U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
Amendment No. 1
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): 4/14/99
PTI HOLDING INC.
(Name of small business issuer in its charter)
Delaware 1-11586 13-3590980
- ------------------- ---------- ----------------
(State or jurisdiction Commission (I.R.S. Employer
of incorporation or file Identification
organization) number No.)
c/o 15 East North Street, Dover, DE 19901
- --------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
(302) 678-0855
-----------------------------------------------
(Issuer's Telephone Number, Including Area Code)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO-FORMA FINANCIAL INFORMATION, AND EXHIBITS.
(a) Financial Statements of Business Acquired
Karlen Manufacturing, Inc. ("Karlen") Unaudited Balance Sheet as of March
31, 1999.
Karlen Unaudited Statement of Stockholder's Equity for the three months
ended March 31, 1999.
Karlen Unaudited Statement of Income for the three months ended March 31,
1999.
Karlen Unaudited Statement of Cash Flows for the three months ended March
31, 1999.
Karlen Notes to Unaudited Financial Statements for the three months ended
March 31, 1999.
Karlen Balance Sheet as of December 31, 1998 and 1997.
Karlen Statement of Stockholder's Equity for the years ended December 31,
1998 and 1997.
Karlen Statement of Income for the years ended December 31, 1998 and 1997.
Karlen Statement of Cash Flows for the years ended December 31, 1998 and
1997.
Karlen Notes to Financial Statements for the years ended December 31, 1998
and 1997.
(b) Pro-Forma Financial Information
PTI Holding Inc. and Subsidiaries Pro Forma Consolidated Balance Sheet as
of March 31, 1999.
PTI Holding Inc. and Subsidiaries Pro Forma Consolidated Statement of
Income for the three months ended March 31, 1999.
PTI Holding Inc. and Subsidiaries Pro Forma Consolidated Statement of
Income for the year ended December 31, 1998.
(c) Exhibits
<PAGE>
Exhibit
No. Description
- -- -----------
1 Asset Purchase Agreement dated January 8, 1999, by and among Flents
Products Co., Inc., Karlen Manufacturing, Inc. and the shareholders of
Karlen Manufacturing, Inc, as amended by amendment dated April 14, 1999.
2 Purchase Money Promissory Note made payable to Karlen Manufacturing, Inc.
dated April 14, 1999.
3 Revolving Credit, Term Loan and Security Agreement dated April 14, 1999
between Flents Products Co., Inc. and PNC Bank, National Association.
4 Revolving Credit, Term Loan and Security Agreement dated April 14, 1999 by
and among Protective Technologies International Inc., Zacko Sports Inc. and
PNC Bank, National Association.
5 Securities Purchase Agreement dated April 14, 1999 between Flents Products
Co., Inc. and The 1818 Mezzanine Fund, L.P.
6 Investment Agreement dated April 14, 1999 by and among Meredith
Birrittella, Warren Schaeffer and Flents Products Co., Inc.
7 Management Agreement dated April 14, 1999 between Flents Products Co., Inc.
and Protective Technologies International Inc.
8 Shareholder's Agreement dated April 14, 1999 by and among Flents Products
Co., Inc., PTI Holding Inc., The 1818 Mezzanine Fund, L.P., Meredith
Birrittella and Warren Schaeffer.
9 Fairness Opinion rendered by Management Planning, Inc. dated April 13,
1999.
10 Consent of Management Planning, Inc.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: June 28, 1999.
PTI HOLDING INC.
By:/s/ Meredith Birrittella
Meredith Birrittella
Chief Executive Officer
(authorized signatory)
<PAGE>
KARLEN MANUFACTURING, INC.
Compiled Financial Statements
March 31, 1999
<PAGE>
TABLE OF CONTENTS
Page
ACCOUNTANTS' COMPILATION REPORT 1
BASIC FINANCIAL STATEMENTS
Balance Sheet 2
Statement of Stockholders' Equity 3
Statement of Income 4
Statement of Cash Flows 5
Notes to Financial Statements 6 - 8
<PAGE>
Accountants' Report
To the Board of Directors of
Karlen Manufacturing, Inc.
