<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 27, 1996
ERC Industries, Inc.
--------------------
(Exact name of registrant as specified in its charter)
Delaware
--------
(State or other jurisdiction of incorporation)
0-14439 76-0382879
------- ----------
(Commission File Number) (IRS Employer Identification No.)
15835 Park Ten Place, Suite 115, Houston, Texas 77084
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 398-8901
----------------
Not Applicable
--------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 7. Financial Statements and Exhibits.
----------------------------------
a. Financial Statements of Businesses Acquired:
*Financial Statements of Seaboard Lloyd Limited for the financial years
ended March 31, 1996 and March 25, 1995, respectively
Directors' Report
Statement of directors' responsibilities
Auditors' Report
Profit and loss account
Balance sheet
Notes
b. *Pro Forma Financial Information:
Introduction
Pro Forma Consolidated Statement of Income for the Year Ended
December 31, 1995
Notes to Pro Forma Consolidated Statements of Income for the Year ended
December 31, 1995
Pro Forma Consolidated Statement of Income for the Nine Months ended
September 30, 1996
Notes to the Pro Forma Consolidated Statements of income for the Nine
Months ended September 30, 1996
c. Exhibits:
**10.1 Purchase Agreement
- ------------
* Filed herewith.
** Previously filed.
<PAGE>
Registered Number 106505
Seaboard Lloyd Limited
Directors' Report and Financial Statements
31 March 1996
<PAGE>
SEABOARD LLOYD LIMITED
- --------------------------------------------------------------------------------
DIRECTORS' REPORT AND FINANCIAL STATEMENTS
CONTENTS PAGE
Directors' report 2
Statement of directors' responsibilities 5
Auditors' report 6
Profit and loss account 7
Balance sheet 8
Notes 9
<PAGE>
SEABOARD LLOYD LIMITED
- -------------------------------------------------------------------------------
DIRECTORS' REPORT
The Directors present their annual report and audited financial statements for
the financial year ended 31st March 1996.
The Company's holding company, VSEL Limited was acquired by The General Electric
Company, p.l.c. on 30th June 1995 and was re-registered as a Private Limited
Company on 2nd January 1996. With effect from 30th June 1995 the Company's
ultimate holding company was The General Electric Company, p.l.c.
PRINCIPAL ACTIVITIES
The principal activities of the Company are the design, manufacture, sale and
service of wellhead control equipment and subsea products to the oil and gas
industry.
BUSINESS REVIEW
The company has continued to experience difficult trading conditions which have
placed pressure on margins and resulted in a reduction in turnover in the year.
PROPOSED DIVIDEND AND TRANSFER TO RESERVES
The loss after taxation for the year ended 31st March 1996 amounted to (pound)
525,875 (1995: (pound) 126,592).
The Directors do not recommend the payment of a dividend. (1995: (pound) NIL).
DIRECTORS AND DIRECTORS' INTERESTS
The Directors who served during the year were as follows:
CN Davies (resigned 2 December 1995)
R.D. Holden
N MacDonald
R Ruesse
C Hart
S McCulloch
KAW Taggart
<PAGE>
SEABOARD LLOYD LIMITED
- -------------------------------------------------------------------------------
DIRECTORS' REPORT (continued)
DIRECTORS AND DIRECTORS' INTERESTS (continued)
According to the Register kept by the Company in accordance with Section 325 of
the Companies Act 1985, the interests of those persons who were directors at the
end of the year in the shares of the Company, its ultimate holding company or
its subsidiaries were as follows:
The General Electric Company, plc.
- ----------------------------------
Options over ordinary shares of 5p each:
- ----------------------------------------
The GEC Employee 1992 Savings-Related Share Option Scheme
- ---------------------------------------------------------
1 April 1995 Options Options 31 March 1996
granted during exercised
the year during the year
R. Ruesse - 6,872 - 6,872
The options were granted during the year at a subscription price of 251p per
share. The options are normally exercisable within six months of 1st April 2001.
The interests of CN Davies and RD Holden are disclosed in the Directors' Report
of VSEL Limited.
PAYMENT OF CREDITORS
The Companies Act 1985 (Miscellaneous Accounting Amendments) Regulations 1996
requires the Company to make a statement of its policy on the payment of
creditors. The Company seeks the best possible terms from suppliers appropriate
to its business and in placing orders, gives consideration to quality, delivery,
price and the terms of payment which will be agreed with suppliers when the
details of the transaction are settled. The Company will continue to honour its
contractual and other legal obligations and to pay creditors on the dates agreed
in contracts and purchase orders.
<PAGE>
SEABOARD LLOYD LIMITED
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AUDITORS
During the year, the Company's auditors, KPMG, resigned and Coopers & Lybrand
were appointed in their place. In accordance with Section 384 of the Companies
Act 1985, a resolution for the appointment of Coopers & Lybrand as auditors of
the Company is to be proposed at the forthcoming Annual General Meeting.
By order of the Board,
KAW Taggart 2 Old Quarry Road
Company Secretary Westfield Industrial Park
Cumbernauld
Date: 12 July 1996
<PAGE>
SEABOARD LLOYD LIMITED
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STATEMENT OF DIRECTORS RESPONSIBILITIES
Company law requires the Directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
Company and of the profit or loss for that year. In preparing those financial
statements, the Directors are required to (a) select suitable accounting
policies and then apply them consistently, (b) make judgements and estimates
that are reasonable and prudent, (c) state whether applicable accounting
standards have been followed, subject to any material departures disclosed and
explained in the financial statements, and (d) prepare the financial statements
on the going concern basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Company and to enable them to ensure that the financial statements comply with
the Companies Act 1985. They have general responsibility for taking such steps
as are reasonably open to them to safeguard the assets of the Company and to
prevent and detect fraud and other irregularities.
<PAGE>
SEABOARD LLOYD LIMITED
- --------------------------------------------------------------------------------
REPORT OF THE AUDITORS TO THE MEMBERS OF SEABOARD LLOYD LIMITED.
We have audited the financial statements on pages 7 to 22.
Respective responsibilities of directors and auditors
As described above the Company's Directors are responsible for the preparation
of financial statements. It is our responsibility to form an independent
opinion, based on our audit, on those statements and to report our opinion to
you.
Basis of opinion
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements. It
also includes an assessment of the significant estimates and judgements made by
the Directors in the preparation of the financial statements and of whether the
accounting policies are appropriate to the Company's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion
In our opinion the financial statements give a true and fair view of the state
of the Company's affairs as at 31 March 1996 and of its loss for the year then
ended and have been properly prepared in accordance with the Companies Act 1985.
Coopers & Lybrand
Chartered Accountants Glasgow
Registered Auditors Date: 4 September 1996
<PAGE>
SEABOARD LLOYD LIMITED
- --------------------------------------------------------------------------------
PROFIT AND LOSS ACCOUNT
for the year ended 31 March 1996
<TABLE>
<CAPTION>
Note 1996 1995
(pound) (pound)
<S> <C> <C> <C>
TURNOVER 3 4,523,092 5,956,490
Cost of Sales (3,723,801) (4,797,614)
---------- ----------
GROSS PROFIT 799,291 1,158,876
Other operating expenses (net) 4 (1,244,844) (1,463,015)
---------- ----------
OPERATING LOSS (445,553) (304,139)
Interest payable and similar charges 8 (65,077) (170,554)
Interest receivable 100 -
---------- ----------
LOST ON ORDINARY ACTIVITIES BEFORE TAXATION 5 (510,530) (474,693)
Tax on loss on ordinary activities 9 (15,345) 348,101
---------- ----------
LOST FOR THE FINANCIAL PERIOD (525,875) (126,592)
========== ==========
</TABLE>
A statement of movements on reserves is given in note 23.
