SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) December 30, 1997
--------------------------------
Lund International Holdings, Inc.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 000-16319 41-1568618
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
911 Lund Boulevard, Anoka, Minnesota 55303
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (612) 576-4200
------------------------------
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
The undersigned registrant hereby amends the following items, financial
statements, pro forma financial information and exhibits, if any, or other
portions of its Report on Form 8-K filed on January 14, 1998.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Financial statements required to be filed pursuant to Item 7 of Report
on Form 8-K filed on January 14, 1998.
<PAGE>
DEFLECTA-SHIELD CORPORATION
CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS)
September 30 December 31
1997 1996
-------- --------
(Unaudited)
ASSETS
Current Assets:
Cash and equivalents $ 951 $ 459
Accounts receivable, less allowance for doubtful
accounts of $972 and $703, respectively 10,819 10,326
Inventories 10,660 10,123
Deferred income taxes 1,762 1,328
Prepaid expenses 351 304
-------- --------
Total current assets 24,543 22,540
Property and equipment, net 12,165 9,383
Goodwill and intangibles, net 11,786 12,117
Other assets 368 107
-------- --------
$ 48,862 $ 44,147
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 8 $ 9
Accounts payable 5,361 4,830
Accrued expenses 3,464 2,461
-------- --------
Total current liabilities 8,833 7,300
Deferred income taxes 301 280
Other liabilities 89 --
Long-term debt, less current maturities 8,434 8,024
-------- --------
Total liabilities 17,657 15,604
-------- --------
Stockholders' equity:
Common stock 48 48
Additional paid-in capital 18,556 18,556
Retained earnings 12,601 9,939
-------- --------
31,205 28,543
Commitments and contingencies -- --
-------- --------
$ 48,862 $ 44,147
======== ========
The accompanying notes are an integral part of these statements.
<PAGE>
DEFLECTA-SHIELD CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended September 30
-------------------------------
1997 1996
---------- ----------
Net sales $ 18,414 $ 18,465
Cost of sales 11,813 12,035
--------- ---------
Gross Profit 6,601 6,430
Operating expenses:
Selling 2,578 2,386
General and administrative 1,845 1,672
Restructuring charge 1,099 --
Amortization 111 113
--------- ---------
Income from operations 968 2,259
Interest expense 135 250
--------- ---------
Income before income taxes 833 2,009
Income tax expense 333 764
--------- ---------
Net income $ 500 $ 1,245
========= =========
Net income per share $ .10 $ .26
========= =========
Weighted average common shares outstanding 4,800 4,800
========= =========
The accompanying notes are an integral part of these statements.
<PAGE>
DEFLECTA-SHIELD CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Nine Months Ended September 30,
-------------------------------
1997 1996
--------- ---------
Net sales $ 53,732 $ 54,743
Cost of sales 34,399 36,185
--------- ---------
Gross Profit 19,333 18,558
Operating expenses:
Selling 7,369 7,681
General and administrative 5,581 4,957
Restructuring charge 1,099 --
Amortization 332 372
--------- ---------
Income from operations 4,952 5,548
Interest expense 454 799
--------- ---------
Income before income taxes 4,498 4,749
Income tax expense 1,836 1,825
--------- ---------
Net income $ 2,662 $ 2,924
========= =========
Net income per share $ .55 $ .61
========= =========
Weighted average common shares outstanding 4,800 4,800
========= =========
The accompanying notes are an integral part of these statements.
<PAGE>
DEFLECTA-SHIELD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
(UNAUDITED)
Nine Months Ended September 30
------------------------------
1997 1996
--------- ---------
Cash flow from operating activities:
Net income $ 2,662 $ 2,924
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,666 1,471
Amortization 332 372
Gain on sale of assets (15) (5)
Restructuring charge 1,099 --
Deferred income taxes (678) --
Add (deduct) changes in assets and liabilities:
Accounts receivable (493) (606)
Inventories (537) 396
Prepaid expenses (47) 748
Other assets 3 4
Accounts payable 531 650
Accrued expenses 671 299
--------- ---------
Net cash provided by operating activities 5,194 6,253
--------- ---------
Cash flow from investing activities:
Purchases of property and equipment (5,183) (1,412)
Proceeds from sale of property and equipment 72 22
--------- ---------
Cash used by investing activities (5,111) (1,390)
--------- ---------
Cash flow from financing activities:
Net proceeds (repayment) of revolving line of credit 415 (3,461)
Repayment of other debt (6) (1,449)
--------- ---------
Net cash used (provided) by financing activities 409 (4,910)
--------- ---------
Net increase (decrease) in cash 492 (47)
Cash at beginning of period 459 533
--------- ---------
Cash at end of period $ 951 $ 486
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 490 $ 815
Cash paid during the period for income taxes $ 1,749 $1,263
The accompanying notes are an integral part of these statements.
<PAGE>
DEFLECTA-SHIELD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
NOTE 1 - BASIS OF PRESENTATION OF UNAUDITED FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements of
Deflecta-Shield Corporation and its subsidiaries (collectively, the "Company")
have been prepared in accordance with generally accepted accounting principles
for interim financial information. In the opinion of management, all adjustments
(which were of a normal recurring nature) considered necessary for a fair
presentation have been included. Operating results for the three and nine months
ended September 30, 1997 are not necessarily indicative of the results that may
be expected for the year ended December 31, 1997. For further information, refer
to the consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1996.
NOTE 2 - lNVENTORIES
Inventories at September 30, 1997 and December 31, 1996 consisted of the
following:
September 30, December 31,
1997 1996
------------- ------------
(Unaudited)
Raw materials $5,150 $ 4,606
Finished goods and work-in-process 5,510 5,517
------- -------
$10,660 $10,123
======= =======
NOTE 3 - NEW ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings Per
Share, which must be adopted by the Company for all financial statements issued
after December 15, 1997. The Company has reviewed the effects of the provisions
of the standard and determined that the net income per share for the three and
nine months ended September 30, 1996 would not be affected. If the Company would
have adopted the provisions of the standard during the third quarter and nine
months of 1997, basic earnings per share would have been equal to the earnings
per share of $.10 and $.55 presented on the face of the Consolidated Statements
of Income.
