<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT TO CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 29, 1995
Donnelly Corporation
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
AMENDMENT NO. 3
<TABLE>
<S> <C> <C>
Michigan I-9716 38-0493110
- ----------------------------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)(Commission File No.)(IRS Employer Identification No.)
414 East Fortieth Street, Holland, Michigan 49423
- -------------------------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (616) 786-7000
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired
1. Consolidated financial statements of Hohe GmbH & Co. KG ("Hohe) as
of March 31, 1995 and 1994 (audited).
(b) Pro Forma Financial Information
1. Pro forma condensed combined consolidated balance sheet for the
Registrant as of March 31, 1995 (unaudited).
2. Pro forma condensed combined consolidated statement of income for
the Registrant for the year ended July 2, 1994 (unaudited).
3. Pro forma condensed combined consolidated statement of income for
the Registrant for the nine month period ended March 31, 1995
(unaudited).
Note: The Company's investment in Hohe is accounted for by the
equity method.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: September 22, 1995
DONNELLY CORPORATION
(Registrant)
/s/ William R. Jellison
-----------------------------------------
William R. Jellison
Vice President, Corporate Controller, and
Treasurer
<PAGE> 3
ITEM 7 a. FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
ACCOUNTANT'S REPORT
We have audited the consolidated financial statements(balance sheets,
statements of income and notes) of Hohe GmbH & Co. KG as of March 31, 1994
and 1995. The financial statements have been prepared on the basis of
accounting principles generally accepted in Germany. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
Corresponding to German auditor's requirements, our audit report to the
consolidated financial statements as of March 31, 1995 includes the
consolidated statement of cash flows on the basis of accounting principles
generally accepted in Germany. The consolidated cash flow statement for the
previous financial year was subsequently calculated using the same principles.
We conducted our audits in accordance with auditing standards generally
accepted in the United States and in Germany. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. 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 the management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
The consolidated financial statements and the cash flow statements have been
prepared using acceptable accounting principles in Germany. Accordingly, the
accompanying financial statements and the cash flow statements are not intended
to present the financial position of Hohe GmbH & Co. KG, the results of its
operations and its cash flows in conformity with generally accepted U.S.
accounting principles.
In our opinion, the consolidated financial statements referred to above present
fairly, in all materials respects, the financial position of Hohe GmbH & Co. KG
at March 31, 1995 and 1994, the results of its operations and its cash flows
for each of the years then ended, in conformity with accounting principles
generally accepted in Germany.
Frankfurt am Main, September 5, 1995
C&L Deutsche Revision
Aktiengesellschaft
Wirtschaftsprufungsgesellschaft
Steuerberatungsgesellschaft
/s/ Dickman /s/ Wagner
- ----------------- -----------------
Wirtschaftsprufer Wirtschaftsprufer
<PAGE> 4
HOHE GmbH & CO. KG
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, March 31,
In thousands Notes 1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Unpaid capital contributions (1) $ 0 $ 300
Business start-up and expansion cost (2) 1 1
Fixed assets (2)
Intangible assets
Concessions and licenses 272 449
Goodwill 63 67
Advance payments on intangibles 0 116
----------- ------------
335 632
Tangible assets
Land and buildings (23) 35,867 28,996
Plant and machinery (23) 5,478 5,661
Fixtures and fittings 6,845 6,595
Payments in advance and construction in
progress 2,978 1,451
----------- ------------
51,168 42,703
Investments (3)
Other loans 9,454 6,579
----------- ------------
60,958 50,215
Current Assets
Inventories 25,058 21,153
Receivables and other assets
Trade receivables (4) 29,338 21,349
Other assets (5) 840 1,690
Receivables from factoring company 949 498
----------- ------------
31,127 23,537
Cash 991 402
Deferred tax asset (24) 0 0
----------- ------------
57,176 45,092
Prepaid expenses and deferred charges (6) 1,706 1,722
----------- ------------
TOTAL ASSETS (23,24) $ 119,840 $ 97,029
=========== ============
</TABLE>
<PAGE> 5
HOHE GmbH & CO. KG
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS - CONT'D
<TABLE>
<CAPTION>
March 31, March 31,
In thousands Notes 1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PARTNERS' EQUITY AND LIABILITIES:
Partners' equity (8) $ 0 $ 0
Withdrawals and losses not covered by capital (7)
contributions (23,24) (4,674) (6,915)
Silent partners' capital contributions (9) 14,391 14,391
Translation gains and losses (25) 1,860 0
Minority interests (10) 347 206
Accruals 0 0
Pension accruals (11) 443 320
Accrued taxes (12) 1,930 1,356
Other accruals (13) 11,129 11,158
----------- ------------
13,502 12,834
Accounts Payable
Amounts owed to banks (14) 50,622 47,890
Amounts owed to insurance companies 4,161 3,604
Amounts owed under hire-purchase 0 0
agreements 2,326 2,665
Payments in advance 3,441 1,545
Trade payables 18,630 10,250
Bills of exchange payable 4,886 3,784
Other payables 10,186 6,744
Amounts due on finance leases (23) 0 0
----------- ------------
94,252 76,482
Deferred income 162 31
----------- ------------
TOTAL EQUITY AND LIABILITIES (23,24) $ 119,840 $ 97,029
=========== ============
</TABLE>
<PAGE> 6
HOHE GmbH & CO. KG
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
March 31, March 31,
In thousands Year Ended Notes 1995 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales (15) $ 206,949 $ 168,426
Increase/decrease(-) in finished goods and work
in process inventories (440) (2,324)
Other capitalized costs 607 267
Other operating income (16) 3,030 2,165
------------ ----------
210,146 168,534
Cost of materials (17)
Raw materials, supplies and
merchandise 107,421 81,610
Purchased services 3,143 2,277
------------ ----------
110,564 83,887
99,582 84,647
Personnel expenses (18)
Wages and salaries 50,959 47,050
Social security and pension expense 9,616 9,506
------------ ----------
60,575 56,556
Depreciation on intangible and tangible fixed (19)
assets and capitalized business start-up expenses 7,196 7,389
Other operating expenses 22,423 17,577
------------ ----------
90,194 81,522
9,388 3,125
Income from loans carried as financial assets 0 214
Other interest and similar income 722 363
Interest and similar expense (20) 5,964 6,325
Payments to silent partners (21) 2,168 1,349
------------ ----------
(7,410) (7,097)
------------ ----------
Profit (loss) on ordinary activities 1,978 (3,972)
Net extraordinary items 0 63
Taxes on income trade taxes 643 178
Other taxes 144 155
Partnership net income/(loss) 1,191 (4,368)
Minority interest in profit 112 68
(22,23, ------------ ----------
Consolidated partnership net income/(loss) 24) $ 1,079 $ (4,436)
============ ==========
</TABLE>
<PAGE> 7
HOHE GmbH & CO. KG
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
March 31, March 31,
In thousands Year Ended 1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Net income (loss) $ 1,079 $ (4,436)
Depreciation charge 7,196 7,389
Other non-cash expense items 597 424
---------- ----------
INTERNAL FINANCING 8,872 3,377
Increase (decrease) in current accruals (1,792) 5,045
Gains on disposal of fixed assets (6) (33)
(Increase) decrease in inventories, trade receivables and
sundry other assets (3,135) 277
Increase(decrease) in trade payables and sundry other
liabilities 9,173 (662)
---------- ----------
CASH PROVIDED BY OPERATING ACTIVITIES 13,112 8,004
Proceeds from sales of fixed assets 1,887 162
---------- ----------
Payments for purchases of tangible fixed assets (4,707) (3,793)
---------- ----------
CASH USED FOR INVESTING ACTIVITIES (2,820) (3,631)
Proceeds from borrowing 642 4,951
Payments of loans and other borrowing (8,090) (4,240)
Payments to shareholder's (partners) (2,255) (4,745)
---------- ----------
NET CASH USED IN FINANCING ACTIVITIES (9,703) (4,034)
---------- ----------
Net Increase in cash and cash equivalents 589 339
Cash and cash equivalents, beginning of year 402 63
---------- ----------
Cash and cash equivalents, end of year $ 991 $ 402
========== ==========
</TABLE>
NOTE: Corresponding to German auditor's requirement, our audit report to the
consolidated financial statements at March 31, 1995, includes the cash flow of
Hohe group on the basis of accounting principles generally accepted in Germany
(International Accounting Standards - "IAS"). The cash flow of Hohe group at
March 31, 1994, was subsequently calculated using the same method. In our
opinion, the determination of the cash flow is widely in accordance with US
GAAP (see IAS 7).
