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
----------------
MAY 21, 1999
------------------------------------------------
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
NIAGARA CORPORATION
--------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 0-22206 59-3182820
---------------------------- ---------------------- ---------------
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
667 MADISON AVENUE
NEW YORK, NEW YORK
--------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
10021
--------
(ZIP CODE)
(212) 317-1000
--------------------------------------------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
----------------------------------------
(FORMER NAME OR FORMER ADDRESS, IF CHANGED
SINCE LAST REPORT)
This filing amends the previously filed Form 8-K, dated June 4,
1999 and filed on June 7, 1999 (the "8-K") of Niagara Corporation
("Niagara"), and relates to the acquisition by Niagara LaSalle (UK)
Limited, an English company and wholly owned subsidiary of Niagara, of the
equipment, inventory and certain other assets of the steel bar businesses
of Glynwed Steels Limited, an English company and a subsidiary of Glynwed
International plc, an English company. As stated in the 8-K, the required
financial statements and pro forma financial information would be filed by
amendment not later than August 4, 1999.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
1. Accounts of the Steel Bar Businesses of Glynwed Steels
Limited for the three years ended 31 December 1998 and Report of
Independent Accountants.
STEEL BAR BUSINESSES OF
GLYNWED STEELS LIMITED
ACCOUNTS FOR THE THREE YEARS
ENDED 31 DECEMBER 1998
STEEL BAR BUSINESSES OF GLYNWED STEELS LIMITED
ACCOUNTS FOR THE THREE YEARS ENDED 31 DECEMBER 1998
CONTENTS
PAGES
Contents...................................................................5
Report of Independent Accountants..........................................6
Profit and Loss Accounts...................................................7
Balance Sheets.............................................................8
Cash Flow Statements.......................................................9
Basis of preparation...................................................10-11
Principal accounting policies..........................................11-12
Other notes to the accounts............................................13-27
STEEL BAR BUSINESSES OF GLYNWED STEELS LIMITED
REPORT OF INDEPENDENT ACCOUNTANTS
To: Glynwed Steels Limited and Niagara Corporation
In our opinion the accompanying consolidated balance sheets and the related
consolidated profit and loss accounts, and consolidated statements of cash
flows present fairly, in all material respects, the financial position of
the Steel Bar Businesses (as defined in note 1 to the financial statements)
of Glynwed Steels Limited at 28 December 1996, 27 December 1997 and 31
December 1998, and the results of operations and cash flows for the three
years ended 31 December 1998, in conformity with accounting principles
generally accepted in the United Kingdom. These financial statements are
the responsibility of the directors of Glynwed Steels Limited; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance
with auditing standards generally accepted in the United Kingdom which do
not materially differ in any material respect from auditing standards
generally accepted in the United States. 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, assessing the accounting principles used and
significant estimates made by management, and evaluating overall financial
statement presentation. We believe our audits provide a reasonable basis
for the opinion expressed above.
Accounting principles generally accepted in the United Kingdom vary in
certain significant respects from accounting principles generally accepted
in the United States. The application of the latter would have affected the
determination of consolidated net income expressed in pounds sterling for
the two years ended 31 December 1998 and the determination of consolidated
financial position also expressed in pounds sterling at 27 December 1997
and 31 December 1998 to the extent summarised in note 23 to the
consolidated financial statements.
/s/ PricewaterhouseCoopers
PricewaterhouseCoopers
Chartered Accountants and Registered Auditors
Birmingham, England
2 August 1999
STEEL BAR BUSINESSES OF GLYNWED STEELS LIMITED
PROFIT AND LOSS ACCOUNTS
FOR THE THREE YEARS ENDED 31 DECEMBER 1998
<TABLE>
<CAPTION>
NOTES 1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C> <C>
Turnover - continuing activities 3 114,354 126,121 126,200
Net operating costs 4 (113,102) (119,101) (117,511)
------------- --------------- --------------
Operating profit - continuing activities 1,252 7,020 8,689
Net interest payable 5 (1,525) (2,058) (2,043)
------------- --------------- --------------
(Loss)/profit on ordinary
activities before taxation (273) 4,962 6,646
Tax credit/(charge) on profits
on ordinary activities 7 76 (1,543) (1,985)
------------- --------------- --------------
Retained (loss) / profit for the period (197) 3,419 4,661
============= =============== ==============
</TABLE>
All the above results are in respect of continuing operations.
The Steel Bar Businesses have no recognised gains and losses other than the
results above and therefore no separate statement of total recognised gains
and losses has been presented.
There is no material difference between the results disclosed in the profit
and loss accounts and the results on an unmodified historical cost basis.
THE NOTES ON PAGES 10 TO 27 FORM PART OF THESE ACCOUNTS
STEEL BAR BUSINESSES OF GLYNWED STEELS LIMITED
BALANCE SHEETS FOR THE THREE YEARS
ENDED 31 DECEMBER 1998
<TABLE>
<CAPTION>
31 DECEMBER 27 DECEMBER 28 DECEMBER
NOTES 1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C> <C>
Fixed assets
Tangible assets 8 7,923 8,144 7,884
------------- ------------ ------------
Current assets
Stocks 10 17,841 22,632 19,940
Debtors 11 25,233 29,814 31,064
Cash at bank and in hand 14,346 17,281 17,199
------------- ------------ ------------
Total current assets 57,420 69,727 68,203
Creditors: amounts falling due
within one year 12 (21,332) (61,225) (60,235)
------------- ------------ ------------
Net current assets 36,088 8,502 7,968
------------- ------------ ------------
Total assets less current liabilities 44,011 16,646 15,852
Creditors: amounts falling due after more
than one year 13 (45) - -
Provisions for liabilities and charges -
deferred taxation 14 (1,123) (904) (870)
------------- ------------ ------------
Net assets 42,843 15,742 14,982
============= ============ ============
Group funding 15 42,843 15,742 14,982
============= ============ ============
</TABLE>
The financial statements on pages 7 to 27 were approved by the board of
directors of Glynwed Steels Limited and signed on their behalf:
/s/ R. Harris
R. Harris
on behalf of Glynwed Group Services Limited
2 August 1999
THE NOTES ON PAGES 10 TO 27 FORM PART OF THESE ACCOUNTS
STEEL BAR BUSINESSES OF GLYNWED STEELS LIMITED
CASH FLOW STATEMENTS
FOR THE THREE YEARS ENDED 31 DECEMBER 1998
<TABLE>
<CAPTION>
NOTES 1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C> <C>
NET CASH (OUTFLOW)/INFLOW FROM OPERATING
ACTIVITIES 16 (4,602) 11,932 13,714
Returns on investments and servicing of
finance 17 (1,525) (2,058) (2,043)
Taxation - (1,509) (2,153)
Capital expenditure and financial investment 18 (1,490) (2,153) (2,736)
------------ ------------ ------------
Net cash (outflow)/inflow before financing (7,617) 6,212 6,782
Financing activities
Financing increase/(decrease) in Group funding 19 27,378 (2,685) 3,812
Decrease in debt factoring (22,696) (3,445) (6,494)
------------ ------------ ------------
(Decrease)/increase in cash in the year (2,935) 82 4,100
============ ============ ============
Reconciliation of net cash flow
Net cash at beginning of year 17,281 17,199 13,099
(Decrease)/Increase in cash during year (2,935) 82 4,100
------------ ------------ ------------
Net cash at end of year 14,346 17,281 17,199
============ ============ ============
</TABLE>
THE NOTES ON PAGES 10 TO 27 FORM PART OF THESE ACCOUNTS
STEEL BAR BUSINESSES OF GLYNWED STEELS LIMITED
NOTES TO THE ACCOUNTS
1 BASIS OF PREPARATION
The financial statements consist of a consolidation of the results,
net assets and cash flows of the following unincorporated trading
units, collectively called the "Steel Bar Businesses", for the
three years ended 31 December 1998:
o Ductile Hot Mill
o Dudley Port Rolling Mills
o George Gadd & Co
o W Wessons
o GB Steel Bar
o Longmore Brothers
o Midland Engineering Steels
o Macreadys
These businesses have not formed a separate statutory entity in the
period but were part of a larger UK statutory entity, Glynwed
Metals Processing Limited, and effective from 31 December 1998,
Glynwed Steels Limited. Consequently, these financial statements do
not contain all the disclosures which would be required for a
statutory entity and therefore do not comply with the requirements
of the UK Companies Act 1985.
