US SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8 - K/A
AMENDMENT NUMBER ONE
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): AUGUST 7, 2000
MEASUREMENT SPECIALTIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 1-11906 22-2378738
------------------------------- ---------------- ------------------------
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) NUMBER) IDENTIFICATION NO.)
80 LITTLE FALLS ROAD, FAIRFIELD, NEW JERSEY 07004
--------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(973) 808-1819
----------------
(ISSUER'S TELEPHONE NUMBER)
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Audited Financial Statements of TRW Sensors and Components Division, which
consists of the U.S and U.K. Sensors Businesses, as of December 31, 1999, March
31, 1999, and January 31, 1999.
(b) Pro Forma Financial Information.
Unaudited Pro Forma Combined Condensed Statements of Income of Measurement
Specialties, Inc (the Registrant) and TRW Sensors and Components for the year
ended March 31, 2000 and for the six months ended September 30, 2000.
(c) Exhibits
2000.3 Audited combined balance sheets of TRW Sensors & Components (the
"Company") which consists of the U.S. and U.K. Sensors Businesses
of the TRW Sensors and Components Division, as of December 31,
1999, March 31, 1999, and January 31, 1999, and the related
combined statements of operations, changes in net investment, and
cash flows for the nine-month period ended December 31, 1999, the
two-month period ended March 31, 1999, and the year ended January
31, 1999.
2000.4 Unaudited Pro Forma Combined Condensed Statements of Income
of Measurement Specialties, Inc (the Registrant) and TRW Sensors
and Components for the year ended March 31, 2000 and for the six
months ended September 30, 2000.
2000.5 Consent of the independent auditors dated December 27, 2000.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MEASUREMENT SPECIALTIES, INC.
(Registrant)
/s/ Kirk J. Dischino
------------------------
Date: December 27, 2000 Kirk J. Dischino
Chief Financial Officer
<PAGE>
EXHIBIT 2000.3
Report of Independent Auditors
Measurement Specialties, Inc.
We have audited the accompanying combined balance sheets of TRW Sensors &
Components (the "Company") which consists of the U.S. and U.K. Sensors
Businesses of the TRW Sensors and Components Division, as of December 31, 1999,
March 31, 1999, and January 31, 1999, and the related combined statements of
operations, changes in net investment, and cash flows for the nine-month period
ended December 31, 1999, the two-month period ended March 31, 1999, and the year
ended January 31, 1999. These financial statements are the responsibility of
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of TRW Sensors
& Components at December 31, 1999, March 31, 1999, and January 31, 1999, and the
results of its operations and its cash flows for the nine-month period ended
December 31, 1999, the two-month period ended March 31, 1999, and the year ended
January 31, 1999, in conformity with accounting principles generally accepted in
the United States.
/s/ Ernst & Young LLP
Ernst & Young LLP
October 16, 2000
Cleveland, Ohio
<PAGE>
<TABLE>
<CAPTION>
TRW Sensors & Components
Combined Balance Sheets
(Thousands of Dollars)
DECEMBER 31, MARCH 31, JANUARY 31,
1999 1999 1999
-------------- ------------ ------------
ASSETS PREDECESSOR BUSINESS
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 940 $ 2,470 $ 2,372
Accounts receivable, net 4,882 5,426 5,175
Inventory, net 5,179 4,035 3,757
Prepaid expenses and other current assets 207 648 576
Receivables from
TRW Inc./LucasVarity units 275 349 681
-------------- ------------ ------------
Total current assets 11,483 12,928 12,561
Deferred income taxes 410 155 145
Property, plant and equipment, net 3,616 3,375 3,329
Prepaid benefit cost 695 745 756
Goodwill, net 1,766 7,514 7,676
Receivable from Lucas Control Systems 2,758 2,663 3,883
-------------- ------------ ------------
Total assets $ 20,728 $ 27,380 $ 28,350
============== ============ ============
LIABILITIES AND NET INVESTMENT
Current liabilities:
Accounts payable $ 1,605 $ 2,440 $ 2,811
Accrued liabilities 1,069 1,597 2,912
Payables to other TRW Inc./LucasVarity units 894 1,010 -
Income tax payable (122) 476 516
-------------- ------------ ------------
Total current liabilities 3,446 5,523 6,239
Long-term deferred income taxes 291 74 70
Net investment 16,991 21,783 22,041
-------------- ------------ ------------
Total liabilities and net investment $ 20,728 $ 27,380 $ 28,350
============== ============ ============
</TABLE>
See notes to combined financial statements.
