SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
AMENDMENT No. 1
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 report)
August 28, 1998
EXCEL INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Indiana 1-8684 35-1551685
(State of (Commission File Number) (I.R.S. Employer
Incorporation) Identification No.)
1120 North Main Street 46514
Elkhart, Indiana (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (219)264-2131
N/A
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
The registrant, Excel Industries, Inc. an Indiana corporation
(Excel), has purchased through its wholly-owned subsidiary,
Excel Industries Germany GmbH, a German limited liability
company (Excel GmbH), a number of shares of Schade GmbH, and a
56.67% participation in the fixed capital Schade GmbH & Co. KG,
a German limited partnership (Schade KG) of which Schade GmbH is
the sole general partner. Excel also agreed that Excel GmbH
will make a contribution to the capital of Schade KG, which
contribution will increase Excel's participation in Schade KG to
70%. The transaction was consummated on August 28, 1998 (the
Closing).
Schade and its affiliated companies are engaged in the
manufacture and distribution of ornament and roof moldings, door
frames, plastic automobile body components (wind deflectors, air
intakes and ventilation covers), plastic automobile inside
fittings or equipment (center consoles, roof covers and panels
as well as sliding roof covers) and glass modules for the
automotive industry.
The aggregate purchase price for the interests in Schade GmbH
and Schade KG was DM 17,036,400 or approximately U.S. $9,688,600
based upon exchange rates reported by Telerate at 4 p.m. on
August 28, 1998. The amount of Excel's agreed upon contribution
to the capital of Schade KG is DM 27,340,000, or approximately
U.S. $15,548,258. Funds for the purchase price for the
interests and a portion of the contribution will come from
Excel's cash on hand. The remaining portion of the funds for
the contribution will come from an advance of up to U.S.
$10,000,000 under Excel's Amended and Restated Credit Agreement
dated as of April 29, 1996, between Excel, the banks named in
such Credit Agreement, Society National Bank, as agent, and
Harris Trust and Savings Bank, as co-agent.
Item 7. Financial Statements and Exhibits
7(a) The following consolidated financial statements of Schade
are included herein:
Report of Independent Accountants
Consolidated Balance Sheet as of June 30, 1998
Consolidated Statement of Income for the year ended June 30,
1998
Notes to Consolidated Financial Statements.
Management Report
7(b) The pro-forma financial information required by Item 7(b),
presented as if Excel had acquired Schade on December 29, 1996,
is included herein. Certain additional adjustments may be made
in the final purchase price allocation of Schade, however, these
are not expected to be material in relation to the information
presented herein.
7(c) The following exhibits are furnished as required by Item
7(c):
<TABLE>
<CAPTION>
Exhibit
Number Description
<S> <C>
2.1* Master Agreement dated March 13, 1998, by and between
Excel Industries, Inc., Hella KG Hueck & Co., certain
limited partners of Schade KG, certain shareholders of
Schade GmbH, and Schade KG.
2.2* Share and Partnership Interest Sales and Purchase
Agreement dated March 13, 1998, among Excel Industries,
Inc., certain limited partners of Schade KG, certain
shareholders of Schade GmbH, and Schade KG.
4.1* Shareholders' Agreement dated March 13, 1998 by and
between Excel Industries, Inc. and Hella KG Hueck & Co.
* Previously filed
</TABLE>
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.
<TABLE>
<CAPTION>
EXCEL INDUSTRIES, INC.
<S> <C>
Date: November 12, 1998
By:s/Joseph A. Robinson
Joseph A. Robinson, Secretary,
Treasurer, and Chief Financial
Officer
</TABLE>
<PAGE>
ITEM 7 a. Financial Statements of Business Acquired
Report of Independent Accountants
WRT Revision und Treuhand GmbH
Wirtschaftsprufungsgesellschaft
Steuerberatungsgesellschaft
Accountant's Report
We have audited the consolidated balance sheet of Schade GmbH &
Co. KG as of June 30, 1998 and the related consolidated
statement of income and cash flows and the management report for
the period 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 auditing standards
generally accepted in Germany. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. As audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
The consolidated financial statements and the cash flow
statement have been prepared using acceptable accounting
principles in Germany. Accordingly, the accompanying financial
statements and the cash flow statement are not intended to
present the financial position of Schade GmbH & Co. KG, the
results of its operations and its cash flows in conformity with
generally accepted U.S. accounting principles.
In our opinion, the financial statements and the management
report referred to above present fairly, in all materials
respects, the financial position of Schade GmbH & Co. KG at June
30, 1998, the results of its operations and its cash flows for
the period then ended, in conformity with accounting principles
generally accepted in Germany and applied on a consistent basis.
In case of a dispute between the German version and the English
translation, the German version shall prevail.
