SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 21, 1996
ATRION CORPORATION
(Exact name of registrant as specified in its charter)
Alabama 0-10763 63-0821819
(State or (Commission (IRS Employer
Other File Number Identification
Jurisdiction of Number)
Incorporation)
Post Office Box 918, Florence, Alabama 35631
(Address of Principal Executive Offices ) (Zip Code)
Registrant's Telephone Number, including area code:
(205) 383-3631
ERNST & YOUNG LLP
787 Seventh Ave
New York, New York 10019
Phone: 212 773 3000
Report of Independent Auditors
The Board of Directors of
Halkey-Roberts, Inc.
We have audited the accompanying consolidated balance sheet of
HRC Holdings Inc. (the "Company") as of September 30, 1994 and
the related consolidated statements of operations 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 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 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 consolidated
financial position of HRC Holdings Inc. at September 30, 1994
and the consolidated results of their operations and their cash
flows for the year then ended, in conformity with generally
accepted accounting principles.
Ernst & Young LLP
June 6, 1996
Ernst & Young LLP is a member of Ernst & Young International,
Ltd.
<TABLE>
HRC Holdings Inc.
Consolidated Balance Sheet
September 30, 1994
(In Thousands)
<CAPTION>
<S> <C>
Assets
Current assets:
Cash $ 5
Trade receivables, net 1,905
Inventories 3,137
Deferred income taxes 130
Other current assets 355
Total current assets 5,532
Property, plant and equipment, net 4,146
Goodwill, net 5,906
$15,584
Liabilities and invested capital
Current liabilities:
Trade payables $ 810
Accrued expenses and other liabilities 351
Total current liabilities 1,161
Notes payable to affiliate 6,229
Deferred income taxes 692
Total liabilities 8,082
Invested capital 7,502
$15,584
See accompanying notes.
HRC Holdings Inc.
Consolidated Statement of Operations
Year ended September 30, 1994
(In Thousands)
<CAPTION>
<S> <C>
Net sales $13,777
Operating costs and expenses:
Cost of products sold 10,676
Selling and administrative expenses 2,113
Management fees to affiliates 140
Operating income 848
Interest expense 623
Other expense, net 50
Income before income taxes 175
Provision for income taxes 144
Net income 31
See accompanying notes.
HRC Holdings Inc.
Consolidated Statement of Cash Flows
Year ended September 30, 1994
(In Thousands)
<CAPTION>
<S> <C>
Cash flows from operating activities
Net income $ 31
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 599
Provision for doubtful accounts 28
Deferred income taxes 50
Changes in operating assets
and liabilities:
Increase in trade receivables (30)
Increase in inventories (451)
Decrease in other current assets 57
Decrease in trade payables (198)
Increase in accrued expenses and
other liabilities 57
Net cash provided by operating activities 143
Cash flows from investing activities
Purchases of property, plant and equipment (396)
Cash flows from financing activities
Net transactions with affiliate 248
Net decrease in cash (5)
Cash, beginning of year 10
Cash, end of year 5
See accompanying notes.
</TABLE>
HRC Holdings Inc.
Notes to Consolidated Financial Statements
September 30, 1994
1. Basis of Presentation and Description of Company
On September 30, 1994, HRC Holdings Inc. (the "Company" or "HRC")
was an indirect wholly-owned subsidiary of Hanson PLC ("Hanson").
(See Note 7 - Subsequent Events).
During the year ended September 30, 1994, certain indirect
wholly-owned subsidiaries of Hanson provided certain corporate general
and administrative services to the Company including legal,
finance, tax, risk management and employee benefits. The charges
for providing such services are included in management fees.
Management believes that such amounts are reasonable; however,
they do not necessarily equal the costs that would have been
incurred by the Company on a stand alone basis.
In addition, except for certain cash balances owned by the
Company, cash accounts have been controlled on a centralized basis
by an affiliate and, accordingly, cash receipts and disbursements
have been received or made through the affiliate. The net results
of cash transactions between or on behalf of HRC, including
intercompany advances, have been included in invested capital.