<PAGE>
<TABLE>
<CAPTION>
TRW Sensors & Components
Combined Statements of Operations
(Thousands of Dollars)
NINE MONTHS TWO MONTHS
ENDED ENDED YEAR ENDED
DECEMBER 31, MARCH 31, JANUARY 31,
1999 1999 1999
-------------- ------------- -------------
PREDECESSOR BUSINESS
<S> <C> <C> <C>
Sales $ 21,843 $ 5,160 $ 35,577
Cost of sales 10,495 2,805 17,129
-------------- ------------- -------------
Gross profit 11,348 2,355 18,448
Selling, general, and administrative,
expenses 11,672 2,536 19,289
Allocated corporate, general and
administrative expenses 614 136 (41)
Other (income) expense, net 181
Gain on sale of assets (2,240)
-------------- ------------- -------------
(Loss) earnings before income taxes (938) (317) 1,259
Income taxes:
Current:
Federal (551) (40) 492
State and local (47) 24
-------------- ------------- -------------
(598) (40) 516
Deferred:
Federal 239 (6) 257
-------------- ------------- -------------
(359) (46) 773
-------------- ------------- -------------
Net (loss) earnings $ (579) $ (271) $ 486
============== ============= =============
</TABLE>
See notes to combined financial statements.
<PAGE>
<TABLE>
<CAPTION>
TRW Sensors & Components
Combined Statements of Changes in Net Investment
(Thousands of Dollars)
CUMULATIVE TOTAL
NET TRANSLATION NET
INVESTMENT ADJUSTMENT INVESTMENT
------------ ------------- ------------
<S> <C> <C> <C>
Balance at February 1, 1998 $ 23,593 $ 23,593
Net earnings for the year ended
January 31, 1999 486 486
Translation adjustment $ 4 4
------------
Comprehensive income 490
Intercompany treasury account activity 317 317
Net transfers to Lucas Control Systems (2,359) (2,359)
------------ ------------- ------------
Balance at January 31, 1999 22,037 4 22,041
Net (loss) for the two months ended
March 31, 1999 (271) (271)
Translation adjustment (36) (36)
------------
Comprehensive income (307)
Intercompany treasury account activity (2,536) (2,536)
Net transfers from Lucas Control Systems 2,585 2,585
------------ ------------- ------------
Balance at March 31, 1999 21,815 (32) 21,783
Net (loss) for the nine months ended
December 31, 1999 (579) (579)
Translation adjustment 18 18
------------
Comprehensive income (561)
Write-off of goodwill (7,514) (7,514)
Intercompany treasury account activity (1,426) (1,426)
Additional investment by TRW Inc. 1,800 1,800
Net transfers from TRW Lucas Control Systems 2,909 2,909
------------ ------------- ------------
Balance at December 31, 1999 $ 17,005 $ (14) $ 16,991
============ ============= ============
</TABLE>
See notes to combined financial statements.
<PAGE>
<TABLE>
<CAPTION>
TRW Sensors & Components
Combined Statements of Cash Flows
(Thousands of Dollars)
NINE MONTHS TWO MONTHS
ENDED ENDED YEAR ENDED
DECEMBER 31, MARCH 31, JANUARY 31,
1999 1999 1999
-------------- ------------- -------------
PREDECESSOR BUSINESS
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net (loss) earnings $ (579) $ (271) $ 486
Adjustments to reconcile net (loss) earnings to net
cash (used in) provided by operating activities:
Depreciation and amortization 499 267 1,333
Deferred income taxes 239 (6) 257
Gain on disposal of fixed assets (2,240)
Changes in operating assets and liabilities:
Accounts receivable 545 (251) (620)
Inventories and prepaid expenses (832) 75 1,089
Accounts payable and other accruals (1,363) (1,686) 3,307
Income tax payable (598) (41) 516
Other, net 49 10 (291)
-------------- ------------- -------------
Net cash (used in) provided by operating activities (2,040) (1,903) 3,837
INVESTING ACTIVITIES
Capital expenditures (272) (123) (1,473)
Proceeds from sale of fixed assets 2,240
Purchases of intangibles (425)
-------------- ------------- -------------
Net cash (used in) provided by investing activities (272) (548) 767
FINANCING ACTIVITIES
Allocation of goodwill and revaluation of fixed
asset by TRW Inc. (2,145)
Net transfers and payments (to)/from
TRW Inc./LucasVarity 2,909 2,585 (2,359)
-------------- ------------- -------------
Net cash provided by (used in) financing activities 764 2,585 (2,359)
-------------- ------------- -------------
(Decrease) increase in cash and cash equivalents (1,548) 134 2,245
Effect of exchange rate changes on cash 18 (36) 4
Cash and cash equivalents at beginning of period 2,470 2,372 123
-------------- ------------- -------------
Cash and cash equivalents at end of period $ 940 $ 2,470 $ 2,372
============== ============= =============
</TABLE>
See notes to combined financial statements.