We have compiled the accompanying balance sheet of Karlen Manufacturing, Inc. as
of March 31, 1999, and the related statements of income, stockholders' equity,
and cash flows for the three months then ended, in accordance with Statements on
Standards for Accounting and Review Services issued by the American Institute of
Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and supplementary schedules and,
accordingly, do not express an opinion or any other assurance on them.
Saginaw, Michigan
June 25, 1999
<PAGE>
<TABLE>
Karlen Manufacturing, Inc.
Balance Sheet
March 31, 1999
<S> <C>
Assets
Current assets
Cash $ 772,533
Accounts receivable 1,426,356
Inventory 1,883,985
Other current assets 46,565
----------
Total current assets 4,129,439
Property and equipment 562,361
Equipment deposits 3,197
----------
Total assets $ 4,694,997
==========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 228,691
Other current liabilities 105,102
----------
Total current liabilities 333,793
----------
Stockholders' equity
Common stock $ 1 par, 1,000,000 shares
authorized, 500,000 issued and outstanding 500,000
Retained earnings 3,861,204
----------
Total stockholders' equity 4,361,204
----------
Total liabilities and stockholders' equity $ 4,694,997
==========
</TABLE>
<PAGE>
Karlen Manufacturing, Inc.
Statement of Stockholders' Equity
For the Three Months Ended March 31, 1999
Common Retained
Stock Earnings
---------- ---------
Balance, January 1, 1999 $ 500,000 $ 3,314,532
Net income - 546,672
Dividends paid - -
--------- ---------
Balance, March 31, 1999 500,000 3,861,204
========= =========
<PAGE>
Karlen Manufacturing, Inc.
Statement of Income
For the Three Months Ended March 31, 1999
Net sales $ 2,960,554
Total cost of sales 1,746,858
----------
Gross margin 1,213,696
Selling, general and
administrative expenses 688,787
----------
Operating income 524,909
----------
Other income (expense)
Interest income 2,996
(Loss) on sale of assets 18,767
---------
Total other income (expenses) 21,763
---------
Net income $ 546,672
=========
<PAGE>
Karlen Manufacturing, Inc.
Statement of Cash Flows
For the Three Months Ended March 31, 1999
Cash flows from operating activities
Net income $ 546,672
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 37,721
(Gain) loss on asset disposals (18,767)
(Increase) decrease in:
Accounts receivable 36,429
Inventories 27,040
Other current assets 23,990
Increase (decrease) in:
Accounts payable (16,738)
Other current liabilities (526,404)
---------
Net cash provided by operating activities 109,943
---------
Cash flows from investing activities
Proceeds from sale of equipment 60,350
Acquisition of fixed assets (141,513)
---------
Net cash used in investing activities (81,163)
---------
Cash flows from financing activities
Dividends paid -
---------
Net cash used by financing activities -
---------
Net increase (decrease) in cash and cash equivalents 28,780
Cash and equivalents, beginning of year 743,753
---------
Cash and equivalents, end of year $ 772,533
=========
<PAGE>
Karlen Manufacturing, Inc.
Notes to Financial Statements
March 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Karlen Manufacturing, Inc. is a Michigan corporation operating from one facility
located in St. Charles, Michigan. The Company manufactures health care
accessories and beauty aids, which are sold throughout the United States by
company sales personnel and independent sales representatives.
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.
Estimates also affect the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
SIGNIFICANT CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of cash. The Company maintains cash balances at
various financial institutions. Accounts at each institution are insured by the
Federal Deposit Insurance Corporation up to $ 100,000. At March 31, 1999, the
Company's uninsured cash balances totaled $ 302,670.
Concentrations of credit risk with respect to accounts receivable are
insignificant due to the number of customers comprising the Company's customer
base and the geographic locations of those customers.
CASH
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash.
INVENTORIES
Inventories are carried at the lower of cost or market on a first-in, first-out
basis.
Raw materials $ 1,412,989
Work in process and finished goods 470,996
----------
Total inventory $ 1,883,985
==========
PROPERTY AND EQUIPMENT
Expenditures for new acquisitions, renewals and betterments, which increase
productive capacity or prolong service lives of the property and equipment, are
capitalized. Repairs and maintenance, which do not enhance the value or extend
the useful life, are charged to costs and expenses as incurred. Acquisitions of
tooling less than $500 are expensed to operations. Upon sale or retirement of
properties the related costs and accumulated depreciation are removed from the
accounts. All gains and losses on sales or retirement of property are reflected
in earnings. Property and equipment is being depreciated on straight line and
accelerated methods over the estimated useful lives of the respective assets.
