................................... (3,870,000)
Decrease in deferred tax valuation allowance..................... (3,300,000)
----------
$4,151,000
==========
</TABLE>
F-6
<PAGE>
g) Reflects the write-off of historical goodwill in connection with the
Sharpsville plant closure.
h) Reflects a $6,836,000 increase as a result of applying purchase
accounting (the $42,457,000 market value of CYBEX, based on the
five-day average share price ending December 31, 1996, less its
$35,621,000 book value on March 31, 1997) offset by a decrease of
$2,500,000 for the charge related to research and development.
i) Reflects the write-off of other assets as follows:
<TABLE>
<S> <C>
Sharpsville closure.............................................. $ 194,000
Termination of CYBEX's European joint venture.................... 313,000
---------
$ 507,000
=========
</TABLE>
j) Reflects liabilities related to the following:
<TABLE>
<S> <C>
Transaction costs (primarily broker fees)....................... $1,645,000
CYBEX severance and relocation.................................. 2,947,000
Professional fees............................................... 766,000
Sharpsville exit costs.......................................... 1,038,000
Colorado Springs exit costs..................................... 350,000
Termination of CYBEX's European joint venture................... 2,081,000
Accrued expenses of isokinetic business held for sale........... (838,000)
----------
$7,989,000
==========
</TABLE>
k) Reflects (i) the issuance of Company shares to the former Trotter
shareholder and the application of purchase accounting (the
$42,457,000 market value of CYBEX, based on the five-day average
share price ending December 31, 1996, less its $35,621,000 book
value on March 31, 1997) with Trotter deemed the acquirer and (ii)
an adjustment to unearned compensation expense for CYBEX restricted
stock that will fully vest upon consummation of the merger.
l) Reflects the retained earnings effect of the exit costs associated
with the Sharpsville plant closure, including intangible and fixed
asset write-offs, net of tax benefit.
m) Reflects the retained earnings effect for the charge related to
research and development.
5. PRO FORMA STATEMENT OF OPERATIONS ADJUSTMENTS
n) Reflects a decrease in revenue related to the discontinuance of
CYBEX's commercial treadmill product line.
o) Reflects decreased cost of sales related to the following:
<TABLE>
<S> <C>
Sharpsville facility costs...................................... $ 79,000
Sharpsville depreciation........................................ 35,000
CYBEX's commercial treadmill product line....................... 1,088,000
-----------
$ 1,202,000
===========
</TABLE>
F-7
<PAGE>
p) Reflects decreased selling, general and administrative expenses
related to the following:
<TABLE>
<S> <C>
Sharpsville amortization expense................................ $ 55,000
CYBEX's commercial treadmill product line....................... 110,000
Sharpsville facility costs...................................... 123,000
-----------
$ 288,000
===========
</TABLE>
q) Reflects a decrease in CYBEX executive and support compensation as a
result of the merger.
r) Reflects additional amortization expense related to the goodwill
resulting from the merger. Merger goodwill is being amortized on a
straight-line basis over 30 years.
s) To adjust the income tax provision using appropriate rates.
The unaudited pro forma combined statement of operations does not include
one-time, after-tax charges expected to be incurred upon consummation of the
merger, as follows:
<TABLE>
<S> <C>
Sharpsville closure and asset write-offs........................ $ 1,689,000
Research and development charge................................. 2,500,000
-----------
$ 4,189,000
===========
</TABLE>
6. PRO FORMA NET INCOME PER SHARE
The shares used in computing pro forma income per share are (i) CYBEX's
historical weighted average shares outstanding, and (ii) Trotter's historical
weighted average shares outstanding, adjusted by the exchange ratio pursuant to
the merger agreement (see Note 2) and (iii) the dilutive effect of common stock
options.
<TABLE>
<S> <C>
CYBEX weighted average shares outstanding......................... 4,380
Trotter weighted average shares outstanding....................... 4,273
CYBEX dilutive options............................................ 3
Trotter dilutive options.......................................... 90
---------
8,746
=========
</TABLE>
F-8
<PAGE>
TROTTER INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(in thousands, except share information)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents ....................................... $ 3,707
Accounts receivable, net ........................................ 6,792
Inventories ..................................................... 2,427
Deferred income taxes ........................................... 665
Prepaid expenses and other ...................................... 879
-------
Total current assets ................................... 14,470
Property and equipment, net .......................................... 4,591
Goodwill ............................................................. 2,419
Other assets ......................................................... 478
Deferred income taxes ................................................ 215
-------
$22,173
=======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current portion of long-term debt ............................... $ 1,409
Accounts payable ................................................ 2,785
Accrued expenses ................................................ 3,141
Income taxes payable ............................................ 1,384
-------
Total current liabilities .............................. 8,719
Long-term debt ....................................................... 9,960
Accrued warranty obligation .......................................... 798
-------
Total liabilities ...................................... 19,477
-------
Commitments and contingencies
Stockholder's equity
Common stock, $.01 par value, 4,750,000 shares
authorized, 3,800,000 shares issued and outstanding.......... 38
Retained earnings ............................................... 2,658
-------
Total stockholder's equity ............................. 2,696
-------
$22,173
=======
</TABLE>
F-9
The accompanying notes are an integral part of these statements.
