<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) November 30, 1995
FIBREBOARD CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-016951 94-0751580
----------------------------------------------------------------------------
(State or other jurisdic- (Commission (IRS Employer Iden-
tion of incorporation) file number) tification No.)
2121 North California Blvd., #560, Walnut Creek, CA 94596
---------------------------------------------------------
(Address of principal executive offices)
(510) 274-0700
--------------
(Registrant's telephone number, including area code)
None
--------------------------------
(Former name or former address, if changed since last report)
-1-
<PAGE>
The undersigned registrant hereby amends the following items of its current
report on Form 8-K dated November 30, 1995.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF VYTEC CORPORATION: Page
----
(i) Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . 3
(ii) Consolidated Balance Sheets as at November 30, 1995 and 1994 . 4
(iii) Consolidated Statements of Shareholder's Equity for the years
ended November 30, 1995 and 1994 . . . . . . . . . . . . . . . 5
(iv) Consolidated Statements of Earnings for the years ended
November 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . 6
(v) Consolidated Statements of Changes in Financial Position
for the years ended November 30, 1995 and 1994 . . . . . . . . 7
(vi) Notes to Consolidated Financial Statements of November
30, 1995 and 1994. . . . . . . . . . . . . . . . . . . . . . . 8
(b) UNAUDITED PRO FORMA FINANCIAL INFORMATION:
(i) Pro Forma Combined Balance Sheet as of September 30, 1995. . . 21
(ii) Pro Forma Combined Statement of Income for the nine-month
period ended September 30, 1995. . . . . . . . . . . . . . . . 22
(iii) Pro Forma Combined Statement of Income for the twelve-month
period ended December 31, 1994 . . . . . . . . . . . . . . . . 23
(iv) Notes to Pro Forma Combined Financial Statements . . . . . . . 24
(c) EXHIBITS:
The following Exhibit is included herewith:
Exhibit 23 - Consent of Deloitte & Touche . . . . . . . . . . . 26
-2-
<PAGE>
AUDITORS' REPORT
To the Directors of
Vytec Corporation.
We have audited the consolidated balance sheets of Vytec Corporation as at
November 30, 1995 and November 30, 1994 and the consolidated statements of
shareholder's equity, earnings and changes in financial position for the years
then ended. These consolidated financial statements are the responsibility of
the company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the company as at November 30, 1995
and November 30, 1994 and the results of its operations and the changes in its
financial position for the years then ended in accordance with generally
accepted accounting principles in Canada.
Deloitte & Touche
London, Canada,
January 5, 1996. Chartered Accountants
-3-
<PAGE>
VYTEC CORPORATION
(Incorporated under the laws of Ontario)
CONSOLIDATED BALANCE SHEETS AS AT NOVEMBER 30, 1995 AND 1994
------
<TABLE>
<CAPTION>
1995 1994
---- ----
ASSETS
------
<S> <C> <C>
Current
Cash $ 201,229 $ 1,305,847
Accounts receivable, Net (Note 3) 12,787,938 11,847,704
Inventory (Note 4) 10,026,666 8,705,795
Prepaid expenses 278,684 213,178
Income tax recoverable 661,875 -
Notes receivable - current portion (Note 7) 192,365 -
----------- -----------
24,148,757 22,072,524
----------- -----------
Property, plant and equipment - Net (Note 5) 12,723,291 11,391,448
Other assets - Net (Note 6) 270,993 375,315
Notes receivable (Note 7) 321,357 19,166
----------- -----------
13,315,641 11,785,929
----------- -----------
$37,464,398 $33,858,453
----------- -----------
----------- -----------
LIABILITIES
-----------
Current
Bank indebtedness (Note 8) $ 4,851,612 $ 1,101,095
Accounts payable and accrued liabilities (Note 9) 10,561,761 9,652,510
Income taxes - 643,623
Current portion of product warranty obligations
(Note 14) 325,948 404,374
Current portion of long-term debt (Note 10) 2,375,454 1,936,822
Current portion of capital lease
obligations (Note 11) 34,201 86,621
----------- -----------
18,148,976 13,825,045
----------- -----------
Long-term product warranty obligations (Note 14) 968,555 791,910
Long-term debt (Note 10) 7,101,029 8,082,586
Capital lease obligations (Note 11) 98,086 57,088
Other long-term liabilities (Note 12) - 394,812
----------- -----------
8,167,670 9,326,396
----------- -----------
Deferred income taxes (Note 17) 440,959 403,976
----------- -----------
Minority interest 227,476 -
----------- -----------
Commitments and contingencies (Note 13)
SHAREHOLDER'S EQUITY
--------------------
Share capital (Note 19) 10,541,235 2,041,235
Contributed surplus 28,779 28,779
Retained earnings 86,082 8,410,025
Currency translation adjustment (176,779) (177,003)
----------- -----------
10,479,317 10,303,036
----------- -----------
$37,464,398 $33,858,453
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
-4-
<PAGE>
VYTEC CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
FOR THE YEARS ENDED NOVEMBER 30, 1995 AND 1994
__________
<TABLE>
<CAPTION>
1995 1994
---- ----
SHARE CAPITAL
-------------