<PAGE>
A. BASIS OF PRESENTATION
Measurement Specialties Inc. ("MSI") and TRW Sensors & Components entered into
an Agreement of Purchase and Sale ("the Agreement") as of August 4, 2000 for the
sale of the U.S. and U.K. businesses of the TRW Sensors & Components Division
(the "Company") to MSI for a cash purchase price of $17,689, subject to
post-closing adjustment.
The combined financial statements of TRW Sensors & Components include the
financial statements of the U.S. and U.K. businesses of the TRW Sensors &
Components Division. All significant intragroup accounts and transactions have
been eliminated in combination.
On March 25, 1999, TRW Inc. acquired LucasVarity. The transaction was accounted
for as a purchase. Assets and liabilities were recorded based on their
respective fair values. The Company's accompanying financial statements for the
year ended January 31, 1999 and two months ended March 31, 1999 represent the
Company prior to acquisition by TRW Inc. The financial statements for the nine
months ended December 31, 1999 represent the Company subsequent to acquisition
by TRW Inc.
The Company has engaged in the business of manufacturing and selling sensors and
components, at premises in Hampton, Virginia, USA, and Slough, U.K.
B. SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
The Company recognizes revenue when the product is shipped.
<PAGE>
B. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES IN THE PREPARATION OF THE FINANCIAL STATEMENTS
The preparation of financial statements in conformity accounting principles
generally accepted in the U.S. requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities as of December 31, 1999, March
31, 1999, and January 31, 1999, and reported amounts of sales and expenses for
the nine months ended December 31, 1999, the two months ended March 31, 1999,
and the year ended January 31, 1999. Actual results could differ from those
estimates.
CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all highly
liquid investments purchased with a maturity of three months or less to be cash
equivalents.
ACCOUNTS RECEIVABLE
The Company has established receivable reserves of $162, $152, and $36 at
December 31, 1999, March 31, 1999, and January 31, 1999 respectively.
CONCENTRATION OF CREDIT RISK
Credit risk with respect to accounts receivable is concentrated principally with
companies in the industrial, medical, process control, offshore oil and gas
recovery, aerospace, automotive and defense industries, operating principally in
the United States and United Kingdom. Customers are not required to provide
collateral.
INVENTORY
Inventories are valued at lower of cost (principally the last-in, first-out
method) or market value. If the first-in, first-out method of inventory
accounting had been used exclusively by the Company, inventory would have been
approximately $693 higher than reported at January 31, 1999 and March 31, 1999.
Upon purchase by TRW, inventory was revalued to fair market and the LIFO reserve
was set to $0.