Hagen, August 13, 1998
WRT Revision und Treuhand GmbH
Wirtschaftsprufungsgesellschaft
Steuerberatungsgesellschaft
- -Dr. Weckerle -Bibmeier
Wirtschaftsprufer Wirtschaftsprufer
<PAGE>
<TABLE>
<CAPTION>
Schade GmbH & Co. KG
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1998
Assets
June 30, 1998
DM
<S> <C>
A. Fixed assets
I. Intangible assets
1. Franchises, trademarks, patents,
licences, and similar rights and
licences to such rights 403,591
2. Advance payments 4,904
408,495
II. Property, plant and equipment
1. Land, leasehold rights and
buildings including buildings
on non-owned land 35,837,869
2. Technical equipment, plant and
machinery 53,314,187
3. Other equipment, operational and
office equipment 12,264,442
4. Advance payments and construction
in progress 8,191,189
109,607,687
III.Financial assets
1. Shares in affiliated companies 0
2. Participations 136,996
3. Security investments 38,572
4. Other loans 158,253
333,821
Fixed assets 110,350,003
B. Current assets
I. Inventories
1. Raw materials, consumables and
supplies 16,226,231
2. Work-in-progress and finished goods 39,292,245
- - advance payments received
on orders (4,800,433)
3. Advance payments 2,690,549
53,408,592
Carry forward 53,408,592
(Carry forward fixed assets) 110,350,003
<CAPTION>
Assets
June 30, 1998
DM
<S> <C>
(Carry forward assets) 110,350,003
Carry forward: 53,408,592
II. Accounts receivable and other
assets
1. Accounts receivable, trade 61,696,046
- - thereof with a remaining life of
more than one year DM 0
2. Receivables from affiliated
companies 100,000
3. Other assets
- - thereof with a remaining life of
more than one year:DM 15,000 6,424,457
- - thereof against shareholders
DM 281,671 68,220,503
III.Checks, cash on hand and in
Federal Bank and in postal giro
accounts, and in banks 17,744,618
Current assets 139,373,713
C. Deferred charges and prepaid
Expenses
1. Loan discount 149,877
2. Other deferred charges & prep.exp. 2,468,759
2,618,636
252,342,352
<CAPTION>
Liabilities and shareholders' equity
June 30, 1998
DM
<S> <C>
A. Equity
I. Capital accounts I 22,965,810
II. Accumulated deficit (5,110,872)
III.Net income 13,810,597
IV. Difference charged to equity from
first time consolidation capital
consolidation (9,654,624)
Difference from currency
translation 3,107,861
25,118,772
B. Special items with equity portion 524,663
C. Accrued liabilities
1. Accruals for pensions and similar
obligations 8,496,637
2. Accrued taxes 2,555,179
3. Other accrued liabilities 24,152,291
35,204,107
D. Liabilities
1. Liabilities due to banks 112,453,185
- - thereof with a remaining life of
up to one year: DM 49,891,331
- - thereof with a remaining life of
more than five years:
DM 12,087,000
Carry forward: 112,453,185
<CAPTION>
Liabilities and shareholders' equity
June 30, 1998
DM
<S> <C>
Carry forward: 112,453,185
2. Accounts payable, trade 37,996,960
- - thereof with a remaining life of
up to one year: DM 37,996,960
3. Amounts due to affiliated companies 0
4. Liabilities due to shareholders 25,308,213
5. Other liabilities 15,736,452
- - thereof for taxes: DM 4,829,160
- thereof for social security:
DM:3,632,407
- thereof with a remaining life of
up to one year: DM 11,506,502
191,494,810
252,342,352
Balance sheet note: Notes discounted: DM 13,866
</TABLE>
<TABLE>
<CAPTION>
Schade GmbH & Co. KG
Consolidated statement of income for the year ended June 30,1998
1997/1998
DM
<S> <C>
1. Sales 527,221,625
2. Increase in finished goods
and work-in-progress 4,748,062
3. Own costs capitalized 7,129,079
4. Other operating income thereof
income from the retransfer of
special reserves with equity
portion DM 686,555 10,621,734
5. Cost of materials
a)Cost of raw materials,
consumables supplies and
purchased merchandise 258,982,925
b)Cost of purchased services 40,031,091
6. Personnel expenses
a)Wages and salaries 138,746,118
b)Social security, pension and
other benefit cost, thereof for
pensions DM 1,475,250 30,290,851
7. Depreciation of tangible and
intangible fixed assets 25,436,613
8. Other operating expenses 31,896,432
9. Income from investments 380,332
10. Income from other securities and
long-term loans 14,258
11. Other interest and similar income 698,306
12. Amortization of financial assets
and marketable securities 271,383
13. Interest and similar expenses 8,047,721
14. Result from ordinary operating
activities 17,110,262
15. Taxes on income 3,219,237
16. Other taxes 80,428
17. Net income 13,810,597
</TABLE>
Notes to consolidated financial statements of Schade GmbH & Co.
KG as of June 30, 1998
Schade GmbH & Co. KG prepares consolidated financial statements
as of June 30, 1998 in accordance with the provisions of the
publicity law (PublG).
A. Consolidated companies
According to numbered clause 11 section 1 PublG, Schade GmbH &
Co. KG is the parent company of the subsidiaries mentioned in
the list of share ownership.
The company mentioned under item A.2 of this list, has been
included in the consolidated accounts as of July 1, 1997 for the
first time since it started operation at that time only.
