<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) March 31, 1995
--------------------------------
PARK-OHIO INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 0-3134 34-6520107
- --------------------------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
600 Tower East
20600 Chagrin Boulevard
Cleveland, Ohio 44122
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (216) 991-9700
------------------------------
Exhibit Index Is On Page 33
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
- ------- ------------------------------------
On March 31, 1995 (the "Closing Date"), P.O. Acquisition Company, Inc.
("POAC"), a wholly owned subsidiary of the Registrant was merged into RB&W
Corporation (RB&W) pursuant to an Amended and Restated Plan and Agreement of
Merger dated as of February 6, 1995 (the "Restated Agreement"), among the
Registrant, POAC, and RB&W. In consideration of such merger, all of the issued
and outstanding shares of capital stock of POAC were converted into 100 shares
of RB&W common stock, and the issued and outstanding shares of common stock of
RB&W were converted into the right to receive, $4.45 in cash, plus .33394 of a
fully paid and nonassessable share of the Registrant's common stock, par value
$1.00 per share (the "Park-Ohio Shares"). The total amount of cash paid to
RB&W Shareholders by Park-Ohio shall not exceed $29,968,387 and the total
number of Park-Ohio Shares finally determined to be issuable (the "Merger
Consideration") shall not exceed 2,248,942 shares. Assuming the maximum number
of Park-Ohio Shares were issued, the Merger Consideration would have a value of
$55,831,220 million, valued at the March 31, 1995 NASDAQ closing price of
$11.50 per Park-Ohio Share. The consideration paid by the Registrant to
acquire RB&W through the merger was determined by arm's length negotiation
between RB&W and the Registrant. See Note A to the unaudited Pro Forma
Condensed Financial Statements for source of the funds used for this
transaction.
RB&W's assets, in general consist of real property, equipment, accounts
receivable, and inventory. RB&W primarily manufactures cold formed industrial
fasteners and distributes products associated with the fastener industry. The
Registrant intends for RB&W to continue and expand in its present lines of
business.
2
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
- ------- ------------------------------------------------------------------
(a) Financial Statements of RB&W Corporation:
Report of Independent Accountants
Consolidated Balance Sheet as of December 31, 1994 and 1993
Consolidated Statement of Operations for the Years Ended
December 31, 1994, 1993 and 1992
Consolidated Statement of Cash Flows for the Years Ended
December 31, 1994, 1993 and 1992
Consolidated Statement of Stockholders' Equity for the Years
Ended December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
(b) Pro Forma Condensed Combined Financial Statements
(c) Exhibits
2.1 The Amended and Restated Plan and Agreement of Merger
dated as of February 6, 1995, among Park-Ohio
Industries, Inc.; P.O. Acquisition Company, Inc. and
RB&W Corporation have been furnished in the Registrant's
Form S-4 (No. 33-87230) filed with the Commission on
December 9, 1994 and hereby incorporated by reference.
23.1 Consent of Price Waterhouse LLP
99 Press release
3
<PAGE> 4
SIGNATURES
----------
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 thereunto duly authorized.
Dated: April 14, 1995 PARK-OHIO INDUSTRIES, INC.
--------------------------
(Registrant)
By: /s/ James S. Walker
--------------------------
Name: James S. Walker
Title: Vice President - Treasurer
and Controller
4
<PAGE> 5
Item 7(a)
Financial Statements of Acquired Business
Current Report on Form 8-K
Park-Ohio Industries, Inc.
Cleveland, Ohio
April 14, 1995
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholders of RB&W Corporation
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of stockholders' equity and of cash
flows present fairly, in all material respects, the financial position of RB&W
Corporation and its subsidiary at December 31, 1994 and 1993, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1994, in conformity with generally accepted
accounting principles. 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 of these
statements in accordance with generally accepted auditing standards which
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 the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Cleveland, Ohio
March 7, 1995
5
<PAGE> 6
RB&W Corporation
Consolidated Balance Sheet
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
December 31,
-------------------------
Dollars in thousands 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash ......................................... $ 860 $ 926
Accounts receivable, less allowances of
$311 in 1994 and $304 in 1993 ............ 25,353 22,056
Inventories:
Raw materials .............................. 2,682 2,823
Finished and in-process product ............ 31,710 25,977
------- -------
34,392 28,800
Tooling and supplies ......................... 5,366 4,646
Funds held in escrow ......................... 354 732
Prepaid expenses ............................. 408 439
------- -------
Total current assets ..................... 66,733 57,599
Property, plant and equipment:
Land ........................................ 167 167
Buildings ................................... 2,512 2,389
Machinery, furniture and equipment .......... 17,888 19,469
------- -------
20,567 22,025
Less - accumulated depreciation ........... (14,719) (15,379)
------- -------
Net property, plant and equipment ....... 5,848 6,646
Property, plant and equipment held for sale ... 2,168 3,860
Other assets .................................. 5,447 4,911
------- -------
$80,196 $73,016
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt .......... $ 144 $ 1,215
Accounts payable ........................... 16,750 14,716
Accrued liabilities ........................ 6,580 7,048
------- -------
Total current liabilities ................ 23,474 22,979
Long-term debt ............................... 25,958 23,581
Other long-term liabilities .................. 2,102 2,066
Accrued postretirement benefits .............. 3,705 3,610
Contingent liabilities ....................... -- --
Stockholders' equity:
Common stock ($1 par value, 8,000,000 shares
authorized, 6,015,885 issued in 1994 and
5,927,636 issued in 1993)................. 6,016 5,928
Capital surplus............................. 15,531 15,132
Retained earnings (deficit)................. 3,854 (223)
Minimum pension liability .................. (295) (33)
Foreign currency translation ............... (149) (24)
------- -------
Total stockholders' equity ............... 24,957 20,780
------- -------
$80,196 $73,016
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
RB&W Corporation
Consolidated Statement of Operations
<TABLE>
<CAPTION>
Dollars in thousands, except per share amounts For the Year Ended December 31,
- -------------------------------------------------------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Net sales ................................. $ 168,292 $ 176,603 $ 182,776
