UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): July 29, 1999
WILLIAMS CONTROLS INC.
-----------------------
(Exact name of Company as specified in its charter)
Delaware 0-18083 84-1099587
- ------------------------------- ------------ -------------------
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
14100 SW 72nd Avenue
Portland, Oregon 97224
- --------------------------------------- ----------
(Address of principal executive offices) (zip code)
(503) 684-8600
---------------------------------------------------
Registrant's telephone number, including area code:
Not Applicable
--------------
(Former name or former address, if changed since last report)
<PAGE>
Item 7. (Financial Statements and Exhibits) is amended to add the following:
(a) Financial Statements of the business acquired. The following is a list of
audited financial statements for ProActive Pedals filed herewith:
Report of Independent Public Accountants......................F-1
Statements of Assets and Liabilities and
Equity (Deficit) as of December 31,
1998 and June 30, 1999 (unaudited).......................F-2
Statements of Operations for the Year Ended
December 31, 1998 and the Six Month
Periods Ended June 30, 1999 (unaudited)
and 1998 (unaudited).....................................F-3
Statements of Changes in Equity (Deficit)
for the Year Ended December 31, 1998 and
the Six Month Period Ended June 30, 1999
(unaudited)..............................................F-4
Statements of Cash Flows for the Year Ended
December 31, 1998 and the Six Month
Periods Ended June 30, 1999 (unaudited)
and 1998 (unaudited).....................................F-5
Notes to Financial Statements, December 31, 1998..............F-6
(b) Pro forma financial information. The following is a list of pro forma
financial information pertaining to Williams Controls, Inc. and ProActive
Pedals filed herewith:
Pro Forma Unaudited Balance Sheet as of
June 30, 1999............................................PF-1
Pro Forma Unaudited Statement of Operations
for the Nine Months Ended June 30, 1999..................PF-2
Pro Forma Unaudited Statement of Operations
for the Year Ended September 30, 1998....................PF-3
Notes to Pro Forma Unaudited Financial Statements.............PF-4
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Williams Controls, Inc.:
We have audited the accompanying statement of assets and liabilities and equity
(deficit) of ProActive Pedals (a wholly owned division of Active Tool and
Manufacturing, Inc.) as of December 31, 1998 and the related statements of
operations, changes in equity (deficit), and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ProActive Pedals as of
December 31, 1998 and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
Portland, Oregon, /s/ ARTHUR ANDERSEN, LLP
September 24, 1999
F-1
<PAGE>
PROACTIVE PEDALS
----------------
STATEMENTS OF ASSETS AND LIABILITIES AND EQUITY (DEFICIT)
---------------------------------------------------------
AS OF DECEMBER 31, 1998 AND JUNE 30, 1999
-----------------------------------------
(In Thousands)
ASSETS
- ------
1998 1999
---- ----
(Unaudited)
CURRENT ASSETS:
Cash $ - $ -
Inventory, net 210 387
----- -----
LEASEHOLD IMPROVEMENTS AND EQUIPMENT, net 178 322
OTHER ASSETS, net 139 109
----- -----
$ 527 $ 818
===== =====
LIABILITIES AND EQUITY (DEFICIT)
- --------------------------------
CURRENT LIABILITIES:
Checks outstanding in excess of cash receipts $ 339 $ 385
Accounts payable 89 105
Accrued liabilities 216 49
Current portion of other long-term liability 100 114
----- -----
Total current liabilities 744 653
OTHER LONG-TERM LIABILITY 300 300
EQUITY (DEFICIT):
Active Tool investment and advances (517) (135)
----- -----
$ 527 $ 818
===== =====
The accompanying notes are an integral part of these statements.