The unincorporated Steel Bar Businesses were wholly owned by
Glynwed International plc, the ultimate parent company, until 21
May 1999. Glynwed International plc is registered in England and
Wales.
Copies of Glynwed International plc's group financial statements
can be obtained from Headland House, New Coventry Road, Sheldon,
Birmingham B26 3AZ.
On 21 May 1999 the Steel Bar Businesses were acquired by Niagara
LaSalle (UK) Limited, a subsidiary of Niagara Corporation, a
company registered in the USA.
The consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the
United Kingdom ("UK GAAP"), which differs in certain material
respects from generally accepted accounting principles in the
United States ("US GAAP"). Such differences involve methods of
measuring the amounts shown in the financial statements, as well as
additional disclosures required by US GAAP.
The financial statements are prepared under the historical cost
convention and in accordance with UK GAAP. The financial statements
have been prepared as if the Steel Bar Businesses had existed as an
independent entity for all years and include allocations of certain
Glynwed International plc expenses prior to the acquisition by
Niagara LaSalle (UK) Limited. All inter-business unit accounts and
balances have been eliminated on consolidation.
The directors of Glynwed Steels Limited believe that the
methodologies and assumptions used in preparing these financial
statements are reasonable. However, the financial statement
information may not necessarily be indicative of the financial
position or results of the Steel Bar Businesses had they operated
on a stand-alone basis.
2 PRINCIPAL ACCOUNTING POLICIES
The following statements outline the principal accounting policies
of the Steel Bar Businesses:
A) TURNOVER
Turnover, which excludes value added tax, sales between
divisional businesses and trade discounts, represents the
invoiced value of goods and services supplied.
B) TANGIBLE FIXED ASSETS AND DEPRECIATION
Tangible fixed assets are stated at cost less accumulated
depreciation. Depreciation is calculated using the straight line
method on the gross value of fixed assets. The estimated useful
lives applied are as follows:
Plant and machinery 4 to 10 years
Fixtures, fittings, tools and equipment 4 to 10 years
C) LEASES
Assets held under finance leases and hire purchase contracts are
integrated with owned tangible fixed assets and the obligations
relating thereto, excluding finance charges, are included in
creditors. Costs payable in respect of operating leases are
charged in arriving at the operating profit.
D) STOCKS
Stocks are valued at the lower of cost (including attributable
overheads) and net realisable value on a first-in-first-out
(FIFO) basis. Provision is made for obsolete and slow moving
items.
E) FOREIGN CURRENCIES
Assets and liabilities in foreign currencies are translated into
sterling at the mid-market rates of exchange ruling at the
balance sheet date unless matched by forward contracts. Exchange
differences arising on the translation of monetary assets are
charged/credited to the profit and loss account, as appropriate.
F) RESEARCH AND DEVELOPMENT
Research and development expenditure is written off in the
period in which it is incurred.
G) PENSION SCHEME ARRANGEMENTS
The costs of providing retirement pensions and other benefits
are charged to profit and loss account over the period
benefiting from employees services.
H) DEFERRED TAXATION
Deferred taxation is taken into account to the extent that a
liability will probably arise in the foreseeable future and is
calculated at taxation rates expected to apply at that time.
I) DEBT FACTORING
Prior to August 1998, certain trade debts were factored to a
fellow subsidiary of Glynwed International plc. In these
financial statements, the debts to that company have been
included in trade debtors at their full value and the monies
advanced under the debt factoring arrangements have been shown
within the amounts owed to fellow subsidiaries.
3 ANALYSIS OF TURNOVER
There is no substantial difference between the activities carried
out by each of the trading operations comprising the Steel Bar
Businesses, which are all engaged in metals processing
and distribution activities.
TURNOVER BY CUSTOMER LOCATION:
<TABLE>
<CAPTION>
1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
North and South America 18,760 15,313 10,662
Europe (excluding United Kingdom) 21,990 28,375 27,344
Middle East 218 438 293
Asia and Australia 514 524 1,166
Other overseas 82 515 845
---------------- --------------- ----------------
Total overseas 41,564 45,165 40,310
United Kingdom 72,790 80,956 85,890
---------------- --------------- ----------------
Total turnover 114,354 126,121 126,200
================ =============== ================
</TABLE>
4 NET OPERATING COSTS
<TABLE>
<CAPTION>
1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
Change in stocks of finished goods
and work in progress 2,590 (1,164) 937
Other operating income (234) (206) (182)
Raw materials and consumables 63,113 73,245 69,834
Other external charges 8,532 7,642 8,056
Staff costs (note 6a) 19,339 19,058 19,266
Depreciation and other amounts
written off tangible fixed assets (note 8) 1,760 1,935 1,924
Other operating charges 18,002 18,591 17,676
---------------- -------------- --------------
113,102 119,101 117,511
================ ============== ==============
Net operating costs include the following:
Profit on disposal of fixed assets 49 42 71
Operating lease rentals:
Hire of plant, equipment and vehicles 419 318 317
Land and buildings 76 67 79
================ ============== ==============
</TABLE>
5 NET INTEREST PAYABLE
<TABLE>
<CAPTION>
1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
Debt factoring interest
from a fellow subsidiary 1,545 2,077 2,068
Other interest receivable (20) (19) (25)
-------------- -------------- --------------
1,525 2,058 2,043
============== ============== ==============
</TABLE>
6 EMPLOYEES
A) STAFF COSTS
<TABLE>
<CAPTION>
1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
Wages and salaries 17,232 16,973 17,519
Social security costs 1,447 1,446 1,525
Pension costs 660 639 222
---------------- ---------------- ---------------
19,339 19,058 19,266
================ ================ ===============
</TABLE>
B) PENSION COSTS
For the three years ended 31 December 1998, the Steel Bar
Businesses were members of the Glynwed International plc group
pension schemes. The relevant schemes, which cover the majority
of employees, are defined benefit schemes and the assets are
held in funds separate from the businesses' assets.
Contributions are based on pension costs across the Glynwed
group as a whole. The 1998 pension charges are covered on the
latest actuarial valuation carried out by the schemes external
actuaries as at 31 March 1998 using the projected unit credit
method. The 1996 and 1997 pension charges were based on the
equivalent valuation as at 31 March 1995. The principal
assumptions on these valuations were:
1998 1997 & 1996
Investment return greater than
general salary increases 2.75% 3%
Investment returns greater
than increases in future
pension payments 4.25% 4.5%
The valuations have been used in assessing the expected cost of
providing pensions for future years. This has resulted in the
charges to the profit and loss accounts set out above. The
relevant pension prepayments held in the balance sheets are set
out at note 11.