<PAGE>
The FASB issued SFAS No. 130, Reporting Comprehensive Income, which will
require the Company to disclose, in financial statement format, all non-owner
changes in equity. SFAS No. 130 is effective for fiscal years beginning after
December 15, 1997. Adoption of this standard is not expected to have a material
impact on disclosures in the Company's financial statements.
The FASB has issued SFAS No. 131, Disclosures About Segments Of An
Enterprise And Related Information, which established a new accounting principle
for reporting information about operating segments in annual financial
statements and interim financial reports. It also established standards for
related disclosures about products and services, geographic areas and major
customers. SFAS No. 131 is effective for fiscal years beginning after December
15, 1997. The Company is currently evaluating the applicability of this
standard. However, the Company does not expect a material impact on disclosures
in the Company's financial statements.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Deflecta-Shield Corporation
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, of cash flows and of changes in stockholders'
equity and predecessor partners' equity, in all material respects, the financial
position of Deflecta-Shield Corporation and its subsidiaries at December 31,
1996 and 1995, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Chicago, Illinois
February 14, 1997
<PAGE>
DEFLECTA-SHIELD CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31,
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
Net sales $72,337,556 $68,239,409 $60,586,325
Cost of sales 47,660,268 46,550,689 37,309,469
----------- ----------- -----------
Gross profit 24,677,288 21,688,720 23,276,856
Operating expenses:
Selling 9,608,194 10,566,769 9,125,271
General and administrative 7,133,930 6,255,355 5,756,676
Amortization 483,571 518,819 364,207
----------- ----------- -----------
Income from operations 7,451,593 4,347,777 8,030,702
Interest expense 985,773 1,436,308 520,616
----------- ----------- -----------
Income before income taxes
and extraordinary item 6,465,820 2,911,469 7,510,086
Income tax expense 2,533,000 1,183,000 3,000,000
----------- ----------- -----------
Income before extraordinary item 3,932,820 1,728,469 4,510,086
----------- ----------- -----------
Extraordinary loss on early
extinguishment of debt, net of tax
benefit of $223,000 -- -- 363,102
----------- ----------- -----------
Net income $ 3,932,820 $ 1,728,469 $ 4,146,984
=========== =========== ===========
Earnings per share:
Income before extraordinary item $ 0.82 $ 0.36 $ 0.97*
=========== =========== ===========
Net income $ 0.82 $ 0.36 $ 0.90*
=========== =========== ===========
Weighted average common
shares outstanding 4,800,000 4,800,000 4,800,000
=========== =========== ===========
* Earnings per share and weighted average common shares outstanding are
presented on a pro forma basis reflecting the recapitalization and
the offering described in Note 2.
The accompanying notes are an integral part of these statements.
<PAGE>
<TABLE>
<CAPTION>
DEFLECTA-SHIELD CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 458,979 $ 532,586
Accounts receivable, less allowance for doubtful
accounts of $702,831 and $623,428, respectively 10,325,902 9,708,390
Inventories, net (Note 5) 10,123,265 10,580,128
Deferred income taxes (Note 10) 1,327,580 1,634,923
Prepaid expenses 304,282 912,431
------------ ------------
Total current assets 22,540,008 23,368,458
Property and equipment, net (Note 6) 9,383,275 9,343,831
Goodwill and intangibles, net (Note 7) 12,116,931 12,600,502
Other assets 106,696 96,914
------------ ------------
$ 44,146,910 $ 45,409,705
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt (Note 8) $ 8,750 $ 1,523,437
Accounts payable 4,830,429 4,232,648
Accrued expenses 2,460,713 2,423,267
------------ ------------
Total current liabilities 7,299,892 8,179,352
Deferred income taxes (Note 10) 279,566 274,925
Long-term debt, less current maturities (Note 8) 8,024,341 12,345,137
------------ ------------
Total liabilities 15,603,799 20,799,414
------------ ------------
Stockholders' equity:
Preferred stock; $.01 par value; 2,500,000 shares
authorized, none outstanding -- --
Common stock; $.01 par value; 20,000,000 shares
authorized, 4,800,000 shares outstanding 48,000 48,000
Additional paid-in capital 18,555,611 18,555,611
Retained earnings 9,939,500 6,006,680
------------ ------------
28,543,111 24,610,291
Commitments and contingencies (Note 13) -- --
------------ ------------
$ 44,146,910 $ 45,409,705
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
DEFLECTA-SHIELD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------------------
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 3,932,820 $ 1,728,469 4,146,984
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 2,109,462 1,574,602 1,012,322
Amortization 483,571 518,819 364,207
Loss on early extinguishment of debt 363,102
Deferred income taxes 311,984 (444,676) (253,679)
Add (deduct) changes in assets and liabilities:
Accounts receivable (617,512) 1,388,948 (3,349,505)
Inventories 456,863 (1,763,334) (646,939)
Prepaid expenses 608,149 (689,786) 1,067,123
Other assets (9,782) (59,446)
Accounts payable 597,781 (347,513) 621,350
Accrued expenses, excluding distribution payable to
Predecessor Partners 37,446 (101,877) (369,886)
------------- ------------- -------------
Net cash provided by operating activities 7,910,782 1,804,206 2,955,079
------------- ------------- -------------
Cash flows from investing activities -
Purchases of property and equipment (2,148,906) (4,004,646) (2,723,650)
Acquisition of Delta III, Inc., net of cash
acquired of $ 17,000 and promissory note
payable of $1,460,000 (5,822,615)
Acquisition of Trailmaster Products, Inc.,
net of cash acquired of $80,000 -- -- (5,250,306)
------------- ------------- -------------
Net cash used in investing activities (2,148,906) (4,004,646) (13,796,571)
------------- ------------- -------------
Cash flows from financing activities:
Proceeds from long-term borrowings 2,800,000 6,505,000
Proceeds from revolving line of credit 5,450,000 7,972,162 2,688,382
Repayment of debt (11,285,483) (8,786,196) (17,345,398)
Proceeds from the issuance of common stock 18,553,610
Payment of debt issuance costs -- -- (114,000)
------------- ------------- -------------
Net cash (used) provided by financing activities (5,835,483) 1,985,966 10,287,594
------------- ------------- -------------
Net decrease in cash and equivalents (73,607) (214,474) (553,898)
Cash and equivalents at beginning of year 532,586 747,060 1,300,958
------------- ------------- -------------
Cash and equivalents at end of year $ 458,979 $ 532,586 $ 747,060
============= ============= =============
Cash paid during the period for:
Interest $ 1,041,801 $ 1,203,175 $ 516,351
