<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K / A
(AMENDMENDMENT NO. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
May 11, 2000
Date of Report
(Date of earliest event reported)
-----------------------
DECRANE AIRCRAFT HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 333-70365 34-1645569
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
2361 ROSECRANS AVENUE, SUITE 180, EL SEGUNDO, CA 90245
(Address, including zip code, of principal executive offices)
(310) 725-9123
(Registrant's telephone number, including area code)
---------------------
NOT APPLICABLE
(Former address and telephone number of principal executive offices, if
changed since last report)
---------------------
================================================================================
<PAGE>
EXPLANATORY NOTE
On May 25, 2000, DeCrane Aircraft Holdings, Inc. filed a Form 8-K
describing our acquisition of Carl F. Booth & Co., Inc. on May 11, 2000. At the
time of the filing, audited financial statements of Carl Booth compliant with
Regulation S-X were not yet available. As a result, the pro forma consolidated
financial information required by the Securities Exchange Act of 1934 could not
be prepared. The purpose of this Form 8-K / A is to amend our initial filing
with respect to the Carl Booth acquisition and provide the required audited
financial statements and pro forma financial information reflecting the
acquisition.
DOCUMENTS REFERRED TO IN THIS REPORT
DeCrane Aircraft has filed documents with the Securities and Exchange
Commission that we refer to in this report. The documents we refer to and the
information they contain are described below.
- Our Form 10-K for the year ended December 31, 1999. The Form 10-K
includes our audited 1999 financial statements, descriptions of our
acquisition by DLJ and descriptions of companies we have acquired.
- Our Form 10-Q for the three months ended March 31, 2000. The Form 10-Q
includes our unaudited financial statements for the three months ended
March 31, 2000.
- Our Form 8-K filed on May 25, 2000. The Form 8-K includes information
about our acquisition of Carl Booth.
You may read and copy any reports, statements or other information we file
at the SEC's reference room in Washington D.C. Please call the SEC at (202)
942-8090 for further information on the operation of the reference rooms. You
can also request copies of these documents, upon payment of a duplicating fee,
by writing to the SEC, or review our SEC filings on the SEC's EDGAR web site,
which can be found at http:\\www.sec.gov. You may also write or call us at our
corporate office located at 2361 Rosecrans Avenue, Suite 180, El Segundo,
California 90245. Our telephone number is (310) 725-9123.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired.
Our Form 8-K filed on May 25, 2000 is hereby amended by deleting the
paragraph in Item 7(a) and replacing it with the following:
Audited financial statements of Carl F. Booth & Co., Inc., including
related notes and independent accountants' report, are attached hereto as
follows:
<TABLE>
<CAPTION>
Page
--------
<S> <C>
Report of Independent Accountants ......................................................................... F-1
Balance Sheets as of December 31, 1998 and 1999 and March 31, 2000 (unaudited) ............................ F-2
Statements of Income for the years ended December 31, 1998 and 1999 and
the three months ended March 31, 1999 and 2000 (unaudited) .............................................. F-3
Statements of Stockholders' Equity for years ended December 31, 1998 and 1999 and
the three months ended March 31, 2000 (unaudited) ....................................................... F-4
Statements of Cash Flows for the years ended December 31, 1998 and 1999 and
the three months ended March 31, 1999 and 2000 (unaudited) .............................................. F-5
Notes to the Financial Statements ......................................................................... F-6
</TABLE>
1
<PAGE>
(b) Pro forma financial information.
Our Form 8-K filed on May 25, 2000 is hereby amended by deleting the
paragraph in Item 7(b) and replacing it with the following:
Unaudited pro forma consolidated financial information reflecting our
acquisition of Carl F. Booth & Co., Inc., including related explanatory notes,
are attached hereto as follows:
<TABLE>
<CAPTION>
Page
--------
<S> <C>
Basis of Presentation ..................................................................................... P-1
Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2000 ....................................... P-2
Unaudited Pro Forma Consolidated Statement of Operations for the:
Year ended December 31, 1999 ............................................................................ P-3
Three months ended March 31, 2000 ....................................................................... P-4
Notes to Unaudited Pro Forma Consolidated Financial Data .................................................. P-5
</TABLE>
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit
No. Exhibit Description
--------- ---------------------------------------------------------------------------------------------------------
<S> <C>
3.25.1 Certificate of Formation and Certificate of Amendment of Carl F. Booth & Co., LLC *
3.25.2 Limited Liability Company Agreement of Carl F. Booth & Co., LLC *
10.10.3 Third Amended and Restated Credit Agreement dated as of May
11, 2000 among DeCrane Aircraft Holdings, Inc., the lenders
listed therein, DLJ Capital Funding, Inc., as syndication
agent, and Bank One NA, as administrative agent **
21.1 List of Subsidiaries of Registrant *
</TABLE>
--------------------
* Previously filed with our Form 8-K on May 25, 2000
** Filed herewith
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DECRANE AIRCRAFT HOLDINGS, INC.