The payments to shareholders (partners) in 1993/1994 were essentially connected
with guarantees given to creditors of the former FMB Group.
<PAGE> 8
HOHE GMBH & CO. KG, COLLENBERG
NOTES TO THE 1995 CONSOLIDATED FINANCIAL STATEMENTS
GENERAL INFORMATION
Hohe GmbH & Co. KG, Collenberg ("the Company"), is a parent company and as such
has prepared consolidated financial statements as of March 31, 1995 and a group
management report, as required by section 11 of the German Law on Disclosure
Requirements for Large Enterprises ("PublG"). The consolidated includes all
subsidiaries required to be consolidated.
The consolidated financial statements have been prepared in conformity with the
provisions of the PublG and the German Commercial Code. Format and account
classifications in the consolidated balance sheet comply with the requirements
applicable to the legal form in which the Company is organized.
COMPANIES INCLUDED IN CONSOLIDATION
The consolidated financial statements included Hohe GmbH & Co. KG, Collenberg,
and the following eight (prior year six) companies. Consolidation was done in
accordance with the rules on "comprehensive consolidation".
<TABLE>
<CAPTION>
COMPANY LOCATION OF PRINCIPAL PLACE PERCENTAGE OF
OF BUSINESS CAPITAL HELD
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Hohe Neunkirchen Verwaltungs GmbH Neunkirchen 100.0
Hohe Neunkirchen GmbH & Co. KG Neunkirchen 100.0
Hohe Schleiz Verwaltungs GmbH Schleiz 100.0
Hohe Schleiz GmbH & Co. KG Schleiz 100.0
Hohe FMB Fabrica Mecanica Barcelonese S.A. Barcelona Spain 65.0
Hohe I.C.A. Industria de Componentes para Automovels. Palmela, Portugal 97.2
Lda.
Factron AG Vaduz, Liechtenstein 100.0
Hohe Anteilstreuhand GmbH Frankfurt 100.0
</TABLE>
The Portuguese subsidiary formed in 1993 is still in the start-up phase. The
buildings are currently being used as a distribution warehouse. Consolidation
was based on unaudited financial statements as of December 31, 1994.
The shares in Factron AG, Vaduz, the company leasing the property in Barcelona
to Hohe FMB S.A., were transferred to the Company in FY 95 by Paul Hohe.
Consolidation of this company was based on unaudited financial statements as of
December 31, 1994.
Hohe Anteilstreuhand GmbH (formerly "EUTERPE" Vermogensverwaltungs-and
Beteiligungs GmbH) was acquired in FY 95. With the exception of $7,000, the
limited partner shares and the shares in Hohe Verwaltungs GmbH have been
transferred to this company. With the admission of Donnelly, Hohe
Anteilstreuhand GmbH has served its purpose. Consolidation was based on
unaudited financial statements as of December 31, 1994.
<PAGE> 9
METHOD OF CONSOLIDATION
The assets and liabilities included in the consolidated financial statements
are valued and disclosed for the most part in accordance with uniform group
policies.
In preparing the Hohe consolidated DM financial statements, the balance sheets
and statements of income of foreign subsidiaries were translated at the middle
rate in operation at the applicable balance sheet date (March 31, 1995 or
December 31, 1994). See Note 25 for information regarding the method of
translation of the DM denominated financial statements into dollars.
Intercompany receivables and payables have been eliminated. Intercompany
profits on supplies of goods and services were not material, and were therefore
not eliminated.
Revenue from intercompany sales, and other items of intercompany income, have
been eliminated against the related cost as recorded by the purchasing company.
Capital consolidation was done by the book value method set out in section
301(1) paragraph 1 Commercial Code, based on values at the date of first
consolidation. Debit balances arising on consolidation were added to goodwill
or tangible fixed assets according to their nature, or ($1.7 million) offset
against partners' equity. Differences representing goodwill are written off
over a period of four years.
ACCOUNTING AND VALUATION METHODS
Business start-up and expansion expense were subject to systematic depreciation
over a period of four years.
Intangible and tangible fixed assets are stated at purchase or manufacturing
cost less systematic depreciation provided on a straight-line basis.
In addition, $1.0 million of special depreciation was provided by the Company
on the galvanizing building and the equipment it contains.
Useful lives of buildings vary between 20 and 50 years, those of technical
equipment and machinery, and other equipment, factory and office equipment
between 5 and 10 years. Fixed assets purchased second hand are assumed to have
useful lives of up to 4 years. Low-value fixed assets costing not more than
$580 each (at the 3/31/95 exchange rate) excluding VAT are written off
completely in the year of acquisition.
Loans receivable are stated at the amounts disbursed less any repayments.
Credit balances with insurance companies included under loans are stated at the
surrender value of the respective policies.
