<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
April 29, 1994
--------------
Scotsman Industries, Inc.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
----------------------------------------------
(State or other jurisdiction of incorporation)
0-10182 36-3635892
------------------------ --------------------------------
(Commission File Number) (IRS Employer Identification No.)
775 Corporate Woods Parkway
Vernon Hills, Illinois 60061
--------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 215-4500
--------------
Exhibit Index is located on page 34.<PAGE>
Item 2. Acquisition or Disposition of Assets
On April 29, 1994, the Registrant acquired DFC Holding
Corporation, a Delaware corporation ("DFC"), and its wholly-owned
subsidiary, The Delfield Company ("Delfield"), and Whitlenge
Acquisition Limited ("WAL"), a private company limited by shares
registered in England, and its wholly-owned subsidiary, Whitlenge
Drink Equipment Limited ("Whitlenge"). DFC and WAL were formerly
controlled by Onex Corporation, an Ontario corporation, and EJJM, an
Ohio limited partnership of which the sole managing general partner is
Matthew O. Diggs, Jr.
The acquisitions took place pursuant to the terms and
conditions of (i) a Merger Agreement, dated as of January 11, 1994, as
amended by the First Amendment thereto, dated March 17, 1994 (the
"Merger Agreement"), among the Registrant, Scotsman Acquisition
Corporation, a wholly-owned subsidiary of the Registrant, DFC,
Delfield, Onex Corporation, Onex DHC LLC, Pacific Mutual Life
Insurance Company, PM Group Life Insurance Co., EJJM, Matthew O.
Diggs, Jr., Timothy C. Collins, W. Joseph Manifold, Charles R.
McCollom, Anita J. Moffatt Trust, Anita J. Moffatt, Remo Panella,
Teddy F. Reed, Robert L. Schafer, Graham E. Tillotson, John A. Tilmann
Trust, John A. Tilmann, Kevin E. McCrone, Michael P. McCrone, Ronald
A. Anderson, and Continental Bank, N.A., providing for the merger (the
"Merger") of Scotsman Acquisition Corporation with and into DFC, and
(ii) a Share Acquisition Agreement, dated as of January 11, 1994, as
amended by the First Amendment thereto, dated March 17, 1994 (the
"Share Acquisition Agreement"), among the Registrant, WAL, Whitlenge,
Onex Corporation, Onex U.S. Investments, EJJM, Matthew O. Diggs, Jr.,
Timothy C. Collins, Graham F. Cook, Christopher R.L. Wheeler, Michael
de St. Paer and John Rushton, providing for the acquisition (the
"Share Acquisition") by Scotsman Drink Limited, a wholly-owned
subsidiary of the Registrant, of all of the outstanding capital stock
of WAL. The consideration paid for all of the outstanding capital
stock of DFC and WAL in the Merger and the Share Acquisition consisted
of (i) $30.4 million in cash, (ii) 1,200,000 shares of common stock of
the Registrant, and (iii) 2,000,000 shares of Series A $0.62
cumulative convertible preferred stock of the Registrant, with an
aggregate liquidation preference of $22.5 million and which are
convertible, at the initial conversion rate, into 1,525,400 shares of
common stock of the Registrant.
The amount of the consideration paid was determined on the
basis of negotiations between the Registrant, Onex Corporation and the
former shareholders of DFC and WAL. Funds for the cash portion of the
consideration paid in the Merger and the Share Acquisition were
obtained under a Credit Agreement, dated April 29, 1994, among certain
wholly-owned subsidiaries of the Registrant, the banks named therein,
and The First National Bank of Chicago, as agent, a copy of which was
- 2 - <PAGE>
filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended April 3, 1994.
There was no material relationship between, on the one hand,
Onex Corporation or any of the shareholders of DFC and WAL and, on the
other hand, the Registrant, any affiliate of the Registrant, any
person who was a director or officer of the Registrant prior to the
Merger and the Share Acquisition, or any associate of any such person.
Under the terms of the Merger Agreement, however, Timothy C. Collins
and Matthew O. Diggs, Jr. were appointed directors of the Registrant
following consummation of the Merger and the Share Acquisition. Mr.
Collins was a shareholder of DFC and WAL and is a Managing Director of
an affiliate of Onex, and Matthew O. Diggs, Jr., is the sole managing
general partner of EJJM, a former shareholder of DFC and WAL. Kevin
E. McCrone, the president of Delfield, and Michael de St. Paer, the
managing director of Whitlenge, also became executive officers of the
Registrant following consummation of the Merger and the Share
Acquisition.
Delfield, which is headquartered in Mt. Pleasant, Michigan,
manufactures and sells refrigerated foodservice equipment, primarily
in the United States. Whitlenge, which is located near Birmingham,
England, manufactures and sells drink dispensing equipment, primarily
in the United Kingdom and other countries in Western Europe. The
Registrant intends to continue to operate such businesses and to use,
for such purposes, plant, equipment or physical property acquired in
connection with the acquisition.
Additional information responsive to this item has been
previously reported in the Registrant's Registration Statement on Form
S-4, as amended (No. 33-52033).
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired
-------------------------------------------
The following financial statements have been previously
reported in the Registrant's Registration Statement on Form S-4, as
amended (No. 33-52033): (i) the audited financial statements of DFC
and Delfield for the years ended December 31, 1993 and 1992 and for
the period from April 27, 1991 to December 31, 1991, (ii) the audited
financial statements of the Delfield Division of Alco Standard
Corporation for the period from October 1, 1990 to April 26, 1991 and
for the year ended September 30, 1990, (iii) the unaudited condensed
consolidated financial statements of WAL and subsidiaries for the
three months ended December 31, 1993 and December 31, 1992, (iv) the
audited consolidated financial statements of WAL as of and for the
year ended September 30, 1993 and the six-month period ended September
- 3 - <PAGE>
30, 1992, and (v) the audited financial statements of Whitlenge for
the six-month period ended March 31, 1992 and the year ended September
30, 1991.
The following financial statements are filed as a part of
this report:
(1) DFC Holding Corporation d/b/a The Delfield Company:
-- Statements of Financial Position as of March 31, 1994
(Unaudited) and December 31, 1993
-- Income Statements for the three months ended March 31,
1994 and 1993 (unaudited)
-- Statements of Cash Flow for the three months ended
March 31, 1994 and 1993 (unaudited)
-- Notes to Financial Statements for the three months
ended March 31, 1994 and 1993.
(2) Whitlenge Acquisition Limited and Subsidiaries:
-- Condensed Consolidated Income Statements for the Three
Months Ended 31 March 1994 and 31 March 1993
(unaudited)
-- Condensed Statements of Accumulated Deficit and
Reconciliation of Movements in Shareholders' Funds for
the Three Months Ended 31 March 1994 and 31 March 1993
(unaudited)
-- Condensed Consolidated Income Statements for the Six
Months Ended 31 March 1994 and 31 March 1993
(unaudited)
-- Condensed Statements of Accumulated Deficit and
Reconciliation of Movements in Shareholders' Funds for
the Six Months Ended 31 March 1994 and 31 March 1993
(unaudited)
-- Condensed Consolidated Balance Sheets as of 31 March
1994 (Unaudited) and 30 September 1993
-- Condensed Consolidated Cash Flow Statements for the Six
Months Ended 31 March 1994 and 31 March 1993
(unaudited)
- 4 - <PAGE>
-- Reconciliation of Operating Profit to Net Cash Inflow
from Operating Activities for the Six Months Ended 31
March 1994 and 31 March 1993
-- Notes to the Condensed Financial Statements for the
Three Months and Six Months Ended 31 March 1994 and 31
March 1993
(b) Pro Forma Financial Statements.