Income taxes 1,995,058 1,574,000 2,673,264
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
DEFLECTA-SHIELD CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND PREDECESSOR PARTNERS' EQUITY
<TABLE>
<CAPTION>
Deflecta-Shield Belmor Manufacturing
Corporation Limited Partnership
----------------------------------------------------- ---------------------------------------
Additional
Common Paid-In Retained
Stock Capital Earnings Total Class B Class C Total
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993 23,826 157,401 181,227
Effect of recapitalization
(Note 2) $ 32,000 $ 18,000 $ 131,227 $ 181,227 (23,826) (157,401) (181,227)
Effect of initial public
offering of common stock
(Note 2) 16,000 18,537,611 18,553,611
Net income for the year ended
December 31, 1994 -- -- 4,146,984 4,146,984 -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance at December 31, 1994 48,000 18,555,611 4,278,211 22,881,822 $ -- $ -- $ --
=========== =========== ===========
Net income for the year ended
December 31, 1995 -- -- 1,728,469 1,728,469
----------- ----------- ----------- -----------
Balance at December 31, 1995 48,000 18,555,611 6,006,680 24,610,291
Net income for the year ended
December 31, 1996 -- -- 3,932,820 3,932,820
----------- ----------- ----------- -----------
Balance at December 31, 1996 $ 48,000 $18,555,611 $ 9,939,500 $28,543,111
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
DEFLECTA-SHIELD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS:
Deflecta-Shield Corporation ("Deflecta-Shield" or the "Company") is a holding
company with subsidiaries involved in the manufacture and marketing of
accessories for light trucks and heavy trucks. The Company conducts its business
through its direct and indirect subsidiaries with customers throughout the
United States and Canada. The direct subsidiaries are Belmor Autotron Corp. and
DFM Corp. (DFM). The indirect subsidiaries are BAC Acquisition Co. ("BAC"),
Trailmaster Products, Inc. ("Trailmaster") and Delta III, Inc. ("Delta III").
The Company's principal product lines for light trucks are bug deflectors, which
customize the relatively uniform look of light trucks and protect the hood and
windshield from insects, stones and other road debris. The Company also sells
other light truck appearance accessories (running boards, cab visors and
taillight covers), pick-up truck tool boxes and other aluminum accessories, and
a variety of aftermarket suspension systems, primarily for light trucks.
In addition to its light truck accessories, the Company is a leading supplier in
the United States of winterfronts, bug screens, bug deflectors and rock guards
for heavy trucks. The Company also manufactures and markets interior trim parts
for heavy truck cabs.
NOTE 2 - RECAPITALIZATION AND BASIS OF PRESENTATION:
Prior to January 27, 1994, the Company was organized as Belmor Manufacturing
Limited Partnership, a Delaware limited partnership (the "Predecessor
Partnership"). On January 27, 1994, the Company executed a Plan of
Recapitalization whereby (i) certain non-corporate partners of the Predecessor
Partnership contributed their interests in the Predecessor Partnership to
Deflecta-Shield, and (ii) the Predecessor Partnership's corporate partners
merged with and into Deflecta-Shield. Upon completion of the Plan of
Recapitalization, the assets and liabilities of the Predecessor Partnership were
owned and assumed by Deflecta-Shield. The Predecessor Partnership's historical
carrying values for assets and liabilities carried over to Deflecta-Shield
Corporation upon consummation of the Plan of Recapitalization.
The Company issued 3,200,000 shares of common stock to the direct and indirect
partners of the Predecessor Partnership effective January 27, 1994. The Plan of
Recapitalization was consummated immediately prior to the public offering of
1,600,000 shares of common stock by Deflecta-Shield Corporation (the
"Offering"). The net proceeds of the Offering of approximately $18.6 million
were used to repay long-term debt (approximately $16.4 million) and other
obligations and provide additional working capital.
<PAGE>
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
This summary of significant accounting policies is presented to assist the
reader in understanding and evaluating the Company's consolidated financial
statements. These policies are in conformity with generally accepted accounting
principles, and have been consistently applied in all material respects. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Basis of consolidation
The consolidated financial statements include the accounts of Deflecta-Shield
and its subsidiaries. All significant intercompany balances and transactions
have been eliminated.
Earnings per share
Earnings per share is computed by dividing net income by the weighted average
number of common and common equivalent shares outstanding during the period.
Common equivalent shares represent the potential dilutive impact of stock
options. For each of the three years in the period ended December 31, 1996,
stock options issued did not have a dilutive impact on earnings per share.
Revenue recognition
Revenue is recognized upon shipment of the product.
Cash and equivalents
The Company considers all highly liquid investments with original maturities of
three months or less to be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market on a first-in, first-out
basis (FIFO), net of an adequate allowance for slow-moving or obsolete material.
Inventory cost includes cost of raw material, labor, and overhead.
Property and equipment
Property and equipment are stated at cost, net of accumulated depreciation.
Expenditures that extend the useful life of property and equipment or increase
productivity are capitalized, whereas maintenance, repairs and minor replacement
costs are charged to expense in the year incurred.
<PAGE>
Depreciation is computed using accelerated and straight-line methods over the
estimated useful lives of the assets, generally ranging from 3 to 31.5 years.
Goodwill and intangible assets
Goodwill, determined as the excess of cost over the fair value of net assets of
businesses acquired, is amortized on a straight-line basis over 40 years.
Patents are amortized over their statutory life. Deferred financing costs are
amortized over the term of the related debt. The Company reviews the carrying
value of intangibles and other long-lived assets for impairment when events or
changes in circumstances indicate that the carrying amount of the asset may not
be recoverable.
Advertising costs
Advertising and related costs are charged to expense as incurred, except for
advertisement production costs which are expensed in the year in which the
advertisement is first run. These costs amounted to $3,129,194, $2,984,569 and
$3,242,882 for years ended 1996, 1995, and 1994, respectively.
