Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired
Wibau-Astec Maschinenfabrik GmbH Financial Statements
filed with this report:
Report on the Examination of the Finanical Statements December 31, 1993
Condensed Balance Sheet as of September 30, 1994 (Unaudited)
Condensed Statements of Operations for nine month periods ended
September 30, 1994 and 1993 (Unaudited)
Condensed Statements of Cash Flows for nine month periods ended
September 30, 1994 and 1993 (Unaudited)
Notes to Condensed Financial Statements (Unaudited)
<PAGE>
THE "REPORT ON THE EXAMINATION OF THE FINANCIAL STATEMENTS DECEMBER 31, 1993"
PRESENTED IS A FAIR AND ACCURATE ENGLISH TRANSLATION OF THE ORIGINAL
GERMAN DOCUMENT.
/S/ Dr. J. Don Brock
President
Report on the Examination of the Financial Statements December 31, 1993
WIBAU - ASTEC MASCHINENFABRIK GmbH
Grundau-Rothenbergen, Germany
C O N T E N T S
A. AUDIT INSTRUCTIONS AND PROCEDURES
B. LEGAL POSITION
I. Legal Position of the Company
II. Litigation
III. Significant Agreements
C. ECONOMIC POSITION
I. Background
II. Operating Results
III. Financial Position
D. AUDIT RESULT
I. Prior Year's Financial Statements
II. Accounting
III. Financial Statements
IV. Management Report
V. Specific Remarks
VI. Final Remarks and Audit Opinion
E. COMMENTS ON SIGNIFICANT ITEMS IN
THE FINANCIAL STATEMENTS
APPENDICES
1. Balance Sheet as of December 31, 1993
2. Statement of Income for 1993
3. Notes to the Financial Statements 1993
4. Management Report 1993
5. General Conditions of Assignment
<PAGE>
A. AUDIT INSTRUCTIONS AND PROCEDURES
The management of
WIBAU-ASTEC Maschinenfabrik GmbH,
Grundau-Rothenbergen
(hereinafter called "the Company"), following a resolution in
the shareholders' meeting of November 15, 1993, engaged us to
carry out the audit of the attached financial statements and
management report.
This engagement is governed by the attached "General
Conditions of Assignment for Auditors and Public Auditing
Companies" (Appendix 5).
We carried out our interim audit in December 1993 and our
final audit in February 1994 in the Company's offices in
Grundau-Rothenbergen. Our examination was based on prior
year's financial statements (not audited due to the size of
the Company) and the financial statements and management
report as of December 31, 1993 prepared by the Company.
Documents and information necessary for our examination were
available upon request.
In accordance with Section 317 of the Commercial Code, we
examined whether the financial statements follow the relevant
commercial and company law regulations, additional provisions
of the Company's articles of association and generally
accepted accounting principles.
Our audit procedures followed the requirements of Statement 1/1988
issued by the "Institut der Wirtschaftsprufer" (IDW) for the audit of
financial statements. The extent and scope of our audit procedures
were determined on the basis of materiality and cost effectiveness.
By procedural and functional tests of the internal control system and
by substantive testing, we determined whether the assets and
liabilities were fully and correctly recorded as to description,
quantity and value.
As agreed, the following short-form report has been prepared.
It does not include either the detailed composition of the
economic position of the Company or explanations of the less
significant balance sheet and income statement items.
B. LEGAL POSITION
I. LEGAL POSITION OF THE COMPANY
Company
The Company was founded on December 18, 1992 with a share
capital of DM 50,000.00.
The Company is registered as WIBAU-ASTEC Maschinenfabrik GmbH
in Grundau-Rothenbergen in the Trade Register of the Court
(Magistrate) in Gelnhausen under HRB 2216. An extract of the
Trade Register with the latest amendments dated January 6, 1994 was available.
Articles of Association
The articles of association dated December 18, 1992 and with
last amendment dated December 10, 1993 remain valid.
Business Purpose
The Company's business is the manufacturing, marketing,
distribution, installation, maintenence and upkeep of asphalt
equipment, bitumen and thermal oil heaters, asphalt-heat-silo-
systems and all other interrelated products.
The Company is entitled to undertake any activity that is,
directly or indirectly, in accordance with its business
objective. Further, the Company may establish branches, both
domestic and foreign. The Company may also acquire other
enterprises of the same or similar type, as well as sublease,
represent, or purchase interests in such enterprises.
Business Year
The business year is the calendar year.
Share Capital
The share capital is fully paid-in. The shareholders are:
DM %
Putzmeister-Werk Maschinenfabrik GmbH, Aichtal 3,000,000.00 50
ASTEC Industries Inc., Chattanooga, Tennessee, USA 3,000,000.00 50
6,000,000.00 100
Three capital increases were made in the business year,
increasing the share capital from DM 50,000 to DM 6,000,000.
Effective March 18, 1993, WIBAU Maschinenfabrik GmbH & Co. KG,
the previous sole shareholder, increased the share capital
from DM 50,000 by DM 1,950,000 to DM 2,000,000. Such increase
was made by a contribution in kind (DM 999,400) and by cash
(DM 950,600).
<PAGE>
In connection with the joint venture agreement dated
July 12, 1993, between Putzmeister-Werk Maschinenfabrik GmbH
and ASTEC Industries Inc. the latter made a contribution in
kind (know-how) amounting to DM 2,000,000.
Effective December 10, 1993, the shareholders increased the
capital from DM 4,000,000 by DM 2,000,000 to DM 6,000,000
contributing DM 1,000,000 each.
Effective December 23, 1993, Putzmeister-Werk Maschinenfabrik
GmbH acquired the shares of WIBAU Maschinenfabrik GmbH & Co. KG.
Shareholders' Committee
In accordance with the articles of association, the Company has such a
committee.
The following are members:
Karl Schlecht Chairman (to December 31, 1993)
Don Brock Chairman (since January 1, 1994)
Dr. Gunther Eschner
Herb Jakob
The Committee, in accordance with the Company's articles of
association, consists of four members, two of which are
appointed from Putzmeister-Werk Maschinenfabrik GmbH and two
from ASTEC Industries Inc. The chairman will rotate annually
by appointment of another member to the position. According
to Company statutes, committee members are not remunerated for
their activity.
General Managers and Company Representatives
The Company's general managers are:
Adolf Herrlein, Frankfurt am Main
Dr. Harald Martin, Bruchkoebel-Niederissigheim
The Company may be represented by a general manager jointly
with either another general manager or with a person granted
procura.
<PAGE>
In a shareholders' resolution dated July 12, 1993 the following individuals
were given procura.
Gerhard Ellenrieder, Maintal 1
Werner Kastens, Nidda-Unterwiddersheim
Peter Muller, Linsengericht 3
Corporate Resolution
With respect to the approval of the prior year's financial
statements and the approach of the activities of the general
managers for the year a shareholders' meeting has yet to pass
the appropriate resolutions.
II. LITIGATION
At the balance sheet date, no significant legal proceedings
were pending.
III. SIGNIFICANT AGREEMENTS
Rental Agreement
As specified in the agreement of July 13, 1993 and the
amendment of January 18, 1994, the Company rented buildings
and production, administration and warehouse space in Grundau-
Rothenbergen. The contract is binding until December 31, 1998
and can be extended for an indefinite period of time, as long
as no party cancels the agreement with the agreed 12-month-
notice period. The monthly rent currently amounts to
DM 60,983.
<PAGE>
C. ECONOMIC POSITION
I. BACKGROUND
The Company's business is essentially the manufacturing and
marketing of asphalt equipment, bitumen and thermal-oil-
heaters as well as asphalt-heat-silo-systems.
Production takes place in the GrUndau-Rothenbergen facility.
