<PAGE> 1
FORM 8
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT TO APPLICATION OR REPORT
FILED PURSUANT TO SECTION 12, 13, OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
WPI GROUP, INC.
---------------
(Exact name of registrant as specified in charter)
AMENDMENT NO. 1
---------------
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its CURRENT REPORT DATED JULY 23, 1996
on Form 8-K as set forth in the pages attached hereto:
Item 7: Financial Statements and Exhibits
---------------------------------
Financials:
Oyster Terminals Limited Consolidated Financial Statements
as of April 30, 1996.
Pro Forma Combined Financial Statements for WPI Group, Inc
and Oyster Terminals Limited as of June 30, 1996.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
WPI Group, Inc.
BY: /s/ Charles F. Johnson
--------------------------------
Charles F. Johnson
Vice President and
Chief Financial Officer
Date: September 27, 1996
<PAGE> 2
OYSTER TERMINALS LIMITED
<PAGE> 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Oyster Terminals Limited
We have audited the accompanying balance sheet of OYSTER TERMINALS LIMITED as of
April 30, 1996 and the related profit and loss accounts, statements of changes
in shareholders' equity and statements of cash flows for the years ended April
30, 1996 and 1995. 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 audit.
We conducted our audit in accordance with United Kingdom generally accepted
auditing standards, which are substantially in accordance with United States
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 Oyster Terminals Limited as of
April 30, 1996 and the results of their operations and their cash flows for each
of the two years then ended in conformity with generally accepted United Kingdom
accounting principles.
Accounting practices used by the Company in preparing the accompanying financial
statements conform with generally accepted accounting principles in the United
Kingdom, but do not conform with accounting principles generally accepted in the
United States. A description of these differences and a complete reconciliation
of net income and shareholders' equity to United States generally accepted
accounting principles is set out in Note 14 to the financial statements.
Arthur Andersen LLP
Bristol, England
September 11, 1996
-1-
<PAGE> 4
OYSTER TERMINALS LIMITED
<TABLE>
PROFIT AND LOSS ACCOUNTS
FOR THE YEARS ENDED APRIL 30, 1995 AND 1996
<CAPTION>
YEAR ENDED APRIL 30
--------------------------
1995 1996
---------- ----------
[POUND] [POUND]
<S> <C> <C>
TURNOVER (Note 2) 4,257,487 4,885,480
COST OF SALES (1,892,613) (2,214,139)
---------- ----------
GROSS PROFIT 2,364,874 2,671,341
DISTRIBUTION COSTS (653,386) (527,133)
ADMINISTRATIVE EXPENSES (698,496) (708,259)
---------- ----------
OPERATING PROFIT (Note 3) 1,012,992 1,435,949
INTEREST (Note 4) 31,968 94,091
---------- ----------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAX 1,044,960 1,530,040
TAX ON PROFIT ON ORDINARY ACTIVITIES (Note 5) (343,782) (546,182)
---------- ----------
PROFIT FOR THE FINANCIAL YEAR 701,178 983,858
DIVIDEND PAID (252,000) (320,000)
---------- ----------
RETAINED PROFIT FOR THE FINANCIAL YEAR 449,178 663,858
---------- ----------
</TABLE>
There are no recognised gains and losses other than the profits for each
financial year, and accordingly, no statements of recognised gains and losses
are presented.
None of the Company's activities were acquired or discontinued during the
current and previous years.
A summary of the significant adjustments to profit for the financial years
that would have been required had United States generally accepted accounting
principles been applied instead of those generally accepted in the United
Kingdom is set forth in Note 14 to the Financial Statements.
The accompanying notes are an integral part of these profit and loss accounts.
-2-
<PAGE> 5
OYSTER TERMINALS LIMITED
<TABLE>
BALANCE SHEET
APRIL 30, 1996
<CAPTION>
APRIL 30,
1996
----------
[POUND]
<S> <C>
FIXED ASSETS:
Tangible assets (Note 8) 392,908
----------
CURRENT ASSETS:
Stocks (Note 9) 951,906
Debtors (Note 10) 869,129
Cash at bank and in hand 1,718,543
----------
3,539,578
CREDITORS:
Amounts falling due within one year (Note 11) (1,290,887)
----------
NET CURRENT ASSETS 2,248,691
PROVISIONS FOR LIABILITIES AND CHARGES (Note 12) (11,377)
----------
NET ASSETS 2,630,222
----------
CAPITAL AND RESERVES:
Called-up share capital 100,000
Profit and loss account 2,530,222
----------
SHAREHOLDERS' FUNDS (ALL EQUITY) 2,630,222
----------
</TABLE>
A summary of the significant adjustments to shareholders' equity that would
be required had United States generally accepted principles been applied instead
of those generally accepted in the United Kingdom is set forth in Note 14 of the
Financial Statements.