These transactions resulted in net receipts of $248,000 for the
year ended September 30, 1994. Invested capital does not include
interest bearing notes payable to affiliates.
Due to the requirement to be filed as an exhibit to the report of
a publicly-traded Company, the consolidated balance sheet at
September 30, 1994, with respect to income taxes and certain
assets, has been restated to comply with Regulation S-X of the
Securities and Exchange Commission. The impact of such restatement
was to increase assets and invested capital by $810,000 and
$118,000, respectively.
2.Significant Accounting Policies
Principles of Consolidation
The financial statements consolidate the accounts of the Company
and its subsidiaries. Intercompany accounts and transactions have
been eliminated.
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.
HRC Holdings Inc.
Notes to Consolidated Financial Statements (continued)
2. Significant Accounting Policies (continued)
Trade Receivables and Concentration of Credit Risk
Trade receivables at September 30, 1994 consist of the
following (in thousands):
Trade receivables $1,930
Allowance for doubtful accounts (25)
Trade receivables, net $1,905
The Company sells industrial products principally in the United
States. Management performs periodic credit evaluations of its
customers' financial condition and generally does not require
collateral. Credit losses have generally been within
management's estimates.
Inventories
Inventories are carried on the basis of the lower of cost
(first-in, first-out) or market. Inventories at September 30,
1994 consist of the following (in thousands):
Finished products $ 809
In-process products 51
Raw materials 2,277
$3,137
Property, Plant and Equipment
Property, plant and equipment is stated on the basis of cost. Cost
of property, plant and equipment acquired in connection with the
acquisition of the Company by Hanson is determined based on the
allocation of the purchase price paid by Hanson on such date.
Depreciation and amortization are provided by the straight-line
method over the estimated useful lives of the assets. Depreciation
of property, plant and equipment
HRC Holdings Inc.
Notes to Consolidated Financial Statements (continued)
2. Significant Accounting Policies (continued)
amounted to approximately $415,000 for the year ended September
30, 1994. Property, plant and equipment at September 30, 1994
consists of the following (in thousands):
Land $ 752
Buildings and improvements 2,947
Machinery and equipment 5,661
9,360
Accumulated depreciation (5,214)
$4,146
Goodwill
Goodwill represents the excess of the purchase price over the fair
value of assets allocated to the Company in Hanson's accounting
for its acquisition of the Company in 1987. Goodwill of the
Company is being amortized using the straight-line method over
forty years. Accumulated goodwill amortization aggregated
approximately $4,718,000 at September 30, 1994. Amortization of
goodwill amounted to approximately $184,000 for the year ended
September 3O, 1994.
The net carrying amount of goodwill is continually assessed for
recoverability by management. Management believes there has been
no impairment to such carrying amount.
Federal Income Taxes
Income taxes are accounted for under the liability method.
Deferred tax assets or liabilities are computed based on the
difference between the financial reporting and tax bases of
assets and liabilities using enacted tax rates and laws.
Deferred income tax expense or benefit is based on the changes
in the asset or liability from period to period. For fiscal
1994, the Company was included in the consolidated U.S. income
tax return of Hanson. In the accompanying financial statements,
HRC provided for income taxes as if it filed its own separate
income tax returns. Taxes currently payable have been included
in Invested Capital.
HRC Holdings Inc.
Notes to Consolidated Financial Statements (continued)
2. Significant Accounting Policies (continued)
Federal Income Taxes (continued)
The Company has entered into tax sharing agreements in which
Hanson and certain of its affiliates agreed to indemnify the
Company for all income tax liabilities with respect to periods
prior to the Demerger Transaction. (See Note 7 - Subsequent
Events)
Revenue Recognition
Revenue is recognized upon shipment of product to the customer.
The Company warrants products against defects and has policies
permitting the return of products under certain circumstances.
Provisions are made for these costs at the time of sale, and
they generally have been within management's estimates and have
not been material.
Fair Value of Financial Instruments
The fair value of the notes payable to affiliates is estimated
to approximate their carrying amounts.