II. OPERATING RESULTS
The summarized income statement provide the following
overview:
1993
TDM %
Sales 30,014 100.0
Change in inventory 453 1.5
Capitalized own production 65 0.2
GROSS OPERATING INCOME 30,532 101.7
Cost of materials 16,977 56.6
Personnel expenses 15,497 51.6
Depreciation 1,084 3.6
Other operating expense
less operating income 1,642 5.5
Taxes (other than income taxes) 25 0.1
OPERATING EXPENSE 35,225 117.4
LOSS FROM OPERATIONS -4,693 -15.7
Financial expense -1,262 - 4.2
NET LOSS -5,955 -19.9
III. FINANCIAL POSITION
1. Financial and Capital Structure
The balance sheet provide the following overview:
1993 Prior Year
TDM %* TDM %*
CURRENT ASSETS 16,225 78.1 50 100.0
SHORT-TERM LIABILITIES 20,718 99.7 0
NET CURRENT ASSETS - 4,493 -21.6 50 100.0
FIXED ASSETS AND LONG-TERM
RECEIVABLES 4,338 20.9 0
PREPAID EXPENSES 200 0.9 0
NET ASSETS 45 0.2 50 100.0
<PAGE>
2. Statement of Cash-Flow
1993
OPERATING ACTIVITIES DM
Net loss ( 5,955,324)
Adjustments to reconcile net loss to net cash
provided from (used in) operating activities:
Depreciation and Amortization 4,269,247
Provision for losses on trade accounts
receivable 588,785
Changes in operating assets and liabilities:
Increase in trade accounts receivable ( 7,138,929)
Increase in intercompany receivables ( 316,915)
Increase in inventories ( 9,247,916)
Increase in other receivables, prepaid
expenses and other assets ( 1,544,885)
Increase in accounts payable 756,697
Increase in accrued expenses and
other liabilities 3,634,927
NET CASH PROVIDED FROM (USED) IN
OPERATING ACTIVITIES (14,954,313)
CASH USED IN INVESTING
ACTIVITIES - Purchases of fixed assets ( 7,133,040)
CASH PROVIDED FROM
FINANCING ACTIVITIES - Increase in bank loans 16,326,751
- Increase in shareholders'
capital 5,950,000
INCREASE IN CASH AND CASH EQUIVALENTS 189,398
Cash and cash equivalents at beginning of year 50,000
CASH AND CASH EQUIVALENTS AT END
OF YEAR 239,398
<PAGE>
D. AUDIT RESULT
I. PRIOR YEAR'S FINANCIAL STATEMENTS
With respect to the approval of the prior year's financial
statements, we refer to the information given under B. I.
Since the prior year's financial statements were not audited,
we have made certain that the assets in the prior year's
financial statements were valued and recorded in such a manner
that no material inaccuracy in the current year's operating
results is to be expected.
Contrary to Sections 325 ff of the Commercial Code, these
accounts have not yet been published.
The books of account as at December 31, 1992 were properly
closed.
II. ACCOUNTING
Our audit did not give rise to doubts regarding proper
bookkeeping.
III. FINANCIAL STATEMENTS
The financial statements were prepared in accordance with
Sections 242 to 256 and 264 to 288 of the Commercial Code as
well as the specific requirements of Company Law. There are
no further requirements under the Company's articles of
association.
Based on the balance sheet as of December 31, 1992, the
financial statements as of December 31, 1993 were correctly
developed from the accounting records and the inventory
registers.
The information contained in the "Notes to the Financial
Statements" is complete and accurate.
<PAGE>
The accounting and valuation principles meet the regulations
specified in the Commercial Code. They are described
correctly in the "Notes to the Financial Statements". In
comparison to the previous year, the valuation principles have
not undergone any changes.
IV. MANAGEMENT REPORT
The management report meets the requirements of Section 289 of
the Commercial Code. It is in agreement with the financial
statements. The other information provided in the management
report does not give a false picture of the Company's
position. We have not become aware of significant matters
arising since the end of the business year.
V. SPECIFIC REMARKS
The Company ended the year 1993 with a net loss of TDM 5,955.
Because of this and despite a share capital of TDM 6,000, the
Company's net equity amounts to only TDM 45.
A net operating loss of TDM 4,693 arose in the prior year.
Should the economic situation of the Company not improve or
the shareholders do not take measures to strengthen the
Company's capital position, it is at risk as a going concern.
<PAGE>
VI. FINAL REMARKS AND AUDIT OPINION
Our audit of the financial statements of WIBAU-ASTEC
Maschinenfabrik GmbH as of December 31, 1993 and the
management report followed generally accepted auditing
standards for the examination of financial statements.
Management has provided us with all requested information and
documentation. In a letter of representation, it was
confirmed to us that all assets and liabilities, contingencies
and other commitments and all known risks have been taken into
account.
The financial statements as of December 31, 1992 have not yet
been approved. We, therefore, issue the following unqualified
opinion in respect of the current financial statements and
management report, but with an additional comment regarding
the above issue:
" Based on our audit performed in accordance with our
professional duties, the accounting records and the
financial statements comply with legal regulations, but
with the reservation that the December 31, 1992
financial statements have not yet been approved. The
financial statements present, in compliance with
required accounting principles, a true and fair view of
the net worth, financial position and results of the
Company. The management report is in agreement with
the financial statements. "
Frankfurt am Main, February 15, 1994
Ernst & Young GmbH
Wirtschaftsprufungsgesellschaft
/s/ Dr. Michael Schlosser /s/ Manfred Masur Wirtschaftsprufer
<PAGE>
E. COMMENTS ON SIGNIFICANT ITEMS IN THE
FINANCIAL STATEMENTS
BALANCE SHEET
ASSETS
B.1. INVENTORIES DM 9,480,182.03
PY DM 0.00
DM
1. Raw materials and supplies, parts 7,820,051.21
2. Work in process 1,417,175.97
3. Merchandise 10,688.85
4. Payments on account 232,266.00
9,480,182.03
Evidence of Quantities
Evidence of quantities was provided by inventory lists which
were prepared at the balance sheet date on the basis of a pre-
close inventory of work in process and the taking over of the
EDP records of other inventories (raw materials, supplies and
merchandise).
The physical stock counts were recorded in accordance with the
inventory guidelines and are documented by EDP listings. We
verified the correctness of stock-taking procedures by
observing the physical stock-take on December 30, 1993.
<PAGE>
Valuation
Raw Materials and Supplies
Raw materials and supplies are valued at average cost under
consideration of the lower of cost or market principle.
Work-in-Process and Parts
Production cost capitalized is in accordance with tax law and
based on individual product costings and the lower of cost or
market principle. Production costs comprise material, labor
and proportional overhead and depreciation. The appropriate
stage of production was taken into account in the inventory
valuation, using the related product routings as the basis.
Merchandise
Merchandise is valued at cost, under consideration of the
lower of cost or market principle.
Value Allowances
Valuation risks associated with above average storage periods
and reduced useability are accounted for by adequate inventory
reserves.
Inventory reserves, totalling TDM 3.277, were recorded against
the year-end book values.
<PAGE>
B.II. RECEIVABLES AND OTHER ASSETS
1. Trade accounts receivable DM 6,550,144.39
thereof with a remaining term of more PY DM 0.00
than one year: DM 1,029,980.00 (PY: DM 0,00)
DM
Domestic 5,194,480.64
Foreign 2,129,462.82
7,323,943.46
Specific allowances - 404,449.88
General allowances - 184,334.99
Discounts of long-term receivables - 185,014.20
6,550,144.39
Evidence of Existence
The receivables are supported by EDP listings as of the balance sheet date.
Valuation
Receivables are recorded at their nominal value, under
consideration of the lower of cost or net realizable value
principle.
Allowances
In addition to specific allowances, the Company established a
general allowance of TDM 184. This allowance was calculated
at 3 % of the balance of accounts receivable adjusted for
balances covered by specific allowances and for value-added-tax.
Trade accounts receivable with a remaining term of more than
one year have been discounted to present value using an interest rate of 8 %.
<PAGE>
2. Receivables due from affiliates DM 316,915.09
thereof due from shareholders: DM 269,840.17 PY DM 0.00
thereof with a remaining term of more
than one year: DM 0.00
DM
Putzmeister-Werk Maschinenfabrik GmbH, Aichtal 266,716.92
Putzmeister Maschinenbau GmbH & Co. KG, Althengstett 9,751.41
ASTEC Industries Inc., Chattanooga, USA 3,123.25
WIBAU Maschinen GmbH & Co. KG, Grundau-Rothenbergen 37,323.51
316,915.09
Evidence of Existence
The affiliated receivables result from normal trade activity
and are supported by corresponding EDP listings and balance
confirmations as of the balance sheet date.