The accompanying notes are an integral part of this balance sheet.
-3-
<PAGE> 6
OYSTER TERMINALS LIMITED
<TABLE>
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED APRIL 30, 1995 AND 1996
<CAPTION>
ORDINARY ORDINARY
SHARES SHARES TOTAL
OF[POUND]1 OF[POUND]1 RETAINED SHAREHOLDERS'
EACH EACH EARNINGS EQUITY
---------- ---------- -------- -------------
NUMBER [POUND] [POUND] [POUND]
<S> <C> <C> <C> <C>
May 1, 1994 100,000 100,000 1,417,186 1,517,186
Profit for the financial year - - 701,178 701,178
Dividends ([pound]2.52 per ordinary share) - - (252,000) (252,000)
------- ------- --------- ---------
April 30, 1995 100,000 100,000 1,866,364 1,966,364
Profit for the financial year - - 983,858 983,858
Dividends ([pound]3.20 per ordinary share) - - (320,000) (320,000)
------- ------- --------- ---------
April 30, 1996 100,000 100,000 2,530,222 2,630,222
------- ------- --------- ---------
</TABLE>
Share capital comprises ordinary shares, [pound]1 par value: 100,000 shares
authorised, allotted and fully paid.
The accompanying notes are an integral part of these statements of changes in
shareholders' equity.
-4-
<PAGE> 7
OYSTER TERMINALS LIMITED
<TABLE>
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED APRIL 30, 1995 AND 1996
<CAPTION>
YEAR ENDED APRIL 30
---------------------
1995 1996
--------- ---------
[POUND] [POUND]
<S> <C> <C>
NET CASH INFLOW FROM OPERATING ACTIVITIES (Note A) 1,014,450 1,391,589
--------- ---------
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE:
Interest received 34,543 97,623
Interest paid (2,575) (3,532)
Dividends paid (252,000) (320,000)
--------- ---------
Net cash outflow from returns on investments and
servicing of finance (220,032) (225,909)
--------- ---------
TAX:
Corporation tax paid (49,171) (327,910)
--------- ---------
INVESTING ACTIVITIES:
Payments to acquire tangible fixed assets (12,455) (75,315)
Receipts from sales of tangible fixed assets 1,750 3,404
--------- ---------
Net cash outflow from investing activities (10,705) (71,911)
--------- ---------
NET CASH INFLOW BEFORE AND AFTER FINANCING, BEING THE
INCREASE IN CASH AND CASH EQUIVALENTS (Note B) 734,542 765,859
--------- ---------
</TABLE>
A summary of the significant adjustments to the Statements of Cash Flows
that would be required had United States generally accepted accounting
principles been applied instead of those generally accepted in the United
Kingdom is set forth in Note 14 of Notes to the Financial Statements.
The accompanying notes are an integral part of these statements.