The directors of Glynwed Steels Limited are not able to provide
any details of the expected effects on future pension costs
following the sale of the Steel Bar Businesses to Niagara LaSalle
(UK) Limited on 21 May 1999 as this matter is dependent upon the
arrangements put in place by the new owners.
C) EMPLOYEE NUMBERS
The average number of persons employed by the Steel Bar
Businesses (including executive directors) during the period was
as follows
1998 1997 1996
No. No. No.
Average number
of persons employed
by the businesses 917 921 1023
=============== =============== ===============
7 TAX ON PROFITS ON ORDINARY ACTIVITIES
1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
UK taxation
Current (at 30%/31%/33%) (295) 1,509 2,153
Deferred (at 30%/31%/33%) 219 34 (168)
--------------- --------------- ---------------
Tax (credit)/
charge for the year (76) 1,543 1,985
=============== =============== ===============
8 TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
PLANT AND FIXTURES FITTINGS ASSETS IN THE
MACHINERY TOOLS & COURSE OF
EQUIPMENT CONSTRUCTION TOTAL
(pound)'000 (pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C> <C>
Cost or valuation
At 26 December 1995 24,789 3,277 - 28,066
Additions 1,728 1,081 - 2,809
Disposals (239) (355) - (594)
Group transfers - 27 - 27
------------------ ----------------- ------------------ --------------
At 28 December 1996 26,278 4,030 - 30,308
Additions 1,029 494 - 1,523
Disposals (106) (460) - (566)
Group transfers 611 12 - 623
------------------ ----------------- ------------------ --------------
At 27 December 1997 27,812 4,076 - 31,888
Additions 753 1,066 90 1,909
Disposals (158) (1,069) - (1,227)
Group transfers - (11) - (11)
------------------ ----------------- ------------------ --------------
At 31 December 1998 28,407 4,062 90 32,559
================== ================= ================== ==============
Accumulated
depreciation
At 26 December 1995 18,686 2,381 21,067
Charge for the period 1,582 342 - 1,924
Disposals (239) (342) - (581)
Group transfers - 14 - 14
------------------ ----------------- ------------------ --------------
At 28 December 1996 20,029 2,395 - 22,424
Charge for the period 1,589 346 - 1,935
Disposals (106) (431) - (537)
Group transfers (70) (8) - (78)
------------------ ----------------- ------------------ --------------
At 27 December 1997 21,442 2,302 23,744
Charge for the period 1,223 537 - 1,760
Disposals (158) (701) - (859)
Group transfers - (9) - (9)
------------------ ----------------- ------------------ --------------
At 31 December 1998 22,507 2,129 - 24,636
================== ================= ================== ==============
</TABLE>
<TABLE>
<CAPTION>
PLANT AND FIXTURES FITTINGS ASSETS IN THE
MACHINERY TOOLS & COURSE OF
EQUIPMENT CONSTRUCTION TOTAL
(pound)'000 (pound)'000 (pound)'000 (pound)'000
NET BOOK VALUE
<S> <C> <C> <C> <C>
At 26 December 1995 6,103 896 - 6,999
=============== ================== ================ ===============
At 28 December 1996 6,249 1,635 - 7,884
=============== ================== ================ ===============
At 27 December 1997 6,370 1,774 - 8,144
=============== ================== ================ ===============
At 31 December 1998 5,900 1,933 90 7,923
=============== ================== ================ ===============
</TABLE>
Assets held under finance leases included in the above.
<TABLE>
<CAPTION>
1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
Assets held under finance leases included
in the above
<S> <C> <C> <C>
Cost 436 538 547
Accumulated depreciation (387) (538) (547)
-------------- --------------- -------------
Net book value 49 - -
-------------- --------------- -------------
</TABLE>
9 COMMITMENTS
A) CAPITAL COMMITMENTS:
<TABLE>
<CAPTION>
1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
Contracted for but not provided in the
accounts 268 508 441
============== =============== =============
</TABLE>
B) OPERATING LEASE COMMITMENTS - LAND AND BUILDINGS
Operating lease rentals in respect of land and buildings
primarily represent rental charges payable to Glynwed Properties
Limited.
C) OPERATING LEASE COMMITMENTS - OTHER
<TABLE>
<CAPTION>
1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
LEASES EXPIRING:
<S> <C> <C> <C>
Within one year 258 168 6
Between one and two years 256 164 85
Between two and five years 406 349 35
After more than five years 20 3 74
-------------- --------------- -------------
940 684 200
============== =============== =============
</TABLE>
10 STOCKS
<TABLE>
<CAPTION>
1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
Raw materials and consumables 7,551 9,752 8,224
Work in progress 434 514 409
Finished goods and goods for resale 9,856 12,366 11,307
-------------- --------------- --------------
17,841 22,632 19,940
============== =============== ==============
</TABLE>
11 DEBTORS
<TABLE>
<CAPTION>
1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
DEBTORS FALLING DUE WITHIN ONE YEAR
<S> <C> <C> <C>
Trade debtors 22,127 27,478 27,871
Amounts owed by fellow subsidiaries 292 710 1,681
Taxation 295 - -
Other debtors 821 815 610
Prepayments and accrued income 472 484 898
-------------- --------------- --------------
DEBTORS FALLING DUE AFTER MORE
THAN ONE YEAR 24,007 29,487 31,060
Pension prepayment 1,226 327 4
-------------- --------------- --------------
25,233 29,814 31,064
============== =============== ==============
</TABLE>
12 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
Trade creditors 18,505 26,917 21,827
Amounts owed to fellow subsidiaries(a, b) 159 31,081 35,896
Taxation - - -
Social security 194 410 208
Other creditors 1,019 2,058 1,598
Accruals and deferred income 1,443 759 706
Obligations under finance leases 12 - -
-------------- --------------- --------------
21,332 61,225 60,235
============== =============== ==============
</TABLE>
a) The reduction in amounts owed to fellow subsidiaries in 1998
arises primarily due to the conversion of debt factoring
liabilities from "Amounts owed to fellow subsidiaries"(above),
to "Group funding"(note 15).
b) Included with Amounts owed to fellow subsidiaries are debt
factoring balances of:
<TABLE>
<CAPTION>
1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
Debt factoring - 22,696 26,141
============== =============== ==============
</TABLE>
13 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
<TABLE>
<CAPTION>
1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
Finance leases 45 - -
============== =============== ==============
</TABLE>
The finance lease obligations to which the businesses
are
committed are set out below:-
<TABLE>
<CAPTION>
1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
Between one and two years 30 - -
Between two and five years 15 - -
-------------- --------------- --------------
45 - -
============== =============== ==============
</TABLE>
14 PROVISIONS FOR LIABILITIES AND CHARGES - DEFERRED TAXATION
<TABLE>
<CAPTION>
1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
At start of period 904 870 1,038
Charge for the year 219 34 (168)
-------------- --------------- --------------
At end of period 1,123 904 870
============== =============== ==============
</TABLE>
There is no unprovided deferred taxation balance. The provision for
deferred taxation comprises:
<TABLE>
<CAPTION>
1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
Timing differences between
tax allowances and depreciation 784 803 869
Other timing differences 339 101 1
-------------- --------------- --------------
1,123 904 870
============== =============== ==============
</TABLE>
15 RECONCILIATION OF MOVEMENT IN GROUP FUNDING
<TABLE>
<CAPTION>
1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
Balance at start of period 15,742 14,982 6,407
Net movement in group funding (1) 27,298 (2,659) 3,914
Retained (loss)/profit for the period (197) 3,419 4,661
-------------- --------------- --------------
42,843 15,742 14,982
============== =============== ==============
</TABLE>
(1) The increase in group funding in 1998 arises primarily due to
the conversion of debt factoring liabilities from "Amounts owed to
fellow subsidiaries" (note 12) to "Group funding" (above).