F-2
<PAGE>
PROACTIVE PEDALS
----------------
STATEMENTS OF OPERATIONS
------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998 AND THE
--------------------------------------------
SIX-MONTH PERIODS ENDED JUNE 30, 1999 AND 1998
----------------------------------------------
(In Thousands)
June 30,
December 31, ------------------
1998 1999 1998
------------ ---- ----
(Unaudited)
SALES $ 210 $ 111 $ 30
COST OF GOODS SOLD 158 111 38
-------- -------- -------
GROSS MARGIN (LOSS) 52 - (8)
OPERATING EXPENSES:
Research and development 1,544 935 614
Administrative 511 385 301
-------- -------- -------
Total operating expenses 2,055 1,320 915
-------- -------- -------
LOSS FROM OPERATIONS (2,003) (1,320) (923)
INTEREST EXPENSE (32) (14) (15)
-------- -------- -------
NET LOSS $(2,035) $(1,334) $(938)
======== ======== =======
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
PROACTIVE PEDALS
----------------
STATEMENTS OF CHANGES IN EQUITY (DEFICIT)
-----------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998 AND THE
--------------------------------------------
SIX-MONTH PERIOD ENDED JUNE 30, 1999
------------------------------------
(In Thousands)
Advances Losses Deficit
-------- ------ -------
BALANCE, December 31, 1997 $ 4,700 $(7,357) $(2,657)
Net loss - (2,035) (2,035)
Change in advances 4,175 - 4,175
-------- -------- --------
BALANCE, December 31, 1998 8,875 (9,392) (517)
Net loss (unaudited) - (1,334) (1,334)
Change in advances (unaudited) 1,716 - 1,716
-------- -------- --------
BALANCE, June 30, 1999 (unaudited) $10,591 $(10,726) $ (135)
======== ======== ========
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
PROACTIVE PEDALS
----------------
STATEMENTS OF CASH FLOWS
------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998 AND THE
--------------------------------------------
SIX-MONTH PERIODS ENDED JUNE 30, 1999 AND 1998
----------------------------------------------
(In Thousands)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
June 30,
December 31, ------------------------
1998 1999 1998
------------ ---- ----
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(2,035) $(1,334) $ (938)
Adjustments to reconcile net loss to net cash
used in operating activities-
Depreciation and amortization 125 65 47
Changes in operating assets and liabilities:
Inventory (115) (177) (146)
Accounts payable 62 16 70
Accrued liabilities 216 (167) -
Other long-term liability (2,350) 14 (2,215)
------- ------- -------
Net cash used in operating activities (4,097) (1,583) (3,182)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of other assets (75) - (75)
Purchase of leasehold improvements and equipment (110) (179) -
------- ------- -------
Net cash used in investing activities (185) (179) (75)
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in checks outstanding in excess of cash
receipts 107 46 (61)
Active Tool investment and advances, net 4,175 1,716 3,318
------- ------- -------
Net cash provided by financing activities 4,282 1,762 3,257
NET INCREASE (DECREASE) IN CASH - - -
CASH, beginning of period - - -
------- ------- -------
CASH, end of period $ - $ - $ -
======= ======= =======
The accompanying notes are an integral part of these statements.
</TABLE>
F-5
<PAGE>
PROACTIVE PEDALS
----------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 1998
-----------------
(In Thousands)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
- -----------------------------------------------
Nature of Operations
- --------------------
ProActive Pedals (the Company), a wholly owned division of Active Tool and
Manufacturing, Inc. (the Parent and a Michigan corporation), is a designer and
developer of patented adjustable foot pedal systems and modular pedal systems.
The Company also manufactures and sells the tooling equipment used to produce
the foot pedal systems. The Company operates in one segment, selling adjustable
pedal systems to the automotive industry.
Interim Financial Statements
- ----------------------------
The accompanying interim financial statements of the Company, as of June 30,
1999 and for the six months ended June 30, 1999 and 1998, have been prepared by
the Company without audit. Certain information and footnote disclosures normally
included in financial statements presented in accordance with generally accepted
accounting principles have been condensed or omitted. The Company believes the
disclosures made are adequate to make the information presented not misleading.