Valuation
Receivables are recorded at their nominal value, under
consideration of the lower of cost or net realisable value
principle.
3. Other assets DM 669,113.14
thereof with a remaining term of more PY DM 0.00
than one year: DM 0.00 (PY: DM 0,00)
DM
Value-added-tax 545,940.08
Accounts payable - debit positions 57,070.18
Travel advances 40,912.12
Wage and salary advances 6,144.00
Other receivables 19,046.76
669,113.14
<PAGE>
EQUITY AND LIABILITIES
B. ACCRUALS
B.4. Other accruals DM 2,660,461.28
PY DM 0.00
DM
Outstanding services 925,977.18
Warranties 865,982.00
Vacation and overtime payments, employee bonuses 239,865.00
Litigation and related costs1 43,000.00
Workmen's accident compensation insurance 137,500.72
Anticipated losses from pending business 109,000.00
Severance payments 81,693.00
Insurance premiums 78,453.30
Audit fees and year-end costs 55,000.00
Other accruals 23,990.08
2,660,461.28
Outstanding services
The accrual for outstanding services consists essentially of
incomplete installation work for asphalt plant equipment already delivered.
Warranties
The Company has set up a general provision for warranties in
addition to a specific allowance for warranty obligations.
<PAGE>
C. LIABILITIES
1. Liabilities to banks DM 16,326,750.77
all due within one year PY DM 0.00
(PY: DM 0.00)
DM
Notes payable to banks 15,000,000.00
Short-term loans 1,000,000.00
Overdraft 326,750.77
16,326,750.77
Notes payable to banks
DM
Bayerische Vereinsbank AG, Frankfurt am Main 5,000,000.00
Berliner Handels-und Frankfurter Bank Ltd., St.Helier, Jersey 6,000,000.00
Dresdner Bank AG, Gelnhausen 4,000,000.00
15,000,000.00
Short-term loans
Dresdner Bank AG, Gelnhausen 1,000,000.00
Overdraft
Dresdner Bank AG, Gelnhausen 326,750.77
Evidence of Existence
Balances per the accounting records (after consideration of
reconciling differences) agree with the bank confirmations as
of the balance sheet date.
Valuation
Liabilities due to banks are valued at the repayment amount.
3. Trade accounts payable DM 756,696.77
all due within one year PY DM 0.00
(PY: DM 0.00)
Evidence of Existence
Accounts payable are supported by EDP listings as at the balance sheet date.
Valuation
Accounts payable are valued at the repayment amount.
Liabilities in foreign currency are converted at the balance
sheet date rate or the original transaction date rate,
whichever is higher.
4. Other liabilities DM 643,904.68
all due within one year PY DM 0.00
(PY: DM 0.00)
DM
From taxes
Wage and church taxes 148,852.71
As part of social security
Social security obligations 287,547.82
Other
Sales ledger credit balances 196,891.63
Other 10,612.52
Total other 207,504.15
643,904.68
<PAGE>
STATEMENT OF INCOME
1. Net sales DM 30,013,880.31
PY DM 0.00
DM
Gross sales 30,152,112.97
Discounts - 82,873.37
Rebates - 55,359.29
Net sales 30,013,880.31
2. Increase in finished goods and work in process DM 452,669.47
PY DM 0.00
The increase in work in process resulted from the corresponding changes
since the date of the capital contribution in kind.
4. Other operating income DM 4,936,675.20
PY DM 0.00
DM
Reimbursement of expenses 1,162,948.77
Reversal of accruals 3,187,054.14
Reduction of specific allowances 220,362.36
Cafeteria earnings 132,556.01
Profits from asset disposals 41,011.09
Damage refunds 37,149.98
Foreign exchange gains 500.08
Other income 155,092.77
4,936,675.20
Income from the reversal of accruals results mainly from the release of an
accrual for the estimated operating loss for the first quarter of 1994.
This was released in conjunction with and at the time of the capital
contribution in kind. Income from the reduction of specific allowances
(TDM 220) results from the change in the relevant balance sheet positions
since the date of the contribution in kind.
<PAGE>
5. Cost of materials DM 16,976,204.71
PY DM 0.00
DM
a) Cost of raw materials, supplies,
production materials and purchased goods
Materials used 15,692,005.73
Energy costs 89,825.76
Freight costs relating to purchases 113,865.95
Supplies and production materials 85,189.49
15,980,86.93
less
Supplier discounts and bonuses 174,286.14
15,806,600.79
b) Cost of purchased services
External wages and salaries 1,169,603.92
16,976,204.71
<PAGE>
6. Personnel expenses DM 15,497,653.66
PY DM 0.00
DM
a) Wages and salaries
Wages 3,079,879.42
Salaries 8,678,136.38
Vacation pay and Christmas bonus 1,123,699.73
Provisions 103,714.33
Contributions to employees savings scheme 111,799.86
13,097,229.72
b) Social security
Social security insurance 2,237,721.82
Workmen's compensation 157,902.12
Other 4,800.00
2,400,423.94
15,497,653.66
7. Depreciation of intangible assets
and tangible assets DM 1,084,123.35
PY DM 0.00
DM
Intangible assets
Ordinary amortization 329,157.00
Assets
Ordinary depreciation 745,093.70
Low-value items 9,872.65
754,966.35
1,084,123.35
<PAGE>
8. Other operating expenses DM 6,579,159.85
PY DM 0.00
DM
Operating expense 2,775,114.66
Administrative expense 1,169,926.70
Distribution expense 2,106,771.55
Other expenses 527,346.94
6,579,159.85
10. Other interest and similar income DM 56,983.12
of which from affilitated companies: PY DM 0.00
DM 5,842.95
DM
Interest 13,593.82
Default interest 43,389.30
56,983.12
11. Interest and similar expenses DM 1,323,894.54
of which to affilitated companies: PY DM 0.00
DM 106.027,78
DM
Interest 743,858.70
Discount expenses 580,035.84
1,323,894.54
<PAGE>
Appendix 1
WIBAU-ASTEC MASCHINENFABRIK GMBH, GRUNDAU-ROTHENBERGEN
BALANCE SHEET AS OF DECEMBER 31, 1993
ASSETS Prior Year
A. FIXED ASSETS DM DM
I. Intangible assets 1,843,034.00 0
II. Fixed assets 1,458,342.50 0
III. Financial assets 6,178.97 0
3,307,555.47 0
B. CURRENT ASSETS
I. Inventories
1. Raw materials and supplies, parts 7,820,051.21 0
2. Work in process 1,417,175.97 0
3. Merchandise 10,688.85 0
4. Payments on account 232,266.00 0
9,480,182.03 0
II. Receivables and other assets
1. Trade accounts receivable 6,550,144.39 0
2. Receivables due from affiliates 316,915.09 0
3. Other assets 669,113.14 0
7,536,172.62 0
III. Cheques, cash and bank balances 239,397.81 50
C. PREPAID EXPENSES 199,744.00 0
TOTAL ASSETS 20,763,051.93 50
<PAGE>
EQUITY AND LIABILITIES
A. EQUITY
I. Share capital 6,000,000.00 50
II. Net loss for the year - 5,955,324.07 0
44,675.93 50
B. ACCRUALS
1. Other accruals 2,660,461.28 0
C. LIABILITIES
1. Liabilities to banks 16,326,750.77 0
2. Payments on account received 330,000.00 0
3. Trade accounts payable 756,696.77 0
4. Other liabilities 643,904.68 0
18,057,352.22 0
D. DEFERRED INCOME 562.50 0
TOTAL EQUITY AND LIABILITIES 20,763,051.93 50
<PAGE>
<TABLE>
ANALYSIS OF FIXED ASSETS
A c q u i s i t i o n C o s t
DM
Balance Contri- Balance
as of bution Additions Disposals as of
1-1-93 in kind 12-31-93
Assets
Intangible Assets
<CAPTION>
<C> <C> <C> <C> <C> <C>
1. Know-how 0.00 2,000,000.00 0.00 0.00 2,000,000.00
2. Software 0.00 949,142.97 13,853.00 0.00 962,995.97
0.00 2,949,142.97 13,853.00 0.00 2,962,995.97
Tangible Assets
1. Technical equipment
and machinery 0.00 779,241.11 0.00 198,019.29 581,221.82