Income taxes
The Company records income tax provisions in accordance with Financial
Accounting Standard (FAS) No. 109, "Accounting for Income Taxes." Under this
statement, a deferred income tax asset or deferred income tax liability are
recognized for temporary differences arising when the bases of assets and
liabilities differ for financial reporting and income tax purposes.
Through January 27, 1994, the Predecessor Partnership was not subject to federal
income tax as the tax effect of its activities accrued to the partners. However,
DFM Corp. was subject to federal and state income taxes. Accordingly, a
provision for income taxes is reflected for taxable income of that entity in
1994. Pro forma earnings per share for 1994 reflect an estimated income tax
provision for the income of the predecessor partnership.
Fair value of financial instruments
The carrying value of receivables, payables, and accrued expenses approximate
their fair value. The estimated fair value of long term debt was determined
using current rates offered to the Company of issues with the same remaining
maturity and approximate the carrying value.
Reclassifications
Certain comparative prior year amounts in the consolidated financial statements
and notes have been reclassified to conform with the current year presentation.
NOTE 4 - BUSINESS ACQUISITIONS:
On August 23, 1994, the Company's wholly owned subsidiary, Delta III Acquisition
<PAGE>
Corp.("Delta III"), acquired all the outstanding shares of capital stock of
Delta III, Inc., a privately-held manufacturer and marketer of running boards,
tool boxes and other similar accessories for light duty trucks. Approximately
$5.8 million of the Company's acquisition credit facility was used to finance
the stock acquisition, with the balance of the purchase price paid by the
issuance of a $1.5 million promissory note due within five years. The Company
accounted for the Delta III acquisition as a purchase. The results of operations
of Delta III are included in the Company's consolidated financial statements
from the acquisition date. The following summarizes the costs of acquiring Delta
III:
Fair value of net assets acquired $8,744,000
Less: Liabilities assumed 1,444,000
----------
Cash paid and promissory note $7,300,000
==========
On June 22, 1994, the Company's wholly owned subsidiary, Trailmaster
Acquisition,Inc.("Trailmaster"), purchased and assumed substantially all of the
assets and liabilities of Trailmaster Products Inc., a privately-held marketer
of a variety of aftermarket suspension systems, primarily for light trucks.
Approximately $2 million of the Company's revolving credit facility was used to
finance the purchase, with the balance of the purchase price (approximately $3.3
million) paid with cash generated from operations. In addition, Trailmaster
Products Inc. was granted options to purchase 100,000 shares of $.01 par, common
stock of Deflecta-Shield Corporation at an option price of $13. The options
expire in July 1999. The Company accounted for the Trailmaster acquisition as a
purchase. The results of operations of Trailmaster are included in the Company's
consolidated financial statements from the acquisition date. The following
summarizes the costs of acquiring Trailmaster:
Fair value of net assets acquired $7,483,000
Less: Liabilities assumed 2,153,000
----------
Cash paid $5,330,000
==========
The following represents pro forma condensed results of operations of the
Company assuming the purchases of Delta III and Trailmaster were consummated
January 1, 1994:
1994
-----------
(unaudited)
Net sales $71,689,000
Gross profit 27,158,000
Income from operations 9,750,000
Net income 4,833,000
These pro-forma results are not necessarily indicative of what actually would
have occurred if the acquisition had been in effect for the entire period
presented and are not intended to project future results.
<PAGE>
NOTE 5 - INVENTORIES:
The components of inventories are as follows:
December 31,
----------------------------
1996 1995
----------- -----------
Raw materials $ 4,606,513 $ 4,689,575
Finished goods 4,291,771 4,315,990
Work-In-Process 1,224,981 1,574,563
----------- -----------
$10,123,265 $10,580,128
=========== ===========
NOTE 6 - PROPERTY AND EQUIPMENT:
Property and equipment consists of the following:
December 31,
----------------------------
1996 1995
----------- -----------
Machinery and equipment $ 6,970,603 $ 6,143,856
Building 6,094,311 6,078,274
Tooling 3,962,565 2,927,273
Furniture and office equipment 2,217,117 1,946,287
----------- ----------
19,244,596 17,095,690
Less accumulated depreciation (10,214,191) (8,104,729)
----------- ----------
9,030,405 8,990,961
Land 352,870 352,870
----------- ----------
$ 9,383,275 $9,343,831
=========== ==========
NOTE 7 - GOODWILL AND INTANGIBLE ASSETS:
Goodwill and intangible assets, net of accumulated amortization of $2,235,000
and $1,876,000 at December 31, 1996 and 1995, respectively, consist of the
following:
December 31,
----------------------------
1996 1995
----------- -----------
Goodwill $11,974,819 $12,309,506
Patents 87,437 172,492
Deferred financing costs 54,675 85,704
Other - 32,800
----------- -----------
$12,116,931 $12,600,502
=========== ===========
<PAGE>
NOTE 8 - LONG-TERM DEBT:
Long-term debt consists of the following:
December 31,
----------------------------
1996 1995
----------- -----------
Revolving credit loan (a) $ 8,019,010 $ 3,025,553
Acquisition A loan (a) - 6,000,000
Acquisition B loan (a) - 3,305,000
Promissory note (b) - 876,000
Other contracts and
agreements (c) 14,081 662,021
----------- -----------
8,033,091 13,868,574
Less: current maturities (8,750) (1,523,437)
----------- -----------
Long-term debt $ 8,024,341 $12,345,137
=========== ===========
(a) The Company obtained a $24 million Revolving Credit and Acquisition
Facility (the "Credit Agreement") with a financial institution on July
21, 1994. The credit facility was comprised of an $18 million
acquisition facility, consisting of three separate $6 million
acquisition facilities, and a $6 million revolving loan facility. On
December 1, 1996, the credit agreement was amended to provide a
revolving credit facility for $21 million and to eliminate the $18
million acquisition facility. Balances in the acquisition facilities
were transferred into the revolving loan facility. The assets of the
Company secure the borrowings under the Credit Agreement. The revolving
credit facility matures on July 21, 1999.
Interest on loans under the Credit Agreement is payable at varying
rates, based on the lender's base rate (8.25% and 8.75% at December 31,
1996 and 1995, respectively) plus a margin ranging from 0% to .25% (.5%
at December 31, 1995) on the revolving credit facility. There was no
margin at December 31, 1996. The Company may also elect to have
portions of the credit facility accrue interest based upon the London
InterBank Offering Rates (LIBOR), plus a margin ranging from 1.25% to
1.75%. No such election was made at December 31, 1996. The Company pays
a .25% fee on the unused line of credit for the revolving credit
facility.