In the opinion of the Company's management, the accompanying unaudited financial
statements as of June 30, 1999 and for the six months ended June 30, 1999 and
1998, reflect all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position of the Company as of June 30,
1999 and the results of operations and cash flows for the six months ended June
30, 1999 and 1998. The results of operations for the six months ended June 30,
1999 and 1998 are not necessarily indicative of fiscal year performance.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Inventory
- ---------
Inventory is valued at lower of cost or market. Raw material costs are primarily
determined on the first-in, first-out method (FIFO). Work-in-process costs
primarily include raw materials and direct labor.
Leasehold Improvements and Equipment
- ------------------------------------
Leasehold improvements and equipment are stated at cost. Depreciation is
provided using primarily accelerated methods over the estimated useful lives of
the assets ranging from 3 to 7 years. Leasehold improvements are depreciated
over the term of the lease or the estimated useful lives of the assets,
whichever is shorter.
Normal repairs and maintenance are expensed as incurred.
F-6
<PAGE>
Income Taxes
- ------------
The Company's Parent has elected to be taxed under the provisions of
subchapter S of the Internal Revenue Code and similar section of the Michigan
code. In lieu of corporate income taxes, the stockholders of the subchapter S
corporation are taxed on their proportionate share of the Parent's taxable
income. Therefore, no provision or liability for federal or state income taxes
has been included in the financial statements.
Other Long-Term Liability
- -------------------------
At December 31, 1998, other long-term liability consists of an obligation due in
equal installments of $100 over four years at 7% interest.
Concentration of Credit Risk and Significant Customer
- -----------------------------------------------------
The Company has one outstanding contract to provide adjustable pedal systems.
This contract makes up substantially all of the Company's revenues.
Revenue Recognition
- -------------------
Revenue is recognized upon shipment of the goods.
Other Assets
- ------------
Other assets consist of licenses held by the Company to develop and manufacture
the adjustable foot pedal systems. The licenses are amortized using the
straight-line method over the estimated useful lives of the licenses ranging
from 3 to 5 years. Accumulated amortization as of December 31, 1998 was $66.
Research and Development
- ------------------------
A significant portion of the Company's activities have been incurred in research
and development of adjustable pedal systems. Research and development expenses
have been expensed as incurred.
Recent FASB Pronouncement
- -------------------------
In June 1999, the FASB issued Statement of Financial Accounting Standards
No. 137, "Accounting for Derivative Instruments and Hedging Activities"
(SFAS 137). SFAS 137 is an amendment to SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS 137 establishes accounting and
reporting standards for all derivative instruments. SFAS 137 is effective for
fiscal years beginning after June 15, 2000. The Company does not have any
derivative instruments and accordingly, the adoption of SFAS 137 will have no
impact on the Company's financial position or results of operations.
F-7
<PAGE>
2. LEASEHOLD IMPROVEMENTS AND EQUIPMENT:
- -----------------------------------------
Leasehold improvements and equipment consist of the following:
December 31,
1998
------------
Leasehold Improvements $ 27
Machinery 84
Vehicles 11
Furniture and Fixtures 238
Tooling 48
-----
408
Accumulated depreciation (230)
-----
Leasehold improvements and equipment, net $ 178
=====
F-8
<PAGE>
3. INVENTORY:
- --------------
Inventory consists of the following:
December 31,
1998
------------
Raw materials $ 82
Work in process 128
----
Total inventory $210
====
4. RELATED PARTY TRANSACTIONS:
- -------------------------------
The Company's operations have been funded solely by the Parent and all
transactions of the Company flow through the Active Tool investment and advances
account.
The Company maintains a cash account to pay all expenditures and has received
advances from the Parent since inception. Interest has not been charged on
advances. The average Active Tool investment and advances account balance for
the year ended December 31, 1998 was $7,181.