2. Other equipment,
operational and
office equipment 0.00 3,553,842.93 177,155.35 142,176.04 3,588,822.24
3. Advance payments and
construction in progress 0.00 0.00 437,583.50 0.00 437,583.50
0.00 4,333,084.04 614,738.85 340,195.33 4,607,627.56
Financial Assets
Other loans 0.00 7,452.19 4,811.94 6,085.16 6,178.97
0.00 7,289,679.20 633,403.79 346,280.49 7,576,802.50
A c c u m u l a t e d D e p r e c i a t i o n
ASSETS
Intangible Assets
<CAPTION>
1. Know-how 0.00 0.00 200,000.00 0.00 200,000.00
2. Software 0.00 790,804.97 129,157.00 0.00 919,961.97
0.00 790,804.97 329,157.00 0.00 1,119,961.97
Tangible Assets
1. Technical equipment
and machinery 0.00 603,195.11 49,786.00 168,681.29 484,299.82
2. Other equipment,
operational and
office equipment 0.00 2,049,448.87 705,180.35 89,643.98 2,664,985.24
3. Advance payments
and construction
in progress 0.00 0.00 0.00 0.00 0.00
0.00 2,652,643.98 754,966.35 258,325.27 3,149,285.06
Financial Assets
Other loans 0.00 0.00 0.00 0.00 0.00
0.00 3,443,448.95 1,084,123.35 258,325.27 4,269,247.03
</TABLE>
<PAGE>
<TABLE>
Net Book Values
DM
Net Book Net Book
Values as of Values as of
12-31-1993 12-31-1992
Assets
Intangible Assets
<CAPTION>
<C> <C> <C>
1. Know-how 1,800,000.00 0.00
2. Software 43,034.00 0.00
1,843.034.00 0.00
Tangible Assets
1. Technical equipment,
and macninery 96,922.00 0.00
2. Other equipment, operational
and office equipment 923,837.00 0.00
3. Advance payments and
construction in progress 437,583.50 0.00
1,458,342.50 0.00
Financial Assets
Other loans 6,178.97 0.00
3,307,555.47 0.00
</TABLE>
<PAGE>
<TABLE>
Appendix 2
WIBAU-ASTEC MASCHINENFABRIK GMBH, GRUNDAU-ROTHENBERGEN
STATEMENT OF INCOME FOR 1993
DM DM
<CAPTION>
<C> <S> <C> <C>
1. Net sales 30,013,880.31
2. Increase in finished goods and work in process 452,669.47
3. Other company-manufactured capitalized items 65,462.00
4. Other operating income 4,936,675.20
35,468,686.98
5. Cost of materials
a) Raw materials, supplies and
merchandise 15,806,600.79
b) Services 1,169,603.92
6. Personnel expenses
a) Wages and salaries 13,097,229.72
b) Social security and pensions 2,400,423.94
7. Depreciation on intangible and
tangible assets 1,084,123.35
8. Other operating expenses 6,579,159.85
40,137,141.57
- 4,668,454.59
9. Income from other investments 4,811.94
10. Other interest and similar income 56,983.12
of which from affilitated companies: TDM 6
11. Interest and similar expenses 1,323,894.54
of which to affiliated companies: TDM 106
- 1,262,099.48
12. Loss from ordinary activities - 5,930,554.07
13. Other taxes 24,770.00
14. Net loss for the year - 5,955,324.07
</TABLE>
<PAGE>
Appendix 3
WIBAU-ASTEC Maschinenfabrik GmbH
Annual Accounts as of December 31, 1993
NOTES TO THE FINANCIAL STATEMENTS
The annual financial statements were prepared according to Sections 242 ff
and 264 ff of the Commercial Code as well as the relevant regulations
specified in the GmbHG.
For the income statement the cost-type format was used.
SIGNIFICANT ACCOUNTING POLICIES
Intangible Assets
Intangible assets are stated at cost and include know-how (contribution in
kind) and software.
The Company provides for amortization of know-how and software by the
straight-line method over a period of five years and the estimated useful
lives respectively.
Machinery and Equipment
Machinery and equipment are carried at cost. Major additions and improvements
are capitalized, while maintenance and repairs which do not improve or extend
the lives of the respective assets are expensed as incurred.
Retirements and disposals are removed from cost and accumulated depreciation
accounts, with the resulting gain or loss reflected in income.
Depreciation, for financial reporting purposes, is computed using the
straight-line method over the estimated useful lives of the assets.
<PAGE>
Inventories
Inventories are carried at the lower of cost or market. The Company uses the
average cost method for determining cost of raw materials. Work in process
include direct materials and labour plus an appropriate proportion of
manufacturing overheads based on a normal level of activity. Reserves are
made for slow moving and obsolete items.
Trade Accounts Receivable
Trade accounts receivable are net of allowances for doubtful accounts. In
addition to specific allowances, a general allowance has been provided to
cover the general risk on outstanding amounts. Receivables
with a term of more than one year are discounted at a rate of eight percent.
Other Accruals
Other accruals take into account all recognizable risks and contingent
liabilities.
Liabilities
Liabilities are recorded at the repayment value.
Basis for the Conversion of Foreign Currency Amounts into German Marks
Liabilities in a foreign currency are valued at the higher exchange rate either
at transaction date or at year end.
<PAGE>
NOTES TO THE BALANCE SHEET
Fixed assets
The development is explained in connection with the analysis of fixed assets
on Page 4.
Inventories
Net inventories comprise:
DM
Raw materials and supplies, parts 7,820,051
Work in process 1,417,176
Merchandise 10,689
Payments on account 232,266
Net inventories 9,480,182
Total valuation allowances amount to DM 3,277,412.
Share capital
The Company's shareholders are as follows:
DM
Putzmeister-Werk Maschinenfabrik GmbH 3,000,000
ASTEC Industries Inc., Chattanooga, Tennessee, USA 3,000,000
6,000,000
Liabilities to banks
The balance includes:
DM
Notes payable to banks 15,000,000
Short-term bank loans and overdraft 1,326,751
16,326,751
Liabilities
The liabilities are all due within one year.
The liabilities due to banks are secured by a guarantee of Putzmeister-Werk
Maschinenfabrik GmbH.
Contingent liabilities
As of the balance sheet date, contingent liabilities in the amount of
TDM 4.433 existed in relation to guarantees given by the Company.
Other financial obligations
In addition to the contingent obligations, there are other financial
obligations, amounting to TDM 4.331 for rent and leasing contracts.
These contracts expire between 1994 and 1998.
There are no additional liabilities to be noted that are of importance for
evaluating the financial position.
<PAGE>
NOTES TO THE STATEMENT OF INCOME
1993
TDM %
Net Sales
- - Per business segments
Asphalt plants 20,367 67.8
Spares 6,925 23.1
Installation fees 2,339 7.8
Other 383 1.3
Total 30,014 100.0
- - According to regions
Federal Republic of Germany 16,780 55.9
Foreign countries 13,234 44.1
30,014 100.0
Other operating income
Other operating income comprises essentially income from the reversal of
accruals (TDM 3,187) the reimbursement of expenses (TDM 1,163) and the
reduction of specific allowances (TDM 220).
Income from the reversal of accruals results mainly from the reversal of a
provision of the estimated operating loss of the first quarter released in
connection with and at the time of the capital contribution in kind.
Income from reduction of provisions as well as the reduction of specific
allowances result from the period since the date of the capital
contribution in kind.