The Credit Agreement contains certain covenants covering the Company
and its subsidiaries on a consolidated basis, including covenants
relating to the maximum amount of indebtedness which the entities may
incur and payment of dividends by the Company. The Company was in
compliance with the covenants at December 31, 1996. During 1996 and
1995, certain covenants were violated for which the company received a
waiver from the lender for the violation.
(b) In conjunction with the Company's acquisition of Delta III in August
1994, a promissory note was given to the former owners of Delta III,
Inc. for an original principal amount of $1,460,000. Principal payments
of $584,000 and $876,000 were
<PAGE>
made on July 1, 1995 and 1996, respectively.
(c) Other contracts and agreements consist of amounts owed under various
consulting and non-compete agreements. These amounts were paid during
1996. The remaining balance relates to a capitalized lease obligation.
Aggregate maturities of long-term debt are as follows:
Period ending Amount
------------- ------
1997 $ 8,750
1998 5,331
1999 8,019,010
-----------
$ 8,033,091
===========
NOTE 9 - EARLY EXTINGUISHMENT OF DEBT:
On January 31, 1994, using approximately $16,360,000 of the net proceeds
received from the Offering, outstanding debt and accrued interest were repaid.
In conjunction with this transaction, the Company wrote off the unamortized
portions of related financing costs and recognized a loss on the early
extinguishment of debt of approximately $586,000, excluding any tax benefits.
The net loss from the early extinguishment of debt is shown, net of tax benefits
of $223,000, as an extraordinary item, "Loss on early extinguishment of debt."
NOTE 10 - INCOME TAXES:
Prior to January 27, 1994, the income of the Predecessor Partnership was not
subject to state and federal income taxes. Income taxes were provided in 1994
for the income of DFM Corp., a wholly owned subsidiary of the Predecessor
Partnership.
The components of the income tax expense shown in the statement of operations
are as follows:
December 31,
------------------------------------------
1996 1995 1994
---------- ---------- -----------
Current:
Federal $1,954,334 $1,332,868 $ 2,911,186
State 266,682 294,808 342,493
---------- ---------- -----------
2,221,016 1,627,676 3,253,679
---------- ---------- -----------
Deferred:
Federal 280,312 (397,868) (226,976)
State 31,672 (46,808) (26,703)
---------- ---------- -----------
311,984 (444, 676) (253,679)
---------- ---------- -----------
$2,533,000 $1,183,000 $ 3,000,000
========== ========== ===========
<PAGE>
A reconciliation of the Company's and Predecessor Partnership's effective
income tax expense and the federal statutory expense is as follows:
December 31,
------------------------------------------
1996 1995 1994
---------- ---------- -----------
Income tax expense at
statutory rate $2,198,000 $ 990,000 $ 2,553,000
State income taxes 259,000 131,000 315,000
Partnership income (105,000)
Other 76,000 62,000 237,000
---------- ---------- -----------
Income tax expense $2,533,000 $1,183,000 $ 3,000,000
========== ========== ===========
Deferred tax assets (liabilities) are comprised of the following:
December 31,
----------------------------
1996 1995
----------- -----------
Inventory $ 605,000 $706,000
Liability for product returns 491,000 457,000
Allowance for doubtful accounts 268,000 237,000
Employee benefit accruals 90,000 149,000
Depreciation (410,000) (313,000)
Amortization of goodwill (142,000) (55,000)
Other 146,000 179,000
---------- ----------
Net deferred tax assets $1,048,000 $1,360,000
========== ==========
NOTE 11 - LEASES:
The Company leases equipment and certain of its facilities under cancelable and
noncancelable operating leases. Rent expense on such leases totaled $899,293,
$804,662 and $747,798 for the years ended 1996, 1995 and 1994, respectively.
Future minimum annual rental payments under noncancellable operating lease
agreements are as follows:
1997 $ 611,155
1998 205,993
1999 125,535
2000 39,601
---------
Total $ 982,284
=========
<PAGE>
NOTE 12 - RELATED PARTY TRANSACTIONS:
The Company signed a lease for a facility with a related party (former owner of
Delta III, Inc.) in August 1994. The lease term is for five years with monthly
rent payments of approximately $8,000 during 1996 ($7,000 in 1995). The lease is
recorded as an operating lease and rental payments made total approximately
$95,000 and $86,000 for the years ended December 31, 1996 and 1995,
respectively.
NOTE 13 - COMMITMENTS AND CONTINGENCIES:
Certain legal claims, suits and complaints have been filed or are pending
against the Company arising out of the normal course of business. These claims
are in the early stages of discovery and the ultimate outcome cannot be
determined; however, the maximum amount of claims are considered to be within
the Company's insurance limits. While the results of litigation cannot be
predicted with certainty, management believes the final outcome of such
litigation will not have a material adverse effect on the Company's consolidated
financial position.
NOTE 14 - DEFINED CONTRIBUTION PLAN:
The Company sponsors a qualified 401(k) plan available to substantially all
full-time employees. Participants may contribute up to 10% of their annual
compensation to the plan. The Company's contributions to the Plan are determined
on a discretionary basis by the management. The Company's contributions to the
Plan for the years ended December 31, 1996, 1995 and 1994 were approximately
$355,000, $300,000, and $400,000, respectively.
NOTE 15 - STOCK OPTION PROGRAM:
The Company offers participation in stock option plans to certain directors and
employees. All of the outstanding options under these plans were granted with
exercise prices for the purchase of common stock at 100% of market value of the
stock on the dates of grant.
The Company applies Accounting Principles Board (APB) Opinion 25 and related
interpretations in accounting for its stock option plans. Accordingly, no
compensation expense has been recognized for its fixed stock option plans as the
exercise price equals the stock price on the date of grant. Had compensation
expense been determined on the fair value at grant dates consistent with FAS No.
123 "Accounting for Stock Based Compensation", the Company's pro forma 1996 net
income and earnings per share would have been $3,830,815 and $0.80,
respectively. The pro forma adjustments for 1995 were not considered material.
