<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 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): December 10, 1996
(September 26, 1996)
APPLIED POWER INC.
------------------
(Exact name of Registrant as specified in its charter)
WISCONSIN 1-11288 39-0168610
--------- ------- -----------
(State of incorporation) (Commission File No.) (I.R.S. Employer Id. No.)
13000 WEST SILVER SPRING DRIVE
BUTLER, WISCONSIN 53007
MAILING ADDRESS: P. O. BOX 325, MILWAUKEE, WISCONSIN 53201
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(414) 781-6600
--------------
(Registrant's telephone number, including area code)
<PAGE> 2
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report dated as of
October 11, 1996 on Form 8-K as set forth in the pages attached hereto to
furnish the required information:
Item 7. Financial Statements and Exhibits
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
APPLIED POWER INC.
Date: December 10, 1996 By: /s/Robert C. Arzbaecher
------------------------
Robert C. Arzbaecher,
Vice President and
Chief Financial Officer
2
<PAGE> 3
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired:
(1) Everest Electronic Equipment, Inc. Balance Sheet as of
December 31, 1995 and the related Statements of Earnings,
Stockholders' Equity and of Cash Flows for the year then ended
and Independent Auditors' Report. See Pages 4 - 8.
(2) Notes to Financial Statements. See Pages 9 - 11.
(3) Everest Electronic Equipment, Inc. Balance Sheet as of
August 31, 1996 and the related Statements of Earnings,
Stockholders' Equity and of Cash Flows for the eight month
periods ended August 31, 1996 and 1995 (unaudited). See Pages
12 - 15.
(4) Notes to Condensed Financial Statements (unaudited). See
Page 16.
(b) Pro Forma Financial Information:
(1) Introduction to Pro Forma Condensed Consolidated
Financial Statements of Applied Power Inc. and Everest Electronic
Equipment, Inc. See Page 17.
(2) Applied Power Inc. and Everest Electronic Equipment,
Inc. Pro Forma Condensed Consolidated Balance Sheet as of
August 31, 1996 and the related Pro Forma Condensed Consolidated
Statement of Earnings for the year then ended (unaudited). See
Pages 18 - 19.
(3) Notes to Pro Forma Condensed Consolidated Financial
Statements (unaudited). See Page 20.
(c) Exhibits:
See the Exhibit Index following the Signature page of this
Report, which is incorporated herein by reference.
3
<PAGE> 4
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Everest Electronic Equipment, Inc.:
We have audited the accompanying balance sheet of Everest Electronic Equipment,
Inc. (the Company) as of December 31, 1995 and the related statements of
earnings, stockholders' equity and of 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 the financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Everest Electronic Equipment, Inc. as of
December 31, 1995 and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
October 23, 1996
4
<PAGE> 5
EVEREST ELECTRONIC EQUIPMENT, INC.
STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
NET SALES $38,780,460
COST OF GOODS SOLD 28,574,644
-----------
GROSS PROFIT 10,205,816
ENGINEERING, SELLING AND ADMINISTRATIVE EXPENSES (Notes 5 and 6) 3,442,366
-----------
EARNINGS FROM OPERATIONS 6,763,450
OTHER INCOME:
Interest, net (Note 5) 28,101
Other, net 124,847
-----------
Total other income 152,948
-----------
EARNINGS BEFORE INCOME TAX PROVISION 6,916,398
INCOME TAX PROVISION (Note 7) 106,905
-----------
NET EARNINGS $6,809,493
===========
</TABLE>
See accompanying notes to financial statements
5
<PAGE> 6
EVEREST ELECTRONIC EQUIPMENT, INC.