<PAGE>
B. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Inventory consists of the following:
DECEMBER 31, MARCH 31, JANUARY 31,
1999 1999 1999
------------- ---------- ------------
Raw material $ 2,871 $ 2,782 $ 2,751
Work-in-process 1,808 1,485 1,537
Finished goods 1,008 963 1,027
------------- ---------- ------------
5,687 5,230 5,315
Less allowances 508 1,195 1,558
------------- ---------- ------------
Inventory, net $ 5,179 $ 4,035 $ 3,757
============= ========== ============
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated on the basis of cost. Depreciation is
computed using the straight-line method over the estimated useful lives of
assets which range from three to ten years. Property, plant and equipment is
comprised of the following categories:
DECEMBER 31, MARCH 31, JANUARY 31,
1999 1999 1999
------------- ---------- ------------
Machinery and equipment $ 6,831 $ 8,037 $ 7,932
Construction in progress 806 963 943
Other 107 334 336
------------- ---------- ------------
Total property, plant and equipment 7,744 9,334 9,211
Less accumulated depreciation 4,128 5,959 5,882
------------- ---------- ------------
Property, plant and equipment, net $ 3,616 $ 3,375 $ 3,329
============= ========== ============
On April 1, 1999, TRW Inc. hired an independent appraiser to conduct a valuation
of fixed assets. Property, plant and equipment was increased by approximately
$345 as a result of the appraisal.
<PAGE>
B. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ADVERTISING COSTS
The Company charges the cost of advertising to expense the first time the
advertising takes place. The Company expensed $178, $39 and $230 for the nine
months ended December 31, 1999, the two months ended March 31, 1999, and the
year ended January 31, 1999, respectively.
COMPREHENSIVE INCOME
The components of accumulated other comprehensive income (loss) for the
nine-months ended December 31, 1999, the two-months ended March 31, 1999, and
the year ended January 31, 1999 are as follows:
DECEMBER 31, MARCH 31, JANUARY 31,
1999 1999 1999
------------ --------- -----------
Foreign currency translation income (loss) $ 18 $ (36) $ 4
------------ --------- -----------
Accumulated other comprehensive
(loss) income $ (14) $ (32) $ 4
============ ========= ===========
INCOME TAXES
Income taxes have been provided on a separate return basis. The tax provision is
determined by multiplying the local statutory income tax rate by local statutory
book income (decreased or increased by local deductible or non-deductible
items.) Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
It is the Company's intention to reinvest undistributed earnings of its U.K.
business and, thereby, indefinitely postpone their remittance. Accordingly,
deferred income taxes have not been provided for accumulated undistributed
earnings.
<PAGE>
B. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ACCOUNTING PRONOUNCEMENTS
In December 1999, the SEC staff issued Staff Accounting Bulletin (SAB) No. 101,
Revenue Recognition in Financial Statements, which provides guidance on the
recognition, presentation, and disclosure of revenue in financial statements.
Management does not anticipate that the adoption of the new statement will have
a significant effect on earnings or the financial position of the Company.
In June 1998, the Financial Accounting Standards Board issued Statement No.
133, Accounting for Derivative Instruments and Hedging Activities, which was
amended during June 2000 by Financial Accounting Standards Board Statement No.
138, Accounting for Certain Derivative Investments and Certain Hedging
Activities and is required to be adopted in fiscal years beginning after June
15, 2000. Because of the Company's minimal use of derivatives, management does
not anticipate that the adoption of the new statement will have a significant
effect on earnings or the financial position of the Company.
C. GOODWILL
Prior to acquisition by TRW, the Company had goodwill of $8,646 at February 1,
1998. Amortization expense for the year ended January 31, 1999 was $970 and for
the two months ended March 31, 1999 was $162. This goodwill was written off
through purchase accounting by TRW on acquisition.
On April 1, 1999, TRW Inc. recorded approximately $1.8 million of total goodwill
related to the acquisition of the Company. At December 31, 1999, accumulated
amortization was approximately $34. Goodwill is being amortized on a
straight-line basis over 40 years.
<PAGE>
D. EMPLOYEE BENEFIT PLANS
PENSION PLANS
The U.K. business has a defined benefit pension plan for substantially all
employees. The other operations of the Company do not have a defined benefit
pension plan as these respective employees did not begin participating in the
TRW Salaried Pension Plan until on or after January 1, 2000. In fiscal year
1997, the U.S. defined benefit plan was converted to a cash balance plan,
however the transfer of funds did not occur until fiscal year 1998.
The following table provides a reconciliation of the changes in the plans'
benefit obligations and fair value of assets for the year ended January 31,
1999, two months ended March 31, 1999, and nine months ended December 31, 1999
and a statement of the funded status as of January 31, 1999, March 31, 1999, and
December 31, 1999:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 1999 JANUARY 31, 1999
NON-U.S. NON-U.S. U.S. NON-U.S.