Cost of goods sold ........................ 145,838 154,108 160,785
Selling, general and administrative
expenses ................................ 16,118 16,164 16,856
Interest expense, net ..................... 2,122 3,163 3,840
Other (income) expense, net ............... (235) 2,444 1,362
Special charges ........................... - (456) 10,550
--------- --------- ---------
Income (loss) before income taxes and
effect of accounting change ............. 4,449 1,180 (10,617)
Provision for income taxes ................ 372 503 468
--------- --------- ---------
Net income (loss) before effect of
accounting change ....................... 4,077 677 (11,085)
Effect of accounting change for
postretirement benefits ................. - - (3,934)
--------- --------- ---------
Net income (loss) ......................... $ 4,077 $ 677 $ (15,019)
========= ========= =========
Net income (loss) per common share:
Income (loss) before effect of
accounting change ..................... $ .67 $ .11 $ (1.99)
Effect of accounting change.............. - - (.70)
--------- --------- ---------
Net income (loss) ......................... $ .67 $ .11 $ (2.69)
========= ========= =========
Weighted average shares of common stock ... 6,113,730 5,906,522 5,573,167
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE> 8
RB&W Corporation
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
Dollars in thousands For the Year Ended December 31,
- ------------------------------------------------------------------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Cash provided by (used for):
Operating Activities
Net income (loss) $4,077 $ 677 $(15,019)
Adjustments to reconcile net income to
net cash provided by operations:
Depreciation and amortization 1,271 2,268 3,422
Adjustment of book value of asset held
for sale -- 1,760 --
ESOP stock contribution -- 630 781
Accrued postretirement benefits 95 (368) 3,978
Long-term pension costs (1,096) (604) 80
Decrease in other long-term liabilities (26) -- (57)
------ ------- --------
4,321 4,363 (6,815)
Changes in:
Accounts receivable (3,297) 1,704 (5,177)
Inventories (5,592) 1,052 2,519
Tooling and prepaid expenses (689) 2,994 (76)
Funds held in escrow 378 (732) --
Accounts payable 2,034 4,538 815
Accrued liabilities (468) (252) 262
Accrued restructuring charges -- (10,252) 10,550
------ ------- --------
Net cash provided by (used for) operations (3,313) 3,415 2,078
------ ------- --------
Investing activities
Additions to property, plant and equipment (829) (1,655) (1,534)
Property, plant and equipment held for sale 1,975 164 (1,169)
Disposal of property and equipment 46 8,565 316
------ ------- --------
Net cash provided by (used for)
investing activities 1,192 7,074 (2,387)
------ ------- --------
Financing activities
Repayment of debt (3,198) (32,509) (571)
Increase in debt 4,504 24,450 1,161
Proceeds from stock options exercised 487 99 --
Long-term receivable 587 (2,226) --
Other (325) (21) (146)
------ ------- --------
Net cash provided by (used for)
financing activities 2,055 (10,207) 444
------ ------- --------
Cash
Increase (decrease) (66) 282 135
Balance at beginning of year 926 644 509
------ ------- --------
Balance at end of year $ 860 $ 926 $ 644
====== ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
8
<PAGE> 9
<TABLE>
RB&W Corporation
Consolidated Statement of Stockholders' Equity
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Common Stock
$1 Par Value Foreign Minimum
----------------------- Retained Currency Pension
Shares Capital Earnings Translation Liability
Dollars in thousands Issued Amount Surplus (Deficit) Adjustment Adjustment Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1991. 5,553,936 $5,554 $13,996 $14,119 $ 373 $ 34,042
Net loss..................... (15,019) (15,019)
ESOP contribution............ 250,000 250 531 781
Minimum pension liability
adjustment.................. $(1,545) (1,545)
Translation adjustment....... (224) (224)
--------- ------ ------- ------- ------- ------- --------
BALANCE AT DECEMBER 31, 1992. 5,803,936 5,804 14,527 (900) 149 (1,545) 18,035
Net income................... 677 677
ESOP contribution............ 107,200 107 523 630
Stock options exercised...... 16,500 17 82 99
Minimum pension liability
adjustment.................. 1,512 1,512
Translation adjustment....... (173) (173)
--------- ------ ------- ------- ------- ------- --------
BALANCE AT DECEMBER 31, 1993. 5,927,636 5,928 15,132 (223) (24) (33) 20,780
Net income................... 4,077 4,077
Stock options and warrants
exercised................... 88,249 88 399 487
Minimum pension liability
adjustment.................. (262) (262)
Translation adjustment....... (125) (125)
--------- ------ ------- ------- ------- ------- --------
BALANCE AT DECEMBER 31, 1994. 6,015,885 $6,016 $15,531 $ 3,854 $ (149) $ (295) $ 24,957
========= ====== ======= ======= ======= ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
9
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Major Accounting Policies:
Basis of consolidation: The financial statements include the accounts of RB&W
Corporation and its wholly-owned subsidiary. All significant intercompany
transactions have been eliminated.
Inventory and tooling valuation: Inventories are valued at the lower of cost
or market with cost determined using the first-in, first-out (FIFO) method.
Production tooling is valued at standard cost, which approximates actual cost,
and is expensed when issued into the manufacturing process.
Property, plant and equipment: Property, plant and equipment are recorded at
cost. Major renewals and betterments are added to the property accounts while
replacements, maintenance and repairs which do not improve or extend the lives
of the respective assets are expensed currently.
The Company follows the policy of providing for depreciation of property,
plant and equipment using the straight-line method over their estimated useful
lives of 20 to 40 years for buildings and of 4 to 12 years for other assets.
At the time of disposition of properties, the related cost and accumulated
depreciation are removed from the respective accounts, and any gain or loss on
disposition is included in income.
Income taxes: Effective January 1, 1992, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes." Income
taxes are recognized during the year in which transactions enter into the
determination of financial statement income with deferred taxes being provided
for temporary differences between amounts of assets and liabilities for
financial reporting purposes and such amounts as measured by tax laws.
Postemployment benefits: The Company contributes to the pension funds the
minimum amount required by regulations or contracts. Company contributions to
the Employee Stock Ownership Plan are expensed when made.
Effective January 1, 1992, the Company adopted Statement of Financial
Accounting Standards No. 106 - "Employers' Accounting for Postretirement
Benefits" (FAS No. 106), which requires the cost of providing postretirement
benefits to be recognized during the years that employees render the necessary
employment service.
In November, 1992, the Financial Accounting Standards Board issued
Statement 112, "Employers' Accounting for Postemployment Benefits."