<S> <C> <C>
Share capital at beginning of year $2,041,235 $2,041,235
Increase in stated capital - common shares (Note 19) 8,500,000 -
----------- -----------
Share capital at end of year 10,541,235 2,041,235
----------- -----------
CONTRIBUTED SURPLUS
-------------------
Contributed surplus 28,779 28,779
----------- -----------
RETAINED EARNINGS
-----------------
Retained earnings at beginning of year
as previously reported 9,070,544 5,193,158
Cumulative adjustment due to accounting
policy change (Note 14) (660,519) (606,755)
----------- -----------
Retained earnings at beginning of year
as restated 8,410,025 4,586,403
Net earnings 1,776,057 3,983,622
Dividends (1,600,000) (160,000)
Allocated to stated capital - common shares (8,500,000) -
Retained earnings at end of year 86,082 8,410,025
----------- -----------
CURRENCY TRANSLATION ADJUSTMENT
-------------------------------
Currency translation adjustment (176,779) (177,003)
----------- -----------
SHAREHOLDER'S EQUITY END OF YEAR $10,479,317 $10,303,036
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
-5-
<PAGE>
VYTEC CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE YEARS ENDED NOVEMBER 30, 1995 AND 1994
-------
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Net sales $70,516,503 $64,954,721
Cost of goods sold 52,549,340 47,543,389
----------- -----------
Gross profit 17,967,163 17,411,332
----------- -----------
Operating expenses 13,857,299 10,517,031
Interest expense 1,080,273 932,763
----------- -----------
14,937,572 11,449,794
----------- -----------
Earnings from operations 3,029,591 5,961,538
Gain (loss) on sale of assets 14,533 (5,163)
Minority interest on earnings (147,000) -
----------- -----------
Earnings before income taxes 2,897,124 5,956,375
Income taxes
- Current (Note 16) (1,084,084) (1,898,777)
- Deferred (36,983) (73,976)
----------- -----------
Net earnings $ 1,776,057 $ 3,983,622
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
-6-
<PAGE>
VYTEC CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
FOR THE YEARS ENDED NOVEMBER 30, 1995 AND 1994
-----------
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings for the year $1,776,057 $3,983,622
Charges (income) not requiring cash payment
or receipts
Depreciation and amortization 1,560,764 1,287,426
Deferred income taxes 36,983 73,976
(Gain) loss on sale of assets (14,533) 5,163
Minority interest on earnings 147,000 -
Currency translation adjustment 224 (129,272)
---------- ----------
3,506,495 5,220,915
Changes in non-cash working capital components
Accounts receivable (940,234) (2,113,338)
Inventory (1,320,871) (2,413,907)
Prepaid expenses (65,504) (48,233)
Accounts payable and accrued liabilities 909,251 1,675,008
Income taxes payable (1,305,498) (263,893)
---------- ----------
Cash provided from operating activities 783,639 2,056,552
---------- ----------
INVESTING ACTIVITIES
Additions to property, plant and equipment (3,268,474) (4,059,813)
Proceeds on disposal of fixed assets 396,343 48,873
Other assets 98,377 (66,942)
---------- ----------
Cash (used in) investing activities (2,773,754) (4,077,882)
---------- ----------
FINANCING ACTIVITIES
Repayment of other long-term liabilities (394,812) (694,350)
Dividends paid (1,600,000) (160,000)
Proceeds of long-term debt 1,490,672 4,106,305
Repayment of long-term debt (2,033,597) (1,100,014)
(Repayment) proceeds of capital lease obligations (11,422) 46,037
Note receivable (494,556) 43,373
Product warranty obligations 98,219 129,529
Minority interest on investment in subsidiary 80,476 -
---------- ----------
Cash (used in) provided from financing activities (2,865,020) 2,370,880
---------- ----------
Cash (decrease) increase during year (4,855,135) 349,550
Cash (bank indebtedness), beginning of year 204,752 (144,798)
---------- ----------
Cash (bank indebtedness), end of year ($4,650,383) $ 204,752
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
-7-
<PAGE>
VYTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1995 AND 1994
__________
1. Description of business
Vytec Corporation is a manufacturer and distributor of vinyl siding and
related home improvement products. The company manufactures vinyl siding
and accessories in Canada and distributes its products in Canada, the
United States, Australia, New Zealand and Poland.
2. Accounting policies
The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in Canada and include the
following significant accounting policies:
a) Principles of consolidation
The accompanying financial statements consolidate the accounts of all
subsidiary companies. All material intercompany balances and
transactions have been eliminated.
b) Inventories
Raw materials are valued at the lower of cost and replacement cost.
Work-in-process and finished goods are valued at the lower of cost and
net realizable value. Cost is determined on the first-in, first-out
basis.
c) Property, plant and equipment
Property, plant and equipment is recorded at cost. Depreciation is
computed using the straight-line method at rates calculated to
amortize the cost of the assets over their estimated useful lives.