The companies Excel Schade Inc. as well as CKD-Binder GmbH of
which Schade Handels-und Beteiligungs-GmbH holds 50% interest
are not under the uniform management or the substantial
influence of the Schade group or play a minor part in revealing
an image of the net worth position, financial situation and
profit situation of the group corresponding to the real
circumstances. For this reason, they were not consolidated
according to numbered clause 290 HGB and not included in the
consolidated accounts according to numbered clause 310 HGB. A
partial consolidation as per numbered clause 310 HGB was waived.
The list of share ownership as per numbered clause 313 section 2
HGB in connection with numbered clause 13 section 2 PublG will
be deposited with the commercial register of the Local Court
Plettenberg.
B. Consolidation principles
The consolidated accounts of Schade GmbH & Co. KG was prepared
as of June 30, 1998, the balance sheet date of the parent
company.
The capital consolidation was performed according to the book
value method as per numbered clause 301 section 1 No. 1 HGB in
connection with numbered clause 1 section 2 PublG. Accordingly
the capital to be consolidated was stated with the amount
corresponding with the book value of the assets, liabilities,
accruals and deferrals and special items to be included in the
consolidated financial statements. The equity of the
subsidiaries determined on this basis was offset with the
relating book values of the shares recorded at the respective
parent companies.
Exercising the option in numbered clause 301 section 2 HGB in
connection with numbered clause 13 section 2 PuplG, the capital
consolidation (first time consolidation) was performed on the
basis of the values at the time of first consolidation of the
subsidiary or at the time of a capital increase.
The asset amounts resulting from capital consolidation were
charged against the equity according to numbered clause 309
section 1 sentence 3 HGB in connection with numbered clause 13
section 2 PublG.
The consolidation of liabilities according to numbered clause
303 section 1 HGB in connection with numbered clause 13 section
2 PublG included intercompany loans and other receivables and
payables. Differences resulting from currency translation
during the debt consolidation amounting to about TDM 347 were
recorded as income.
Material intercompany profits from the sale of equipment to
group companies as well from the sale of inventories to group
companies were eliminated.
A further elimination of intercompany profits was not necessary
since no further tangible fixed assets and/or inventories
existed where material intercompany profits were realized as
part of intercompany sales and purchases. Immaterial amounts
were not considered according to numbered clause 304 section 3
HGB in connection with numbered clause 13 section 3 PublG.
Sales revenues and other income from intercompany sales and
purchases were consolidated with the respective expenses
according to numbered clause 305 section 1 HGB in connection
with numbered clause 13 section 2 PublG, unless they were
recorded as an increase in inventories or as internally produced
and capitalized assets. For reasons of simplicity, the expenses
and revenues as indicated by the subsidiaries were taken for the
consolidation. Intercompany interest income and interest
expenses were consolidated as well.
Deferred taxes as per numbered clause 306 HGB were not to be
recorded. Deferred tax liabilities as per numbered clause 274
HGB amounting to TDM 978 after translation into DM were included
in the consolidated financial statements from the individual
financial statements as per numbered clause 300 section 1
sentence 2 HGB in connection with numbered clause 13 section 2
PublG.
The translation of the foreign subsidiaries' annual financial
statements into Deutsche Mark for the captions of the statement
of income was based on the average annual exchange rate.
Translating effects resulting therefrom were recorded as
income/expense.
The equity captions with the exception of the results for the
year were translated at historical rates. The results for the
year as well as the remaining balance sheet captions were
translated at the middle rate at the balance sheet closing date.
The differences from translating the equity capital resulting
from parity changes have been offset with the same in a manner
not effecting net income. Differences from currency translation
within the scope of offsetting of receivables and payables in
the consolidated financial statement have been considered in a
way effecting net income.
C. Accounting and valuation principles
Intangible assets were evaluated based on purchase cost less
ordinary depreciation.
Fixed assets have been evaluated at purchase cost or at
manufacturing cost less ordinary depreciation. Tangible fixed
assets have been depreciated according to the straight-line
method (mainly the foreign subsidiaries) or according to the
declining balance method (mainly Schade GmbH & Co. KG), and
there was a change from declining balance method to the
straight-line method of depreciation as soon as higher amounts
of depreciation were achieved. Extraordinary depreciation was
recorded in cases of a permanent reduction of the fair value.
Extraordinary tax allowances included in the financial
statements of Schade GmbH & Co. KG remained recorded.
The financial assets were recorded at the lower of cost or
market.
Inventories were recorded with the group purchase and
manufacturing cost or at the lower market value. Depreciation
for inventory risks resulting from period of storage and from
reduced merchantability is appropriate and was sufficiently
made. Considering the loss-free evaluation, a deduction of
TDM 20 was recorded at Schade GmbH & Co. KG. An accrual was
recorded for anticipated losses in orders on hand.
Accounts receivable were recorded at nominal value less
appropriate allowances. Receivables in denominated in foreign
currencies were translated with the exchange rate on the balance
sheet date. Other assets were evaluated at purchase cost or a
lower value applicable at the balance sheet date.
Prepaid expenses were recorded representing expenditures for a
certain time after the balance sheet date.
Exercising the option in numbered clauses 308 section 3 HGB in
connection with numbered clause 13 section 2 PublG, special
items with an equity portion were taken over from the individual
balance sheets.