3. Notes Payable to Affiliate
At September 30, 1994, the Company had unsecured notes in the
principal amount of $6,229,000 payable to Hanson which bore
interest annually at 10%.
Interest paid to Hanson and affiliates during fiscal 1994 was
$623,000. The notes payable were repaid in connection with the
Demerger Transaction. (See Note 7 Subsequent Events)
4. Income Taxes
Significant components of the income tax provision at September
30, 1994 are as follows (in thousands):
Current $ 94
Deferred 50
$144
HRC Holdings Inc.
Notes to Consolidated Financial Statements (continued)
4. Income Taxes (continued)
Significant components of deferred taxes at September 30, 1994
consist of the following (in thousands):
Deferred tax liability:
Property, plant and equipment $692
Deferred tax asset:
Accruals and allowances 85
Inventory 45
Total deferred tax asset 130
Net deferred tax liability $562
The Company's effective income tax rate at September 30, 1994
differs from the statutory federal income tax rate as follows:
Statutory federal income tax rate 35.0%
State income taxes, net of federal benefit 6.3
Goodwill 36.3
Other 4.7
82.3%
HRC Holdings Inc.
Notes to Consolidated Financial Statements (continued)
5. Leases
Rental expense for operating leases was $145,000 for the year
ended September 30, 1994. Future minimum rental commitments
under noncancelable operating leases as of September 30, 1994
are as follows ($ in thousands):
For the fiscal years ended:
1995 $120
1996 44
1997 36
1998 28
1999 5
$233
6. Contingencies
The Company is a party to legal proceedings which arose in the
ordinary course of business. In management's opinion, the outcome
of these matters will not have a material effect on the Company's
consolidated financial position.
7. Subsequent Events
On May 31, 1995, as a result of demerger and distribution
agreements between U.S. Industries, Inc. ("USI") and Hanson
("Demerger Transactions"), the Company became an indirect
wholly-owned subsidiary of USI. On September 15, 1995, the
Company was sold by USI to HRC Acquisition Corp., an indirect
subsidiary of Fenway Holdings, L.L.C ("Fenway"), in accordance
with the Stock Purchase Agreement among USI, USI American
Holdings, Inc., JUSI Holdings, Inc., and Jacuzzi (U.K.) Limited
and Fenway dated August 11, 1995 and as amended on August 25,
1995. On May 18, 1996, the Company was sold by Fenway to Atrion
Corporation, in accordance with the Stock Purchase Agreement
between the two parties.
<TABLE>
HRC Holdings Inc.
Consolidated Statements of Operations
($ In Thousands)
<CAPTION>
Six Months Ended
March 31, March 31,
1996 1995
<S> <C> <C>
Net Sales $7,476 $7,215
Operating costs and expenses:
Cost of products sold 5,450 5,320
Selling and admin expenses 1,234 1,183
Management fees to affiliat 0 93
Operating income 792 619
Interest expense 280 311
Other income & expenses, net 14
Income before income taxes 512 294
(Provision) for income taxes (250) 0
Net income $ 262 $ 294
HRC Holdings Inc.
Consolidated Balance Sheets
As of March 31, 1996 and March 31, 1995
($ In Thousands)
<CAPTION>
March 31, March 31,
1996 1995
<S> <C> <C>
Assets
Current Assets:
Cash $ 0 $ 5
Trade receivables, net 2,015 2,033
Inventories 2,800 2,848
Other current assets 129 142
Total current assets 4,944 5,028
Property, plant and equipment, net 7,788 4,272
Deferred tax asset 59 0
Deferred financing costs, net 299 0
Goodwill, net 1,582 5,814
Total assets $14,672 $15,114
Liabilities and stockholder's equity
Current liabilities:
Trade accounts payable $ 687 $ 786
Accrued exp and other liab 593 480
Due to affiliates 115 0
Total current liabilities 1,395 1,266
Long-term debt 7,041 5,326
Total liabilities 8,436 6,592
Stockholder's equity:
Common stock ($.01 par value; 3,000 shares
authorized, issued and outstanding 1,000
shares) 0 0
Additional paid-in capital 5,993 225
Retained earnings 243 8,297
Total stockholder's equity 6,236 8,522
Total liab and stockholder's equity $14,672 $15,114
See accompanying notes.
