<PAGE>
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 15, 1999
MORTON INDUSTRIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
GEORGIA 0-13198 38-0811650
(State of other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
1021 West Birchwood, Morton, Illinois 61550
(Address of principal executive offices) (Zip Code)
(309-266-7176)
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report.)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
WORTHINGTON CUSTOM PLASTICS, INC. ACQUISTION
As previously reported on a Current Report on Form 8-K filed with the
Securities and Exchange Commission on April 29, 1999, the Company acquired
three manufacturing facilities from Worthington Custom Plastics, Inc. on
April 15, 1999. This Current Report on Form 8-K/A amends the earlier filing
by adding the financial statements identified in Item 7.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following financial statements are filed as Exhibits to this Form
8-K/A:
Exhibit 99.1 Audited combined balance sheets of Worthington Non-Automotive
Plastics Group of Worthington Custom Plastics, Inc. as of
March 31, 1999, May 31, 1998 and May 31, 1997 and the related
combined statements of operations and net assets and cash flows
for the ten months ended March 31, 1999 and the years ended
May 31, 1998 and May 31, 1997.
Exhibit 99.2 Unaudited Pro Forma Condensed Consolidated Financial Statements
Exhibit 99.3 Consent of Ernst & Young LLP.
<PAGE>
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.
MORTON INDUSTRIAL GROUP, INC.
Date: June 28, 1999 By: /s/ __________________________
Daryl R. Lindemann
Vice President of Business
Development and Secretary
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
99.1 Audited combined balance sheets of Worthington Non-Automotive
Plastics Group of Worthington Custom Plastics, Inc. as of
March 31, 1999, May 31, 1998 and May 31, 1997 and the related
combined statements of operations and net assets and cash flows
for the ten months ended March 31, 1999 and the years ended
May 31, 1998 and May 31, 1997.
99.2 Unaudited Pro Forma Condensed Consolidated Financial Statements.
99.3 Consent of Ernst & Young LLP.
<PAGE>
Audited Financial Statements
Worthington Non-Automotive Plastics Group of
Worthington Custom Plastics, Inc.
TEN MONTHS ENDED MARCH 31, 1999
AND YEARS ENDED MAY 31, 1998 AND 1997
WITH REPORT OF INDEPENDENT AUDITORS
<PAGE>
Audited Financial Statements
Worthington Non-Automotive Plastics Group of
Worthington Custom Plastics, Inc.
Ten months ended March 31, 1999 and
years ended May 31, 1998 and 1997
Table of Contents
<TABLE>
<S> <C>
Report of Independent Auditors.............................................1
Audited Financial Statements
Combined Balance Sheets....................................................2
Combined Statements of Operations and Net Assets...........................3
Combined Statements of Cash Flow...........................................4
Notes to Financial Statements..............................................5
</TABLE>
<PAGE>
Report of Independent Auditors
Board of Directors
Worthington Industries, Inc.
We have audited the accompanying combined balance sheets of Worthington
Non-Automotive Plastics Group of Worthington Custom Plastics, Inc., a subsidiary
of Worthington Industries, Inc., as of March 31, 1999, May 31, 1998 and May 31,
1997, and the related combined statements of operations and net assets and cash
flows for the ten months ended March 31, 1999 and the years ended May 31, 1998
and 1997. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of Worthington
Non-Automotive Plastics Group of Worthington Custom Plastics, Inc., a
subsidiary of Worthington Industries, Inc. at March 31, 1999, May 31, 1998
and May 31, 1997, and the combined results of their operations and their cash
flows for the ten months ended March 31, 1999 and the years ended May 31,
1998 and 1997 in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
April 30, 1999
1
<PAGE>
<TABLE>
<CAPTION>
Worthington Non-Automotive Plastics Group of
Worthington Custom Plastics, Inc.
