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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
AMENDMENT NO. 1 TO
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): December 23, 1996
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Commission File Number 0-22580
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JPE, INC.
(Exact name of registrant as specified in its charter)
Michigan
(State or other jurisdiction of Incorporation)
38-2958730
(IRS Employer Identification No.)
900 Victors Way, Suite 140, Ann Arbor, MI 48108
(Address of principal executive offices, including
zip code)
(313) 662-2323
(Registrant's telephone number, including area code)
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<PAGE>
FORM 8-K/A
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K, dated
as of December 23, 1996 and filed with the Securities and Exchange Commission on
January 6, 1997, as set forth in the pages attached hereto:
1. Cover page
2. Item 7 Financial Statements, Pro Forma Financial Information and
Exhibits
(a) FINANCIAL STATEMENTS OF PEBRA INC.
Report of Independent Auditors for 1995, 1994 and 1993
Non-Consolidated Balance Sheets at December 31, 1995,
1994 and 1993
Non-Consolidated Statements of Operations and Retained
Earnings for the years ended December 31, 1995, 1994
and 1993
Non-Consolidated Statements of Changes in Financial
Position for the years ended December 31, 1995, 1994
and 1993
Notes to Non-Consolidated Financial Statements for the
year Ended December 31, 1995
(b) PRO FORMA FINANCIAL INFORMATION
Pro forma condensed consolidated Balance Sheet as of
September 30, 1996 (Unaudited)
Pro forma condensed consolidated Statement of Income
for the nine months ended September 30, 1996 (Unaudited)
Pro forma condensed consolidated Statement of Income
for the year ended December 31, 1995 (Unaudited)
Notes to unaudited pro forma condensed consolidated
Financial Statements
(c) EXHIBITS
23 Consent of Price Waterhouse, Chartered Accountants
<PAGE>
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this amendment to be signed on its behalf
by the undersigned, thereunto duly authorized.
JPE, INC.
Dated: March 6, 1997 By: /s/ James J. Fahrner
-------------------------
James J. Fahrner
Vice President and
Chief Financial Officer
<PAGE>
Item 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
------------------------------------------------------------------
(A) FINANCIAL STATEMENTS
The following are the historical financial statements for Pebra Inc. on
a non-consolidated basis. The financial statements have been prepared in
accordance with Canadian generally accepted accounting principles and in
Canadian dollars. Management believes there are no material differences between
Canadian and United States accounting principles. The financial statements have
also been presented on a non-consolidated basis because the subsidiaries of
Pebra Inc. were not acquired by JPE, Inc.
<PAGE>
PRICE WATERHOUSE Canada Trust Centre, Suite 900 Telephone (519) 579 6300
Chartered Accountants 55 King Street West Fax (519) 579 8701
Kitchener, Ontario N2G 4W1
March 15, 1996, except as to Note 14
which is as of February 6, 1997
Auditors' Report
To the Directors of
Pebra Inc.
We have audited the non-consolidated balance sheet of Pebra Inc. as at December
31, 1995 and the non-consolidated statements of operations and retained earnings
and changes in financial position 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.
In our opinion, these non-consolidated financial statements present fairly, in
all material respects, the financial position of the Company as at December 31,
1995 and the results of its operations and the changes in its financial position
for the year then ended in accordance with generally accepted accounting
principles except that they are prepared on a non-consolidated basis as
explained in Note 2.
/s/ Price Waterhouse
Chartered Accountants
<PAGE>
PRICE WATERHOUSE Canada Trust Centre, Suite 900 Telephone (519) 579 6300
Chartered Accountants 55 King Street West Fax (519) 579 8701
Kitchener, Ontario N2G 4W1
March 10, 1995, except as to Note 14
which is as of February 6, 1997
Auditors' Report
To the Directors of
Pebra Inc.
We have audited the non-consolidated balance sheet of Pebra Inc. as at December
31, 1994 and the non-consolidated statements of operations and retained earnings
and changes in financial position for the year then ended. These financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.
In our opinion, these non-consolidated financial statements present fairly, in
all material respects, the financial position of the Corporation as at December
31, 1994 and the results of its operations and the changes in its financial
position for the year then ended in accordance with generally accepted
accounting principles except that they are prepared on a non-consolidated basis
as explained in Note 2.