Depreciation rates are as follows:
Buildings 4%
Machinery and equipment 8%
Dies and moulds 33 1/3%
Automotive equipment 33 1/3%
Furniture and fixtures 10%
Computer 33 1/3%
d) Product warranty costs
Anticipated future costs of product warranties are charged to
operations in the year the product is sold. The estimate of product
warranty costs is based upon the historical trend of actual warranty
costs applied to current product sales.
-8-
<PAGE>
Vytec Corporation
Notes to consolidated financial statements
November 30, 1995 and 1994
- ------------------------------------------
2. Accounting policies (Continued)
e) Trademarks
Trademarks are recorded at cost, less accumulated amortization, and
are amortized on a straight line basis over 20 years. Costs include
the cost of acquiring, registering and defending the trademarks.
Trademarks will be charged to income immediately if they are deemed to
be of no future benefit to the company. Management reviews trademarks
annually to determine if a write-down is required.
f) Deferred advertising
Advertising costs pertaining to the design and development of
promotional inventory are deferred and amortized over a 5 year
period. All other advertising costs are expensed as incurred.
g) Foreign currency translation
The accounts of subsidiaries considered financially and operationally
independent of the company are translated into Canadian dollars using
the year-end rate of exchange for the balance sheet and average rate
for the statement of earnings. The resulting translation adjustment
is deferred as a separate component of shareholders' equity until
there is a realized reduction in the net investment in a subsidiary.
h) Revenue recognition
Sales are recorded upon shipment to customers. Net sales consist of
gross sales less allowances and price adjustments.
i) Income taxes
The Corporation follows the tax allocation method of accounting for
income taxes. As a result, the provision for income taxes is based on
accounting income, with any timing differences between accounting
income and taxable income being accounted for as deferred income
taxes.
3. Accounts receivable
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Accounts receivable $13,077,278 $12,089,344
Allowance for doubtful accounts (289,340) (241,640)
----------- -----------
$12,787,938 $11,847,704
----------- -----------
----------- -----------
</TABLE>
-9-
<PAGE>
Vytec Corporation
Notes to consolidated financial statements
November 30, 1995 and 1994
- ------------------------------------------
4. Inventory
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Raw materials $ 1,445,253 $ 1,912,872
Work-in-process 594,062 387,754
Finished goods 7,987,351 6,405,169
----------- -----------
$10,026,666 $ 8,705,795
----------- -----------
----------- -----------
</TABLE>
5. Property, plant and equipment
<TABLE>
<CAPTION>
1995
-------------------------------------
Accumulated
Depreciation
and Net Book
Cost Amortization Value
---- ------------ -----
<S> <C> <C> <C>
Buildings $ 6,931,856 $1,726,873 $ 5,204,983
Machinery and equipment 9,849,937 4,272,246 5,577,691
Dies and moulds 2,825,850 2,135,434 690,416
Automotive equipment 183,452 73,434 110,018
Automotive equipment under
capital leases 182,091 39,873 142,218
Furniture and fixtures 702,095 540,720 161,375
Computer 351,395 186,887 164,508
Land 672,082 - 672,082
----------- ---------- -----------
$21,698,758 $8,975,467 $12,723,291
----------- ---------- -----------
----------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
1994
-------------------------------------
Accumulated
Depreciation
and Net Book
Cost Amortization Value
---- ------------ -----
<S> <C> <C> <C>
Buildings $ 5,244,244 $1,493,717 $ 3,750,527
Machinery and equipment 9,529,388 3,788,107 5,741,281
Dies and moulds 2,666,666 1,826,517 840,149
Automotive equipment 198,826 65,804 133,022
Automotive equipment under
capital leases 242,318 127,366 114,952
Furniture and fixtures 581,108 457,575 123,533
Computer 298,979 146,736 152,243
Land 535,741 - 535,741
----------- ---------- -----------
$19,297,270 $7,905,822 $11,391,448
----------- ---------- -----------
----------- ---------- -----------
</TABLE>
-10-
<PAGE>
Vytec Corporation
Notes to consolidated financial statements
November 30, 1995 and 1994
- ------------------------------------------
6. Other assets
1995 1994
---- ----
<TABLE>
<CAPTION>
<S> <C> <C>
Trademarks, net $ 191,501 $ 197,444
Deferred advertising, net 77,558 79,301
Other 1,934 98,570
---------- ----------
$ 270,993 $ 375,315
---------- ----------
---------- ----------
</TABLE>
7. Notes receivable
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Note receivable, unsecured, bearing interest
at 9%, due September 1, 1998, receivable in
monthly principal and interest instalments of
$15,900. $ 475,609 $ -
Notes receivable, non-interest bearing
due February 29, 1996. 38,113 19,166
513,722 19,166
Current portion (192,365) -
---------- ----------
$ 321,357 $ 19,166
---------- ----------
---------- ----------
</TABLE>
8. Bank indebtedness
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Bank of Montreal
Due on demand, bearing interest at U.S.