INCOME TAXES
The Company with the consent of its shareholders has elected under the Internal
Revenue Code to be an S corporation effective October 1, 1989. In lieu of
corporation income taxes, the shareholders of an S corporation are taxed on
their proportionate share of the Company's taxable income. Therefore, no
provision or liability for Federal income taxes has been included in these
financial statements for the current period.
NOTE 2 - PROPERTY AND EQUIPMENT
The following is a summary of property and equipment:
Leasehold improvements $ 200,121
Vehicles 35,536
Machinery and equipment 1,033,224
Office equipment 523,123
----------
1,792,004
Less: accumulated depreciation 1,229,643
----------
Net book value $ 562,361
==========
Depreciation expense charged to operations for the three months ended March 31,
1999, was $37,721.
NOTE 3 - PROFIT SHARING PLAN
The Company has a defined contribution profit sharing plan covering all
qualified personnel. There were no contributions to the plan for the three
months ended March 31, 1999.
NOTE 4 - RELATED PARTIES
The Company leases the premises from which it operates and certain vehicles on a
monthly basis from its shareholders. Rent expense with related parties amounted
to $ 78,915 for the three months ended March 31, 1999.
The Company purchases raw materials from a company that is owned by the
shareholders. Purchases from the related party were $ 367,527 for the three
months ended March 31, 1999. These purchases approximately 31% of the total raw
materials purchased for the period.
NOTE 5 - SUBSEQUENT EVENTS
On January 12, 1999, PTI Holding, Inc. (a public company) announced that it had
agreed to purchase significantly all of the net assets of Karlen Manufacturing,
Inc. for $17.8 million. The agreement was finalized on April 16, 1999.
<PAGE>
KARLEN MANUFACTURING, INC.
Annual Financial Statements
and Auditor's Report
December 31, 1998
<PAGE>
TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT 1
BASIC FINANCIAL STATEMENTS
Balance Sheet 2
Statement of Stockholders' Equity 3
Statement of Income 4
Statement of Cash Flows 5
Notes to Financial Statements 6 - 8
<PAGE>
Independent Auditor's Report
To the Board of Directors of
Karlen Manufacturing, Inc.
We have audited the accompanying balance sheet of Karlen Manufacturing, Inc. as
of December 31, 1998 and 1997, and the related statements of income,
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. 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 audits provide 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 Karlen Manufacturing, Inc. as
of December 31, 1998 and 1997, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
Saginaw, Michigan
March 26, 1999
<PAGE>
Karlen Manufacturing, Inc.
Balance Sheet
December 31, 1998 and 1997
<TABLE>
<S> <C> <C>
1998 1997
Assets --------- ---------
Current assets
Cash $ 743,753 $ 755,659
Accounts receivable 1,462,785 1,021,261
Inventory 1,911,025 1,774,392
Other current assets 70,555 916,797
--------- ---------
Total current assets 4,188,118 4,468,109
Property and equipment 503,349 657,759
Equipment deposits - 55,077
--------- ---------
Total assets $ 4,691,467 $ 5,180,945
========= =========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 245,429 $ 112,673
Other current liabilities 631,506 428,995
-------- ---------
Total current liabilities 876,935 541,668
-------- ---------
Stockholders' equity
Common stock $ 1 par, 1,000,000 shares
authorized, 500,000 issued and outstanding 500,000 500,000
Retained earnings 3,314,532 4,139,277
--------- ---------
Total stockholders' equity 3,814,532 4,639,277
--------- ---------
Total liabilities and stockholders' equity $ 4,691,467 $ 5,180,945
========= =========
</TABLE>
<PAGE>
Karlen Manufacturing, Inc.
Statement of Stockholders' Equity
For the Years Ended December 31, 1998 and 1997
Common Retained
Stock Earnings
Balance, January 1, 1997 $ 500,000 $ 3,731,359
Net income - 407,918
Dividends paid - -
-------- ---------
Balance, December 31, 1997 500,000 4,139,277
Net income - 499,652
Dividends paid - (1,324,397)
------- ----------
Balance, December 31, 1998 $ 500,000 $ 3,314,532
======= ==========
<PAGE>
Karlen Manufacturing, Inc.