Other operating expense
1993
TDM
Operating 2,775
Administration 1,170
Selling and distribution 2,107
Other 527
6,579
<PAGE>
OTHER REMARKS
Management
Members of the board of directors are:
Adolf Herrlein
Dr. Harald Martin
Members of the Shareholders' Committee are:
Karl Schlecht, Chairman to December 31, 1993
Don Brock, Chairman since January 1, 1994
Dr. Gunther Eschner
Herb Jakob
Total remuneration of Management
and of the Shareholders Committee members
Management remuneration amounted to DM 394.160 in 1993.
The members of the Shareholders' Committee receive no remuneration per the
Company's constitution.
<PAGE>
Employees
Average number of the employees working for the Company during the year were:
1993
Hourly 77
Salaried 124
Trainees 10
211
Recommendation Regarding the Net Operating Result
Management recommends that the net loss of DM 5.955.324,07 is carried forward
to the new accounting period.
Grundau-Rothenbergen, February 14, 1994
The Management
<PAGE>
AUDIT OPINION
Based on our audit performed in accordance with our professional duties, the
accounting records and the financial statements comply with legal
regulations, but with the reservation that the December 31, 1992
financial statements have not yet been approved. The financial statements
present, in compliance with required accounting principles, a true and fair
view of the net worth, financial position and results of the
Company. The management report is in agreement with the financial statements.
Frankfurt am Main, February 15, 1994
Ernst & Young GnbH
Wirtschaftsprufungsgesellschaft
/s/ Dr. Michael Schloesser
Wirtschaftspruefer
/s/ Manfred Masur
Wirtschaftspruefer
<PAGE>
Appendix 4
MANAGEMENT REPORT
Wibau-Astec Maschinenfabrik GmbH
Business Year: January 1 - December 31, 1993
General
At of the beginning of 1993, Wibau Maschinen GmbH & Co. KG
integrated its asphalt plant construction business into Wibau
Astec Maschinenfabrik GmbH (WAG) by means of a cash and assets
contribution.
At the beginning of July 1993, Astec Industries Inc./USA
purchased a 50% interest in the shares of WAG as part of an
increase in capital.
At the beginning of December 1993, a further capital increase
of DM 2.0 Million, to DM 6.0 Million was made. This increase
was allocated equally to Astec Industries Inc./USA (50%) and
Putzmeister-Werk Maschinenfabrik GmbH (50%).
Following Wibau Maschinen GmbH & Co. KG disposal of its
interest in WAG to Putzmeister-Werke Maschinenfabrik GmbH at
the end of December 1993, the share capital of WAG of DM 6.0
Million, is allocated equally to Astec Industries Inc./USA and
Putzmeister-Werke Maschinenfabrik GmbH.
Marketing/Sales
The year 1993 was characterized by a serious decrease in the
asphalt plant construction market, which had already been
apparent at the end of 1992. This decrease was also
accompanied by a fall in prices. Because of this, only 6
asphalt plants were invoiced in 1993, of which 4 were
delivered to the former Soviet Union. Total turnover for the
year was approximately DM 30.0 Million.
Operating Results
As the Company had assumed that the decline in the asphalt
plant construction market would not be restricted to the short
term, The Company's organization was changed to reflect market
conditions.
<PAGE>
These measures were primarily aimed at reducing personnel as
well as other costs. With this goal in mind, the number of
employees was reduced in 1993 from 286 to 177. In addition,
measures were implemented to increase efficiency and
productivity. Despite these measures, however, the Company
ended the year with an operating loss of TDM 5,955.
Outlook
As a result of the demand increasing toward the end of 1993,
after the 1993 year-end inquiry, 1994 beagn with an order
backlog of approx. DM 17.0 Million. In January 1994, an
Asphalt plant was sold to the American Astec-Technology. As a
result of this additional technology contributed by our
American shareholder, we expect a positive reaction from the
market.
Despite continuing competitive pressure and the weak economic
situation in Europe, we expect that WAG will realize a
substantial increase in sales in 1994. We will strive to
attain a net operating result which is at least break-even.
The Management
Grundau-Rothenbergen
February 14, 1994
<PAGE>
<TABLE>
WIBAU-ASTEC Maschinenfabrik, GmbH
CONDENSED BALANCE SHEET
(UNAUDITED)
SEPTEMBER 30,
1994
TDM
ASSETS
CURRENT ASSETS
<CAPTION>
<S> <C>
Cash 305
Accounts receivable-net 3,586
Inventories 10,764
Prepaid expenses and other 309
TOTAL CURRENT ASSETS 14,964
PROPERTY AND EQUIPMENT-NET 2,769
17,733
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable 16,000
Bank overdraft 2,304
Accounts payable-trade 732
Accrued expenses and other 3,759
TOTAL CURRENT LIABILITIES 22,795
SHAREHOLDERS' EQUITY
Share capital 8,000
Retained earnings-current (13,062)
TOTAL SHAREHOLDERS' EQUITY (5,062)
17,733
<FN>
See Notes to Condensed Financial Statements (Unaudited).
</TABLE>
<TABLE>
WIBAU-ASTEC Maschinenfabrik, GmbH
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Nine months ended
September 30, September 30,
1994 1993
TDM TDM
<CAPTION>
<S> <C> <C>
Net sales 26,484 28,895
Cost of sales 25,752 25,863
732 3,032
Selling, general and
administrative 7,672 5,551
Income (loss) from operations (6,940) (2,519)
Interest expense 750 928
Other income, net of expense 584 40
Net income (loss) (7,106) (3,407)
<FN>
See Notes to Condensed Financial Statements (Unaudited).
</TABLE>
<PAGE>
<TABLE>
WIBAU-ASTEC Maschinenfabrik, GmbH
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine months ended
September 30, September 30,
1994 1993
TDM TDM
Cash flows from operating activities:
<CAPTION>
<S> <C> <C>
Net (loss) (7,106) (3,407)
Adjustments to reconcile net (loss)
to net cash (used) by operating acitvities:
Depreciation and amortization 869 745
Provision for bad debts 35 555
Provision for warranty reserve 680
Provision for inventory reserve 2,950
(Increase) decrease in:
Receivables 3,246 (10,410)
Inventories (1,284) (13,022)
Prepaid expenses 91 (250)
Other assets 470 (960)
Increase (decrease) in:
Accounts payable (24) 842
Bank overdraft 977 5,000
Accrued expenses 209 3,331
Other accrued liabilities (86) 2,333
Total adjustments 4,503 (8,206)
Net cash (used) by operating activities (2,603) (11,613)
Cash flows from investing activities:
Expenditures for property and equipment (331) (515)
Net cash (used) by investing
activities (331) (515)
Cash flows from financing activities:
Contributed capital reserves 2,000 1,000
Borrowings under loan agreements 1,000 11,357
Net cash provided by financing
activities 3,000 12,357
Increase in cash 66 229
Cash, beginning of period 239 50
Cash, end of period 305 279
Supplemental Cash Flow Information
Excluded from the Condensed Statements of Cash Flows (Unaudited) were the
following effects of non-cash financing activities:
Non-cash transfer of assets for capital:
Fixed assets 3,440
Share capital (2,950)
Accrued expenses (490)
</TABLE>
[FN]
See Notes to Condensed Financial Statements (Unaudited).
<PAGE>
WIBAU-ASTEC Maschinenfabrik, GmbH
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
statements which do not include all of the information and footnotes required
in annual financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for
the nine months ended September 30, 1994 are not necessarily
indicative of the results that may be expected for the entire year.
NOTE B - INVENTORY
Inventory at September 30, 1994 is summarized as follows:
<TABLE>
(IN THOUSANDS)
(DM)
September 30, 1994
<CAPTION>
<S> <C>
Raw materials 6,059
Work-in-process 4,596
Finished goods 10
Parts 99
TOTAL 10,764
</TABLE>
NOTE C - SUBSEQUENT EVENT
On November 7, 1994, Astec Industries, Inc. (Astec) acquired the remaining
50% ownership interest in Wibau-Astec Maschinenfabrik GmbH of Grandau, Germany
(Wibau-Astec) from Putzmeister-Werk Maschinenfabrik GmbH of Stuttgart, Germany
(Putzmeister) in a stock purchase transaction for DM 100,000. As a result
of the transaction, Astec now owns 100% of the outstanding stock of Wibau-
Astec.
