U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Current Report
Pursuant to Section 13 or 15 (d) of
The Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): February 10, 2000
ANTENNA PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State of other jurisdiction of incorporation)
0-12866 75-1907070
(Commission File Number) (IRS Employer Identification No.)
1209 Orange Street
Wilmington, Delaware 19801
(Address of Principal Executive Officers) (Zip Code)
Registrant's telephone number, including area code: (940) 325-330
Item 2. Acquisition or Disposition of Assets
API Acquisition Corp., a Texas Corporation and 80% owned subsidiary of
Antenna Products, Inc., purchased the assets and business of The
Upholstery Shop, Inc. on January 27, 2000. The assets purchased included
the machinery, equipment and inventory. No land or buildings were included
as part of this acquisition. The business will continue to operate in
the existing facility at 326 North Highway 377, Roanoke, Texas under a
lease agreement. The assets were purchased for the amount of $2,000,000.
The purchase price was based on the performance of The Upholstery Shop
in the two previous fiscal years and the potential for future earnings.
The transaction was financed by $2,000,000 in loans from The Frost National
Bank, San Antonio, Texas to API Acquisition Corp. that are guaranteed by
Antenna Products, Inc. and otherwise secured by a pledge of assets of
Antenna Products, Inc. subsidiaries.
Brian Perryman, the principal shareholder of The Upholstery Shop, Inc.,
owns 20% of API Acquisition Corp. and will stay on as Vice President and
General Manager, responsible for day to day operations. Prior to the
purchase of The Upholstery Shop, there were no material relationships
between Mr. Perryman and Antenna Products, Inc. or any of its
affiliates, any director or officer of Antenna Products, Inc., or any
associate of any such director or officer.
The Upholstery Shop provides complete refurbishment for a full range of
corporate and executive aircraft interiors. The range and scope of these
services include design and fabrication of seats, side panels, headliners and
cabinets, as well as the installation of varous interior electronics and
entertainment systems. The Upholstery Shop removes existing interiors of
aircraft and installs new interiors designed to customer specifications
and coordinates the refurbishment of exteriors for customers when
required. The Upholstery Shop provides this service on virtually all
executive and corporate class aircraft, including, but not limited to:
Lear, Cessna, Gulfstream, Galaxy, Dassault, and Bombardier. The
refurbishments are diverse with the lower range being minor upgrading
of Lear 25's to total interior upgrading of the larger aircraft to the
Gulfstream and Falcon family. API Acquisition Corp, intends to continue
to operate said Upholstery Shop business.
Item 7. Financial Statements and Exhibits.
The financial statements required by this Item 7 are attached to this Current
Report on Form 8-K. The financial statements filed herewith are:
(a) Financial Statements of Businesses Acquired.
The Upholstery Shop, Inc.
- Independent Auditor's Report
- Balance Sheets as of December 31, 1999 and 1998
- Statements of Income for the Years Ended December 31, 1999 and 1998
- Statements of Stockholders' Equity for the Years Ended December 31,
1999 and 1998
- Statements of Cash Flows for the Year Ended December 31, 1999 and 1998
- Notes to Financial Statements
(b) Pro Forma Financial Statements.
Pro forma Antenna Products, Inc./The Upholstery Shop, Inc.
- Unaudited Pro Forma Condensed Balance Sheets as of November 30, 1999
- Unaudited Pro Forma Condensed Statements of Income for the Six
Months Ended November 30, 1999 and for the Year Ended May 31, 1999
(c) Exhibits
Incorporated by reference to Form 8-K filed February 10, 2000.
THE UPHOLSTERY SHOP, INC.
FINANCIAL REPORT
DECEMBER 31, 1999
C O N T E N T S
Page
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Balance Sheets 2
Statements of Income 3
Statements of Stockholders' Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 7
INDEPENDENT AUDITOR'S REPORT
To the Stockholders
The Upholstery Shop, Inc.
Roanoke, Texas
We have audited the accompanying balance sheets of The Upholstery Shop, Inc.
as of December 31, 1999 and 1998, the related statements of income,
stockholders' equity, and cash flows for the years 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Upholstery Shop, Inc. as
of December 31, 1999 and 1998, and the results of its operations and cash
flows for the years then ended in conformity with generally accepted
accounting principles.
WEAVER AND TIDWELL, L.L.P.
Fort Worth, Texas
March 25, 2000
3418
THE UPHOLSTERY SHOP, INC.