(Registrant)
June 16, 2000 By: /s/ RICHARD J. KAPLAN
-------------------------------------------------------
Name: Richard J. Kaplan
Title: Senior Vice President, Chief Financial Officer,
Secretary and Treasurer
2
<PAGE>
FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholders of
Carl F. Booth & Co., Inc.
In our opinion, the accompanying balance sheets and the related statements
of income, of stockholders' equity and of cash flows present fairly, in all
material respects, the financial position of Carl F. Booth & Co., Inc. at
December 31, 1998 and 1999 and the results of its operations and its cash flows
for the years then ended, in conformity with accounting principles generally
accepted in the United States. These financial statements are the responsibility
of the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States which require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Los Angeles, California
April 14, 2000
F-1
<PAGE>
CARL F. BOOTH & CO., INC.
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------------ -----------
1998 1999 2000
----------- ----------- -----------
(UNAUDITED)
ASSETS
<S> <C> <C> <C>
Current assets
Cash and cash equivalents ....................................................... $ 1,202 $ 1,539 $ 2,798
Trade accounts receivable ....................................................... 976 1,340 1,930
Inventories ..................................................................... 2,838 4,259 3,647
----------- ----------- -----------
Total current assets .......................................................... 5,016 7,138 8,375
Property, plant and equipment, net ................................................. 1,402 1,709 1,734
Other assets ....................................................................... 20 - -
----------- ----------- -----------
Total assets ................................................................ $ 6,438 $ 8,847 $ 10,109
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Trade accounts payable .......................................................... $ 400 $ 647 $ 765
Accrued expenses and other liabilities .......................................... 191 460 364
Customer deposits................................................................ 1,308 2,941 2,768
----------- ----------- -----------
Total current liabilities ..................................................... 1,899 4,048 3,897
----------- ----------- -----------
Commitments and contingencies (Note 7).............................................. - - -
----------- ----------- -----------
Stockholders' equity
Common stock, $1 par value, 1,000 shares authorized; 1,000 shares
issued and outstanding at December 31, 1998 and 1999 and March 31, 2000........ 1 1 1
Additional paid-in capital ...................................................... 11 11 11
Retained earnings ............................................................... 4,527 4,787 6,200
----------- ----------- -----------
Total stockholders' equity .................................................... 4,539 4,799 6,212
----------- ----------- -----------
Total liabilities and stockholders' equity .................................. $ 6,438 $ 8,847 $ 10,109
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
CARL F. BOOTH & CO., INC.
STATEMENTS OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------------ ------------------------
1998 1999 1999 2000
----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Sales ................................................................. $ 9,801 $ 13,757 $ 3,148 $ 4,414
Cost of sales ......................................................... 7,244 10,163 2,327 2,172
----------- ----------- ----------- -----------
Gross profit .......................................................... 2,557 3,594 821 2,242
Operating expenses
Selling, general and administrative ................................ 1,061 1,237 258 307
----------- ----------- ----------- -----------
Income from operations ................................................ 1,496 2,357 563 1,935
Other income
Interest income, net ............................................... 32 65 13 22
Other income, net .................................................. 4 25 69 -
----------- ----------- ----------- -----------
Net income ............................................................ $ 1,532 $ 2,447 $ 645 $ 1,957
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
CARL F. BOOTH & CO., INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK
------------------------
NUMBER ADDITIONAL
OF PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 ............................... 1,000 $ 1 $ 11 $ 3,727 $ 3,739
Net income ............................................ - - - 1,532 1,532
Distributions to stockholders ......................... - - - (732) (732)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 ............................... 1,000 1 11 4,527 4,539
Net income ............................................ - - - 2,447 2,447
Distributions to stockholders ......................... - - - (2,187) (2,187)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1999 ............................... 1,000 1 11 4,787 4,799
Net income (Unaudited) ................................ - - - 1,957 1,957
Distributions to stockholders (Unaudited) ............. - - - (544) (544)
----------- ----------- ----------- ----------- -----------
Balance, March 31, 2000 (Unaudited) ...................... 1,000 $ 1 $ 11 $ 6,200 $ 6,212
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
CARL F. BOOTH & CO., INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------------ -------------------------
1998 1999 1999 2000
----------- ----------- ----------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net income ......................................................... $ 1,532 $ 2,447 $ 645 $ 1,957
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation ................................................... 272 312 68 66
Changes in operating assets and liabilities
Trade accounts receivable ........................................ (525) (364) (286) (590)
Inventories ...................................................... (966) (1,421) (153) 612
Trade accounts payable ........................................... 290 247 (147) 118
Accrued expenses and other liabilities ........................... - 269 67 (96)
Customer deposits ................................................ 1,308 1,633 348 (173)
----------- ----------- ----------- ------------
Net cash provided by operating activities ...................... 1,911 3,123 542 1,894
----------- ----------- ----------- -----------
Cash flows from investing activities
Purchases of property, plant and equipment ......................... (458) (691) (205) (91)
Proceeds from sale of property, plant and equipment ................ - 92 - -
----------- ----------- ----------- -----------
Net cash used for investing activities ......................... (458) (599) (205) (91)
----------- ----------- ----------- -----------
Cash flows from financing activities
Distributions paid to stockholders ................................. (732) (2,187) (495) (544)
----------- ----------- ----------- -----------
Net cash used for financing activities ......................... (732) (2,187) (495) (544)
----------- ----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents .................. 721 337 (158) 1,259
Cash and cash equivalents at beginning of period ...................... 481 1,202 1,202 1,539
----------- ----------- ----------- -----------
Cash and cash equivalents at end of period ............................ $ 1,202 $ 1,539 $ 1,044 $ 2,798
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
CARL F. BOOTH & CO., INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - THE COMPANY
Carl F. Booth & Co., Inc. (the "Company") is a New Albany, Indiana based
manufacturer of wood veneer panels primarily used in aircraft interior
cabinetry. The Company operates in the U.S. and its customers are principally
concentrated in the corporate aircraft industry.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original
maturity of three months or less when purchased to be cash equivalents.