<PAGE>
(b) Pro Forma Financial Information
PRO FORMA FINANCIAL INFORMATION
The Pro Forma Balance Sheet and Pro Forma Statements of Income (collectively,
the "pro forma financial information") give effect to Astec's acquisition
of the remaining 50% interest of a German joint
venture, Wibau-Astec Maschinenfabrik GmbH, for DM 100,000 (approximately
$ 67,000) and the assumption of liabilities of approximately DM 10,760,000
(approximately $ 7,080,000). Subsequent to the acquisition of the
remaining 50% of Wibau-Astec, Astec made the
decision to restructure Wibau-Astec and to discontinue manufacturing
operations. As a result, approximately 150 employees were given
notice of their termination and Wibau-Astec also gave notice that it intended
to vacate its manufacturing facilities which were leased. After the
restructuring, Wibau-Astec will supply parts for use in asphalt
production and also sell asphalt plants manufactured by Astec. The pro forma
financial information is based on the historical financial information of
Astec and Wibau-Astec and gives effect to the restructuring of Wibau-Astec
and the pro forma adjustments, based on estimates, described in the notes
thereto. The Pro Forma Statements of Income assume that the acquisition of
the remaining interest in Wibau-Astec and its restructuring had been effective
as of the beginning of the periods presented and the Pro Forma Balance
Sheet assumes that such acquisition and restructuring was effective as of
September 30, 1994.
The pro forma financial information reflects the purchase method of accounting
for the acquisition of the remaining interest in Wibau-Astec, and accordingly
is based on estimated purchase accounting adjustments that are subject to
further revision once appraisals or other studies of the fair value
of Wibau-Astec's assets and liabilities are completed. The pro forma financial
information was computed using an assumed exchange rate of DM 1.547 per dollar
(the quoted exchange rate at September 30, 1994 as published in the Wall
Street Journal).
The pro forma financial information reflects certain assumptions described
above and in Notes to Pro Forma Balance Sheet and Notes to Pro Forma
Statements of Income, including Astec's estimates of
certain anticipated cost savings resulting from the restructuring of
Wibau-Astec. The actual savings may be higher or lower than these
estimates. The pro forma financial information does not purport to present
what Astec's financial condition or results of operations would actually have
been if the acquisition of the remaining interest in Wibau-Astec had occurred
as of the beginning of the periods presented, as specified
above, or to project Astec's financial condition or results of operations for
any future date or any future period. Wibau-Astec expects to incur
restructuring charges of approximately DM 3,700,000
(approximately $2,400,000) in the fourth quarter of 1994 related to the
discontinuance of its manufacturing operations.
<PAGE>
<TABLE>
PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 1994
(UNAUDITED)
(Amounts in thousands)
PRO FORMA PRO FORMA
Astec and
Historical Historical Adjustments Wibau-Astec Adjustments Wibau-Astec
Astec Wibau-Astec Ref. Amount As Adjusted Ref. Amount Combined
ASSETS
CURRENT ASSETS
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents $1,677 $197 $197 (3) ($65) $1,809
Accounts receivable-net 27,270 2,318 2,318 29,588
Inventories 46,155 6,958 6,958 53,113
Prepaid expenses and other 5,833 200 200 6,033
Patent damage escrow fund 12,795 12,795
TOTAL CURRENT ASSETS 93,730 9,673 9,673 (65) 103,338
PROPERTY AND EQUIPMENT-NET 37,751 1,790 (2) ($420) 1,370 (4) (970) 38,151
OTHER ASSETS 3,385 (3) 2,671 7,796
(6) 1,740
$134,866 $11,463 ($420) $11,043 $3,376 $149,285
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of
long-term debt $500 $11,832 (1) ($4,072) $7,760 $8,260
Accounts payable-trade 13,183 473 473 13,656
Reserve for patent damages 13,736 13,736
Other accrued liabilities 12,601 2,430 (2) 2,016 4,446 17,047
TOTAL CURRENT LIABILITIES 40,020 14,735 (2,056) 12,679 52,699
LONG-TERM DEBT 18,700 18,700
OTHER LONG-TERM LIABILITIES 793 793
SHAREHOLDERS' EQUITY
Common Stock 1,961 5,171 5,171 (5) ($5,171) 1,961
Additional paid-in
capital 48,229 48,229
Retained earnings 25,163 (8,443) (1) 1,636 (6,807) (5) 6,807 26,903
(6) 1,740
TOTAL SHAREHOLDERS'
EQUITY 75,353 (3,272) 1,636 (1,636) 3,376 77,093
$134,866 $11,463 ($420) $11,043 $3,376 $149,285
</TABLE>
[FN]
See Notes to Condensed Combined Balance Sheet (Unaudited).
<PAGE>
<TABLE>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1994
(UNAUDITED)
(Amounts in thousands, except per share data)
PRO FORMA PRO FORMA
Astec and
Historical Historical Adjustments Wibau-Astec Adjustments Wibau-Astec
Astec Wibau-Astec Ref. Amount As Adjusted Ref. Amount Combined
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net sales $157,941 $17,119 (1) ($13,796) $3,323 $161,264
Cost of sales 121,683 16,646 (1) (14,887) 1,759 123,442
36,258 473 1,091 1,564 37,822
Selling, general and
administrative 23,832 4,959 (2) (3,361) 1,598 (4) $100 25,530
Patent suit damages
and expenses 205 205
Income (losss) from operations 12,221 (4,486) 4,452 (34) (100) 12,087
Interest expense 331 485 485 816
Other income, net of expense (2) 377 (3) (377) (5) 1,740 1,738
Income (loss) before income 11,888 (4,594) 4,075 (519) 1,640 13,009
Income taxes 669 669
Net income (loss) $11,219 ($4,594) $4,075 ($519) $1,640 $12,340
Earnings per common and
common equivalent shares $1.14 $1.26
Weighted average number
of common and common
equivalent shares 9,801,032 9,801,032
</TABLE>
[FN]
See Notes to Pro Forma Condensed Combined Statements of Income (Unaudited).
<PAGE>
<TABLE>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1993
(UNAUDITED)
(Amounts in thousands, except per share data)
PRO FORMA PRO FORMA
Astec and
Historical Historical Adjustments Wibau-Astec Adjustments Wibau-Ast
Astec Wibau-Astec Ref. Amount As Adjusted Ref. Amount Combined
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net sales $172,802 $22,592 (1) ($18,068) $4,524 $177,326
Cost of sales 130,906 21,357 (1) (19,189) 2,168 133,074
41,896 1,235 1,121 2,356 44,252
Selling, general and
administrative 31,547 4,269 (2) (2,137) 2,132 (4) $134 33,813
Patent suit damages
and expenses 375 375
Income (loss) from operations 9,974 (3,034) 3,258 224 (134) 10,064
Interest expense (1,788) (856) (856) (2,644)
Loan prepayment penalty and
expenses (545) (545)
Other income, net of expense 2,131 40 (3) (40) (5) 720 2,851
Income before income taxes 9,772 (3,850) 3,218 (632) 586 9,726
Income taxes 434 434
Net income (loss) $9,338 ($3,850) $3,218 ($632) $586 $9,292
Earnings per common and
common equivalent share $1.07 $ 1.07
Weighted average number of
common and common
equivalent shares 8,694,478 8,694,478
</TABLE>
[FN]
See Notes to Pro Forma Condensed Combined Statements of Income (Unaudited).
<PAGE>
NOTES TO PRO FORMA CONDENSED COMBINED
BALANCE SHEET (UNAUDITED)
(1) Concurrently with Astec's acquisition of the remaining 50% of Wibau-Astec
from Putzmeister-Werk Maschinenfabrik GmbH, its joint venture partner,
Putzmeister contributed DM 6,300,000 (approximately $4,072,000) to eliminate
the deficiency in its capital account (approximately DM 2,531,000
or $1,636,000) and pay a portion of the costs to be incurred in restructuring
Wibau-Astec. This pro forma adjustment gives effect to such contribution as
of September 30, 1994. This contribution was used to pay down debt as
required under revised lines of credit.