5. COMMITMENTS AND CONTINGENCIES:
- ----------------------------------
Litigation Settlement
- ---------------------
In 1997, the Company recorded the settlement of a lawsuit filed against the
Company by Comcorp Technologies, Inc. and DeCouper Industries, Inc.
(collectively "Comcorp"), in which it was alleged that the Company
misappropriated certain Comcorp trade secrets relating to adjustable pedal
technology. The Company settled the lawsuit, without admitting any liability.
Under the terms of the settlement agreement between the parties, issues relating
to ownership of certain patents covering the technology were resolved.
Operating Lease
- ---------------
The Company leases office space under a noncancelable operating lease expiring
November 1999. Rent expense for the year ended December 31, 1998 was $56. At
December 31, 1998, future minimum leased payments for the operating lease are
$99 for 1999.
6. SALE OF BUSINESS:
- ---------------------
In July 1999, substantially all of the assets and liabilities of the Company
were sold to Williams Controls Inc. (Williams) for $6,350 in cash and the
assumption of certain liabilities. Williams is a manufacturing company involved
in various production lines for the automotive industry, primarily in the
manufacture of electronic throttle controls.
F-9
<PAGE>
Williams Controls, Inc.
Unaudited Pro Forma Consolidated Balance Sheet
As of June 30, 1999
(Dollars in thousands)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Unaudited
Williams Pro Forma
Controls, ProActive Pro Forma Consolidated
Inc. Pedals Adjustments As Adjusted
------------- -------------- --------------- ---------------
ASSETS
Current Assets:
Cash and cash equivalents $ 1,410 $ - $ - $ 1,410
Trade and other accounts receivable, net 10,602 - - 10,602
10,430 387 - 10,817
Inventories
Deferred taxes and other 2,616 - - 2,616
Net assets held for disposition 5,125 - - 5,125
------------- -------------- --------------- ---------------
Total current assets 30,183 387 - 30,570
Property, plant and equipment, net 18,665 322 (a) (22) 18,965
Investment in and note receivable from affliate 5,733 - - 5,733
Property held for sale, net 1,818 - - 1,818
Net assets held for disposition 1,821 - - 1,821
Other assets 1,851 109 (b) 4,882 7,514
(d) 672
============= ============== =============== ===============
Total assets $ 60,071 $ 818 $ 5,532 $ 66,421
============= ============== =============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Checks outstanding in excess of cash receipts $ - $ 385 $(a) (385) $ -
Accounts payable 5,063 105 - 5,168
Accrued expenses 2,605 163 (a) 171 2,939
Current portion of long-term debt and capital leases 2,257 - (a) 2,500 4,757
Estimated loss on disposal 589 - - 589
------------- -------------- --------------- ---------------
Total current liabilities 10,514 653 2,286 13,453
Long-term debt and capital lease obligations 22,460 - (a) 454 22,914
Other liabilities 2,737 300 (a) 639 3,376
(a) (300)
Commitments and contingencies
Shareholders' equity:
Preferred stock 1 - - 1
Common stock 185 - (a) 1 186
Additional paid-in capital 18,183 - (a) 3,395 21,578
Retained earnings (accumulated deficit) 7,125 (a)(1,750) 6,047
(d) 672
Active Tool investment and advances (135) (c) 135
Unearned ESOP shares (73) - - (73)
Treasury stock (377) - - (377)
Note receivable (500) - - (500)
Pension liability adjustment (184) - - (184)
------------- -------------- --------------- ---------------
Total shareholders' equity 24,360 (135) 2,453 26,678
============= ============== =============== ===============
Total liabilities and shareholders' equity $ 60,071 $ 818 $ 5,532 $ 66,421
============= ============== =============== ===============
The accompanying notes are an integral part of this
unaudited pro forma consolidated balance sheet.