There were no recognised gains or losses in either year other than the retained
loss for the financial year.
<PAGE>
SEABOARD LLOYD LIMITED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCE SHEET
at 31 March 1996
1996 1995
Note (pound) (pound) (pound) (pound)
<S> <C> <C> <C> <C> <C>
FIXED ASSETS
Intangible assets 10 238,329 284,110
Tangible assets 11 1,490,166 1,689,548
Investments 12 47,107 47,107
CURRENT ASSETS
Stocks 13 894,794 1,101,117
Debtors:
amounts falling due within 14 1,946,140 1,515,308
one year
Cash at bank and in hand 1,969 640
--------- ---------
2,842,903 2,617,065
Creditors: amounts falling 15 (2,277,981) (1,768,023)
due within one year
--------- ---------
NET CURRENT ASSETS 564,922 849,042
--------- ---------
TOTAL ASSETS LESS CURRENT
LIABILITIES 2,340,524 2,869,807
CREDITORS: amounts falling 16
due after more than one year (56,811) (73,219)
DEFERRED INCOME 17 - -
PROVISION FOR LIABILITIES AND
CHARGES 18 (42,000) (29,000)
--------- ---------
NET ASSETS 2,241,713 (2,767,588)
========= =========
CAPITAL AND RESERVES
Called up share capital 20 2,810,000 2,810,000
Share premium account 21 84,050 84,050
Profit and loss account 22 (652,337) (126,462)
--------- ---------
EQUITY SHAREHOLDERS' 23 2,241,713 2,767,588
FUNDS ========= =========
</TABLE>
These financial statements were approved by the Board of Directors on 12 July
1996 and were signed on its behalf by:
/s/ N MacDonald
- ---------------------------------
N MacDonald
Chairman
<PAGE>
SEABOARD LLOYD LIMITED
- --------------------------------------------------------------------------------
NOTES
(forming part of the financial statements)
1. ACCOUNTING DATE
The Company made up its financial statements for the financial year
ended 31 March 1996 (1995: for the 52 week financial year ended 25 March
1995).
2. ACCOUNTING POLICIES
The following accounting policies have been applied consistently in
dealing with items which are considered material in relation to the
Company's financial statements.
Basis of preparation
The financial statements have been prepared in accordance with
applicable accounting standards and under the historical cost accounting
rules.
The Accounting Standards Board has issued Financial Reporting Standard
('FRS') 1, which requires companies to prepare a cash flow statement.
However, companies which are wholly owned subsidiary undertakings of a
European Community parent are granted exemption by FRS 1 from the
requirement to prepare a cash flow statement, provided that certain
conditions are met. Seaboard Lloyd Limited is such a subsidiary
undertaking and, accordingly, a cash flow statement has not been
prepared.
Consolidated accounts
As the Company is a wholly owned subsidiary undertaking of The General
Electric Company, p.l.c., it is exempt from preparing consolidated
accounts.
Fixed assets and depreciation
Tangible assets are stated at cost less depreciation.
The annual depreciation charge is calculated on a straight line basis on
cost and is designed to write-off the relevant assets over the following
estimated working lives:
Buildings - 50 years
Plant and machinery - 3-10 years
Land is not depreciated.
Intangible fixed assets and amortisation
Patents, licences, trade marks and similar rights and assets are
amortised by the straight line method over a period of ten years.
Goodwill
The business and assets of Sealand Industries Limited (formerly Seaboard
Lloyd Limited) were transferred to the company on 27 March 1994 for
their book value which was less than their fair value. The cost of the
Company's investments in the subsidiary undertaking selected the
underlying fair value of their net assets and goodwill at the time of
acquisition.
<PAGE>
SEABOARD LLOYD LIMITED
- ----------------------------------------------------------------------------
NOTES (continued)
ACCOUNTING POLICIES (continued)
As a result of the transfer, the value of the Company's investments in
the subsidiary undertakings fell below the amount at which they were
stated in the Company's accounting records. Schedule 4 to the Companies
Act 1985 requires that the investments be written down accordingly and
that the amount be charged as a loss in the Company's profit and loss
account. However, the Directors consider that, as there has been no
overall loss to the Company, it would fail to give a true and fair view
to charge that diminution to the Company's profit and loss account and
it should instead be re-allocated to goodwill and the identifiable net
assets transferred, so as to recognise in the company's balance sheet
the effective cost of these net assets and goodwill. The goodwill is
shown as an intangible asset and amortised over its expected useful
economic life.
Goodwill is written off over a period of ten years from the date of the
Company's investment in subsidiary undertakings.
Stocks
Stocks are valued at cost or, if less, at estimated net realisable
value. Cost comprises direct materials, direct labour and an appropriate
proportion of the overheads incurred in bringing the stock to its
present location and condition.
Foreign currencies
Transactions denominated in foreign currencies are translated into
sterling and recorded at the rate of exchange ruling at the date of the
transaction. Balances denominated in foreign currencies are translated
into sterling at the exchange rates ruling at the balance sheet date and
differences on exchange included in the profit and loss account.
Deferred taxation
Provision is made for taxation on timing differences between profits
computed for taxation purposes and those disclosed in the financial
statements only if there is a reasonable probability that such taxation
will become payable in the foreseeable future.
Leased assets
Assets acquired under finance leases are capitalised at their fair value
at the date of inception of the agreement. The capital element repayable
within one year is included within creditors due within one year. The
total finance charges are allocated over the period of the agreement in
accordance with the terms of the lease.
The cost of operating leases is charged to income in the year of
expenditure.
<PAGE>
SEABOARD LLOYD LIMITED
- --------------------------------------------------------------------------------
ACCOUNTING POLICIES (continued)
Government grants
Regional Selective Assistance Grants received are credited to the profit
and loss account over a period of three years.
Other grants are credited to the profit and loss account on a basis
which matches the grants with the costs to which they relate.
Pension costs
The Company provides for certain pension benefits by payments to defined
contribution insured funds independent from the finances of the Company
and contributions are charged against profits.
Research & Development
Expenditure incurred in the year is charged to the profit and loss
account in full.
3. ANALYSIS OF TURNOVER
The turnover stated is the amount receivable (excluding VAT) in respect
of goods and services supplied during the financial year.
The analysis of turnover by geographical market is:
1996 1995
(pound) (pound)
United Kingdom 3,531,266 3,108,926
Rest of EC 83,125 390,306
Rest of Europe 430,056 550,785
Africa - 180,956
Asia 275,997 637,626
Australasia 201,094 1,080,245
USA 1,554 7,646
--------- ---------
4,523,092 5,956,490
========= =========
<PAGE>
SEABOARD LLOYD LIMITED
- -------------------------------------------------------------------------------
NOTES (continued)
4. OTHER OPERATING EXPENSES (NET)
<TABLE>
<CAPTION>
1996 1995
(pound) (pound)
<S> <C> <C>
Distribution Costs 360,790 408,490
Administrative expenses 1,065,561 1,148,962
Amortisation of goodwill (note 10) 24,781 24,781
--------- ---------
1,451,132 1,582,233
Other operating income
Government grants: Regional Selective
Assistance (note 17) (175,000) (58,333)
Other income (31,288) (60,885)
--------- ---------
1,244,844 1,463,015
========= =========
5. LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION
1996 1995
(pound) (pound)
Loss on ordinary activities before taxation is
stated after charging
Auditors' remuneration:
Audit 14,500 15,000
Other Services 4,570 6,446
Depreciation and other amounts written off
tangible and intangible fixed assets:
Owned assets 307,046 341,811
Leased assets 41,740 43,296
Other operating leases:
Property leases 37,000 36,200
Others 39,800 53,108
Re-organisation costs 114,976 204,152
</TABLE>
The total amount charged to revenue for the hire of plant and machinery amounted
to (pound) 155,742 (1995: (pound) 193,312). This comprises rentals payable under
operating leases as well as depreciation on plant and machinery held under
finance leases together with the related finance charges.