Statement of Income
For the Years Ended December 31, 1998 and 1997
1998 1997
---------- ----------
Net sales $ 12,291,443 $ 10,988,237
Total cost of sales 7,116,211 6,319,057
---------- ----------
Gross margin 5,175,232 4,669,180
Selling, general and
administrative expenses 4,662,683 4,359,565
---------- ----------
Operating income 512,549 309,615
---------- ----------
Other income (expense)
Interest income 73,416 98,798
(Loss) on sale of assets (86,313) (495)
----------- ----------
Total other income (expenses) (12,897) 98,303
----------- ----------
Net income $ 499,652 $ 407,918
=========== ==========
<PAGE>
<TABLE>
Karlen Manufacturing, Inc.
Statement of Cash Flows
For the Years Ended December 31, 1998 and 1997
<S> <C> <C>
1998 1997
-------- -------
Cash flows from operating activities
Net income $ 499,652 $ 407,918
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 192,089 211,865
Loss on asset disposals 86,313 495
(Increase) decrease in:
Accounts receivable (441,524) 5,536
Inventories (136,633) (139,856)
Other current assets 858,642 (54,894)
Increase (decrease) in:
Accounts payable 132,756 (91,848)
Other current liabilities 202,511 39,155
--------- --------
Net cash provided by operating activities 1,393,806 378,371
--------- --------
Cash flows from investing activities
Proceeds from sale of equipment 24,939 17,925
Acquisition of fixed assets (106,254) (291,986)
--------- --------
Net cash used in investing activities (81,315) (274,061)
--------- --------
Cash flows from financing activities
Dividends paid (1,324,397) -
---------- --------
Net cash used by financing activities (1,324,397) -
---------- --------
Net increase (decrease) in cash and cash equivalents (11,906) 104,310
Cash and equivalents, beginning of year 755,659 651,349
---------- --------
Cash and equivalents, end of year $ 743,753 $ 755,659
========== ========
</TABLE>
<PAGE>
Karlen Manufacturing, Inc.
Notes to Financial Statements
December 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Karlen Manufacturing, Inc. is a Michigan corporation operating from one facility
located in St. Charles, Michigan. The Company manufactures health care
accessories and beauty aids, which are sold throughout the United States by
company sales personnel and independent sales representatives.
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.
Estimates also affect the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
SIGNIFICANT CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of cash. The Company maintains cash balances at
various financial institutions. Accounts at each institution are insured by the
Federal Deposit Insurance Corporation up to $ 100,000. At December 31, 1998 and
1997, the Company's uninsured cash balances totaled $ 643,753 and $ 655,659,
respectively.
Concentrations of credit risk with respect to accounts receivable are
insignificant due to the number of customers comprising the Company's customer
base and the geographic locations of those customers.
CASH
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash.
INVENTORIES
Inventories are carried at the lower of cost or market on a first-in, first-out
basis.
1998 1997
Raw materials $ 1,435,853 $ 1,652,582
Work in process and finished goods 475,172 121,810
--------- ---------
Total inventory $ 1,911,025 $ 1,774,392
========= =========
PROPERTY AND EQUIPMENT
Expenditures for new acquisitions, renewals and betterments, which increase
productive capacity or prolong service lives of the property and equipment, are
capitalized. Repairs and maintenance, which do not enhance the value or extend
the useful life, are charged to costs and expenses as incurred. Acquisitions of
tooling less than $500 are expensed to operations. Upon sale or retirement of
properties the related costs and accumulated depreciation are removed from the
accounts. All gains and losses on sales or retirement of property are reflected
in earnings. Property and equipment is being depreciated on straight line and
accelerated methods over the estimated useful lives of the respective assets.
INCOME TAXES
The Company with the consent of its shareholders has elected under the Internal
Revenue Code to be an S corporation effective October 1, 1989. In lieu of
corporation income taxes, the shareholders of an S corporation are taxed on
their proportionate share of the Company's taxable income. Therefore, no
provision or liability for Federal income taxes has been included in these
financial statements for the current period.