Combined Balance Sheets
(Dollars in thousands)
MARCH 31, MAY 31, MAY 31,
1999 1998 1997
--------------------------------------------
<S> <C> <C> <C>
ASSETS
Current assets:
Accounts receivable, less allowances of $105, $215 and $315
at March 31, 1999, May 31, 1998 and $ 17,896 $ 17,820 $ 18,481
May 31, 1997, respectively
Inventories - (NOTE A) 12,439 12,174 13,675
Prepaid expenses and other current assets 274 196 46
---------------------------------------------
Total current assets 30,609 30,190 32,202
Cash held by trustee 962 1,040 1,182
Intangible assets 29,027 29,902 30,964
Net property, plant, and equipment - (NOTE B) 37,428 40,611 42,868
---------------------------------------------
Total assets $ 98,026 $101,743 $ 107,216
=============================================
LIABILITIES
Current liabilities:
Cash overdraft $ 168 $ 342 $ 272
Accounts payable - (NOTE F) 10,117 7,809 7,431
Accrued liabilities 2,564 2,818 2,417
Current portion of industrial revenue bonds - (NOTE C) 340 280 100
---------------------------------------------
Total current liabilities 13,189 11,249 10,220
Industrial revenue bonds, net of current portion - (NOTE C) 11,280 11,620 11,900
Net obligations to affiliates - (NOTE F) 73,790 78,890 83,926
NET ASSETS (DEFICIENCY) (233) (16) 1,170
---------------------------------------------
Total liabilities and net assets $ 98,026 $101,743 $ 107,216
=============================================
</TABLE>
SEE ACCOMPANYING NOTES.
2
<PAGE>
<TABLE>
<CAPTION>
Worthington Non-Automotive Plastics Group of
Worthington Custom Plastics, Inc.
Combined Statements of Operations and Net Assets
(Dollars in thousands)
TEN MONTHS YEAR YEAR
ENDED ENDED ENDED
MARCH 31, MAY 31, MAY 31,
1999 1998 1997
---------------------------------------------
<S> <C> <C> <C>
Net sales $ 87,246 $ 105,163 $ 86,909
Cost of goods sold 80,788 95,815 76,511
-----------------------------------------
Gross margin 6,458 9,348 10,398
Selling, general, and administrative expense 7,493 8,588 6,185
-----------------------------------------
Operating income (loss) (1,035) 760 4,213
Other income (expense):
Allocated Parent expenses (595) (649) (709)
Interest expense, net (534) (663) (763)
Miscellaneous income - 1 30
-----------------------------------------
Income (loss) before income taxes (2,164) (551) 2,771
Income taxes (benefit) - (NOTE E) (801) (204) 1,039
-----------------------------------------
Net income (loss) (1,363) (347) 1,732
Beginning net assets (deficiency) (16) 1,170 (793)
-----------------------------------------
Net assets (deficiency) before distributions from (to) Parent (1,379) 823 939
Distributions from (to) Parent 1,146 (839) 231
-----------------------------------------
Ending net assets (deficiency) $ (233) $ (16) $ 1,170
=========================================
</TABLE>
SEE ACCOMPANYING NOTES.
3
<PAGE>
<TABLE>
<CAPTION>
Worthington Non-Automotive Plastics Group of
Worthington Custom Plastics, Inc.