-5-
<PAGE> 8
OYSTER TERMINALS LIMITED
NOTES TO THE STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED APRIL 30, 1995 AND 1996
<TABLE>
A. RECONCILIATION OF OPERATING PROFIT TO CASH FLOWS
Reconciliation of operating profit to net cash inflow from operating
activities:
<CAPTION>
YEAR ENDED APRIL 30
---------------------
1995 1996
--------- ---------
[POUND] [POUND]
<S> <C> <C>
OPERATING PROFIT 1,012,992 1,435,949
Depreciation 61,110 57,218
Profit on sale of tangible fixed assets - (317)
Decrease/(increase) in stocks 226,809 (288,327)
(Increase)/decrease in debtors (269,119) 215,418
Decrease in creditors (17,342) (28,352)
--------- ---------
NET CASH INFLOW FROM OPERATING ACTIVITIES 1,014,450 1,391,589
--------- ---------
</TABLE>
<TABLE>
B. CASH AND CASH EQUIVALENTS
Analysis of balances shown in the balance sheet and changes during the
current and previous year:
<CAPTION>
APRIL 30, CHANGE APRIL 30, CHANGE APRIL 30,
1994 IN YEAR 1995 IN YEAR 1996
-------- ------- --------- ------- ---------
[POUND] [POUND] [POUND] [POUND] [POUND]
<S> <C> <C> <C> <C> <C>
Cash at bank and in hand 300,692 588,045 888,737 829,806 1,718,543
Short term borrowings (216,451) 146,497 (69,954) (63,947) (133,901)
-------- ------- ------- ------- ---------
84,241 734,542 818,783 765,859 1,584,642
-------- ------- ------- ------- ---------
</TABLE>
-6-
<PAGE> 9
OYSTER TERMINALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
A summary of the principal accounting policies, all of which have been
applied consistently throughout the year and the preceding year, is set out
below:
GENERAL
The Company was incorporated as a limited company under the laws of England
and Wales on April 25, 1974 as G R Electronics Limited. On September 2, 1986 the
Company changed its name to Oyster Terminals Limited. The financial statements
of the Company have been prepared from records maintained in the United Kingdom.
BASIS OF ACCOUNTING
The financial statements have been prepared under the historical cost
convention and are presented in conformity with accounting principles generally
accepted in the United Kingdom.
These financial statements do not comprise "statutory accounts" within the
meaning of Section 240 of the Companies Act 1985. Statutory accounts for the
period ended September 30, 1996 will be delivered to the Registrar of Companies
for England and Wales in due course, and statutory accounts for the year ended
April 30, 1995 have been so delivered. The auditors' report on such accounts was
unqualified.
TURNOVER
Turnover represents amounts receivable for goods and services provided in
the normal course of business, net of trade discounts and value added tax.
TANGIBLE FIXED ASSETS
Tangible fixed assets are stated at cost, less amounts provided to write
off the cost, less anticipated residual value of the assets over their useful
economic lives, which are as follows:
Freehold buildings 50 years
Fixtures and equipment 6 2/3 years
Vehicles are depreciated by the reducing balance method at 25%.
LEASES
Rents for operating leases are charged to the profit and loss account in
equal annual amounts over the period of the lease.
RESEARCH AND DEVELOPMENT
Expenditure on research and development is written off to the profit and
loss account in the year in which it is incurred.
TAX
Corporation tax payable is provided on taxable profits at the current rate
of corporation tax.
Deferred tax is calculated using the liability method. Deferred tax is
provided on timing differences, which are expected to reverse without being
replaced at the rates of tax likely to be in force at the time of reversal. The
amounts of all deferred tax, including that which has not been provided, is
shown in Note 12 to the financial statements.
-7-
<PAGE> 10
OYSTER TERMINALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS - (CONTINUED)
PENSION COSTS
The Company operates defined contribution pension schemes and charges
contributions payable for the year to the profit and loss account in that year.
STOCKS AND WORK-IN-PROGRESS
Stocks are valued at the lower of cost and net realisable value. The
valuation of work-in-progress is based on the cost of labour, plus appropriate
overheads and the cost of materials. Net realisable value is based on estimated
selling price less further costs expected to be incurred to completion and
disposal. Provision is made for obsolete, slow-moving or defective items where
appropriate.
FOREIGN CURRENCY
Transactions in foreign currencies are recorded at the rate of exchange at
the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies at the balance sheet date are reported at the rates of
exchange prevailing at that date. Any gain or loss arising from a change in
exchange rates subsequent to the date of the transaction is included as an
exchange gain or loss in the profit and loss account.
MANAGEMENT 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.
CASH AND CASH EQUIVALENTS
For the purposes of the statement of cash flows, the Company considers all
highly liquid investments purchased with a maturity of three months or less to
be cash equivalents.
2. TURNOVER
The directors do not wish to disclose a geographical analysis of turnover,
profit before taxation or net assets as they believe this would be prejudicial
to the interests of the Company (CA 1985 Sch 4.55(5)).