<PAGE>
SEABOARD LLOYD LIMITED
- --------------------------------------------------------------------------------
NOTES (continued)
6. REMUNERATION OF DIRECTORS
1996 1995
(pound) (pound)
Directors' emoluments:
Fees as Directors 66,320 -
Other emoluments, including pension
contributions and taxable benefits 209,190 191,158
Compensation for loss of office paid by the
Company - 161,158
------- -------
275,510 352,316
======= =======
The emoluments, excluding pension contributions, of the Chairman were (pound)
66,320 (1995: (pound) 69,328) and those of the highest paid Director were
(pound) 61,897 ((pound) 1995: (pound) 69,328)
Details of Directors' share options are given in the Directors' Report on page
2.
The emoluments, excluding pension contributions, of the Directors (including the
Chairman and highest paid Director) were within the following ranges:
NUMBER OF DIRECTORS
1996 1995
(Pound) 0 - (Pound) 5,000 2 6
(Pound) 35,001 - (Pound) 40,000 1 -
(Pound) 40,001 - (Pound) 45,000 1 1
(Pound) 50,001 - (Pound) 55,000 1 1
(Pound) 65,001 - (Pound) 70,000 2 1
<PAGE>
SEABOARD LLOYD LIMITED
- -------------------------------------------------------------------------------
NOTES (continued)
7. STAFF NUMBERS AND COSTS
The average number of persons employed by the Company (including
executive Directors) during the year, analysed by category, was as
follows:
NUMBER OF EMPLOYEES
1996 1995
Staff 41 47
Works 26 23
-- --
67 70
== ==
The aggregate payroll costs of these persons were as follows:
1996 1995
(pound) (pound)
Wages and salaries 1,336,970 1,447,898
Social security costs 129,270 145,649
Other pension costs 14,584 19,405
--------- ---------
1,480,824 1,642,952
========= =========
8. INTEREST PAYABLE AND SIMILAR CHARGES
1996 1995
(pound) (pound)
Finance charges payable in respect of finance
leases and hire purchase contracts 14,986 20,222
Other interest 180 2,948
Interest payable to group undertakings 49,911 147,384
--------- ---------
65,077 170,554
========= =========
<PAGE>
SEABOARD LLOYD LIMITED
- --------------------------------------------------------------------------------
NOTES (continued)
9. TAXATION
1996 1995
(pound) (pound)
Group relief receivable - (393,743)
Adjustment relating to an earlier year (3,300) 718
Overseas taxation unrelieved 5,645 15,924
Deferred taxation 13,000 29,000
------- -------
15,345 (348,101)
======= =======
The taxation credit in 1995 reflects (pound) 393,743 for group relief
surrendered to the Company's then ultimate parent undertaking at 100% of
the value of tax losses for the year.
10. INTANGIBLE FIXED ASSETS
GOODWILL PATENTS TOTAL
LICENCES,
TRADE MARKS
& SIMILAR
RIGHTS AND
ASSETS
(pound) (pound) (pound)
Cost
At beginning and end of period 125,245 209,896 335,141
======= ======= =======
Accumulated depreciation
At beginning of period 24,781 26,250 51,031
Amortised in the period 24,781 21,000 45,781
------- ------- -------
At end of period 49,562 47,250 96,812
======= ======= =======
Net book value
At 31 March 1996 75,683 162,646 238,329
======= ======= =======
At 25 March 1995 100,464 183,646 284,110
======= ======= =======
The goodwill of (pound) 75,683 represents the excess of the cost of
investments in subsidiary undertakings over the net assets of these
subsidiary undertakings transferred to the Company on 27 March 1994.
This amount is being amortised over its expected useful economic life
(note 2).
<PAGE>
SEABOARD LLOYD LIMITED
- --------------------------------------------------------------------------------
NOTES (continued)
11. TANGIBLE FIXED ASSETS
LAND AND PLANT AND TOTAL
BUILDINGS MACHINERY
(pound) (pound) (pound)
Cost 1,062,949 2,322,103 3,385,052
At beginning of period
Additions - 114,140 114,140
Disposals (4,800) (50,861) (55,661)
--------- --------- ---------
At end of period 1,058,149 2,385,382 3,443,531
--------- --------- ---------
Depreciation and diminution in
value
At beginning of period 120,497 1,575,007 1,695,504
Charge for period 26,728 276,277 303,005
On disposals (4,319) (40,825) (45,144)
--------- --------- ---------
At end of period 142,906 1,810,459 1,953,365
--------- --------- ---------
Net book value
At 31 March 1996 915,243 574,923 1,490,166
========= ========= =========
At 25 March 1995 942,452 747,096 1,689,548
========= ========= =========
The net book value of land and building comprised:
1996 1995
(pound) (pound)
Freehold 910,529 934,032
Short leasehold 4,713 8,420
--------- ---------
915,242 942,452
--------- ---------
<PAGE>
SEABOARD LLOYD LIMITED
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NOTES (continued)
11. TANGIBLE FIXED ASSETS (continued)
Tangible fixed assets include the following assets held under finance
leases (including similar hire purchase contracts):
1996 1995
(pound) (pound)
Plant and machinery 87,569 150,292
Accumulated depreciation (64,033) (88,834)
------ -------
23,536 61,458
====== =======
12. INVESTMENTS
1996 1995
(pound) (pound)
Shares in group undertakings at cost:
At beginning of period 47,107 172,352
Transferred to goodwill (note 10) - (125,245)
------ -------
At end of period 47,107 47,107
====== =======
Sealand Industries Limited (formerly Seaboard Lloyd Limited) is a wholly
owned subsidiary undertaking and is registered in England and Wales.
Sealand Industries Limited is dormant within the meaning of Section 250
of the Companies Act 1985.
Forsac Limited is a wholly owned subsidiary undertaking and is
registered in Scotland. Forsac Limited is dormant within the meaning of
Section 250 of the Companies Act 1985.
In both cases, the shares held are ordinary shares.
<PAGE>
SEABOARD LLOYD LIMITED
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NOTES (continued)
13. STOCKS
1996 1995
(pound) (pound)
Raw materials 108,831 198,124
Work in progress 201,938 181,878
Finished goods 584,025 721,115
--------- ---------
894,794 1,101,117
========= =========
14. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
1996 1995
(pound) (pound)
Trade debtors 1,609,473 955,101
Prepayments & accrued income 34,645 107,101
Amounts owed by group undertakings:
Parent undertakings 302,022 453,106
--------- ---------
1,946,140 1,515,308
========= =========
15. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
1996 1995
(pound) (pound)
Bank overdraft 1,092,356 999,974
Finance lease commitments (note 24) 13,740 30,144
Trade creditors 781,514 523,978
Other taxes and social security 184,290 43,561
Other creditors 2,109 73,664
Accruals and deferred income 203,972 96,702
--------- ---------
2,277,981 1,768,023
========= =========
<PAGE>
SEABOARD LLOYD LIMITED
- -------------------------------------------------------------------------------
NOTES (continued)
16. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
1996 1995
(pound) (pound)
Amounts owed to group undertakings:
Subsidiary undertakings 47,107 47,107
Finance lease commitments (note 24) 9,704 26,112
------- -------
56,811 73,219
======= =======
There were no fixed repayment terms for the amounts owed to group
undertakings. These amounts were interest free.