Combined Statements of Cash Flows
(Dollars in thousands)
TEN MONTHS YEAR YEAR
ENDED ENDED ENDED
MARCH 31, MAY 31, MAY 31,
1999 1998 1997
------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings (losses) $ (1,363) $ (347) $ 1,732
Adjustments to reconcile net earnings (losses) to net cash
provided by operating activities:
Depreciation 3,390 3,783 2,687
Amortization 875 1,062 432
Loss on disposal of property, plant and equipment 40 - -
Decrease in provision for bad debts (110) (100) -
Changes in assets and liabilities:
Accounts receivable 34 761 1,585
Inventories (265) 1,501 (1,214)
Prepaid expenses and other current assets (78) (150) 1,470
Accounts payable and accrued expenses 2,054 779 (5,031)
-----------------------------------------
Net cash provided by operating activities 4,577 7,289 1,661
INVESTING ACTIVITIES
Investment in property, plant and equipment (493) (1,526) (1,441)
Proceeds from disposal of property, plant and equipment 246 - -
-----------------------------------------
Net cash used by investing activities (247) (1,526) (1,441)
FINANCING ACTIVITIES
Principal payments on Industrial Revenue Bonds (280) (100) -
Net decrease in cash held by trustee 78 142 525
Decrease in net obligations to affiliates (5,100) (5,036) (2,618)
Distributions from (to) Parent 1,146 (839) 231
-----------------------------------------
Net cash used by financing activities (4,156) (5,833) (1,862)
-----------------------------------------
Increase (decrease) in cash and cash equivalents 174 (70) (1,642)
Cash and cash equivalents (overdraft) at beginning of period (342) (272) 1,370
-----------------------------------------
Cash overdraft at end of period $ (168) $ (342) $ (272)
=========================================
</TABLE>
SEE ACCOMPANYING NOTES.
4
<PAGE>
Worthington Non-Automotive Plastics Group of
Worthington Custom Plastics, Inc.
Notes to Financial Statements
March 31, 1999
(Dollars in thousands)
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS DESCRIPTION
Worthington Non-Automotive Plastics Group (the "Group") is part of
Worthington Custom Plastics, Inc. (the "Company"), a subsidiary of
Worthington Industries, Inc. (the "Parent"). The Group consists of three
manufacturing plants located in Lebanon, Kentucky; Harrisburg, North Carolina
and St. Matthews, South Carolina. The combined financial statements do not
include the accounts of the Company's automotive related custom plastics
plants located in Salem, Ohio; Upper Sandusky, Ohio; Mason, Ohio; Mentor,
Ohio and Cumming, Georgia nor its investments in London Industries, Inc. and
Worthington Precision Metals, Inc. The Group produces a wide variety of
functional and decorative, custom-made, molded plastic products.
BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying combined financial statements are prepared on the basis of
historical cost from the accounting records of the Group. The combined financial
statements have been presented as if the Group had operated as an independent,
stand-alone entity for the periods presented. Significant intergroup accounts
and transactions are eliminated. The combined financial statements include
allocations of certain Company and Parent liabilities and expenses relating to
the Group businesses. Management believes these allocations are reasonable.
The Company and Parent charge each plant for corporate, sales and administrative
services. As the Harrisburg, North Carolina plant (PMI) handles most of these
functions on site, no charges are allocated to this plant. The allocated Company
and Parent expenses include executive, sales and administrative payroll,
information systems, legal services, various payroll benefits, aviation
services, and facilities management. Such expenses are allocated on a direct
basis where appropriate or an indirect basis (primarily based on sales) in a
manner designed to allocate all such expenses to the various divisions and
subsidiaries of the Company and Parent.
Interest expense in the combined financial statements is also based on
allocations from the Parent. Such allocations relate to the Group's working
capital and industrial revenue bonds. No intercompany interest was allocated to
the Group for the Parent's investment in the Harrisburg, North Carolina plant
(see Note H).
5
<PAGE>
Worthington Non-Automotive Plastics Group of
Worthington Custom Plastics, Inc.
Notes to Financial Statements (continued)
(Dollars in thousands)
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
BASIS OF FINANCIAL STATEMENT PRESENTATION (CONTINUED)
As a result of the Company and Parent charges and allocations, these financial
statements may not be indicative of the financial position and results of
operations which would have occurred had the Group been an independent entity
during the periods presented.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Group considers all highly liquid investments purchased with a maturity of
three months or less to be cash equivalents.
INVENTORIES
Raw materials and work in process inventories are valued at the lower of cost,
which is principally determined on the first-in, first-out (FIFO) basis, or
market. Finished goods inventories are valued as a percentage (primarily 85%) of
their selling prices which is estimated to approximate their FIFO cost.