NOTE 2 - PROPERTY AND EQUIPMENT
The following is a summary of property and equipment:
1998 1997
-------- ---------
Leasehold improvements $ 198,220 $ 300,952
Vehicles 35,537 30,740
Machinery and equipment 1,048,508 1,024,316
Office equipment 505,076 665,012
--------- ---------
1,787,341 2,021,020
Less: accumulated depreciation 1,283,992 1,363,261
--------- ---------
Net book value $ 503,349 $ 657,759
========= =========
Depreciation expense charged to operations in 1998 and 1997 was $ 192,089 and
$211,865, respectively.
NOTE 3 - PROFIT SHARING PLAN
The Company has a defined contribution profit sharing plan covering all
qualified personnel. The contributions to the plan for the years ended December
31, 1998 and 1997 were $ 386,810 and $ 242,800, respectively.
NOTE 4 - RELATED PARTIES
The Company leases the premises from which it operates and certain vehicles on a
monthly basis from its shareholders. Rent expense with related parties, amounted
to $ 328,677 and $ 334,368 for the years ended December 31, 1998 and 1997,
respectively.
The Company purchases raw materials from a company that is owned by the
shareholders. Purchases from the related party were $1,668,991 and $1,311,243
for the years ended December 31, 1998 and 1997. These purchases approximate 32%
and 33% of the total raw materials purchased for the respective years.
The Company has outstanding notes receivable from related parties in the amounts
of $ 38,593 and $ 885,880 as of December 31,1998 and 1997, respectively.
NOTE 5 - SUBSEQUENT EVENTS
On January 12, 1999, PTI Holding, Inc. (a public company) announced that it had
agreed to purchase significantly all of the net assets of Karlen Manufacturing,
Inc. for $17.8 million. As of the date of this report, the sale has not been
consummated. The Company expects final closing on the agreement in April 1999.
<PAGE>
PTI HOLDING INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
PTI Holding Inc. & Karlen Manufacturing
Adjustments Pro Forma
<TABLE>
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS: PTI Holding Inc. Karlen
& Subsidiaries Manufacturing Adjustments Pro Forma
--------------- -------------- ----------- ---------
Cash and cash equivalents $ 1,454,000 $ - (1) $(1,200,000) $ 254,000
Accounts receivable, net 14,676,000 1,387,000 - 16,063,000
Inventories 13,192,000 1,909,000 15,101,000
Deferred tax assets 256,000 - 256,000
Prepaid expenses and other current assets 1,641,000 40,000 (1) (225,000) 1,292,000
(2) (164,000)
------------- ------------ ----------- -----------
Total current assets 31,219,000 3,336,000 (1,589,000) 32,966,000
Deferred tax assets 218,000 218,000
Equipment & improvements, net 2,948,000 449,000 3,397,000
Intangible assets, net 5,306,000 - (4) 14,937,000 20,243,000
Deferred loan fees (3) 784,000 784,000
================ ================ ============== ==============
$ 39,691,000 $ 3,785,000 $ 14,132,000 $ 57,608,000
================ ================ ============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of loan payable, banks $ 13,758,000 $ - (1) $ 1,358,000 $ 15,116,000
Current portion of note payable, seller (1) 295,000 295,000
Due to seller (7) 92,000 92,000
Accounts payable and accrued expenses 6,496,000 240,000 (2) 200,000 6,963,000
(3) 27,000
----------- ---------- ---------- ----------
Total current liabilities 20,254,000 240,000 1,972,000 22,466,000
LONG-TERM LIABILITIES:
Loan payable, banks, net of current portion - - (1) 5,200,000 5,200,000
Subordinated loan payable - - (1) 5,800,000 5,800,000
Note payable, seller, net of current portion (1) 705,000 705,000
MINORITY INTERESTS (5) 3,530,000 3,530,000
STOCKHOLDERS' EQUITY 19,437,000 3,545,000 (6) (3,545,000) 19,907,000
(1) 4,000,000
(5) (3,530,000)
================ ================ ============== ==============
$ 39,691,000 $ 3,785,000 $ 14,132,000 $ 57,608,000
================ ================ ============== ==============
In preparing the pro forma consolidated balance sheet as of March 31, 1999,
adjustments were made to the
historical financial statement to reflect:
(1) funding at date of acquisition,
(2) acquisition costs,
(3) loan fees associated with acquisition financing,
(4) goodwill resulting from the acquisition,
(5) minority interests established in subsidiary at date of acquisition,
(6) net assets acquired, and
(7) purchase price adjustment.