BALANCE SHEET
AS OF DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,148,490
Accounts receivable 4,436,335
Inventories (Note 2) 1,464,174
Prepaid expenses 119,617
-----------
Total current assets 9,168,616
PROPERTY, PLANT AND EQUIPMENT, net (Note 3) 4,317,347
OTHER ASSETS 104,500
-----------
$13,590,463
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 1,218,823
Accrued compensation and benefits (Note 5) 576,708
Income taxes payable (Note 7) 6,271
Other current liabilities 16,352
-----------
Total current liabilities 1,818,154
STOCKHOLDERS' EQUITY:
Class A voting common stock, $9.09 par value per share; 2,000 shares authorized;
500 shares issued and outstanding 4,545
Class B nonvoting common stock, $9.09 par value per share; 20,000 shares authorized;
5,611 shares issued and outstanding 51,004
Additional paid-in capital 244,451
Retained earnings 11,472,309
-----------
Total stockholders' equity 11,772,309
-----------
$13,590,463
===========
</TABLE>
See accompanying notes to financial statements
6
<PAGE> 7
EVEREST ELECTRONIC EQUIPMENT, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Series A Series B Additional
common common paid-in Retained
stock stock capital earnings
--------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
BALANCE, January 1, 1995 $4,545 $51,004 $244,451 $8,916,519
Net earnings 6,809,493
Distributions to stockholders (4,253,703)
--------- ---------- ----------- -------------
BALANCE, December 31, 1995 $4,545 $51,004 $244,451 $11,472,309
========= ========== =========== =============
</TABLE>
See accompanying notes to financial statements
7
<PAGE> 8
EVEREST ELECTRONIC EQUIPMENT, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 6,809,493
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation 1,119,805
Amortization 5,767
Gain on disposal of equipment (100,928)
Changes in operating assets and liabilities:
Accounts receivable (894,328)
Inventories (564,943)
Prepaid expenses and other assets 48,653
Trade accounts payable 630,354
Other liabilities (809,503)
-------------
Net cash provided by operating activities 6,244,370
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property, plant and equipment (3,247,687)
Proceeds from sale of equipment 114,950
-------------
Net cash used in investing activities (3,132,737)
CASH FLOWS FROM FINANCING ACTIVITIES-
Distributions to stockholders (4,253,703)
-------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,142,070)
CASH AND CASH EQUIVALENTS, beginning of year 4,290,560
-------------
CASH AND CASH EQUIVALENTS, end of year $ 3,148,490
=============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ 93,571
=============
Income taxes paid $ 87,031
=============
</TABLE>
See accompanying notes to financial statements
8
<PAGE> 9
EVEREST ELECTRONIC EQUIPMENT, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business - Everest Electronic Equipment, Inc. (the Company)
manufactures custom and standard electronic enclosures sold in North
America and used primarily by the computer, telecom and datacom
industries. Manufacturing facilities are located in California and New
Hampshire.
Cash and Cash Equivalents - The Company considers all highly-liquid
investments with original maturities of 90 days or less to be cash
equivalents.
Accounts Receivable - An allowance for bad debts has not been recorded as
the Company has a policy of directly writing off all receivables
considered to be uncollectible.
Inventories - Inventories are comprised of material, direct labor and
manufacturing overhead, and are stated at the lower of cost (first-in,
first-out basis) or market.
Property, Plant and Equipment - Property, plant and equipment are stated
at cost. With the exception of leasehold improvements, plant and
equipment are depreciated over the estimated useful lives of the assets
under accelerated methods over periods ranging from five to seven years.
Leasehold improvements are amortized using the straight-line method over
the lesser of the lease term or the estimated useful life of the asset.
Depreciation is computed using the same methods for both financial
reporting and tax purposes. Expenditures for maintenance and repairs not
expected to extend the useful life of an asset beyond its normal useful
life are expensed.
Revenue Recognition - Revenues and costs of products sold are recognized
as the related products are shipped.
Income Taxes - The Company has elected to be taxed under the provisions
of Subchapter S of the Internal Revenue Code (IRC) for both federal and
California state, whereby taxes are paid by the stockholders of the
Company. The Company provides for New Hampshire income taxes as if it
were a C corporation under the IRC (Note 7).
Use of Estimates - The financial statements have been prepared in
accordance with generally accepted accounting principles and necessarily
include amounts based on estimates and assumptions by management. Actual
results could differ from those amounts.
Fair Value of Financial Instruments - The recorded amounts of cash and
cash equivalents, accounts receivable, trade accounts payable and accrued
liabilities at December 31, 1995 approximate fair value in accordance
with Statement of Financial Accounting Standards (SFAS) No. 107,
Disclosures About Fair Value of Financial Instruments.