Inventories are valued at weighted average purchase price.
Manufacturing cost of finished goods and work in process includes materials
consumption and direct labor, and part of manufacturing overhead and
administrative expenses.
Advanced payments are stated at the amounts disbursed.
<PAGE> 10
Receivables and other assets are stated at nominal or face amount, less
individual valuation allowances provided to reflect specific risks of loss and
a general allowance to cover general credit risks. Long-term
non-interest-bearing assets are stated net of interest.
Pension accruals are calculated by the "Teilwert" method described in section
6a of the German Income Tax Law (roughly equivalent to the "entry-age normal"
method) using actuarial methods and applying the interest rate of 6% required
by that statute.
Other accruals are set up to cover all identifiable risks and uncertain
liabilities, at the amounts expected to be lost or to become payable.
Accounts payable are stated at the amounts actually (re)payable.
Receivables and payables denominated in foreign currencies are translated at
the lower (receivables) or higher (payables) of the historical rates or the
rates in operation at the balance sheet date. No exchange losses were realized
between the balance sheet date and preparation of the balance sheet.
NOTES TO THE CONSOLIDATED BALANCE SHEET
(1) The capital contributions unpaid at March 31, 1994 were paid in FY 95.
(2) An analysis of fixed assets and FY 95 depreciation and amortization
expense by fixed asset category is given in the consolidated statement
of movements in fixed assets and related depreciation presented on the
following page. The statement included details of business start-up
and expansion expense, which at March 31, 1995 has been almost
completely written off.
(3) Other loans ($9.4 million) include $6.8 million of refinancing and
lessee loans to leasing companies.
At March 31, 1994, other loans included a loan of $525 thousand to
Factron AG. In FY 95 the shares in Factron were acquired by the
Company, and the loan is therefore shown under "disposals".
In FY 95, the surrender value of life insurance policies ($1.3
million) was recorded as an asset. This was necessary because of a
field audit conducted by the tax authorities, and is the first time
such an asset has been recorded by the Company.
(4) Trade receivables are all due during FY 96.
<PAGE> 11
FIXED ASSET MOVEMENT SCHEDULE AS OF MARCH 31, 1995
<TABLE>
<CAPTION>
Purchase or manufacturing cost Depreciation
----------------------------------------------- -------------------------------------------------
April March April March
1, Reclassif- 31, 1, Reclassif- 31,
$'s in thousands 1994 Additions Disposals ications 1995 1994 Additions Disposals ications 1995
- ----------------------------------------------------------------------------- -------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Business start-up and
expansion cost 727 0 771 0 (44) 723 1 771 0 (47)
------ ------ ----- ---- ------ ------ ----- ----- --- ------
INTANGIBLE ASSETS
Concessions and licenses 771 192 269 11 705 308 317 138 4 491
Goodwill 259 0 173 0 86 192 16 173 0 35
Advance payments on
intangible assets 116 0 125 0 (9) 0 0 0 0 0
------ ------ ----- ---- ------ ------ ----- ----- --- ------
1,146 192 567 11 782 500 333 311 4 526
TANGIBLE ASSETS
Land and buildings 38,988 3,787 1,655 7 41,127 9,993 2,164 722 0 11,435
Plant and machinery 22,120 1,270 2,707 109 20,792 16,028 1,786 1,993 (11) 15,810
Fixtures and fittings 24,335 2,149 2,054 24 24,454 17,671 2,912 1,825 6 18,764
Payments in advance and
construction in progress 1,665 1,238 0 (156) 2,747 213 0 0 0 213
------ ------ ----- ---- ------ ------ ----- ----- --- ------
87,108 8,444 6,416 (16) 89,120 43,905 6,862 4,540 (5) 46,222
INVESTMENTS
Other loans 6,579 2,491 1,168 0 7,902 0 0 0 0 0
------ ------ ----- ---- ------ ------ ----- ----- --- ------
95,560 11,127 8,922 (5) 97,760 45,128 7,196 5,622 (1) 46,701
</TABLE>
Continued on following page.
<PAGE> 12
FIXED ASSET MOVEMENT SCHEDULE AS OF MARCH 31, 1995 - CONT'D
<TABLE>
<CAPTION>
Exchange Differences Net Book Values
-------------------- ----------------------
April 1, March 31, March 31, March 31,
$'s in thousands 1994 1995 1994 1995
- -------------------------------------------------------- ----------------------
<S> <C> <C> <C> <C>
Business start-up and
expansion cost (3) (2) 1 1
---- ----- ------ ------
INTANGIBLE ASSETS
Concessions and licenses (14) 58 449 272
Goodwill 0 12 67 63
Advance payments on
intangible assets 0 9 116 0
---- ----- ------ ------
(14) 79 632 335
TANGIBLE ASSETS
Land and buildings 1 6,175 28,996 35,867
Plant and machinery (431) 496 5,661 5,478
Fixtures and fittings (69) 1,155 6,595 6,845
Payments in advance and (1) 444 1,451 2,978
construction in progress (500) 8,270 42,703 51,168
---- ----- ------ ------
INVESTMENTS
Other loans 0 1,552 6,579 9,454
---- ----- ------ ------
(517) 9,899 49,915 60,958
</TABLE>
<PAGE> 13
(5) Other assets ($0.9 million) includes $0.3 million of recoverable value
added tax on inputs.
$0.1 million of other assets mature after more than one year from the
balance sheet date.
(6) Prepaid expenses and deferred charges ($1.7 million) consisted
primarily of unamortized debt discount ($0.4 million) and prepaid rent
($0.8 million). $0.7 million of the total disclosed under this
caption represents FY 96 expense.
(7) Withdrawals and losses not covered by capital contributions amounted
at March 31, 1995 to $4.7 million. The improvement of $2.2 million
compared to the previous year was due to contributions of capital by
limited partners and the FY 95 consolidated net income of $1.1
million.
(8) Partners' equity (capital contributions and retained earnings) has
been reduced to zero in the balance sheet by offset against the debit
balances arising on capital consolidation and partners' withdrawals.
Further withdrawals, net of net income for the year, are shown on the
equity side of the balance sheet (see note 7).
(9) Silent partner's capital contributions ($14.4 million) consisted of
several amounts requiring individual comment.
On admission of the new limited partner, Donnelly Holding GmbH, $11.4
million became due for repayment, as agreed, on May 31,1995. The
letters of subordination for $11.4 million received at the previous
year-end were still operative at March 31, 1995.
The silent partners have been/will be repaid largely out of the loan
of $14.5 million from Donnelly Corporation.
Donnelly Corporation has issued a letter of subordination for this
loan.