-------------------------------
The following pro forma financial statements are filed as
part of this report:
-- Unaudited Pro Forma Condensed Consolidated Balance Sheet as
of January 2, 1994
-- Unaudited Pro Forma Condensed Combining Balance Sheet as of
January 2, 1994
-- Unaudited Pro Forma Condensed Consolidated Statement of
Income for the Year Ended January 2, 1994
-- Unaudited Pro Forma Condensed Combining Statement of Income
for the Year Ended January 2, 1994
-- Unaudited Pro Forma Condensed Consolidated Balance Sheet as
of April 3, 1994
-- Unaudited Pro Forma Condensed Combining Balance Sheet as of
April 3, 1994
-- Unaudited Pro Forma Condensed Consolidated Statement of
Income for the Three Months Ended April 3, 1994
-- Unaudited Pro Forma Condensed Combining Statement of Income
for the Three Months Ended April 3, 1994.
(c) Exhibits
--------
Exhibit 2.1 - Agreement and Plan of Merger, dated as of
January 11, 1994, among Scotsman Industries,
Inc., Scotsman Acquisition Corporation, DFC
Holding Corporation, The Delfield Company,
Onex Corporation, Onex DHC LLC, Pacific
Mutual Life Insurance Co., PM Group Life
Insurance Co., EJJM, Matthew O. Diggs, Jr.,
Timothy C. Collins, W. Joseph Manifold,
- 5 - <PAGE>
Charles R. McCollom, Anita J. Moffatt Trust,
Anita J. Moffatt, Remo Panella, Teddy F.
Reed, Robert L. Schafer, Graham E. Tillotson,
John A. Tilmann Trust, John A. Tilmann, Kevin
E. McCrone, Michael P. McCrone, Ronald A.
Anderson and Continental Bank N.A.
(incorporated by reference herein to the
Company's 8-K, dated January 13, 1994, File
No. 0-10182), as amended by the First
Amendment to Agreement and Plan of Merger,
dated as of March 17, 1994 (incorporated by
reference herein to the Company's 10-K for
the fiscal year ended January 2, 1994).
Exhibit 2.2 - Share Acquisition Agreement, dated as of
January 11, 1994, among Scotsman Industries,
Inc., Whitlenge Acquisition Limited,
Whitlenge Drink Equipment Limited, Timothy C.
Collins, Graham F. Cook, Christopher R.L.
Wheeler, Michael de St. Paer and John Rushton
(incorporated by reference herein to the
Company's 8-K, dated January 13, 1994, File
No. 0-10182), as amended by the First
Amendment to Share Acquisition Agreement,
dated as of March 17, 1994 (incorporated by
reference herein to the Company's 10-K for
the fiscal year ended January 2, 1994).
Exhibit 4.1 - Rights Agreement dated as of April 14, 1989
between Scotsman Industries, Inc. and Harris
Trust & Savings Bank (incorporated herein by
reference to the Company's 8-K, dated April
25, 1989, File No. 0-10182), as amended by
Amendment No. 1 thereto, dated as of January
11, 1994 (incorporated herein by reference to
Scotsman Industries, Inc. Amendment No. 4 to
General Form for Registration of Securities
on Form 10/A, as filed with the Commission on
January 27, 1994, File No. 0-10182).
Exhibit 4.2 - Certificate of Designations of Series A $0.62
Cumulative Convertible Preferred Stock of
Scotsman Industries, Inc. (incorporated by
reference to the Company's Registration
Statement on Form S-4, as amended, No. 33-
52033)
Exhibit 12 - Scotsman Industries, Inc. Ratio of Earnings
to Fixed Charges
- 6 - <PAGE>
DFC HOLDING CORPORATION
D/B/A THE DELFIELD COMPANY
STATEMENTS OF FINANCIAL POSITION
As of March 31, 1994 (Unaudited) and December 31, 1993
($000'S omitted)
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
-------- --------
<S> <C> <C>
ASSETS (Unaudited)
Current Assets
Cash $ 348 $ 499
Accounts receivable, net of allowances 10,888 9,920
Inventories 12,971 13,410
Prepaid expenses and other current assets 556 846
-------- --------
Total current assets 24,763 24,675
Property, plant and equipment 20,664 20,454
Less: accumulated depreciation 2,531 2,276
Net property, plant and equipment 18,133 18,178
Debt issuance costs, net of amortization 634 676
Other assets, net of amortization 498 526
-------- --------
Total assets $ 44,028 $ 44,055
======== ========
LIABILITIES AND DEFICIT
Current Liabilities
Trade accounts payable $ 5,179 $ 4,113
Accrued expenses 8,980 8,050
Current portion, long-term liabilities 4,090 4,088
-------- --------
Total current liabilities 18,249 16,251
Deferred federal income taxes 1,688 1,688
Revolving note payable 7,900 10,500
Long-term debt 16,040 16,801
Other long-term liabilities 1,069 1,094
-------- --------
Total liabilities 44,946 46,334
Commitments and contingencies 0 0
Preferred stock 0 0
Common stock 64 64
Additional paid-in-capital 6,381 6,381
Retained deficit (7,363) (8,724)
- 7 - <PAGE>
-------- --------
Total deficit (918) (2,279)
-------- --------
Total liabilities and deficit $ 44,028 $ 44,055
======== ========
</TABLE>
The accompanying notes are an integral part of these Statements of
Financial Position.
- 8 - <PAGE>
DFC HOLDING CORPORATION
D/B/A THE DELFIELD COMPANY
INCOME STATEMENTS
For the three months ended March 31, 1994, and 1993
Unaudited
($000'S omitted)
<TABLE>
<CAPTION>
For the three months ended
March 31, March 31,
1994 1993
-------- --------
<S> <C> <C>
Net sales $ 24,582 $ 19,014
Cost of sales 18,578 14,354
-------- --------
Gross margin 6,004 4,660
Selling, general and administrative costs 3,241 2,996
-------- --------
Operating income 2,763 1,664
Interest expense 563 600
-------- --------
Pretax income 2,200 1,064
Provision for income taxes 839 407
-------- --------
Net income $ 1,361 $ 657
======== ========
</TABLE>
The accompanying notes are an integral part of these Income Statements
- 9 - <PAGE>
DFC HOLDING CORPORATION
D/B/A THE DELFIELD COMPANY
STATEMENTS OF CASH FLOW
For the three months ended March 31, 1994, and 1993
Unaudited
($000'S omitted)
<TABLE>
<CAPTION>
March 31, March 31,
1994 1993
-------- --------
<S> <C> <C>
Operating Activities
Net income $ 1,361 $ 657
Adjustments to net income to net cash
provided by operating activities:
Depreciation and amortization 322 285
Decrease (increase) in inventories 439 (1,247)
(Increase) in receivables (968) (1,607)
Increase in accounts payable and
accrued expenses 1,119 101
Other working capital changes 1,167 707
Decrease (increase) in other liabilities (25) 1
-------- --------
Net cash provided by (used in) operating activities 3,415 (1,103)
Investing Activities
Purchase of plant and equipment (210) (241)
Net decrease (increase) in other assets 3 (7)
-------- --------
Net cash used in investing activities (207) (248)
Financing Activities
(Decrease) Increase in revolving note payable (2600) 800
Payments of long-term debt (759) (58)
Issuance of stock 0 145
-------- --------
Net cash (used in) provided by
financing activities (3,359) 887
Net (decrease) in cash (151) (464)
Cash at beginning of period 499 1,267
-------- --------
Cash at end of period $ 348 $ 803
======== ========
Interest paid during the period 571 633
Income taxes (refunded) paid during
the period (605) 41
- 10 - <PAGE>
</TABLE>
The accompanying notes are an integral part of these Statements of
Cash Flows.
- 11 - <PAGE>
DFC HOLDING CORPORATION
D/B/A THE DELFIELD COMPANY
NOTES TO FINANCIAL STATEMENTS
For the three months ended March 31, 1994 and 1993
1. Basis of Presentation
The condensed consolidated financial statements include the accounts
of the DFC Holding Company and its subsidiaries (the "Company").
Accounting policies used in the preparation of the quarterly condensed
financial statements are consistent with the accounting policies
described in the notes to the financial statements for the year ended
December 31, 1993. In the opinion of management, the interim
financial statements reflect all adjustments which are necessary for a
fair presentation of the Company's financial position, results of
operations and cash flows for the interim periods presented. The
results for such interim periods are not necessarily indicative of
results for the full year. The financial statements should be read in
conjunction with the consolidated financial statements for the year
ended December 31, 1993 and the accompanying notes thereto.