/s/ Price Waterhouse
Chartered Accountants
<PAGE>
PRICE WATERHOUSE Canada Trust Centre, Suite 900 Telephone (519) 579 6300
Chartered Accountants 55 King Street West Fax (519) 579 8701
Kitchener, Ontario N2G 4W1
March 11, 1994, except as to Note 14
which is as of February 6, 1997
Auditors' Report
To the Directors of
Pebra Inc.
We have examined the non-consolidated balance sheet of Pebra Inc. as at December
31, 1993 and the non-consolidated statements of income and retained earnings and
changes in financial position for the year then ended. These financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.
In our opinion, these non-consolidated financial statements present fairly, in
all material respects, the financial position of the Corporation as at December
31, 1993 and the results of its operations and the changes in its financial
position for the year then ended in accordance with generally accepted
accounting principles except that they are prepared on a non-consolidated basis
as explained in Note 2.
/s/ Price Waterhouse
Chartered Accountants
<PAGE>
PEBRA INC.
<TABLE>
NON-CONSOLIDATED BALANCE SHEET
<CAPTION>
December 31
-----------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
ASSETS
Current assets
Accounts receivable ........ $10,653,720 $10,198,204 $ 6,294,508
Inventory (Note 3) ......... 11,477,874 8,753,297 7,198,034
Prepaid expenses ........... 179,784 273,105 132,625
Income taxes recoverable ... 519,000 1,593,960 --
Notes receivable ........... -- 406,152 --
----------- ----------- -----------
22,830,378 21,224,718 13,625,167
Notes receivable .............. -- 206,151 --
Deferred tooling costs ........ 192,661 351,800 --
Investments and advances,
at cost (Note 4) ............ 182,407 1,825,981 272,548
Fixed assets (Note 5) ......... 28,622,350 27,452,965 23,120,296
----------- ----------- -----------
$51,827,796 $51,061,615 $37,018,011
=========== =========== ===========
LIABILITIES
Current liabilities
Bank indebtedness .......... $ 806,613 $ 2,017,716 $ 2,831,823
Bank operating loans
(Note 6) ................. 10,307,500 7,629,000 --
Accounts payable and
accrued liabilities ...... 12,929,681 13,738,701 8,754,209
Due to related party ....... -- 784,714 --
Due to parent corporation .. 1,274,204 1,134,627 134,410
Current portion of long-
term debt ................ 2,870,884 2,043,874 1,223,358
Income taxes payable ....... -- -- 90,417
----------- ----------- -----------
28,188,882 27,348,632 13,034,217
Long-term debt (Note 7) ....... 12,520,000 6,559,301 3,739,006
Deferred income taxes ......... 1,151,000 1,754,700 2,054,700
SHAREHOLDERS' EQUITY
Stated capital (Note 8) ....... 13,430,000 13,430,000 13,430,000
(Deficit) retained earnings ... (3,462,086) 1,968,982 4,760,088
------------ ----------- -----------
9,967,914 15,398,982 18,190,088
----------- ----------- -----------
$51,827,796 $51,061,615 $37,018,011
=========== =========== ===========
</TABLE>
<PAGE>
PEBRA INC.