Statement 112 requires accrual accounting for benefits provided to former or
inactive employees after employment but before retirement. The Company
adopted the provisions of this standard effective January 1, 1994. The effect
of adopting this statement was not material to the consolidated financial
statements.
10
<PAGE> 11
Note 1 - Summary of Major Accounting Policies Cont'd:
Environmental: Expenditures that relate to current operations are expensed or
capitalized as appropriate. Expenditures that relate to an existing condition
caused by past operations, and which do not contribute to current or future
revenue generation, are expensed. Liabilities are recorded when environmental
assessments and/or remedial efforts are probable, and the costs can be
reasonably estimated. Generally, the timing of these accruals coincides with
completion of a feasibility study or the Company's commitment to a formal plan
of action.
Income per common share: Income per common share computations are based on
the weighted average number of shares of common stock outstanding during the
respective years and the assumed exercise of outstanding stock options and
warrants in 1994 and 1993.
11
<PAGE> 12
Note 2 - Special Charges:
To continue addressing the major restructuring of manufacturing operations,
the Company provided, in the fourth quarter of 1992, $10,550,000 in
contemplation of possible plant sales or closures, reductions in labor force
and other related costs. In March 1993, the Company agreed to sell its Rock
Falls and Chicago, Illinois manufacturing plants. The sale of the plants was
completed on August 17, 1993 to be effective on August 9, 1993. The revenues
and expenses of the plants during the phase-out period through the date of
sale were included in the appropriate sales and expense captions in the
statement of operations. The net loss of $1,156,000 incurred during the
phase-out period was credited to special charges and offset against the
accrual. The extended delay in completing the sale resulted in incurring
expenses beyond the reserve taken in 1992. Therefore, an additional charge of
$700,000 was recorded in the third quarter of 1993.
The sales proceeds, which approximated the book value of the assets sold less
the liabilities assumed by the buyer were comprised of a combination of
subordinated notes and cash. The notes total $9.9 million, are non-interest
bearing and are due in August, 1998. They are secured by a second position in
the plants' assets. No value was assigned to these notes in the financial
statements.
The cash portion of the purchase price was $5.9 million. The Company utilized
approximately $2.7 million of the proceeds for the purchase of heat treat
furnaces at both plants that had been previously leased to the Company and
will be leased by the Company to the buyer. The Company has agreed to
indemnify the buyer and its lender for existing environmental conditions
discovered during the next five years for an unlimited dollar amount. Cash of
$1 million was deposited into an escrow account for this purpose. At
December 31, 1994, $354,000 remained in the escrow account. The Company
believes, based on comprehensive environmental investigations conducted at the
time of sale, this amount will be adequate to cover potential environmental
costs.
The terms of the sale agreement called for the Company to keep existing
accounts receivable as of the sale date of approximately $6.9 million and for
the buyer to assume the plants' outstanding liabilities of approximately $6.0
million. The Company guaranteed up to $500,000 of the buyer's trade payables
to a major steel supplier for up to a three-year period. The Company leases
several high-speed cold-forming machines located at Rock Falls from a finance
company under leases with remaining terms of five years. The machines have
been subleased to the buyer, but the Company will remain principally liable
for the lease payments.
12
<PAGE> 13
Note 3 - Property, Plant and Equipment Held for Sale:
In 1983, the Company sold its Mentor, Ohio plant and office facilities to
Geo. Worthington Company for $7,400,000 including the assumption of the
$5,700,000 Industrial Revenue Bonds (IRB's) for which the Company
remained contingently liable. In 1986, Worthington filed Chapter 11
under the Bankruptcy Act, and the Trustee for the IRB's required the
Company to make payments of the remaining obligations as they became due.
In April, 1991 Worthington filed Chapter VII.
In 1992, the IRB's were paid off and the Company acquired title to the
real estate. The net payments are included in property, plant and
equipment held for sale. These payments totalled $3,885,000 at
December 31, 1992. In the fourth quarter of 1993 the Company signed a
letter of intent to sell the property, and the asset was reduced by
$1,760,000 to approximate the net cash proceeds to be received upon
completion of the sale. The charge was recorded in other expense. The
sale was completed duing the fourth quarter of 1994.
The unsold real estate relating to the closed Cleveland plant is also
included in property, plant and equipment held for sale at December 31,
1994 and 1993.
13
<PAGE> 14
Note 4 - Leases:
The Company leases manufacturing, warehouse and office facilities and other
equipment under leases which are often renewable. Many of the leases provide
that the Company will pay the taxes, insurance and maintenance on the
property. Total rent expense was $3,001,000 in 1994, $3,368,000 in 1993 and
$3,587,000 in 1992.
Minimum lease commitments for operating leases are:
<TABLE>
<CAPTION>
Dollars in Thousands
<S> <C>
1995...........................$2,543
1996........................... 1,968
1997........................... 1,375
1998........................... 635
1999........................... 270
Later years.................... -
------
Total minimum lease payments...$6,791
======
</TABLE>
Minimum commitments have not been reduced by minimum sublease rentals of
$1,604,000 receivable under noncancellable subleases.
The Company leases certain equipment to the buyer of the two screw plants sold
in 1993 (Note 2). A summary of minimum lease rentals to be received under
direct financing leases are as follows:
<TABLE>
<S> <C>
1995...............................................$ 461
1996............................................... 461
1997............................................... 461
1998............................................... 461
1999............................................... 461
Later years........................................ 690
------
Total minimum lease payments receivable............ 2,995
Less interest...................................... 900
------
Present value of minimum lease payments............ 2,095
Less current portion............................... 461
------
Long-term portion (included in other assets).......$1,634
======
</TABLE>
14
<PAGE> 15
Note 5 - Long-Term Debt:
Long-term debt consists of:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Dollars in thousands 1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C>
Revolving loan (1).............................. $25,954 $21,450
Term loan (1)................................... - 3,000
Equipment bills of exchange (2)................. 148 346
------- -------
26,102 24,796
Less: current portion.......................... 144 1,215
------- -------
$25,958 $23,581
======= =======
</TABLE>
- ---------------------------------------------------------------------------
Total debt maturities during the next three years are:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Dollars in thousands
- ---------------------------------------------------------------------------
<S> <C>
1995...... $ 144
1996...... 25,958
-------
Total..... $26,102
=======
Cash paid for interest was $2,067,000 in 1994, $3,486,000 in 1993 and
$4,260,000 in 1992.