16 RECONCILIATION OF OPERATING PROFIT TO NET CASH (OUTFLOW)/INFLOW
FROM CONTINUING OPERATING ACTIVITIES
<TABLE>
<CAPTION>
1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
Operating profit 1,252 7,020 8,689
Depreciation 1,760 1,935 1,924
Profit on sale of tangible fixed assets (49) (42) (71)
Decrease/(increase) in stocks 4,791 (2,692) 7,420
Decrease in debtors 4,876 1,250 3,015
(Decrease)/increase in creditors (17,232) 4,461 (7,263)
-------------- --------------- --------------
NET CASH (OUTFLOW)/INFLOW FROM OPERATING
ACTIVITIES (4,602) 11,932 13,714
============== =============== ==============
</TABLE>
17 RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
<TABLE>
<CAPTION>
1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
Interest received 20 19 25
Interest paid (1,545) (2,077) (2,068)
-------------- --------------- --------------
NET INTEREST PAID (1,525) (2,058) (2,043)
============== =============== ==============
</TABLE>
18 CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
<TABLE>
<CAPTION>
1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
Purchase of tangible fixed assets (1,852) (2,224) (2,822)
Sale of tangible fixed assets 362 71 86
-------------- --------------- --------------
NET CASH OUTFLOW FROM CAPITAL EXPENDITURE (1,490) (2,153) (2,736)
AND FINANCIAL INVESTMENT
============== =============== ==============
</TABLE>
19 CASHFLOW MOVEMENT IN GROUP FUNDING
<TABLE>
<CAPTION>
1998 1997 1996
(pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C>
Transfers from Group Funding 34,497 12,133 9,295
Transfers to Group Funding (7,119) (14,818) (5,483)
-------------- --------------- --------------
Net movement in Group Funding 27,378 (2,685) 3,812
Debt factoring balance converted to
Group Funding (22,696) - -
-------------- --------------- --------------
4,682 (2,685) 3,812
============== =============== ==============
</TABLE>
20 ANALYSIS OF NET DEBT
<TABLE>
<CAPTION>
CASH AT GROUP FINANCE
BANK AND FUNDING LEASES
IN HAND TOTAL
(pound)'000 (pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C> <C>
At 26 December 1995 13,099 (6,407) - 6,692
Net cash inflow/(outflow) 4,100 (3,812) - 288
Retained profit - (4,661) - (4,661)
Other non-cash movements - (102) - (102)
------------ ------------- ------------- ------------
At 28 December 1996 17,199 (14,982) - 2,217
Net cash inflow 82 2,685 - 2,767
Retained profit - (3,419) - (3,419)
Other non-cash movements - (26) - (26)
------------ ------------- ------------- ------------
At 27 December 1997 17,281 (15,742) - 1,539
Net cash outflow (2,935) (4,682) - (7,617)
Debt factoring balances
converted to
Group funding - (22,696) - (22,696)
Retained loss - 197 - 197
Other non-cash movements - 80 (57) 23
------------ ------------- ------------- ------------
At 31 December 1998 14,346 (42,843) (57) (28,554)
============ ============= ============= ============
</TABLE>
21 MAJOR NON-CASH TRANSACTIONS
During the year to 31 December 1998 the Steel Bar Businesses
entered into finance lease arrangements in respect of assets with a
total capital value at inception of the leases of (pound)57,000.
22 ULTIMATE HOLDING COMPANY
The unincorporated Steel Bar Businesses were wholly owned by
Glynwed International plc, the ultimate parent company, until 21
May 1999. Glynwed International plc is registered in England and
Wales.
Copies of Glynwed International plc's group financial statements
can be obtained from Headland House, New Coventry Road, Sheldon,
Birmingham B26 3AZ.
On 21 May 1999 the Steel Bar Businesses were acquired by Niagara
LaSalle (UK) Limited, a subsidiary of Niagara Corporation, a
company registered in the USA.
23 SUMMARY OF DIFFERENCES BETWEEN THE FINANCIAL INFORMATION AND US GAAP
The financial information set out above has been prepared in
accordance with UK GAAP and on the basis of presentation set out in
note 1 which differs in certain material respects from US GAAP.
Such differences involve methods for measuring the amounts shown in
the financial statements, as well as additional disclosures
required by US GAAP. Set out below are summary reconciliations of
certain of the financial information presented under UK GAAP with
the presentation of that information under US GAAP.
The following is a summary of the material adjustments to profit on
ordinary activities after taxation and net assets that would have
been required in applying the significant differences between UK
and US GAAP.
RECONCILIATION OF RETAINED PROFIT IN ACCORDANCE WITH UK GAAP TO NET PROFIT
IN ACCORDANCE WITH US GAAP:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
1998 1997
(pound)'000 (pound)'000
<S> <C> <C>
(Loss)/profit in accordance with UK GAAP (197) 3,419
US GAAP adjustments:
Pension costs 500 (400)
Tax affect of US GAAP adjustments (150) 124
------------- -------------
NET INCOME IN ACCORDANCE WITH US GAAP 153 3,143
============= =============
</TABLE>
RECONCILIATION OF NET ASSETS IN ACCORDANCE WITH UK GAAP AND IN ACCORDANCE
WITH US GAAP
<TABLE>
<CAPTION>
AS AT
31 DECEMBER 27 DECEMBER
1998 1997
(pound)'000 (pound)'000
<S> <C> <C>
Net assets in accordance with UK GAAP 42,843 15,742
US GAAP adjustments:
Pension costs 1,000 500
Tax affect of US GAAP adjustments (300) (155)
------------- --------------
NET ASSETS IN ACCORDANCE WITH US GAAP 43,543 16,087
============= ==============
</TABLE>
PENSION COSTS
Under UK GAAP, the cost of providing pension benefits has been
expensed over the average expected service lives of eligible
employees in accordance with the provisions of Statement of
Standard Accounting Practice ("SSAP") No. 24 "Accounting for
Pension Costs". SSAP No. 24 aims to produce an estimate of cost
based on long-term actuarial assumptions. Variations from the
regular pension cost arising from, for example, experience
deficiencies or surpluses, are charged or credited to the profit
and loss account over the expected average remaining service
lives of current employees in the schemes.
Under US GAAP, the annual pension cost comprised the estimated
cost of benefits accruing in the period as determined in
accordance with Statement of Financial Accounting Standards
("SFAS") No. 87, which requires readjustment of the significant
actuarial assumptions annually to reflect current market and
economic conditions. Under SFAS No. 87, a pension asset
representing the excess plan assets over benefit obligations has
been recognised in the balance sheet. The pension benefit
obligation is calculated by using a projected unit credit
method. Actuarial gains or losses within a 10% "corridor" have
not been recognised.