It is the policy of the Company to deposit its cash and cash equivalents in
federally insured financial institutions. In addition, one of the banks used by
the Company maintains a special insurance policy that covers the first $500,000
of customer's bank balances. From time to time deposits may exceed Federal
Deposit Insurance Corporation ("FDIC") and special insurance limits. At December
31, 1999, the Company had approximately $1 million on deposit in excess of the
FDIC and special insurance limits.
INVENTORIES
Inventories are valued at the lower of cost or market, cost being
determined using the first-in, first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost less accumulated
depreciation. Major renewals and betterments are capitalized and ordinary
repairs and maintenance are charged against operations in the year incurred.
Depreciation is computed using the straight-line method for buildings and the
double-declining balance method for machinery and equipment, vehicles and
furniture and fixtures. Estimated useful lives are 40 years for buildings and
building improvements and 5 to 7 years for machinery and equipment, vehicles and
furniture and fixtures.
REVENUE RECOGNITION
Revenue is recognized when products are shipped.
INCOME TAXES
The Company elected to have its income taxed as an S corporation under
provisions of the Internal Revenue Code; therefore, taxable income or loss is
reported to the individual stockholders for inclusion in their tax returns, and
no provision for Federal and state income tax is included in these statements.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of financial instruments including cash, receivables,
accounts payable and accrued expenses and other liabilities do not significantly
differ from fair values as of December 31, 1998 and 1999.
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 contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-6
<PAGE>
CARL F. BOOTH & CO., INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
UNAUDITED INTERIM RESULTS
The financial information as of March 31, 2000 and for the six months ended
March 31, 1999 and 2000 is unaudited. In the opinion of the Company, the
unaudited financial information is presented on a basis consistent with the
audited financial statements and contains all adjustments, consisting only of
normal recurring adjustments, necessary for a fair statement of the results for
such interim periods. The results of operations for the interim periods are not
necessarily indicative of results of operations for the full year.
NOTE 3 - ACCOUNTS RECEIVABLE AND SIGNIFICANT CUSTOMERS
ACCOUNTS RECEIVABLE
The Company is potentially subject to concentration of credit risk as the
Company relies heavily on customers operating in the domestic corporate aircraft
industry. Generally, the Company does not require collateral or other security
to support accounts receivable subject to credit risk. Under certain
circumstances, deposits or cash-on-delivery terms are required. If necessary,
the Company maintains reserves for potential credit losses and generally, such
losses have historically been minimal and within management's expectations.
SIGNIFICANT CUSTOMERS
Three customers each accounted for more than 10% of the Company's revenues
as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1998 1999
----------- ----------
<S> <C> <C>
Gulfstream ...................................................................................... 24% 24%
Falcon Jet ...................................................................................... 19% 16%
Precision Pattern, Inc........................................................................... 12% 12%
</TABLE>
NOTE 4 - INVENTORIES
Inventories consist of the following (amounts in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------------ -----------
1998 1999 2000
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Raw material ....................................................................... $ 2,757 $ 4,067 $ 3,451
Work-in-process .................................................................... 81 192 196
----------- ----------- -----------
Total inventories ............................................................... $ 2,838 $ 4,259 $ 3,647
=========== =========== ===========
</TABLE>
F-7
<PAGE>
CARL F. BOOTH & CO., INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following (amounts in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1998 1999
----------- -----------
<S> <C> <C>
Land ............................................................................................ $ 35 $ 35
Buildings and building improvements ............................................................. 749 1,131
Machinery and equipment ......................................................................... 1,678 1,789
Furniture and fixtures .......................................................................... 21 44
----------- -----------
Total cost ................................................................................... 2,483 2,999
Accumulated depreciation and amortization .................................................... (1,081) (1,290)
----------- -----------
Net property and equipment ................................................................... $ 1,402 $ 1,709
=========== ===========
</TABLE>
Depreciation expense for the years ended December 31, 1998 and 1999 was
$272,000 and $312,000, respectively.