<PAGE>
The pro forma amounts were estimated using the Black-Scholes option pricing
model with the following assumptions for 1996:
1996
----
Weighted average expected life (years) 5
Expected volatility 40.0% - 47.2%
Risk free interest rate 5.8% - 6.3%
Weighted average fair value of options granted $2.21 - $3.90
The following table summarizes the Company's option activity:
1996 1995
---- ----
Number of shares under option:
Beginning of year 137,000 45,000
Granted 179,000 164,000
Canceled/expired (6,000) (72,000)
------- -------
Options outstanding at end of year 310,000 137,000
======= =======
Exercise price per share for options
outstanding at end of year $4.50 - $13.00 $7.75 - $13.00
Awarded options typically vest and become exercisable over three years. Under
the plan, the exercise price of options granted may not be less than the market
value of the common stock at the date of the grant. Expiration dates for
outstanding options range from May 25, 2004 to December 1, 2006. The weighted
average option price was approximately $7.39 at December 31, 1996. A total of
450,000 shares of common stock have been reserved for issuance under the stock
option plans.
In addition, in conjunction with the Company's acquisition of Trailmaster,
options for 100,000 shares of common stock were granted with an exercise price
per share of $13 to the former owner of Trailmaster Products, Inc. Such options
expire in 1999.
<PAGE>
NOTE 16 - QUARTERLY FINANCIAL DATA (unaudited):
Summarized quarterly financial data for 1996 and 1995 is as follows:
(In thousands, except per share data) First Second Third Fourth
----- ------ ----- ------
1996
----
Net sales $ 18,023 $ 18,255 $ 18,465 $ 17,595
Gross profit 5,790 6,338 6,430 6,119
Net income 722 957 1,245 1,009
Net income per share .15 .20 .26 .21
1995
----
Net sales $ 17,351 $ 19,346 $ 16,007 $ 15,535
Gross profit 6,995 6,136 4,840 3,717
Net income (loss) 1,411 706 96 (485)
Net income (loss) per share .29 .15 .02 (.10)
<PAGE>
(b) PRO FORMA FINANCIAL INFORMATION.
Pro forma financial information required to be filed pursuant to
Item 7 of Report on Form 8-K filed on January 14, 1998.
<PAGE>
On December 30, 1997, a wholly-owned subsidiary of the registrant, Zephyros
Acquisition Corporation, a Delaware corporation ("Purchaser"), acquired
4,742,411 shares of common stock (the "Purchased Shares") of Deflecta-Shield
Corporation, a Delaware Corporation ("Deflecta-Shield"), for per share
consideration of $16.00 to the holders of the Purchased Shares in cash, or total
consideration of $75,878,576. On February 27, 1998, the remaining 57,589 shares
of Deflecta-Shield's common stock were acquired for per share consideration of
$16.00, or total cash consideration of $921,424. Additionally, long-term debt of
Deflecta-Shield of approximately $10,462,594 was repaid by Purchaser upon
completion of the merger between Purchaser and Deflecta-Shield on February 27,
1998. The funds for the purchase of the common stock of Deflecta-Shield were
obtained from (i) an equity investment in the registrant of approximately $30
million from an affiliate of Harvest Partners, Inc., (ii) a loan to Purchaser of
approximately $50 million from Heller Financial, Inc. and (iii) working capital
of the registrant.
Deflecta-Shield is a holding company with subsidiaries involved in the
manufacture and marketing of accessories for light trucks and heavy trucks.
Deflecta-Shield conducts its business through its direct and indirect
subsidiaries with customers throughout the United States and Canada. The direct
subsidiaries are Belmor Autotron Corp. and DFM Corp. The indirect subsidiaries
are BAC Acquisition Co., Trailmaster Products, Inc. and Delta III, Inc. The
registrant intends to utilize assets obtained in connection with the acquisition
for the continued production of accessories for light trucks and heavy trucks.
Deflecta-Shield's principal product lines for light trucks are bug deflectors,
which customize the relatively uniform look of light trucks and protect the hood
and windshield from insects, stones and other road debris. Deflecta-Shield also
sells other light truck appearance accessories (running boards, cab visors and
taillight covers), pick-up truck tool boxes and other aluminum accessories, and
a variety of after-market suspension systems, primarily for light trucks. In
addition to its light truck accessories, Deflecta-Shield is a leading supplier
in the United States of winterfronts, bug screens, bug deflectors and rock
guards for heavy trucks. Deflecta-Shield also manufactures and markets interior
trim parts for heavy truck cabs.
The following pro forma condensed consolidated statements of operations for the
three months ended September 30, 1997 and the year ended June 30, 1997 give
effect to the acquisition and the financing thereof as if such transactions had
occurred on July 1, 1996. The pro forma condensed balance sheet as of September
30, 1997 gives effect to the acquisition and the financing thereof as if such
transactions had occurred as of that date. The acquisition was accounted for
pursuant to the purchase method of accounting.
The pro forma financial data presented herein is based on management's estimate
of the effects of the acquisition and financing thereof. The pro forma financial
data is based upon current available information and certain assumptions that
Lund International Holdings, Inc. ("the Company") believes are reasonable. The
Company does not expect the receipt of additional information to have a material
adverse effect on the pro forma financial data. The pro forma condensed
consolidated balance sheet as of September 30, 1997 and the statements of
operations for the three months ended September 30, 1997 and the year ended June
30, 1997 are unaudited, but in the opinion of the Company include all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of the results of operations and financial position for the periods
presented.
The pro forma condensed consolidated statements of operations for the three
months ended September 30, 1997 and the year ended June 30, 1997, and the pro
forma condensed consolidated balance sheet as of September 30, 1997 are not
necessarily indicative of the results of operations or financial position that
actually would have been achieved had the transactions described been
consummated as of the dates indicated, or that may be achieved in the future.