Exercising the option of Art. 28 EHGB, pension obligations from
pensions to shareholders and indirect pension obligations
amounting to a total of TDM 2.684 were not accrued in the
commercial balance sheet. Otherwise, the remaining pension
obligations are completely recorded with its "partial value"
based on actuarial calculations using a discount interest rate
of 6%.
For anticipated losses in orders on hand an accrual of TDM 73
has been recorded. As of June 30, 1998 the accrual was based on
variable cost, whereas as of June 30, 1997 a value between full
cost and variable cost was recorded as a consequence of
potential changes in tax law. As a result of the partial
release of the accrual an income of TDM 3,573 was recorded. A
valuation on the basis of full cost as of June 30, 1998 would
have resulted in an accrual of TDM 1,355. The valuation method
applied before was given up since the partnership agreement
requires the consideration of tax regulations - as far as
possible.
The accrual for severance payments as of June 30, 1998 is TDM
1,634; it consists of severance payments based on a so-called
"social plan" dated February 12, 1998 and other compensating
payments relating to the domestic operations of Schade GmbH &
Co. KG. For calculating the accrual for severance payments,
considerably less employees to be laid off were taken as a basis
than this had been possible according to the general agreement
for the workforce dated February 28, 1998 since based on the
knowledge as of June 30, 1998 lay-offs to the full extent as
provided for by this general agreement may not be realizable
because of increasing customer demand.
As for the rest, all foreseeable risks and uncertain obligations
were taken into account based on a prudent business judgement
when assessing the tax and other accruals.
Liabilities have been recorded with the respective amount
repayable. Liabilities denominating in foreign currencies were
evaluated at the higher exchange rate of the balance sheet date,
if applicable.
D. Information on consolidated balance sheet and statement of
income.
1. Fixed assets
The development of individual items of fixed assets in the
financial year results is shown in the group's fixed-asset
movement schedule.
2. Equity
The net asset differences resulting from the first time capital
consolidation as per numbered clause 301 sentence 1 HGB in
connection with numbered clauses 13 PublG have been deducted
from equity capital as per numbered clause 309 section 1
sentence 3 HGB in connection with numbered clause 13 section 2
PublG.
Furthermore differences resulting from the translation of
foreign currencies have been offset against equity.
<TABLE>
<CAPTION>>
Changes in shareholders' equity
Balance as Allocation
of July 1 of results
1997 1996/97
TDM TDM
<S> <C> <C>
Capital accounts 25,864 (2,898)
Loss carried forward (8,069) 2,898
Net profit 1997/98 -- --
Offsetting items
- -Difference charged
to equity from first
time consolidation (9,657) --
- -Differences from
foreign currency
translation relating
to the evaluation
of equity with
historical exchange
rates 2,641 --
10,779 --
<CAPTION>
Changes in shareholders' equity
Net profit Changes
1997/98 currency
translation
TDM TDM
<S> <C> <C>
Capital accounts -- --
Loss carried forward -- --
Net profit 1997/98 13,811 --
Offsetting items
- -Difference charged
to equity from first
time consolidation -- --
- -Differences from
foreign currency
translation relating
to the evaluation
of equity with
historical exchange
rates -- 467
13,811 467
<CAPTION>
Changes in shareholders' equity
Others Balance as
of June 30,
1998
TDM TDM
<S> <C> <C>
Capital accounts -- 22,966
Loss carried forward 60 (5,111)
Net profit 1997/98 -- 13,811
Offsetting items
- -Difference charged
to equity from first
time consolidation 2 (9,655)
- -Differences from
foreign currency
translation relating
to the evaluation
of equity with
historical exchange
rates -- 3,108
62 25,119
</TABLE>
Exercising the option in numbered clause 9 section 3 PublG, the
capital shares of shareholders, the accumulated losses carried
forward, and the annual result have been combined under the
"Equity" caption in the consolidated balance sheet for the
purpose of disclosure.
3. Special items with an equity portion
The special items with accrual character are public investment
subsidies (TDM 525) from the balance sheet of Schade Automocion
S.A., Spain.
4. Liabilities
The liabilities to shareholders shown under balance sheet item
D.4 are bearing no interest. They are considered being equity
replacing loans to the company. These limitations become
inapplicable if and when the preconditions of numbered clause
172 a HGB in connection with numbered clause 32 a GmbHG -
completely or partly, as far as legally possible - are no longer
existing for a longer period of time.
Liabilities to banks amounting to TDM 112.453 are secured by
collateral on real properties, liens on technical equipment and
machinery, and partially by assignments of trade receivables and
profit participating rights in an amount of TDM 68.997.
5. Consolidating statement of income
<TABLE>
<CAPTION>
The sales revenues can be broken down as follows:
1997/98
TDM
<S> <C>
- -domestic 346,985
- -international 180,237
527,222
</TABLE>
Other operating income includes income from the release of
accruals of TDM 4,402.
Wages and salaries include severance payments to employees
amounting to TDM 952.
Included in depreciation expense are extraordinary depreciations
of TDM 378.