HRC Holdings Inc.
Consolidated Statements of Cash Flows
($ In Thousands)
<CAPTION>
Six Months Ended
March 31, March 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities
Net (loss) income $ 262 $ 294
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation and amortization 431 308
Changes in operating assets and liab:
Decr (incr)in trade accts receivable (221) (128)
(Increase) decrease in inventories (113) 289
(Increase) decr in other current assets 22 213
Decrease in trade accounts payable (192) (24)
Increase in accrued exp and other liab 210 129
Net cash provided by operating activities 399 1,081
Cash flows from investing activities
Purchases of property, plant and equipment 224 342
Net cash used in investing activities 224 342
Cash flows from financing activities
Net transactions with affiliate (175) (739)
Net cash provided by (used in)
financing activities (175) (739)
Net increase (decrease) in cash 0 0
Cash, beginning of period 0 5
Cash, end of period 0 5
See accompanying notes
</TABLE>
HRC Holdings Inc.
Notes to Consolidated Financial Statements
6 Month Financial Statements as of 3/31/96
In $000's
1. Basis of Presentation and Description of Company
As of March 31, 1996, Halkey-Roberts Corporation was owned by
Fenway Holdings, L.L.C. As of March 31, 1995, Halkey-Roberts
was owned by Hanson P.L.C.
Fenway purchased Halkey-Roberts on September 15, 1995 from
U.S. Industries. U.S. Industries owned Halkey-Roberts from
May 30, 1995 to effective date of the sale to Fenway. Prior
to May 30, 1995, the effective date of demerger and
distribution agreements between Hanson P.L.C. and U.S.I., HRC
was owned by Hanson.
The acquisition of HRC by Fenway resulted in a new basis of
accounting based upon the estimated fair value of assets and
liabilities assumed at September 14, 1995. The statements for
1996 are based on the new valuations. The statements for 1995
are based upon historical costs.
2. Significant Accounting Policies
Trade Receivables at March 31, 1996 consist of the following:
1996 1995
Trade Receivables $2,054 $2,078
Allowance for Doubtful Accounts 39 45
Trade Receivables Net $2,015 $2,033
The Company sells industrial products principally in the
United States. Management performs periodic credit
evaluations of its customers' financial condition and
generally does not require collateral. Credit losses have
generally been within management's estimates.
Inventories
Inventories are carried on the basis of the lower of cost
(first-in, first-out) or market. Inventories at March 31,
1996 and 1995 consist of the following:
1996 1995
Finished Products $ 614 $ 767
In-Process Products 46 77
Raw Materials 2,140 2,044
$ 2,800 $ 2,848
Property, Plant and Equipment
Property, plant and equipment is stated on the basis of cost.
Cost for property, plant and equipment acquired in connection
with the acquisition by Fenway is determined based on its
fair values at the date of the transaction. The March 31,
1995 amounts are based on historical costs. Depreciation and
amortization are provided by the straight-line method over the
estimated useful lines of the assets.
Goodwill
Goodwill for March 31, 1996 represents the excess of the
purchase price over the net fair value of assets acquired and
liabilities assumed. The March 31, 1995 goodwill was
allocated to the Company in Hanson's accounting for its
acquisition of the company. Goodwill of the Company is being
amortized over forty years. Predecessor goodwill was being
amortized over forty years. Accumulated amortization
aggregated approximately $22 and $4,810 for period ended March
31, 1996 and 1995 respectively. 1996 accumulated goodwill
amortization represents amortization for the period subsequent
to 9/14/95 due to the Fenway purchase.
The net carrying amount of goodwill is continually assessed
for recoverability by management. Management believes there
has been no impairment to such carrying amount.
Federal Income Tax
Deferred tax assets or liabilities are computed on the
difference between the financial reporting and tax bases of
assets and liabilities using enacted tax rates and laws.