<FN>
(1) On October 20, 1993 the Company entered into a new Credit Agreement with
a finance company. The Credit Agreement, which has a three-year term,
consists of a $3,000,000 term loan and a $27,000,000 revolving loan, a
portion of which can be utilized in the form of a letter of credit
facility. The term loan was paid off in its entirety in November, 1994.
The loans outstanding under the Credit Agreement bear interest at varying
rates, and at December 31, 1994 the rate was 8.43%. An annual collateral
monitoring fee of $50,000 is payable beginning in 1994 and the Company
must also pay a fee of 1/2% on the unused loan balance up to $5,000,000
and 1/4% on the unused balance over $5,000,000. The borrowings under the
Credit Agreement are secured by a major portion of the Company's current
assets. The agreement contains certain covenants which, among other
things, restrict the payment of dividends, limit investments and other
indebtedness, limit borrowings under the Credit Agreement pursuant to a
borrowing base formula and other criteria, and require maintenance of
certain financial ratios.
15
<PAGE> 16
Note 5 - Long-Term Debt Cont'd.:
(2) During 1990, the Company purchased a piece of manufacturing equipment and
related tooling from a Belgian company for which bills of exchange were
issued. The bills of exchange, which are denominated in Belgian Francs,
bear interest at a rate of 8.70% and are due in equal principal
semi-annual payments over a five-year period.
</TABLE>
16
<PAGE> 17
Note 6 - Income Taxes:
The Company adopted Statement of Financial Accounting Standard No. 109 (FAS
No. 109) "Accounting for Income Taxes" effective January 1, 1992. FAS No. 109
requires the Company to adopt the liability method of accounting for income
taxes. The liability method measures the expected tax impact of future
taxable income or deductions implicit in the balance sheet. The cumulative
effect as of January 1, 1992 of the accounting change to FAS No. 109 was not
considered material. The adoption of FAS No. 109 had no cash flow impact.
Income taxes consist of:
<TABLE>
<CAPTION>
Dollars in thousands 1994 1993 1992
- -------------------- ------ ------ ------
<S> <C> <C> <C>
Current tax
Federal $ 122 $ - $ -
Foreign 284 526 507
Deferred tax
Foreign (34) (23) (39)
------ ------ ------
$ 372 $ 503 $ 468
====== ====== ======
</TABLE>
Results of operations of the Company's foreign subsidiary included in pre-tax
accounting income were $569,000 in 1994, $1,381,000 in 1993 and $1,083,000 in
1992.
Temporary differences and carryforwards which give rise to deferred tax assets
and liabilities for 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
Dollars in thousands 1994 1993
- -------------------- ---------- ----------
<S> <C> <C>
Change in method of costing inventories $ (3,666) $ (5,074)
Imputed interest on note receivable (691) (1,145)
Pensions (494) (463)
Other (103) (136)
-------- ---------
Total deferred tax liabilities (4,954) (6,818)
-------- ---------
Federal net operating loss carryforwards 7,185 9,422
Federal tax credit and state operating loss
carryforwards 1,487 1,654
Capital loss carryforwards 716 -
Accrued postretirement benefits 1,394 1,387
Inventory basis differential 1,002 747
Depreciation 1,451 2,254
Reserve for notes receivable 3,737 3,847
Accrued estimated expenses and other reserves 2,056 2,420
-------- ---------
Subtotal 19,028 21,731
Valuation allowance (14,186) (15,059)
-------- ---------
Total deferred tax assets 4,842 6,672
-------- ---------
Total deferred taxes $ (112) $ (146)
======== =========
</TABLE>
17
<PAGE> 18
Note 6 - Income Taxes Cont'd.:
The valuation allowance represents the tax effect of various future tax
benefits which are not likely to be utilized. The net change in the valuation
allowance was a decrease of $873,000.
The difference between the provision for income taxes and the tax expense
computed by applying the statutory federal income tax rate of 34% to (income)
loss before taxes, is attributable to the following:
<TABLE>
<CAPTION>
Dollars in thousands 1994 1993 1992
- -------------------- -------- -------- --------
<S> <C> <C> <C>
Tax (benefit) at statutory rate $ 1,513 $ 401 $(3,610)
Current year operating loss for
which no benefit is available - 41 3,769
Utilization of net operating
loss carryforward (1,267) - -
Foreign tax rate differential 49 32 79
Intercompany dividend elimination - - 202
Other 77 29 28
--------- -------- --------
$ 372 $ 503 $ 468
========= ======== ========
</TABLE>
The Company has net operating loss carryforwards for income tax return purposes
aggregating approximately $21,131,000. These carryforwards will expire in
various periods between 1998 and 2008. In addition, the Company has investment
tax credit carryforwards of $628,000 for income tax return purposes. The tax
credits will expire in various amounts through 2000.
Cash paid for income taxes in 1994 was $460,000 in 1994, $485,000 in 1993 and
$515,000 in 1992.
18
<PAGE> 19
Note 7 - Stock Options and Warrants:
During the period from 1978 through 1994, non-qualified options were granted at
an option price equal to the market price of the Company's common stock at the
grant dates. Generally, one-third or one-fourth of these options become
exercisable annually after a holding period of twelve to twenty-six months.
The table below summarizes information with respect to employee and director
stock options:
<TABLE>
<CAPTION>
Number
of Shares Option Price
--------- --------------
<S> <C> <C>
Outstanding at December 31, 1991 255,000 $3.375 -$8.625
Granted 43,000 $4.9375-$6.500
Cancelled or expired (81,000) $3.000 -$8.625
- -----------------------------------------------------------------------------
Outstanding at December 31, 1992 217,000 $3.000 -$7.625
Granted 232,000 $3.0625-$6.125
Exercised (16,500) $4.9375-$6.500
Cancelled or expired (53,500) $3.000 -$7.625
- -----------------------------------------------------------------------------
Outstanding at December 31, 1993 379,000 $3.0625-$7.625
Granted 64,000 $5.000 -$6.875
Exercised (21,583) $3.0625-$6.125
Cancelled or expired (43,167) $3.0625-$6.250
- -----------------------------------------------------------------------------
Outstanding at December 31, 1994 378,250 $3.125 -$7.625
=============================================================================
</TABLE>
There were 172,834 options exercisable at December 31, 1994, and 114,500
at December 31, 1993.