<TABLE>
3. OPERATING PROFIT
Operating profit is stated after charging/(crediting):
<CAPTION>
YEAR ENDED APRIL 30
-------------------
1995 1996
------- -------
[POUND] [POUND]
<S> <C> <C>
Depreciation - owned assets 61,110 57,218
Profit on disposal of fixed assets - (317)
Auditors' remuneration 6,950 6,950
Foreign currency exchange gains (1,503) (9,396)
Research and development expenditure 142,337 147,226
------- -------
</TABLE>
-8-
<PAGE> 11
OYSTER TERMINALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
4. INTEREST
<CAPTION>
YEAR ENDED APRIL 30
---------------------
1995 1996
--------- ---------
[POUND] [POUND]
<S> <C> <C>
Interest payable and similar charges (2,575) (3,532)
--------- ---------
Interest receivable on deposit accounts 34,543 97,623
--------- ---------
5. TAX ON PROFIT ON ORDINARY ACTIVITIES
<CAPTION>
YEAR ENDED APRIL 30
---------------------
1995 1996
--------- ---------
[POUND] [POUND]
<S> <C> <C>
Payable in the United Kingdom:
Corporation tax at 33% (1995 - 32.17%) 340,911 506,751
Deferred tax (Note 12) 1,388 1,417
Foreign taxes - 40,000
Adjustment to current tax in respect of prior
years 1,483 (1,986)
--------- ---------
403,782 546,182
--------- ---------
6. DIVIDEND
<CAPTION>
YEAR ENDED APRIL 30
---------------------
1995 1996
--------- ---------
[POUND] [POUND]
<S> <C> <C>
Dividend paid of(pound)3.20 per ordinary share
(1995 - [pound]2.52 per ordinary share) 252,000 320,000
--------- ---------
7. EMPLOYEE COSTS AND NUMBERS INCLUDING DIRECTORS
<CAPTION>
YEAR ENDED APRIL 30
---------------------
1995 1996
--------- ---------
[POUND] [POUND]
<S> <C> <C>
Employee costs:
Total employee costs during the year amounted to:
Wages and salaries 1,003,218 912,055
Social Security costs 95,431 81,946
Pension costs 22,598 134,900
--------- ---------
1,121,247 1,128,901
--------- ---------
</TABLE>
-9-
<PAGE> 12
OYSTER TERMINALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS - (CONTINUED)
7. EMPLOYEE COSTS AND NUMBERS INCLUDING DIRECTORS (continued)
<TABLE>
The average number of employees during each year was as follows:
<CAPTION>
HEAD COUNT
-------------------
YEAR ENDED APRIL 30
-------------------
1995 1996
-------- --------
<S> <C> <C>
Production and development 33 33
Sales and marketing 8 8
Administration 13 13
-- --
54 54
-- --
</TABLE>
<TABLE>
8. TANGIBLE FIXED ASSETS
<CAPTION>
FREEHOLD PLANT AND MOTOR
BUILDINGS MACHINERY VEHICLES TOTAL
--------- --------- -------- -------
[POUND] [POUND] [POUND] [POUND]
<S> <C> <C> <C> <C>
Cost:
At May 1, 1994 229,842 364,578 77,024 671,444
Additions - 12,455 - 12,455
Disposals - - (9,933) (9,933)
------- ------- ------ -------
At April 30, 1995 229,842 377,033 67,091 673,966
Additions - 27,217 48,097 75,314
Disposals - (5,000) (16,000) (21,000)
------- ------- ------ -------
April 30, 1996 229,842 399,250 99,188 728,280
------- ------- ------ -------
Depreciation:
At May 1, 1994 9,022 198,190 35,928 243,140
Charge for the year 5,400 44,833 10,877 61,110
Disposals - - (8,183) (8,183)
------- ------- ------ -------
At April 30, 1995 14,422 243,023 38,622 296,067
Charge for the year 5,385 43,459 8,374 57,218
Disposals - (5,000) (12,913) (17,913)
------- ------- ------ -------
April 30, 1996 19,807 281,482 34,083 335,372
------- ------- ------ -------
Net book values:
At May 1, 1994 220,820 166,388 41,096 428,304
------- ------- ------ -------
At April 30, 1995 215,420 134,010 28,469 377,899
------- ------- ------ -------
At April 30, 1996 210,035 117,768 65,105 392,908
------- ------- ------ -------
</TABLE>
-10-
<PAGE> 13
- -
OYSTER TERMINALS LIMITED
<TABLE>
NOTES TO THE FINANCIAL STATEMENTS - (CONTINUED)
<CAPTION>
9. STOCKS AND WORK-IN-PROGRESS
APRIL 30,
1996
---------
[POUND]
<S> <C>
Raw materials and consumables 859,825
Work-in-progress 22,810
Goods for resale 69,271
---------
951,906
---------
10. DEBTORS
<CAPTION>
APRIL 30,
1996
---------
[POUND]
<S> <C>
Amounts falling due within one year:
Trade debtors 765,661
Advanced corporation tax recoverable 80,000