------------ --------- -------- ---------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATIONS
Benefit obligations at beginning of period: $ 2,854 $ 2,793 $ 3,000 $ 2,460
Service cost 91 20 114
Interest cost 185 41 210 219
Actuarial loss 607
Benefits paid (3,817)
------------ --------- -------- ---------
Benefit obligations 3,130 2,854 - 2,793
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning
of period: 3,599 3,549 3,494 3,271
Actual return on plan assets 226 50 323 278
Plan receivable 1,557
Benefits paid (3,817)
------------ --------- -------- ---------
Fair value of plan assets 5,382 3,599 - 3,549
------------ --------- -------- ---------
Funded status of the plan 2,252 745 756
Unrecognized actuarial (gain) (1,557)
------------ --------- -------- ---------
Total recognized $ 695 $ 745 $ $ 756
============ ========= ======== =========
</TABLE>
<PAGE>
D. EMPLOYEE BENEFIT PLANS (CONTINUED)
The following table provides the components of net pension cost for the plans as
of December 31, 1999, March 31, 1999 and January 31, 1999:
DECEMBER 31, MARCH 31,
1999 1999 JANUARY 31, 1999
(IN THOUSANDS) NON -U.S. NON-U.S. U.S. NON-U.S.
------------------------------ ------------ ---------- ------ ----------
Defined benefit plans:
Service cost-benefits earned
during the year $ 91 $ 20 $ 114
Interest cost on projected
benefit obligations 185 41 $ 210 219
Expected return on plan assets (226) (50) (323) (278)
FAS 88 (232)
------------ ---------- ------ ----------
Total pension cost $ 50 $ 11 $(345) $ 55
============ ========== ====== ==========
The assumptions used in the measurement of the Company's benefit obligations are
shown in the following table:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, JANUARY 31, JANUARY 31,
1999 1999 1999 1999
NON -U.S. NON-U.S. U.S. NON-U.S.
------------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Actuarial assumptions:
Discount rate 8.50% 8.50% 7.00% 8.50%
Expect return on plan assets 8.50% 8.50% 9.25% 8.50%
Rate of increase of
compensation levels 6.50% 6.50% N/A 6.50%
</TABLE>
The U.S. business offered a defined cash balance plan for the benefit of all
eligible employees during fiscal year 1998. The company makes a pension
contribution to the account of each eligible participant equal to 2% to 9% of
the participant's wages based on the participant's age. In addition, the company
matches 50% of the first 6% of employee contributions. The company recognized
pension expense related to this plan of approximately $258, $58, and $284 for
the nine months ended December 31, 1999, the two months ended March 31, 1999,
and the year ended January 31, 1999, respectively.
<PAGE>
D. EMPLOYEE BENEFIT PLANS (CONTINUED)
The Company did not provide postretirement benefits other than pensions to its
employees and therefore does not have a liability for this purpose.
E. INCOME TAXES
(Loss) earnings before income taxes
NINE
MONTHS TWO MONTHS
ENDED ENDED YEAR ENDED
DECEMBER 31, MARCH 31, JANUARY 31,
1999 1999 1999
------------ ---------- -----------
U.S. $ (1,029) $ (187) $ 474
Non-U.S. 91 (130) 785
------------ ---------- -----------
$ (938) $ (317) $ 1,259
============ ========== ===========
Provision for income taxes
NINE
MONTHS TWO MONTHS
ENDED ENDED YEAR ENDED
DECEMBER 31, MARCH 31, JANUARY 31,
1999 1999 1999
------------ ---------- -----------
Current:
U.S. federal $ (555) $ (1) $ 279
Non-U.S. 4 (39) 213
U.S. state and local (47) 24
------------ ---------- -----------
(598) (40) 516
Deferred:
U.S. federal 211 (6) 221
Non-U.S. 28 36
------------ ---------- -----------
239 (6) 257
------------ ---------- -----------
$ (359) $ (46) $ 773
============ ========== ===========
<PAGE>
E. INCOME TAXES (CONTINUED)
Income taxes differ from the statutory rate principally due to the following:
NINE
MONTHS TWO MONTHS
ENDED ENDED YEAR ENDED
DECEMBER 31, MARCH 31, JANUARY 31,
1999 1999 1999
------------ ---------- -----------
U.S. statutory income tax rate $ (319) $ (108) $ 428
Effect of non-deductible goodwill 0 55 330
State and local income taxes net of
federal tax benefit (47) 0 24
Effect of tax rate differential on
foreign operations (4) 4 (23)
Other permanent differences 11 3 14
------------ ---------- -----------