Warrants to purchase 400,000 shares of common stock were issued with a 1984
sale of 1,200,000 shares of common stock. At December 31, 1994, 66,666
warrants had been exercised and 333,334 remained outstanding. Subject to
dilution provisions, each outstanding warrant entitles the holder to purchase
one share of common stock for $6.00 per share through December 31, 1999.
19
<PAGE> 20
Note 8 - Postretirement Benefits:
In 1992, the Company adopted Statement of Financial Accounting Standards
No. 106 - "Employers' Accounting for Postretirement Benefits" (FAS No. 106),
which requires the cost of providing postretirement benefits to be recognized
during the years that employees render the necessary employment service. In
applying FAS No. 106, the Company immediately recognized the Accumulated
Postretirement Benefit Obligation (APBO) of $3,934,000, or $.71 per share, as
of January 1, 1992 as a change in accounting principle in the first quarter of
1992.
The Company provides certain health care and life insurance benefits for
retired employees. Substantially all of the Company's employees may become
eligible for those benefits. Those and similar benefits for active employees
are provided through an insurance company whose premiums are based on the
benefits paid during the year. With the exception of certain participants,
plans require retired participants to make contributions towards the premiums,
and premium increases have historically been passed on to the participants.
In addition, benefits under postretirement medical plans for most retirees
have fixed payment schedules which are immune to inflationary pressures.
The Company's APBO is comprised of the following:
<TABLE>
<CAPTION>
Dollars in Thousands
- --------------------
1994 1993
------ ------
<S> <C> <C>
Retirees $1,985 $2,652
Fully eligible active plan participants 248 224
Other active plan participants 883 906
------ ------
APBO 3,116 3,782
Unrecognized net loss 589 (172)
------ ------
Postretirement benefit related liability $3,705 $3,610
====== ======
</TABLE>
The components of net periodic postretirement benefit costs are:
<TABLE>
<CAPTION>
Dollars in Thousands
- --------------------
1994 1993
------ ------
<S> <C> <C>
Service Cost $ 40 $ 80
Interest Cost 229 292
Net amortization (21) -
------ ------
Net periodic postretirement benefit cost 248 372
Curtailment due to sale of plants - (261)
Curtailment at Kent, Ohio plant - (105)
------ ------
Net periodic postretirement benefit expense $248 $ 6
====== ======
</TABLE>
A discount rate of 7.5% was used to determine the APBO for both years.
Assumed annual rates of increase in the cost of health care for 1994 ranged
from 3% for certain retirees over age 65 to 14.25% for retirees younger than
65. A 1% increase in the assumed rate of increase would increase the APBO by
$171,000 and the 1994 expense by $19,000.
20
<PAGE> 21
Note 9 - Retirement and Pension Plans:
The Company has a number of pension plans which provide coverage for
substantially all union employees in the Manufacturing segment. The majority
of plan assets are invested in stocks, bonds and temporary investments.
The components of net pension expense are:
<TABLE>
<CAPTION>
Dollars in thousands 1994 1993 1992
- -------------------- -------- -------- --------
<S> <C> <C> <C>
Service cost $ 179 $ 299 $ 370
Interest cost 1,917 2,013 2,004
Actual return on assets 69 (7,608) (3,631)
Net amortization and deferral (3,046) 5,368 1,608
-------- -------- --------
Net pension expense (income) $ (881) $ 72 $ 351
======== ======== ========
</TABLE>
Assumptions used for net periodic pension costs for all three years were:
<TABLE>
<S> <C>
Assumed discount rate 7-1/2%
Expected rate of return on assets 9%
Assumed rate of compensation increase
for certain plans 2-1/2%
</TABLE>
Benefits under certain other plans are not based upon wages.
21
<PAGE> 22
Note 9 - Retirement and Pension Plans Cont'd.:
The funded status of the Company's pension plans is:
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993
---------------------- ----------------------
Overfunded Underfunded Overfunded Underfunded
Dollars in Thousands Plan Plans Plans Plans
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets available for benefits:
Plan assets at fair value $ 24,976 $ 5,103 $26,620 $ 5,960
Accrued (prepaid) pension expense (3,132) 1,441 (2,222) 1,417
------- ------- ------- -------
Total assets 21,844 6,544 24,398 7,377
------- ------- ------- -------
Actuarial present value of projected
benefit obligation based upon
employment service to date and
current salary levels:
Vested benefits 18,022 6,854 17,792 7,317
Non-vested benefits 869 -- 1,557 --
------- ------- ------- -------
Accumulated benefit obligation 18,891 6,854 19,349 7,317
Additional amounts related to
projected salary increases 508 -- 432 --
------- ------- ------- -------
Total projected benefit obligation 19,399 6,854 19,781 7,317
------- ------- ------- -------
Assets in excess of (less than)
projected benefit obligation $ 2,445 $ (310) $ 4,617 $ 60
======= ======= ======= =======
Consisting of:
Unamortized net asset (liability)
existing at date of adoption $ (504) $ (15) $ (597) $ (29)
Unrecognized net gain (loss) 3,129 (295) 5,329 89
Unrecognized prior service cost (180) -- (115) --
------- ------- ------- -------
$ 2,445 $ (310) $ 4,617 $ 60
======= ======= ======= =======
</TABLE>
For the valuation of pension obligations at December 31, 1994 and 1993, the
discount rate was 7-1/2% and the expected return on assets was 9%.
Effective December 31, 1993, the Company merged one underfunded and three
overfunded pension plans into one overfunded plan. The merger had no effect on
benefit levels, accrued benefits, or other rights and entitlements previously
given under each plan prior to the merger. In 1992, the Company recorded an
additional pension liability in the amount of $4,157,000 and an intangible
asset in the amount of $1,702,000 representing the unfunded accumulated benefit
obligation required by FAS No. 87. The difference of $2,455,000 represented a
charge to stockholders' equity of $1,545,000 for the underfunded plans and
expense totalling $910,000 resulting from the plan curtailment at the Cleveland
plant. As a result of the merger and the increase in the market value of the
plans' assets during 1993, the pension liability and the corresponding asset
and reduction of stockholders' equity for the underfunded plans at December 31,
1992 have been substantially reversed.