Other debtors 6,995
Prepayments and accrued income 16,473
---------
869,129
---------
11. CREDITORS
<CAPTION>
APRIL 30,
1996
---------
[POUND]
<S> <C>
Amounts falling due within one year:
Bank loans and overdrafts 133,901
Trade creditors 223,554
Corporation tax 544,765
Advanced corporation tax payable 80,000
Taxation and Social Security 66,880
Other creditors 180,432
Accruals and deferred income 61,355
---------
1,290,887
---------
</TABLE>
-11-
<PAGE> 14
OYSTER TERMINALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS - (CONTINUED)
12. PROVISIONS FOR LIABILITIES AND CHARGES
<TABLE>
DEFERRED TAX
<CAPTION>
APRIL 30,
1996
---------
[POUND]
<S> <C>
Deferred tax provided on capital allowances in excess of
depreciation 11,377
Deferred tax in respect of other timing differences -
------
11,377
------
There was no unprovided deferred tax at April 30, 1996.
Movement in deferred taxation:
[POUND]
Balance at May 1, 1994 8,572
Charged to profit and loss account 1,388
------
Balance at April 30, 1995 9,960
Charged to profit and loss account 1,417
------
Balance at April 30, 1996 11,377
------
</TABLE>
13. CAPITAL AND OTHER COMMITMENTS
<TABLE>
There are annual commitments under operating leases for land and buildings
which expire:
<CAPTION>
APRIL 30, APRIL 30,
1995 1996
--------- ---------
[POUND] [POUND]
<S> <C> <C>
Within one year 22,500 22,500
------ ------
<CAPTION>
APRIL 30, APRIL 30,
1995 1996
--------- ---------
[POUND] [POUND]
<S> <C> <C>
Contracted but not provided for in the financial
statements - 15,610
------ ------
</TABLE>
-12-
<PAGE> 15
OYSTER TERMINALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS - (CONTINUED)
14. DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles in the United Kingdom ("UK GAAP"),
which differ in certain material respects from United States generally accepted
accounting principles ("US GAAP"). Significant differences between UK GAAP and
US GAAP applicable to Oyster Terminals Limited are as follows:
CASH FLOW STATEMENTS
The cash flow statements included in the financial statements have been
prepared in conformity with the UK Financial Reporting Standard No. 1. The
principal differences between this statement and the cash flows presented in
accordance with US Statement of Financial Accounting Standards No. 95, "Cash
Flow Statements" ("SFAS No. 95") are as follows:
Under US GAAP, cash and cash equivalents would not include bank overdrafts
and borrowings with original maturities of less than three months. Under UK
GAAP, cash flows are presented separately for operating activities, returns on
investments and servicing of finance, taxation, investing activities, and
financing activities. US GAAP, however, requires only three categories of cash
flow activity to be reported: operating, investing, and financing. Cash flows
from taxation and returns on investments and servicing of finance shown under UK
GAAP would, with the exception of dividends paid, be included as operating
activities under US GAAP. The payment of dividends would be included as a
financing activity under US GAAP.
<TABLE>
Categories of cash flow activity under US GAAP can be summarised as
follows:
<CAPTION>
YEAR ENDED APRIL 30
--------------------
1995 1996
-------- ---------
[POUND] [POUND]
<S> <C> <C>
Cash flows provided by operating activities 995,744 1,148,374
Cash flows used in investing activities (10,705) (71,911)
Cash flows used in financing activities (398,497) (256,053)
-------- ---------
Increase in cash and cash equivalents 586,542 820,410
Cash and cash equivalents at beginning of year 300,692 888,737
Exchange gain on foreign currency deposits 1,503 9,396
-------- ---------
Cash and cash equivalents at end of year 888,737 1,718,543
-------- ---------
</TABLE>
-13-
<PAGE> 16
OYSTER TERMINALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS - (CONTINUED)
RECONCILIATION OF NET PROFIT AND SHAREHOLDERS' EQUITY
No material adjustments are required to state net profit and shareholders'
equity in accordance with US GAAP.