NOTE 6 - EMPLOYEE BENEFIT PLANS
The Company has a savings and retirement plan which qualifies under Section
401(k) of the Internal Revenue Code in which all full-time employees are
eligible to participate. In accordance with the terms of the plan, employees may
elect to contribute up to 15% of their annual compensation to the plan, subject
to certain limitations. The Board of Directors may elect to declare a
discretionary matching contribution to the Plan of 50% of all contributions made
up to 8% of each employee's salary. The Company also contributes 3% of all
salaries to eligible employees to the plan at year-end. The Company's expense
related to its matching contributions to the plan totaled $129,000 and $192,000
during the years ended December 31, 1998 and 1999, respectively.
NOTE 7 - COMMITMENT AND CONTINGENCIES
The Company is involved in routine legal and administrative proceedings
incidental to the normal conduct of business. Management believes the ultimate
disposition of these matters will not have a material adverse effect on the
Company's financial position, results of operations or cash flows.
NOTE 8 - SUBSEQUENT EVENT
In May 2000, substantially all of the Company's net assets were acquired by
DeCrane Aircraft Holdings, Inc.
F-8
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
BASIS OF PRESENTATION
The following unaudited pro forma consolidated financial data for DeCrane
Aircraft is based on our historical financial statements adjusted to reflect:
- our 1999 PATS, PPI, Custom Woodwork, PCI NewCo, International Custom
Interiors and Infinity acquisitions; and
- our 2000 Carl Booth acquisition, which was completed subsequent to
March 31, 2000.
For additional information on the 1999 acquisitions, see the notes to our
audited consolidated financial statements included in our Form 10-K for the year
ended December 31, 1999. For additional information on the Carl Booth
acquisition, see our Form 8-K filed on May 25, 2000 and the Carl Booth audited
financial statements included elsewhere in this Form 8-K / A. Unaudited pro
forma consolidated statements of operations are presented for the year ended
December 31, 1999 and the three months ended March 31, 2000. The statements
reflect all of our acquisitions as if they had occurred as of January 1, 1999.
The unaudited pro forma balance sheet reflects the Carl Booth acquisition as of
March 31, 2000; all of the 1999 acquisitions had occurred by that date and are
therefore reflected in our historical balance sheet.
The pro forma adjustments are based upon available information and
assumptions management believes are reasonable under the circumstances. The
unaudited pro forma consolidated financial data and accompanying notes should be
read in conjunction with our historical audited and unaudited financial
statements and related notes and the historical audited financial statements and
related notes of the companies we have acquired. The pro forma financial data
does not purport to represent what our actual results of operations or actual
financial position would have been if the transactions described above in fact
occurred on such dates or to project our results of operations or financial
position for any future period or date.
P-1
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
<TABLE>
<CAPTION>
COMPANY ACQUIRED SUBSEQUENT
DECRANE TO MARCH 31, 2000 (2)
AIRCRAFT --------------------------------
HISTORICAL (1) HISTORICAL (3) ADJUSTMENTS PRO FORMA
----------- --------------- -------------- -----------
(DOLLARS IN THOUSANDS)
ASSETS
<S> <C> <C> <C> <C>
Current assets
Cash and cash equivalents ................................... $ 648 $ 2,798 $ 12,204 (4) $ 15,650
Accounts receivable, net .................................... 42,755 1,930 - 44,685
Inventories ................................................. 62,174 3,647 - 65,821
Deferred income taxes ....................................... 5,452 - - 5,452
Prepaid expenses and other current assets ................... 2,110 - - 2,110
----------- ---------- ----------- -----------
Total current assets ...................................... 113,139 8,375 12,204 133,718
----------- ---------- ----------- -----------
Property and equipment, net .................................... 37,223 1,734 - 38,957
----------- ---------- ----------- -----------
Other assets, principally intangibles, net
Goodwill and other intangibles .............................. 356,588 - 16,084 (5) 372,672
Deferred financing costs .................................... 11,517 - 1,900 (6) 13,417
Other assets ................................................ 1,220 - - 1,220
----------- ---------- ----------- -----------
Net other assets, principally intangibles ................. 369,325 - 17,984 387,309
----------- ---------- ----------- -----------
Total assets ............................................ $ 519,687 $ 10,109 $ 30,188 $ 559,984
=========== ========== =========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Current portion of long-term debt ........................... $ 5,544 $ - $ 713 (7) $ 6,257
Accounts payable ............................................ 15,840 765 - 16,605
Accrued liabilities ......................................... 27,976 3,132 - 31,108
Income taxes payable ........................................ 3,994 - - 3,994
----------- ---------- ----------- -----------
Total current liabilities ................................. 53,354 3,897 713 57,964
----------- ---------- ----------- -----------
Long-term debt
Senior revolving credit facility ............................ 26,100 - (26,100) (8) -
Senior term facility ........................................ 207,525 - 54,287 (7) 261,812
Senior subordinated notes ................................... 100,000 - - 100,000
Other long-term obligations ................................. 1,263 - - 1,263
----------- ---------- ----------- -----------
Total long-term debt ...................................... 334,888 - 28,187 363,075
----------- ---------- ----------- -----------
Deferred income taxes .......................................... 21,763 - - 21,763
Other long-term liabilities .................................... 3,223 - - 3,223
Stockholder's equity ........................................... 106,459 6,212 1,288 (9) 113,959
----------- ---------- ----------- -----------
Total liabilities and stockholder's equity .............. $ 519,687 $ 10,109 $ 30,188 $ 559,984
=========== ========== =========== ===========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Financial Data.