The net periodic pension cost to the Steel Bar Businesses under
US GAAP for the defined benefit pension plans is as follows:
<TABLE>
<CAPTION>
Components of pension cost (In
(pound)'000s) YEAR ENDED YEAR ENDED
31 DECEMBER 27 DECEMBER
1998 1997
-------------- --------------
<S> <C> <C>
Net service cost 2,500 2,300
Interest cost 2,000 2,100
Amortization of net
transition (asset) (200) (200)
Amortization of net
actuarial (gain) loss (300) (100)
Expected return on plan assets (3,800) (3,100)
-------------- --------------
Net periodic pension cost 200 1,000
============== ==============
</TABLE>
The funded status under US GAAP for the defined benefit pension
plan relating to the Steel Bar Businesses is as follows:
<TABLE>
<CAPTION>
Funded status (In (pound)'000s) YEAR ENDED YEAR ENDED
31 DECEMBER 27 DECEMBER
1998 1997
-------------- --------------
<S> <C> <C>
Fair value of plan assets 43,000 36,500
Projected benefit obligation 30,500 26,300
-------------- --------------
Funded status 12,500 10,200
Unrecognised net actuarial (gain) loss (9,000) (7,900)
Unrecognised transition asset (1,300) (1,500)
Unrecognised prior service cost - -
-------------- --------------
Net amount recognised - prepaid benefit cost 2,200 800
============== ==============
</TABLE>
Changes in the project benefit obligation and plan assets during
the year were as follows:
<TABLE>
<CAPTION>
Changes in projected benefit obligation (In
(pound)'000s) YEAR ENDED YEAR ENDED
31 DECEMBER 27 DECEMBER
1998 1997
-------------- --------------
<S> <C> <C>
Benefit obligation, beginning of period/year 26,300 22,600
Service cost 2,500 2,300
Interest cost 2,000 2,100
Plan participant contributions 400 200
Benefits paid (300) (200)
Actuarial (gains) losses (400) (700)
-------------- --------------
Benefit obligation, end of period/year 30,500 26,300
============== ==============
</TABLE>
<TABLE>
<CAPTION>
Changes in plan assets (In (pound)'000's) YEAR ENDED YEAR ENDED
31 DECEMBER 27 DECEMBER
1998 1997
-------------- --------------
<S> <C> <C>
Fair value of plan assets,
beginning of period/year 36,500 29,700
Actual return on plan assets 4,800 5,900
Employer contributions 1,600 900
Plan participants' contributions 400 200
Benefits paid (300) (200)
-------------- --------------
Fair value of plan assets, end of period/year 43,000 36,500
============== ==============
</TABLE>
The assumptions used to determine pension cost for the defined
benefit pension plan were as follows:
YEAR ENDED YEAR ENDED
31 DECEMBER 27 DECEMBER
1998 1997
-------------- --------------
Discount rate 5.50% 7.25%
Expected rate of
return on plan assets 9.00% 10.00%
Expected rate of
compensation increase 4.00% 5.00%
Rate of inflation 2.50% 3.50%
CASH FLOW INFORMATION
Under UK GAAP, the Consolidated Cash Flow Statements are presented
in accordance with UK Financial Reporting Standard No. 1 as revised
("FRS 1"). The Statements prepared under FRS 1 present
substantially the same information as that required under US GAAP
as interpreted by SFAS No. 95.
Under UK GAAP, cash comprises cash in hand and at bank (including
overnight deposits), net of bank overdrafts. Under US GAAP, cash
and cash equivalents include cash and short-term investments with
original maturities of three months or less.
Under UK GAAP, cash flows are presented for operating activities;
returns on investments and servicing of finance; taxation; capital
expenditure and financial investment; acquisitions and disposals;
equity dividends paid; management of liquid resources; and
financing. US GAAP requires the classification of cash flows as
resulting from operating, investing and financing activities.
Cash flows under US GAAP in respect of interest received, interest
paid, investment income, and taxation, would be included within
operating activities. Capital expenditure and financial investment
and cash flows from acquisitions and disposals would be included
within investing activities under US GAAP. Dividends paid by
subsidiary undertakings to minority interests, equity dividends
paid, and management of liquid resources would be included within
financing activities under US GAAP.
A summary of the Steel Bar Businesses' operating, investing and
financing activities, classified in accordance with US GAAP, is
presented below.
<TABLE>
<CAPTION>
1998 1997
(pound)'000 (pound)'000
<S> <C> <C>
Cash used in operating activities (6,127) 8,365
Cash used in investing activities (1,490) (2,153)
Cash provided by financing activities 4,682 (6,130)
-------------- --------------
Net (decrease)/increase in cash
and cash equivalents (2,935) 82
============== ==============
Cash and cash equivalents under US GAAP
At beginning of year 17,281 17,199
-------------- --------------
At end of year 14,346 17,281
============== ==============
</TABLE>
NEWLY ISSUED PRONOUNCEMENTS
In 1998, the US Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133 establishes accounting and reporting
standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to
as derivatives), and for hedging activities. This statement is
effective for all fiscal quarters of fiscal years beginning after
June 15, 2000. The Steel Bar Businesses are currently reviewing the
likely impact of adopting this statement on its measurement of
derivative financial instruments, and on the disclosures currently
provided in its financial statements.
2. Accounts of the Steel Bar Businesses of Glynwed Steels
Limited for the three months ended 31 March 1999 and 1998 (unaudited).
STEEL BAR BUSINESSES OF
GLYNWED STEELS LIMITED
ACCOUNTS FOR THE THREE MONTHS
ENDED 31 MARCH 1999 AND 1998 (UNAUDITED)
STEEL BAR BUSINESSES OF GLYNWED STEELS LIMITED
ACCOUNTS FOR THE THREE MONTHS
ENDED 31 MARCH 1999 AND 1998 (UNAUDITED)
CONTENTS
- --------------------------------------------------------------------------
PROFIT AND LOSS ACCOUNTS 31
BALANCE SHEETS 32
CASH FLOW STATEMENTS 33
NOTES TO THE ACCOUNTS 34-39
<TABLE>
<CAPTION>
STEEL BAR BUSINESSES OF GLYNWED STEELS LIMITED
PROFIT AND LOSS ACCOUNTS
FOR THE THREE MONTHS ENDED 31 MARCH 1999 AND 1998
(UNAUDITED)
- ----------------------------------------------------------------------------------------------
Three Months ended 31 March
Notes 1999 1998
- ----------------------------------------------------------------------------------------------
(pound)'000 (pound)'000
<S> <C> <C> <C>
TURNOVER - CONTINUING ACTIVITIES 26,538 33,130
Net operating costs 2 30,858 31,397
=============================================================================================
Operating profit (loss) - continuing activities (4,320) 1,733
Net interest payable - 572
=============================================================================================
(Loss)/profit on ordinary activities
before taxation (4,320) 1,161
Tax credit (charge) on profits on ordinary
activities 1,296 (341)
RETAINED (LOSS)/PROFIT FOR THE PERIOD (3,024) 820
============================================================================================
All the above results are in respect of continuing operations.
The Steel Bar Businesses (as defined in note 1) have no recognized gains
and losses other than the results above and therefore no separate statement
of total recognised gains and losses has been presented.
There is no material difference between the results disclosed in the profit
and loss accounts and the results on an unmodified historical cost basis.
- ----------------------------------------------------------------------------------------------
THE NOTES ON PAGES 34 THROUGH 39 FORM PART OF THESE ACCOUNTS.