2. Inventories
<TABLE>
March 31, 1994 December 31, 1993
(Unaudited)
$000's $000's
-------- --------
<S> <C> <C>
Raw materials $ 3,285 $ 3,867
Work in progress 5,763 5,802
Finished goods 3,923 3,741
-------- --------
$ 12,971 $ 13,410
======== ========
</TABLE>
3. Contingency
In February 1992, a fire at a hotel is reported to have resulted in
the deaths of several persons, injuries to other persons, and
significant property damage. Lawsuits alleging that a refrigerator
manufactured by the Company was the cause of the fire have been
brought against the Company by several parties, including the hotel
and the estates of three deceased persons.
Management believes that the equipment was manufactured and sold by
the former owner which has indemnified the Company for losses from
certain product liability claims involving that equipment. Management
believes that insurance coverage is adequate to protect it from
significant loss as a result of the fire if, and to the extent that,
- 12 - <PAGE>
the indemnification obligation is not applicable to certain losses or
the former owner is unable to fulfill its indemnification obligation.
- 13 - <PAGE>
WHITLENGE ACQUISITION LIMITED AND SUBSIDIARIES
Financial Statements for the Three Months Ended
31 March 1994 and 31 March 1993
CONDENSED CONSOLIDATED INCOME STATEMENTS
In thousands of pounds sterling
(Unaudited)
<TABLE>
<CAPTION>
3 Months 3 Months
Ended Ended
31 March 1994 31 March 1993
--------- ---------
<S> <C> <C>
Total sales 2,902 2,889
--------- ---------
Cost of sales 2,014 1,999
Selling, general and administrative expenses 581 650
--------- ---------
Total costs and operating expenses 2,595 2,649
--------- ---------
Income from operations 307 240
Net interest payable 41 100
--------- ---------
Income before income taxes 266 140
Provision for income taxes 96 51
--------- ---------
Net income 170 89
Preference stock dividends 30 30
--------- ---------
Net income attributable to common shareholders 140 59
========= =========
</TABLE>
CONDENSED STATEMENTS OF ACCUMULATED DEFICIT AND RECONCILIATION
OF MOVEMENTS IN SHAREHOLDERS' FUNDS
(Unaudited)
<TABLE>
<S> <C> <C>
Accumulated deficit brought forward (1,961) (2,657)
Net income 170 89
--------- ---------
(1,791) (2,568)
Less dividends declared:
Preference stock 30 30
--------- ---------
Accumulated deficit at period end (1,821) (2,598)
Capital stock brought forward 3,000 3,000
--------- ---------
Shareholders' equity at period end 1,179 402
========= =========
</TABLE>
- 14 - <PAGE>
All items dealt with in arriving at the income from operations relate
to continuing activities.
The Company has no recognized gains and losses other than those
included in income, and therefore no separate statement of total
recognized gains and losses has been presented.
There is no difference between the results for the periods above, and
the historical cost equivalent.
The accompanying notes form an integral part of these financial
statements.
- 15 - <PAGE>
WHITLENGE ACQUISITION LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
As of 31 March 1994 (Unaudited) and 30 September 1993
In thousands of pounds sterling
<TABLE>
<CAPTION>
31 March 30 Sept.
1994 1993
--------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents 1,399 2,260
Accounts receivable, net of allowance
for doubtful accounts of 18 2,223 1,978
Inventories 2,965 2,805
Other current assets 141 138
--------- ---------
Total current assets 6,728 7,181
Property, plant and equipment 612 600
Other non-current assets 1 1
--------- ---------
Total assets 7,341 7,782
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current maturities of long term debt 748 745
Accounts payable 1,757 2,001
Accrued expenses 505 905
Current income taxes 701 539
--------- ---------
Total current liabilities 3,711 4,190
Long term debt, exclusive of current maturities 2,450 2,781
Other liabilities 1 1
Total liabilities 6,162 6,972
--------- ---------
Commitments and contingent liabilities -- --
Shareholder's equity
Common stock: par value 1 pound sterling
Class A 150 150
Class B 775 775
Class C 75 75
Preference Stock:
Par value 100 pounds sterling 2,000 2,000
- 16 - <PAGE>
Accumulated deficit (1,821) (2,190)
--------- ---------
Total shareholders' equity 1,179 810
--------- ---------
Total liabilities and shareholders' equity 7,341 7,782
========= =========
</TABLE>
The accompanying notes form an integral part of these financial
statements.
- 17 - <PAGE>
WHITLENGE ACQUISITION LIMITED AND SUBSIDIARIES
Financial Statements for the Six Months Ended
31 March 1994 and 31 March 1993
CONDENSED CONSOLIDATED INCOME STATEMENTS
In thousands of pounds sterling
(Unaudited)
<TABLE>
<CAPTION>
6 Months 6 Months
Ended Ended
31 March 1994 31 March 1993
--------- ---------
<S> <C> <C>
Total sales 6,334 6,201
--------- ---------
Cost of sales 4,409 4,287
Selling, general and administrative expenses 1,161 1,186
--------- ---------
Total costs and operating expenses 5,570 5,473
--------- ---------
Income from operations 764 728
Net interest payable 94 154
--------- ---------
Income before income taxes 670 574
Provision for income taxes 241 207
--------- ---------
Net income 429 367
Preference stock dividends 60 60
--------- ---------
Net income attributable to common shareholders 369 307
========= =========
</TABLE>
CONDENSED STATEMENTS OF ACCUMULATED DEFICIT AND RECONCILIATION
OF MOVEMENTS IN SHAREHOLDERS' FUNDS
(Unaudited)
<TABLE>
<S> <C> <C>
Accumulated deficit brought forward (2,190) (2,905)
Net income 429 367
--------- ---------
(1,761) (2,538)
Less dividends declared:
Preference stock 60 60
--------- ---------
Accumulated deficit at period end (1,821) (2,598)
Capital stock brought forward 3,000 3,000
--------- ---------
Shareholders' equity at period end 1,179 402
========= =========
</TABLE>
All items dealt with in arriving at the income from operations relate
to continuing activities.
- 18 - <PAGE>
The Company has no recognized gains and losses other than those
included in income, and therefore no separate statement of total
recognized gains and losses has been presented.
There is no difference between the results for the periods above, and
the historical cost equivalent.
- 19 - <PAGE>
WHITLENGE ACQUISITION LIMITED AND SUBSIDIARIES
Financial Statements for the Six Months Ended
31 March 1994 and 31 March 1993
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
In thousands of pounds sterling
(Unaudited)
<TABLE>
<CAPTION>
6 Months 6 Months
Ended Ended
31 March 1994 31 March 1993
--------- ---------
<S> <C> <C>
Net cash inflow from operating activities (376) 442
--------- ---------
Returns on investments and servicing of finance
Interest received 37 62
Interest paid (22) (80)
--------- ---------
Net cash outflow from returns on investments
and servicing of finance 15 (18)
Taxation
United Kingdom corporation tax paid (80) --
--------- ---------
Investing activities
Purchases of property, plant and equipment (92) (193)
Net cash outflow from investing activities (92) (193)
Financing
New finance leases 37 --
Bank loans (repaid) taken out (350) (800)
Payment of principal under capital leases (15) (13)
--------- ---------
Net (decrease)/ increase in cash and cash equivalents (861) (582)
Cash and cash equivalents at beginning of period 2,260 2,400
--------- ---------
Cash and cash equivalents at end of period 1,399 1,818
========= =========
</TABLE>
The accompanying notes form an integral part of these financial
statements.
- 20 - <PAGE>
WHITLENGE ACQUISITION LIMITED AND SUBSIDIARIES
Financial Statements for the Six Months Ended
31 March 1994 and 31 March 1993
RECONCILIATION OF OPERATING PROFIT TO
NET CASH INFLOW FROM OPERATING ACTIVITIES
In thousands of pounds sterling
(Unaudited)
<TABLE>
<CAPTION>
6 Months 6 Months
Ended Ended
31 March 1994 31 March 1993
--------- ---------
<S> <C> <C>
Continuing operating activities:
Income from operations 764 728
Depreciation of property, plant and equipment 80 94
(Increase) decrease in accounts receivable (245) (318)
Decrease (Increase) in other current assets (3) 86
(Increase) decrease in inventories (160) (379)
Increase (decrease) in accounts payable (244) 339
Decrease in accrued expenses (568) (108)
--------- ---------
Net cash inflow (outflow) from operating activities (376) 442
========= =========
</TABLE>
The accompanying notes form an integral part of these financial
statements.