<PAGE>
LUND INTERNATIONAL HOLDINGS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Lund International Deflecta-Shield Pro Forma Pro Forma
------------------ ---------------- ------------- ------------
Historical(1) Historical(2) Adjustments Consolidated
------------------ ---------------- ------------- ------------
ASSETS
<S> <C> <C> <C> <C>
Current assets:
Cash and temporary cash investments $ 361 $ 951 $ (1,312) (3) --
Restricted cash 994 -- $ 994
Marketable securities 11,329 -- (11,329) (3) --
Accounts receivable, net 8,527 10,819 19,346
Inventories 6,735 10,660 599 (4) 17,994
Deferred income taxes 744 1,762 514 (5) 3,020
Other current assets 1,008 351 1,805 (6) 3,164
-----------------------------------------------------
Total current assets 29,698 24,543 (9,723) 44,518
Property and equipment, net 7,334 12,165 (1,632) (7) 17,867
Intangibles, net 2,183 11,786 55,082 (8) 69,051
Restricted cash and marketable securities 588 -- 588
Other assets 1,038 368 1,452 (9) 2,825
(33) (10)
-----------------------------------------------------
Total assets $ 40,841 $ 48,862 $ 45,146 $ 134,849
=====================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade $ 2,167 $ 5,361 -- $ 7,528
Accrued expenses 1,898 3,464 $ 1,916 (11) 7,278
Long-term debt, current portion 500 8 1,200 (14) 1,700
(8) (15)
-----------------------------------------------------
Total current liabilities 4,565 8,833 3,108 16,506
Long-term debt, less current portion 3,630 8,434 3,463 (12) 53,491
1,384 (13)
49,861 (14)
(13,281) (15)
Other liabilities 255 89 -- 344
Deferred taxes -- 301 1,858 (5) 2,159
Stockholders' equity:
Preferred stock 18,922 (16) 18,922
Class A common stock 439 48 87 (16) 526
(48) (17)
Additional paid-in capital 987 18,556 10,991 (16) 11,978
(18,556) (17)
Unrealized holding gains on marketable securities 50 (50) (3) --
Unearned deferred compensation (74) -- (74)
Retained earnings 30,989 12,601 (3,463) (12) 30,989
(1,384) (13)
(7,754) (17)
-----------------------------------------------------
Total stockholders' equity 32,391 31,205 (1,255) 62,341
-----------------------------------------------------
Total liabilities and stockholders' equity $ 40,841 $ 48,862 $ 45,146 $ 134,849
=====================================================
</TABLE>
<PAGE>
The following footnotes describe the adjustments to the historical financial
statements to arrive at the condensed pro forma consolidated balance sheet at
September 30, 1997. In preparing such adjustments, the assumed purchase price is
as follows (in thousands):
Acquisition of 4.8 million shares of
Deflecta-Shield common stock $76,800
Direct transaction costs 2,119
-------
$78,919
=======
Including Deflecta-Shield assumed long-term debt of $13,289 at September 30,
1997 repaid in connection with the acquisition, the total purchase price would
be approximately $92 million.
The purchase price has been allocated to assets and liabilities as indicated in
the following summary opening balance sheet of Deflecta-Shield (in thousands):
Current assets $27,461
Property and equipment, net 10,533
Identifiable intangibles 5,126
Goodwill 61,742
Other 335
-------
Total assets 105,197
Accounts payable, trade and
accrued expenses 10,741
Long-term debt 13,289
Deferred income taxes and other 2,248
------
Total liabilities 26,278
------
Net assets $78,919
=======
(1) Represents the unaudited historical balance sheet of the Company as of
September 30, 1997 as reported in the Company's September 30, 1997 Form
10-Q as filed with the SEC.
(2) Represents the unaudited historical balance sheet of Deflecta-Shield as
of September 30, 1997 as reported in Deflecta-Shield's September 30,
1997 Form 10-Q as filed with the SEC.
(3) Represents a reduction in cash, marketable securities and the related
unrealized holding gain of the Company used to finance the acquisition.
(4) Represents fair market value adjustment to inventories.
<PAGE>
(5) Represents deferred tax adjustments resulting from other pro forma
balance sheet adjustments.
(6) Represents income tax benefit resulting primarily from the settlement
of Deflecta-Shield stock options and other costs.
(7) Represents fair market value adjustment to fixed assets.
(8) Represents the increase in goodwill to reflect the total goodwill of
$61,742,000 and the fair market value adjustments to customer lists and
patents of $2,737,000 and $2,389,000, respectively.
(9) Represents deferred financing costs in connection with the debt
incurred to finance the acquisition.
(10) Represents the write-off of deferred financing costs resulting from the
assumed repayment of Deflecta-Shield debt.
(11) Represents the accrual of severance and other expenses related to the
consolidation of the businesses of the Company and Deflecta-Shield
pursuant to the Company's plan to exit certain activities and
involuntarily terminate and relocate certain employees of
Deflecta-Shield.
(12) Represents the settlement of Deflecta-Shield stock options.
(13) Represents deal fees incurred by Deflecta-Shield.
(14) Represents the debt incurred to finance the acquisition.
(15) Represents Deflecta-Shield debt repaid in connection with the
acquisition.
(16) Represents stock issued to Harvest Partners in connection with their
$30,000,000 equity contribution to the Company.
(17) Represents the elimination of Deflecta-Shield's shareholders' equity.
<PAGE>
<TABLE>
<CAPTION>
Lund International Holdings, Inc.
Unaudited Pro-Forma Condensed Consolidated Statement of Earnings
For The Three Months Ended September 30, 1997
Lund International Deflecta-Shield Pro Forma Pro Forma
------------------------------------------------ -------------
Historical(1) Historical(2) Adjustments Consolidated
------------------------------------------------ -------------
<S> <C> <C> <C> <C>
Net sales $ 10,028 $ 18,414 $ 28,442
Cost of goods sold 6,624 11,813 $ 560 (3) 18,997
--------------------------------------------------------------
Gross profit 3,404 6,601 (560) 9,445
Operating expenses
General and administrative 1,143 1,845 (422)(4) 2,566
Selling and marketing 1,550 2,578 (560)(3) 3,568
Research and development 348 422 (4) 770
Non-recurring transaction 1,174 1,099 2,273
Amortization 30 111 487 (5) 628
-------------------------------------------- --------------
Total operating expenses 4,245 5,633 (73) 9,805
-------------------------------------------- --------------
(Loss) income from operations (841) 968 (487) (360)
Other income (expense)
Interest expense (72) (135) (1,066)(6) (1,273)
Interest income 163 - (163)(7) -
Other, net (17) - (17)
-------------------------------------------- --------------
Other income, net 74 (135) (1,229) (1,290)
-------------------------------------------- --------------
(Loss) income before income taxes (767) 833 (1,716) (1,650)
Income tax (benefit) expense (248) 333 (601)(8) (516)
-------------------------------------------- --------------
Net (loss) income $ (519) $ 500 $ (1,115) $ (1,134)
============================================ ==============
Net loss per share $ (0.12) $ (0.17)
============== ==============
Common and common equivalent
shares 4,393,970 2,367,798 (9) 6,761,768
============== ============== ==============
</TABLE>
<PAGE>
(1) Represents the unaudited historical statement of earnings of the
Company for the three months ended September 30, 1997 as reported in
the Company's September 30, 1997 Form 10-Q as filed with the SEC.