<TABLE>
NON-CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
<CAPTION>
Year ended December 31
----------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Sales ......................... $91,024,187 $77,016,422 $56,928,058
Cost of goods sold ............ 83,652,340 68,458,499 47,898,106
----------- ----------- -----------
Gross profit .................. 7,371,847 8,557,923 9,029,952
Selling and administrative
expenses .................... 10,998,957 11,618,543 8,522,576
----------- ----------- -----------
Income (loss) from operations . (3,627,110) (3,060,620) 507,376
Other income
Other ...................... 25,928 39,182 119,071
Foreign exchange gain ...... 460,521 76,432 436,603
----------- ----------- -----------
Income (loss) before income
taxes and other items ....... (3,140,661) (2,945,006) 1,063,050
Write-down of investment in
and advances to Polytech
Coatings Limited (Note 13) .. (3,165,393) -- --
Write-down of notes receivable (512,303) -- --
----------- ----------- -----------
Income (loss) before income
taxes ....................... (6,818,357) (2,945,006) 1,063,050
Income taxes (recovery)
Current .................... (783,589) (853,900) 778,077
Deferred ................... (603,700) (300,000) (403,200)
----------- ----------- -----------
(1,387,289) (1,153,900) 374,877
----------- ----------- -----------
Net income (loss) for the
year ........................ (5,431,068) (1,791,106) 688,173
Retained earnings, beginning
of the year ................. 1,968,982 4,760,088 4,071,915
Dividends paid -- (1,000,000) --
----------- ----------- -----------
(Deficit) retained earnings,
end of year ................. $(3,462,086) $ 1,968,982 $ 4,760,088
============ =========== ===========
</TABLE>
<PAGE>
PEBRA INC.
<TABLE>
NON-CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
<CAPTION>
Year ended December 31
----------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash provided by (used in)
operating activities
Net income (loss) for the year $ (5,431,068) $ (1,791,106) $ 688,173
Items not requiring cash
Depreciation 4,714,567 5,042,782 4,546,793
Gain on disposal of fixed assets (12,420) (39,182) (119,071)
Write-down of investment in and
advances to Polytech Coatings
Limited 3,165,393 -- --
Write-down of notes receivable 512,303 -- --
Deferred income taxes (603,700) (300,000) (403,200)
Changes in non-cash operating items
Accounts receivable (455,516) (3,903,696) (250,769)
Inventory (2,724,577) (1,555,263) (1,541,773)
Prepaid expenses 93,321 (140,480) 56,726
Income taxes 1,074,960 (1,684,377) (378,499)
Accounts payable and accrued
liabilities (809,020) 4,984,492 4,528,495
Due to related party (784,714) 784,714 --
Due to parent corporation 139,577 1,000,217 (5,376,179)
------------ ------------ -----------
(1,120,894) 2,398,101 1,750,696
------------ ------------ ----------
Cash provided by (used in)
investment activities
Notes receivable 100,000 (612,303) --
Deferred tooling costs 159,139 (351,800) --
Fixed asset additions (6,620,228) (9,465,888) (8,158,724)
Proceeds on disposal of
fixed assets 748,696 129,619 138,052
Advances to subsidiaries (1,521,819) (1,553,433) (126,920)
Dividends paid -- (1,000,000) --
------------ ------------ ----------
(7,134,212) (12,853,805) (8,147,592)
------------ ------------ ----------
Cash provided by (used in)
financing activities
Bank operating loans 2,678,500 1,486,808 --
Proceeds of long-term debt 15,600,000 4,864,169 3,346,168
Principal repayments on
long-term debt (8,812,291) (1,223,358) --
------------ ------------ ----------
9,466,209 5,127,619 3,346,168
------------ ------------ ----------
Increase (decrease) in cash
during the year 1,211,103 (5,328,085) (3,050,728)
(Bank indebtedness) cash,
beginning of year (2,017,716) 3,310,369 218,905
------------- ------------ ----------
Bank indebtedness, end of year $ (806,613) $ (2,017,716) $(2,831,823)
========== ============ ===========
</TABLE>
<PAGE>
PEBRA INC.
NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. BASIS OF PRESENTATION
These financial statements are presented on the going-concern basis which
assumes the realization of assets and liquidation of liabilities in the
normal course of business.
The Company's shareholder, Pebra GmbH Paul Braun, has been placed in
bankruptcy and as a result is currently searching for a purchaser of the
Company's business
The application of the going-concern concept is dependent on the Company's
ability to generate future profitable operations and receive continued
financial support.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING FOR INVESTMENT IN SUBSIDIARIES
The Corporation has prepared these non-consolidated financial statements
for tax filing purposes. These financial statements are prepared in
accordance with generally accepted accounting principles except that they
are prepared on a non-consolidated basis.
The Corporation carries its investment in its wholly-owned subsidiary,
Pebra U.S. Inc. and its 60% owned subsidiary, Polytech Coatings Limited at
cost (see Note 13).