2. INVENTORIES
Inventories consist of the following at December 31, 1995:
<TABLE>
<S> <C>
Raw materials $ 651,493
Work in process 812,681
----------
Total inventory $1,464,174
==========
</TABLE>
9
<PAGE> 10
3. PROPERTY, PLANT AND EQUIPMENT
Property consists of the following at December 31, 1995:
<TABLE>
<S> <C>
Production equipment $ 8,498,539
Office equipment 1,159,718
Automotive 440,828
Leased improvements 740,012
-------------
10,839,097
Less accumulated depreciation (6,521,750)
-------------
Property, plant and equipment, net $ 4,317,347
=============
</TABLE>
4. LINE OF CREDIT
On February 2, 1995, Everest Electronic Equipment, Inc. entered into an
agreement with Bank of America National Trust and Savings Association for
a $3,000,000 line of credit. The agreement calls for interest on the
outstanding balance at the Bank's reference rate (8.5% at December 31,
1995) unless the Company elects either a fixed rate or an offshore rate
agreed upon by both parties. The line of credit expires April 30, 1997.
As of December 31, 1995, there were no amounts outstanding under this
agreement.
5. DEFERRED COMPENSATION
On June 30, 1991, the Board of Directors of the Company adopted a
nonqualified deferred compensation plan (the Plan). The only two
participants of the Plan are the Company's founders. Under the provisions
of the Plan, the Company agrees to pay a total of $2,000,000 to each
participant over the five-year period beginning July 1, 1991. The
participants of this Plan shall be entitled to receive interest on the
outstanding balance at a rate equal to 9.5% per annum compounded monthly
from June 30, 1991 until the deferred compensation has been fully
distributed to the participants under the terms of the Plan. Interest
paid to Plan participants during the year was $93,571. The remaining
amount outstanding under the agreement as of December 31, 1995 was
$486,643.
6. COMMITMENTS
The Company leases certain office, warehouse and plant facilities under
noncancelable operating leases with original maturities greater than one
year. The leases contain cost of living escalation clauses and require
the Company to pay the property taxes, insurance, maintenance and other
fees related to the leased property. Two of these facilities are leased
from related parties and expire in fiscal years 1996 and 1998,
respectively. Total rent expense was approximately $1,242,000 for the
year ended December 31, 1995, of which approximately $1,172,000 was paid
to the related parties.
10
<PAGE> 11
As of December 31, 1995, minimum future lease obligations are as follows:
<TABLE>
<CAPTION>
RELATED NONRELATED
PARTY PARTY
<S> <C> <C>
Year ending December 31:
1996 $1,394,890 $136,840
1997 251,926 136,840
1998 167,951 101,044
1999 29,460
2000 29,460
Thereafter 14,730
---------- --------
Total future minimum lease payments $1,814,767 $448,374
========== ========
</TABLE>
7. INCOME TAXES
The Company has elected by consent of its stockholders to be taxed under
the provisions of Subchapter S of the Internal Revenue Code. Under those
provisions, the Company does not pay federal corporate income taxes on
its taxable income and is not allowed a net operating loss carryover or
carryback as a deduction. Instead, each stockholder is liable for
individual income taxes on his respective share of the Company's taxable
income and includes his respective share of the Company's net operating
loss in his individual income tax return.
California has conformed to federal tax law which allows domestic
corporations to be taxed under provisions similar to Subchapter S of the
Internal Revenue Code. Unlike the federal provisions, a 1.5% tax on the
net income of the Company is still maintained for California purposes.
New Hampshire treats federal Subchapter S corporations as if they were C
corporations. Under New Hampshire provisions, the Company pays tax at a
rate of 7% on the business profits apportioned to that state.
The current year tax provision has been calculated under present tax laws
for both federal and state reporting purposes. The provision consists of
the following:
<TABLE>
<S> <C>
California $103,139
New Hampshire 3,766
--------
Total tax provision $106,905
========
</TABLE>
8. SUBSEQUENT EVENT
Effective September 26, 1996, all of the operating assets and liabilities
of the Company were acquired by Applied Power Inc. The general operations
of the Company will be assumed by Applied Power Inc. and proceeds from
the sale will be distributed to the stockholders through a liquidating
dividend.
11
<PAGE> 12
EVEREST ELECTRONIC EQUIPMENT, INC.