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
1999 1998
ASSETS ---- ----
------
CURRENT ASSETS
Contracts receivable $ 103,433 $ -
Costs and estimated earnings in excess
of billings on contracts in progress 181,190 311,930
Refundable payroll taxes 76,166 -
Other 3,310 310
----------- ----------
Total current assets 364,099 312,240
PROPERTY AND EQUIPMENT, at cost
Machinery and equipment 35,806 35,806
Vehicles 56,704 56,704
--------- ---------
92,510 92,510
Less accumulated depreciation 58,725 41,304
--------- ---------
33,785 51,206
--------- ---------
TOTAL ASSETS $ 397,884 $ 363,446
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Outstanding checks in excess of bank balance $ 38,394 $ 30,674
Line of credit 75,000 70,001
Current portion of long-term debt 19,198 6,945
Accounts payable trade 83,703 137,853
Accrued liabilities 3,210 3,606
Billings in excess of costs and estimated
earnings on contracts in progress - 124,986
--------- ---------
Total current liabilities 219,505 374,065
LONG-TERM DEBT - 19,198
STOCKHOLDERS' EQUITY
Common stock, $1 par value, 1,000 shares
authorized, issued and outstanding 1,000 1,000
Retained earnings 663,567 241,409
--------- --------
664,567 242,409
Less stockholder receivable 486,188 272,226
--------- --------
178,379 (29,817)
--------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 397,884 $ 363,446
The notes to Financial Statements are an integral part of these statements.
THE UPHOLSTERY SHOP, INC.
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
---- ----
Revenues earned $ 3,632,538 $ 4,821,917
Cost of revenues earned 2,935,518 4,445,184
----------- -----------
Gross profit 697,020 376,733
----------- -----------
OPERATING EXPENSES
General and administrative expense 257,300 219,451
Depreciation 17,421 15,682
----------- -----------
274,721 235,133
----------- -----------
Income from operations 422,299 141,600
OTHER INCOME (EXPENSE)
Interest income 400 995
Rental income 7,800 7,800
Interest expense (8,341) (6,392)
----------- -----------
NET INCOME $ 422,158 $ 144,003
=========== ===========
The Notes to Financial Statements are an integral part of these statements
THE UPHOLSTERY SHOP, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999 AND 1998
Common Retained
Stock Earnings Total
------ -------- -----
BALANCE,
December 31, 1997 $ 1,000 $ 97,406 $ 98,406
Net income - 144,003 144,003
-------- -------- --------
BALANCE,
December 31, 1998 1,000 241,409 242,409
Net income - 422,158 422,158
-------- -------- --------
BALANCE,
December 31, 1999 $ 1,000 $663,567 $664,567
======== ======== ========
The Notes to Financial Statements are an integral part of these statements
THE UPHOLSTERY SHOP, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $ 3,656,845 $ 4,617,848
Rent received 7,800 7,800
Interest received 400 995
Cash paid to suppliers and employees (3,362,796) (4,370,440)
Interest paid (8,341) (6,392)
Rent paid (78,000) (70,000)
------------ ------------
Net cash provided
by operating activities 215,908 179,811
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures - (26,452)
------------ ------------
Net cash used in
investing activities - (26,452)
CASH FLOWS FROM FINANCING ACTIVITIES
Net short-term borrowing 4,999 70,000
Advance to shareholder (213,962) (221,488)
Principal paid on long-term debt (6,945) (1,871)
------------ -----------
Net cash used in
financing activities (215,908) (153,359)
------------ ----------
Net increase in cash - -
CASH, beginning of period - -
CASH, end of period $ - $ -
----------- -----------
The Notes to Financial Statements are an integral part of these statements.
THE UPHOLSTERY SHOP, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
---- ----
RECONCILIATION OF NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Net income $ 422,158 $ 144,003
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation 17,421 15,682
Changes in operating assets and liabilities
Contracts receivable (103,433) -
Costs and estimated earnings in excess
of billings on contracts in progress 130,740 (207,634)
Refundable payroll taxes (76,166) -
Other (3,000) 3,565
Outstanding checks in
excess of bank balance 7,720 1,038
Accounts payable (54,150) 112,443
Accrued liabilities (396) 781
Billings in excess of costs and estimated
earnings on contracts in progress (124,986) 109,933
Net cash provided
by operating activities $ 215,908 $179,811
The Notes to Financial Statements are an integral part of these statements
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
- --------------------
The Upholstery Shop, Inc.'s (the Company) operations consist primarily
of contracting to refurbish the interiors of corporate and private
jets. As a result, the Company derives a substantial portion of its
revenue and has a substantial portion of its receivables with the
individuals or entities that own those jets. The length of the
contracts vary but are typically less than one year. The Company's
operations are performed in Texas for customers throughout the country.
Accounting Basis for Revenue Recognition
- ----------------------------------------
Revenue on contracts is recognized on the basis of the Company's
estimates of the percentage of completion of individual contracts.