<PAGE>
TROTTER INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
1997 1996
------------ ------------
<S> <C> <C>
Net sales .............................................. $ 15,541 $ 12,669
Cost of sales .......................................... 8,965 8,086
------- ----------
Gross profit ............................. 6,576 4,583
Selling, general and administrative expenses............ 4,208 3,190
------- ----------
Operating income ......................... 2,368 1,393
Interest expense, net .................................. 183 313
------- ----------
Income before income taxes ............................. 2,185 1,080
Income taxes ........................................... 885 440
------- ----------
Net income ............................................. $ 1,300 $ 640
========= ==========
Net income per share ................................... $ .34 $ .17
========= ==========
Shares used in computing net income per share........... 3,800 3,800
========= ==========
</TABLE>
F-10
The accompanying notes are an integral part of these statements.
<PAGE>
TROTTER INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
1997 1996
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ......................................................... $ 1,300 $ 640
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ................................ 304 303
Changes in operating assets and liabilities
Accounts receivable .................................... 812 624
Inventories, prepaid expenses and other assets ......... (806) 95
Accounts payable, income taxes payable, accrued warranty
and other accrued expenses .......................... 506 174
----------- -----------
Net cash provided by operating activities .................... 2,116 1,836
----------- -----------
INVESTING ACTIVITIES:
Purchases of property and equipment ................................ (65) (98)
------------ ------------
FINANCING ACTIVITIES:
Remittances from UM Holdings, Ltd. ................................. -- 890
NET INCREASE IN CASH AND CASH EQUIVALENTS ................................ 2,051 2,628
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ........................... 1,656 5
----------- -----------
CASH AND CASH EQUIVALENTS END OF PERIOD .................................. $ 3,707 $ 2,633
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-11
<PAGE>
TROTTER INC. AND SUBSIDIARY
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not
include all information and footnotes necessary for a fair presentation of
financial position, results of operations and changes in cash flows in
conformity with generally accepted accounting principles. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.
Trotter is an indirect wholly owned subsidiary of UM Holdings, Ltd. ("UM"), and
was incorporated in February 1993. Prior to January 1, 1994, Trotter operated as
a division of UM. Effective January 1, 1994, the net assets of the division were
transferred to Trotter by UM. The transfer was recorded as a capital
contribution of the carrying value of the net assets of the division. The
consolidated financial statements are presented as if Trotter had existed as an
entity separate from UM, and include the historical revenues, expenses, assets
and liabilities that are directly related to Trotter's operations.
2. MERGER AGREEMENT
On December 27, 1996, Trotter entered into an agreement and plan of merger with
CYBEX International, Inc. ("CYBEX") pursuant to which a newly formed wholly
owned subsidiary of CYBEX will be merged with and into Trotter. Trotter would
survive the merger as a wholly owned subsidiary of CYBEX with UM receiving in
exchange for their shares of Trotter the number of common shares of CYBEX which,
upon issuance, together with shares attributed to holders of options to acquire
Trotter common shares, shall equal 50.001% of all CYBEX common shares issued and
outstanding immediately following the merger, on a fully diluted basis as
defined in the merger agreement; which assumes all common shares subject to
dilutive options will be issued immediately prior to the merger and the proceeds
received form the exercise of such options will be used to repurchase shares for
treasury, and a price of $9.75 per share. In addition, Trotter options will be
exchanged for options to purchase CYBEX common shares at the same equivalent
exchange rate as the common share exchange discussed above. The merger will be
accounted for using the purchase method with Trotter deemed to be the acquirer.
The estimated purchase price will consist of the $42,457,000 market value of
CYBEX, calculated based on the five-day average share price ending December 31,
1996 of $9.69, plus transaction costs.
F-12
<PAGE>
3. INVENTORIES
Inventories are stated at the lower of cost (weighted average) or market.
Inventories consist of the following (in thousands):
Raw materials ........................................... $1,203
Work-in-process ......................................... 555
Finished goods .......................................... 669
------
$2,427
======
F-13