Inventories consist of:
<TABLE>
<CAPTION>
MARCH 31, MAY 31, MAY 31,
1999 1998 1997
---------------------------------------------
<S> <C> <C> <C>
Raw materials $ 5,543 $ 6,180 $ 7,420
Work in process 3,086 1,796 2,699
Finished goods 3,810 4,198 3,556
---------------------------------------------
$ 12,439 $ 12,174 $13,675
=============================================
</TABLE>
6
<PAGE>
Worthington Non-Automotive Plastics Group of
Worthington Custom Plastics, Inc.
Notes to Financial Statements (continued)
(Dollars in thousands)
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INTANGIBLE ASSETS
Intangible assets consist of goodwill which is being amortized on the
straight-line method over 30 years. Amortization expense was $875 for the ten
months ended March 31, 1999 and $1,062 and $432 for the years ended May 31, 1998
and 1997, respectively.
PROPERTY, PLANT, AND EQUIPMENT AND DEPRECIATION
Property, plant, and equipment are carried at cost and depreciated using the
straight-line method over the following estimated useful lives of the assets:
<TABLE>
<CAPTION>
(IN YEARS)
----------
<S> <C>
Buildings 10 - 40
Improvements 5 - 20
Machinery and Equipment 2 - 20
Vehicles 3 - 5
Furniture and Fixtures 3 - 10
</TABLE>
IMPAIRMENT OF LONG-LIVED ASSETS
Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be fully
recoverable.
REVENUE RECOGNITION
The Group recognizes revenue at the time the related inventory is shipped.
ENVIRONMENTAL COSTS
Environmental costs are capitalized if the costs extend the life of the
property, increase its capacity, and/or mitigate or prevent contamination from
future operations. Costs related to environmental contamination treatment and
clean-up are charged to expense.
7
<PAGE>
Worthington Non-Automotive Plastics Group of
Worthington Custom Plastics, Inc.
Notes to Financial Statements (continued)
(Dollars in thousands)
NOTE B - PROPERTY, PLANT, AND EQUIPMENT
Major classifications of property, plant and equipment consisted of the
following at:
<TABLE>
<CAPTION>
MARCH 31, MAY 31, MAY 31,
1999 1998 1997
-----------------------------------------------
<S> <C> <C> <C>
Land $ 1,630 $ 1,630 $ 1,630
Buildings 9,660 9,660 9,620
Improvements 1,108 823 815
Machinery and equipment 37,998 37,077 35,828
Vehicles 203 243 67
Furniture and fixtures 788 1,886 1,622
-----------------------------------------------
51,387 51,319 49,582
Accumulated depreciation (13,959) (10,708) (6,714)
-----------------------------------------------
Net property, plant and equipment $ 37,428 $ 40,611 $42,868
===============================================
</TABLE>
NOTE C - INDUSTRIAL REVENUE BONDS
The industrial development revenue bonds mature on December 31, 2019 and bear
interest at 8.0%. The bonds were issued under a lease and purchase agreement for
the Group's plant in Lebanon, Kentucky through the City of Lebanon, Kentucky and
were acquired by the Parent. At March 31, 1999, May 31, 1998 and May 31, 1997,
the carrying value of the bonds approximates their fair value.
Covenants and restrictions associated with these bonds include the restriction
on the use of proceeds for construction costs, maintaining insurance and
providing financial information. At March 31, 1999, the Group is in compliance
with all covenants.
Principal payments due on the bonds for the next five years ending March 31 are
as follows:
<TABLE>
<CAPTION>
<S> <C>
2000 $ 340
2001 430
2002 480
2003 590
2004 650
2005 and thereafter 9,130
---------
$11,620
=========
</TABLE>
8
<PAGE>
Worthington Non-Automotive Plastics Group of
Worthington Custom Plastics, Inc.
Notes to Financial Statements (continued)
(Dollars in thousands)
NOTE D - LEASE COMMITMENTS
The Group leases certain buildings and equipment for use in its operations under
non-cancelable operating leases. Most leases contain renewal options. The lease
agreements provide for increases in rentals if the renewal options are exercised
based on prearranged increases. The minimum rental payments for each of the next
five years in the period ending March 31, 2004 are: $744, $748, $614, $207 and
$207, respectively. Rent expense under operating leases during the ten months
ended March 31, 1999 and the years ended May 31, 1998 and May 31, 1997 was $904,
$1,081 and $441, respectively.