INVENTORY
Inventory is valued at the lower of cost and net realizable value. Cost is
determined on a first-in, first-out basis.
TOOLING CONTRACTS
The costs and billings for tooling contracts are accumulated until the
project is complete, at which time the income is recognized. Provision for
loss is made for all projects expected to yield losses when completed.
DEFERRED TOOLING COSTS
Deferred tooling costs are amortized over the life of the related
contracts.
FIXED ASSETS
Fixed assets are stated at cost. Depreciation is calculated on a
straight-line basis over the estimated useful lives of the assets as
follows:
Buildings - 20 years
Production machinery - 5-10 years
Computer equipment and furniture - 3-15 years
Automobiles - 3 years
<PAGE>
PEBRA INC.
NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
3. INVENTORY
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Raw materials and packaging
materials .................... $ 4,258,013 $3,080,074 $2,256,030
Work-in-progress .............. 1,382,448 1,442,300 1,064,228
Finished goods ................ 3,527,101 3,106,025 2,103,307
Tooling, net of prepayments
of $15,503,009 (1994 -
$7,648,656; 1993 - $1,378,664) 2,310,312 1,124,898 1,774,469
----------- ---------- ----------
$11,477,874 $8,753,297 $7,198,034
=========== =========== ==========
</TABLE>
4. INVESTMENTS
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
---- ---- ----
Investments
Pebra U.S. Inc. ............... $ 12,600 $ 12,600 $ 12,600
Polytech Coatings
Limited (Note 13) ............ -- 803,767 --
-------- ---------- --------
12,600 816,367 12,600
Advances
Pebra U.S. Inc. ............... 169,807 209,614 259,948
Polytech Coatings
Limited (Note 13) ........... -- 800,000 --
-------- ---------- --------
169,807 1,009,614 259,948
-------- ---------- --------
$182,407 $1,825,981 $272,548
======== ========== ========
</TABLE>
<PAGE>
PEBRA INC.
NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
5. FIXED ASSETS
<TABLE>
<CAPTION>
Accumulated Net
Cost Depreciation 1995 1994 1993
---- ------------ ---- ---- ----
<S> <C> <C> <C> <C> <C>
Land ......................................................... $ 1,139,579 $ -- $ 1,139,579 $ 1,139,579 $ 1,139,579
Buildings .................................................... 7,479,449 2,642,627 4,836,822 4,872,948 4,952,417
Production machinery ......................................... 50,409,604 28,282,405 22,127,199 19,730,547 14,604,971
Computer equipment
and furniture ............................................... 2,528,744 2,164,900 363,844 412,510 337,527
Automobiles .................................................. 296,559 263,879 32,680 73,431 143,854
Construction-in-
progress .................................................... 122,226 -- 122,226 1,223,950 1,941,948
----------- ----------- ----------- ----------- -----------
$61,976,161 $33,353,811 $28,622,350 $27,452,965 $23,120,296
=========== =========== =========== =========== ===========
</TABLE>
<PAGE>
PEBRA INC.
NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
6. BANK OPERATING LOANS
An agreement with a Canadian chartered bank provides for aggregate
borrowing of up to $9,000,000 for general operating requirements and
$4,000,000 to finance tooling inventory and receivables. As of December 31,
1995, $8,300,000 was outstanding under the general operating line and
$2,007,500 was outstanding under the tooling operating line. As security
for the loan the Corporation executed a general assignment of book debts,
and a general security agreement incorporating a fixed charge on all
equipment valued in excess of $50,000 and floating charge on all other
equipment.