- 21 - <PAGE>
WHITLENGE ACQUISITION LIMITED AND SUBSIDIARIES
Financial Statements for the Three Months and Six Months Ended
31 March 1994 and 31 March 1993
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
In thousands of pounds sterling
1. Basis of Presentation
The condensed consolidated financial statements include the accounts
of Whitlenge Acquisition Limited and its subsidiaries (the "Company").
Accounting policies used in the preparation of the quarterly condensed
financial statements are consistent with the accounting policies
described in the notes to the financial statements for the year ended
30 September 1993. In the opinion of management, the interim
financial statements reflect all adjustments which are necessary for a
fair presentation of the Company's financial position, results of
operations and cash flows for the interim periods presented. The
results for such interim periods are not necessarily indicative of
results for the full year. These financial statements should be read
in conjunction with the consolidated financial statements for the year
ended 30 September 1993 and the accompanying notes thereto.
2. Inventories
<TABLE>
<CAPTION>
31 March 30 Sept.
1994 1993
--------- ---------
(Unaudited)
<S> <C> <C>
Raw materials and consumables 2,450 1,920
Work in progress 300 606
Finished goods and goods for resale 215 279
--------- ---------
2,965 2,805
========= =========
</TABLE>
The replacement cost of stocks approximates to the value at which they
are stated in the financial statements.
3. Summary of Differences between UK GAAP and US GAAP
The financial statements are prepared in accordance with United
Kingdom generally accepted accounting principles ("UK GAAP"), which
differs in certain significant respects from United States Generally
Accepted Accounting Principles ("US GAAP"). The approximate
- 22 - <PAGE>
adjustments of significance to net income and shareholders' equity
which would be required under US GAAP are shown in the tables below.
Explanations for the adjustments are given in the notes to the
financial statements for the year ended 30 September 1993.
- 23 - <PAGE>
Adjusted Consolidated Net Income for the Period
-----------------------------------------------
The following table sets out a summary of the amounts reported in the
consolidated income statements and the estimated adjustments required
to conform with US GAAP.
<TABLE>
<CAPTION>
3 Months 3 Months
Ended Ended
31 March 1994 31 March 1993
--------- ---------
(Unaudited) (Unaudited)
<S> <C> <C>
Net income for the period (as reported under UK GAAP) 170 89
Goodwill amortization (21) (21)
Estimated net income for the period under US GAAP 149 68
Preference stock dividends (30) (30)
--------- ---------
Estimated net income attributable to common 119 38
shareholders under US GAAP ========= =========
</TABLE>
<TABLE>
<CAPTION>
6 Months 6 Months
Ended Ended
31 March 1994 31 March 1993
--------- ---------
(Unaudited) (Unaudited)
<S> <C> <C>
Net income for the period (as reported under UK GAAP) 429 367
Goodwill amortization (42) (42)
Estimated net income for the period under US GAAP 387 325
Preference stock dividends (60) (60)
--------- ---------
Estimated net income attributable to common 327 265
shareholders under US GAAP ========= =========
</TABLE>
Adjusted Shareholders' Equity
-----------------------------
The following table sets out a summary of the amounts reported as
consolidated shareholders' equity and the estimated adjustments
required to conform with US GAAP.
<TABLE>
- 24 - <PAGE>
<CAPTION> 31 March 30 Sept.
1994 1993
--------- ---------
(Unaudited)
<S> <C> <C>
Shareholders' equity under UK GAAP 1,179 810
Recognition of goodwill 3,375 3,375
Pension costs (120) (120)
Deferred tax 69 69
Goodwill amortization (168) (126)
Reclassification of preference stock (2,000) (2,000)
--------- ---------
Estimated shareholders' equity under US GAAP 2,335 2,008
========= =========
</TABLE>
Cash Flow Statement
-------------------
Under UK GAAP, the cash flow statement format differs from that under
US GAAP. For US GAAP purposes, the following cash flow headings and
totals would have been reported:
<TABLE>
<CAPTION>
6 Months 6 Months
Ended Ended
31 March 1994 31 March 1993
--------- ---------
(Unaudited) (Unaudited)
<S> <C> <C>
Net cash (used in) provided by operating activities (441) 424
Net cash used in financing activities (328) (813)
Net cash used in investing activities (92) (193)
Net decrease in cash and cash equivalents (861) (582)
</TABLE>
- 25 - <PAGE>
SCOTSMAN INDUSTRIES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Year Ended January 2, 1994 and as of and for the
Three Months Ended April 3, 1994
(000's omitted, except per share data)
Introduction:
The following pro form condensed financial statements should be read in
conjunction with the historical financial statements and related notes
thereto of Scotsman, DFC and WAL previously reported in Scotsman's
Registration Statement on Form S-4, as amended (No. 33-52033), Annual
Report on Form 10-K for the Fiscal Year Ended January 2, 1994, and
Quarterly Report on Form 10-Q for the Quarterly Period Ended April 3,
1994 or included elsewhere in this report. The fiscal year of
Scotsman ends on the Sunday nearest to December 31, the fiscal year of
DFC is December 31 and the fiscal year end of WAL is September 30.
The unaudited pro forma condensed consolidated statements of income for
the year ended January 2, 1994 and for the three months ended April 3,
1994 have been prepared as if the acquisition of DFC and WAL by
Scotsman had occurred at the beginning of Scotsman's 1993 fiscal year
and 1994 fiscal year, respectively. The unaudited pro forma condensed
balance sheets as of January 2, 1994 and April 3, 1994, have been
prepared to reflect the acquisition of DFC and WAL by Scotsman at
January 2, 1994 and April 3, 1994, respectively.
- 26 - <PAGE>
SCOTSMAN INDUSTRIES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of January 2, 1994
(In thousands)
<TABLE>
<CAPTION>
Historical <F1>
----------------------------------
DFC and
WAL Pro Forma
Scotsman Combined<F9> Subtotal Adjustments Pro Forma
-------- ----------- -------- ----------- ---------
<C> <C> <C>
ASSETS
Current Assets
Cash and temporary cash investments $ 8,462 $ 3,889 $ 12,351 $(638)<F3> $ 11,713
Trade accounts and notes receivable, net 28,578 12,887 41,465 0 41,465
Inventories 25,693 17,618 43,311 0 43,311
Deferred income taxes 3,748 119 3,867 0 3,867
Other current assets 1,701 1,053 2,754 0 2,754
-------- -------- -------- -------- --------
Total current assets 68,182 35,566 103,748 (638) 103,110
Properties and equipment, net 19,867 19,078 38,945 0 38,945
Cost of investments in acquired
businesses in excess of net
assets at acquisition, net 11,320 4,874 16,194 69,283 <F7> 85,477
Debt issuance costs 0 676 676 (676)<F5> 0
Other noncurrent assets 3,804 528 4,332 0 4,332
-------- -------- -------- -------- --------
Total assets $103,173 $ 60,722 $163,895 $ 67,969 $231,864
======== ======== ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt and current maturities
of long-term debt and capitalized
lease obligations $ 2,707 $ 5,206 $ 7,913 $ (4,829)<F8> $ 3,084
Trade accounts payable 11,743 7,115 18,858 0 18,858
Accrued income taxes 2,087 807 2,894 0 2,894
Accrued expenses 15,327 9,403 24,730 1,862<F4> 26,592
-------- -------- -------- ------- --------
Total current liabilities 31,864 22,531 54,395 (2,967) 51,428
Long-term debt and capitalized lease
obligations 29,469 31,471 60,940 35,177<F2> 96,117
Deferred income taxes 435 1,703 2,138 0 2,138
Other noncurrent liabilities 7,411 1,276 8,687 2,000<F7> 10,687
-------- -------- -------- -------- --------
Total liabilities 69,179 56,981 126,160 34,210 160,370
Redeemable preferred stock 0 3,000 3,000 (3,000)<F6> 0
Shareholders' equity
Common stock 721 1,564 2,285 (1,444)<F6> 841
Preferred stock 0 0 0 22,500<F6> 22,500
- 27 - <PAGE>
Additional paid in capital 20,557 6,381 26,938 8,499<F6> 35,437
Retained earnings (deficit) 20,855 (6,803) 14,052 6,803<F6> 20,855
Deferred compensation and
unrecognized pension cost (54) 0 (54) 0 (54)
Foreign currency translation adjustment (6,741) (401) (7,142) 401<F6> (6,741)
Less: Common stock held in treasury (1,344) 0 (1,344) 0 (1,344)
-------- -------- -------- -------- --------
Total shareholders' equity 33,994 741 34,735 36,759<F6> 71,494
-------- -------- -------- -------- --------
Total liabilities and shareholders' equity $103,173 $ 60,722 $163,895 $ 67,969 $231,864
======== ======== ======== ========= ========
- 28 - <PAGE>
NOTES:
<FN>
<F1> Includes the balance sheets of Scotsman, DFC, and WAL as of
January 2, 1994, December 31, 1993 and September 30, 1993,
respectively.