To improve the financial structure of the Company, Donnelly
Corporation is to grant a further loan of $14.5 million.
The silent partner capital contribution of $1.8 million for which a
call for repayment was received in FY 95 will be repaid on September
30, 1995, as provided in the agreement.
The remaining $1.2 million from the silent partner of Hohe Neunkirchen
GmbH & Co. KG will be available until September 30, 2002, reduced by
quarterly repayment installments of $60,000 starting December 30,
1997.
(10) Minority interest ($0.3 million ) consisted of interests of outside
shareholders in capital and reserves ($0.2 million) and in the FY 95
profit ($0.1 million).
(11) Pension accruals ($0.4 million) relate to a pension promised to one of
the partners the year before.
(12) Accrued taxes ($2.0 million) include $1.2 million of deferred taxes.
<PAGE> 14
(13) Other accruals ($11.1 million) include $3.3 million provided in
respect of contingent liabilities and $4.9 million in respect of
unused vacation entitlements and other personnel expenses.
(14) Accounts payable are due for payment as follows:
<TABLE>
<CAPTION>
Less than
1 YEAR
Less than Less than
or equal to or equal to Less than
1 YEAR 5 YEARS 5 YEARS TOTAL
$'s '000 $'s '000 $'s '000 $'s '000
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Amounts owed to banks 36,753 10,294 3,575 50,622
Amounts owed to insurance companies 170 617 3,374 4,161
Amounts owed under hire-purchased agreements 958 1,368 0 2,326
Payments received on account of orders 3,441 0 0 3,441
Trade payable 18,630 0 0 18,630
Bills of exchange payable 4,886 0 0 4,886
Other payables 10,186 0 0 10,186
75,024 16,926 9,578 94,252
</TABLE>
Amounts owed to banks due in not more than one year include $2.5
million covered by adjustment warrants given by the Company.
Other payables include $1.5 million for taxes and $2.2 million for
social security contributions.
To secure loans and leasing obligations, land charges and mortgages
totaling $76.7 million have been given and a security interest in
machinery and other plant and equipment has been granted.
Other financial commitments not disclosed in the balance sheet or by
way of footnote exist in the form of leasing obligations, adjustment
warrants and the like. At the balance sheet date the present value of
the leasing obligations, discounted at 8%, was $15.1 million.
NOTES TO THE CONSOLIDATED STATEMENTS OF INCOME
(15) Sales ($207.0 million) consisted mostly of revenue from the sale of
rearview mirrors to automotive manufacturers in Germany and other
countries. Excluding intercompany sales, $14.3 million of total
mirror sales was realized by the Spanish and Portuguese subsidiaries.
(16) Other operating income ($3.0 million) included primarily the gain on
the recording as an asset of the surrender value of life assurance
policies ($1.2 million) and reversals of accruals ($0.3 million).
<PAGE> 15
(17) Cost of materials ($110.6 million) consisted of $107.4 million of raw
materials, supplies and merchandise and $3.1 million of purchased
services.
(18) Personnel expenses consisted of wages and salaries ($51.0 million) and
social security and pension expense ($9.6 million); pension expense
amounted to $0.1 million.
(19) Depreciation ($7.2 million) consisted of systematic straight-line
depreciation ($6.2 million) and special depreciation ($1.0 million).
(20) Interest and similar expense ($6.0 million) was paid mainly on loans
and overdrafts. $4.4 million was paid by the Company.
(21) Payments to silent partners consisted of the variable compensation for
the previous year and the fixed and variable compensation for FY 95.
(22) Consolidated partnership net income for the fiscal year 1995 was
affected chiefly by extraordinary reconstruction costs and by
consultant costs of $4.4 million.
US GAAP ADJUSTMENTS
(23) Due to the difference in accounting requirements under German
standards and US GAAP, virtually all leases classified as operating
leases by Hohe needed to be reclassified as capital leases for US GAAP
purposes. The effect of this adjustment for leases on the balance
sheet is shown in the table on the following page (Table I). It is
assumed for purposes of this calculation that the useful lives of the
assets over which they would be depreciated are the same as the lease
terms. Therefore, leasing charges are assumed to approximate the
depreciation that would have been recognized if the assets had been
capitalized plus the interest element of the financing, with any
differences deemed immaterial. The amount to be capitalized for these
leases was determined by calculating the present value of the future
minimum lease payments using a discount rate of 8%.
The above mentioned calculation includes two land leases, classified
for capitalization for US GAAP purposes. An additional adjustment is
calculated to add back to retained earnings the past leasing charge
net of the interest element to take account of the fact that land is
not depreciated. This adjustment is made to the 'Withdrawals and
losses not covered by capital contributions account' in the table on
the following page. The current year lease interest is shown as an
adjustment to current year net income in the table on the following
page (Table II).
(24) An adjustment to recognize a deferred tax asset has been calculated as
a reconciling item to US GAAP. This asset is related to a loss
carryforward. Due to the improved profitability of Hohe, it is
expected that this loss carryforward will be able to be utilized and
provide a future tax benefit to Hohe. The effects of this adjustment
on the balance sheet and income statement are shown in the tables on
the following page (Table I & II).
<PAGE> 16
<TABLE>
<CAPTION>
TABLE I Adjusted
US GAAP BALANCE SHEET ADJUSTMENTS Balances at Capital Deferred Balances at
- --------------------------------- March 31, Lease Tax March 31,
$'s in thousands 1995 Adjustment Adjustment 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Tangible assets
Land and buildings 35,867 8,168 44,035
Plant and machinery 5,478 6,457 11,935
Deferred taxation asset 0 542 542
TOTAL ASSETS 119,840 14,625 542 135,007
EQUITY AND LIABILITIES:
Withdrawals and losses not covered by
capital contributions (8,043) 692 436 (6,915)
Translation gains and losses 138 106 244
Amounts due on finance leases 0 13,795 13,795
TOTAL EQUITY AND LIABILITIES 119,840 14,625 542 135,007
</TABLE>
<TABLE>
<CAPTION>
TABLE II
US GAAP NET INCOME ADJUSTMENTS Year Ended
- ------------------------------ March 31,
$'s in thousands 1995
- ------------------------------------------------------------------------------
<S> <C>
Net income as shown in the financial statements 1,079
Items having the effect of increasing reported income:
Land leased but not depreciated 95
Items having the effect of decreasing reported income:
Deferred tax (141)
-------------
Net income according to US GAAP 1,033
</TABLE>
<PAGE> 17
(25) These financial statements were translated from DM's to dollars by the
Registrant. All balance sheet accounts, except equity accounts, which
were translated at assumed historical rates, were translated at the
middle rate in effect at the applicable balance sheet date. The income
statements were translated using the average exchange rate for the
corresponding year. Translation gains and losses are reported as a
separate component of equity.