E. Other information
<TABLE>
<CAPTION>
1. Consolidated statement of cash flows
The following statement of cash-flows can be derived from
the consolidated balance sheet:
TDM
<S> <C> <C>
Net profit 13,811
Depreciation on fixed assets 25,437
Increase of pension accrual 868
Cash flow 40,116
Increase of tax accruals and of other accruals 1,223
Other non-cash income (633)
Losses from the disposal of fixed assets 443
Increase of inventories, trade accounts
receivable, and of other assets (18,560)
Increase of trade accounts payable on of
other liabilities 7,430
Net cash provided by operating activities 30,019 (1)
Proceeds on disposal of capital equipment 3,038
Net cash used in investing activities (34,329)
Cash flows from investing activities (31,291) (2)
Non-cash changes of shareholders' equity
from foreign currency translation adjustment 623
Net cash inflow from repayment and new
borrowings of bank debts 7,425
Cash flows from financing activities 8,048 (3)
Net increase in cash and cash equivalents
(total of lines (1), (2) and (3) 6,776
Cash and cash equivalents at beginning of period 10,969
Cash and cash equivalents at end of period 17,745
</TABLE>
2. Other financial commitments
Other financial commitments resulting from tenancies, rental and
leasing agreements are within the scope usual in that industry.
With regard to trade accounts payable there are conditional
transfers of ownership that are within the usual scope.
3. Employees
The average number of employees in the fully consolidated group
companies was:
<TABLE>
<CAPTION>
1997/98
<S> <C>
- -industrial employees 2,349
- -salaried employees 534
2,883
</TABLE>
F. Adjustments to U.S. Generally Accepted Accounting Principles
These financial statements have been prepared on the basis of
German GAAP. The following summarizes, on an unaudited basis,
differences in U.S. GAAP and German GAAP as they relate to the
consolidated financial statements of Schade GmbH & Co. K.G. for
the fiscal year ending June 30, 1998:
<TABLE>
<CAPTION>
DM
<S> <C>
Net income as reported under German GAAP 13,811,000
Adjustments required to conform to U.S. GAAP:
Elimination of general allowance on receivables 36,000
Pension accruals required to conform to FAS 87 690,000
Establish contingent loss accrual on long-term
sales contract (955,000)
Accrual for severance payments (323,000)
Accrued maintenance expenses (350,000)
Payment for lease extension 66,000
Adjust deferred taxes to the liability method (1,463,000)
(2,299,000)
Net income in accordance with U.S. GAAP 11,512,000
Plettenberg, July 1998
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Development of group fixed assets of Schade GmbH & Co. KG
1997/98
Purchase/ Additions Reclassi-
Production fications
cost
DM DM DM
<S> <C> <C> <C>
I. Intangible assets
1. Franchises, trademarks,
patents, licences, and
similar rights and
licences 1,742,124 382,313 0
2. Advance payments 0 4,904 0
1,742,124 387,217 0
II. Property, plant and
equipment
1. Land, leasehold rights
and buildings including
buildings on non-owned
land 78,333,805 3,877,988 210,776
2. Technical equipment,
plant and machinery 157,327,647 18,039,892 6,750,161
3. Other fixtures,
fittings and equipment 57,304,495 3,899,002 224,655
4. Advance payments and
construction in
progress 4,362,532 8,124,439 (7,185,592)
297,328,479 33,941,321 0
III.Financial assets
1. Shares in affiliated
companies 370,000 0 0
2. Investments 905,070 0 0
3. Security investments 38,572 0 0
4. Other loans 191,627 0 0
1,505,269 0 0
Fixed assets, total 300,575,872 34,328,538 0
<CAPTION>
Disposals Currency diff. Depre-
Adoption to ciation
Consolidation accrued
DM DM DM
<S> <C> <C> <C>
I. Intangible assets
1. Franchises, trademarks,
patents, licences, and
similar rights and
licences 32,790 9,311 1,697,367
2. Advance payments 0 0 0
32,790 9,311 1,697,367
II. Property, plant and
equipment
1. Land, leasehold rights
and buildings including
buildings on non-owned
land 64,586 190,772 46,710,886
2. Technical equipment,
plant and machinery 14,237,725 1,462,832 116,028,620
3. Other fixtures,
fittings and equipment 2,706,491 740,614 47,197,833
4. Advance payments and
construction in
progress 1,158 2,890,968 0
17,009,960 5,285,186 209,937,339
III.Financial assets
1. Shares in affiliated
companies 370,000 0 0
2. Investments 768,074 0 0
3. Security investments 0 0 0
4. Other loans 33,374 0 0
1,171,448 0 0
Fixed assets, total 18,214,198 5,294,497 211,634,706
<CAPTION>
Book value Depreciation
June 30, 1998 of business
year
DM DM
<S> <C> <C>
I. Intangible assets
1. Franchises, trademarks,
patents, licences, and
similar rights and
licences 403,591 314,844
2. Advance payments 4,904 0
408,495 314,844
II. Property, plant and
equipment
1. Land, leasehold rights
and buildings including
buildings on non-owned
land 35,837,869 2,889,049
2. Technical equipment,
plant and machinery 53,314,187 17,259,211
3. Other fixtures,
fittings and equipment 12,264,442 4,973,509
4. Advance payments and
construction in
progress 8,191,189 0
109,607,687 25,121,769
III.Financial assets
1. Shares in affiliated
companies 0 0
2. Investments 136,996 0