NOTE E - INCOME TAXES
Federal income taxes and related deferred tax assets and liabilities are
calculated by the Parent in accordance with Statement of Financial Accounting
Standards No. 109. All deferred tax assets and liabilities are recorded at the
Parent level. The tax expense or benefit is allocated to the Group based on an
annual income tax rate of 37.0% for the ten months ended March 31, 1999 and the
year ended May 31, 1998 and 37.5% for the year ended May 31, 1997.
NOTE F - RELATED PARTY TRANSACTIONS
The Group's net obligations to affiliates consist of various receivables and
accounts payable to the Parent and its affiliates. Accounts payable to the
parent at March 31, 1999, May 31, 1998 and May 31, 1997 include $61,562 related
to the acquisition of Plastics Manufacturing, Inc. and approximately $15,000
related to the acquisition of the Group's plant in St. Matthews, South Carolina.
The Group purchases from and sells to affiliated companies certain raw materials
and services at prevailing market prices. Purchases from affiliated companies
totaled $543, $2,979 and $717 for the ten months ended March 31, 1999 and the
years ended May 31, 1998 and 1997, respectively. Sales to affiliated companies
totaled $379, $419 and $283 for the ten months ended March 31, 1999 and the
years ended May 31, 1998 and 1997, respectively.
9
<PAGE>
Worthington Non-Automotive Plastics Group of
Worthington Custom Plastics, Inc.
Notes to Financial Statements (continued)
(Dollars in thousands)
NOTE G - EMPLOYEE BENEFIT PLANS
Certain employees of the Group participate in a current cash profit sharing plan
and a deferred profit sharing plan. Contributions to and costs for these plans
are determined as a percentage of the Group's pre-tax income before profit
sharing by location. Profit sharing expenses and related accruals are recorded
at each of the Group's plant locations. Total profit sharing expenses were $639,
$391 and $470 for the ten months ended March 31, 1999 and the years ended May
31, 1998 and 1997, respectively.
NOTE H - ACQUISITION
On December 6, 1996, the Company acquired the net assets of Plastics
Manufacturing, Inc. (PMI) located in Harrisburg, North Carolina for $61,562
in a business combination accounted for as a purchase. PMI is a manufacturer
of plastic injection-molded and thermoformed parts. The combined statements
of earnings and cash flows for the year ended May 31, 1997 include six months
of PMI's operations. Goodwill in the amount of $31,396 resulting from the
purchase is being amortized using the straight-line method over 30 years.
NOTE I - CONCENTRATION OF CREDIT RISK AND SALES TO SIGNIFICANT CUSTOMERS
The Group recorded sales transactions with significant customers as follows:
<TABLE>
<CAPTION>
SALES ACCOUNTS RECEIVABLE
------------------------------------------------------------------------------------
TEN MONTHS YEAR YEAR
ENDED ENDED ENDED
MARCH 31, MAY 31, MAY 31, MARCH 31, MAY 31, MAY 31,
1999 1998 1997 1999 1998 1997
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
American Yard Products 9.1% 12.9% 17.4% $ - $2,532 $ 2,709
General Electric 13.5 12.4 16.7 2,528 3,229 1,851
B/E Aerospace 10.5 10.8 6.4 2,681 1,691 3,917
IBM 11.0 10.2 12.2 1,579 2,522 1,741
------------------------------------------------------------------------------------
44.1% 46.3% 52.7% $6,788 $9,974 $10,218
==================================================================================
</TABLE>
10
<PAGE>
Worthington Non-Automotive Plastics Group of
Worthington Custom Plastics, Inc.