<F2> Represents new borrowings required to finance the acquisition
($62,523) net of payment of certain amounts of the acquired entities
existing debt ($32,175), net of current portions ($4,829).
<F3> Represents payment of acquired entities accrued interest
balances with existing cash.
<F4> Includes payment of acquired entities accrued interest balances
with existing cash. Also includes the allocation of the purchase price
to the estimated fair value of the net assets acquired.
<F5> Represents write-off of DFC capitalized debt issuance costs from
a previous recapitalization.
<F6> Represents Scotsman common stock issued ($120) net of acquired
entities common stock retired ($1,564); Scotsman convertible preferred
stock issued ($22,500); additional paid in capital on Scotsman common
stock issued ($14,880) net of retirement of acquired entities
additional paid in capital ($6,381); retirement of acquired entities
net retained earnings balance ($6,803); retirement of acquired
entities redeemable preferred stock ($3,000); and retirement of
acquired entities unfavorable foreign currency translation adjustment
($401).
<F7> Represents the allocation of the purchase price to the estimated
fair value of the net assets acquired.
<F8> Represents the reclassification from current portion to long-
term debt in accordance with Scotsman's new financing agreements.
<F9> See the Unaudited Pro Forma Condensed Combining Balance Sheet as
of January 2, 1994 on the following page.
- 29 - <PAGE>
SCOTSMAN INDUSTRIES, INC.
UNAUDITED PRO FORMA CONDENSED COMBINING BALANCE SHEET
As of January 2, 1994
(In thousands)
</TABLE>
<TABLE>
<CAPTION>
WAL
-----------------------------------------------------
British Pounds Sterling US Dollars
-------------------------------------- ----------------------
Adjust DFC and
to WAL
UK GAAP<F1>US GAAP<F2> US GAAP US GAAP<F3> DFC<F1> Combined
---------- --------- -------- ---------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and temporary cash investments 2,260 0 2,260 $ 3 ,390 $ 499 $ 3,889
Trade accounts and notes receivable, net 1,978 0 1,978 2,967 9,920 12,887
Inventories 2,805 0 2,805 4,208 13,410 17,618
Deferred income taxes 0 79 79 119 0 119
Other current assets 138 0 138 207 846 1,053
------ ------ ------ ------ ------ ------
Total current assets 7,181 79 7,260 10,891 24,675 35,566
Properties and equipment, net 600 0 600 900 18,178 19,078
Cost of investments in acquired
businesses in excess of net
assets at acquisition, net 0 3,249 3,249 4,874 0 4,874
Debt issuance costs 0 0 0 0 676 676
Other noncurrent assets 1 0 1 2 526 528
------ ------ ------ ------ ------ ------
Total assets 7,782 3,328 11,110 $ 16,667 $ 44,055 $ 60,722
====== ====== ====== ====== ====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt and current maturities
of long-term debt and capitalized
lease obligations 745 0 745 $ 1,118 $ 4,088 $ 5,206
Trade accounts payable 2,001 0 2,001 3,002 4,113 7,115
Accrued income taxes 539 0 539 807 0 807
Accrued expenses 905 0 905 1,353 8,050 9,403
------ ------ ------ ------ ------ ------
Total current liabilities 4,190 0 4,190 6,280 16,251 22,531
Long-term debt and capitalized lease
obligations 2,781 0 2,781 4,170 27,301 31,471
Deferred income taxes 0 10 10 15 1,688 1,703
Other noncurrent liabilities 1 120 121 182 1,094 1,276
------ ------ ------ ------ ------ ------
Total liabilities 6,972 130 7,102 10,647 46,334 56,981
Redeemable preferred stock 0 2,000 2,000 3,000 0 3,000
Shareholders' equity
- 30 - <PAGE>
Common stock 1,000 0 1,000 1,500 64 1,564
Preferred stock 2,000 (2,000) 0 0 0 0
Additional paid in capital 0 0 0 0 6,381 6,381
Retained earnings (deficit) (2,190) 3,198 1,008 1,921 (8,724) (6,803)
Deferred compensation and unrecognized
pension cost 0 0 0 0 0 0
Foreign currency translation adjustment 0 0 0 (401) 0 (401)
Less: Common stock held in treasury 0 0 0 0 0 0
------ ------ ------ -------- ------ ------
Total shareholders' equity (deficit) 810 1,198 2,008 3,020 (2,279) 741
------ ------ ------ -------- ------ ------
Total liabilities and shareholders' equity 7,782 3,328 11,110 $ 16,667 $ 44,055 $ 60,722
====== ====== ====== ====== ====== ======
<FN>
<F1> Represents historical balance sheets of WAL and DFC as of
September 30, 1993 and December 31, 1993, respectively, and as
presented in the financial statements section on page F-47 and F-3,
respectively, of the proxy statement-prospectus included in the
Registrant's Registration Statement on Form S-4, as amended (No.
33-52033).
<F2> Represents adjustments from UK GAAP to US GAAP as discussed in
footnote 3 to the WAL financial statements for the year ended
September 30, 1993 on pages F-60 to F-62 of the proxy statement-
prospectus included in the Registrant's Registration Statement on Form
S-4, as amended (No. 33-52033).
<F3> The WAL balance sheet in British pounds sterling is converted to
US dollars using exchange rates discussed on page 9 of the proxy
statement-prospectus included in Registrant's Registration Statement
on Form S-4, as amended (No. 33-52033).
</FN>
</TABLE>
- 31 - <PAGE>
SCOTSMAN INDUSTRIES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Year Ended January 2, 1994
(In thousands, except per share data)
<TABLE>
<CAPTION>
Historical<F1>
-----------------------------------
DFC and
WAL Pro Forma
Scotsman Combined<F8> Subtotal Adjustments Pro Forma
-------- ----------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales $163,952 $117,818 $281,770 $ 0 $281,770
Cost of sales 114,472 87,844 202,316 0 202,316
-------- -------- -------- -------- --------
Gross profit 49,480 29,974 79,454 0 79,454
Unusual charge 0 390 390 0 390
Selling and administrative expenses 31,874 17,425 49,299 1,193<F5> 50,492
-------- -------- -------- -------- --------
Income from operations 17,606 12,159 29,765 (1,193) 28,572
Interest expense, net 4,235 2,868 7,103 1,909<F6> 9,012
-------- -------- -------- -------- --------
Income before income taxes 13,371 9,291 22,662 (3,102) 19,560
Income taxes 5,989 3,651 9,640 (548)<F7> 9,092
-------- -------- -------- -------- --------
Net income before extraordinary item and
cumulative effect of accounting changes $ 7,382 $ 5,640 $ 13,022 $ (2,554) $ 10,468
======== ======== ======== ======== ========
Net income per share before extraordinary
item and cumulative effect of
accounting changes 1.06 <F2> 1.08 <F4>
Average number of common shares outstanding 7,001 9,726 <F3>
Notes:
<FN>
<F1> Includes the results of operations of Scotsman, DFC and WAL for
the fiscal year ended January 2, 1994, December 31, 1993 and September
30, 1993, respectively.