3. Security investments 38,572 0
4. Other loans 158,253 0
333,821 0
Fixed assets, total 110,350,003 25,436,613
</TABLE>
<PAGE>
List of share ownership of the Schade group
A. Share ownership as per numbered clause 313 section 2 No. 1
HGB in connection with numbered clause 13 PublG
1. Schade Handels-und Beteiligungs-GmbH, Plettenberg
(wholly-owned subsidiary of Schade GmbH & Co. KG)
2. Schade DECO Systems GmbH, Plettenberg
(wholly-owned subsidiary of Schade Handels-und Beteiligungs-
GmbH)
3. Schade U.K. Ltd, Birmingham, GroBbritannien
(wholly-owned subsidiary of Schade Handels-und Beteiligungs-
GmbH)
4. Marsch Designs Ltd., Essex, GroBbritannien
(wholly-owned subsidiary of Schade Handels-und Beteiligungs-
GmbH)
5. Schade Automocion S.A., Egues, Spanien
(wholly-owned subsidiary of Schade Handels-und Beteiligungs-
GmbH)
6. Schade Portuguesa Lda., Guarda, Portugal
(wholly-owned subsidiary of Schade Handels-und Beteiligungs-
GmbH)
7. Schade GmbH Projektgesellschaft, Plettenberg
(wholly-owned subsidiary of Schade Handels-und Beteiligungs-
GmbH)
8. Schade s.r.o., Blatna, Tschechien
(wholly-owned subsidiary of Schade Handels-und Beteiligungs-
GmbH)
9. S.-G. Ges. s.r.o., Blatna, Tschechien
(wholly-owned subsidiary of Schade s.r.o., Blatna)
B. Share ownership as per numbered clause 313 section 2 No. 4
HGB in connection with numbered clause 13 section 2 PublG
1. Excel-Schade Incorp., Indianapolis, Indiana, USA
(50% subsidiary of Schade Handels-und Beteiligungs-GmbH)
2. System Design Automotiv Engineering GmbH (vormals: CKD-
Binder GmbH), Lenting (22.5% subsidiary of Schade Handels-und
Beteiligungs-GmbH)
The equity as well as of the operating results of the companies
to B.1. and B.2. for the last business year are of minor
importance for the group's net worth position, financial
position and profit situation.
Plettenberg, July 1998
<PAGE>
MANAGEMENT REPORT
1. As was the case in the previous year, the net result of the
fiscal year 1997/98 was characterized by the particular
situation of the industry supplying components for automobile
industry. In comparison with the previous year, the situation
of the Schade group continued to improve considerably in 1997/98
because of the restructuring measures performed. In order to
produce in a more cost-advantageous manner, production abroad
was further increased.
In the year under review, in all entities of the Schade group
with a production, positive results were achieved. One domestic
business segment, however, suffered considerable losses in
1997/98 such that the operating results of the parent company
have become negative since February 1998. The reorganization
measures introduced in the last two years presently indicate
positive effects. Further restructuring measures have been
introduced and intensified in the German operations.
For the current stub period, a further improved economic
situation of the Schade group can be expected. The Schade
group's backlog is developing positively providing improving
perspectives.
2. Research and development is reinforced and the practical co-
operation with customers will be intensified.
3. With effect as of July 1, 1998, the shareholders of Schade
GmbH & Co. KG sold their limited partners' shares with a nominal
value of TDM 17,000 (total limited liability capital TDM 30,000)
to Excel Industries, Inc., Indiana, USA. It is planned to
change the fiscal year to the calendar year such that there will
be a stub period from July 1 to December 31, 1998. Furthermore,
it is intended to spin off the business segments cover strips
and cover plates, body, glass modules, plastic parts, tool
construction as well as development/distribution from the Schade
GmbH & Co. KG into independent corporations as of January 1,
1999.
4. With respect to the entrance of Excel Industries, Inc. we
have engaged our auditor to check the consolidated financial
statements as of June 30, 1998 for internal purposes in regard
of material deviations from the U.S. Generally Accepted
Accounting Principles (U.S. GAAP) and to determine the
adjustments necessary for setting up financial statements based
on U.S. GAAP as well as to reconcile following hereupon the
consolidated net income 1997/98 and the consolidated
shareholders' equity as of June 30, 1998 to the respective
figures according to U.S. GAAP. Adjustments were to be
considered material with an effect on net income of TDM 250
and/or on shareholders' equity of TDM 500.
The transformation was to be based upon the audited financial
statements of the company as of June 30, 1998 (under inclusion
of the opening balances of the fiscal year 1997/98).
The respective judgements for the foreign subsidiaries were
performed by their auditors. These auditors have presented
calculations and explanations hereto and in regard to the
consideration of materiality, in response to a questionnaire
addressing the relevant U.S. GAAP issues being sent to them by
us, which have been taken without further audit activities.
For the determination of the pension accruals, which are to be
calculated differently according to U.S. GAAP, the actuary Dr.