7. LONG-TERM DEBT
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
---- ---- ----
Non-revolving term debt:
Repayable in monthly installments
of $20,000, bearing interest of
the bank's prime lending rate plus
3/4% per annum, secured by a
collateral mortgage of unspecified
amount on the Kitchener plant. $ 3,560,000 $ -- $ --
Repayable in monthly installments
of $200,000, bearing interest of
the bank's prime rate plus 3/4%
per annum, secured by a collateral
mortgage of unspecified amount on
the Peterborough plant. 11,600,000 -- --
Industrial Regional Development
Program, term loan, interest-free 230,884 692,655 1,154,426
Term loans, repaid during the year -- 7,910,520 3,807,938
----------- ---------- ----------
15,390,884 8,603,175 4,962,364
Less: Current portion 2,870,884 2,043,874 1,223,358
----------- ---------- ----------
$12,520,000 $6,559,301 $3,739,006
=========== ========== ===========
</TABLE>
Long-term debt principal repayments are as follows:
1996 ....................................................... $ 2,870,884
1997 ....................................................... 2,640,000
1998 ....................................................... 2,640,000
1999 ....................................................... 2,640,000
2000 ....................................................... 2,640,000
Thereafter ................................................. 1,960,000
-----------
$15,390,884
===========
Interest incurred on long-term debt amounted to approximately $257,485
(1994 - $397,200; 1993 - $47,200).
The Company is currently in violation of certain loan covenants. While the
lendor has not waived its rights with respect to the covenants, the lendor
is currently tolerating the conditions pending the potential sale of the
Company.
<PAGE>
PEBRA INC.
NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995
8. STATED CAPITAL
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Authorized
Unlimited number of
Class A special shares
Unlimited number of
common shares
Issued
12,930,000 Class A
special shares ............. $12,930,000 $12,930,000 $12,930,000
500,000 common shares ....... 500,000 500,000 500,000
----------- ----------- -----------
$13,430,000 $13,430,000 $13,430,000
=========== =========== ===========
</TABLE>
9. TRANSACTIONS WITH RELATED PARTIES
The Company had the following related party transactions:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Sales agency expenses ......... $2,071,641 $1,731,770 $709,851
Royalty expense ............... -- 698,051 555,899
Purchases of inventory
and painting services ........ 7,345,597 1,868,883 375,839
</TABLE>
10. PENSION PLANS
The Company has a contributory defined benefit pension plan for executives.
For each year of credited service, the normal retirement benefit will be 2%
of the highest consecutive 5 year average pensionable earnings.
In 1992, the Company established a contributory defined benefit pension
plan for hourly employees.
The actuarial present value of accrued pension obligations is estimated to
be $1,562,000 (1994 - $1,456,000; 1993 - $1,148,000). The estimated value
of pension fund assets is $826,800 (1994 - $639,300; 1993 - $483,000).
11. SALES AND CUSTOMERS
The Corporation's sales consists of the following:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Parts ......................... $86,536,657 $69,995,797 $55,994,285
Tooling ....................... 4,487,530 7,020,625 933,773
----------- ----------- -----------
$91,024,187 $77,016,422 $56,928,058
=========== =========== ===========
</TABLE>
The majority of the Company's sales were to three customers.
12. LEASE COMMITMENTS
The Company has the following long-term lease commitments:
1996 ......................................................... $ 115,000
1997 ......................................................... 32,000
<PAGE>
PEBRA INC.
NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
13. SUBSEQUENT EVENT
Subsequent to the year-end, a subsidiary of the Company, Polytech Coatings
Limited (Polytech), was petitioned into bankruptcy by its bank. The Company
previously relied on Polytech to paint certain parts, and now the Company
has alternate painting locations and suppliers in order to ensure the
uninterrupted delivery of completed products to its customers. The Company
has written off its investment in and advances to Polytech.
14. SUBSEQUENT EVENTS AND SALE OF ASSETS
Effective September 20, 1996, the Company filed for Court protection under
the Companies' Creditors Arrangement Act. Financial support for continuing
operations was provided by The Bank of Nova Scotia and against security
issued in 1995 to General Motors Corporation. On November 15, 1996 an
Agreement of Purchase and Sale was signed between the Company and JPE, Inc.
The agreement provided that inventory, accounts receivable balances not
more than 90 days old, income tax receivable balances, fixed assets and
prepaid expenses of the Company as at December 20, 1996 would be sold to
JPE, Inc. The purchase price was as follows:
Inventory Book value at December 20,
1996 (before any allowance
or reserves for obsolete,
slow moving or excess
inventory) less $1,100,000
Accounts receivable balances not
more than 90 days old Book value at December 20, 1996
Income tax and goods and
services tax receivable balances Book value at December 20, 1996
Fixed assets $14,500,000
Prepaid expenses $300,000
Active operations by the Company ceased on December 20, 1996. The sale to
JPE, Inc. was completed subsequent to December 20, 1996 and all existing
bank indebtedness to The Bank of Nova Scotia was repaid. A shortfall is
anticipated in amounts advanced by General Motors Corporation to finance
operations subsequent to September 20, 1996. As a result, funds will not be
available for payment of amounts owed to other creditors.