<F2> Net income per share (EPS) excludes the dilutive effect of stock
options outstanding as such effect is immaterial.
<F3> Pro forma weighted average number of common shares outstanding
consists of 7,001 Scotsman shares plus 1,200 common shares issued for
the acquisition plus 1,525 common stock equivalents (2,000 shares of
preferred stock convertible into 1,525 shares of common stock).
<F4> EPS excludes the effect of up to 667 additional shares of common
stock which are contingently issuable as additional purchase price if
the acquired entities achieve certain combined earnings levels in
fiscal year 1994. These earnings levels are based on earnings before
interest, taxes, depreciation and amortization (EBITDA). The minimum
- 32 - <PAGE>
level of EBITDA required in fiscal 1994 that would require issuance of
any of the 667 contingent shares is approximately 23% higher than
combined DFC and WAL EBITDA for the fiscal years ended December
31,1993 and September 30, 1993, respectively. If all 667 contingent
shares are issued, approximately $8,340 of additional purchase price
and approximately $209 of additional annual amortization expense will
result. If all of these contingent shares were included in the above
EPS calculation, EPS would have been $.99.
<F5> Represents amortization expense for the period of the allocation
of the purchase price to the estimated fair value of the net assets
acquired using a 40 year amortization period and elimination of
management fees paid by DFC and WAL.
<F6> Represents net additional interest expense for the period.
Consists of additional interest expense on new debt at 7% per annum
($2,124) and reduction of interest expense on refinanced debt ($215).
<F7> Represents the related tax effect of pro forma adjustments.
<F8> See the Unaudited Pro Forma Condensed Combining Statement of
Income for the Year Ended January 2, 1994 on the following page.
</FN>
</TABLE>
- 33 - <PAGE>
SCOTSMAN INDUSTRIES, INC.
UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENT OF INCOME
For the year ended January 2, 1994
(In thousands, except per share data)
<TABLE>
<CAPTION>
WAL
-----------------------------------------------------
British Pounds Sterling US Dollars
---------------------------------------- ---------------------
Adjust DFC and
to WAL
UK GAAP<F1> US GAAP<F3> US GAAP US GAAP<F4> DFC<F2> Combined
---------- ---------- ------- ---------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Net sales 13,970 0 13,970 $ 24,168 $ 93,650 $117,818
Cost of sales 9,994 0 9,994 17,290 70,554 87,844
-------- -------- -------- -------- -------- --------
Gross profit 3,976 0 3,976 6,878 23,096 29,974
Unusual charge 0 0 0 0 390 390
Selling and administrative expenses 2,360 84 2,444 4,228 13,197 17,425
-------- -------- -------- -------- -------- --------
Income from operations 1,616 (84) 1,532 2,650 9,509 12,159
Interest expense, net 266 0 266 460 2,408 2,868
-------- -------- -------- -------- -------- --------
Income before income taxes 1,350 (84) 1,266 2,190 7,101 9,291
Income taxes 514 (9) 505 874 2,777 3,651
-------- -------- -------- -------- -------- --------
Net income before extraordinary item and
cumulative effect of accounting changes 836 (75) 761 1,316 4,324 5,640
Extraordinary item - recapitalization costs 0 0 0 0 0 0
-------- -------- -------- -------- -------- --------
Net income before cumulative effect of
accounting changes 836 (75) 761 1,316 4,324 5,640
Cumulative effect of accounting changes 0 0 0 0 0 0
-------- -------- -------- -------- -------- --------
Net income 836 (75) 761 1,316 4,324 5,640
Preferred stock dividends 120 0 120 208 0 208
-------- -------- -------- -------- -------- --------
Net income attributable to common
shareholders 716 (75) 641 $ 1,108 $ 4,324 $ 5,432
======== ======== ======== ======== ======== ========
<FN>
<F1> Represents the historical income statement of WAL for the fiscal
year ended September 30, 1993 as presented on page F-46 of the proxy
statement-prospectus included in the Registrant's Registration
Statement on Form S-4, as amended (No. 33-53033).
<F2> Represents the historical income statement of DFC for the year
ended December 31, 1993 as presented in the financial statements on
page F-4 of the proxy statement-prospectus included in the
Registrant's Registration Statement on Form S-4, as amended (No.
33-52033).
- 34 - <PAGE>
<F3> Represents adjustments from UK GAAP to US GAAP as discussed in
footnote 20 to the WAL financial statements on pages F-60 to F-62 of
the proxy statement-prospectus included in the Registrant's
Registration Statement on Form S-4, as amended (No. 33-52033).
<F4> Converted from British pounds sterling to US dollars using
exchange rates discussed on page 9 of the proxy statement-prospectus
included in the Registrant's Registration Statement on Form S-4, as
amended (No. 33-52033).
</FN>
</TABLE>
- 35 - <PAGE>
SCOTSMAN INDUSTRIES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of April 3, 1994
(In thousands)
<TABLE>
<CAPTION>
Historical <F1>
-----------------------------
DFC and
WAL Pro Forma
Scotsman Combined<F9> Subtotal Adjustments Pro Forma
-------- ----------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and temporary cash investments $ 4,669 $ 2,419 $ 7,088 $ (187)<F3> $ 6,901
Trade accounts and notes receivable, net 35,034 14,178 49,212 0 49,212
Inventories 26,702 17,359 44,061 0 44,061
Deferred income taxes 3,697 117 3,814 0 3,814
Other current assets 1,915 765 2,680 0 2,680
-------- -------- -------- -------- --------
Total current assets 72,017 34,838 106,855 (187) 106,668
Properties and equipment, net 20,013 19,039 39,052 0 39,052
Cost of investments in acquired
businesses in excess of net
assets at acquisition, net 11,449 4,746 16,195 67,483<F7> 83,678
Debt issuance costs 0 634 634 (634)<F5> 0
Other noncurrent assets 4,728 499 5,227 0 5,227
-------- -------- -------- -------- --------
Total assets $108,207 $ 59,756 $167,963 $ 66,662 $234,625
======== ======== ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt and current maturities
of long-term debt and capitalized
lease obligations $ 3,380 $ 5,197 $ 8,577 $ (4,820)<F8> $ 3,757
Trade accounts payable 14,867 7,779 22,646 0 22,646
Accrued income taxes 2,565 1,037 3,602 0 3,602
Accrued expenses 13,659 9,727 23,386 2,313<F4> 25,699
-------- -------- -------- -------- --------
Total current liabilities 34,471 23,740 58,211 (2,507) 55,704
Long-term debt and capitalized lease
obligations 29,449 27,566 57,015 35,168<F2> 92,183
Deferred income taxes 450 1,703 2,153 0 2,153
Other noncurrent liabilities 7,343 1,248 8,591 2,000<F7> 10,591
-------- -------- -------- -------- --------
Total liabilities 71,713 54,257 125,970 34,661 160,631
Redeemable preferred stock 0 2,960 2,960 (2,960)<F6> 0
Shareholders' equity
Common stock 722 1,544 2,266 (1,424)<F6> 842
Preferred stock 0 0 0 22,500<F6> 22,500
Additional paid in capital 20,613 6,381 26,994 8,499<F6> 35,493
- 36 - <PAGE>
Retained earnings (deficit) 22,224 (4,924) 17,300 4,924<F6> 22,224
Deferred compensation & unrecognized
pension cost (32) 0 (32) 0 (32)
Foreign currency translation adjustment (5,689) (462) (6,151) 462<F6> (5,689)
Less: Common stock held in treasury (1,344) 0 (1,344) 0 (1,344)
-------- -------- -------- -------- --------
Total shareholders' equity 36,494 2,539 39,033 34,961<F6> 73,994
-------- -------- -------- -------- --------
Total liabilities and shareholders'
equity $108,207 $ 59,756 $167,963 $ 66,662 $234,625
======== ======== ======== ======== ========
NOTES:
<FN>
<F1> Includes the balance sheets of Scotsman as of April 3, 1994, and
of DFC and WAL as of March 31, 1994, respectively.