base rate prime plus 0.25%. A general
security agreement has been pledged as
collateral. The effective rate of interest
at November 30, 1995 is 9.5% (1994 -
9.25%). $3,012,650 $ 830,000
Cheques issued in excess of funds
on deposit 1,838,962 271,095
---------- ----------
$4,851,612 $1,101,095
---------- ----------
---------- ----------
</TABLE>
-11-
<PAGE>
-5-
Vytec Corporation
Notes to consolidated financial statements
November 30, 1995 and 1994
- ------------------------------------------
9. Accounts payable and accrued liabilities
Accounts payable and accrued liabilities consist of the following at
November 30:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Trade payables $ 4,653,684 $5,912,908
Accrued employee benefits 4,338,644 2,116,822
Accrued sales incentives 1,361,463 1,167,170
Accrued other 207,970 455,610
---------- ----------
$10,561,761 $9,652,510
---------- ----------
---------- ----------
</TABLE>
10. Long-term debt
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
U.S. Dollar Debenture - Bank of Montreal
The debenture is repayable in quarterly
principal payments of U.S. $55,000 and bears
interest at U.S. base rate prime plus 1%
(1994 - Libor), due on demand. Pledged as
security is a $20,000,000 fixed and floating
charge over all assets of the company. The
effective rate of interest at November 30, 1995
is 9.25% (1994 - 8.729%). $2,667,380 $1,503,810
Term loan - Ontario Development Corporation
Term loan repayable in blended monthly
payments of $31,276 at 8% per annum, maturing
April 15, 1996. Pledged as security is a
charge over all assets of the company. 153,352 501,577
U.S. Dollar Bank Loan - Bank of Montreal
The loan is repayable in quarterly principal
payments of U.S. $57,500 and bears interest at
U.S. base rate prime plus 1% (1994 - Libor),
due on demand. Pledged as security is a general
assignment of book debts. The effective rate
of interest at November 30, 1995 is 9.25%
(1994 - 7.858%). 2,115,625 2,751,289
Term loan - RoyNat Inc.
The loan is repayable in monthly principal
instalments of $10,000 plus interest at the cost
of the lender's short-term borrowing plus 2%, due
October 15, 1997. Equipment located at London,
Ontario has been pledged as security. The
effective rate of interest at November 30,
1995 is 8.451% (1994 - 7.607%). 224,000 370,000
-12-
<PAGE>
-6-
Vytec Corporation
Notes to consolidated financial statements
November 30, 1995 and 1994
- ------------------------------------------
10. Long-term debt (Continued)
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Term loan - RoyNat Inc.
The loan is repayable in monthly principal
instalments of $5,200 plus interest at the cost
of the lender's short-term borrowing plus 2 1/4%,
due August 15, 1997. Equipment located at London,
Ontario has been pledged as security. The
effective rate of interest at November 30,
1995 is 8.701% (1994 - 7.857%). 93,510 169,400
Term loan - RoyNat Inc.
The loan is repayable in monthly principal
instalments of $7,500 plus interest at the cost
of the lender's short-term borrowing plus 2 1/4%,
due November 15, 1996. A fixed and floating
charge debenture has been pledged as security.
The effective rate of interest at November 30,
1995 is 8.701% (1994 - 7.857%). 87,000 187,500
9 1/2% mortgage - Sun Life
The loan is repayable in equal monthly
instalments of principal and interest of
$1,901, due December 1, 2000. Property
located at London, Ontario has been pledged
as security. 91,770 105,337
Term loan - Bank of Montreal
This loan is repayable in 8 monthly principal
instalments of $30,250 plus interest at bank
prime plus 1%. Pledged as security is a first
charge over all equipment, a floating charge
over all other assets and a first charge over
all registered land and buildings. The
effective rate of interest at November 30,
1995 is 8.75% (1994 - 8%). 1,586,000 1,828,000
Fixed rate term loan - Bank of Montreal
This loan is repayable in monthly principal
instalments of $30,000 plus interest at 9.15%,
due on demand. Pledged as security is an
assignment of book debts. 1,440,000 1,800,000
-13-
<PAGE>
Vytec Corporation
Notes to consolidated financial statements
November 30, 1995 and 1994
10. Long-term debt (Continued)
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
10 1/2% Mortgage - Royal Trust
The loan is repayable in equal monthly
instalments of principal and interest of
$4,425, due December 15, 1999. Property
located at London, Ontario has been pledged
as security. 312,692 -
Fixed Rate Advance - ANZ Bank
The advance has no set terms of repayment
and bears interest at 9.8% (1994 - repayable
in annual payments of Australian $75,000 plus
interest at 9.53%), due April 19, 1996.
It is management's intention to renew this debt
at maturity. Pledged as security is a letter
of credit for Australian $650,000. 313,951 368,460
Fixed Rate Advance - ANZ Bank
The advance has no set terms of repayment
and bears interest at 9.8% (1994 - 10%), due
April 19, 1996. It is management's intention
to renew this debt at maturity. Pledged as
security is a letter of credit for Australian
$650,000. 156,975 160,200
Fixed Rate Advance - ANZ Bank
The advance has no set terms of repayment
and bears interest at 9.8% (1994 - repayable
in annual payments of Australian $55,000
plus interest at 9.53%) due April 19, 1996.