Effective income tax rate $ (359) $ 46 $ 773
============ ========== ===========
The following is a summary of the significant components of the Company's
deferred tax assets and liabilities as of December 31, 1999, March 31, 1999, and
January 31, 1999:
<TABLE>
<CAPTION>
DEFERRED
---------------------------------------------------------------------------
TAX ASSETS TAX LIABILITIES
---------------------------------------------------------------------------
DECEMBER 31, MARCH 31, JANUARY 31, DECEMBER 31, MARCH 31, JANUARY 31,
1999 1999 1999 1999 1999 1999
------------ --------- ----------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Inventory $ 42 $ 106 $ 106 $ 168
Fixed assets 123 $ 74 $ 70
Accrued expenses 92 49 39
Net operating loss
carryforward 276
------------ --------- ----------- ------------ ---------- -----------
Total $ 410 $ 155 $ 145 $ 291 $ 74 $ 70
============ ========= =========== ============ ========== ===========
</TABLE>
<PAGE>
F. RELATED PARTY TRANSACTIONS
TRW Lucas Control System (LCS) Headquarters incurred general and administrative
expenses that related to all LCS operating units, which were allocated to the
operating units based on a percentage of each operating unit's sales revenue.
The Company recorded these expenses with an offsetting entry to the intercompany
receivable/payable account.
The Company sold manufactured goods to affiliates of LucasVarity and TRW.
Revenues from sales to LucasVarity and TRW affiliates for the nine months ended
December 31, 1999, two months ended March 31, 1999 and the year ended January
31, 1999 were approximately $501, $68 and $184, respectively.
G. COMMITMENTS AND CONTINGENCIES
The Company is subject to various claims and legal proceedings covering a wide
range of matters that arise in the ordinary course of its business activities.
In 1994, the Company was named defendant regarding a patent infringement
lawsuit. As of the year ended January 31, 1999, two months ended March 31,1999,
and nine months ended December 31, 1999, the Company had a reserve of
approximately $500 related to this lawsuit.
The Company is subject to various other legal proceedings that arose in the
ordinary course of its business activities. Management believes that any
liability that may ultimately result from the resolution of these matters will
not have a material adverse effect on the combined financial position or results
of operations of the Company.
H. SEGMENTS
The Company has one operating segment-the sale of sensors and components for the
industrial, medical, process control, offshore oil and gas recovery, aerospace,
automotive and defense industries operating primarily in the U.S. and U.K.
<PAGE>
H. SEGMENTS (CONTINUED)
Information concerning principal geographic areas for and as of the nine-month
period ended December 31, 1999, the two-month period ended March 31, 1999 and
the year ended January 31, 1999 follows.
U.S. U.K. TOTAL
--------------------------------------
Revenues from external customers
Nine months ended
December 31, 1999 $ 14,508 $ 7,335 $ 21,843
Two months ended
March 31, 1999 3,345 1,815 5,160
Year ended January 31, 1999 20,490 15,087 35,577
Property, plant and equipment, net
December 31, 1999 $ 2,171 $ 1,445 $ 3,616
March 31, 1999 1,844 1,531 3,375
January 31, 1999 1,981 1,348 3,329
<PAGE>
EXHIBIT 2000.4
MEASUREMENT SPECIALTIES, INC.
PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
On August 7, 2000 (the "Closing Date") Measurement Specialties, Inc. (the
"Registrant") acquired TRW Sensors and Components from TRW, Inc. A total of
$16,775,000 was paid in cash to TRW financed with a term loan issued by the
Company's principal bank. Reference is made to the previously filed 8-K on
August 22, 2000.
The accompanying unaudited pro forma combined condensed financial statements
have been derived from the historical results of Measurement Specialties, Inc
(the Company or MSI) and TRW Sensors and Components for the year ended March 31,
2000 and the six months ended September 30, 2000. Financial statements for the
Company should be read in conjunction with the annual financial statements
included in the Company's Annual Report on Form 10-K for the year ended March
31, 2000, and quarterly reports on Form 10-Q.