<F2> Represents new borrowings required to finance the acquisition
($58,910) net of payment of certain amounts of the acquired entities
existing debt ($28,562), net of current portions ($4,820).
<F3> Represents payment of acquired entities accrued interest
balances with existing cash.
<F4> Includes payment of acquired entities accrued interest balances
with existing cash. Also includes the allocation of the purchase
price to the estimated fair value of the net assets acquired.
<F5> Represents write-off of DFC capitalized debt issuance costs from
a previous recapitalization.
<F6> Represents Scotsman common stock issued ($120) net of acquired
entities common stock retired ($1,544); Scotsman convertible preferred
stock issued ($22,500); additional paid in capital on Scotsman common
stock issued ($14,880) net of retirement of acquired entities
additional paid in capital ($6,381); retirement of acquired entities
net retained earnings balance ($4,924); retirement of acquired
entities redeemable preferred stock ($2,960); and retirement of
acquired entities unfavorable foreign currency translation adjustment
($462).
<F7> Represents the allocation of the purchase price to the estimated
fair value of the net assets acquired.
<F8> Represents the reclassification from current portion to
long-term debt in accordance with the company's new financing
agreements.
<F9> See the Unaudited Pro Forma Condensed Combining Balance Sheet as
of April 3, 1994 on the following page.
</FN>
</TABLE>
- 37 - <PAGE>
SCOTSMAN INDUSTRIES, INC.
UNAUDITED PRO FORMA CONDENSED COMBINING BALANCE SHEET
As of April 3, 1994
(In thousands)
<TABLE>
<CAPTION>
WAL
--------------------------------------------------
British Pounds Sterling US Dollars
------------------------------------- ----------------------
Adjust DFC and
to WAL
UK GAAP<F1> US GAAP<F3> US GAAP US GAAP<F4> DFC<F2> Combined
---------- ---------- ------- ---------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Assets
Current Assets
Cash and temporary cash investments 1,399 0 1,399 $ 2,071 $ 348 $ 2,419
Trade accounts and notes receivable, net 2,223 0 2,223 3,290 10,888 14,178
Inventories 2,965 0 2,965 4,388 12,971 17,359
Deferred income taxes 0 79 79 117 0 117
Other current assets 141 0 141 209 556 765
-------- -------- -------- -------- -------- --------
Total current assets 6,728 79 6,807 10,075 24,763 34,838
Properties and equipment, net 612 0 612 906 18,133 19,039
Cost of investments in acquired
businesses in excess of net
assets at acquisition, net 0 3,207 3,207 4,746 0 4,746
Debt issuance costs 0 0 0 0 634 634
Other noncurrent assets 1 0 1 1 498 499
-------- -------- -------- -------- -------- --------
Total assets 7,341 3,286 10,627 $ 15,728 $ 44,028 $ 59,756
======== ======== ======== ======== ======== ========
Liabilities and Shareholders' Equity
Current Liabilities
Short-term debt and current maturities
of long-term debt and capitalized
lease obligations 748 0 748 $ 1,107 $ 4,090 $ 5,197
Trade accounts payable 1,757 0 1,757 2,600 5,179 7,779
Accrued income taxes 701 0 701 1,037 0 1,037
Accrued expenses 505 0 505 747 8,980 9,727
-------- -------- -------- -------- -------- --------
Total current liabilities 3,711 0 3,711 5,491 18,249 23,740
Long-term debt and capitalized lease
obligations 2,450 0 2,450 3,626 23,940 27,566
Deferred income taxes 0 10 10 15 1,688 1,703
Other noncurrent liabilities 1 120 121 179 1,069 1,248
--------- ------- -------- -------- -------- --------
Total liabilities 6,162 130 6,292 9,311 44,946 54,257
Redeemable preferred stock 0 2,000 2,000 2,960 0 2,960
- 38 - <PAGE>
Shareholders' equity
Common stock 1,000 0 1,000 1,480 64 1,544
Preferred stock 2,000 (2,000) 0 0 0 0
Additional paid in capital 0 0 0 0 6,381 6,381
Retained earnings (deficit) (1,821) 3,156 1,335 2,439 (7,363) (4,924)
Deferred compensation and unrecognized
pension cost 0 0 0 0 0 0
Foreign currency translation adjustment 0 0 0 (462) 0 (462)
Less: Common stock held in treasury 0 0 0 0 0 0
-------- -------- -------- -------- -------- --------
Total shareholders' equity (deficit) 1,179 1,156 2,335 3,457 (918) 2,539
-------- -------- -------- -------- -------- --------
Total liabilities and shareholders'
equity 7,341 3,286 10,627 $ 15,728 $ 44,028 $ 59,756
======== ======== ======== ======== ======== ========
<FN>
<F1> Represents historical balance sheet of WAL and DFC as of March
31, 1994, as presented elsewhere in this report.
<F2> Represents adjustments from UK GAAP to US GAAP as discussed in
footnote 3 to the WAL financial statements for the three months ended
March 31, 1994 on pages 16 to 18.
<F3> The WAL balance sheet in British pounds sterling is converted to
US dollars using an exchange rate of 1.48 US dollars per British pound
Sterling, which was the noon buying rate in New York City for cable
transfers in British pounds sterling as certified for customs purposes
by the Federal Reserve Bank of New York on March 31, 1994.
</FN>
</TABLE>
- 39 - <PAGE>
SCOTSMAN INDUSTRIES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Three Months Ended April 3, 1994
(In thousands, except per share data)
<TABLE>
<CAPTION>
Historical <F1>
----------------------------------
DFC and
WAL Pro Forma
Scotsman Combined<F8> Subtotal Adjustments Pro Forma
-------- ----------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales $ 37,986 $ 28,906 $ 66,892 $ 0 $ 66,892
Cost of sales 26,800 21,579 48,379 0 48,379
-------- -------- -------- -------- --------
Gross profit 11,186 7,327 18,513 0 18,513
Unusual charge 0 0 0 0 0
Selling and administrative expenses 7,476 4,138 11,614 288<F5> 11,902
-------- -------- -------- -------- --------
Income from operations 3,710 3,189 6,899 (288) 6,611
Interest expense, net 907 624 1,531 484<F6> 2,015
-------- -------- -------- -------- --------
Income before income taxes 2,803 2,565 5,368 (772) 4,596
Income taxes 1,259 982 2,241 (139)<F7> 2,102
-------- -------- -------- -------- --------
Net income before extraordinary item and
cumulative effect of accounting changes $ 1,544 $ 1,583 $ 3,127 $ (633) $ 2,494
======== ======== ======== ======== ========
Net income per share before extraordinary
item and cumulative effect of
accounting changes 0.22 <F2> 0.25<F4>
Average number of common shares outstanding 7,136 9,861<F3>
Notes:
<FN>
<F1> Includes the results of operations of Scotsman for the three
months ended April 3, 1994, and of DFC and WAL for the three months
ended March 31, 1994.
<F2> Net income per share (EPS) includes the dilutive effect of stock
options outstanding.
<F3> Pro forma weighted average number of common shares outstanding
consists of 7,136 Scotsman shares plus 1,200 common shares issued for
the acquisition plus 1,525 common stock equivalents (2,000 shares of
preferred stock convertible into 1,525 shares of common stock).
<F4> EPS excludes the effect of up to 667 additional shares of common
stock which are contingently issuable as additional purchase price if
the acquired entities achieve certain combined earnings levels in
fiscal year 1994. These earnings levels are based on earnings before
interest, taxes, depreciation and amortization (EBITDA). The minimum
- 40 - <PAGE>
level of EBITDA required in fiscal 1994 that would require issuance of
any of the 667 contingent shares is higher than combined DFC and WAL
EBITDA for the three months ended March 31, 1994 annualized to a
twelve-month basis. If all 667 contingent shares are issued,
approximately $8,340 of additional purchase price and approximately
$52 of additional annual amortization expense for the period will
result. If all of these contingent shares were included in the above
EPS calculation, EPS would have been $.23.