OTHER PARTICULARS
The average number of persons employed by the Hohe Group in FY 95 (FY94) was
1,727 (1,773), comprising 1,358 (1,379) wage earners and 369 (394) salaried
staff.
<PAGE> 18
HOHE GMBH & CO. KG, COLLENBERG
NOTES TO THE 1994 CONSOLIDATED FINANCIAL STATEMENTS
GENERAL INFORMATION
Being a parent company Hohe GmbH & Co. KG, Collenberg, has prepared
consolidated financial statements as of March 31, 1994, and a group management
report pursuant to Section 11 German Disclosure Law (PublG) which include all
subsidiaries to be consolidated.
Regarding the classification of the consolidated balance sheet, the
consolidated financial statements prepared pursuant to the regulations of the
PublG and the German Commercial Code observe the regulations specific to the
company's legal form.
COMPANIES INCLUDED IN CONSOLIDATION
Apart from Hohe GmbH & Co. KG, Collenberg, the following six (previous year
five) enterprises were included in the consolidated financial statements
according to the principles of comprehensive consolidation:
<TABLE>
<CAPTION>
COMPANY LOCATION OF PRINCIPAL PLACE PERCENTAGE OF
OF BUSINESS CAPITAL HELD
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Hohe Neunkirchen Verwaltungs GmbH Neunkirchen 100.0
Hohe Neunkirchen GmbH & Co. KG Neunkirchen 100.0
Hohe Schleiz Verwaltungs GmbH Schleiz 100.0
Hohe Schleiz GmbH & Co. KG Schleiz 100.0
Hohe FMB Fabrica Mecanica Barcelonese S.A. Barcelona, Spain 65.0
Hohe I.C.A. Industria de Componentes para Automovels. Lda. Palmela, Portugal 97.2
</TABLE>
The investment company established in Portugal in 1993 is in its start-up
phase; the commencement of production is scheduled for the end of 1994.
Consolidation was based on unaudited interim financial statements as of
December 31, 1993.
METHODS OF CONSOLIDATION
The assets and liabilities of the consolidated enterprises included in the
consolidated financial statements are mainly valued and reported according to
uniform group principles.
When preparing the Hohe consolidated DM financial statements, the balance
sheets and the statements of income of the foreign subsidiaries were translated
at the middle rate prevailing on the balance sheet date or the date of the
interim financial statements as of December 31, 1993. See Note 25 for
information regarding the method of translation of the DM denominated financial
statements into dollars.
<PAGE> 19
Receivables and liabilities between the consolidated companies were eliminated.
Intercompany profits for deliveries and services affected between group
companies were not eliminated due to their minor significance.
Intergroup sales and other intergroup income were offset against the respective
expenses.
Capital consolidation was made on the basis of the book value method pursuant
to Section 301, para. (1), no. 1 German Commercial Code at the date of the
first consolidation. Debit differences were disclosed as goodwill in
accordance with their economic character or were deducted from equity at the
amount of $1.6 million. Where the differences are disclosed as goodwill they
are amortized over a period of four years.
ACCOUNTING AND VALUATION METHODS
Accounting was made assuming the going concern of the group - taking into
account the deeds of postponement issued by dormant partners, the schedule
capital increase and the initiated restructuring measures.
Start-up and business expansion expenses were subject to systematic
depreciation over four years. Intangible assets and tangible assets were
reported at purchased or manufacturing costs reduced by systematic depreciation
according to the straight-line methods. Furthermore, the tangible assets to be
sold in the following year (electronics production) were adjusted to the
expected sales proceeds by way of extraordinary deprecation. The useful lives
of buildings are between 20 and 50 years, while technical equipment and
machines as well as other equipment and plant and office equipment have useful
lives of between 5 and 10 years. For fixed assets acquired second hand a
useful life of up to four years is assumed. Low-value tangible assets were
written down to their full amount in the year of their acquisition.
Loans are reported at the net loan proceeds reduced by redemption payments if
applicable. Balances with insurance companies included in the loans are
reported at the cash surrender value.
Inventories are valued on the basis of the weighted average purchase prices.
Manufacturing costs of finished goods and work in process include not only
materials usage and direct labor but also partly indirect manufacturing
overhead and administrative expenses.
Advanced payments are reported at the amounts paid out.
RECEIVABLES AND OTHER ASSETS are reported at their nominal value. For
customer-related non-payment risks itemized allowances and for the general
credit risk a general allowance were deducted from receivables. Long-term
non-interest-bearing assets were discounted.
PENSIONS ACCRUALS are reported at their actuarial present value applying a
capitalization yield of 6%.
OTHER ACCRUALS take into account all foreseeable risks and contingent
liabilities to the extent of the expected utilization.
<PAGE> 20
ACCOUNTS PAYABLE are carried at the amount repayable.
Receivables and liabilities denominated in foreign currencies were recorded at
purchase rates. Valuation at the rate prevailing as of the balance sheet date
was made only if in case of receivables this value was lower than the purchase
cost or in case of liabilities higher than the purchase cost. Between the
balance sheet date and the preparation of the balance sheet no exchange losses
have occurred.
NOTES TO THE CONSOLIDATED BALANCE SHEET
(1) UNPAID CAPITAL CONTRIBUTIONS have been called in and relate to liable
capital ($0.3 million) of the limited partner Paul Hohe.
(2) The individual items of the FIXED ASSETS including depreciation of the
business year are presented in the fixed-asset movement schedule, see
following page. The presentation includes BUSINESS START-UP AND
EXPANSION EXPENSES. As of March 31, 1994 this item was mainly
written off.
(3) OTHER LOANS include refinancing and tenants' loans to leasing
companies at an amount of $6.1 million and one loan to the affiliate
Factron AG, Vaduz, amounting to $0.5 million.
(4) TRADE RECEIVABLES are due at short notice except for claims of $0.1
million with a remaining time to maturity of more than one year.
(5) OTHER ASSETS ($1.7 million) include as a main item an unsecured loan
amounting to $0.6 million to FMB Faulbacher Management und
Betriebstechnik GmbH & Co. Maschinenbau KG, Faulbacher, which has gone
bankrupt as well as interest receivables amounting to $0.2 million
from Paul Hohe. Assets at a total amount of $0.1 million have a
remaining time to maturity of more than one year.
(6) PREPAID EXPENSES ($1.7 million) include as main items disagio amounts
($0.4 million) and rent advances ($0.7 million). $0.7 million of the
amount disclosed will affect the result in the following year.