Heubeck, Cologne, has been engaged. The calculations and
determinations presented by him have been taken without further
audit activities.
The most significant difference of the transformation to U.S.
GAAP relates as a result to the different methods of calculation
and charges to income for pension accruals and similar
obligations.
With a material effect as well with opposite effects to all
temporary differences and additionally on existing tax loss
carry-forwards there was as a net figure a deferred tax asset to
be considered.
The material effects on the shareholders' equity and results
relating to the pension accruals resulted from significant non-
funded obligations not recorded under German GAAP on the one
hand and from different methods of calculating the obligations
itself as well as from different measurement dates and from a
different method of charging the expenses.
The obligations not funded under FAS 87 have been fully
recorded. The full charge has been included in the
reconciliation respectively.
The effects of a transformation to U.S. GAAP can be summarized
as follows:
<TABLE>
Reconciliation of shareholders' equity to U.S. GAAP
<CAPTION>
June 30, 1998
DM
<S> <C>
Shareholders' equity in accordance with German GAAP 25,119
Adjustments required to conform with U.S. GAAP (1,005)
Shareholders' equity in accordance with U.S. GAAP 24,114
Reconciliation of net income to U.S. GAAP
1997/98
DM
Net income in accordance with German GAAP 13,811
Adjustments required to conform with U.S. GAAP (2,299)
Net income in accordance with U.S. GAAP 11,512
</TABLE>
5. No operations of particular importance that had to be
reported about as per numbered clause 315 section 2 No. 1 HGB in
connection with numbered clause 13 section 2 PublG have occurred
after closing the fiscal year.
Plettenberg, in August 1998
<PAGE>
PRO-FORMA FINANCIAL INFORMATION
Effective July 1, 1998, Excel Industries, Inc. (Excel) purchased
through its wholly-owned subsidiary, Excel Industries Germany
GmbH, a German limited liability company (Excel GmbH), a number
of shares of Schade GmbH, a German limited liability company,
equal to 70% of the aggregate share capital of Schade GmbH, and
a 56.67% participation in the fixed capital of Schade GmbH & Co.
KG, a German limited partnership (Schade KG) of which Schade
GmbH is the sole general partner. Excel also agreed that Excel
GmbH will make a contribution to the capital of Schade KG, which
contribution will increase Excel's participation in Schade KG to
70%. The transaction was consummated on August 28, 1998.
The following unaudited pro-forma financial statements give
effect to the acquisition of Schade KG by Excel assuming that
the acquisition had occurred as of December 28, 1997. The
consolidated balance sheet of Excel as of September 26, 1998
includes the accounts of Schade KG. The consolidated statement
of income of Excel for the nine months ended September 26, 1998
include the operations of Schade KG since July 1, 1998, the
effective date of the transaction.
The unaudited pro-forma financial information presented is not
necessarily indicative either of the results of operations that
would have occurred had the transactions been completed on the
indicated dates, or of future results of operations of the
combined companies.
<PAGE>
<TABLE>
Excel Industries, Inc.
Pro-Forma Balance Sheet
September 26, 1998
(Amounts in thousands)
<CAPTION>
Excel as Pro-forma adj
Assets reported Debit
<S> <C> <C> <C>
Currents assets:
Cash and short-term investments $ 15,780 $ 7,417 (1)
Accounts receivable 196,623
Customer tooling to be billed 33,354
Inventories 61,635
Prepaid expenses 14,698
Total current assets 322,090 7,417
Investment and advances -
associated companies -- 7,417 (1)
Property, plant and equipment (net) 231,346
Goodwill 37,710
Other assets 15,689
$ 606,835 $ 14,834
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable $ 15,000 $
Accounts payable 119,654
Accrued liabilities 61,470
Current portion of debt 12,536
Total current liabilities 208,660 --
Long-term debt 153,673
Other long-term liabilities 45,843
Minority interest companies 6,306
Commitments and contingent liabilities --
Shareholders' equity:
Common shares - no par value 115,331 7,417 (2)
Retained earnings 78,667
Cumulative translation adjustment 733
Treasury shares at cost (2,378)
Total shareholders' equity 192,353 7,417
$ 606,835 $ 7,417
<CAPTION>
Assets Pro-forma Adj Adjusted
Currents assets: Credit
<S> <C> <C> <C>
Cash and short-term investments $ 7,417 (1) $ 15,780
Accounts receivable 196,623
Customer tooling to be billed 33,354
Inventories 61,635
Prepaid expenses 14,698
Total current assets 7,417 322,090
Investment and advances -
associated companies 7,417 (2) --
Property, plant and equipment (net) 231,346
Goodwill 37,710
Other assets -- 15,689
$ 14,834 $ 606,835
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable $ $ 15,000
Accounts payable 119,654
Accrued liabilities 61,470
Current portions of debt 12,536
Total current liabilities -- 208,660
Long-term debt 153,673
Other long-term liabilities 45,843
Minority interest companies 6,306
Commitments and contingent
liabilities --
Shareholders' equity:
Common shares - no par value 7,417 (2) 115,331
Retained earnings 78,667
Cumulative translation adjustment 733
Treasury shares at cost -- (2,378)
Total shareholders' equity 7,417 192,353
Total liabilities and
shareholders' equity $ 7,417 $ 606,835
</TABLE>
PRO-FORMA BALANCE SHEET
September 26, 1998
Description of pro-forma adjustments:
1. Record additional capital contribution to Schade.
2. To consolidate Schade.
<TABLE>
Excel Industries, Inc.