<PAGE>
(B) PRO FORMA FINANCIAL INFORMATION
JPE, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial statements
give effect to the following transactions, all of which are accounted for as
purchases:
o Acquisition of substantially all of the assets used in the business of
Pebra Inc. ("Pebra") on December 23, 1996 for an aggregate of Cdn. $29.7
(U.S. $21.7) paid in the form of cash.
o Acquisition of all of the issued and outstanding shares of capital stock of
Plastic Trim, Inc. ("PTI") on March 31, 1995 for an aggregate purchase
price of $40.7 million paid in the form of cash.
o Acquisition of all of the assets used in the business of Key Manufacturing
Group Limited Partnership ("KMGLP") (now known as Industrial & Automotive
Fasteners, Inc. ("IAF")) from KMGLP and TTD Management, Inc. on February
28, 1995 for an aggregate purchase price of $25.6 million paid in the form
of cash and a note payable to KMGLP.
The pro forma condensed consolidated balance sheet at September 30, 1996
reflects the acquisition of Pebra as if it had been completed on September 30,
1996. The pro forma condensed consolidated statement of income for the nine
months ended September 30, 1996 and the year ended December 31, 1995 reflect the
acquisitions as if they had been completed as of January 1, 1995. Nine months of
Pebra's 1996 earnings are included in a separate column of the statement of
income for the nine months ended September 30, 1996. Twelve months of Pebra's
1995 earnings are included in a separate column of the statement of income for
the year ended December 31, 1995.
IAF's January and February 1995 earnings and PTI's earnings for the three months
ended March 31, 1995 are combined in a separate column of the statement of
income for the year ended December 31, 1995. Ten months of IAF's 1995 earnings
and nine months of PTI's 1995 earnings are included in JPE's historical
statement of income for the year ended December 31, 1995.
The pro forma data do not purport to be indicative of the results which would
actually have been reported if these transactions had occurred on such dates or
which may be reported in the future. The pro forma data should be read in
conjunction with the historical financial statements of JPE and Pebra and the
related notes to such financial statements.
<PAGE>
(B) PRO FORMA FINANCIAL INFORMATION
JPE, INC.
<TABLE>
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(UNAUDITED)
(amounts in thousands)
<CAPTION>
Pro Forma Pro Forma
JPE, Inc. Pebra Adjustments Consolidated
--------- ----- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 681 -- -- $ 681
Accounts receivable, net 28,792 $ 5,653 -- 34,445
Inventory 33,681 5,887 $ (331)(d) 39,237
Other current assets 2,682 726 -- 3,408
-------- ------- ------- --------
Total current assets 65,836 12,266 (331) 77,771
Property, plant & equipment,
net 53,733 19,905 (4,634)(h) 69,004
Goodwill 27,351 -- -- 27,351
Other assets 1,388 150 (43)(b) 1,495
-------- ------- ------- --------
Total assets $148,308 $32,321 $(5,008) $175,621
======== ======= ======== ========
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt -- $ 7,869 $ 669 (c) $ 8,538
Current portion of
long-term debt $ 107 2,022 (1,802)(c) 327
Accounts payable 19,158 12,286 (12,286)(a) 19,158
Accrued liabilities 4,947 -- 1,769 (g) 6,716
Income taxes payable -- -- -- --
-------- ------- -------- --------
Total current liabilities 24,212 22,177 (11,650) 34,739
Accrued liabilities 1,147 -- 495 (f) 1,642
Long-term debt, non-current 84,443 7,736 8,555 (c) 100,734
Deferred income taxes 2,251 -- -- 2,251
-------- ------- -------- --------
Total liabilities 112,053 29,913 (2,600) 139,366
Shareholders' Equity:
Common stock 27,921 10,459 (10,459)(e) 27,921
Retained earnings 8,334 (8,051) 8,051 (e) 8,334
-------- ------- -------- --------
Total shareholders' equity 36,255 2,408 (2,408) 36,255
-------- ------- -------- --------
Total liabilities &
shareholders' equity $148,308 $32,321 $ (5,008) $175,621
======== ======= ========= ========
</TABLE>
See notes to unaudited pro forma
condensed consolidated financial statements.