It is management's intention to renew this
debt at maturity. Pledged as security is a
Letter of Credit for Australian $650,000. 234,228 273,835
---------- ----------
9,476,483 10,019,408
Less current portion of long-term debt (2,375,454) (1,936,822)
---------- ----------
$7,101,029 $ 8,082,586
---------- ----------
---------- ----------
</TABLE>
<TABLE>
<CAPTION>
Scheduled principal repayments on long-term debt are as follows:
<S> <C>
1996 $2,375,454
1997 1,870,244
1998 1,219,420
1999 1,507,766
2000 1,120,844
Thereafter 1,382,755
----------
$9,476,483
----------
----------
</TABLE>
-14-
<PAGE>
Vytec Corporation
Notes to consolidated financial statements
November 30, 1995 and 1994
- ------------------------------------------
11. Capital lease obligations
The Corporation has capital lease obligations relating to vehicles with a
cost of $182,091 (1994 - $242,318) and a net book value of $142,218 (1994 -
$114,952). The related assets and obligations are recorded at the fair
value of the vehicles at the inception of the leases.
Future minimum lease payments for non-cancellable leases are summarized as
follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Year of payment
1995 $ - $ 96,203
1996 44,732 29,177
1997 57,560 30,937
1998 48,973 -
-------- --------
Total minimum lease payments 151,265 156,317
Less: Imputed interest (at rates ranging
from 8.49% to 10.49%) (18,978) (12,608)
-------- --------
Total capital lease obligation 132,287 143,709
Less: current portion of capital lease
obligation 34,201 86,621
-------- --------
Long-term capital lease obligations $ 98,086 $ 57,088
-------- --------
-------- --------
</TABLE>
12. Other long-term liabilities
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Advance from director
The company has pledged a general security
agreement over the assets and a collateral
charge on real property in the amount of
the outstanding balance for the loan
bearing interest at 15%. $ - $ 343,112
Loan from shareholder
The loan bears interest at a rate of 10%
and has no set terms of repayment. - 51,700
-------- --------
$ - $ 394,812
-------- --------
-------- --------
</TABLE>
-15-
<PAGE>
Vytec Corporation
Notes to consolidated financial statements
November 30, 1995 and 1994
- ------------------------------------------
13. Commitments and contingencies
The details and estimated maximum amounts of contingent liabilities,
classified according to the party from whom the contingent liability
arises, are set out below. Management is not aware of any circumstances or
information which would lead them to believe that these liabilities will
crystallize and consequently no provisions are included in the accounts in
respect of these matters.
A former customer is seeking damages of $641,500 in respect of damages
allegedly caused by the use of a product supplied by the company in the
construction of residential units. It is alleged that the product supplied
was unsuitable for the particular application and that it was the cause of
significant damage to the buildings.
The Corporation is defending this claim and management believes the action
will be successfully defended. It is the corporation's belief that its
product liability insurance will cover the costs of proceedings.
The company has commitments for operating leases in Australia and New
Zealand. Rent expense for the year was $181,119 (1994 - $163,349). Future
minimum lease payments for operating leases will aggregate $143,345 over
the next two years as follows:
<TABLE>
<CAPTION>
<S> <C>
1996 $116,399
1997 26,946
--------
$143,345
--------
--------
</TABLE>
14. Change in accounting policy - product warranty costs
The corporation has changed its method of accounting for product warranty
costs effective December 1, 1994. Previously, such costs had been
recognized on a warranty claim basis. The change in accounting policy has
resulted in a charge to retained earnings as at December 1, 1993 of
$606,755 (net of a deferred income tax debit of $380,000) and a charge to
fiscal 1994 net earnings of $53,764 (net of a deferred income tax debit of
$33,000). Prior years' financial statements have been restated to reflect
this change in accounting policy.
-16-
<PAGE>
Vytec Corporation
Notes to consolidated financial statements
November 30, 1995 and 1994
- ------------------------------------------
15. Related party transactions
Andcur Building Corp., a company controlled by the Corporation's Chairman
of the Board, constructed two warehouses for proceeds of $865,420 (1994 -
$828,759).
H.M.S. Investments Inc., a company controlled by the Corporation's Chairman
of the Board's family, was paid $96,300 (1994 - $165,149) for management
and administrative services it provided to the Corporation.
Mr. A. M. Spriet, the Chairman of the Board, was paid $739,731 (1994 -
$428,816) for management services that he provided to the Corporation.
Andrew Investments, a sole proprietorship of the Corporation's Chairman of
the Board, sold land and building to the Corporation for $550,000. The
Corporation also assumed the outstanding mortgage on this property. Prior
to the acquisition of these assets, the Corporation leased them for $54,891
(1994 - $73,188).
Spriet Associates London Limited, a company controlled by the Corporation's
Chairman of the Board, was paid $56,614 (1994 - $70,239) for engineering
services provided to the Corporation.
Red Lion Leasing Limited, a company controlled by the Corporation's
Chairman of the Board, was paid $23,197 (1994 - $17,588) for vehicles it
leased to the Corporation.