(7) The item WITHDRAWALS AND LOSSES NOT COVERED BY CAPITAL CONTRIBUTIONS
($6.9 millions) is at $4.4 million attributable to the net loss for
the year 1993/94 and at $2.4 million to withdrawals exceeding
contributions. The withdrawals of $12.1 million were mainly made for
affiliates and mainly include at $5.6 million liability risks
resulting from guarantees towards banks and leasing companies.
By entry in the land register dated May 16, 1994, the contribution of
Paul Hohe (real estate in Dorfprozelten) amounting to $1.1 million was
made. A further contribution is to be made after Factron AG, which is
owned by Paul Hohe, is sold. Factron AG which owns the real estate
used by Hohe FMB Barcelona is to be acquired by Hohe KG. At present,
it is not possible to state an amount for the purchase price or the
value of the contribution.
<PAGE> 21
FIXED ASSET MOVEMENT SCHEDULE AS OF MARCH 31, 1994
<TABLE>
<CAPTION>
Purchase or manufacturing cost Net Book Values
---------------------------------------- ---------------
March March Current
April 1, Reclassi- Accumul. Exchange 31, 31, Year
$'s in thousands 1993 Additions Disposals fications Deprec. Differences 1993 1994 Deprec.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Business start-up and expansion cost 762 0 0 0 723 (38) 2 1 2
------ ----- ----- ---- ------ ------ ------ ------ ------
INTANGIBLE ASSETS
Concessions and licenses 606 186 0 7 308 (42) 481 449 319
Goodwill 272 0 0 0 192 (13) 86 67 25
Advance payments on intangible assets 129 0 0 (7) 0 (6) 129 116 0
------ ----- ----- ---- ------ ------ ------ ------ ------
1,007 186 0 0 500 (61) 696 632 344
TANGIBLE ASSETS
Land and buildings 40,529 392 36 0 9,993 (1,896) 31,809 28,996 2,804
Plant and machinery 22,428 874 177 43 16,028 (1,479) 7,961 5,661 4,404
Fixtures and fittings 24,545 1,256 514 195 17,671 (1,216) 8,554 6,595 4,815
Payments in advance and construction
in progress 1,640 339 0 (238) 213 (77) 1,416 1,451 0
------ ----- ----- ---- ------ ------ ------ ------ ------
89,142 2,861 727 0 43,905 (4,668) 49,740 42,703 12,023
INVESTMENTS
Other loans 3,493 4,011 773 0 0 (152) 3,493 6,579 0
------ ----- ----- ---- ------ ------ ------ ------ ------
94,404 7,058 1,500 0 45,128 (4,919) 53,931 49,915 12,369
</TABLE>
<PAGE> 22
(8) EQUITY (liable capital and profits brought forward) was set off
against a debit difference arising from capital consolidation and
against withdrawals of the shareholders up to the amount disclosed.
Further withdrawals and the net loss for the year are shown on the
equity side of the balance sheet (see note 7).
(9) Most of the SILENT PARTNER'S CAPITAL CONTRIBUTIONS ($14.4 million) are
available in the long run. The interest on these contributions
includes a fixed and a profit-related share. The profit-related share
is not payable in years of loss, however, a retrospective payment of
this share is agreed for years recording a profit. There are deeds of
postponement for contributions of $11.4 million.
(10) The MINORITY INTERESTS ($0.2 million) includes the share in capital
and reserves attributable to the other shareholders ($0.1 million) as
well as shares in the results 1993/94 ($0.1 million).
(11) PENSION ACCRUALS ($0.3 million) relate to a pension commitment for a
shareholder entered into the year under review.
(12) At $1.0 million TAX ACCRUALS ($1.4 million) include deferred taxes.
(13) OTHER ACCRUALS ($11.2 million) are at $5.6 million attributable to
liability risks and furthermore to contingent liabilities, as for
example, holidays not taken, outstanding bonus payments, expense
relating to tool-making.
(14) ACCOUNTS PAYABLE show the following time to maturity:
<TABLE>
<CAPTION>
LESS THAN
1 YEAR
LESS THAN OR LESS THAN
EQUAL TO OR EQUAL TO LESS THAN
1 YEAR 5 YEARS 5 YEARS TOTAL
$'s '000 $'s '000 $'s '000 $'s '000
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Amounts owed to banks 25,878 15,626 6,386 47,890
Amounts owed to insurance companies 134 489 2,981 3,604
Amounts owed under hire-purchased agreements 836 1,829 0 2,665
Payments received on account of orders 1,545 0 0 1,545
Trade payables 10,250 0 0 10,250
Bills of exchange payable 3,784 0 0 3,784
Other payables 6,744 0 0 6,744
49,171 17,944 9,367 76,482
</TABLE>
$1.1 million of other liabilities relate to taxes while $1.8 million
relate to social security and similar obligations.
As collateral for loans, land charges amounting to $57.6 million were
provided. Furthermore, machines and machinery are assigned as
collateral.
<PAGE> 23
Other financial commitments which are not reported or disclosed in the
balance sheet respectively, exist in the form of leasing commitments,
debtor warrant bonds and similar obligations. The present value of
the leasing commitments was - applying an interest rate of 8% - $15.7
million as of the balance sheet date.
Due to a waiver signed in 1993/94 debtor warrant bonds were issued for
liabilities to banks at an amount of $4.3 million. According to
agreement the commitments are revived if they can be serviced from
future net income for the year, from a realization profit or from
future assets exceeding the other liabilities of Hohe GmbH & Co. KG.
There is one other commitment towards silent partners at an amount of
$0.4 million which is to be met from future profits.
COMMENTS ON THE CONSOLIDATED STATEMENT OF INCOME
(15) SALES ($168.4 million) mainly from the sale of rear-view mirrors to
domestic and foreign vehicle manufacturers; proceeds from the sale of
electronic products are included at an amount of $9.1 million. The
proceeds from rear-view mirrors are at $6.6 million attributable to
the Spanish subsidiary.
(16) OTHER OPERATING INCOME ($2.2 million) include the release of accruals
at an amount of $1.0 million and investment subsidies at an amount of
$0.2 million.
(17) COST OF MATERIALS ($83.9 million) are at $81.6 million attributable to
raw materials, consumables and supplies and purchased merchandise
while $2.3 million are attributable to cost of purchased services.
(18) PERSONNEL EXPENSES include expenses for wages and salaries ($47.0
million) as well as social security and pension costs ($9.5 million);
expenses in respect of old age pensions amounted to $0.3 million.
(19) DEPRECIATION includes systematic depreciation according to the
straight-line method at $5.8 million and at $1.6 million extraordinary
depreciation on fixed assets relating to the electronics production
which were sold at the beginning of the business year 1994/95.