(2) This pro forma adjustment reflects the accrual of restructuring costs of
approximately DM 3,770,000 or $2,436,000 (pretax) to discontinue manufacturing
at Wibau-Astec. These costs are primarily related to employee severance,
write-off of property and equipment and lease termination costs. This
accrual is specifically related to actions impacting Wibau-Astec's
pre-acquisition operations. The majority of the costs represented by the
accrual will be incurred in the fourth quarter of 1994. The
restructuring plan, which has resulted in net employee reductions of
approximately 150, is expected to result in significant cost savings
and is expected to be substantially completed during the first half of
1995.
(3) This pro forma adjustment represents the acquisition of Putzmeister's 50%
interest in Wibau-Astec for DM 100,000 or approximately $65,000. The
following table depicts the calculation of Astec's
purchase price and its preliminary allocations to Wibau-Astec's assets using
estimated purchase accounting adjustments as of September 30, 1994, which are
subject to further revision once appraisals and other studies of the fair
value of Wibau-Astec's assets and liabilities are completed. Final purchase
accounting adjustments will differ from the amounts shown below due to foreign
currency translation effects and the results of operations of Wibau-Astec
to the date of closing.
<TABLE>
(Dollars in thousands)
Calculation of acquisition cost
<CAPTION>
<S> <C>
Purchase of Putzmeister's interest $ 65
Assumed liabilities of Wibau-Astec 5,901
Accrual for restructuring costs 2,436
Total acquisition cost $ 8,402
Allocation of acquisition cost
Cash and cash equivalents $ 98
Accounts receivable 1,159
Inventories 3,479
Prepaid expenses and other 100
Property and equipment 895
Intangible assets (goodwill) 2,671
Total acquisition cost $ 8,402
</TABLE>
[FN]
(4) This pro forma adjustment represents the elimination of Wibau-Astec
intangible assets.
(5) This pro forma adjustment represents the elimination of Wibau-Astec
shareholders' equity.
(6) This pro forma adjustment represents the elimination of Astec's equity
in losses of Wibau-Astec for nine months ended September 30, 1994.
<PAGE>
NOTES TO PRO FORMA CONDENSED COMBINED
STATEMENTS OF INCOME (UNAUDITED)
(1) This pro forma adjustment reflects the restructuring of Wibau-Astec to
discontinue manufacturing. As a result, net sales and cost of sales have been
reduced by the amounts related to the manufacture and sale of asphalt
plants and components. Subsequent to the restructuring, Wibau-Astec
will continue to supply parts for asphalt production as well as sell asphalt
plants which will be manufactured by Astec. No revenue has been assumed in
the pro formas from the sale of asphalt plants
manufactured by Astec, but expenses related to selling plants has been included
in selling, general and administrative expenses. If adequate revenues from
plant sales are not generated, expenses will be reduced accordingly.
No such expense reduction has been assumed in the Pro Forma Condensed
Combined Statements of Income. Revenue and cost of sales relative to the sale
of supply parts for the year ended December 31, 1993, and the nine months
ended September 30, 1994 were as follows:
<TABLE>
Year Ended December 31, 1993 Nine Months Ended September 30, 1994
DM U.S. DOLLARS DM U.S. DOLLARS
<CAPTION>
<S> <C> <C> <C> <C>
Net Sales 6,999,742 $ 4,524,720 5,140,964 $ 3,323,183
Cost of Sales 3,355,202 $2,168,844 2,720,831 $ 1,758,779
</TABLE>
(2) This pro forma adjustment reflects the estimated cost savings resulting
from the restructuring of Wibau-Astec. The estimated cost savings result from
net reductions of approximately 150 employees and the termination of the lease
of manufacturing facilities. A substantial majority of the workforce
reductions took place in the fourth quarter of 1994 and notice has been given
of Wibau-Astec's intention to vacate its leased manufacturing facility.
The costs associated with the restructuring plan have been accrued in the
Pro Forma Condensed Combined Balance Sheet.
(3) This pro forma adjustment represents the elimination of other income which
was primarily related to the manufacturing operations which have been
eliminated in the restructuring.(4) This pro forma adjustment represents the
amortization expense relating to acquisition of goodwill which will be
amortized over a period of twenty years.
(5) This pro forma adjustment represents the elimination of equity in losses of
joint venture relative to Wibau-Astec which had been recognized in Astec's
historical financial statements.
Notarial Deed No 2903/1994 M
S t u t t g a r t
Executed on
October 13, 1994
Before me, the
Notary Krafft D. Most
with office in Konigstrasse 84,
70173 Stuttgart,
appeared today in Kriegsberg -
strasse 11, 70174 Stuttgart,
to where I betook myself upon request:
1. Dr. Ing.Hartmut Benckert,
business address Max-Eyth-Strasse 10,
72631 Aichtal,
2. Mr. Waldemar Thoma,
business address Max-Eyth-Strasse 10,
72631 Aichtal,
<PAGE>
not acting in their own names, but the appeared No. 1 in his capacity
as Geschaftsfuhrer with power of joint representation, the appeared No. 2
in his capacity as Procurist with power of joint representation, of
Putzmeister-Werk Maschinenfabrik GmbH, registered in the Commercial
Register of the Municipal Court Nurtingen under HRB 371,
- hereinafter "PMW" -
3. Mr. Peter Erbacher, attorney,
business address Myliusstrasse 33-37,
60323 Frankfurt am Main,
not acting in his own name, but for ASTEC Industries, Inc., Tennessee,
U.S.A. on the basis of a notarized power of attorney dated September 26,
1994, the original of which was presented at the notarisation and a
certified copy of which is attached hereto,
- hereinafter "ASTEC" -
4. Dr. Gunter Eschner,
business address Max-Eyth-Strasse 10,
72631 Aichtal,
5. Mrs. Erika Mack,
business address Max-Eyth-Strasse 10,
72631 Aichtal,
not acting in their own names, but the appeared No. 4 in his capacity as
Geschaftsfuhrer with power of joint representation, the appeared No. 5
in her capacity as Procurist with power of joint representation, of
Grundauer Asphalt-Mischanlagen Verwaltungs-Gmbh, registered in the
Commercial Register of the Municipal Court Gelnhausen under HRB 2037,
this company in turn acting in its capacity as sole general partner of
WIBAU Maschinen GmbH & Co. Kommanditgesellschaft, registered in the
Commercial Register of the Municipal Court of Gelnhausen under HRA 1857
<PAGE>
- hereinafter "WIBAU" -
The persons appearing identified themselves as follows:
The person appearing to 1 by submitting his German identity card;
The person appearing to 2 by submitting his Passport;
The person appearing to 3 by submitting his German identity card;
The person appearing to 4 by submitting his German identity card;
The person appearing to 5 by submitting his German identity card;
The persons appearing then asked for notarisation of the following
<PAGE>
GmbH-SHARE PURCHASE AND TRANSFER AGREEMENT
I.
Preamble
(1) In the Commercial Register of the Municipal Court Gelnhausen the company
with limited liability
WIBAU-ASTEC Maschinenfabrik GmbH
(hereinafter "WAG") with seat in Grundau-Rothenbergen is registered under
HRB 2216.
(2) The fully paid up stated share capital of WAG is DM 8 million and is
divided into 7 shares, namely one in the nominal amount of DM 50,000.--,
one in the nominal amount of DM 1,950,000, one in the nominal amount of
DM 2 million and four in the nominal amount of DM 1 million each.
The share in the nominal amount of DM 50,000,-- and the four shares in the
nominal amount of DM 1 million are paid up in cash; the shares in the
nominal amount of DM 1,950,000 and DM 2 million are paid up by
contributions in kind.
(3) In the stated share capital of WAG, PMW holds 50 %, namely four shares
in the nominal amounts of DM 50,000, DM 1,950,000,--and two shares in the
nominal amounts of DM 1,000,000 each.
<PAGE>
II.