16. Income taxes
Income tax expense differs from the amount which would be obtained by
applying the combined Federal/Provincial statutory income tax rate to the
respective period's earnings before income taxes. The difference results
from the following items:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Combined basic Canadian federal and
provincial income tax rates 44.6% 44.3%
Provision for income taxes based on above rates $1,292,117 $2,638,674
Increase (decrease) resulting from:
Manufacturing and processing credits (150,777) (295,328)
Items deductible for tax in excess of accounting (34,394) (261,415)
</TABLE>
-17-
<PAGE>
Vytec Corporation
Notes to consolidated financial statements
November 30, 1995 and 1994
- ------------------------------------------
16. Income taxes (Continued)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Lower rate on earnings of foreign subsidiaries (56,229) -
Effect of application of loss carryforwards of
foreign subsidiaries - (176,291)
Losses of foreign subsidiary not tax affected 55,255 -
Other (21,888) (6,863)
----------- ----------
$ 1,084,084 $1,898,777
----------- ----------
----------- ----------
</TABLE>
17. Deferred income taxes
The tax effects of temporary differences giving rise to a deferred tax
liability (asset) are as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Deprecation and amortization $ 996,168 $ 828,783
Unrealized intercompany inventory profits (67,109) (38,506)
Product warranty costs (438,057) (413,000)
Workers' compensation reserve - 19,768
Deferred taxes of foreign subsidiaries (50,043) (8,024)
Other - 14,955
---------- ----------
$ 440,959 $ 403,976
---------- -----------
---------- -----------
</TABLE>
18. Purchase of business - Procanpol Sp z.o.o.
Effective October 31, 1994, the Corporation acquired a 51% interest in
Procanpol Sp z.o.o., a vinyl siding distribution company operating in
Poland, for cash payment of $99,896. The acquisition was accounted for
using the purchase method. The results of the Corporation include the
operating results of Procanpol Sp z.o.o. effective from January 1, 1995 as
the company was in a start-up phase until that time. The acquisition is
summarized as follows:
Net assets of Procanpol Sp z.o.o. at date of acquisition $195,875
Value of net assets acquired (@ 51%) 99,896
Minority interest (@ 49%) 95,979
-18-
<PAGE>
Vytec Corporation
Notes to consolidated financial statements
November 30, 1995 and 1994
- ------------------------------------------
19. Share capital
<TABLE>
<CAPTION>
Authorized
Unlimited 8% cumulative redeemable and
retractable at $1, non-voting,
Class A preference shares
5,000 common shares
1995 1994
---- ----
<S> <C> <C>
Issued
2,008,979 Class A preference shares $ 2,008,979 $2,008,979
4,100 common shares 8,532,256 32,256
----------- ----------
$10,541,235 $2,041,235
----------- ----------
----------- ----------
</TABLE>
On November 30, 1995 the stated capital of the common shares was increased
by $8,500,000 pursuant to a resolution of the Board of Directors under
Section 24(6) of the Ontario Business Corporations Act.
20. Export sales
The Corporation is principally engaged in the production of vinyl siding
and related home improvement products in Canada for sale to customers in
Canada, the United States, Australia, New Zealand and Poland. Financial
information by geographic area is summarized in the accompanying table:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Canada $17,448,197 $18,148,970
United States 44,777,995 41,113,355
Australia 2,849,208 4,226,446
New Zealand 1,858,862 1,465,950
Poland 3,582,241 -
----------- -----------
$70,516,503 $64,954,721
----------- -----------
----------- -----------
</TABLE>
21. Sales to major customer
The Corporation's largest customer accounted for approximately 11% and 13%
of net sales in 1995 and 1994, respectively. Approximately $735,280 and
$624,231, is included in accounts receivable from this customer at November
30, 1995 and 1994, respectively.
-19-
<PAGE>
Vytec Corporation
Notes to consolidated financial statements
November 30, 1995 and 1994
- ------------------------------------------
22. Collective bargaining agreement
The Corporation's collective bargaining agreement with its hourly paid
workforce in London, Canada expires September 28, 1996.
23. Subsequent event
On December 1, 1995, all of the Corporation's share capital was acquired by
Fibreboard Corporation, a United States public company. To affect this
transfer, Vytec Corporation was amalgamated with 1157490 Ontario Limited
(formerly Vytec (B.C.) Inc.), Vytec International Corp and 1155714 Ontario
Inc. (the company Fibreboard Corporation used to acquire its interest in
the Corporation). The amalgamated entity continues to operate under the
name "Vytec Corporation".
Fibreboard Corporation has advanced the Corporation a US $25,000,000 note
payable. Part of the proceeds of the note were used to retire the bank
indebtedness owing to the Bank of Montreal (Note 8) and the long-term debt
excluding the advances owing to the ANZ Bank (Note 10). The US $25,000,000
advance from Fibreboard Corporation bears interest at 7% and has no set
terms of repayment.