17. DEFERRED INCOME
1996
(pound)
Government grants:
At beginning of period -
Grants received during the period 175,000
Credited to the profit and loss account (175,000)
during the period
-------
At end of period -
=======
The grant received during the year represents the final instalment under a
project qualifying for Regional Selective Assistance. In these circumstances,
the Directors consider that it is appropriate to credit the grant received to
the profit and loss account in full.
<PAGE>
SEABOARD LLOYD LIMITED
- --------------------------------------------------------------------------------
NOTES (continued)
18. PROVISIONS FOR LIABILITIES AND CHARGES
TAXATION INCLUDING
DEFERRED TAXATION
(pound)
At beginning of period 29,000
Charge for the year in the profit and
loss account 13,000
-------
At end of period 42,000
=======
The amounts provided for deferred taxation and the amounts not provided
are set out below:
1996 1995
Provided Unprovided Provided Unprovided
(pound) (pound) (pound) (pound)
Difference between
accumulated
depreciation and
amortisation and
capital allowances 122,000 - 38,000 118,000
Other timing
differences (80,000) (79,000) (9,000) (80,000)
------- ------ ------ -------
42,000 (79,000) 29,000 38,000
======= ====== ====== =======
19. CONTINGENT LIABILITIES
The Company has issued bank guarantees to certain customers in the
normal course of business. The total amount outstanding at 31 March 1996
was (pound) 324,212. (1995: (pound) 414,046).
20. CALLED UP SHARE CAPITAL
1996 1995
(pound) (pound)
Authorised
Ordinary shares of (pound) 1 each 2,810,000 2,810,000
========= =========
Allotted, called up and fully paid
Ordinary shares of (pound) 1 each 2,810,000 2,810,000
========= =========
<PAGE>
SEABOARD LLOYD LIMITED
- -------------------------------------------------------------------------------
NOTES (continued)
21. SHARE PREMIUM ACCOUNT
1996 1995
(pound) (pound)
Balance at beginning and end of the
period 84,050 84,050
========= =========
22. PROFIT AND LOSS ACCOUNT
(pound)
Balance at beginning of period (126,462)
Loss for the financial period (525,875)
---------
Balance at end of period (652,337)
=========
23. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
1996 1995
(pound) (pound)
Loss for the financial period (525,875) (126,592)
Shares issued during period - 1,794,000
--------- ---------
Net addition to shareholders' funds (525,875) 1,667,408
Opening shareholders' funds 2,767,588 1,100,180
--------- ---------
Closing shareholders' funds 2,241,713 2,767,588
========= =========
<PAGE>
SEABOARD LLOYD LIMITED
- -------------------------------------------------------------------------------
NOTES (continued)
24. COMMITMENTS
(l) There were no capital commitments at the end of the financial
year for which no provision has been made.
(ii) Finance leases
The Company's total capital repayment obligations under finance
leases at 31 March 1996 were as follows:
1996 1995
(pound) (pound)
Due within on year (note 15) 13,740 30,144
Due between two and five years
(note 16) 9,704 26,112
------ ------
23,444 56,256
====== ======
(iii) Operating leases
At the end of the financial year the Company had annual
commitments under non-cancellable operating leases as follows:
1996 1995
LAND & OTHER Land & Other
BUILDINGS building
(pound) (pound) (pound) (pound)
Operating leases
which expire:
Within one year - 24,504 - 13,032
In the second to
fifth years
inclusive 13,500 21,308 13,500 38,776
Over five years 23,500 - 23,500 -
------ ------ ------ ------
37,000 45,812 37,000 51,808
====== ====== ====== ======
25. ULTIMATE PARENT UNDERTAKING
The Company's ultimate holding company is The General Electric Company,
p.l.c., a company registered in England and Wales which is the largest
group in which the results of the Company are consolidated. The
consolidated accounts of The General Electric Company, p.l.c. are
available to the public and may be obtained from its Registered Office
at 1 Stanhope Gate, London, W1A 1EH
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
Directors' report and financial statements
25 March 1995
Registered number 106505
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
Directors' report and financial statements
Contents Page
Directors' report 1-3
Statement of directors' responsibilities 4
Auditors' report 4
Profit and loss account 5
Balance sheet 6
Notes 7-21
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
Directors' report
The directors present their annual report and audited financial statements for
the 52 week period ended March 1995.
CHANGE OF NAME
On 22 February 1995 the company changed its name to Seaboard Lloyd Limited.
PRINCIPAL ACTIVITIES
The principal activity of the company was to act as an investment holding
company.
On 27 March 1994, the company entered into an agreement whereby the business and
assets of its subsidiary undertaking, Seaboard Lloyd Limited, were transferred
to it. On 22 February 1995 Seaboard Lloyd Limited changed its name to Sealand
Industries Limited.
Since 27 March 1994 the principal activities of the company have been the
design, manufacture, sale and service of wellhead control equipment and subsea
products to the oil and gas industry.
BUSINESS REVIEW
In recognition of difficult trading conditions in the North Sea market,
reorganisation programmes were undertaken during 1994 and 1995 to create an
operating structure appropriate to the level of business. Critical reviews of
processes have been successful in achieving a significant improvement in gross
margin. Product development is receiving considerable attention and a number of
focussed programmes are in progress within our engineering group.
PROPOSED DIVIDEND AND TRANSFER TO RESERVES
The loss for the financial year amounted to (pound) 126,592 (1994: (pound) Nil)
and this has been applied against reserves.
The directors do not recommend the payment of a dividend.
DIRECTORS AND DIRECTORS' INTERESTS
The directors who held office during the year were as follows:
CN Davies
NN Broadhurst (resigned 30 June 1994)
RD Holden (appointed 30 June 1994)
N MacDonald
AA MacDonald (resigned 30 November 1994)
R Ruesse (appointed 20 February 1995)
C Hart
S McCulloch (appointed 20 February 1995)
KAW Taggart (appointed 20 February 1995)
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
Directors' report (continued)
DIRECTORS AND DIRECTORS' INTERESTS (continued)
The directors who held office at the end of the financial year had no interests
in the ordinary shares of the company. Their interests in the ordinary shares of
VSEL plc, the company's ultimate parent undertaking, were as follows:
BENEFICIAL OPTION
INTEREST INTEREST AT INTEREST INTEREST AT
AT END OF BEGINNING OF AT END OF BEGINNING OF
YEAR YEAR (OR DATE OF YEAR YEAR (OR DATE OF
APPOINTMENT APPOINTMENT
IF LATER) IF LATER)
N MacDonald 21,664 21,664 - -
C Hart 4,489 5,289 676 676
R Ruesse - - - -
S McCulloch - - - -
KAW Taggart - - 178 178
The interests of CN Davies and RD Holden are disclosed in the directors' report
of VSEL plc.
SIGNIFICANT CHANGES IN FIXED ASSETS
Movements in tangible fixed assets are set out in note 11 to the financial
statements.
SHARE CAPITAL
As part of the reorganisation of the Seaboard Lloyd Limited group, the
authorised and issued share capital of the company was increased by (pound)
1,794,000 on 20 February 1995.
Movements in the authorised and issued share capital during the year are
detailed in note 20 to the financial statements.
LIABILITY INSURANCE
VSEL plc has maintained during the year insurance of the kind referred to in
Section 310(3)(a) of the Companies Act 1985 (as amended) covering officers
against certain liabilities in relation to the company.
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
Directors' report (continued)
AUDITORS
On 6 February 1995 our auditors change the name under which they practise to
KPMG and, accordingly, have signed their report in their new name. In accordance
with Section 384 of the Companies Act 1985, a resolution for the re-appointment
of KPMG as auditors of the company is to be proposed at the forthcoming Annual
General Meeting.