The unaudited pro forma combined condensed financial statements are presented
for informational purposes only and do not purport to be indicative of the
operating results that actually would have occurred if the acquisition had been
consummated at the beginning of the periods, nor which may result from future
operations. The acquisition will be accounted for using the purchase price to
assets acquired and liabilities assumed. The unaudited pro forma adjustments are
based on available information and certain assumptions that the Company believes
are reasonable. These pro forma financial statements should be read in
conjunction with the historical financial statements of the Company and the
related notes and the acquisition document.
<PAGE>
<TABLE>
<CAPTION>
MEASUREMENT SPECIALTIES INC
PRO FORMA COMBINED INCOME STATEMENT
FOR THE YEAR ENDED MARCH 31, 2000
TRW Sensors
($ in thousands, except per share amounts) MSI and Components Adjustments Combined
------- -------------- ----------- --------
<S> <C> <C> <C> <C>
Sales 59,997 23,804 - 83,801
Cost of Goods Sold 33,052 14,355 - 47,407
------- -------------- ----------- --------
Gross Profit 26,945 9,449 - 36,394
Operating expenses 19,353 8,420 468 (1) 28,241
Interest expense/(income) 304 (24) 1,712 (2) 1,992
------- -------------- ----------- --------
19,657 8,396 2,180 30,233
------- -------------- ----------- --------
Income before income taxes 7,288 1,053 (2,180) 6,161
Income taxes 1,757 (451) (3) 1,306
------- ----------- --------
Net Income 5,531 (1,729) 4,855
======= =========== ========
Earnings per share
Basic $ 0.73 $ 0.64
Dilluted 0.64 0.56
Shares outstanding (000's)
Basic 7,612 7,612
Diluted 8,696 8,696
<FN>
(1) Amortization of goodwill. The acquisition is being accounted for as a
purchase. The aggregate cash paid was $17,860 (including payments to TRW
Components Inc. of $16,775 and closing costs of $1,085). The excess purchase
price paid over assets acquired (principally goodwill) of $6,998 is being
amortized over 15 years.
(2) Interest on acquisition financing and amortization of debt financing costs.
(3) Tax benefit at U.S. statutory rate.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MEASUREMENT SPECIALTIES INC
PRO FORMA COMBINED INCOME STATEMENT
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
TRW Sensors
($ in thousands, except per share amounts) MSI and Components Adjustments Combined
------- -------------- ----------- --------
<S> <C> <C> <C> <C>
Sales 44,539 9,176 - 53,715
Cost of Goods Sold 25,029 6,255 - 31,284
------- -------------- ----------- --------
Gross Profit 19,510 2,921 - 22,431
Operating expenses 13,774 3,177 234 (1) 17,185
Interest expense/(income) 478 (142) 856 (2) 1,192
------- -------------- ----------- --------
14,252 3,035 1,090 18,377
------- -------------- ----------- --------
Income before income taxes 5,258 (114) (1,090) 4,054
Income taxes 1,246 (482) (3) 764
------- ----------- --------
Net Income 4,012 (608) 3,290
======= =========== ========
Earnings per share
Basic $ 0.50 $ 0.41
Diluted 0.45 0.37
Shares outstanding (000's)
Basic 8,010 8,010
Diluted 8,915 8,915
<FN>
(1) Amortization of goodwill. The acquisition is being accounted for as a
purchase. The aggregate cash paid was $17,860 (including payments to TRW
Components Inc. of $16,775 and closing costs of $1,085). The excess purchase
price paid over assets acquired (principally goodwill) of $6,998 is being
amortized over 15 years.
(2) Interest on acquisition financing and amortization of debt financing costs.
(3) Tax benefit at U.S. statutory rate.
</TABLE>
<PAGE>
EXHIBIT 2000.5
Consent of Independent Auditors
We consent to the use of our reports dated October 16, 2000, with respect to the
financial statements of TRW Sensors and Components included in the Form 8-K of
MSI Inc. filed with the Securities and Exchange Commission on December 27, 2000.
/s/ Ernst & Young LLP
December 27, 2000
Cleveland, Ohio
<PAGE>