BALANCE SHEET
UNAUDITED
AUGUST 31, 1996
<TABLE>
<S> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 5,912,832
Accounts receivable 5,652,772
Inventories 1,264,183
Prepaid expenses 223,867
-----------
Total Current Assets 13,053,654
Other Assets 110,448
Property, Plant and Equipment - net 3,566,825
-----------
Total Assets $16,730,927
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $ 1,360,654
Accrued compensation and benefits 1,201,734
Other current liabilities 7,962
-----------
Total Current Liabilities 2,570,350
Stockholders' Equity
Class A voting common stock, $9.09 par value per share, authorized 2,000 shares,
issued and outstanding 500 shares 4,545
Class B nonvoting common stock, $9.09 par value per share, authorized 20,000
shares, issued and outstanding 5,611 shares 51,004
Additional paid-in capital 244,451
Retained earnings 13,860,577
-----------
Total Stockholders' Equity 14,160,577
-----------
Total Liabilities and Stockholders' Equity $16,730,927
===========
</TABLE>
See accompanying notes to condensed financial statements
12
<PAGE> 13
EVEREST ELECTRONIC EQUIPMENT, INC.
STATEMENT OF EARNINGS
UNAUDITED
FOR THE EIGHT MONTH PERIODS ENDED AUGUST 31,
<TABLE>
<CAPTION>
1996 1995
------------- --------------
<S> <C> <C>
Net Sales $30,504,395 $25,787,419
Cost of Products Sold 22,018,365 18,956,436
------------- --------------
Gross Profit 8,486,030 6,830,983
Engineering, selling and administrative expenses 2,764,490 2,311,538
------------- --------------
Operating Earnings 5,721,540 4,519,445
Other (Income) Expense
Net financing costs (91,865) 329
Other - net 2,009 (108,151)
------------- --------------
Earnings Before Income Tax Expense 5,811,396 4,627,267
Income Tax Expense 89,300 48,750
------------- --------------
Net Earnings $5,722,096 $4,578,517
============= ==============
</TABLE>
See accompanying notes to condensed financial statements
13
<PAGE> 14
EVEREST ELECTRONIC EQUIPMENT, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
UNAUDITED
FOR THE EIGHT MONTH PERIODS ENDED AUGUST 31, 1996 AND 1995
<TABLE>
<CAPTION>
Series A Series B Additional
Common Common Paid-in Retained
Stock Stock Capital Earnings
---------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Balances at January 1, 1995 $4,545 $51,004 $244,451 $8,916,519
Net earnings for the period - - - 4,578,517
Distributions to stockholders - - - (3,756,692)
---------- ----------- ---------- -------------
Balances at August 31, 1995 $4,545 $51,004 $244,451 $9,738,344
========== =========== ========== =============
Balances at January 1,1996 $4,545 $51,004 $244,451 $11,472,309
Net earnings for the period - - - 5,722,096
Distributions to stockholders - - - (3,333,828)
---------- ----------- ---------- -------------
Balances at August 31, 1996 $4,545 $51,004 $244,451 $13,860,577
========== =========== ========== =============
</TABLE>
See accompanying notes to condensed financial statements
14
<PAGE> 15
EVEREST ELECTRONIC EQUIPMENT, INC.
STATEMENT OF CASH FLOWS
UNAUDITED
FOR THE EIGHT MONTH PERIODS ENDED AUGUST 31,
<TABLE>
<CAPTION>
1996 1995
------------ -------------
<S> <C> <C>
Net Earnings $5,722,096 $4,578,517
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation 869,951 850,000
Amortization - 5,767
Other non-cash charges 20,860 (103,000)
Changes in operating assets and liabilities:
Accounts receivable (1,216,437) (514,057)
Inventories 200,000 -
Prepaid expenses and other assets (110,197) 11,903
Trade accounts payable 141,820 482,463
Other liabilities 610,362 451,491
------------ -------------
Net Cash Provided by Operating Activities 6,238,455 5,763,084
Investing Activities
Proceeds on the sale of property, plant and equipment 22,000 103,000
Additions to property, plant and equipment (162,285) (2,224,527)
------------ -------------
Net Cash Used in Investing Activities (140,285) (2,121,527)
Financing Activities
Distributions to stockholders (3,333,828) (3,756,692)
------------ -------------
Net Cash Used in Financing Activities (3,333,828) (3,756,692)
------------ -------------
Net Increase(Decrease) in Cash and Cash Equivalents 2,764,342 (115,135)
Cash and Cash Equivalents - Beginning of Year 3,148,490 4,290,560
------------ -------------
Cash and Cash Equivalents - End of Year $5,912,832 $4,175,425
============ =============
</TABLE>
See accompanying notes to condensed financial statements
15
<PAGE> 16
EVEREST ELECTRONIC EQUIPMENT, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements of Everest
Electronic Equipment, Inc. have been prepared in accordance with
generally accepted accounting principles for interim financial reporting
and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements.