-20-
<PAGE>
FIBREBOARD CORPORATION
Pro Forma Combined Balance Sheet
Reflecting the Acquisition of Vytec Corporation
As of September 30, 1995
(Unaudited)
(in 000's)
<TABLE>
<CAPTION>
Fibreboard Currency
Corporation Vytec Translation Pro forma Adj. Pro forma
(U.S. $) (Cdn. $) Adjustments Adjustments Key Combined
----------- --------- ------------ ----------- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
Current assets:
Cash 147,271 201 (52) (38,726) (1) 108,694
Receivables 46,684 13,450 (3,448) (888) (2) 55,798
Current portion notes receivable 6,188 192 (49) 6,331
Inventories 50,568 10,027 (2,571) 58,024
Other current assets 13,196 279 (71) 13,404
----------- --------- ------------ ----------- ---------
Total current assets 263,907 24,149 (6,191) (39,614) 242,251
Property, plant and equipment, net 72,353 12,723 (3,262) 1,714 (3) 83,528
Notes receivable 6,489 321 (82) 6,728
Goodwill 67,328 0 19,805 (4) 87,133
Other assets 17,460 271 (70) (56) 17,605
----------- --------- ------------ ----------- ---------
Total operating assets 427,537 37,464 (9,605) (18,151) 437,245
Asbestos-related assets 839,877 839,877
----------- --------- ------------ ----------- ---------
Total assets 1,267,414 37,464 (9,605) (18,151) 1,277,122
----------- --------- ------------ ----------- ---------
----------- --------- ------------ ----------- ---------
Current liabilities:
Current portion of debt 1,105 7,262 (1,861) (4,851) (5) 1,655
Accounts payable and accruals 147,747 10,887 (2,792) (167) (2,6) 155,675
Reserve for asbestos-related costs 2,700 2,700
----------- --------- ------------ ----------- ---------
Total current liabilities 151,552 18,149 (4,653) (5,018) 160,030
Long-term debt 6,989 7,199 (1,846) (5,280) (5) 7,062
Reserve for asbestos-related costs 9,002 9,002
Other long-term liabilities 21,334 1,196 (306) (721) (6) 21,503
Deferred income taxes 1,822 441 (113) 660 (7) 2,810
----------- --------- ------------ ----------- ---------
Total operating liabilities 190,699 26,985 (6,918) (10,359) 200,407
Asbestos-related liabilities 845,399 845,399
Stockholders' equity 231,316 10,479 (2,687) (7,792) (8) 231,316
----------- --------- ------------ ----------- ---------
Total liabilities and stockholders' equity 1,267,414 37,464 (9,605) (18,151) 1,277,122
----------- --------- ------------ ----------- ---------
----------- --------- ------------ ----------- ---------
</TABLE>
See accompanying notes.
-21-
<PAGE>
FIBREBOARD CORPORATION
Pro Forma Combined Income Statement
Reflecting the Acquisition of Vytec Corporation
Nine Months Ended September 30, 1995
(Unaudited)
(in 000's, except per share data)
<TABLE>
<CAPTION>
Fibreboard Currency
Corporation Vytec Translation Pro forma Adj. Pro forma
(U.S. $) (Cdn. $) Adjustments Adjustments Key Combined
----------- --------- ------------ ----------- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
Net sales 277,640 50,262 (13,925) (2,813) (a) 311,164
Cost of sales (201,104) (37,362) 10,351 2,503 (b) (225,612)
----------- --------- ------------ ----------- ---------
Gross margin 76,536 12,900 (3,574) (310) 85,552
Selling and administrative costs (57,547) (7,785) 2,157 8 (b) (63,167)
Asbestos-related items 4,000 4,000
Interest expense, net (6,007) (815) 226 (1,643) (c) (8,239)
Interest and other income 1,450 (100) 28 1,378
----------- --------- ------------ ----------- ---------
Income from continuing operations
before income taxes 18,432 4,200 (1,163) (1,945) 19,524
Income taxes (7,373) (1,219) 338 778 (d) (7,476)
----------- --------- ------------ ----------- ---------
Income from continuing operations 11,059 2,981 (825) (1,167) 12,048
----------- --------- ------------ ----------- ---------
----------- --------- ------------ ----------- ---------
Earnings per share:
Primary 1.23 1.34
----------- ---------
----------- ---------
Fully diluted 1.22 1.33
----------- ---------
----------- ---------
Common equivalent shares outstanding:
Primary 9,016 9,016
Fully diluted 9,036 9,036
</TABLE>
See accompanying notes.