Plan curtailments in 1993 resulted from the sale of the Company's screw plants
and reductions in the work force at the Kent, Ohio plant. The net curtailment
gain of $604,000 relating to the screw plants was offset against the accrued
restructuring reserve and the $167,000 curtailment loss relating to the Kent
plant was charged to 1993 operations.
The Company has a fully Company paid Employee Stock Ownership Plan which
provides coverage to all domestic employees, except those covered by a
Collective Bargaining Agreement which does not require them to be included in
the Plan. The contribution to this Plan was $630,000 in 1993 and $781,000 in
1992. In 1994 an accrual of $622,000 was recorded, and the contribution will
be made in 1995.
22
<PAGE> 23
Note 10 - Contingent Liabilities:
In 1993 the Company sold real estate in Mentor, Ohio, and the buyer assumed
the outstanding Industrial Revenue Bonds. The Company remains contingently
liable for the bond payments. The outstanding balance at December 31, 1994
was $1,156,000.
The Company is subject to various legal actions, governmental investigations,
and proceedings relating to various matters incidental to its business
including product liability claims. The Company intends to vigorously defend
these matters. While the outcome of such matters cannot be predicted with
certainty, in the opinion of management, after reviewing such matters and
consulting with the Company's counsel and insurers, any liability which may
ultimately be incurred is not expected to materially affect the consolidated
financial position of the Company.
The Company engaged an independent consultant to complete environmental
assessments at its owned manufacturing facilities. While a number of
environmental tests and measurements were conducted at the Company's Kent
plant, definitive conclusions have not been reached pending additional
investigations, including those in accordance with proposed modifications to a
State approved plan. The Company has accrued, in the 1994 financial
statements, management's best estimate of costs associated with remediation of
the Kent site. This estimate will be updated as new information becomes
available.
It is possible that the results of operations and/or cash flows in any
particular quarterly or annual period could be materially affected by these
environmental contingencies. While it is impossible at this time to determine
with certainty the ultimate effect on the financial statements of
environmental matters, including at the Kent site, it is management's opinion,
based in part on the advice of independent experts and counsel (after taking
into account possible recourse actions) that when the final costs are
determined, they will not have a materially adverse effect on the consolidated
results of operations or on the consolidated financial position of the
Company.
23
<PAGE> 24
Note 11 - Quarterly Data (Unaudited):
Summarized unaudited quarterly financial data (in thousands of dollars, except
for per share amounts) follow. The third quarter of 1993 includes a $700,000
non-recurring charge (Note 2) and the fourth quarter of 1993 includes a
$1,760,000 charge to write down an asset to its estimated fair market value
(Note 3).
<TABLE>
<CAPTION>
Quarter Ended
----------------------------------------------------------------
Mar. 31 June 30 Sept. 30 Dec. 31 Total
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994
Net sales $41,737 43,528 42,057 40,970 $168,292
- ---------------------------------------------------------------------------------------
Gross profit $ 5,672 6,021 6,142 4,619 $ 22,454
- ---------------------------------------------------------------------------------------
Income before
income taxes $ 1,029 1,116 1,131 1,173 $ 4,449
- ---------------------------------------------------------------------------------------
Net income $ 839 1,011 1,046 1,181 $ 4,077
- ---------------------------------------------------------------------------------------
Net income
per share $ .14 .17 .17 .19 $ .67
- ---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
----------------------------------------------------------------
Mar. 31 June 30 Sept. 30 Dec. 31 Total
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993
Net sales $50,783 49,909 39,683 36,228 $176,603
- ---------------------------------------------------------------------------------------
Gross profit $ 7,081 6,297 4,823 4,294 $ 22,495
- ---------------------------------------------------------------------------------------
Income (loss) before
income taxes $ 1,236 1,242 20 (1,318) $ 1,180
- ---------------------------------------------------------------------------------------
Net income (loss) $ 1,035 1,059 (127) (1,290) $ 677
- ---------------------------------------------------------------------------------------
Net income (loss)
per share $ .18 .18 (.02) (.23) $ .11
- ---------------------------------------------------------------------------------------
</TABLE>
24
<PAGE> 25
Note 12 - Business Segments:
The Company operates in two segments: Manufacturing and Distribution.
Operations in Manufacturing involve production and sale of metal nuts.
Operations in Distribution involve the distribution of all types of products
associated with the fastener industry for use in maintenance and repair
requirements and as components to original equipment manufacturers.
Operating profit for each segment consists of total revenues less applicable
costs and expenses related to those revenues. In 1992, Manufacturing
operating loss was increased by $10,550,000 for a restructuring charge (see
Note 2). The following items are excluded from the determination of operating
profit: general corporate expenses, interest expense and miscellaneous income
and expense items. Transfers between segments are generally at normal selling
prices.
General corporate expenses are primarily central administrative office
expenses.
Identifiable assets by segment are those assets identified with the operations
of each segment. Corporate assets consist of certain cash accounts,
miscellaneous receivables, prepaid expenses, property, plant and equipment and
a long term pension asset (see Note 9) relating directly to corporate offices.
Sales to automotive original equipment manufacturers were approximately 13%,
20% and 22% of consolidated sales in 1994, 1993 and 1992, respectively. One
customer accounted for 5% of consolidated sales in 1994, 11% in 1993 and 13%
in 1992. Foreign sales were not significant. Sales and identifiable assets
of the Canadian subsidiary were not material and are included in the
Manufacturing segment.