SECTION 1
Non-Refundable Contribution
(1) In the financial year 1993 and in the current financial year 1994 WAG
has suffered losses in a significant amount. For the purpose of balancing
these losses as well as PMW's share of possible future liabilities and
losses, and for the preservation of WAG, PMW shall make a non-refundable
cash contribution to the reserves of WAG in the amount of DM 6,300,000
(in words: German Marks six million three hundred thousand).
(2) The payment by PMW pursuant to para. (1) above shall be due
simultaneously (Zug um Zug) upon effective indemnification of PMW pursuant
to Section 2 below.
(3) PMW shall pay the non-refundable contribution pursuant to the above
within 10 days after execution of this Agreement to Boden Oppenhoff Rasor
Raue as trustee to their account No. 589 2625 at Commerzbank AG Frankfurt
am Main, bank code 500 400 00.
Boden Oppenhoff Rasor Raue shall invest the amount in a trust account as
daily funds. Boden Oppenhoff Rasor Raue shall release the amount plus
interest accrued thereon to WAG
a) after receipt of the complete and effective release statements of the
banks listed in Section 2, if and to the extent they become effective
subject to the condition precedent that PMW shall have paid the
non-refundable contribution of DM 6.3 Million to a trust account of
Boden Oppenhoff Rasor Raue
and
b) after receipt of the purchase price from ASTEC pursuant to the provision
in Article III Section 2 in the amount of DM 100,000, which is to be
surrendered to PMW together with the release statements of the banks
pursuant to a) above.
(4) If the conditions for the release of the non-refundable contribution by
Boden Oppenhoff Rasor Raue to WAG have not been fulfilled by December 15,
1994, Boden Oppenhoff Rasor Raue shall immediately repay the amount of
DM 6.3 Million plus interest accrued thereon to PMW.
<PAGE>
Section 2
Indemnity
(1) PMW has for the benefit of WAG
a) given a guarantee for failure of payment to Bankhaus Sal. Oppenheim
Jr. & Cie., 60078 Frankfurt am Main, on December 9, 1993 up to a maximum
of DM 675,000,-- plus accrued interest in the amount of Libor plus 1%;
b) given a surety to Dresdner Bank AG, Filiale Gelnhausen, 63552 Gelnhausen,
on December 23, 1993 in the amount of DM 7.5 million plus related charges;
c) given a surety to Berliner Handels - und Frankfurter Bank, 60323
Frankfurt am Main, on December 23, 1993 in the amount of DM 5 million plus
related charges;
d) given a surety to Bayerische Vereinsbank AG, Niederlassung Frankfurt am
Main, on January 10, 1994 in the amount of DM 5 million plus related charges.
(2) ASTEC undertakes to cause the aforementioned bank institutes to
ultimately and unconditionally release PMW from the aforementioned sureties
and guarantee including all interest, costs and any other related charges
with effect for the past, presence and future.
<PAGE>
III.
Purchase Agreement
Section 1
Object of Sale
(1) Subject to the condition precedent, that Boden Oppenhoff Rasor Raue
shall have received the release statements pursuant to the provision of
Article II Section 2 and the purchase price shall have been paid in accordance
with the provision of Article III Section 2, PMW hereby sells to ASTEC the
four shares referred to in the Preamble in the nominal amounts of
DM 50,000, DM 1,950,000 and the two shares in the nominal amounts of
DM 1 Million, provided that the assignment of such shares from PMW to
ASTEC shall take place at the time such conditions precedent were fulfilled.
ASTEC hereby accepts such sale and assignment. Title to the Shares shall
pass to ASTEC immediately upon fulfillment of the condition precedent.
(2) The Shares are sold together with all rights and obligations pertaining
thereto, including the rights to all profits since the formation of WAG.
Section 2
Purchase Price
(1) The purchase price for the shares sold pursuant to Section 1 is DM 100.000
(in words: one hundred thousand German Marks) and is due for payment ten
days since execution of this Agreement to Boden Oppenhoff Rasor Raue as
escrow agent.
(2) The result of tax audits of WAG for the period until the transfer of the
shares shall be without effect for the provisions laid down in this
Agreement. In particular, PMW is not entitled to and has no obligation
from altered profit and loss statements of the preceding years.
Section 3
Warranties of PMW/Indemnifications by ASTEC
(1) PMW represents and warrants that it is the owner of the sold shares,
that such shares are not encumbered with rights of third parties and that
PMW is free to dispose of such shares. Furthermore, PMW represents and
warrants that all shares created by capital increases for contributions in
cash have been fully paid up. Beyond this, PMW excludes any warranty for
the sold shares as far as legally possible.
<PAGE>
(2) ASTEC shall indemnify and hold harmless PMW and WIBAU from all
liabilities, risks and hazards, whether reflected or not reflected in the
balance sheets, that are relative to WAG and the former asphalt plant
business contributed by WIBAU by contract dated March 18, 1993 - Notarial
Deed No. 448/1993 of the Notary Dr. Jauch, Stuttgart - irrespective of
whether they are reflected or not reflected in the takeover balance sheet
made as of March 17, 1993 and revised as of July 12, 1993.
(3) ASTEC accepts all previous capital increases of WAG as being in good
order and shall indemnify and hold harmless PMW and WIBAU from all possible
liabilities, risks and hazards and potential recourse for wrongful or
insufficient capital contribution. PMW and WIBAU accept this indemnification.
(4) The statute of limitation for the mutual claims pursuant to this Section 3
shall be 30 years.
Section 4
General Waiver
Upon the transfer of the shares of PMW in WAG to ASTEC all mutual claims
between ASTEC on one side and PMW and WIBAU on the other side shall be
settled and discharged with effect for past, presence and future
irrespective of their legal grounds, except for claims pursuant to this
Agreement. This shall not apply for the mutual claims of WAG and ASTEC
on one side and PMW and WIBAU on the other side arising from the offer of
WIBAU to WAG to sell certain business real estate located in
Grundau-Rothenbergen as amended in the past and today. In particular,
all claims between ASTEC on one side and PMW and WIBAU on the other side
arising from the Joint Venture Agreement dated July 12, 1993 , shall be
settled and discharged.
<PAGE>
IV.
Assignment
(1) PMW hereby assigns and transfers to ASTEC the shares referred to in the
Preamble in the nominal amounts of DM 50,000, DM 1,950,000 and the two
shares in the nominal amounts of DM 1 Million each, subject to the
condition precedent, that the effective release statements pursuant to
the provision in Article II Section 2 shall have been submitted to
Boden Oppenhoff Rasor Raue and the purchase price pursuant to the provision
of Article II. Section 2 shall be paid unconditionally to Boden Oppenhoff Rasor
Raue.
(2) ASTEC hereby accepts the assignment and transfer.
V.
Real Estate, Costs, Miscellaneous
(1) WAG does not own any real estate.
(2) The costs of this Agreement shall be borne by ASTEC.
(3) This Agreement shall be governed exclusively by German law, except for
German conflicts of laws provisions.
(4) The place of jurisdiction for all disputes under or in connection with
this Agreement, including disputes relating to its validity, shall be the
District Court (Landgericht) in Frankfurt am Main.
VI.
Severability Clause
If a provision of this Agreement should be or become invalid, the validity
of the other provisions of this Agreement shall not be affected thereby.
The invalid provision shall be replaced by a legally valid arrangement
which economically corresponds as closely as possible to the invalid
provison. Gaps of the Agreement shall be filled in accordance with meaning
and purpose of this Agreement; if the Agreement contains a provison for a
similar situation, it shall govern.
The aforementioned deed has been read to the persons appearing by the
notary, approved by them and signed in their own hands as follows:
October 13, 1994
Before me, the
/s/ Dr. Ing. Hartmut Benckert
General Manager
Putzmeister-Werk
/s/ Mr. Waldemar Thoma
Procurist
Putzmeister-Werk
/s/ Mr. Peter Erbacher
Attorney
Boden Oppenhoff Rasor Raue
Power of Attorney for Astec Industries, Inc.
/s/ Dr. Gunter Eschner
General Manager
Putzmeister-Werk
/s/ Mrs. Erika Mack
Procurist
Grundauer Asphalt-Mischanlagen Verwaltungs-GmbH
/s/ Krafft D. Most
Notary