P-2
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
ACQUISITION ADJUSTMENTS (11)
DECRANE -----------------------------
AIRCRAFT HISTORICAL
HISTORICAL (10) RESULTS (12) ADJUSTMENTS PRO FORMA
--------------- ------------ --------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues ....................................................... $ 244,048 $ 66,591 $ (2,890) (13) $ 307,749
Cost of sales .................................................. 165,871 46,603 (2,890) (13) 209,584
----------- ---------- ----------- -----------
Gross profit (loss) ....................................... 78,177 19,988 - 98,165
Selling, general and administrative expenses ................... 40,803 6,561 (1,206) (14) 46,158
Amortization of intangible assets............................... 13,073 124 2,327 (15) 15,524
----------- ---------- ----------- -----------
Operating income .......................................... 24,301 13,303 (1,121) 36,483
Interest expense ............................................... 27,918 87 11,343 (16) 39,348
Other income ................................................... (199) (54) - (253)
----------- ---------- ----------- -----------
Income (loss) before provision for income taxes and
extraordinary item .......................................... (3,418) 13,270 (12,464) (2,612)
Provision for income taxes (benefit) ........................... 952 (827) 980 (17) 1,105
----------- ---------- ----------- -----------
Net income (loss) .............................................. $ (4,370) $ 14,097 $ (13,444) $ (3,717)
=========== ========== =========== ===========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Financial Data.
P-3
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
ACQUISITION ADJUSTMENTS (11)
DECRANE ----------------------------
AIRCRAFT HISTORICAL
HISTORICAL (10) RESULTS (12) ADJUSTMENTS PRO FORMA
--------------- ----------- ----------------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues ....................................................... $ 79,178 $ 4,414 $ (1,102) (13) $ 82,490
Cost of sales .................................................. 52,463 2,172 (1,102) (13) 53,533
----------- ---------- ----------- -----------
Gross profit (loss) ....................................... 26,715 2,242 - 28,957
Selling, general and administrative expenses ................... 11,609 307 - (14) 11,916
Amortization of intangible assets............................... 4,213 - 134 (15) 4,347
----------- ---------- ----------- -----------
Operating income .......................................... 10,893 1,935 (134) 12,694
Interest expense (income)....................................... 8,676 (22) 1,618 (16) 10,272
Other expenses ................................................. 64 - - 64
----------- ---------- ----------- -----------
Income (loss) before provision for income taxes and
extraordinary item .......................................... 2,153 1,957 (1,752) 2,358
Provision for income taxes (benefit) ........................... 1,398 - 92 (17) 1,490
----------- ---------- ----------- -----------
Net income (loss) .............................................. $ 755 $ 1,957 $ (1,844) $ 868
=========== ========== =========== ===========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Financial Data.
P-4
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
(1) Reflects our financial position subsequent to our 1999 PATS, PPI, Custom
Woodwork, PCI NewCo, International Custom Interiors and Infinity
acquisitions. Excludes the effect of our acquisition of Carl Booth that
occurred subsequent to March 31, 2000.
(2) Reflects our acquisition of Carl Booth subsequent to March 31, 2000. The
acquisition was funded with borrowings under our senior credit facility
and a capital contribution from DeCrane Holdings. Concurrently with the
Carl Booth acquisition financing, we also increased our senior term debt
borrowings to refinance other existing senior credit facility
indebtedness and to raise additional cash to fund future acquisitions.
The sources and uses of funds from the financing were as follows:
<TABLE>
<CAPTION>
CARL SENIOR
BOOTH CREDIT
ACQUISITION FACILITY
FINANCING REFINANCING PRO FORMA
----------- ----------- -----------
(DOLLARS IN THOUSANDS)
SOURCES:
<S> <C> <C> <C>
Acquisition financing:
Senior credit facility borrowings ......................................... $ 11,998 $ (11,998) $ -
Capital contribution from DeCrane Holdings ................................ 7,500 - 7,500
Senior credit facility refinancing (a):
Term A facility ........................................................... - 2,500 2,500
Term D facility ........................................................... - 52,500 52,500
----------- ----------- -----------
Total sources ........................................................... $ 19,498 $ 43,002 $ 62,500
=========== =========== ===========
USES:
Acquisition:
Purchase of net assets .................................................... $ 18,653 $ - $ 18,653
Acquisition fees and expenses ............................................. 845 - 845
Senior credit facility refinancing (a):
Acquisition revolving credit facility (b).................................. - 25,000 25,000
Working capital revolving credit facility (b).............................. - 1,100 1,100
Financing fees and expenses ............................................... - 1,900 1,900
Excess cash (b) ........................................................... - 15,002 15,002
----------- ----------- -----------
Total uses .............................................................. $ 19,498 $ 43,002 $ 62,500
=========== =========== ===========
</TABLE>
------------------
(a) Excludes the conversion of $69.3 million of Term C indebtedness to
Term B indebtedness in conjunction with the refinancing.