Deferred income tax expense or benefit is based on the changes
in the asset or liability from period to period. For periods
prior to September 14, 1995, HRC was included in the
consolidated U.S. income tax return of its former owners.
Consequently, for the period ending March 31, 1995 there was
no provision for U.S. income tax in financial statements.
Taxes currently payable for periods prior to September 14,
1995 have been included in Invested Capital.
Federal Income Tax (continued)
For periods subsequent to September 14, 1995, the Company will
file its own separate U.S. federal and state tax returns
The Company has entered into tax sharing agreements in which
the Predecessor owners and certain of their affiliates agree
to indemnify the Company for all income tax liabilities with
respect to periods prior to Fenway's acquisition of HRC.
Revenue Recognition
Revenue is recognized upon shipment of product to the
customer. The Company warrants products against defects and
has policies permitting the return of products under certain
circumstances. Provisions are made for these costs at the
time of sale, and they generally have been within management's
estimates and have not been material.
Fair Value of Financial Instruments
The Company believes that the carrying value for its debt
approximates its fair value as the debt was recently issued
and bears a floating interest rate.
Long Term Debt
Long term debt at March 31, 1996 and 1995 is as follows:
1996 1995
Term Loans
10.5% Tranche A due 1996-2000 $2,935 $ 0
11.0% Tranche B due 1996-2002 2,484 0
Revolving Credit Facility 1,581 0
Capital Lease 41 0
Due from Affiliates 0 (903)
Grosvenor Note 10% 1998 0 6,229
Totals $7,041 $5,326
On September 15, 1995, the Borrowers entered into a credit
agreement (the "Credit Agreement") which includes the Tranche
A and Tranche B term loans and the revolving credit facility.
The revolving credit facility to the Borrowers is limited to
$60 million in the aggregate (including a swingline sub-facility
in an amount of up to $5 million and a letter of
credit sub-facility of up to $5 million) and terminates on
September 15, 2000.
Under the Credit Agreement and other related agreements, all
of the issued and outstanding shares of capital stock of the
U.S. Borrowers, 65% of the issued and outstanding shares of
capital stock of any foreign affiliated companies of these
businesses, and substantially all of the assets of these
businesses, are pledged to secure borrowings under the Credit
Agreement. In addition, the Borrowers jointly and severally
guarantee the prompt payment of the obligations in full when
due. The Credit Agreement provides, among other things, for
the maintenance of certain consolidated financial ratios of
Fenway and places limits on dividends, capital expenditures
and other transactions. The borrowings under the Credit
Agreement are subject to mandatory prepayments if certain
events, as defined in the Credit Agreement, occur.
Payments due under the Credit Agreement for the fiscal years
ending September 30 are approximately as follows ($ in
thousands):
3/31/96 3/31/95
Tranche Debt Grosvenor
Debt
1996 $ 339 $ 0
1997 452 0
1998 564 6,229
1999 677 0
2000 2,710 0
Thereafter 2,258 0
$ 7,000 $ 6,229
The interest rate for borrowing under the facility is, at the
option of the Borrowers, based on i) the Federal Funds rate
plus 1/2 of 1% plus an additional percentage as defined in
the Credit Agreement (the "Applicable Percentage"), ii) the
Prime Rate plus the Applicable Percentage, or iii) the
Eurobond Rate plus the Applicable Percentage. In addition,
the interest rate is reset at either one, three or six month
intervals at the option of the borrowers. The interest rate
for the revolving credit facility at March 31, 1996 was
8.41%.
Net interest expense was $280 and $311 for the periods ended
March 31, 1996 and 1995 respectively.