That portion of the total contract price that is recognized as revenue
is based upon net contract costs incurred as a percentage of net
estimated costs. That method is used because management considers
total cost to be the best available measure of progress on the
contracts.
Contract costs include all direct material and labor costs and those
indirect costs related to contract performance, such as indirect labor,
supplies, tools, and repairs. General and administrative costs are
charged to expense as incurred. Provisions for estimated losses on
contracts in progress are made in the period in which such losses are
determined. Changes in job performance, job conditions, and estimated
profitability may result in revisions to costs and income, which are
recognized in the period in which the revisions are determined.
Changes in estimated job profitability resulting from job performance,
job conditions, contract penalty provisions, claims, change orders, and
settlements, are accounted for as changes in estimates in the current
period.
Depreciation
- ------------
Depreciation is computed using primarily the straight-line method.
Estimated useful lives for the major categories of depreciable assets
are as follows:
Machinery and equipment 5 years
Vehicles 5 years
Income Taxes
- ------------
The Company has elected to be taxed under the provisions of
Subchapter S of the Internal Revenue Code. Accordingly, the
financial statements do not include a provision for federal
income taxes because the Company does not incur federal income
taxes. Instead, its earnings and losses are included in the
stockholders' personal federal income tax returns. The Company
is subject to state income tax on the portion of its income
earned in Texas.
Cash Flows Presentation
- -----------------------
For purposes of the statement of cash flows, time deposits that mature
in three months or less and certificates of deposit are considered cash
and cash equivalents.
Accounts Receivable
- --------------------
The Company has not provided an allowance for doubtful accounts. All
receivables considered doubtful have been charged to current operations
and it is management's opinion that no additional material amounts are
doubtful of collection.
Advertising
- -----------
Advertising costs are expensed as incurred. Total advertising costs
included in general and administrative expenses for the years ended
December 31, 1999 and 1998, are $3,980 and $3,428, respectively.
Concentration of Credit Risk
- ----------------------------
The Company maintains its cash in bank deposit accounts that, at times,
may exceed federally insured limits. The Company has not experienced
any losses in such accounts. The Company believes it is not exposed to
any significant credit risk on cash and cash equivalents.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
NOTE 2. CONTRACTS RECEIVABLE
At December 31, contracts receivable consist of the following:
1999 1998
Completed contracts $ 64,080 $ -
Contracts in progress 39,353 -
------------ ----------
$ 103,433 $ -
NOTE 3. RELATED PARTY TRANSACTIONS
In 1998, the Company purchased materials and services from an entity
related through common ownership totaling $367,639. Those expenses were
included in contract costs for 1998. No purchases were made in 1999.
The Company rents office and warehouse facilities owned by the
stockholders of the Company on a month-to-month basis. Rental expense on
these facilities for 1999 and 1998 was $78,000 and $70,000, respectively.
NOTE 4. CONTRACTS IN PROGRESS
Information with respect to contracts in progress follows:
1999 1998
Cost incurred on contracts in progress $ 252,184 $ 766,195
Estimated earnings thereon 68,359 276,678
---------- ----------
320,543 1,042,873
Less billings applicable thereto (139,353) ( 855,929)
---------- -----------
$ 181,190 $ 186,944
========= ===========
These amounts are included in the accompanying balance sheet under the
following captions:
1999 1998
Costs and estimated earnings in excess
of billings on contracts in progress $181,190 $311,930
Billings in excess of costs and estimated
earnings on contracts in progress - (124,986)
-------- ---------
$181,190 $186,944
======== =========
NOTE 5. LINE OF CREDIT AND LONG-TERM DEBT
The line of credit and long-term debt at December 31 consist of the
following:
1999 1998
Line of credit to bank, due on November
11, 1999, subsequently renewed through
March 13, 2000, including interest at
9.50%, secured by equipment. $ 75,000 $ 70,001
Loan to credit institution, due on
February 11, 2000, including interest at
10.50%, secured by an auto. 19,198 26,143
--------- ---------
94,198 96,144
Less current maturities 94,198 76,946
--------- --------
$ - $ 19,198
========= =========
NOTE 6. SUBSEQENT EVENTS
On January 27, 2000, certain assets and the operations of the Company were
purchased by API Acquisition Corp. for $2,000,000.
PRO FORMA ANTENNA PRODUCTS, INC./THE UPHOLSTERY SHOP, INC.
On January 27, 2000, API Acquisition Corp., a Texas Corporation and 80%
owned subsidiary of Antenna Products, Inc., purchased the assets and business
of The Upholstery Shop, Inc. on January 27, 2000. The assets purchased
included the machinery, and equipment. No land or buildings were
included as part of this acquisition. The business will continue to operate
in the existing facility at 326 North Highway 377, Roanoke, Texas under a
lease agreement. The assets were purchased for the amount of $2,000,000.