By order of the board
/s/ H Lavitt
- -------------------------------- 2 Old Quarry Road
H LAVITT Westfield Industrial Park
Secretary Cumbernauld
23 May 1995
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
Statement of directors' responsibilities
Company law requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
company and of the profit or loss for that period. In preparing those financial
statements, the directors are required to (a) select suitable accounting
policies and then apply them consistently, (b) make judgements and estimates
that are reasonable and prudent, (c) state whether applicable accounting
standards have been followed, subject to any material departures disclosed and
explained in the financial statements, and (d) prepare the financial statements
on the going concern basis unless it is inappropriate to presume that the
company will continue in business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and to enable them to ensure that the financial statements comply with
the Companies Act 1985. They have general responsibility for taking such steps
as are reasonably open to them to safeguard the assets of the company and to
prevent and detect fraud and other irregularities.
KPMG
Report of the auditors to the members of Seaboard Lloyd Limited (formerly
Sealand Industries plc)
We have audited the financial statements on pages 5 to 21.
Respective responsibilities of directors and auditors
As described above the company's directors are responsible for the preparation
of financial statements. It is our responsibility to form an independent
opinion, based on our audit, on those statements and to report our opinion to
you.
Basis of opinion
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements.
It also includes an assessment of the significant estimates and judgements made
by the directors in the preparation of the financial statements, and of
whether the accounting policies are appropriate to the company's circumstances,
consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion
In our opinion the financial statements give a true and fair view of the state
of the company's affairs as at 25 March 1995 and of its loss for the year then
ended and have been properly prepared in accordance with the Companies Act 1985.
KPMG 24 Blythswood Square
Chartered Accountants Glasgow
Registered Auditors G2 4QS
1 June 1995
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
PROFIT AND LOSS ACCOUNT
for the year ended 25 March 1995
<TABLE>
<CAPTION>
Note 1995 1994
(pound) (pound)
<S> <C> <C> <C>
TURNOVER 3 5,956,490 415,195
Cost of Sales (4,797,614) --
---------- --------
GROSS PROFIT 1,158,876 415,195
Other operating expenses (net) 4 (1,463,015) (415,195)
---------- --------
OPERATING LOSS (304,139) --
Interest payable and similar charges 8 (170,554) --
---------- --------
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION 5 (474,693) --
Tax on loss on ordinary activities 9 348,101 --
---------- --------
LOSS FOR THE FINANCIAL YEAR (126,592) --
========== ========
</TABLE>
A statement of movements on reserves is given in note 22.
There were no recognised gains or losses in either year other than the retained
loss for the financial year.
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
BALANCE SHEET
at 25 March 1995
<TABLE>
<CAPTION>
1995 1994
Note (pound) (pound) (pound) (pound)
<S> <C> <C> <C> <C> <C>
FIXED ASSETS
Intangible assets 10 284,110 --
Tangible assets 11 1,689,548 --
Investments 12 47,107 172,352
CURRENT ASSETS
Stocks 13 1,101,117 --
Debtors:
amounts falling due within
one year 14 1,515,308 349,034
amounts falling due after
more than one year 14 -- 1,857,145
Cash at bank and in hand 640 --
--------- ---------
2,617,065 2,206,179
CREDITORS: amounts falling
due within one year 15 (1,768,023) (525,999)
--------- ---------
NET CURRENT ASSETS 849,042 1,680,180
--------- ---------
TOTAL ASSETS LESS
CURRENT LIABILITIES 2,869,807 1,852,532
CREDITORS: amounts falling
due after more than one
year 16 (73,219) (752,352)
PROVISION FOR LIABILITIES AND
CHARGES 18 (29,000) --
--------- ---------
NET ASSETS 2,767,588 1,100,180
========= =========
CAPITAL AND RESERVES
Called up share capital 20 2,810,000 1,016,000
Share premium account 21 84,050 84,050
Profit and loss account 22 (126,462) 130
--------- ---------
SHAREHOLDERS' FUNDS 23 2,767,588 1,100,180
========= =========
</TABLE>
These financial statements were approved by the board of directors on 23 May
1995 and were signed on its behalf by:
/s/ KAW TAGGART
KAW Taggart
Director
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
NOTES
(forming part of the financial statements)
1 ACCOUNTING DATE
The company made up its financial statements for the 52 week period
ended 25 March 1995 (1994: for the 52 week period ended 26 March 1994).
2 ACCOUNTING POLICIES
The following accounting policies have been applied consistently in
dealing with items which are considered material in relation to the
company's financial statements.
Basis of preparation
The financial statements have been prepared in accordance with
applicable accounting standards and under the historical cost accounting
rules.
The Accounting Standards Board has issued Financial Reporting Standard
('FRS') 1, which requires companies to prepare a cash flow statement.
However, companies which are wholly owned subsidiary undertakings of a
European Community parent are granted exemption by FRS 1 from the
requirement to prepare a cash flow statement, provided that certain
conditions are met. Seaboard Lloyd Limited is such a subsidiary
undertaking and, accordingly, a cash flow statement has not been
prepared.
Consolidated accounts
As the company is a wholly owned subsidiary undertaking of VSEL plc it
is exempt from preparing consolidated accounts.
Fixed assets and depreciation
Tangible assets are stated at cost less depreciation.
The annual depreciation charge is calculated on a straight line basis on
cost and is designed to write off the relevant assets over the following
estimated working lives:
Buildings - 50 years
Plant and machinery - 3 - 10 years
Land is not depreciated.
Intangible fixed assets and amortisation
Patents, licences, trade marks and similar rights and assets are
amortised by the straight line method over a period of ten years.
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
NOTES (continued)
2 ACCOUNTING POLICIES (continued)
Goodwill
The business and assets of Sealand Industries Limited (formerly Seaboard
Lloyd Limited) were transferred to the company on 27 March 1994 for
their book value which was less than their fair value. The cost of the
company's investments in the subsidiary undertaking reflected the
underlying fair value of their net assets and goodwill at the time of
acquisition. As a result of the transfer, the value of the company's
investments in the subsidiary undertakings fell below the amount at
which they were stated in the company's accounting records. Schedule 4
to the Companies Act 1985 requires that the investments be written down
accordingly and that the amount be charged as a loss in the company's
profit and loss account. However, the directors consider that, as there
has been no overall loss to the company, it would fail to give a true
and fair view to charge that diminution to the company's profit and loss
account and it should instead be re-allocated to goodwill and the
identifiable net assets transferred, so as to recognise in the company's
balance sheet the effective cost of these net assets and goodwill. The
goodwill is shown as an intangible asset and amortised over its expected
useful economic life. The effect of this departure from the Companies
Act is to reduce the company's loss for the financial year by
(pound)100,464 and to increase the value of the goodwill and profit and
loss account in the company's balance sheet by (pound)100,464.
Goodwill is written off over a period of ten years from the date of the
company's investment in subsidiary undertakings.
Stocks
Stocks are valued at cost or, if less, at estimated realisable value.
Cost comprises direct materials, direct labour and an appropriate
proportion of the overheads incurred in bringing the stock to its
present location and condition.
Foreign currencies
Transactions denominated in foreign currencies are translated into
sterling and recorded at the rate of exchange ruling at the date of the
transaction. Balances denominated in foreign currencies are translated
into sterling at the exchange rates ruling at the balance sheet date and
differences on exchange included in the profit and loss account.
Deferred taxation
Provision is made for taxation on timing differences between profits
computed for taxation purposes and those disclosed in the financial
statements only if there is a reasonable probability that such taxation
will become payable in the foreseeable future.