-22-
<PAGE>
FIBREBOARD CORPORATION
Pro Forma Combined Income Statement
Reflecting the Acquisition of Vytec Corporation
Year Ended December 31, 1994
(Unaudited)
(in 000's, except per share data)
<TABLE>
<CAPTION>
Fibreboard Currency
Corporation Vytec Translation Pro forma Adj. Pro forma
(U.S. $) (Cdn. $) Adjustments Adjustments Key Combined
----------- --------- ------------ ----------- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
Net sales 183,396 64,955 (17,289) (4,335) (a) 226,727
Cost of sales (132,861) (47,549) 12,656 3,687 (b) (164,067)
----------- --------- ------------ ----------- ---------
Gross margin 50,535 17,406 (4,633) (648) 62,660
Selling and administrative costs (35,392) (10,517) 2,799 (53) (b) (43,163)
Asbestos-related items 0
Interest expense, net (4,931) (933) 248 (1,523) (c) (7,139)
Interest and other income 3,697 3,697
----------- --------- ------------ ----------- ---------
Income from continuing operations
before income taxes 13,909 5,956 (1,586) (2,224) 16,055
Income taxes (5,633) (1,972) 525 901 (d) (6,179)
----------- --------- ------------ ----------- ---------
Income from continuing operations 8,276 3,984 (1,061) (1,323) 9,876
----------- --------- ------------ ----------- ---------
----------- --------- ------------ ----------- ---------
Earnings per share:
Primary 0.92 1.10
----------- ---------
----------- ---------
Fully diluted 0.92 1.10
----------- ---------
----------- ---------
Common equivalent shares outstanding:
Primary 8,986 8,986
Fully diluted 8,992 8,992
</TABLE>
See accompanying notes.
-23-
<PAGE>
FIBREBOARD CORPORATION
Notes to Pro Forma Combined Financial Statements
Reflecting the Acquisition of Norandex Inc.
(Unaudited)
(In 000's)
1. Principles of Presentation:
On November 30, 1995 Fibreboard Corporation acquired all the outstanding
stock of Vytec Corporation, a Canadian manufacturer of exterior vinyl
siding building products, for approximately $38,700 in cash. The
allocation of the purchase price resulted in goodwill of approximately
$19,800 which will be amortized over 30 years.
The audited pro forma combined balance sheet as of September 30, 1995
give effect to the transaction as though it had occurred on September 30,
1995 and is based on the historical balance sheet of Fibreboard as of
September 30, 1995 and the historical balance sheet of Vytec Corporation
as of November 30, 1995.
The unaudited pro forma combined income statements for the year ended
December 31, 1994 and for the nine months ended September 30, 1995 give
effect to the transaction as though it had occurred on January 1, 1994 and
January 1, 1995. The pro forma combined income statements are based on the
historical income statements of Fibreboard for the year ended December 31,
1994 and for the nine months ended September 30, 1995 and the historical
income statements of Vytec Corporation for the year ended November 30,
1994 and the nine months ended August 31, 1995.
The unaudited pro forma combined financial statements give effect to the
acquisition transaction using the purchase method of accounting and the
adjustments described below.
Because the pro forma statements include only the adjustments described
below, they should not be considered indicative of the results that would
have occurred if the combination had been in effect on the dates indicated
or which may be obtained in the future. No attempt has been made to
quantify in the pro forma statements additional costs which may be
incurred as a result of the combination.
The pro forma statements should be read in conjunction with the
consolidated financial statements of Fibreboard Corporation and
Vytec Corporation.
-24-
<PAGE>
FIBREBOARD CORPORATION
Notes to Pro Forma Combined Financial Statements
Reflecting the Acquisition of Norandex Inc.
(Unaudited)
(In 000's)
2. Pro Forma Adjustments:
The following adjustments are incorporated in the pro forma combined income
statements:
<TABLE>
<CAPTION>
Inc/(Dec) Reported Pre-Tax Income
Year Ended Nine Months Ended
12/31/94 9/30/95
-------- -------
<S> <C> <C>
a. Adjust sales to reflect intercompany
sales from Vytec Corporation to
Fibreboard Corporation (4,335) (2,813)
b. Adjust depreciation and amortization
to reflect revised basis in property,
plant and equipment, to amortize
goodwill and reduce cost of sales by
intercompany sales in a. above. 3,634 2,511
c. Adjust interest expense to reflect the
acquisition as if it had been purchased
with Fibreboard's credit facility at
rates which would have then been in
affect. (1,523) (1,643)
d. Adjust income tax provision to consider
items a., b. and c. above. 901 778
</TABLE>
The following adjustments are incorporated in the pro forma combined balance
sheet:
1. Adjust the cash balance to reflect the purchase price.
2. Adjust receivables for accrued cash discounts and eliminate intercompany
balances.
3. Adjust property, plant and equipment to appraised fair market values.
4. Adjust goodwill to reflect the excess of the purchase price of Vytec
Corporation over the net assets acquired.
5. Adjust debt to reflect payment of specified outstanding balances at the
acquisition date.
6. Reclass of a long term liability to accounts payable and accruals.
7. Adjust deferred income taxes to reflect the increase in the financial basis
of assets acquired as compared to their tax basis.
8. Adjust stockholders' equity to reflect Vytec Corporation as a wholly-owned
subsidiary.
-25-
w<PAGE>
Consent of Independent Public Accountants
We consent to the use in this Form 8-K/A of Fibreboard Corporation of our report
dated January 5, 1996, relating to the financial statements of Vytec Corporation
and the incorporation by reference to previously filed Registration Statements
on Form S-8, File No. 33-60412, No. 33-26449, and No. 33-26450.
Deloitte & Touche
London, Ontario, Canada
-26-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIBREBOARD CORPORATION
----------------------
(Registrant)
Dated: February 13, 1996 By: /s/ Garold E. Swan
--------------------------
Garold E. Swan
Vice President and Controller
-27-