In the opinion of management, all adjustments considered necessary for a
fair presentation have been made. Such adjustments consist of only those
of a recurring nature. Operating results for the eight months ended
August 31, 1996 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1996.
2. INVENTORIES
Inventories consist of the following at August 31, 1996:
<TABLE>
<S> <C>
Raw materials $ 451,493
Work in process 812,690
----------
Total inventory $1,264,183
==========
</TABLE>
16
<PAGE> 17
APPLIED POWER INC. AND EVEREST ELECTRONIC EQUIPMENT, INC.
INTRODUCTION TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
As described under Item 2 of this report as originally filed on October 11,
1996, Applied Power Inc. (the "Company"), through its Wright Line subsidiary,
acquired the net assets of Everest Electronic Equipment, Inc. ("Everest"). The
transaction was completed on September 26, 1996 for cash consideration of
approximately $52 million.
The following unaudited pro forma condensed consolidated financial statement of
earnings and balance sheet (the "pro forma statements") give effect to the
acquisition of Everest using the purchase method of accounting and are based on
the estimates and assumptions set forth in the notes to such pro forma
statements. The pro forma statements have been prepared by the Company
utilizing the historical financial statements of the Company and of Everest and
accordingly, should be read in conjunction with such historical financial
statements of the Company and notes thereto which were contained in the
Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1996
and the audited financial statements and notes thereto of Everest which are
filed as item 7(a) of this Form 8-K/A.
These pro forma statements have been prepared and included herein as required
by the rules and regulations of the Securities and Exchange Commission and are
provided for comparative purposes only. The pro forma statements are not
necessarily indicative of the future consolidated financial position and
results of operations or those which would have occurred had the acquisition
been consummated as of the dates reflected in the pro forma statements. In
reviewing the pro forma statements, the reader should consider the following:
1. Prior to the acquisition, Everest was operating as an S Corporation
under the Subchapter S provisions of the Internal Revenue Code. Under such
provisions, Everest was not subject to federal and certain state income
taxes. The following pro forma statements reflect adjustments for the
estimated corporate income tax effects during the periods Everest operated
as an S Corporation. The resulting total estimated income tax effects
reflect Everest as a separate taxpayer. As a result, the consolidated
total income tax expense is not necessarily indicative of the result which
would have occurred if Everest had been included in a consolidated US
federal income tax return of the Company and its subsidiaries.
2. Everest had been a supplier to Wright Line prior to the acquisition.
Approximately $1.0 million in sales to Applied Power Inc. was recorded by
Everest during the fiscal year ended August 31, 1996, which has been
eliminated in the adjustments to the pro forma Condensed Consolidated
Statement of Earnings.