</TABLE>
PF-1
<PAGE>
Williams Controls, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the Nine Months ended June 30, 1999
(Dollars in thousands, except share and per share information)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Unaudited
Williams Pro Forma
Controls, ProActive Pro Forma Consolidated
Inc. Pedals Adjustments Adjusted
------------- -------------- -------------- ----------------
Sales $ 47,828 $ 214 $ - $ 48,042
Cost of sales 33,885 170 - 34,055
------------- -------------- -------------- ----------------
Gross margin 13,943 44 - 13,987
Operating expenses:
Research and development 2,683 1,477 4,160
1,501 - - 1,501
Selling
2,884 465 (a) 472 3,821
Administration
Loss from impairment of assets 5,278 - - 5,278
------------- -------------- -------------- ----------------
Total operating expenses 12,346 1,942 472 14,760
------------- -------------- -------------- ----------------
Earnings (loss) from continuing operations 1,597 (1,898) (472) (773)
Other (income) expenses:
Interest income (277) - - (277)
Interest expense 1,187 23 (b) 202 1,412
Other (income) expense 69 - - 69
Equity interest in (income) loss of affiliate 407 - - 407
------------- -------------- -------------- ----------------
Total other expenses 1,386 23 202 1,611
------------- -------------- -------------- ----------------
Earnings (loss) from continuing operations before
income tax expense (benefit) 211 (1,921) (674) (2,384)
Income tax expense (benefit) 81 - (c) (997) (916)
------------- -------------- -------------- ----------------
Net earnings (loss) 130 (1,921) 323 (1,468)
Dividends on preferred stock 449 - - 449
------------- -------------- -------------- ----------------
Net earnings (loss) allocable to common shareholders $ (319) $ (1,921) $ 323 $(1,917)
============= ============== ============== ================
Net earnings (loss) per common share - basic $ (.02) $ (0.10)
============= ============== ============== ================
Weighted average shares - basic 18,313,559 19,644,708
============= ============== ============== ================
Net earnings per common share - diluted $ (.02) (0.10)
------------- -------------- -------------- ----------------
Weighted average shares - diluted 18,313,559 19,644,708
============= ============== ============== ================
The accompanying notes are an integral part of this unaudited pro forma consolidated statement of operations.
</TABLE>
PF-2
<PAGE>
Williams Controls, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended September 30, 1998
(Dollars in thousands, except share and per share information)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Unaudited
Williams Pro Forma
Controls, ProActive Pro Forma Consolidated
Inc. Pedals Adjustments Adjusted
------------- -------------- -------------- ----------------
Sales $ 57,646 $ 210 $ - $ 57,856
Cost of sales 40,129 158 - 40,287
------------- -------------- -------------- ----------------
Gross margin 17,517 52 - 17,569
Operating expenses:
Research and development 2,778 1,544 4,322
Selling 2,065 - - 2,065
Administration 3,683 511 (a) 628 4,822
------------- -------------- -------------- ----------------
Total operating expenses 8,526 2,055 628 11,209
------------- -------------- -------------- ----------------
Earnings (loss) from continuing operations 8,991 (2,003) (628) 6,360
Other (income) expenses:
Interest expense 1,508 32 (b) 269 1,809
Equity interest in (income) loss of affiliate 506 - - 506
------------- -------------- -------------- ----------------
Total other expenses 2,014 32 269 2,315
------------- -------------- -------------- ----------------
Earnings (loss) from continuing operations before
income tax expense (benefit) 6,977 (2,035) (897) 4,045
Income tax expense (benefit) 2,366 - (c) (1,125) 1,241
------------- -------------- -------------- ----------------
Net earnings (loss) from continuing operations 4,611 (2,035) 228 2,804
Discontinued operations:
Net loss from operations of automotive
accessories business unit (1,625) - - (1,625)
Net loss from operations of the agricultural segment (1,271) - - (1,271)
Net loss on disposal of the agricultural segment (1,403) - - (1,403)
------------- -------------- -------------- ----------------
Net loss from discontinued operations $ (4,299) $ - $ - $(4,299)
------------- -------------- -------------- ----------------
Net earnings (loss) $ 312 $ (2,035) $ 228 $(1,495)