The purchase price was based on the performance of The Upholstery Shop in the
two previous fiscal years and the potential for future earnings. The
transaction was financed by $2,000,000 in loans from The Frost National Bank,
San Antonio, Texas to API Acquisition Corp. that are guaranteed by Antenna
Products, Inc. and otherwise secured by a pledge of assets of Antenna
Products, Inc. subsidiaries.
The transaction will be accounted for as a purchase. The purchase price will
be allocated to the underlying assets purchased and liabilities assumed based
on their fair market values at the acquisition date.
The following table summarizes the net assets purchased in connection with
The Upholstery Shop, Inc. acquisition and the amount attributable to cost in
excess of net assets acquired:
Machinery & Equipment $ 121,110
Autos & Trucks $ 53,890
Non Compete Agreement $ 75,000
Good Will $ 1,750,000
The following shows the unaudited pro forma condensed balance sheets of
Antenna Products, Inc. and The Upholstery Shop, Inc. as of November 30, 1999
and assumes the Upholstery Shop, Inc. acquisition occurred on June 1, 1998:
UNAUDDITED PRO FORMA CONDENSED BALANCE SHEETS
OF
ANTENNA PRODUCTS, INC. AND THE UPHOLSTERY SHOP, INC.
AS OF NOVEMBER 30, 1999
Antenna The
Products, Inc. Upholstery Pro forma Pro forma
Shop, Inc. Adjustments Consolidated
-------------- ---------- ----------- ------------
Current Assets $ 3,964,973 $ 364,099 $ 110,460 $ 4,439,532
Property & Equipment, net 2,243,396 33,785 106,215 2,383,396
Intangibles 1,693,333 1,693,333
---------- ---------- --------- ----------
Total Assets $6,208,369 $ 397,884 $1,910,008 $8,516,261
========== ========= ========= =========
Current Liabilities 1,253,426 219,505 (66,521) 1,406,410
Long-term Debt 1,626,427 2,000,000 3,626,427
Deferred Income Taxes 460,462 460,462
Minority Interest 30,982 30,982
Shareholders' Equity 2,868,054 178,379 (54,453) 2,991,980
---------- ---------- ----------- ----------
$6,208,369 $ 397,884 $1,910,008 $8,516,261
========== ========== =========== ==========
Pro forma adjustments were made to eliminate assets and facilities not
purchased in the acquisition, to recoed depreciation and amortization on
the identifiable assets purchased and excess of purchase price assigned to
Goodwill, and to adjust for income taxes and minority interest.
The following unaudited pro forma condensed statements of income for the six
months ended November 30, 1999 and for the year ended May 31, 1999 and assumes
The Upholstery Shop, Inc. acquisition occurred on June 1, 1998.
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF INCOME
SIX MONTHS ENDED NOVEMBER 30, 1999
Antenna The
Products,Inc. Upholstery Pro forma Pro forma
Shop, Inc. Adjustments Consolidated
------------- ----------- ----------- ------------
Sales and Contract
Revenues 2,818,191 1,816,269 4,634,460
Cost of Sales and
Contract Revenues 2,036,021 1,467,759 3,503,780
Sales and Administration
Expenses 706,931 137,361 83,334 927,626
Other income (expense) (101,894) (70) (101,964)
Income (loss) before taxes (26,655) 211,079 (83,334) 101,090
Provision for income taxes 34,371 34,371
Minority interest (18,675) (18,675)
Net income (26,655) 211,079 (136,380) 48,044
Earnings per common share (0.01) 211.08 0.03
Weighted average number of
shares outstanding 1,902,928 1,000 1,902,928
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF INCOME
FOR THE YEAR ENDED MAY 31, 1999
Antenna The
Products, Inc. Upholstery Pro forma Pro forma
Shop, Inc. Adjustments Consolidated
-------------- ----------- ----------- ------------
Sales and Contract
Revenues 7,786,911 4,326,343 12,113,254
Cost of Sales and
Contract Revenues 5,896,240 3,816,157 9,712,397
Sales and Administration
Expenses 1,311,583 251,628 166,667 1,729,878
Other income (expense) (220,318) 1,343 (218,975)
Income before taxes 358,770 259,901 (166,667) 452,004
Provision for income
taxes 124,401 31,700 156,101
Minority interest (12,307) (12,307)
Net income 234,369 259,901 (210,674) 283,596
Earnings per common share 0.13 259.90 0.15
Weighted average number of
shares outstanding 1,862,928 1,000 1,862,928
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Antenna Products, Inc.
Date: April 12, 2000 s/o/f:______________________________
Clark D. Wraight, Vice President and
Principal Financial Officer