Notes to Financial Statements (continued)
(Dollars in thousands)
NOTE J - CONTINGENCIES
In the ordinary course of business, the Group is threatened with or named as
a defendant in various litigation or environmental issues related to its
operations. It is not possible to determine the ultimate disposition of these
matters. In the opinion of management, the outcome of these actions would not
significantly affect the Group's financial position.
NOTE K - SUBSEQUENT EVENT
Effective April 15, 1999, substantially all of the assets of the Group were
acquired by Morton Custom Plastics, LLC.
NOTE L - YEAR 2000 ISSUE (UNAUDITED)
The Group has developed a plan to modify its information technology to be ready
for the Year 2000 and has begun converting critical data processing systems. The
project is expected to be complete before the end of 1999. The Group believes
all significant Year 2000 issues will be resolved before the millennium change
and does not believe any Year 2000 issues will significantly impact the
financial condition of the Company.
11
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited pro forma condensed consolidated statements
of operations for the year ended December 31, 1998 and for the quarter ended
April 3, 1999 of Morton Industrial Group, Inc. (Morton) give effect to (i)
the acquisition of the Non-Automotive Plastics Group of Worthington Custom
Plastics, Inc. ("Worthington") and (ii) the acquisitions in 1998 of B&W Metal
Fabricators, Inc., certain assets of SMP Steel Corporation, Carroll George,
Inc. and Mid-Central Plastics, Inc. (collectively, the "1998 Acquisitions"),
as though each such transaction was effective at the beginning of respective
periods.
The unaudited pro forma condensed consolidated balance sheet gives
effect to the acquisition of Worthington, as though such transaction was
completed on April 3, 1999.
The unaudited pro forma condensed consolidated financial statements
are not necessarily indicative either of the results that actually would have
been achieved if the transactions reflected therein had been completed on the
dates indicated or the results which may be obtained in the future.
<PAGE>
MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
1998 Pro Forma
Morton Worthington Acquisitions(1) Adjustments
----------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
Net Sales $ 151,196 $ 105,084 $ 24,561 $ 0
----------- ------------ -------------- -------------
Gross Profit 21,456 9,694 3,890 3,401 (2)
Selling and administrative expenses 14,499 9,614 2,401 (1,059) (3)
----------- ------------ -------------- -------------
Operating income 6,957 80 1,489 4,460
Interest and other expense 4,459 571 1,143 2,326 (5)
----------- ------------ -------------- -------------
Earnings (loss) before income taxes and
extraordinary charge 2,498 (491) 346 2,134
(Provision) benefit for income taxes (415) 15 (81) (167) (4)
----------- ------------ -------------- -------------
Earnings (loss) before extraordinary charge 2,083 (476) 265 2,301
----------- ------------ -------------- -------------
----------- ------------ -------------- -------------
Earnings before extraordinary charge per common share:
Basic $ 0.52
Diluted 0.45
Number of shares used to compute per share data:
Basic 4,023,373
Diluted 4,582,614
<CAPTION>
Pro Forma
Consolidated
----------------
<S> <C>
Net Sales $ 280,841
----------------
Gross Profit 38,441
Selling and administrative expenses 25,455
----------------
Operating income 12,986
Interest and other expense 8,499
----------------
Earnings (loss) before income taxes and
extraordinary charge 4,487
(Provision) benefit for income taxes (314)
----------------
4,173
----------------
----------------
Earnings before extraordinary charge per common share:
Basic $ 0.64 (a)
Diluted 0.56 (a)
Number of shares used to compute per share data:
Basic 4,023,373
Diulted 4,582,614
</TABLE>
(a) Pro forma per share amounts give effect to preferred stock dividends
requirements and related discount accretion.