<F5> Represents amortization expense for the period of the allocation
of the purchase price to the estimated fair value of the net assets
acquired using a 40 year amortization period and elimination of
management fees paid by DFC and WAL.
<F6> Represents net additional interest expense for the period.
Consists of additional interest expense on new debt at 7% per annum
($2,124) and reduction of interest expense on refinanced debt ($47).
<F7> Represents the related tax effect of pro forma adjustments.
<F8> See the Unaudited Pro Forma Condensed Combining Statement of
Income for the Three Months Ended March 31, 1994 on the following
page.
</FN>
</TABLE>
- 41 - <PAGE>
SCOTSMAN INDUSTRIES, INC.
UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENT OF INCOME
For the Three Months Ended April 3, 1994
(In thousands, except per share data)
<TABLE>
<CAPTION>
WAL
--------------------------------------------------
British Pounds Sterling US Dollars
------------------------------------- ----------------------
Adjust DFC and
to WAL
UK GAAP<F1> US GAAP<F3> US GAAP US GAAP<F4> DFC<F2> Combined
---------- ---------- ------- ---------- ------ --------
<S> <C> <C> <C> <C>
Net sales 2,902 0 2,902 $ 4,324 $ 24,582 $ 28,906
Cost of sales 2,014 0 2,014 3,001 18,578 21,579
-------- -------- -------- -------- -------- --------
Gross profit 888 0 888 1,323 6,004 7,327
Unusual charge 0 0 0 0 0 0
Selling and administrative expenses 581 21 602 897 3,241 4,138
-------- -------- -------- -------- -------- --------
Income from operations 307 (21) 286 426 2,763 3,189
Interest expense, net 41 0 41 61 563 624
-------- -------- -------- -------- -------- --------
Income before income taxes 266 (21) 245 365 2,200 2,565
Income taxes 96 0 96 143 839 982
-------- -------- -------- -------- -------- --------
Net income before extraordinary item and
cumulative effect of accounting changes 170 (21) 149 222 1,361 1,583
Extraordinary item - recapitalization costs 0 0 0 0 0 0
-------- -------- -------- -------- -------- --------
Net income before cumulative effect of
accounting changes 170 (21) 149 222 1,361 1,583
Cumulative effect of accounting changes 0 0 0 0 0 0
-------- -------- -------- -------- -------- --------
Net income 170 (21) 149 222 1,361 1,583
Preferred stock dividends 30 0 30 45 0 45
-------- -------- -------- -------- -------- --------
Net income attributable to common
shareholders 140 (21) 119 $ 177 $ 1,361 $ 1,538
======== ======== ======== ======== ======== ========
<FN>
<F1> Represents the historical income statement of WAL for the three
months ended March 31, 1994 as presented elsewhere in this report.
<F2> Represents the historical income statement of DFC for the three
months ended March 31, 1994 as presented elsewhere in this report.
<F3> Represents adjustments from UK GAAP to US GAAP as discussed in
footnote 3 to the WAL financial statements on pages 16 to 18.
<F4> Converted from British pounds sterling to US dollars using an
exchange rate of 1.49 US dollars per British pound sterling, which was
- 42 - <PAGE>
the average of the noon buying rates in New York City for cable
transfers in British pounds sterling as certified for customs purposes
by the Federal Reserve Bank of New York for the three months ending
March 31, 1994.
</FN>
</TABLE>
- 43 - <PAGE>
SIGNATURE
---------
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.
Scotsman Industries, Inc.
-----------------------------
Registrant
Dated: May 16, 1994 By: /s/ Donald D. Holmes
------------------------
Donald D. Holmes
Vice President-Finance
- 44 - <PAGE>
<TABLE>
<CAPTION> EXHIBIT INDEX
-------------
Number Description Page Number
------ ----------- -----------
<S> <C> <C>
2.1 Agreement and Plan of Merger, dated as of
January 11, 1994, among Scotsman
Industries, Inc., Scotsman Acquisition
Corporation, DFC Holding Corporation, The
Delfield Company, Onex Corporation, Onex
DHC LLC, Pacific Mutual Life Insurance Co.,
PM Group Life Insurance Co., EJJM, Matthew
O. Diggs, Jr., Timothy C. Collins, W.
Joseph Manifold, Charles R. McCollom, Anita
J. Moffatt Trust, Anita J. Moffatt, Remo
Panella, Teddy F. Reed, Robert L. Schafer,
Graham E. Tillotson, John A. Tilmann Trust,
John A. Tilmann, Kevin E. McCrone, Michael
P. McCrone, Ronald A. Anderson and
Continental Bank N.A. (incorporated by
reference herein to the Company's 8-K,
dated January 13, 1994, File No. 0-10182),
as amended by the First Amendment to
Agreement and Plan of Merger, dated as of
March 17, 1994 (incorporated by reference
herein to the Company's 10-K for the fiscal
year ended January 2, 1994).
2.2 Share Acquisition Agreement, dated as of
January 11, 1994, among Scotsman
Industries, Inc., Whitlenge Acquisition
Limited, Whitlenge Drink Equipment Limited,
Timothy C. Collins, Graham F. Cook,
Christopher R.L. Wheeler, Michael de St.
Paer and John Rushton (incorporated by
reference herein to the Company's 8-K,
dated January 13, 1994, File No. 0-10182),
as amended by the First Amendment to Share
Acquisition Agreement, dated as of March
17, 1994 (incorporated by reference herein
to the Company's 10-K for the fiscal year
ended January 2, 1994).
- 45 - <PAGE>
Number Description Page Number
------ ----------- -----------
4.1 Rights Agreement dated as of April 14,
1989 between Scotsman Industries, Inc. and
Harris Trust & Savings Bank (incorporated
herein by reference to the Company's 8-K,
dated April 25, 1989, File No. 0-10182), as
amended by Amendment No. 1 thereto, dated
as of January 11, 1994 (incorporated herein
by reference to Scotsman Industries, Inc.
Amendment No. 4 to General Form for
Registration of Securities on Form 10/A, as
filed with the Commission on January 27,
1994, File No. 0-10182).
4.2 Certificate of Designations of Series A
$0.62 Cumulative Convertible Preferred
Stock of Scotsman Industries, Inc.
(incorporated by reference to the Company's
Registration Statement on Form S-4, as
amended, No. 33-52033)
12 Scotsman Industries, Inc. Ratio of Earnings 36
to Fixed Charges
</TABLE>
- 46 - <PAGE>
Scotsman Industries, Inc. EXHIBIT 12
Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Three
Months
Ended Nine Months Ended Fiscal Year Ended
------ ----------------- ---------------------------------------------------------
APR 3, OCT 3, SEP 27, JAN 2, JAN 3, DEC 29, DEC 30, DEC 31, JAN 1,
1994 1993 1992 1994 1993 1991 1990 1989 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
I. Earnings
Pre Tax Income 2,803 12,892 10,230 13,371 10,185 936 12,320 13,747 20,075
Fixed Charges 1,086 3,729 4,150 4,810 5,378 6,865 8,511 6,702 2,483
----- ------ ------ ------ ------ ----- ------ ------ ------
Earnings 3,889 16,621 14,380 18,181 15,563 7,801 20,831 20,449 22,558
===== ====== ====== ====== ====== ===== ====== ====== ======
II. Fixed Charges
Interest Expense<F1> 957 3,392 3,725 4,360 4,811 6,332 8,011 6,235 2,083
Interest on
Operating Leases<F2> 129 337 425 450 567 533 500 467 400
----- ----- ----- ----- ----- ------ ----- ----- -----
Fixed Charges 1,086 3,729 4,150 4,810 5,378 6,865 8,511 6,702 2,483
===== ===== ===== ===== ===== ===== ===== ===== =====
III. Ratio of Earnings
to Fixed Charges 3.58 4.46 3.47 3.78 2.89 1.14 2.45 3.05 9.08
<FN>
<F1> Includes interest on capital lease obligations.
<F2> Represents one third of operating lease expense as being
representative of the interest component included in such costs.
</FN>
/TABLE
<PAGE>