(20) INTEREST AND SIMILAR EXPENSES ($6.3 million) mainly result from loans
and credits on current account. Hohe GmbH & Co. KG has expended $4.4
million.
(21) PAYMENTS TO SILENT PARTNERS result from individual contractual
agreements and relate to the fixed share payable in years of loss.
The profit-related share ($0.4 million) are to be paid retrospectively
in years recording a profit.
(22) N/A
US GAAP ADJUSTMENTS
(23) Due to the difference in accounting requirements under German
standards and US GAAP, virtually all leases classified as operating
leases by Hohe needed to be reclassified as
<PAGE> 24
capital leases for US GAAP purposes. The effect of this adjustment
for leases on the balance sheet is shown in the table on the following
page (Table I). It is assumed for purposes of this calculation that
the useful lives of the assets over which they would be depreciated
are the same as the lease terms. Therefore, leasing charges are
assumed to approximate the depreciation that would have been
recognized if the assets had been capitalized plus the interest
element of the financing, with any differences deemed immaterial. The
amount to be capitalized for these leases was determined by
calculating the present value of the future minimum lease payments
using a discount rate of 8%.
The above mentioned calculation includes two land leases, classified
for capitalization for US GAAP purposes. An additional adjustment is
calculated to add back to retained earnings the past leasing charge
net of the interest element to take account of the fact that land is
not depreciated. This adjustment is made to the 'Withdrawals and
losses not covered by capital contributions account' in the table on
the following page. The current year lease interest is shown as an
adjustment to current year net income in the table on the following
page (Table II).
(24) An adjustment to recognize a deferred tax asset has been calculated as
a reconciling item to US GAAP. This asset is related to a loss
carryforward. Due to the improved profitability of Hohe, it is
expected that this loss carryforward will be able to be utilized and
provide a future tax benefit to Hohe. The effects of this adjustment
on the balance sheet and income statement are shown in the tables
below (Table I & II).
<TABLE>
<CAPTION>
TABLE I
US GAAP BALANCE SHEET ADJUSTMENTS Adjusted
- --------------------------------- Balances at Capital Deferred Balances at
March 31, Lease Tax March 31,
$'s in thousands 1994 Adjustment Adjustment 1994
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Tangible assets
Land and buildings 28,996 7,775 36,770
Plant and machinery 5,661 7,704 13,365
Deferred taxation asset 0 579 579
TOTAL ASSETS 97,029 15,479 579 113,087
EQUITY AND LIABILITIES:
Withdrawals and losses not covered by
capital contributions (6,915) 598 576 (5,741)
Translation gains and losses 0 0 3 3
Amounts due on finance leases 0 14,881 14,881
TOTAL EQUITY AND LIABILITIES 97,029 15,479 579 113,087
</TABLE>
<PAGE> 25
<TABLE>
TABLE II
US GAAP NET INCOME ADJUSTMENTS Year Ended
- ------------------------------ March 31,
$'s in thousands 1994
- -----------------------------------------------------------------------------
<S> <C>
Net income as shown in the financial statements (4,436)
Items having the effect of increasing reported income:
Land leased but not depreciated 88
Deferred tax asset 576
------------
Net income according to US GAAP (3,772)
</TABLE>
(25) These financial statements were translated from DM's to dollars by the
Registrant. All balance sheet accounts, except equity accounts, which
were translated at assumed historical rates, were translated at the
middle rate in effect at the balance sheet date. The income statements
were translated using the average exchange rate for the corresponding
year. Translation gains and losses are reported as a separate
component of equity.
OTHER COMMENTS
On average the Hohe Group employed 1,773 (previous year 2,024) people
throughout the year. 1,379 people thereof (previous year 1,629) are industrial
employees and 394 (previous year 395) are salaried employees.
<PAGE> 26
ITEM 7 b. PRO FORMA FINANCIAL INFORMATION
The Company's investment in Hohe GmbH & Co. KG will be accounted for using the
equity method, with the results of Hohe's operations included in the Company's
combined consolidated financial statements from the date of acquisition.
The following Pro Forma Condensed Combined Consolidated Balance Sheet is
derived from the unaudited balance sheet of the Registrant including the
results of Hohe as if the acquisition occurred on July 4, 1993 (the Company)
and April 1, 1993 (Hohe). Also presented are the Pro Forma Condensed Combined
Consolidated Statements of Income for the year ended July 2, 1994, including
Hohe results for the year ended March 31, 1994, and the nine months ended April
1, 1995 including Hohe results for the nine months ended December 31, 1994,
assuming the acquisition occurred at the beginning of the periods represented.
The pro forma information presented is based on the historical financial
statements of the Company and Hohe for the periods listed. Balance sheet
related items are translated for purposes of these statements at the middle
exchange rate at the balance sheet date and income related items are translated
at the average exchange rate for the period presented.
The pro forma results are not necessarily indicative of the results which would
have actually been attained if the acquisition had been consummated on the date
indicated, or the results that may be expected in the future.
<PAGE> 27
DONNELLY CORPORATION AND SUBSIDIARIES
- --------------------------------------------------------------------------------
PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
July 2,
In thousands except share Year ended 1994 Adjustments Pro Forma
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES $337,262 $337,262
COSTS AND EXPENSES:
Cost of sales 263,630 263,630
Selling, general and administrative 37,965 37,965
Research and development 21,362 21,362
Restructuring charges 1,184 1,184
-------- ------- --------
Operating income 13,121 13,121
NON OPERATING EXPENSES (INCOME):
Interest expense 3,528 $ 1,144 5 4,672
Royalty income (1,370) (1,370)
Other income, net (45) (826) 2,4 (871)
-------- ------- --------
Income before taxes on income 11,008 (318) 10,690
Taxes on income 3,334 (126) 6 3,208
-------- ------- --------
Income before minority interest and
equity earnings 7,674 (192) 7,482
Minority interest in net income of subsidiaries (825) (825)
Equity in earnings (loss) of affiliated companies (104) (1,675) 3 (1,779)
-------- ------- --------
Income before cumulative effect of change
in accounting principle $ 6,745 $(1,867) $ 4,878
======== ======= ========
PER SHARE OF COMMON STOCK:
Income before cumulative effect of change
in accounting principle $ 0.87 $ 0.63
Weighted average number of shares outstanding 7,717 7,717
======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED).