<TABLE>
A RECONCILIATION OF THE UK STATUTORY RATE TO THE EFFECTIVE RATE FOR THE YEARS
ENDED APRIL 30, 1995 AND 1996 IS AS FOLLOWS:
<CAPTION>
YEAR ENDED APRIL 30
-------------------
1995 1996
------ ------
% %
<S> <C> <C>
UK statutory rate 33.0 33.0
Small companies relief - (0.1)
Foreign taxes - 2.8
Absolute items 0.1 -
Effective income tax rate 33.1 35.7
---- ----
</TABLE>
15. SUBSEQUENT EVENTS
On July 16, 1996, a wholly-owned subsidiary of WPI Group Inc. (a U.S.
company headquartered at 1155 Elm Street, Manchester, New Hampshire 03101)
acquired all of the outstanding shares of the Company.
On July 15, 1996, the Company's US distributor, ESCOM International
Marketing Inc, filed a complaint against the Company in the United States
District Court. The directors do not believe any further provision is required.
D Watkins, C Allen, M Ludlow and J Eskdale resigned as directors on July
16, 1996. D Watkins, M Ludlow, and J Eskdale have remained in their executive
positions.
-14-
<PAGE> 17
WPI GROUP, INC
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
SEPTEMBER 24, 1995
(UNAUDITED)
The following unaudited pro forma combined statements of operations give
effect to the acquisition of Oyster Terminals Limited, by WPI Group, Inc.,
assuming that the acquisition was effective on September 26, 1994 and that the
transaction was accounted for as a purchase. The pro forma data reflect the
acquisition of the assets and assumption of liabilities of Oyster Terminals
Limited by WPI Group, Inc. The unaudited pro forma combined statements of
operations for the period ended September 24, 1995 combine the historical
statements of operations of WPI Group, Inc. for the year ended September 24,
1995 and of Oyster Terminals Limited for the year ended April 30, 1995. The
following pro forma information is presented for illustrative purposes only and
is not necessarily indicative of the actual results of operations that would
have been reported if the acquisition had been effected at that date or which
may be reported in the future. This statement shall be read in conjunction with
the accompanying explanatory notes; the pro forma combined balance sheet and the
respective historical financial statements and related notes of WPI Group, Inc.
and Oyster Terminals Limited.
The unaudited pro forma statement of operations of Oyster Terminals Limited
has been translated for convenience at [pound]1 = $1.5050, the noon buying rate
in New York City in pounds sterling as certified for customs purposes by the
Federal Reserve Bank of New York on April 30, 1996, which is not materially
different from the average rate for the period. No representation is made that
the pounds sterling amounts have been, could have been, or could be converted
into US dollars at that or any other rate of exchange.
-15-
<PAGE> 18
WPI GROUP INC
<TABLE>
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
PERIOD ENDED SEPTEMBER 24, 1995
<CAPTION>
OYSTER
TERMINALS
WPI GROUP,INC LIMITED
SEPT 24, APRIL 30, ADJUSTMENTS COMBINED
1995 1995 (UNAUDITED) (UNAUDITED)
----------- --------- ---------- -----------
$ $ $ $
<S> <C> <C> <C> <C>
Net sales 25,855,790 6,407,518 - 32,263,308
Cost of sales 15,959,216 2,848,383 - 18,807,599
---------- --------- ---------- ----------
Gross profit 9,896,574 3,559,135 - 13,455,709
---------- --------- ---------- ----------
Operating expenses:
Research and new product
development 1,508,942 214,217 - 1,723,159
Selling, general and administration 6,597,060 1,820,365 402,430 (1) 8,590,855
(229,000)(7)
---------- --------- ---------- ----------
Total operating expenses 8,106,002 2,034,582 173,430 10,314,014
---------- --------- ---------- ----------
Operating income 1,790,572 1,524,553 (173,430) 3,141,695
---------- --------- ---------- ----------
Other income (expense):
Interest income 22,386 51,987 (51,987)(8) 22,386
Miscellaneous income 72,141 - - 72,141
Interest expense (129,981) (3,875) (815,270)(4) (945,251)
3,875 (8)
---------- --------- ---------- ----------
Income before provision for
income taxes 1,755,118 1,572,665 (1,036,812) 2,290,971
Provision for income taxes 600,000 517,392 (217,000)(6) 900,392
---------- --------- ---------- ----------
Net income 1,155,118 1,055,273 (819,812) 1,390,579
---------- --------- ---------- ----------
Net income per share $.20 $.24
Weighted average common shares and
common equivalent shares outstanding 5,822,906 5,822,906
</TABLE>
SEE NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS.