(2) Represents the unaudited historical statement of income of
Deflecta-Shield for the three months ended September 30, 1997 as
reported in Deflecta-Shield's September 30, 1997 Form 10-Q as filed
with the SEC.
(3) Represents the reclassification of freight expense from selling and
marketing expense to cost of goods sold for Deflecta-Shield for
consistent presentation with the Company.
(4) Represents the reclassification of Deflecta-Shield research and
development expense to a separate line for consistent presentation with
the Company.
(5) Represents increased amortization of goodwill (40 years), customer
lists (10 years) and patents (6 years).
(6) Represents interest expense related to indebtedness incurred to
complete the acquisition and amortization of related deferred financing
costs, offset by interest expense on Deflecta-Shield debt and related
deferred financing costs retired in connection with the acquisition.
Pro forma interest expense was calculated based on average debt
outstanding using the current interest rates on acquisition debt.
(7) Represents elimination of interest income from marketable securities
used to finance the acquisition.
(8) Represents the tax effects of the pro forma adjustments at the
consolidated Company and Deflecta-Shield tax rate.
(9) Represents common and preferred shares issued to Harvest Partners, Inc.
in connection with their $30,000,000 equity investment.
<PAGE>
<TABLE>
<CAPTION>
Lund International Holdings, Inc.
Unaudited Pro-Forma Condensed Consolidated Statement of Earnings
For The Twelve Months Ended June 30, 1997
Lund Deflecta-Shield Pro Forma Pro Forma
------------------------------------------------------- ----------------
Historical(1) Historical(2) Adjustments Consolidated
------------------------------------------------------- ----------------
<S> <C> <C> <C> <C>
Net sales $ 43,305 $ 71,377 $ 114,682
Cost of goods sold 28,531 46,096 $ 2,182 (3) 77,458
649 (4)
------------------------------------------------------- ----------------
Gross profit 14,774 25,281 (2,831) 37,224
Operating expenses
General and administrative 4,247 7,585 (1,303)(5) 10,529
Selling and marketing 6,332 9,104 (2,182)(3) 13,254
Research and development 1,290 - 1,303 (5) 2,593
Amortization 139 446 1,946 (6) 2,531
------------------------------------------------------- ----------------
Total operating expenses 12,008 17,135 (236) 28,907
------------------------------------------------------- ----------------
Income from operations 2,766 8,146 (2,595) 8,317
Other income (expense)
Interest expense (293) (756) (3,944)(7) (4,993)
Interest income 695 - (695)(8) -
Other, net (38) - (38)
------------------------------------------------------- ----------------
Other income, net 364 (756) (4,639) (5,031)
------------------------------------------------------- ----------------
Income before income taxes 3,130 7,390 (7,234) 3,286
Income tax (benefit) expense 934 2,975 (2,117)(9) 1,792
------------------------------------------------------- ----------------
Net (loss) income $ 2,196 $ 4,415 $ (5,117) $ 1,494
======================================================= ================
Net income per share $ 0.50 $ 0.22
============= ================
Common and common equivalent
shares 4,393,566 2,367,798(10) 6,761,364
============= ================= ================
</TABLE>
<PAGE>
(1) Represents the audited historical statement of earnings of the Company
for the twelve months ended June 30, 1997 as reported in the Company's
June 30, 1997 Form 10-K as filed with the SEC.
(2) Represents the unaudited historical statements of income of
Deflecta-Shield for the twelve months ended June 30, 1997 as derived
from reported results in Deflecta-Shield's June 30, 1997 Form 10-Q,
June 30, 1996 Form 10-Q and December 31, 1996 Form 10-K as filed with
the SEC.
(3) Represents the reclassification of freight expense from selling and
marketing expense to cost of goods sold for Deflecta-Shield for
consistent presentation with the Company.
(4) Represents cost of goods sold related to the fair market value
adjustment to inventories.
(5) Represents the reclassification of Deflecta-Shield research and
development expense to a separate line for consistent presentation with
the Company.
(6) Represents increased amortization of goodwill (40 years), customer
lists (10 years) and patents (6 years).
(7) Represents interest expense related to indebtedness incurred to
complete the acquisition and amortization of related deferred financing
costs, offset by interest expense on Deflecta-Shield debt and related
deferred financing costs retired in connection with the acquisition.
Pro forma interest expense was calculated based on average debt
outstanding using the current interest rates on acquisition debt.
(8) Represents elimination of interest income from marketable securities
used to finance the acquisition.
(9) Represents the tax effects of the pro forma adjustments at the
consolidated Company and Deflecta-Shield tax rate.
(10) Represents common and preferred shares issued to Harvest Partners, Inc.
in connection with their $30,000,000 equity investment.
<PAGE>
(c) EXHIBITS.
23.1 Consent of Price Waterhouse LLP.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LUND INTERNATIONAL HOLDINGS, INC.
Dated: March 16, 1998 By: /s/ William J. McMahon
--------------------------
William J. McMahon
Its Chief Executive Officer
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
23.1 Consent of Price Waterhouse LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 (No. 33-78140), Registration Statement on Form S-8 (No.
333-46263), Registration Statement on Form S-8 (No. 33-64083) and Registration
Statement on Form S-8 (No. 33-37160) of Lund International Holdings, Inc. of our
report dated February 14, 1997 relating to the consolidated financial statements
of Deflecta-Shield Corporation which appears in the Current Report on Form 8-K/A
of Lund International Holdings, Inc. dated March 16, 1998.
PRICE WATERHOUSE LLP
Chicago, Illinois
March 16, 1998