Pro-Forma Statement of Income
Nine months ended September 26, 1998
(Amounts in thousands)
<CAPTION>
Excel
as reported Schade
12/28/97-9/26/98 1/1/98-6/30/98
<S> <C> <C>
Net sales $ 758,462 $ 158,551
Costs of goods sold 681,584 147,372
Gross profit 76,878 11,179
Selling, administrative and
engineering expenses 56,157 7,480
Operating income 20,721 3,699
Interest expense (8,127) (2,675)
Other income, net 1,521 4,388
Income (loss) before income taxes 14,115 5,412
Provision for income taxes 1,304 154
Minority interest 87 --
Net income $ 12,724 $ 5,258
Net income per share:
Basic $ 1.02
Diluted $ 1.01
Average number of shares:
Basic 12,429
Diluted 12,564
<CAPTION>
Pro-forma Adjustments
Debit Credit
<S> <C> <C> <C>
Net sales $ $
Costs of goods sold 394 (3)
Gross profit (394) --
Selling, administrative and
engineering expenses 36 (1)
Operating income (430) --
Interest expense
Other income, net (475)(2)
Income (loss) before income taxes (905) --
Provision for income taxes 1,341 (3)
Minority interest 1,057 (4)
Net income $ (3,303) $ --
Net income per share:
Basic
Diluted
Average number of shares:
Basic
Diluted
<CAPTION>
Adjusted
<S> <C>
Net sales $ 917,013
Costs of goods sold 829,350
Gross profit 87,663
Selling, administrative and
engineering expenses 63,673
Operating income 23,990
Interest expense (10,802)
Other income, net 5,434
Income (loss) before income taxes 18,622
Provision for income taxes 2,799
Minority interest 1,144
Net income $ 14,679
Net income per share:
Basic $ 1.18
Diluted $ 1.17
Average number of shares:
Basic 12,429
Diluted 12,564
</TABLE>
PRO-FORMA STATEMENT OF INCOME
Nine months ended September 26, 1998
Description of pro-forma adjustments
1. Record amortization of goodwill resulting from Excel's
acquisition of Schade. Goodwill is being amortized on a
straightline basis over a 40 year period.
2. Eliminate estimated lost investment income due to
liquidating marketable securities to pay the acquisition
costs.
3. Record adjustments to reflect U.S. GAAP.
4. Record minority interest relating to 30% minority
ownership of Schade.
<TABLE>
Excel Industries, Inc.
Pro-Forma Statement of Income
Year Ended December 27, 1997
(Amounts in thousands)
<CAPTION>
Excel
as reported Schade
<S> <C> <C>
Net sales $ 962,333 $ 281,208
Costs of goods sold 846,990 222,156
Gross profit 115,343 59,052
Selling, administrative and
engineering expenses 79,267 45,600
Operating income 36,076 13,452
Interest expense (10,984) (5,176)
Other income, net 1,930 (654)
Income (loss) before income taxes 27,022 7,622
Provision for income taxes 9,458 48
Minority interest -- --
Net income $ 17,564 $ 7,574
Net income per share:
Basic $ 1.59
Diluted $ 1.48
Average number of shares:
Basic 11,079
Diluted 12,636
<CAPTION>
Pro-forma Adjustments
Debit Credit
<S> <C> <C> <C>
Net sales $ $
Costs of goods sold 228 (3)
Gross profit (228) --
Selling, administrative and
engineering expenses 72 (1)
Operating income (300) --
Interest expense
Other income, net (950)(2)
Income (loss) before income taxes (1,250) --
Provision for income taxes 842 (3)
Minority interest 1,930 (4)
Net income $ (4,022) $ --
Net income per share:
Basic
Diluted
Average number of shares:
Basic
Diluted
<CAPTION>
Adjusted
<S> <C>
Net sales $1,243,541
Costs of goods sold 1,069,374
Gross profit 714,167
Selling, administrative and
engineering expenses 124,939
Operating income 49,228
Interest expense (16,160)
Other income, net 326
Income (loss) before income taxes 33,394
Provision for income taxes 10,348
Minority interest 1,930
Net income $ 21,116
Net income per share:
Basic $ 1.91
Diluted $ 1.77
Average number of shares:
Basic 11,079
Diluted 12,636
</TABLE>
PRO-FORMA STATEMENT OF INCOME
Year ended December 27, 1997
Description of pro-forma adjustments
1. Record amortization of goodwill resulting from Excel's
acquisition of Schade. Goodwill is being amortized on a
straightline basis over a 40 year period.
2. Eliminate estimated lost investment income due to
liquidating marketable securities to pay the acquisition
costs.
3. Record adjustments to reflect U.S. GAAP.
4. Record minority interest relating to 30% minority
ownership of Schade.