</TABLE>
<PAGE>
<TABLE>
PTI HOLDING INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 1999
PTI Holding Inc. & Karlen Manufacturing
Adjustments Pro Forma
<S> <C> <C> <C> <C>
PTI Holding Inc. Karlen
& Subsidiaries Manufacturing Adjustments Pro Forma
--------------- -------------- ----------- ---------
Net sales $ 16,121,000 $ 2,961,000 $ - $ 19,082,000
Cost of sales 11,512,000 1,747,000 13,259,000
---------- --------- -------- ----------
Gross profit 4,609,000 1,214,000 - 5,823,000
Operating expenses 3,508,000 689,000 (1) 177,000 4,374,000
---------- --------- -------- ----------
Income from operations 1,101,000 525,000 (177,000) 1,449,000
Other income (expenses) (265,000) 22,000 (2) (379,000) (622,000)
---------- --------- -------- ----------
836,000 547,000 (556,000) 827,000
Minority interests - - (3) (16,000) (16,000)
--------- --------- -------- ----------
Income before income taxes 836,000 547,000 (540,000) 843,000
Income taxes 351,000 230,000 (4) (227,000) 354,000
================ =============== ============ ==============
Net income $ 485,000 $ 317,000 $ (313,000) $ 489,000
================ =============== ============ ==============
Net income per share of common stock $ 0.10 $ 0.10
================ ==============
Weighted average shares outstanding 5,014,769 5,014,769
================ ==============
In preparing the pro forma unaudited consolidated statement of income for
the three months ended March 31, 1999,
adjustments were made to the historical financial statement to reflect:
(1) amortization expense resulting from the amortization of goodwill and
other intangible assets arising
pursuant to the acquisition,
(2) interest expense and amortization of deferred loan fees resulting from
the acquisition financing,
(3) minority interests in earnings of subsidiary, and
(4) the income tax benefit of adjustments (1) ~ (3).
</TABLE>
<PAGE>
<TABLE>
PTI HOLDING INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1998
PTI Holding Inc. & Karlen Manufacturing
Adjustments Pro Forma
<S> <C> <C> <C> <C>
PTI Holding Inc. Karlen
& Subsidiaries Manufacturing Adjustments Pro Forma
--------------- -------------- ----------- ---------
Net sales $ 60,522,000 $ 12,291,000 $ - $ 72,813,000
Cost of sales 43,283,000 7,116,000 50,399,000
---------- ---------- ---------- ----------
Gross profit 17,239,000 5,175,000 - 22,414,000
Operating expenses 11,873,000 4,662,000 (1) 710,000 17,245,000
---------- ---------- --------- ----------
Income from operations 5,366,000 513,000 (710,000) 5,169,000
Other expenses 1,016,000 13,000 (2) 1,517,000 2,546,000
---------- ---------- --------- ----------
Income before income taxes 4,350,000 500,000 (2,227,000) 2,623,000
Minority interests - - (3) (331,000) (331,000)
---------- ---------- --------- ----------
4,350,000 500,000 (1,896,000) 2,954,000
Income taxes 1,858,000 210,000 (4) (796,000) 1,272,000
================= =============== ============ ==============
Net income $ 2,492,000 $ 290,000 $ (1,100,000) $ 1,682,000
================= =============== ============ ===============
Net income per share of common stock $ 0.49 $ 0.33
================= ===============
Weighted average shares outstanding 5,087,387 5,087,387
================= ===============
In preparing the pro forma unaudited consolidated statement of income for
the year ended December 31, 1998,
adjustments were made to the historical financial statement to reflect:
(1) amortization expense resulting from the amortization of goodwill and
other intangible assets arising pursuant to the acquisition,
(2) interest expense and amortization of deferred loan fees resulting from
the acquisition financing,
(3) minority interests in earnings of subsidiary, and
(4) the income tax benefit of adjustments (1) ~ (3).
</TABLE>