</TABLE>
<TABLE>
<CAPTION>
STEEL BAR BUSINESSES OF GLYNWED STEELS LIMITED
BALANCE SHEETS
- ---------------------------------------------------------------------------------------------
31 March
1999 31 December
Notes (unaudited) 1998
- ---------------------------------------------------------------------------------------------
(pound)'000 (pound)'000
FIXED ASSETS
<S> <C> <C> <C>
Tangible assets 7,759 7,923
============================================================================================
CURRENT ASSETS
Stocks 2 13,827 17,841
Debtors 30,077 25,233
Cash at bank and in hand 7,643 14,346
============================================================================================
TOTAL CURRENT ASSETS 51,547 57,420
CREDITORS: amounts falling due within one year (15,252) (21,332)
============================================================================================
NET CURRENT ASSETS 36,295 36,088
============================================================================================
TOTAL ASSETS LESS CURRENT LIABILITIES 44,054 44,011
CREDITORS: amounts falling due after more than
one year (52) (45)
Provisions for liabilities and charges - deferred
taxation (1,123) (1,123)
============================================================================================
NET ASSETS 42,879 42,843
GROUP FUNDING 42,879 42,843
============================================================================================
THE NOTES ON PAGES 34 THROUGH 39 FORM PART OF THESE ACCOUNTS.
</TABLE>
<TABLE>
<CAPTION>
STEEL BAR BUSINESSES OF GLYNWED STEELS LIMITED
CASH FLOW STATEMENTS
FOR THE THREE MONTHS ENDED 31 MARCH 1999 AND 1998
(UNAUDITED)
- ----------------------------------------------------------------------------------------------
Three Months ended 31 March
Notes 1999 1998
- ----------------------------------------------------------------------------------------------
(pound)'000 (pound)'000
<S> <C> <C> <C>
NET CASH OUTFLOW FROM OPERATING
ACTIVITIES 3 (9,424) (18,522)
Returns on investments and servicing of
finance 4 - (572)
Capital expenditure and financial
investment 5 (339) (320)
- ---------------------------------------------------------------------------------------------
Net cash outflow before financing (9,763) (19,414)
FINANCING ACTIVITIES
Financing increase in Group funding 6 3,060 1,450
Increase in debt factoring - 9,672
- ---------------------------------------------------------------------------------------------
DECREASE IN CASH IN THE PERIOD (6,703) (8,292)
=============================================================================================
RECONCILIATION OF NET CASH FLOW
Net cash at beginning of period 14,346 17,281
Decrease in cash during period (6,703) (8,292)
- ---------------------------------------------------------------------------------------------
NET CASH AT END OF PERIOD 7,643 8,989
=============================================================================================
THE NOTES ON PAGES 34 THROUGH 39 FORM PART OF THESE ACCOUNTS.
</TABLE>
STEEL BAR BUSINESSES OF GLYNWED STEELS LIMITED
NOTES TO THE ACCOUNTS
- ----------------------------------------------------------------------------
1. BASIS OF The consolidated condensed financial statements
PREPARATION are unaudited; however, in the opinion of
management, all adjustments necessary for a
fair statement of financial position and
results for the stated periods have been
included. These adjustments are of a normal
recurring nature. Selected information and
footnote disclosures normally included in
financial statements prepared in accordance
with generally accepted accounting principles
have been condensed or omitted. Results for
interim periods are not necessarily indicative
of the results to be expected for an entire
fiscal year. It is suggested that these
condensed financial statements be read in
conjunction with the audited financial
statements and accompanying notes for the
three years ended 31 December 1998.
The financial statements consist of a
consolidation of the results, net assets and
cash flows of the following unincorporated
trading units, collectively called the "Steel
Bar Businesses", for the three months ended 31
March 1999 and 1998:
o Ductile Hot Mill
o Dudley Port Rolling Mills
o George Gadd & Co.
o W Wessons
o GB Steel Bar
o Longmore Brothers
o Midland Engineering Steels
o Macreadys
These businesses have not formed a separate
statutory entity in the periods but were part
of a larger UK statutory entity, Glynwed
Metals Processing Limited and, effective from
31 December 1998, Glynwed Steels Limited.
Consequently, these financial statements do
not contain all the disclosures which would be
required for a statutory entity and therefore
do not comply with the requirements of the UK
Companies Act of 1985.
The unincorporated Steel Bar Businesses were
wholly owned by Glynwed International plc, the
ultimate parent company, until 21 May 1999.
Glynwed International plc is registered in
England and Wales.
On 21 May 1999, the Steel Bar Businesses were
acquired by Niagara LaSalle (UK) Limited, a
subsidiary of Niagara Corporation, a company
registered in the USA.
The consolidated condensed financial
statements have been prepared in accordance
with accounting principles generally accepted
in the United Kingdom ("UK GAAP"), which
differs in certain material respects from
generally accepted accounting principles in
the United States ("US GAAP"). Such
differences involve methods for measuring the
amounts shown in the financial statements, as
well as additional disclosures required by US
GAAP.
2. NET OPERATING During the three months ended 31 March 1999 net
COSTS/STOCKS operating costs were charged in the amount of
(pound)3,594,000 in order to adjust stocks at
31 March 1999 to estimated net realizable
value. Such adjustment resulted primarily from
declines in prices and the provision of
reserves for obsolete and slow moving stocks
in certain of the Steel Bar Businesses.
<TABLE>
<CAPTION>
3. RECONCILIATION OF
OPERATING PROFIT
(LOSS) TO NET CASH
OUTFLOW FROM
CONTINUING OPERATING
ACTIVITIES Three months ended 31 March
--------------------------------
1999 1998
--------------------------------
(pound)'000 (pound)'000
<S> <C> <C> <C>
Operating profit (loss) (4,320) 1,733
Depreciation 503 565
Decrease in market value of stocks 3,594 -
Decrease/(increase) in stocks 420 (1,404)
Decrease in debtors (3,548) (11,202)
Decrease in creditors (6,073) (8,214)
====================================================================
Net cash outflow from operating (9,424) (18,522)
activities
====================================================================
</TABLE>
<TABLE>
<CAPTION>
4. RETURNS ON
INVESTMENTS
AND SERVICING
OF FINANCE Three months ended 31 March
--------------------------------
1999 1998
(pound)'000 (pound)'000
<S> <C> <C> <C>
Interest received - -
Interest paid - (572)
--------------------------------------------------------------------
Net interest paid - (572)
====================================================================
</TABLE>
<TABLE>
<CAPTION>
5. CAPITAL
EXPENDITURE
AND FINANCIAL
INVESTMENT Three months ended 31 March
--------------------------------
1999 1998
(pound)'000 (pound)'000
<S> <C> <C> <C>
Purchase of tangible fixed assets (380) (322)
Sale of tangible fixed assets 41 2
---------------------------------------------------------------------
Net cash outflow from capital (339) (320)
expenditure and financial
investment
====================================================================
</TABLE>
<TABLE>
<CAPTION>
6. CASH FLOW
MOVEMENT IN GROUP
FUNDING Three months ended 31 March
--------------------------------
1999 1998
(pound)'000 (pound)'000
<S> <C> <C> <C>
Transfers from Group Funding 3,074 1,450
Transfers to Group Funding (14) -
--------------------------------------------------------------------
Net movement in Group Funding 3,060 1,450
====================================================================
</TABLE>
7. SUBSEQUENT EVENT On 21 May 1999 the Steel Bar Businesses were
acquired by Niagara LaSalle (UK) Limited, a
subsidiary of Niagara Corporation, a company
registered in the USA.
8. SUMMARY OF The financial information set out above has been
DIFFERENCES prepared in accordance with UK GAAP and on the
BETWEEN THE basis of presentation set out in note 1 which
FINANCIAL differs in certain material respects from US
INFORMATION AND GAAP. Such differences involve methods for
US GAAP measuring the amounts shown in the financial
statements, as well as additional disclosures
required by US GAAP. Set out below are summary
reconciliations of certain of the financial
information presented under UK GAAP with the
presentation of that information under US
GAAP.