17
<PAGE> 18
APPLIED POWER INC. AND SUBSIDIARIES
AND EVEREST ELECTRONIC EQUIPMENT, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
UNAUDITED
AUGUST 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA PRO FORMA
API EVEREST ADJUSTMENTS CONSOLIDATED
---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 1,001 $ 5,913 $ (5,913) (b) $1,001
Accounts receivable 68,747 5,653 74,400
Inventories 120,648 1,264 121,912
Prepaid income tax 10,734 - - 10,734
Prepaid expenses 5,775 224 - 5,999
---------- ------------ --------- ------------
Total Current Assets 206,905 13,054 (5,913) 214,046
Investment in Everest Electronics, Inc. - - 53,500 (a) -
(53,500) (b)
Other Assets 6,370 110 - 6,480
Goodwill 58,266 - 43,552 (b) 101,818
Other Intangibles 33,464 - - 33,464
Property, Plant and Equipment - net 76,236 3,567 1,700 (b) 81,503
---------- ------------ --------- ------------
Total Assets $381,241 $16,731 $ 39,339 $437,311
========== ============ ========= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 16,068 $ - $ - $16,068
Trade accounts payable 41,397 1,360 - 42,757
Accrued compensation and benefits 20,805 1,202 - 22,007
Income taxes payable 7,081 - - 7,081
Other current liabilities 22,378 8 1,500 (a) 23,886
---------- ------------ --------- ------------
Total Current Liabilities 107,729 2,570 1,500 111,799
Long-term Debt 76,548 - 52,000 (a) 128,548
Deferred Income Tax 15,395 - - 15,395
Other Deferred Liabilities 13,114 - - 13,114
Shareholders' Equity
Common stock 2,730 56 (56) 2,730
Additional paid-in capital 34,383 244 (244) 34,383
Retained earnings 126,392 13,861 (13,861) 126,392
Cumulative translation adjustments 4,950 - 4,950
---------- ------------ --------- ------------
Total Shareholders' Equity 168,455 14,161 (14,161) (b) 168,455
---------- ------------ --------- ------------
Total Liabilities and Shareholders' Equity $381,241 $16,731 $ 39,339 $437,311
========== ============ ========= ============
</TABLE>
18
<PAGE> 19
APPLIED POWER INC. AND SUBSIDIARIES AND
EVEREST ELECTRONIC EQUIPMENT, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
UNAUDITED
YEAR ENDED AUGUST 31, 1996
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA PRO FORMA
API EVEREST ADJUSTMENTS CONSOLIDATED
--------- ----------- ----------------- ---------------
<S> <C> <C> <C> <C>
Net sales $571,215 $43,570 $ (1,025) (c) $613,760
Cost of products sold 351,283 32,271 (782) (c),(d) 382,772
--------- ----------- ---------- ---------------
Gross Profit 219,932 11,299 (243) 230,988
Engineering, selling and administrative expenses 158,485 3,867 - 162,352
--------- ----------- ---------- ---------------
Operating Earnings 61,447 7,432 (243) 68,636
Other Expense(Income)
Net financing costs 8,456 (120) 3,380 (d) 11,716
Amortization of intangible assets 4,054 - 1,742 (d) 5,796
Other - net (230) (68) - (298)
--------- ----------- ---------- ---------------
Earnings Before Income Tax Expense 49,167 7,620 (5,365) 51,422
Income Tax Expense 15,438 89 836 (d) 16,363
--------- ----------- ---------- ---------------
Net Earnings $33,729 $7,531 $ (6,201) $35,059
========= =========== ========== ===============
Earnings Per Share $2.41 $2.51
========= ===============
Weighted Average Number of Shares Outstanding 13,983 13,983
========= ===============
</TABLE>
19
<PAGE> 20
APPLIED POWER INC. AND EVEREST ELECTRONICS EQUIPMENT, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
(Dollars in Thousands)
(a) The following pro forma adjustments reflect the Company's purchase of the
Everest business. Pro forma adjustments include estimated direct costs of
acquisition of $1,500.
<TABLE>
<S> <C>
Purchase price of net assets $52,000
Accrued liabilities 1,500
--------
Investment in Everest Business $53,500
========
</TABLE>
(b) The following pro forma adjustments are made to reflect estimated fair
value adjustments and to eliminate the investment in Everest Business.
<TABLE>
<S> <C>
Everest Business net assets - as reported $14,161
Fair value adjustments:
Eliminate cash balance (not acquired) (5,913)
Increase carrying amount of plant and equipment to fair value 1,700
Record goodwill generated from purchase 43,552
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Investment in Everest Business $53,500
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</TABLE>
(c) Elimination of $1,025 in sales of Everest product to the Company which
was recorded during the year ended August 31, 1996.
(d) The following pro forma adjustments are incorporated in the pro forma
condensed consolidated statement of earnings.
<TABLE>
<S> <C>
1. Incremental interest expense on acquisition debt at a rate of 6.5% $(3,380)
2. Increase in depreciation expense resulting from adjustment to carrying
amount of plant and equipment being depreciated over a 7 year life (243)
3. Reflect amortization of goodwill arising from this transaction, over a
25 year life (1,742)
4. Increase in income taxes applying a 41% effective US and California state
income tax rate to the earnings of Everest, less the effect of pro forma
adjustments in 1, 2 and 3 above (836)
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$(6,201)
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</TABLE>
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