-16-
<PAGE> 19
WPI GROUP, INC
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
JUNE 30, 1996
(UNAUDITED)
The following unaudited pro forma combined statements of operations give
effect to the acquisition of Oyster Terminals Limited, by WPI Group, Inc.,
assuming that the acquisition was effective on September 26, 1994 and that the
transaction was accounted for as a purchase. The pro forma data reflect the
acquisition of the assets and assumption of liabilities of Oyster Terminals
Limited by WPI Group, Inc. The unaudited pro forma combined statements of
operations for the period ended June 30, 1996 combine the historical statements
of operations of WPI Group, Inc. for the nine months ending June 30, 1996 and of
Oyster Terminals Limited for the nine month period ending April 30, 1996. The
following pro forma information is presented for illustrative purposes only and
is not necessarily indicative of the actual results of operations that would
have been reported if the acquisition had been effected at that date or which
may be reported in the future. This statement should be read in conjunction with
the accompanying explanatory notes; the pro forma combined balance sheet and the
respective historical financial statements and related notes of WPI Group, Inc.
and Oyster Terminals Limited.
The unaudited pro forma statement of operations of Oyster Terminals Limited
has been translated for convenience at [pound]1 = $1.5050, the noon buying rate
in New York City in pounds sterling as certified for customs purposes by the
Federal Reserve Bank of New York on April 30, 1996, which is not materially
different from the average rate for the period. No representation is made that
the pounds sterling amounts have been, could have been, or could be converted
into US dollars at that or any other rate of exchange.
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<PAGE> 20
WPI GROUP INC
<TABLE>
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED JUNE 30, 1996
<CAPTION>
OYSTER
TERMINALS
WPI GROUP,INC LIMITED
9 MONTHS TO 9 MONTHS TO
JUNE 30, 30 APRIL,
1996 1996 DJUSTMENTS COMBINED
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- ----------- -----------
$ $ $ $
<S> <C> <C> <C> <C>
Net sales 33,003,591 5,500,427 - 38,504,018
Cost of sales 20,086,060 2,492,462 - 22,578,522
---------- --------- -------- ----------
Gross profit 12,917,531 3,007,965 - 15,925,496
---------- --------- -------- ----------
Operating expenses:
Research and new product
development 2,471,985 168,602 - 2,640,587
Selling, general and administration 7,576,963 1,271,855 301,822 (1) 9,003,640
(147,000)(7)
---------- --------- -------- ----------
Total operating expenses 10,048,948 1,440,457 154,822 11,644,227
---------- --------- -------- ----------
Operating income 2,868,583 1,567,508 (154,822) 4,281,269
---------- --------- -------- ----------
Other income (expense):
Interest income 15,067 118,843 (118,843)(8) 15,067
Miscellaneous income 77,896 - - 77,896
Interest expense (350,960) (3,912) (611,452)(4) (962,412)
3,912 (8)
---------- --------- -------- ----------
Income before provision for
income taxes 2,610,586 1,682,439 (881,205) 3,411,820
Provision for income taxes 835,000 616,353 (185,000)(6) 1,266,353
---------- --------- -------- ----------
Net income 1,775,586 1,066,086 (696,205) 2,145,467
---------- --------- -------- ----------
Net income per share $.30 $.36
Weighted average common shares and
common equivalent sales outstanding 5,973,851 5,973,851
</TABLE>
SEE NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS.
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<PAGE> 21
WPI GROUP, INC
PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 1996
(UNAUDITED)
The following unaudited pro forma combined balance sheet gives effect to
the acquisition of Oyster Terminals Limited by WPI Group, Inc., assuming that
the acquisition was consummated as of June 30, 1996 and assumes that the
acquisition was accounted for as a purchase. The pro forma data reflect the
acquisition of the assets and assumption of liabilities of Oyster Terminals
Limited by WPI Group, Inc. The unaudited pro forma combined balance sheets
combine the historical balance sheets of WPI Group, Inc. as of June 30, 1996 and
of Oyster Terminals Limited as of April 30, 1996. The following pro forma
information is presented for illustrative purposes only and is not necessarily
indicative of the financial position that would have been reported had the
acquisition been consummated as of June 30, 1996 or which may be reported in the
future. This statement shall be read in conjunction with the accompanying
explanatory notes; the pro forma combined statement of operations and the
respective historical financial statements and related notes of WPI Group, Inc.
and Oyster Terminals Limited.