Dividends on preferred stock 270 - - 270
------------- -------------- -------------- ----------------
Net earnings (loss) allocable to common shareholders $ 42 $ (2,035) $ 228 $(1,765)
============= ============== ============== ================
Earnings (loss) per common share from continuing $ 0.24 $ 0.13
operations - basic
Loss per common share from discontinued operations - basic (0.24) (0.22)
------------- -------------- -------------- ----------------
Net earnings (loss) per common share - basic $ 0.00 $ (0.09)
============= ============== ============== ================
Weighted average shares - basic 17,922,558 19,253,707
============= ============== ============== ================
Earnings per common share from continuing operations -
diluted $ 0.23 $ 0.13
Loss per common share from discontinued operations -
diluted (0.23) (0.22)
------------- -------------- -------------- ----------------
Net earnings per common share - diluted $ 0.00 $ (0.09)
============= ============== ============== ================
Weighted average shares - diluted 19,808,460 19,253,707
============= ============== ============== ================
The accompanying notes are an integral part of this unaudited pro forma consolidated statement of operations.
</TABLE>
PF-3
<PAGE>
Williams Controls, Inc.
Notes to Unaudited Pro Forma Financial Statements
June 30, 1999 and September 30, 1998
(Dollars in thousands)
1. Basis of Presentation
The accompanying unaudited pro forma consolidated financial statements have
been prepared to present the effect of the acquisition (the Acquisition) of
ProActive Pedals (a wholly owned division of Active Tool and Manufacturing,
Inc.)(ProActive) by Williams Controls, Inc. (the Company) on July 29, 1999.
ProActive performs research and development activities related to the
development of adjustable foot pedals for automobiles. They also engage in
the manufacture of adjustable foot pedals. The unaudited pro forma
statements of operations for the nine months ended June 30, 1999 and for
the fiscal year ended September 30, 1998 have been prepared based upon the
historical statements of operations of the Company and ProActive as if the
Acquisition had occurred on the first date of each such period. The
unaudited pro forma consolidated balance sheet as of June 30, 1999 has been
prepared based upon the historical balance sheets of the Company and
ProActive as if the acquisition had occurred on June 30, 1999.
For purposes of the unaudited pro forma consolidated financial statements
(1) the statement of operations of the Company for the nine months ended
June 30, 1999 has been combined with the statement of operations of
ProActive for the nine months ended June 30, 1999, (2) the statement of
operations of the Company for the fiscal year ended September 30, 1998 has
been combined with the statement of operations of ProActive for the fiscal
year ended December 31, 1998, and (3) the balance sheet of the Company as
of June 30, 1999 has been combined with the balance sheet of ProActive as
of June 30, 1999. In order to present comparable periods in the unaudited
pro forma statements of operations, revenues of $103 and net loss from
continuing operations of $587 for ProActive Pedals for the three months
ended December 31, 1998 have been included in both the unaudited pro forma
consolidated statements of operations for the nine months ended June 30,
1999 and for the year ended September 30, 1998.
The unaudited pro forma consolidated financial statements give effect to
the Acquisition under the purchase method of accounting.
The unaudited pro forma consolidated financial statement may not be
indicative of the results of operations or financial position that would
have occurred if the Acquisition had been in effect as of the beginning of
the respective periods or as of the balance sheet date, nor do they purport
to indicate the results of operations of the Company for any future period
or as of any future date. The unaudited pro form consolidated financial
statements should be read in conjunction with the Company's audited
financial statements and notes thereto, included in the Company's Form 10-K
for the year ended September 30, 1998. Management believes that all
adjustments necessary to present fairly such unaudited pro form
consolidated financial statements have been made based on the terms and
structure of the Acquisition.