<PAGE>
(B) PRO FORMA FINANCIAL INFORMATION (CONTINUED)
JPE, INC.
<TABLE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
(amounts in thousands, except share data)
<CAPTION>
Pebra
Pro Forma Pro Forma
JPE Pebra Adjustments Consolidated
--- ----- ----------- ------------
<S> <C> <C> <C> <C>
Net sales $153,732 $50,052 $4,004 (a) $207,788
Cost of goods sold 126,589 50,514 (1,446)(b) 175,657
-------- ------- ------ --------
Gross profit (loss) 27,143 (462) 5,450 32,131
Charge for impairment of
goodwill 4,300 -- -- 4,300
Selling, general &
administrative expenses 18,667 4,586 (1,351)(c) 21,902
-------- -------- ------ ---------
Operating profit (loss) 4,176 (5,048) 6,801 5,929
Non-operating expenses -- (425) -- (425)(f)
Interest expense (5,252) (845) (205)(d) (6,302)
-------- -------- ------ --------
Income (loss) before
income taxes (1,076) (6,318) 6,596 (798)
Income taxes (benefit) 36 (830) 930 (e) 136
-------- -------- ------ --------
Net income (loss) $ (1,112) $ (5,488) $5,666 $ (934)
======== ======== ====== =======
Earnings (loss) per share $(0.24) $(0.20)
====== ======
Weighted average shares
outstanding 4,585 4,585
===== =====
</TABLE>
See notes to unaudited pro forma
condensed consolidated financial statements.
<PAGE>
(B) PRO FORMA FINANCIAL INFORMATION (CONTINUED)
JPE, INC.
<TABLE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDING DECEMBER 31, 1995
(UNAUDITED)
(amounts in thousands, except share data)
<CAPTION>
IAF IAF and PTI Pebra
and Pro Forma Pro Forma Pro Forma
JPE PTI Pebra Adjustments Adjustments Consolidated
--- --- ----- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net sales ................................. $ 169,202 $ 21,083 $ 66,485 $ -- $ 5,769 (e) $ 262,539
Cost of goods sold ........................ 134,156 17,178 60,745 (85)(a) (2,036)(f) 209,958
--------- --------- --------- --------- --------- ---------
Gross profit ............................ 35,046 3,905 5,740 85 7,805 52,581
Selling, general &
administrative expenses .................. 21,591 1,650 6,693 (33)(b) (1,806)(g) 28,095
--------- --------- --------- --------- --------- ---------
Operating profit ........................ 13,455 2,255 (953) 118 9,611 24,486
Non-operating expenses .................... -- -- (2,686) -- -- (2,686)(j)
Interest expense .......................... (6,226) (287) (1,340) (876)(c) (59)(h) (8,788)
--------- --------- --------- --------- --------- ---------
Income before income
taxes .................................... 7,229 1,968 (4,979) (758) 9,552 13,012
Income taxes (benefit) .................... 2,780 -- (1,013) 466 (d) 2,659 (i) 4,892
--------- --------- --------- --------- --------- ---------
Net income .............................. $ 4,449 $ 1,968 $ (3,966) $ (1,224) $ 6,893 $ 8,120
========= ========= ========= ========= ========= =========
Earnings per share ........................ $ 1.09 $ 1.98
========= =========
Weighted average shares
outstanding .............................. 4,092 4,092
========= =========
</TABLE>
See notes to unaudited pro forma
condensed consolidated financial statements.