The following is a summary of the material
adjustments to (loss)/profit on ordinary
activities after taxation and net assets that
would have been required in applying the
significant differences between UK and US
GAAP.
Reconciliation of retained (loss)/profit in
accordance with UK GAAP to net (loss)/profit
in accordance with US GAAP
<TABLE>
<CAPTION>
---------------------------------
Three months ended 31 March
---------------------------------
1999 1998
=====================================================================
(pound)'000 (pound)'000
<S> <C> <C>
(Loss)/profit in accordance with UK
GAAP (3,024) 820
US GAAP adjustments:
Pension costs - 125
Tax effect of US GAAP adjustments - (38)
----------------------------------------------------------------------
Net (loss)/profit in accordance
with US GAAP (3,024) 907
=====================================================================
Reconciliation of net assets in accordance with UK GAAP and in
accordance with US GAAP
As at
--------------------------------
31 December
31 March 1999 1998
--------------------------------------------------------------------
(pound)'000 (pound)'000
Net assets in accordance with UK
GAAP 42,879 42,843
US GAAP adjustments:
Pension costs - 1,000
Tax effect of US GAAP adjustments - (300)
--------------------------------------------------------------------
NET ASSETS IN ACCORDANCE WITH US
GAAP 42,879 43,543
====================================================================
</TABLE>
CASH FLOW INFORMATION
Under UK GAAP, the consolidated cash flow
statements are presented in accordance with UK
Financial Reporting Standard No. 1 as revised
("FRS 1"). The statements prepared under FRS 1
present substantially the same information as
that required under US GAAP as interpreted by
SFAS No. 95.
Under UK GAAP, cash comprises cash in hand and
at bank (including overnight deposits), net of
bank overdrafts. Under US GAAP, cash and cash
equivalents include cash and short-term
investments with original maturities of three
months or less.
Under UK GAAP, cash flows are presented for
operating activities; returns on investments
and servicing of finance; capital expenditure
and financial investment; acquisitions and
disposals; equity dividends paid; management
of liquid resources; and financing. US GAAP
requires the classification of cash flows as
resulting from operating, investing and
financing activities.
Cash flows under US GAAP in respect of
interest received, interest paid, investment
income and taxation, would be included within
operating activities. Capital expenditure and
financial investment and cash flows from
acquisitions and disposals would be included
within investing activities under US GAAP.
Dividends paid by subsidiary undertakings to
minority interests, equity dividends paid, and
management of liquid resources would be
included within financing activities under US
GAAP.
A summary of the Steel Bar Businesses'
operating, investing and financing activities,
classified in accordance with US GAAP, is
presented below.
<TABLE>
<CAPTION>
Three months ended 31 March
----------------------------------
1999 1998
----------------------------------
(pound)'000 (pound)'000
<S> <C> <C>
Cash used in operating activities (9,424) (19,094)
Cash used in investing activities (339) (320)
Cash provided by financing
activities 3,060 11,122
---------------------------------------------------------------------
Net decrease in cash and cash
equivalents (6,703) (8,292)
Cash and cash equivalents under
US GAAP
At beginning of period 14,346 17,281
At end of period 7,643 8,989
====================================================================
</TABLE>
(b) PRO FORMA FINANCIAL INFORMATION.
1. Unaudited Pro Forma Consolidated Financial Statements of Niagara
Corporation and the Steel Bar Businesses of Glynwed Steels Limited.
NIAGARA CORPORATION
AND
STEEL BAR BUSINESSES
OF
GLYNWED STEELS LIMITED
UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
NIAGARA CORPORATION AND
STEEL BAR BUSINESSES OF GLYNWED
STEELS LIMITED
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
- ------------------------------------------------------------------------------
BASIS OF PREPARATION 43
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET 44
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET 45
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS 46-47
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS 48
BASIS OF PREPARATION
The unaudited pro forma consolidated balance sheet as of March 31, 1999 and
the unaudited pro forma consolidated statements of operations for the year
ended December 31, 1998 and the three months ended March 31, 1999 include
the accounts of Niagara Corporation ("Niagara") and the Steel Bar
Businesses (as defined in the historical financial statements) for the
respective periods. The unaudited pro forma financial statements have been
prepared to illustrate the estimated effects of the acquisition of the
Steel Bar Businesses (the "Acquisition"). The Acquisition is accounted for
under the purchase method of accounting. The pro forma financial statements
were derived by adjusting the historical financial statements of Niagara
and the Steel Bar Businesses for certain transactions pursuant to the
Acquisition described in the notes to the unaudited pro forma financial
statements.
The historical financial statements of the Steel Bar Businesses were
provided by Glynwed Steels Limited ("Glynwed") for the three years ended
December 31, 1998, and by management of the Steel Bar Businesses for the
three months ended March 31, 1999 and 1998. The Steel Bar Businesses'
balance sheet as of March 31, 1999 was translated from British pounds
sterling to U.S. dollars using the exchange rate on March 31, 1999 ($1.6120
per British pound). The Steel Bar Businesses' statements of operations for
the year ended December 31, 1998 and the three months ended March 31, 1999
were translated from British pounds sterling to U.S. dollars using the
average of the exchange rates on the first and last day of the respective
periods ($1.6530 per British pound for the year ended December 31, 1998 and
$1.6270 per British pound for the three months ended March 31, 1999).
The unaudited pro forma consolidated balance sheet was prepared as if the
Acquisition had occurred on March 31, 1999. The unaudited pro forma
consolidated statements of operations for the year ended December 31, 1998
and the three months ended March 31, 1999 were prepared as if the
Acquisition had occurred on January 1, 1998. The pro forma financial data
does not purport to be indicative of the results which actually could have
been obtained had such transactions been completed as of the assumed dates
or which may be obtained in the future.
The pro forma financial data should be read in conjunction with the
financial statements of Niagara and the Steel Bar Businesses.
<TABLE>
<CAPTION>
NIAGARA CORPORATION
AND STEEL BAR BUSINESSES OF GLYNWED STEELS LIMITED
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
Pro forma
adjustments
------------------
Steel Bar Pro forma
March 31, 1999 Niagara Businesses Debit Credit consolidated
- --------------------------------------------------------------------------------------------------
ASSETS
CURRENT:
<S> <C> <C> <C> <C> <C>
Cash and equivalents $ 111 $ 12,321 $ 36,270(1) $34,238(2) $ 2,143
12,321(2)
Trade accounts receivable, net 24,059 43,047 - 43,047(2) 24,059
Inventories 32,360 22,290 - -(2) 54,650
Other current assets 1,906 3,461 - 3,461(2) 1,906
- --------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 58,436 81,119 36,270 93,067 82,758
PROPERTY, PLANT AND EQUIPMENT, NET 89,982 12,508 1,569(2) - 104,059
GOODWILL, NET 2,080 - - - 2,080
DEFERRED FINANCING COSTS, NET 563 - - - 563
INTANGIBLE PENSION ASSET 526 - - - 526
OTHER ASSETS, NET 1,052 1,976 - 1,976(2) 1,052
- --------------------------------------------------------------------------------------------
$152,639 $ 95,603 $ 37,839 $95,043 $ 191,038
- --------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT:
Accounts payable $ 22,768 $ 22,109 $ 22,109(2)$ - $ 22,768
Accrued expenses 7,430 2,478 2,478(2) 2,129(2) 9,559
Current maturities of long term
debt 4,798 - - - 4,798
- --------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 34,996 24,587 24,587 2,129 37,125
OTHER:
Long-term debt, less current
maturities 43,302 - - 36,270(1) 79,572
Accrued pension cost 4,665 - - - 4,665
Accrued post-retirement welfare
benefits 5,638 - - - 5,638
Deferred income taxes 7,537 1,810 1,810(2) - 7,537
Other noncurrent liabilities 551 84 84(2) - 551
- --------------------------------------------------------------------------------------------
TOTAL LIABILITIES 96,689 26,481 26,481 38,399 135,088
- --------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY:
Common stock 10 - - - 10
Additional paid-in capital 50,112 - - - 50,112
Retained earnings 9,804 - - - 9,804
Accumulated other comprehensive
income (1,076) - - - (1,076)
Group funding - 69,122 69,122(2) - -
- --------------------------------------------------------------------------------------------
58,850 69,122 69,122 - 58,850
Treasury stock, at cost (2,900) - - - (2,900)
- --------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 55,950 69,122 69,122 - 55,950
- --------------------------------------------------------------------------------------------
$152,639 $ 95,603 $ 95,603 $38,399 $ 191,038
- --------------------------------------------------------------------------------------------
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
1. Represents cash received of $36,270 under (i) a revolving credit
loan ($4,352) and term loan agreement ($15,798) entered into in
connection with the Acquisition (all considered long-term)) and
(ii) an existing revolving credit agreement against which
additional borrowings of $16,120 were made relating to the
Acquisition (also considered long-term).