Income Taxes
Significant components of deferred taxes, including amounts
recorded upon acquisitions, at March 31, 1996 consist of the
following ($ in thousands):
Income Taxes (continued)
Deferred Tax Liability:
Property, Plant and Equipment $ 21
Total Deferred Tax Liability 21
Deferred Tax Asset:
Accruals 38
Net Operating Loss Carry Forward 42
Total Deferred Tax Asset 80
Net Deferred Tax Asset $ 59
The Company's effective income tax rate differs from the
statutory federal income tax rate as follows:
March 31, 1996
Statutory Federal Income Tax Rate 35.0%
State Income Taxes, net of Federal Benefit 4.6%
39.6%
At March 31, 1996, the Company has approximately $105,000 of
available Net Operating Loss (NOL's) carry forwards, all of
which arose during the period ended September 30, 1995. Such
carry forwards expire in 2010.
Leases
Rental expense for operating leases is $31 and $62
(Predecessor) for the periods ending March 31, 1996 and 1995
respectfully. Future minimum rental commitments under
non-cancelable operating leases as of March 31, 1996 are as
follows ($ in thousands):
For the Fiscal Years Ended:
1996 $28
1997 52
1998 39
1999 8
2000 4
2001 1
Contingencies
The Company may become a party to legal proceedings which
arise in the ordinary course of business. In management's
opinion, the outcome of these matters will not have a material
effect on the Company's consolidated financial position.
<TABLE>
ATRION CORPORATION
PRO FORMA INCOME STATEMENT
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995
(UNAUDITED)
(In Thousands, Except Per Share Data)
<CAPTION>
HRC
HOLDINGS PRO FORMA ADJMNTS
ATRION INC. DR. CR. TOTAL
<S> <C> <C> <C> <C> <C>
Operating Revenues 80,379 14,587 94,966
Cost of Goods Sold 63,082 10,618 131 (1) 123 (2) 73,708
Gross margin 17,297 3,969 21,258
Other Operating Exp
Operations 7,685 2,456 325 (3) 128 (4) 10,246
76 (5)
16 (6)
Maintenance 255 6 261
Depreciat & amort 1,191 1 1,192
Other taxes 355 5 360
9,486 2,468 12,059
Operating Income 7,811 1,501 9,199
Other Income (Expense)
Intrst & other inc 753 (14) 83 (7) 656
Interest expense 193 626 650 (8) 626 (9) 843
8,371 861 9,012
Income Taxes 3,031 28 208 (10) 3,267
Inc From Cont Oprtn 5,340 833 1,397 969 5,745
Earnings Per Share $2.52 $2.71
Avg Cmmn Shares Otstnd 2,117,000
See Notes to Unaudited Pro Forma Income Statement
</TABLE>
ATRION CORPORATION
NOTES TO PRO FORMA INCOME STATEMENT
The following is a summary of the adjustments reflected in the
Unaudited Pro Forma Income Statement for the twelve months ended
December 31, 1995
(1)To adjust depreciation related to manufacturing equipment for
revaluation
(2)To eliminate depreciation expense on buildings
(3)To reflect lease payments on buildings retained by previous owners
and rented by Halkey-Roberts
(4)To eliminate management fees related to previous owners
(5)To adjust goodwill amortization related to change in ownership
(6)To eliminate amortization of deferred financing charges
(7)To reflect reduction in interest income due to use of cash of
$1,650,000 for acquisition
(8)To accrue interest expense related to $10,000,000 note issued
to finance acquisition
(9)To eliminate interest expense on long-term debt related
to previous ownership
(10)To adjust income taxes on operating income at Registrant's
combined statutory rate (36.25%)
<TABLE>
ATRION CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
(UNAUDITED)
DECEMBER 31, 1995
(Amounts in Thousands)
<CAPTION>
HRC
HOLDINGS PRO FORMA ADJMNTS
ATRION INC. DR. CR. TOTAL
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and temp cash invest 2,811 0 714 (1) 1,650 (2) 1,875