(b) A portion of the proceeds from the financing were used to repay
$32.0 million of then existing revolving credit facility borrowings.
The pro forma balance sheet reflects the repayment of $26.1 million
of revolving credit facility borrowings outstanding as of March 31,
2000 and the excess funds as cash.
(3) Reflects the historical financial position of Carl Booth.
(4) Reflects $15.0 million of excess cash received in connection with the
financing reduced by $2.8 million of Carl Booth cash not acquired.
(5) Reflects the excess of the Carl Booth purchase price over the fair value
of the assets acquired. For purposes of this pro forma consolidated
financial data, we allocated the excess purchase prices to goodwill and
amortized the amounts on a straight-line basis over 30 years. Such
allocations are preliminary and may change upon completion of the final
valuations of the assets acquired.
P-5
<PAGE>
(6) Reflects financing fees and expenses associated with the financing.
(7) Reflects the increase resulting from the senior term debt borrowings in
connection with the financing.
(8) Reflects the repayment of existing borrowings with a portion of the
proceeds from the financing.
(9) Reflects the additional capital contribution from DeCrane Holdings,
reduced by the elimination of Carl Booth's stockholders' equity upon
acquisition.
(10) Reflects our historical results of operations for the year ended
December 31, 1999 and the three months ended March 31, 2000 derived from
our historical audited and unaudited consolidated financial statements.
(11) Reflects the historical results of operations of companies we acquired
for the periods not included in our historical results.
(12) Reflects the results of operations of companies we acquired that are not
included in our historical results. The results of operations for the
companies we acquired are for the periods from the beginning of the
period presented to the dates indicated below. For periods subsequent to
those dates, their respective results of operations are included in our
historical results.
1999 ACQUISITIONS
- PATS - January 21, 1999;
- PPI - April 22, 1999;
- Custom Woodwork - August 4, 1999;
- PCI NewCo - October 5, 1999;
- International Custom Interiors - October 7, 1999;
- Infinity - December 16, 1999; and
2000 ACQUISITION
- Carl Booth - March 31, 2000.
A table summarizing the acquired companies' results of operations for the
twelve months ended December 31, 1999 appears below. For the three months
ended March 31, 2000, the amounts reflect the historical results of
operations for Carl Booth.
<TABLE>
<CAPTION>
INTERNATIONAL
CUSTOM PCI CUSTOM CARL
PATS PPI WOODWORK NEWCO INTERIORS INFINITY BOOTH TOTAL
------- ------- ------ ------ ------- ------- ------ --------
(DOLLARS IN THOUSANDS)
YEAR ENDED DECEMBER 31, 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues ................................... $ 451 $12,757 $4,972 $6,692 $ 4,753 $23,209 $13,757 $ 66,591
Cost of sales .............................. 1,229 8,435 2,203 4,747 3,057 16,769 10,163 46,603
------- ------- ------ ------ ------- ------- ------ --------
Gross profit (loss)......................... (778) 4,322 2,769 1,945 1,696 6,440 3,594 19,988
Selling, general and administrative expenses 611 944 262 520 492 2,495 1,237 6,561
Amortization of intangible assets .......... - 124 - - - - - 124
------- ------- ------ ------ ------- ------- ------ --------
Operating income (loss) .................... (1,389) 3,254 2,507 1,425 1,204 3,945 2,357 13,303
Interest expense (income) .................. 23 127 (11) (2) (19) 34 (65) 87
Other expenses (income) .................... 11 (33) - (3) (4) - (25) (54)
------- ------- ------ ------ ------- ------- ------ --------
Income (loss) before provision for
income taxes and extraordinary item ...... (1,423) 3,160 2,518 1,430 1,227 3,911 2,447 13,270
Provision for income taxes (benefit) ....... (1,244) - - - 417 - - (827)
------- ------- ------ ------ ------- ------- ------ --------
Net income (loss) .......................... $ (179) $ 3,160 $2,518 $1,430 $ 810 $ 3,911 $2,447 $ 14,097
======= ======= ====== ====== ======= ======= ====== ========
</TABLE>
P-6
<PAGE>
(13) Reflects the elimination of intercompany sales.