25
<PAGE> 26
<TABLE>
<CAPTION>
For the Year Ended December 31,
- -------------------------------------------------------------------------------
Dollars in thousands 1994 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales to unaffiliated customers
Manufacturing....................... $ 48,263 $ 77,684 $ 96,066
Distribution........................ 120,029 98,919 86,710
-------- -------- --------
Consolidated........................ $168,292 $176,603 $182,776
======== ======== ========
Intersegment sales
Manufacturing....................... $ 1,424 $ 1,918 $ 2,039
Adjustments/eliminations............ (1,424) (1,918) (2,039)
-------- -------- --------
Consolidated........................ $ -- $ -- $ --
======== ======== ========
Operating profit (loss)
Manufacturing....................... $ (74) $ 1,310 $ 1,640
Special items*...................... -- 456 (10,550)
-------- -------- --------
(74) 1,766 (8,910)
Distribution...................... 9,713 8,136 6,683
General corporate expenses.......... (3,303) (3,115) (3,188)
Interest expense, net............... (2,122) (3,163) (3,840)
Other income (expense), net......... 235 (2,444) (1,362)
-------- -------- --------
Income (loss) before taxes and
effect of accounting change.... $ 4,449 $ 1,180 $(10,617)
======== ======== ========
Identifiable assets
Manufacturing....................... $ 28,585 $ 28,480 $ 52,878
Distribution........................ 44,193 34,419 27,294
Corporate........................... 7,418 10,117 8,420
-------- -------- --------
Consolidated........................ $ 80,196 $ 73,016 $ 88,592
======== ======== ========
Depreciation and amortization
Manufacturing....................... $ 910 $ 1,796 $ 2,891
Distribution........................ 242 236 224
Corporate........................... 119 236 307
-------- -------- --------
Consolidated........................ $ 1,271 $ 2,268 $ 3,422
======== ======== ========
Capital expenditures
Manufacturing....................... $ 408 $ 1,447 $ 1,279
Distribution........................ 335 183 177
Corporate........................... 86 25 78
-------- -------- --------
Consolidated........................ $ 829 $ 1,655 $ 1,534
======== ======== ========
- ------------------------------------------------------------------------------
<FN>
* See Note 2.
</TABLE>
26
<PAGE> 27
Item 7(b)
Unaudited Pro Forma Financial Information
Current Report on Form 8-K
Park-Ohio Industries, Inc.
Cleveland, Ohio
April 14, 1995
27
<PAGE> 28
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS--
(UNAUDITED)
The following unaudited pro forma condensed combined financial statements
reflect the acquisition of RB&W by Park-Ohio through the issuance of 2,135,257
shares of Common Stock ($11.50 per share market value as of March 31, 1995)
and cash of $28,454,000 in a transaction accounted for as a purchase. The pro
forma financial statements are based on estimates and assumptions set forth
below and in the notes to such statements which include the pro forma
adjustments. Historical financial data of Park-Ohio and RB&W included in the
following data have been taken from the financial statements and other
financial information of Park-Ohio and RB&W. The pro forma condensed combined
balance sheet and the related pro forma condensed combined statement of income
for the year ended December 31, 1994 includes the audited historical financial
data of Park-Ohio and RB&W. The pro forma condensed combined balance sheet
gives effect to the transaction as if it has occurred as of the date of the
Company's latest year end balance sheet, December 31, 1994. The pro forma
condensed combined statement of income for the year ended December 31, 1994,
gives effect to the Merger as if it had occurred at the beginning of the year.
Final purchase accounting adjustments and analysis of possible contingent
liabilities will be evaluated and, therefore, may differ from the pro forma
adjustments presented herein. The pro forma information presented below is not
necessarily indicative of the results which actually would have been obtained
if the Merger had been consummated in the past or which may be obtained in the
future.
The pro forma condensed combined financial statements should be read in
conjunction with the historical consolidated financial statements and notes
thereto of Park-Ohio and RB&W.
28
<PAGE> 29
<TABLE>
PARK-OHIO INDUSTRIES, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET--(UNAUDITED)
<CAPTION>
DECEMBER 31, 1994
----------------------------------------------------------------------------
PRO-FORMA
PARK-OHIO RB&W ADJUSTMENTS (B) ELIMINATIONS CONSOLIDATED
----------------------------------------------------------------------------
(IN THOUSANDS)
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 2,172 $ 860 $ $ 3,032
Accounts receivable 27,165 25,353 52,518
Inventories 25,651 34,392 60,043
Prepaid expenses 1,845 6,128 $ (5,366) 2,607
----------------------------------------------------------------------------
TOTAL CURRENT ASSETS 56,833 66,733 (5,366) 118,200
Property, plant and equipment 111,881 20,567 (14,719) 117,729
Less accumulated depreciation 61,246 14,719 14,719 61,246
----------------------------------------------------------------------------
50,635 5,848 56,483
Excess purchase price over net assets
acquired, net 16,727 54,805 (24,957) 46,575
Other assets 10,420 7,615 8,000 26,035
----------------------------------------------------------------------------
$ 134,615 $80,196 $ 57,439 $ (24,957) $ 247,293
============================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable and accrued
expenses $ 24,237 $23,330 $ 1,000 $ 48,567
Current portion of long-term liabilities 2,469 144 2,613
----------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 26,706 23,474 1,000 51,180
Long-term debt 9,513 25,958 26,884 62,355
Other postemployment benefits 27,800 3,705 31,505
Other 1,646 2,102 5,000 8,748
----------------------------------------------------------------------------
38,959 31,765 31,884 102,608
Convertible senior subordinated
debentures 22,235 22,235
SHAREHOLDERS' EQUITY
Common stock 8,192 6,016 2,135 $ (6,016) 10,327
Additional paid-in capital 26,189 15,531 22,420 (15,531) 48,609
Retained earnings 12,334 3,854 (3,854) 12,334
Minimum pension liability (295) 295
Foreign currency translation (149) 149
----------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 46,715 24,957 24,555 (24,957) 71,270
----------------------------------------------------------------------------
$ 134,615 $80,196 $ 57,439 $ (24,957) $ 247,293
============================================================================
<FN>
See notes to unaudited pro forma condensed combined financial statements.
</TABLE>
29
<PAGE> 30
<TABLE>
PARK-OHIO INDUSTRIES, INC.
PRO FORMA CONDENSED STATEMENT OF INCOME--(UNAUDITED)
YEAR ENDED DECEMBER 31, 1994
<CAPTION>
PRO-FORMA
ADJUSTMENTS PRO-FORMA
PARK-OHIO RB&W (B) COMBINED
---------------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales $ 191,527 $ 168,292 $ 359,819
Costs and expenses:
Cost of products sold 157,862 145,838 303,700
Selling, general and administrative 21,049 15,883 $ 1,527 38,459
Interest expense 1,958 2,122 2,151 6,231
---------------------------------------------------------------------
180,869 163,843 3,678 348,390
---------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 10,658 4,449 (3,678) 11,429
---------------------------------------------------------------------
Federal and foreign income taxes (1,826) 372 (1,454)
---------------------------------------------------------------------
NET INCOME $ 12,484 $ 4,077 $ (3,678) $ 12,883
====================================================================
NET INCOME PER COMMON SHARE $1.49 $.67
===============================
PRO FORMA NET INCOME PER COMMON SHARE
$1.22
=================
COMMON SHARES USED IN THE COMPUTATION (C)
8,092 6,114 2,135 10,227
====================================================================
<FN>
See notes to unaudited pro forma condensed combined financial statements.