Accounts receivable 13,890 1,980 15,870
Materials and supplies 689 0 689
Inventories 717 2,847 3,564
Prepayments 288 155 443
Total Current Assets 18,395 4,982 22,441
Property, Plant and Equipment 35,447 8,040 3,140 (3) 40,347
Accumulated Depreciation 15,725 214 34 (4) 437 (5) 16,342
Net Property, Plant and Equip 19,722 7,826 24,005
Other Assets and Deferred Chgs
Patents 5,505 0 5,505
Goodwill 2,652 1,594 1,911 (6) 64 (7) 6,093
Deferred Financing Costs 0 313 313 (8) 0
Other 2,232 59 22 (9) 2,269
Total Deferred Charges 10,389 1,966 13,867
Total Assets 48,506 14,774 60,313
SHAREHOLDERS' EQUITY AND LIAB
Current Liabilities:
Crnt mat of long-term debt 203 0 203
Accounts payable 12,646 1,611 122 (10) 14,004
131 (11)
Acrud inc and other taxes 537 0 537
13,386 1,611 14,744
L-Term Debt, less curnt matur 1,609 7,044 7,000 (12) 10,000 (13) 11,653
Other Liab and Deferred Crdts
Accrd defrd income taxes 1,559 0 1,559
Unamort invest tax credits 243 0 243
Other 1,739 0 1,739
3,541 0 3,541
Common Shareholders' Equity
Shareholders' Equity
Capital stock 228 0 228
Paid-in-capital 6,078 5,197 5,197 (14) 6,078
Retained earnings 25,525 922 922 (15) 405 (16) 25,930
Treasury stock (1,861) 0 (1,861)
Ttl Shareholders' Equity 29,970 6,119 30,375
Ttl Shrholders' Eqty and Liab: 48,506 14,774 16,031 16,031 60,313
See Notes to Unaudited Pro Forma Balance Sheet
</TABLE>
ATRION CORPORATION
NOTES TO PRO FORMA BALANCE SHEET
The following is a summary of the adjustments reflected in the Unaudited
Pro Forma Balance Sheet at December 31, 1995:
(1)To adjust cash to reflect cash from operations reflected in pro forma
income statement for 12 months ended December 31, 1995
(2)To adjust cash to reflect $1,650,000 used in purchase of stock
of HRC Holdings, Inc.
(3)To eliminate land and buildings retained by previous owner
(4)To eliminate accumulated depreciation related to buildings in (3) above
(5)To adjust depreciation for year ended December 31, 1995
(6)To record goodwill related to acquisition
(7)To record amortization of goodwill
(8)To eliminate deferred financing costs related to previous ownership
(9)To adjust deferred tax asset
(10)To eliminate accrued interest related to previous ownership
(11)To eliminate purchase price adjustments and amounts due to affiliates
related to previous ownership
(12)To eliminate long-term debt related to previous ownership
(13)To record long-term debt related to acquisition
(14)To eliminate paid-in-capital related to previous ownership
(15)To eliminate retained earnings related to previous ownership
(16)To reflect additional retained earnings based on results reflected
in pro forma income statement for 12 months ended December 31, 1995
<TABLE>
ATRION CORPORATION
PRO FORMA INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
(In Thousands, Except Per Share Data)
<CAPTION>
HRC
HOLDINGS PRO FORMA ADJ
ATRION INC. DR. CR. TOTAL
<S> <C> <C> <C> <C> <C>
Operating Revenues 41,322 3,876 45,198
Cost of Goods Sold 35,405 2,774 31 (1) 38,148
Gross margin 5,917 1,102 7,050
Other Operating Expenses
Operations 2,451 632 81 (2) 3,164
Maintenance 33 2 35
Depreciation and amortization 314 19 (3) 333
Other taxes 96 96
2,894 634 3,628
Operating Income 3,023 468 3,422
Other Income (Expense)
Interest and other income 290 21 (4) 269
Interest expense 26 158 167 (5) 158 (6) 193
3,287 310 3,498
Income Taxes 1,188 123 43 (7) 1,268
Income From Continuing Operations 2,099 187 288 232 2,230
Earnings Per Share $0.99 $1.05
Average Common Shares Outstanding 2,119,925
See Notes to Unaudited Pro Forma Income Statement
</TABLE>
ATRION CORPORATION
NOTES TO PRO FORMA INCOME STATEMENT