The unaudited pro forma balance sheet for Oyster Terminals Limited has been
translated for convenience at [pound]1 = $1.5050, the noon buying rate in New
York City in pounds sterling as certified for customs purposes by the Federal
Reserve Bank of New York on April 30, 1996. No representation is made that the
pounds sterling amounts have been, could have been, or could be converted into
US dollars at that or any other rate of exchange.
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<PAGE> 22
WPI GROUP INC
<TABLE>
COMBINED BALANCE SHEETS
JUNE 30, 1996
<CAPTION>
OYSTER
WPI GROUP,INC TERMINALS
JUNE 30, LIMITED
1996 APRIL 30, ADJUSTMENTS COMBINED
(UNAUDITED) 1996 (UNAUDITED) (UNAUDITED)
----------- --------- ---------- -----------
$ $ $ $
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and equivalents 176,570 2,586,407 (2,500,000)(3) 262,977
Accounts receivable net of allowance
for doubtful accounts 9,131,732 1,152,320 - 10,284,052
Accounts receivable, other 3,376,177 35,319 - 3,411,496
Inventories 6,170,370 1,432,619 - 7,602,989
Prepaid expenses and other
current assets 192,225 - - 192,225
Prepaid income taxes 505,000 120,400 - 625,400
Total current assets 19,552,074 5,327,065 (2,500,000) 22,379,139
Property, plant and equipment:
At cost less accumulated
depreciation 7,350,165 591,326 - 7,941,491
Other assets 9,060,312 - - 9,060,312
Goodwill - - 10,060,266 (2) 10,060,266
35,962,551 5,918,391 7,560,266 49,441,208
---------- --------- ---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank overdraft - 201,521 (201,521)(3) -
Accounts payable 3,702,315 336,449 - 4,038,764
Accrued expenses 2,267,478 464,544 850,000 (5) 3,582,022
Accrued income taxes 306,409 940,271 - 1,246,680
6,276,202 1,942,785 648,479 8,867,466
Long term liabilities: -
Long term debt 8,625,000 - 10,870,271 (3) 19,495,271
Non compete agreement 30,000 - - 30,000
Deferred income taxes 1,367,000 17,122 - 1,384,122
10,022,000 17,122 10,870,271 20,909,393
Stockholders' equity:
Common stock - WPI Group($.01 par) 59,268 - - 59,268
Common stock - Oyster([pound]1.00 par) - 150,500 (150,500)(2) -
Additional paid-in capital 13,534,884 - - 13,534,884
Retained earnings 6,070,197 3,807,984 (3,807,984)(2) 6,070,197
Total stockholders' equity 19,664,349 3,958,484 (3,958,484) 19,664,349
35,962,551 5,918,391 7,560,266 49,441,208
---------- --------- ---------- ----------
</TABLE>
SEE NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS.
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<PAGE> 23
NOTES TO PROFORMA COMBINED FINANCIAL STATEMENTS
(1) Adjustment to reflect amortization of goodwill over 25 years.
(2) Adjustment to reflect goodwill arising on acquisition and elimination of
share capital and pre acquisition retained earnings.
(3) Adjustment to reflect the net debt drawn down to finance the acquisition of
Oyster Terminals Limited, the paydown of Oyster's bank overdraft and the
use of substantially all of Oyster's cash balance to reduce the debt drawn
to finance the acquisition.
(4) Adjustment to reflect interest expense on debt drawn down to finance the
acquisition, at a rate of 7..5%.
(5) Adjustment to reflect estimated accrued acquisition expenses, primarily
legal and accounting expenses, and estimated employee related costs..
(6) Adjustment to reflect tax effect of pro forma adjustments.
(7) Adjustment to reflect specific cost savings which would not have been
incurred had the acquisition occurred on September 26, 1994. Such cost
savings relate to compensation expense in excess of amounts that will be
paid in the future.
(8) Adjustment to eliminate historical interest income on cash balances used to
finance the acquisition, and historical interest expense related to bank
overdrafts.
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