<PAGE>
(B) PRO FORMA FINANCIAL INFORMATION (CONTINUED)
JPE, INC., IAF, PTI AND PEBRA
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
A. PRO FORMA BALANCE SHEET ADJUSTMENTS
The following adjustments were made to arrive at the pro forma condensed
consolidated balance sheet.
a. Eliminate accounts payable that were not assumed by JPE.
b. Eliminate investment in subsidiary not acquired by JPE.
c. Reflects additional debt required for the acquisition and
reclassifying current and long-term portions.
d. Adjust inventory to properly reflect fair market value.
e. Eliminate Pebra's stockholder equity.
f. Recording of unfunded pension obligation assumed in the purchase.
g. Recording of expenses related to the acquisition of Pebra.
h. Increase fixed assets by $10,649 to reflect fair market value and then
reduce fixed assets for the bargain element in the purchase of
$15,283.
B. ADJUSTMENTS TO PRO FORMA STATEMENT OF INCOME FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1996
The following adjustments were made to arrive at the pro forma condensed
consolidated statement of income:
a. Adjusts sales revenue for the effect of a long-term supply agreement
with a major customer.
b. Reflects reduction in depreciation as result of the bargain purchase
price.
c. Adjusts sales commission expense for the change in sales agencies.
d. Recognition of additional interest expense booked on funds borrowed
for the acquisition purchase price.
e. Reflects provision for Canadian federal and provincial income taxes at
an effective rate of 36%.
f. The non-operating expense for Pebra Inc. in the nine months ended
September 30, 1996 represents a loss on sale of assets.
<PAGE>
(B) PRO FORMA FINANCIAL INFORMATION (CONTINUED)
JPE, INC., IAF, PTI AND PEBRA
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
C. ADJUSTMENTS TO PRO FORMA STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER
31, 1995
The following adjustments were made to arrive at the pro forma condensed
consolidated statement of income:
a. Reflects change in depreciation resulting from differences in the
values and depreciable lives of property, plant, and equipment. Also
reflects the effect of change from LIFO to FIFO method of accounting
for inventory.
b. Represents amortization of goodwill over 25 years. Includes adjustment
of certain salaries, bonuses and profit sharing calculation.
Eliminates costs related to the sale of PTI.
c. Elimination of JPE's interest income earned on funds used to finance
the acquisitions, offset by interest expense recorded by PTI prior to
the transaction which was repaid on the date of acquisition and
recognition of JPE's interest expense on funds borrowed to finance the
acquisitions.
d. Reflects provision for income taxes at a combined federal and state
tax rate of 38.5 percent at December 31, 1995.
e. Adjusts sales revenue for the effect of a long-term supply agreement
with a major customer.
f. Reflects reduction in depreciation as result of the bargain purchase
price.
g. Adjusts sales commission expense for the change in sales agencies.
h. Recognition of additional interest expense booked on funds borrowed
for the acquisition purchase price.
i. Reflects provision for Canadian federal and provincial income taxes at
an effective rate of 36%.
j. The non-operating expense for the year ended December 31, 1995
represents the write-off of Pebra Inc.'s investment and advances to a
60% owned subsidiary that was petitioned into bankruptcy. This also
includes the write-off of notes receivable from the 40% owners of this
subsidiary.
D. ADJUSTMENT TO STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1995
KMGLP sold all of its fixed assets to TTD Management, Inc. for
approximately $11 million in February 1995, prior to their sale to JPE.
This resulted in a gain to IAF of approximately $4 million which is
excluded from the statement of income for the year ended December 31, 1995.
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit
- ----------- -------
23 Consent of Price Waterhouse, Chartered Accountants
EXHIBIT 23
CONSENT OF PRICE WATERHOUSE, CHARTERED ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (File Nos. 33-86060, 33-93326 and 33-93328) of our reports
dated March 16, 1996 except for Note 14 which is as of February 6, 1997, March
10, 1995 except for Note 14 which is as of February 6, 1997, and March 11, 1994
except for Note 14 which is as of February 6, 1997, on the non-consolidated
financial statements of Pebra Inc., a Canadian company, for the years ended
December 31, 1995, 1994 and 1993 respectively, which reports are included in
Amendment No. 1 to Form 8-K/A dated March 6, 1997.
/s/ Price Waterhouse
Chartered Accountants
Kitchener, Ontario
March 6, 1997