Leased assets
Assets acquired under finance leases are capitalised at their fair value
at the date of inception of the agreement. The capital element repayable
within one year is included within creditors due within one year. The
total finance charges are allocated over the period of the agreement in
accordance with the terms of the lease.
The cost of operating leases is charged to income in the year of
expenditure.
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
DIRECTOR' REPORT (continued)
2 ACCOUNTING POLICIES (continued)
Government grants
Regional Selective Assistance Grants received are credited to the profit
and loss account over a period of three years.
Other grants are credited to the profit and loss account on a basis
which matches the grants with the costs to which they relate.
Pension costs
The company provides for certain pension benefits by payments to defined
contribution insured funds independent from the finances of the company
and contributions are charged against profits.
3 ANALYSIS OF TURNOVER
The turnover stated is the amount receivable (excluding VAT) in respect
of goods and services supplied during the financial year.
The analysis of turnover by geographical market is:
1995 1994
(pound) (pound)
United Kingdom 3,108,926 415,195
Rest of EC 390,306 --
Rest of Europe 550,785 --
Africa 180,956 --
Asia 637,626 --
Australasia 1,080,245 --
USA 7,646 --
--------- ---------
5,956,490 415,195
========= =========
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
NOTES (continued)
4 OTHER OPERATING EXPENSES (NET)
1995 1994
(pound) (pound)
Distribution costs 408,490 --
Administrative expenses 1,148,962 415,195
Amortisation of goodwill (note 10) 24,781 --
--------- ---------
1,582,233 415,195
Other operating income
Government grants: Regional
Selective Assistance (note 17) (58,333) --
Other income (60,885) --
--------- ---------
1,463,015 415,195
========= =========
5 LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION
1995 1994
(pound) (pound)
Loss on ordinary activities before
taxation is stated
after charging
Auditors' remuneration:
Audit 15,000 --
Other services 6,446 --
Depreciation and other amounts
written off tangible and intangible
fixed assets:
Owned assets 341,811 --
Leased assets 43,296 --
Other operating leases:
Property leases 36,200 --
Others 53,108 --
Re-organisation costs 204,152 --
The total amount charged to revenue for the hire of plant and machinery
amounted to (pound)188,731 (1994:(pound)Nil). This comprises rentals
payable under operating leases as well as depreciation on plant and
machinery held under finance leases together with the related finance
charges.
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
NOTES (continued)
6 REMUNERATION OF DIRECTORS
1995 1994
(pound) (pound)
Directors' emoluments:
Fees as directors -- --
Other emoluments, including pension
contributions and taxable benefits 191,158 --
--------- ---------
191,158 --
Compensation for loss of office paid
by the company 161,158 --
--------- ---------
352,316 --
========= =========
The emoluments, excluding pension contributions, of the chairman were
(pound)69,328 (1994:(pound)Nil) and those of the highest paid director
were (pound)69,328 (1994:(pound)Nil).
Details of directors' share options are given in the directors' report
on page 2.
The emoluments, excluding pension contributions, of the directors
(including the chairman and highest paid director) were within the
following ranges:
Number of directors
1995 1994
(pound)0 - (pound)5,000 6 8
(pound)40,0001 - (pound)45,000 1 --
(pound)50,0001 - (pound)55,000 1 --
(pound)65,0001 - (pound)70,000 1 --
==== ====
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
NOTES (continued)
7 STAFF NUMBERS AND COSTS
The average number of persons employed by the company (including
executive directors) during the year, analysed by category, was as
follows:
Number of employees
1995 1994
Staff 47 8
Works 23 --
---- ----
70 8
==== ====
The aggregate payroll costs of these
persons were as follows:
1995 1994
(pound) (pound)
Wages and salaries 1,477,898 --
Social security costs 145,649 --
Other pension costs 19,405 --
--------- ---------
1,642,952 --
========= =========
8 INTEREST PAYABLE AND SIMILAR CHARGES
1995 1994
(pound) (pound)
Finance charges payable in respect
of finance leases and hire
purchase contracts 20,222 --
Other interest 2,948 --
Interest payable to group
undertakings 147,384 --
--------- ---------
170,554 --
========= =========
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
NOTES (continued)
9 TAXATION
1995 1994
(pound) (pound)
Group relief receivable 393,743 --
Adjustment relating to an
earlier year (718) --
Overseas taxation unrelieved (15,924) --
Deferred taxation (29,000) --
--------- ---------
348,101 --
========= =========
The taxation credit reflects (pound)393,743 (1994:(pound)Nil) for group
relief surrendered to the company's ultimate parent undertaking at 100%
of the value of tax losses for the year.
10 INTANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
GOODWILL PATENTS TOTAL
LICENCES, TRADE
MARKS AND
SIMILAR RIGHTS
AND ASSETS
(pound) (pound) (pound)
<S> <C> <C> <C>
Cost
At beginning of year -- -- --
Transferred from subsidiary
undertaking -- 209,896 209,896
Transferred from investments
(note 12) 125,245 -- 125,245
------- ------- -------
At end of year 125,245 209,896 335,141
Accumulated depreciation
At beginning of year -- -- --
Transferred from subsidiary
undertaking -- 5,250 5,250
Amortised in the year 24,781 21,000 45,781
------- ------- -------
At end of year 24,781 26,250 51,031
------- ------- -------
Net book value
AT 25 MARCH 1995 100,464 183,646 284,110
======= ======= =======
At 26 March 1994 -- -- --
======= ======= =======
</TABLE>
The goodwill of (pound)125,245 represents the excess of the cost of
investments in subsidiary undertakings over the net assets of these
subsidiary undertakings transferred to the company on 27 March 1994.
This amount is being amortised over its expected useful economic life
(note 2).
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
NOTES (continued)
11 TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
LAND AND PLANT AND TOTAL
BUILDINGS MACHINERY
(pound) (pound) (pound)
<S> <C> <C> <C>
Cost
At beginning of year -- -- --
Transferred from subsidiary
undertaking 1,056,244 2,243,110 3,299,354
Additions 6,705 81,093 87,798
Disposals -- (2,100) (2,100)
--------- --------- ---------
At end of year 1,062,949 2,322,103 3,385,052
--------- --------- ---------
Depreciation and
diminution in value
At beginning of year -- -- --
Transferred from subsidiary
undertaking 93,159 1,264,488 1,357,647
Charge for year 27,338 311,988 339,326
On disposals -- (1,469) (1,469)
--------- --------- ---------
At end of year 120,497 1,575,007 1,695,504
Net book value
AT 25 MARCH 1995 942,452 747,096 1,689,548
========= ========= =========
At 26 March 1994 -- -- --
========= ========= =========
The net book value of land and buildings comprised:
1995 1994
(pound) (pound)
Freehold 934,032 --
Short leasehold 8,420 --
--------- ---------
942,452 --
========= =========
</TABLE>
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
NOTES (continued)
11 TANGIBLE FIXED ASSETS (continued)
Tangible fixed assets include the following assets held under finance
leases (including similar hire purchase contracts):
<TABLE>
<CAPTION>
1995 1994
(pound) (pound)
<S> <C> <C>
Plant and machinery 150,292 --
Accumulated depreciation (88,834) --
--------- ---------
61,458 --
========= =========
12 INVESTMENTS
1995 1994
(pound) (pound)
Shares in group undertakings at cost:
At beginning of year 172,352 172,352
Transferred to goodwill (note 10) (125,245) --
--------- ---------
47,107 172,352
========= =========
</TABLE>
Sealand Industries Limited (formerly Seaboard Lloyd Limited) is a wholly owned
subsidiary undertaking and is registered in England. Its principal activities,
which were carried out in the United Kingdom, were the design, manufacture, sale
and service of wellhead control equipment to the oil and gas industries. On 27
March 1994 the company entered into an agreement whereby its business and assets
were transferred to Seaboard Lloyd Limited and it became dormant.