<PAGE> 28
DONNELLY CORPORATION AND SUBSIDIARIES
- --------------------------------------------------------------------------------
PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
April 1
In thousands except share Nine Months Ended 1995 Adjustments Pro Forma
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $281,909 $281,909
COSTS AND EXPENSES:
Cost of sales 220,477 220,477
Selling, general and administrative 33,652 33,652
Research and development 17,132 17,132
Restructuring charges (gain) (2,265) (2,265)
-------- ------ --------
Operating income 12,913 12,913
NON OPERATING EXPENSES (INCOME):
Interest expense 3,523 1,224 5 4,747
Royalty income (1,872) (1,872)
Other income, net (159) (769) 2,4 (928)
-------- ------ --------
Income before taxes on income 11,421 (455) 10,966
Taxes on income 3,835 (169) 6 3,666
-------- ------ --------
Income before minority interest and
equity earnings 7,586 (286) 7,300
Minority interest in net income of subsidiaries (9) (9)
Equity in earnings (loss) of affiliated companies 113 1,536 3 1,649
-------- ------ --------
Net income $ 7,690 $1,250 $ 8,940
======== ====== ========
PER SHARE OF COMMON STOCK:
Income per share of common stock $ 0.99 $ 1.16
======== ========
Weighted average number of shares outstanding 7,739 7,739
======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED).
<PAGE> 29
DONNELLY CORPORATION AND SUBSIDIARIES
- --------------------------------------------------------------------------------
PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE SHEET - Unaudited
<TABLE>
<CAPTION>
April 1
In thousands 1995 Adjustments Pro Forma
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,715 $ 5,715
Accounts receivable, less allowance of $676 and $562 50,505 50,505
Inventories 21,086 21,086
Prepaid expenses and other current assets 19,419 19,419
-------- ------- --------
Total current assets 96,725 $ 0 96,725
Property, plant and equipment: 158,259 158,259
Less accumulated depreciation 59,589 59,589
-------- ------- --------
Net property, plant and equipment 333,992 0 98,670
Investments in and advances to affiliates 0 17,638 1,2,3 17,638
Other long-term assets 8,087 3,454 1,2,4 11,541
-------- ------- --------
Total assets $438,804 $21,092 $224,574
======== ======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 35,151 35,151
Other current liabilities 21,658 $ 2,219 3,5,6 23,877
-------- ------- --------
Total current liabilities 56,809 2,219 59,028
Long-term debt, less current maturities 56,404 16,347 1 72,751
Deferred income taxes and other 10,704 10,704
-------- ------- --------
Total liabilities 123,917 18,566 142,483
-------- ------- --------
Minority interest 1,956 1,956
SHAREHOLDERS' EQUITY:
Preferred stock 531 531
Common stock 781 781
Other shareholders' equity 76,297 2,526 1,7 78,823
-------- ------- --------
Total shareholders' equity 77,609 2,526 80,135
-------- ------- --------
Total liabilities and shareholders' equity $203,482 $21,092 $224,574
======== ======= ========
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED).
<PAGE> 30
NOTES TO PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) To record the Company's original investment in Hohe including a (DM 20
million) loan advanced to Hohe and (DM 5 million) investment in Hohe,
translated at the year end middle exchange rate. Both items are
assumed to be financed for purposes of this pro forma presentation by
incurrence of long-term debt. Translation gains and losses due to
changes in the exchange rate are recorded as a separate component of
stockholder's equity due to the long-term financing nature of both of
these items. The Company also capitalized certain organizational
costs relating to the acquisition.
<TABLE>
<CAPTION>
Nine Months Cumulative
Year Ended Ended Adjustments
July 2, March 31, at March 31,
$'s in thousands 1994 1995 1995
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE SHEET:
Advances to affiliate 11,992 2,516 14,508
(loan to affiliate)
Investment in affiliates 2,998 629 3,627
Other long-term assets 1,357 1,357
(organizational costs)
Long-term debt (16,347) (16,347)
Other shareholders' equity 0 (3,145) (3,145)
(Translation gains/losses)
</TABLE>
(2) To record the amortization of goodwill (DM 7 million) and
organizational expenses, straight-line over 15 years.
<TABLE>
<CAPTION>
Nine Months Cumulative
Year Ended Ended Adjustments
July 2, March 31, at March 31,
$'s in thousands 1994 1995 1995
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME STATEMENT:
Other income, net 369 293 662 *
(amortization)
BALANCE SHEET:
Investment in affiliate (279) (225) (504)
(amortization of goodwill)
Other long-term assets (90) (68) (158)
(amortization of organizational
expenses)
</TABLE>
<PAGE> 31
(3) To record Hohe equity earnings (pro forma calculated with interest
expense relating to loan from Donnelly - DM 20 million, offset by
interest savings from pay down of debt with loan and investment from
Donnelly - DM 25 million), net of tax.
<TABLE>
<CAPTION>
Nine Months Cumulative
Year Ended Ended Adjustments
July 2, March 31, at March 31,
$'s in thousands 1994 1995 1995
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME STATEMENT:
Equity earnings 1,675 (1,536) 139 *
BALANCE SHEET:
Investment in affiliate (2,713) 2,720 7
Other current liabilities 1,038 (1,184) (146)
(income taxes payable)
</TABLE>
(4) To record interest income relating to loan advanced to Hohe (DM 20
million at 10% interest).
<TABLE>
<CAPTION>
Nine Months Cumulative
Year Ended Ended Adjustments
July 2, March 31, at March 31,
$'s in thousands 1994 1995 1995
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME STATEMENT:
Other income, net (1,195) (1,060) (2,255) *
(interest income)
BALANCE SHEET:
Other long-term assets 1,195 1,060 2,255
(interest receivable) 0 0 0
</TABLE>
<PAGE> 32
(5) To record interest expense relating to long-term debt incurred by the
Company at an assumed rate of interest of 7%.
<TABLE>
<CAPTION>
Nine Months Cumulative
Year Ended Ended Adjustments
July 2, March 31, at March 31,
$'s in thousands 1994 1995 1995
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME STATEMENT:
Interest expense 1,144 1,224 2,368 *
BALANCE SHEET:
Other current liabilities (1,144) (1,224) (2,368)
(interest payable)
</TABLE>
(6) To adjust tax expense to reflect the income tax effects at the
Company's effective tax rate of the pro forma adjustments to income
before income taxes.
<TABLE>
<CAPTION>
Nine Months Cumulative
Year Ended Ended Adjustments
July 2, March 31, at March 31,
$'s in thousands 1994 1995 1995
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME STATEMENT:
Taxes on income (126) (169) (295) *
BALANCE SHEET:
Other current liabilities 126 169 295
(income taxes payable)
</TABLE>
(7) The total cumulative adjustments for income statement items (denoted
with *) are also recorded as an adjustment to Other shareholder's
equity on the pro forma condensed combined consolidated balance sheet
at March 31, 1995.