2. Represents the payment for assets of $34,238 and the accrual of
$2,129 for finance, legal and professional fees for a total
acquisition price of $36,367 and the reversal of all other assets
and liabilities not included in the Acquisition. This total
acquisition price of $36,367 (calculated based on March 31, 1999
asset values) was allocated to inventories for $22,290 (approximate
fair market value based upon independent appraisal) and property,
plant and equipment for $14,077 (approximate fair market value of
$26,600 (based upon independent appraisal) less negative goodwill
of $12,523).
Pursuant to the acquisition agreement for the Steel Bar Businesses,
Niagara submitted to Glynwed draft completion accounts for the
Steel Bar Businesses as of May 21, 1999. Such completion accounts
reflect claims for a reduction in the purchase price paid for plant
and equipment (approximately $795,000) and inventories
(approximately $1,045,000). No reductions in the purchase price
have been reflected in the pro forma financial statements. The
resolution of these completion accounts is subject to binding
arbitration by an independent accounting firm. There is no
assurance, however, that these claims will be resolved in favor of
Niagara.
<TABLE>
<CAPTION>
NIAGARA CORPORATION
AND STEEL BAR BUSINESSES OF GLYNWED STEELS LIMITED
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Pro forma
adjustments
------------------
Steel Bar Pro forma
Year ended December 31, 1998 Niagara Businesses Debit Credit consolidated
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET SALES $207,547 $ 189,027 $ - $ - $ 396,574
COST OF PRODUCTS SOLD 177,340 151,271 1,190(2) 1,443(1) 326,105
2,253(3)
- ----------------------------------------------------------------------------------------------
GROSS PROFIT 30,207 37,756 (1,190) 3,696 70,469
OPERATING EXPENSES:
Selling, general and
administrative 15,645 35,687 - - 51,332
- --------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 14,562 2,069 (1,190) 3,696 19,137
OTHER INCOME (EXPENSE):
Interest income 172 - - - 172
Interest expenses (4,154) (2,521) 3,197(4) 2,521(5) (7,351)
Other income 195 - 195
- --------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE TAXES
(RECOVERIES) ON INCOME 10,775 (452) (4,387) 6,217 12,153
TAXES (RECOVERIES) ON INCOME 4,265 (126) 126(6) - 4,692
427(7)
- --------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 6,510 $ (326) $ (4,940) $ 6,217 $ 7,461
- --------------------------------------------------------------------------------------------
NET INCOME PER SHARE (BASIC) $ 0.66 $ 0.76
- --------------------------------------------------------------------------------------------
NET INCOME PER SHARE (DILUTED) $ 0.64 $ 0.73
- --------------------------------------------------------------------------------------------
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 9,880 9,880
Diluted 10,250 10,250
- --------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NIAGARA CORPORATION
AND STEEL BAR BUSINESSES OF GLYNWED STEELS LIMITED
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Pro forma
adjustments
------------------
Steel Bar Pro forma
Three months ended March 31, 1999 Niagara Businesses Debit Credit consolidated
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET SALES $ 49,380 $ 43,188 $ - $ - $ 92,568
COST OF PRODUCTS SOLD 42,139 42,254 293(2) 458(1) 84,228
- ------------------------------------------------------------------------------------------------
GROSS PROFIT 7,241 934 (293) 458 8,340
OPERATING EXPENSES:
Selling, general and
administrative 4,105 7,964 - - 12,069
- ------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 3,136 (7,030) (293) 458 (3,729)
OTHER INCOME (EXPENSE): -
Interest income 7 - - - 7
Interest expenses (896) - 762(4) - (1,658)
Other income 71 - - - 71
- -----------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE TAXES
(RECOVERIES) ON INCOME 2,318 (7,030) (1,055) 458 (5,309)
TAXES (RECOVERIES) ON INCOME 900 (2,109) 2,109(6) 2,288(7) (1,388)
- -----------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 1,418 $ (4,921) $ (3,164) $ 2,746 $ (3,921)
- ----------------------------------------------------------------------------------------------
NET INCOME PER SHARE (BASIC) $ 0.15 $ (0.41)
- ----------------------------------------------------------------------------------------------
NET INCOME PER SHARE (DILUTED) $ 0.15 $ (0.41)
- ----------------------------------------------------------------------------------------------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 9,512 9,512
Diluted 9,678 9,678
- ----------------------------------------------------------------------------------------------
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
1. Represents a net reduction in depreciation and amortization of
$1,443 for the year ended December 31, 1998 and $458 for the three
months ended March 31, 1999. This is due to the adjustment of
average estimated useful lives of the assets acquired to
approximately 9 years.
2. Represents rent expense of $1,190 for the year ended December 31,
1998 and $293 for the three months ended March 31, 1999 that is
incurred by the Steel Bar Businesses under new leases entered into
in connection with the Acquisition.
3. Represents the reversal of rent expense of $2,253 for the year
ended December 31, 1998 charged by Glynwed to the Steel Bar
Businesses.
4. Represents additional interest expense of $3,197 for the year ended
December 31, 1998 and $762 for the three months ended March 31,
1999 on the debt incurred in connection with the Acquisition.
5. Represents the reversal of interest expense of $2,521 for the year
ended December 31, 1998 charged by Glynwed to the Steel Bar
Businesses that would not be incurred as a result of the
Acquisition. There was no such interest expense to Glynwed for the
three months ended March 31, 1999.
6. Represents the reversal of income tax recoveries recorded by the
Steel Bar Businesses of $126 for the year ended December 31, 1998
and $2,109 for the three months ended March 31, 1999.
7. Represents income taxes of $427 for the year ended December 31,
1998 and income tax recoveries of $2,288 for the three months ended
March 31, 1999. The income tax provisions were calculated at an
effective tax rate of approximately 31% on the Steel Bar
Businesses' income before taxes.
SIGNATURE
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.
NIAGARA CORPORATION
By: /s/ Raymond Rozanski
-----------------------
Name: Raymond Rozanski
Title: Vice President
Date: August 4, 1999