Forsac Limited is a wholly owned subsidiary undertaking and is registered in
Scotland. Forsac Limited is dormant.
In both cases, the shares held are ordinary shares.
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
NOTES (continued)
13 STOCKS
<TABLE>
<CAPTION>
1995 1994
(pound) (pound)
<S> <C> <C>
Raw materials 198,124 --
Transferred to goodwill (note 10) 181,878 --
Finished goods 721,115 --
--------- ---------
1,101,117 --
========= =========
</TABLE>
14 DEBTORS
<TABLE>
<CAPTION>
1995 1994
DUE WITHIN DUE AFTER Due within Due after
ONE YEAR ONE YEAR one year one year
(pound) (pound) (pound) (pound)
<S> <C> <C> <C> <C>
Trade debtors 955,101 -- -- --
Prepayments and accrued
income 107,101 -- -- --
Amounts owned by group
undertakings:
Parent undertaking 453,106 -- -- --
Subsidiary undertakings -- -- 349,034 1,857,145
--------- --------- --------- ---------
1,515,308 -- 349,034 1,857,145
========= ========= ========= =========
</TABLE>
15 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
1995 1994
(pound) (pound)
<S> <C> <C>
Bank overdraft 999,974 --
Finance lease commitments (note 24) 30,144 --
Trade creditors 523,978 --
Amounts owed to parent and fellow subsidiary
undertakings -- 525,999
Other taxes and social security 43,561 --
Other creditors 73,664 --
Accruals and deferred income 96,702 --
--------- ---------
1,768,023 525,999
========= =========
</TABLE>
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
NOTES (continued)
<TABLE>
<CAPTION>
16 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
1995 1994
(pound) (pound)
<S> <C> <C>
Amounts owed to group undertakings:
Parent and fellow subsidiary
undertakings -- 600,000
Subsidiary undertakings 47,107 152,352
Finance lease commitments (note 24) 26,112 --
--------- ---------
73,219 752,352
========= =========
</TABLE>
There were no fixed repayment terms for the amounts due to group
undertakings.
The amounts owed to parent and fellow subsidiary undertakings in 1994
represented loans which bore interest at 1% over the base rate of the
National Westminster Bank plc. The interest was waived during the year
ended 26 March 1994. All other amounts owed to group undertakings were
interest free.
17 DEFERRED INCOME
<TABLE>
<CAPTION>
1995
(pound)
<S> <C>
Government grants:
At beginning of year --
Transferred from subsidiary undertaking 58,333
Credited to the profit and loss account
during the year (note 4) (58,333)
---------
At end of year --
=========
</TABLE>
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
NOTES (continued)
18 PROVISIONS FOR LIABILITIES AND CHARGES
<TABLE>
<CAPTION>
TAXATION INCLUDING
DEFERRED TAXATION
(pound)
<S> <C>
At beginnings of year --
Charge for the year in the profit and loss account 29,000
---------
At end of year 29,000
=========
</TABLE>
The amounts provided for deferred taxation and the amounts not provided are set
out below:
<TABLE>
<CAPTION>
1995 1994
PROVIDED UNPROVIDED Provided Unprovided
(pound) (pound) (pound) (pound)
<S> <C> <C> <C> <C>
Difference between accumulated
depreciation and amortisation
and capital allowances 38,000 118,000 -- --
Other timing differences (9,000) (80,000) -- 8,800
--------- --------- --------- ---------
29,000 38,000 -- 8,800
========= ========= ========= =========
</TABLE>
19 CONTINGENT LIABILITIES
The company has issued bank guarantees to certain customers in the
normal course of business. The total amount outstanding at 25 March 1995
was (pound)414,046 (1994:(pound)Nil).
The company has issued cross guarantees for other group undertakings
under the group banking arrangements. The contingent liability as at 25
March 1995 in respect of these guarantees amounted to (pound)Nil (1994:
(pound)26,769,000).
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
NOTES (continued)
20 CALLED UP SHARE CAPITAL
<TABLE>
<CAPTION>
1995 1994
(pound) (pound)
<S> <C> <C>
Authorised
Ordinary shares of (pound)1 each
At beginning of year 1,016,000 1,016,000
Increase during the year 1,794,000 --
--------- ---------
At end of year 2,810,000 1,016,000
========= =========
Allotted, called up and fully paid
Ordinary shares of (pound)1 each
At beginning of year 1,016,000 1,016,000
Issued during year 1,794,000 --
--------- ---------
At end of year 2,810,000 1,016,000
========= =========
On 20 February 1995, the authorised share capital of the company was
increased to (pound)2,810,000.
On 20 February 1995, the issued share capital of the company was
increased by 1,794,000 ordinary shares of (pound)1 each issued at par.
The increase in the authorised and issued share capital was part of the
reorganisation of the Seaboard Lloyd Limited group and involved the conversion
of (pound)1,794,000 of loans received from the ultimate parent undertaking, VSEL
plc, to ordinary share capital.
21 SHARE PREMIUM ACCOUNT
1995 1994
(pound) (pound)
Balance at beginning and end of year 84,050 84,050
========= =========
</TABLE>
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
NOTES (continued)
<TABLE>
<CAPTION>
<S> <C> <C>
22 PROFIT AND LOSS ACCOUNT
(pound)
Balance at beginning of year 130
Loss for the financial year (126,462)
---------
Balance at end of year (126,462)
=========
23 RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
1995 1994
(pound) (pound)
Loss for the financial year (126,592) --
Shares issued during year 1,794,000 --
--------- ---------
Net addition to shareholders' funds 1,667,408 --
Opening shareholders' funds 1,100,180 1,100,180
========= =========
Closing shareholders' funds
24 COMMITMENTS
(i) There were no capital commitments at the end of the financial
year for which no provision has been made.
(ii) Finance leases
The company's total capital repayment obligations under finance
leases at 25 March 1995 were as follows:
1995 1994
(pound) (pound)
Due within one year (note 15) 30,144 --
Due between two and five years (note 16) 26,112 --
--------- ---------
56,256 --
========= =========
</TABLE>
<PAGE>
SEABOARD LLOYD LIMITED
(formerly Sealand Industries plc)
NOTES (continued)
24 COMMITMENTS (continued)
(iii) Operating leases
At the end of the financial year the company had annual
commitments under non-cancellable operating leases as follows:
<TABLE>
<CAPTION>
1995 1994
LAND AND OTHER Land and Other
BUILDINGS buildings
(pound) (pound) (pound)
<S> <C> <C> <C> <C>
Operating leases
which expire:
within one year -- 13,032 -- --
In the second to
fifth years inclusive 13,500 38,776 -- --
Over five years 23,500 -- -- --
-------- -------- -------- --------
37,000 51,808 -- --
======== ======== ======== ========
</TABLE>
25 ULTIMATE PARENT UNDERTAKING
The company's ultimate parent undertaking is VSEL plc, a company
registered in England. The largest group in which the results of the
company are consolidated is that headed by VSEL plc. The consolidated
accounts of VSEL plc are available to the public and may be obtained
from Barrow-in-Furness, Cumbria LA14 1AF.
No other group accounts include the results of the company.
<PAGE>
Pro Forma Financial Information
Introduction
The Unaudited Pro Forma Condensed Consolidated Income Statements have been
prepared in accordance with the requirements of Article 11 of Regulation S-X
promulgated by the Securities and Exchange Commission ("SEC"). These statements
are presented for informational purposes only and are not indicative of the
results of future operations, nor the results of historical operations had the
acquisition occurred as of the assumed dates.