(14) Reflects the net decrease in selling, general and administrative expenses
attributable to the following:
<TABLE>
<CAPTION>
THREE
YEAR ENDED MONTHS ENDED
DECEMBER 31, MARCH 31,
1999 2000
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Acquisition related expenses (a).......................................................... $ (716) $ -
Bonuses and employment contract termination expenses (b).................................. (468) -
Other, net (c) ........................................................................... (22) -
----------- -----------
Decrease in selling, general and administrative expenses ............................... $ (1,206) $ -
=========== ===========
</TABLE>
-----------------
(a) Reflects a reduction for non-capitalizable acquisition expenses
incurred by PATS and Infinity on behalf of their stockholders related
to their respective acquisitions by us.
(b) Reflects a reduction in expenses attributable to employment contract
termination expenses and nonrecurring bonuses awarded prior to, and
in anticipation of, our acquisitions of PATS and Infinity.
(c) Reflects cost savings attributable to employee benefit plans
implemented at the companies we acquired.
(15) Reflects the net increase in amortization expense pertaining to the
amortization of goodwill and other intangible assets related to the
companies we have acquired as follows:
<TABLE>
<CAPTION>
YEARS THREE
INTANGIBLE ESTIMATED YEAR ENDED MONTHS ENDED
ASSET USEFUL DECEMBER 31, MARCH 31,
AMOUNT LIFE (A) 1999 2000
----------- ------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Elimination of predecessor basis amortization (b)............... $ (124) $ -
Amortization attributable to companies acquired (c):
Goodwill ..................................................... $ 127,006 30 2,180 134
Customer contracts ........................................... 8,390 7 100 -
FAA certifications ........................................... 2,000 15 11 -
Engineering drawings ......................................... 2,624 15 25 -
Assembled workforce .......................................... 2,327 7 135 -
----------- -----------
Net increase in amortization expense ....................... $ 2,327 $ 134
=========== ===========
</TABLE>
----------------
(a) Amortized on a straight-line basis over the respective estimated
useful lives.
(b) Reflects the elimination of amortization expense recorded by PPI for
the period prior to their acquisition.
(c) Reflects adjustments for all of our 1999 acquisitions and our 2000
Carl Booth acquisition from the beginning of the period presented to
their respective acquisition dates; subsequent to those dates,
amortization expense is included in our historical results.
(16) Reflects the net increase in interest expense, including deferred
financing cost amortization and commitment fees, as a result of our 1999
acquisitions and our 2000 Carl Booth acquisition as if they all had
occurred on January 1, 1999.
The components of pro forma interest expense are summarized in the table
on the following page.
P-7
<PAGE>
<TABLE>
<CAPTION>
THREE
YEAR ENDED MONTHS ENDED
DECEMBER 31, MARCH 31,
RATE OR TERM AMOUNT 1999 2000
---------------- ----------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Senior credit facility (a):
Term facilities:
Term A .............................................. LIBOR (b) + 3.0% (c) 3,450 897
Term B .............................................. LIBOR (b) + 3.5% (d) 11,930 3,215
Term D .............................................. LIBOR (b) + 4.0% (e) 8,668 2,337
Senior subordinated notes ............................... 12.00% 100,000 12,000 3,000
Customer advance ........................................ 7.50% (f) 380 76
Other long-term obligations ............................. 6.5% to 21.0% (g) 151 60
Deferred financing cost amortization:
Senior revolving credit facilities .................... 6 years (h) 1,277 213 53
Senior term facilities:
Term A .............................................. 6 years (i) 1,141 343 82
Term B .............................................. 7 years (i) 4,211 679 169
Term D .............................................. 6 years (i) 3,100 481 120
Senior subordinated notes ............................. 10 years (i) 5,810 581 145
Commitment fees and expenses ............................ 472 118
----------- -----------
Pro forma interest expense (j) ...................... $ 39,348 $ 10,272
=========== ===========
</TABLE>
(a) Reflects our senior credit facility as amended for all of our 1999
acquisitions, our 2000 acquisition of Carl Booth and the concurrent
debt refinancing, as if all events had occurred on January 1, 1999.
(b) Calculations based on the historical LIBOR rates charged during the
respective periods. The weighted average historical LIBOR rates were
as follows:
<TABLE>
<CAPTION>
THREE
YEAR ENDED MONTHS ENDED
DECEMBER 31, MARCH 31,
1999 2000
------------ ------------
<S> <C> <C>
Term A facility ...................................................................... 5.368% 6.111%
Term B facility ...................................................................... 5.369% 6.119%
Term D facility ...................................................................... 5.396% 6.191%
</TABLE>
(c) Reflects Term A facility borrowings of $34.5 million at December 31,
1998 plus $7.5 million pro forma additional borrowings as of
January 1, 1999 for our Infinity and Carl Booth acquisitions,
reduced by quarterly principal payments of $500,000 on March 31,
1999, $531,000 on June 30 and September 30, 1999 and $1.1 million on
December 31, 1999 and March 31, 2000. The pro forma weighted average
borrowings outstanding under the Term A facility were $41.2 million
for the twelve months ended December 31, 1999 and $39.4 million for
the three months ended March 31, 2000.