<PAGE>
MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Quarter Ended April 3, 1999
<TABLE>
<CAPTION>
Pro Forma
Morton Worthington Adjustments
------------- ------------- -------------
<S> <C> <C> <C>
Net Sales $ 39,359 $ 26,864 $ 0
------------- ------------- -------------
Gross Profit 5,656 2,024 851 (2)
Selling and administrative expenses 4,807 2,503 (265) (3)
------------- ------------- -------------
Operating income 849 (479) 1,116
Interest and other expense 1,575 155 569 (5)
------------- ------------- -------------
Earnings (loss) before income taxes and cumulative effect
of accounting change (726) (634) 547
(Provision) benefit for income taxes 46 45 (38)(4)
------------- ------------- -------------
Earnings (loss) before cumulative effect of accounting change (680) (589) 509
------------- ------------- -------------
------------- ------------- -------------
Earnings before cumulative effect of accounting change per
common share, basic and diluted $ (0.17)
Number of shares used to compute per share data:
Basic 4,067,573
Diluted 4,422,215
<CAPTION>
Pro Forma
Consolidated
-------------
<S> <C>
Net Sales $ 66,223
----------------
Gross Profit 8,531
Selling and administrative expenses 7,045
-------------
Operating income 1,486
Interest and other expense 2,299
-------------
Earnings (loss) before income taxes and cumulative effect
of accounting change (813)
(Provision) benefit for income taxes 53
-------------
Earnings (loss) before cumulative effect of accounting change (760)
-------------
-------------
Earnings before cumulative effect of accounting change per $ (0.28) (a)
common share, basic and diulted
Number of shares used to compute per share data:
Basic 4,067,573
Diluted 4,422,215
</TABLE>
(a) Pro forma per share amounts give effect to preferred stock dividends
requirements and related discount accretion.
<PAGE>
MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of April 3, 1999
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Morton Worthington Adjustments Consolidated
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash $ 736 $ (168) $ 168 (8) $ 736
Accounts, notes and other receivables, net 16,100 17,896 0 33,996
Inventories 14,678 12,439 0 27,117
Prepaid expenses 1,094 274 0 1,368
Other 2,581 0 0 2,581
------------- ------------- ------------- -------------
Total current assets 35,189 30,441 168 65,798
------------- ------------- ------------- -------------
Deferred income taxes 4,646 0 0 4,646
Property, plant and equipment, net 45,482 37,428 (20,981) (7) 61,929
Intangible assets, net 12,908 29,027 (29,027) (8) 12,908
Other 1,610 962 913 (7) 3,485
------------- ------------- ------------- -------------
$ 99,835 $ 97,858 $ (48,927) $ 148,766
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Liabilities and Stockholders' Equity
Current Liabilities:
Note payable to bank $ 14,400 $ 0 $ 0 $ 14,400
Current installment of long-term debt 5,473 340 (340) (9) 5,473
Accounts payable 16,490 10,117 0 26,607
Other accrued expenses 4,192 2,564 0 6,756
------------- ------------- ------------- -------------
Total current liabilities 40,555 13,021 (340) 53,236
Long term debt, net of current portion 51,664 11,280 20,720 (9) 83,664
Other 2,502 73,790 (73,790) (8) 2,502
------------- ------------- ------------- -------------
Total liabilities 94,721 98,091 (53,410) 139,402
------------- ------------- ------------- -------------
Stockholders Equity
Preferred stock 0 0 4,250(6)(7) 4,250
Class A common stock 39 0 0 39
Class B common stock 2 0 0 2
Additional paid-in capital 19,937 0 0 19,937
Retained earnings(deficit) (14,864) (233) 233 (8) (14,864)
------------- ------------- ------------- -------------
Total stockholders' equity 5,114 (233) 4,483 9,364
------------- ------------- ------------- -------------
$ 99,835 $ 97,858 $ (48,927) $ 148,766
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
<PAGE>
MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
AS OF APRIL 3, 1999
(in thousands)
(1) Reflects the results of operations of the companies acquired between
January 1, 1998 and the date of acquisition by Morton. The companies were
acquired on the following dates.
<TABLE>
<CAPTION>
DATE ACQUIRED
-------------
<S> <C>
Carroll George, Inc........................................... March 30, 1998
B&W Metal Fabricators, Inc.................................... April 8, 1998
Mid-Central Plastics, Inc..................................... May 29, 1998
SMP Steel Corporation......................................... June 1, 1998
</TABLE>
The results below also reflect purchase accounting adjustments to
depreciation, amortization, interest and income tax expense.