These statements have been prepared assuming that the acquisition of Seaboard
Lloyd Limited had occurred at the beginning of the period presented. Pursuant
to the SEC's regulations, permitted pro forma adjustments include only the
effects of events directly attributable to a transaction that are factually
supportable and are expected to have a continuing impact, and should be read in
conjunction with the historical consolidated financial statements included in
ERC's annual report on Form 10-K for the year ended December 31, 1995 and the
Seaboard Lloyd Limited audited statement of income in item 7 (b) above.
<PAGE>
ERC INDUSTRIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
------------------------------------------ -----------------------------------
ERC SEABOARD
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1995 MARCH 31, 1996 CONSOLIDATED
US$ US$ ADJUSTMENTS TOTAL
------------------ ------------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 34,840 $ 7,146 $ 41,986
Cost of goods sold 27,399 5,884 $ (300) (a) 32,983
------------------ ------------------ ------------ ------------
Gross profit 7,441 1,262 300 9,003
------------------ ------------------ ------------ ------------
Selling, general
and administrative expenses 8,116 1,967 (140)(c, d, e) 9,943
------------------ ------------------ ------------ ------------
Operating (loss) income (675) (705) 440 (940)
------------------ ------------------ ------------ ------------
Other (income) expense:
Interest expense 439 103 96 (b) 638
Other, net (66) 0 (66)
------------------ ------------------ ------------ ------------
(Loss) income before
provision for income taxes (1,048) (808) 344 (1,512)
(Benefit) provision for
income taxes (273) (101) 0 (374)
------------------ ------------------ ------------ ------------
Net (loss) income $ (775) $ (707) $ 344 $ (1,138)
================== ================== ============ ============
Net (loss) per share $ (0.06) $ (0.08)
------------------ ------------
Weighted average
shares outstanding 13,864 13,864
================== ============
</TABLE>
<PAGE>
ERC INDUSTRIES, INC.
NOTES TO THE PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
One UK pound sterling equivalent to $1.58, which represents the average exchange
rate for the period.
a) To record the estimated cost savings from the headcount reduction of 10
employees that was effected immediately upon the acquisition.
b) To record interest cost for debt incurred by ERC Industries to finance the
acquisition of Seaboard.
c) To remove the historical goodwill amortization recorded by Seaboard during
the year for $72,000.
d) Amortization of goodwill recorded in the acquisition of Seaboard (10 year
life, $32,000 per year).
e) To subtract corporate charge by previous management group (General Electric)
to Seaboard for certain management fees ($100,000).
The following adjustments were made to the historical financials of Seaboard
Lloyd Limited in order to restate historical financial statements to US GAAP:
<TABLE>
<CAPTION>
Historical Amounts As reported in Unaudited
Converted to US Dollars Adjustments to Pro Forma Combined
in UK GAAP US GAAP Statement of Income
----------------------- ------------------ ------------------------
<S> <C> <C> <C>
Revenues $ 7146 $ $ 7,146
Cost of goods sold 5,884 5,884
----------------------- ------------------ ------------------------
Gross profit 1262 0 1,262
Selling, general
and administrative expenses 1,967 1,967
----------------------- ------------------ ------------------------
Operating loss (705) 0 (705)
----------------------- ------------------ ------------------------
Other (income) expense:
Interest expense 103 103
Other, net 0 0
----------------------- ------------------ ------------------------
Loss before provision
for income taxes (808) 0 (808)
(Benefit) provision for
income taxes 24 (125) (1) (101)
----------------------- ------------------ ------------------------
Net (loss) income $ (832) $ 125 $ (707)
======================= ================== ========================
</TABLE>
(1) Under UK GAAP, deferred taxation is provided under the liability method only
to the extent that an asset or liability will materialize. Under US GAAP
deferred tax liabilities or assets are provided on all temporary timing
differences existing at the end of a financial period. For the purposes of the
above adjustment, a deferred tax provision has been recognized for all timing
differences.
<PAGE>
ERC INDUSTRIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
------------------------------------------ -----------------------------------
ERC SEABOARD
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1996 CONSOLIDATED
US$ US$ ADJUSTMENTS TOTAL
------------------ ------------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 34,949 $ 6,137 $ 41,086
Cost of goods sold 26,924 4,977 $ (225) (a) 31,676
------------------ ------------------ ------------ ------------
Gross profit 8,025 1,160 225 9,410
------------------ ------------------ ------------ ------------
Selling, general
and administrative expenses 6,906 1,481 (105)(c, d ,e) 8,282
------------------ ------------------ ------------
Operating (loss) income 1,119 (321) 330 1,128
------------------ ------------------ ------------ ------------
Other (income) expense:
Interest expense 211 83 72 (b) 366
Other, net (34) 0 0 (34)
------------------ ------------------ ------------ ------------
(Loss) income before provision
for income taxes 942 (404) 258 796
(Benefit) provision for
income taxes 370 (39) 0 331
------------------ ------------------ ------------ ------------
Net (loss) income $ 572 $ (365) $ 258 $ 465
================== ================== ============ ============
Net income per share $ 0.03 $ .03
------------------ ------------
Weighted average
shares outstanding 16,990 16,990
================== ============
</TABLE>
<PAGE>
ERC INDUSTRIES, INC.
NOTES TO THE PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
SEPTEMBER 30, 1996
One UK pound sterling equivalent to $1.54, which represents the average exchange
rate for the period.
a) To record the estimated cost savings from the headcount reduction of 10
employees that was effected immediately upon the acquisition.
b) To record interest cost for debt incurred by ERC Industries to finance the
acquisition of Seaboard.
c) To remove the historical goodwill amortization recorded by Seaboard during
the nine months of $54,000.
d) Amortization of goodwill recorded in the acquisition of Seaboard of $24,000
for the nine months.
e) To subtract corporate charge by previous management group to Seaboard for
certain management fees ($75,000 for the nine months).
The following adjustments were made to the historical financials of Seaboard
Lloyd Limited in order to restate historical financial statements to US GAAP:
<TABLE>
<CAPTION>
Historic Amounts As reported in Unaudited
Converted to US Dollars Adjustments to Pro Forma Combined
in UK GAAP US GAAP Statement of Income
----------------------- ------------------ ------------------------
<S> <C> <C> <C>
Revenues $ 6,137 $ $ 6,137
Cost of goods sold 4,977 4,977
----------------------- ------------------ ------------------------
Gross profit 1,160 0 1,160
Selling, general
and administrative expenses 1,481 1,481
----------------------- ------------------ ------------------------
Operating (loss) income (321) 0 (321)
----------------------- ------------------ ------------------------
Other (income) expense:
Interest expense 83 83
Other, net 0 0
----------------------- ------------------ ------------------------
Loss before provision
for income taxes (404) 0 (404)
(Benefit) provision for
income taxes 23 (62) (1) (39)
----------------------- ------------------ ------------------------
Net (loss) income $ (427) $ 62 $ (365)
======================= ================== ========================
</TABLE>
(1) Under UK GAAP, deferred taxation is provided under the liability method only
to the extent an asset or liability will materialize. Under US GAAP deferred
tax liabilities or assets are provided on all temporary timing differences
existing at the end of a financial period. For the purposes of the above
adjustment, a deferred tax provision has been recognized for of all timing
differences.
<PAGE>
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 hereunto duly authorized.
ERC Industries, Inc.
By: /s/ Wendell R. Brooks
-------------------------------------
Wendell R. Brooks
President and Chief Executive Officer
Date: December 12, 1996