(d) Reflects Term B facility borrowings of $44.9 million at December 31,
1998 plus $90.0 million pro forma additional borrowings as of
January 1, 1999 for our PATS and PPI acquisition, reduced by
quarterly principal payments of $163,000 on March 31, 1999 and
$338,000 commencing June 30, 1999. The pro forma weighted average
borrowings outstanding under the Term B facility were $134.5 million
for the twelve months ended December 31, 1999 and $133.7 million for
the three months ended March 31, 2000.
(e) Reflects Term D facility pro forma additional borrowings of $92.5
million as of January 1, 1999 for our Infinity and Carl Booth
acquisitions and to repay then existing revolving credit facility
borrowings as of January 1, 1998, reduced by quarterly principal
payments of $100,000 on March 31, 1999 and $231,000 commencing June
30, 1999. The pro forma weighted average borrowings outstanding
under the Term D facility were $92.3 million for the twelve months
ended December 31, 1999 and $91.7 million for the three months ended
March 31, 2000.
(f) Reflects a $5.0 million customer advance related to our PATS
acquisition, pro forma as of January 1, 1999, reduced by principal
payments of $975,000 on November 30, 1999. The pro forma weighted
average advance outstanding was $4.9 million for the twelve months
ended December 31, 1999 and $4.0 million for the three months ended
March 31, 2000.
P-8
<PAGE>
(g) Reflects historical interest expense related to capital lease
obligations and equipment term debt financing.
(h) Deferred financing costs are amortized on a straight-line basis over
the term of the agreement.
(i) Deferred financing costs are amortized using the effective interest
method.
(j) A 0.125% change in the interest rates charged on variable rate
borrowings would change interest expense and net income (loss) by:
<TABLE>
<CAPTION>
THREE
YEAR ENDED MONTHS ENDED
DECEMBER 31, MARCH 31,
1999 2000
------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Interest expense ......................................................................... $ 340 $ 83
Net income (loss) ........................................................................ 207 51
</TABLE>
(17) Represents an increase in the provision for income taxes as a result of
reflecting a pro forma provision for income taxes on the income of PPI,
Custom Woodwork, PCI NewCo, Infinity and Carl Booth which were taxed as S
Corporations or partnerships prior to their acquisitions, partially
offset by a decrease in pro forma taxable income. The effective tax rate
differs from the U.S. federal statutory rate primarily due to goodwill
amortization related to acquisitions not deductible for income tax
purposes and state and foreign income taxes.
(18) Supplemental pro forma financial information is as follows:
<TABLE>
<CAPTION>
THREE
YEAR ENDED MONTHS ENDED
DECEMBER 31, MARCH 31,
1999 2000
------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Net cash provided by (used for):
Operating activities ................................................................... $ 24,050 $ (1,953)
Investing activities ................................................................... (174,411) (29,858)
Financing activities ................................................................... 147,494 23,014
EBITDA (a) ............................................................................... 71,833 19,183
Depreciation and amortization (b) ........................................................ 22,311 6,400
Capital expenditures:
Paid in cash ........................................................................... 8,793 1,679
Financed with capital lease obligations ................................................ 1,865 58
Cash interest expense .................................................................... 37,051 9,703
Ratio of earnings to fixed charges (c) ................................................... -- 1.2x
</TABLE>
--------------------
(a) EBITDA equals operating income plus depreciation, amortization, the 1999
Systems Integration Group non-recurring restructuring charge, DLJ advisory
fees, non-cash acquisition related charges and other non-operating costs.
EBITDA is not a measure of performance or financial condition under
generally accepted accounting principles. EBITDA is not intended to
represent cash flow from operations and should not be considered as an
alternative to income from operations or net income computed in accordance
with generally accepted accounting principles, as an indicator of our
operating performance, as an alternative to cash flow from operating
activities or as a measure of liquidity. The funds depicted by EBITDA are
not available for our discretionary use due to funding requirements for
working capital, capital expenditures, debt service, income taxes and other
commitments and contingencies. We believe that EBITDA is a standard measure
of liquidity commonly reported and widely used by analysts, investors and
other interested parties in the financial markets. However, not all
companies calculate EBITDA using the same method, and the EBITDA numbers
set forth above may not be comparable to EBITDA reported by other
companies.
(b) Reflects depreciation and amortization of plant and equipment, goodwill and
other intangible assets. Excludes amortization of deferred financing costs,
which are classified as a component of interest expense.
P-9
<PAGE>
(c) For purposes of calculating the ratio of earnings to fixed charges,
earnings represent net income before income taxes, minority interest in the
income of majority-owned subsidiaries, extraordinary items and fixed
charges. Fixed charges consist of:
- interest, whether expensed or capitalized;
- amortization of debt expense and discount relating to any indebtedness,
whether expensed or capitalized; and
- one-third of rental expense under operating leases which is considered
to be a reasonable approximation of the interest portion of such
expense.
There were deficiencies of earnings to fixed charges of $2.4 million for
the year ended December 31, 1999.
P-10