PF-4
<PAGE>
2. Pro Forma Adjustments.
The pro forma adjustments consist of the following:
Balance Sheet
-------------
Effective July 29, 1999, Williams Controls, Inc.
acquired substantially all of the assets and
assumed certain liabilities of ProActive Pedals, in
a purchase transaction. The following amounts in
footnotes (a) through (d) describe the nature of
the transaction and are for informational purposes
only. They reflect the adjustments that would have
been recorded on the balance sheet at June 30, 1999
had the purchase occurred on that date.
(a) The Company recorded the acquisition as follows:
Purchase price:
Net cash used from issuance of
common stock (1,331,149 shares) $ 3,396
Term loan 2,500
Line of credit 454
Accrued acquisition costs 100
-------
Total $ 6,450
Value of assets acquired and liabilities assumed:
Fair value of recorded net assets acquired $ 348
Appraised value of in-process research and
development 1,750
Purchased technology 1,820
Patent license agreement 1,239
Liability for future payments on patent
license agreement (639)
-------
Goodwill resulting from purchase $ 1,932
=======
The components of the fair value of recorded net assets acquired are as
follows:
Book value of assets acquired $ (135)
Adjustments:
Leasehold improvements not acquired (22)
License agreement not acquired (109)
Outstanding checks not assumed 385
Other long-term liability not assumed 300
Other miscellaneous net liabilities incurred (71)
-------
Fair value of net assets acquired $ 348
=======
PF-5
<PAGE>
(b) To record intangible assets:
Goodwill $ 1,932
Purchased technology 1,820
Patent license agreement 1,239
License agreement not acquired (109)
-------
$ 4,882
=======
(c) To record the elimination of Active Tool investment and
advances. $ 135
(d) A deferred tax asset was recorded for the $1,750 of
in-process research and development expensed immediately
for book purposes and amortized for tax purposes over
fifteen years. $ 672
PF-6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
For the For the
nine months ended year ended
June 30, 1999 September 30, 1998
-------------------------- -----------------------
Income Statement
- ----------------
The Unaudited Pro Forma Statements of
Operations are presented without the
impact of the $1,750 expense of in-process research
and development related to the purchase of ProActive
Pedals as the expense would not have an ongoing effect
on normal operations. The pro forma adjustments
to the Unaudited Pro Forma Statements of Operations
for the nine months ended June 30, 1999 and the year
ended September 30, 1998 consist of the following:
(a) Amortization expense was recorded on the intangible assets acquired:
Goodwill (15 years) $ 97 $ 129
Purchased technology (5 years) 290 386
Patent license (11 years) 85 113
------- --------
$ 472 $ 628
(b) Interest expense was recorded on the incremental borrowings
utilized to finance the acquisition.
Term loan of $2,500 at 9.25% $ 173 $ 231
Line of credit of $454 at 8.25% 29 38
------- --------
$ 202 $ 269
(c) The pro forma adjustment to the provision for income taxes was made to
bring the total tax provision to the amount that would have been recorded
based on an effective rate of 38.4% for the period calculated using the
combined pro forma income.
ProActive Pedals loss $ (738) $ (781)
Pro forma adjustments (259) (344)
------- --------
$ (997) $(1,125)
PF-7
</TABLE>
<PAGE>
Williams Controls, Inc.
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.
WILLIAMS CONTROLS, INC.
By:_______________________________________
Gerard A. Herlihy, Chief Financial Officer
By:_______________________________________
Kim L. Childs, Corporate Controller
and Principal Accounting Officer
Date: October 12, 1999
<PAGE>
Williams Controls, Inc.
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.
WILLIAMS CONTROLS, INC.
By: /s/ Gerard A. Herlihy
------------------------------------------
Gerard A. Herlihy, Chief Financial Officer
By: /s/ Kim L. Childs
------------------------------------------
Kim L. Childs, Corporate Controller
and Principal Accounting Officer
Date: October 12, 1999