<TABLE>
<CAPTION>
B&W METAL SMP STEEL CARROLL MID-CENTRAL 1998
FABRICATORS, INC. CORPORATION GEORGE, INC. PLASTICS, INC. ACQUISITIONS
----------------- ----------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Net sales...................... $2,336 $1,330 $6,941 $13,954 $24,561
Gross profit................... 651 479 768 1,992 3,890
Selling and
administrative expenses.... 462 72 809 1,058 2,401
----------------- ----------- ------------ -------------- ------------
Operating income............... 189 407 (41) 934 1,489
Interest and other expense..... 170 4 177 792 1,143
----------------- ----------- ------------ -------------- ------------
Earnings before income
taxes and extraordinary
charge..................... 19 403 (218) 142 346
(Provision)/benefit for
income taxes............... (16) (28) 40 (77) (81)
----------------- ----------- ------------ -------------- ------------
Earnings before
extraordinary charge....... 3 375 (178) 65 265
----------------- ----------- ------------ -------------- ------------
</TABLE>
<PAGE>
(2) Reduction in depreciation expense and amortization arising from the
Worthington purchase price allocation.
(3) Reduction of the Worthington corporate expense allocation that is
discontinued.
(4) Because of the available net operating loss carryforward at Morton, no
Federal income tax effect has been given in these pro forma statements;
state income tax (expenses) or benefits have been provided at an average
rate of 7%.
(5) Increase in interest expense, and related amortization of debt issuance
expense, attributable to the new secured revolving credit and term loan
facility with an average interest rate of approximately 7.75% on a
principal balance of $32,000.
(6) In connection with the Worthington acquisition, 8% preferred shares
valued at $4,250 were issued. The preferred shares have a face value
of $10,000. The discount will be accreted over a five year period using
the effective yield method. The preferred shares will provide a yield
of approximately 28%.
<PAGE>
(7) Reflects the Worthington acquisition as follows:
<TABLE>
<S> <C>
Purchase price paid as:
Cash......................................................... $ 25,000
Preferred stock value........................................ 4,250
Estimated working capital adjustment......................... 4,000
Acquisition costs............................................ 1,125
Debt issuance expense........................................ 1,875
--------
Total consideration....................................... $ 36,250
--------
--------
Allocated to:
Historical book value........................................ $ 55,356
Less reduction in carrying value of property,
plant and equipment................................... (20,981)
--------
Net allocation to property, plant and equipment............. 34,375
Increase in other assets--debt issuance expense............. 1,875
--------
Total consideration.................................... $ 36,250
--------
--------
</TABLE>
The Worthington agreement also includes a contingent cash payment. The
above data does not consider any contingent amounts. Any contingent cash
payments will result in an adjustment to the carrying value of property,
plant and equipment.
(8) Adjustment to eliminate Worthington cash, intangible assets, intercompany
balances and equity account existing at the time of the acquisition and
not assumed.
(9) Represents the elimination of Worthington's industrial revenue bond ($340
in current debt and $11,280 in long-term debt), and the entry into the
secured revolving credit facility and term loan in the amount of $32,000.
(10) The unaudited pro forma condensed consolidated statements of operations
do not include any adjustments for cost savings which management
expects to achieve in the areas of staff level adjustments, changes
in sick pay policies, changes in contributory health care coverage
policies and to other reductions in selling and administrative
expenses.
<PAGE>
CONSENT OF ERNST & YOUNG LLP
We consent to the incorporation by reference in the Registration Statements
on Forms S-8 (Nos. 333-68927 and 333-69575) of Morton Industrial Group, Inc.
of our report dated April 30, 1999, with respect to the financial statements
of Worthington Non-Automotive Plastics Group of Worthington Custom Plastics,
Inc. included in the Form 8-K/A filed by Morton Industrial Group, Inc. dated
April 15, 1999 (date of earliest event reported).