The following is a summary of the adjustments reflected in the Unaudited
Pro Forma Income Statement for the three months ended March 31, 1996:
(1)To eliminate depreciation expense related to buildings
(2)To record lease payments on buildings retained by previous owners
and rented by Halkey-Roberts
(3)To record amortization on goodwill related to acquisition
(4)To reflect reduction in interest income due to use of cash
of $1,650,000 for acquisition
(5)To accrue interest expense related to $10,000,000 note issued
to finance acquisition
(6)To eliminate intercompany interest related to previous owners
(7)To adjust income taxes on operating income at Registrant's
combined statutory rate (36.25%)
<TABLE>
ATRION CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
(UNAUDITED)
MARCH 31, 1996
(Amounts in Thousands)
<CAPTION>
HRC
HOLDINGS PRO FORMA ADJ
ATRION INC. DR. CR. TOTAL
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and temp cash invst 5,455 0 1,650 (1) 3,593
212 (2)
Accounts receivable 15,762 2,015 17,777
Materials and supplies 513 0 513
Inventories 766 2,800 3,566
Prepayments 555 129 684
Total Current Assets 23,051 4,944 26,133
Property, Plant and Equip 36,266 8,188 3,140 (3) 41,314
Accumulated Depreciation 15,835 400 63 (4) 16,172
Net Property, Plant and Equip 20,431 7,788 25,142
Other Assets and Deferred Chgs
Patents 5,395 0 5,395
Goodwill 2,624 1,582 1,835 (5) 19 (6) 6,022
Deferred Financing Costs 0 299 299 (7) 0
Other 2,403 59 51 (8) 2,411
Total Deferred Charges 10,422 1,940 13,828
Total Assets 53,904 14,672 65,103
SHAREHOLDERS' EQUITY AND LIAB
Current Liabilities:
Curnt maturit of lng-trm dbt 203 0 203
Accounts payable 15,762 1,337 154 (9) 16,830
115 (10)
Acrud inc and other taxes 1,407 0 1,407
17,372 1,337 18,440
Lng-Trm Dbt, less crnt mat 1,508 7,041 7,041 (11) 10,000 (12) 11,508
Other Liab and Deferd Cred
Acrud deferred inc taxes 1,631 58 58 (13) 1,631
Unamort invest tax cred 235 0 235
Other 1,725 0 1,725
3,591 58 3,591
Common Shareholders' Equity
Shareholders' Equity
Capital stock 228 0 228
Paid-in-capital 6,078 6,048 6,048 (14) 6,078
Retained earnings 26,988 188 188 (15) 131 (16) 27,119
Treasury stock (1,861) 0 (1,861)
Ttl Shareholders' Equity 31,433 6,236 31,564
Ttl Shrhldrs' Eqty and Liab: 53,904 14,672 15,502 15,502 65,103
See Notes to Unaudited Pro Forma Balance Sheet
</TABLE>
ATRION CORPORATION
NOTES TO PRO FORMA BALANCE SHEET
The following is a summary of the adjustments reflected in the Unaudited
Pro Forma Balance Sheet at March 31, 1996:
(1)To adjust cash to reflect $1,650,000 used in purchase of stock of
HRC Holdings, Inc.
(2)To adjust cash to reflect cash from operations reflected in pro
forma income statement for 3 months ended March 31, 1996
(3)To eliminate land and buildings retained by previous owner
(4)To eliminate accumulated depreciation related to buildings
in (3) above
(5)To record goodwill related to acquisition
(6)To record amortization of goodwill
(7)To eliminate deferred financing costs related to previous
ownership
(8)To adjust deferred tax asset
(9)To eliminate accrued interest related to previous ownership
(10)To eliminate purchase price adjustments and amounts due to
affiliates related to previous ownership
(11)To eliminate long-term debt related to previous ownership
(12)To record long-term debt related to acquisition
(13)To adjust deferred income taxes
(14)To eliminate paid-in-capital related to previous ownership
(15)To eliminate retained earnings related to previous ownership
(16)To reflect additional retained earnings based on results reflected
in pro forma income statement for 3 months ended March 31, 1996