</TABLE>
30
<PAGE> 31
PARK-OHIO INDUSTRIES, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
DECEMBER 31, 1994
NOTE A
The Pro Forma Condensed Combined Balance Sheet (Unaudited) reflects the
issuance of 2,135,257 shares of Park-Ohio Common Stock ($11.50 market value
per share at March 31, 1995, total of $24,555,000) and cash of $28,454,000
($4.45 per share) less proceeds of $1,570,000 from the assumed exercise of
outstanding options of RB&W, in exchange for all of the outstanding shares of
RB&W Common Stock (6,015,885) and common shares issuable upon exercise of
outstanding options of RB&W (378,250). This assumes an exchange ratio of
.33394 shares of Park-Ohio Common Stock for each share of RB&W.
The net cash portion of the Merger ($26,884,000) will be financed under
Park-Ohio's existing long-term credit facility with a bank group led by Society
National Bank, which carries interest at a percentage over LIBOR.
NOTE B
The transaction will be accounted for as a purchase. The following
purchase accounting adjustments were recorded in the accompanying pro forma
condensed combined financial statements, which results in an excess purchase
price over historical cost of $29,848,000 which will be amortized over
twenty-five years:
- A $5,366,000 reduction in prepaid tooling and manufacturing supplies
of RB&W to conform RB&W's accounting policy for these items to
Park-Ohio's.
- Adjustment of $3,000,000 to RB&W's valuation allowance for deferred
tax assets to reflect the anticipated benefit from the use of a
portion of RB&W's operating loss carryforwards.
- Recognition of RB&W's prepaid pension expense of $5,000,000 reflecting
the fair market value of aggregate pension plan assets in excess of
projected benefit obligations.
- Additional accruals, based on Park-Ohio's estimate, for possible
environmental exposures and product liability matters of $3,000,000
and $2,000,000, respectively.
31
<PAGE> 32
PARK-OHIO INDUSTRIES, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS--CONTINUED
NOTE B--CONTINUED
The Pro Forma Condensed Combined Balance Sheet (Unaudited) reflects a
$1,000,000 liability for expenses to be incurred in connection with the Merger.
The Pro Forma Condensed Combined Income Statement (Unaudited) reflects
additional interest expense under the credit facility of $2,151,000, additional
amortization of $1,194,000 on a straight line basis over twenty-five years for
goodwill arising from the Merger and amortization of $333,000 on a straight
line basis over fifteen years of the prepaid pension expense.
Based upon Park-Ohio management's analysis of RB&W's property, plant and
equipment, historical net book value approximates fair market value.
NOTE C
Net Income Per Common Share for Park-Ohio and RB&W is based on the
average number of common shares outstanding and assumes the exercise of
outstanding dilutive stock options and, for Park-Ohio only, is also based on
issuance of additional shares subject to certain earn-out provisions of
previous acquisitions of Park-Ohio after adjusting results of operations for
preferred stock dividend requirements.
Pro forma weighted average shares outstanding for the year ended December
31, 1994 reflects the issuance of 2,135,257 shares of Park-Ohio Common
Stock in connection with the Merger.
Historical and Pro forma net income per common share as of December 31,
1994 has taken into account imputed goodwill amortization of $398,000 relating
to earn-out provisions of previous acquisitions of Park-Ohio.
32
<PAGE> 33
EXHIBIT INDEX
-------------
EXHIBIT
NO. EXHIBIT
--- -------
2.1 The Amended and Restated Plan and Agreement of Merger dated as of
February 6, 1995, among Park-Ohio Industries, Inc.; P.O. Acquisition
Company, Inc. and RB&W Corporation (previously filed as Exhibit No.
2.1 to the Form S-4 (No. 33-87230) of Park-Ohio Industries, Inc. on
December 9, 1994).
23.1 Consent of Price Waterhouse LLP
99 Press release
33
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the inclusion in this Current Report on Form 8-K of
Park-Ohio Industries, Inc. dated April 14, 1995 of our report dated March 7,
1995 relating to the consolidated financial statements of RB&W Corporation and
to the incorporation by reference of our report dated March 7, 1995 relating
to the consolidated financial statements of RB&W Corporation in (i) Park-Ohio
Industries, Inc.'s Registration Statement No. 33-86054 on Form S-3, (ii)
Registration Statement No. 33-64420 on Form S-8 relating to Park-Ohio
Industries, Inc.'s 1992 Stock Option Plan, and (iii) Park-Ohio Industries,
Inc.'s Registration Statement No. 33-87230 on Form S-4.
PRICE WATERHOUSE LLP
Cleveland, Ohio
April 14, 1995
<PAGE> 1
[PARK OHIO CORPORATION LOGO]
EXHIBIT 99
FOR IMMEDIATE RELEASE CONTACT: EDWARD F. CRAWFORD
PARK-OHIO INDUSTRIES, INC.
(216)991-9700
CLEVELAND, OHIO, APRIL 4, 1995 -- Park-Ohio Industries, Inc. (NASDAQ: PKOH)
announced that the merger with RB&W Corporation was effective March 31, 1995.
Letters of transmittal will be sent in the second week of April to exchange
each outstanding share of RB&W common stock for $4.45 in cash and .33394 of a
share of Park-Ohio common stock. Unexchanged holders of RB&W common stock, as
of the April 12, 1995 record date, will be allowed to vote at Park-Ohio's
annual meeting scheduled for May 25, 1995.
Park-Ohio Industries, Inc., headquartered in Cleveland, Ohio, is a
diversified manufacturer organized into three business groups:
- The Container Products Group manufactures plastic containers for the food
products, industrial coatings and building products industries.
- The Transportation Group manufactures industrial products for the airline,
automotive, locomotive and trucking industries.
- The Consumer Products Group manufactures and distributes molded plastic,
wood products and metal indoor and outdoor products for the housewares,
hardware and lawn and garden industries.
The Company's stock is traded on the NASDAQ National Market System.
# # # # #
20600 Chagrin Blvd. * Cleveland, Ohio 44122 * 216-991-9700 / Fax 216-991-9316
