<PAGE>
UNITED STATES
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) October 9, 1997
CPI Aerostructures, Inc.
------------------------
(Exact name of Registrant as specified in its charter)
New York 1-11398 11-2520310
-------- ------- ----------
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification Number)
200A Executive Drive, Edgewood, NY 11717
----------------------------------------
(Address of principal executive offices)(Zip Code)
(516) 586-5200
--------------
(Registrant's telephone number, including area code)
<PAGE>
EXPLANATORY NOTE
This Amendment No. 1 on Form 8-K/A to the Current Report on Form 8-K
("Form 8-K") for October 9, 1997 of CPI Aerostructures, Inc., a New York
corporation ("the Company") is submitted in order to provide the Financial
Statements and pro forma financial information called for under Item 7 of Form
8-K concerning the Company's acquisition of Kolar Machine, Inc. Therefore, the
Company hereby amends its Form 8-K in accordance with Rule 12b-15 under the
Securities Exchange Act of 1934.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Kolar Machine, Inc.
We have audited the accompanying balance sheet of Kolar Machine, Inc. as of
October 9, 1997 and the related statements of income and retained earnings, and
cash flows for the year ended December 31, 1996 and the period from January 1,
1997 to October 9, 1997. 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 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 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 Kolar Machine, Inc. as of
October 9, 1997, and the results of its operations and its cash flows for the
year ended December 31, 1996 and the period from January 1, 1997 to October 9,
1997 in conformity with generally accepted accounting principles.
GOLDSTEIN GOLUB KESSLER & COMPANY, P.C.
November 7, 1997
<PAGE>
KOLAR MACHINE, INC.
BALANCE SHEET
<TABLE>
============================================================================================================
October 9, 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents (Note 1) $ 250,000
Accounts receivable 1,275,496
Inventory (Notes 1 and 2) 2,055,469
Prepaid expenses and other current assets 26,149
- ------------------------------------------------------------------------------------------------------------
Total current assets 3,607,114
Property and Equipment - net (Notes 1, 3 and 4) 1,635,983
- ------------------------------------------------------------------------------------------------------------
Total Assets $5,243,097
============================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 312,880
Accrued expenses 281,578
Notes Payable (Note 4) 1,041,315
Deferred income tax payable (Note 6) 67,000
- ------------------------------------------------------------------------------------------------------------
Total current liabilities 1,702,773
- ------------------------------------------------------------------------------------------------------------
Commitments (Note 5)
Shareholders' Equity:
Common stock - no par value; authorized 200 shares, issued 100 shares,
outstanding 30 shares 75,000
Retained Earnings 3,865,324
- ------------------------------------------------------------------------------------------------------------
3,940,324
Less treasury stock, 70 shares, at cost (400,000)
- ------------------------------------------------------------------------------------------------------------
Shareholder's equity 3,540,324
- ------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $5,243,097
============================================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
KOLAR MACHINE, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
============================================================================================================
Period Ended Year Ended
October 9, 1997 December 31, 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Sales $ 12,288,058 $ 13,864,920
Cost of sales 8,370,381 9,222,720
- ------------------------------------------------------------------------------------------------------------
Gross profit 3,917,677 4,642,200
Selling, general and administrative expenses 2,042,804 1,944,013
- ------------------------------------------------------------------------------------------------------------
Income from operations 1,874,873 2,698,187
Interest expense (52,844) (54,161)
Interest income 38,712 55,944
- ------------------------------------------------------------------------------------------------------------
Income before provision for income taxes 1,860,741 2,699,970
Provision for income taxes (Note 6) 30,499 31,956
- ------------------------------------------------------------------------------------------------------------
Net income 1,830,242 2,668,014
Retained earnings at beginning of period 3,678,710 2,606,156
Distributions to shareholder (1,634,628) (1,595,460)
- ------------------------------------------------------------------------------------------------------------
Retained earnings at end of period $ 3,865,324 $ 3,678,710
============================================================================================================
Earnings per share $ 61,008 $ 88,934
============================================================================================================
Weighted average number of shares outstanding 30 30
============================================================================================================
Pro forma (unaudited):
Net income (as above) $ 1,830,242 $ 2,668,014
Provision for income taxes (Note 6) 716,000 1,050,000
- ------------------------------------------------------------------------------------------------------------
Pro forma net income $ 1,114,242 $ 1,618,014
============================================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
KOLAR MACHINE, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
=============================================================================================================
Period Ended Year Ended
October 9, 1997 December 31, 1996
- --------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 1,830,242 $ 2,668,014
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 358,955 367,819
Gain on sale or abandonment of equipment 6,075 (1,394)
Provision for deferred income taxes 12,499 11,737
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 101,341 (368,476)
Increase in inventory (741,092) (414,716)
(Increase) decrease in prepaid expenses and other current assets 5,417 (23,385)
Increase (decrease) in accounts payable 183,200 (157,267)
Increase in accrued expenses 185,612 48,445
- ------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,942,249 2,130,777
- ------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of property and equipment (971,221) (680,979)
Proceeds from sale of equipment -- 5,306
- ------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (971,221) (675,673)
- ------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase in notes payable 360,965 158,679
Principal payments on capital lease obligations (4,377) -
Distributions paid to shareholder (1,643,628) (1,595,460)
- ------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (1,287,040) (1,436,781)
- ------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (316,012) 18,323
Cash and cash equivalents at beginning of period 566,012 547,689
- ------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 250,000 $ 566,012
============================================================================================================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 57,855 $ 50,468
============================================================================================================
Income taxes $ 5,053 $ 42,247
============================================================================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
KOLAR MACHINE, INC.
NOTES TO FIANNCIAL STATEMENTS
================================================================================
1. SUMMARY OF The Company's principal business is the precision
SIGNIFICANT computer control machining of metal products on a
ACCOUNTING contract-order basis. The Company operates,
POLICIES AND distributes and markets its products in New York
PRINCIPAL State.
BUSINESS
ACTIVITY: Revenue is recognized when goods are shipped to
customers.
Inventory is stated at the lower of cost
(first-in, first-out method) or market.
Depreciation and amortization of property and
equipment is provided for by the straight-line
method over the estimated useful lives of the
respective assets or the life of the lease for
leasehold improvements.
The Company maintains cash in bank deposit
accounts which, at times, may exceed federally
insured limits. The Company has not experienced
any losses in such accounts. The Company believes
it is not exposed to any significant credit risk
on cash.
The Company considers all highly liquid
investments with an original maturity of three
months or less to be cash equivalents.
The preparation of financial statements in
conformity with generally accepted accounting
principles requires the use of estimates by
management. Actual results could differ from those
estimates.
On October 9, 1997, Kolar, Inc., a wholly owned
subsidiary of CPI Aerostructures, Inc. purchased
substantially all of the assets and assumed
substantially all of the liabilities of Kolar
Machine, Inc.
2. INVENTORY: Inventory consists of the following:
Raw materials $ 567,437
Work-in-process 617,884
Finished goods 870,148
--------------------------------------------------
$2,055,469
==================================================
3. PROPERTY AND EQUIPMENT: Property and equipment, at cost, consists of the
following:
<TABLE>
<CAPTION>
Estimated
Useful Life
-------------------------------------------------------------
<S> <C> <C>
Machinery $5,112,385 5 years
Leasehold improvements 808,893 15 years
Equipment, furniture and fixtures 199,177 5 years
Automobiles and trucks 143,672 5 years
------------------------------------------------------------
6,264,127
Less accumulated depreciation
and amortization 4,628,144
------------------------------------------------------------
$1,635,983
============================================================
</TABLE>
<PAGE>
KOLAR MACHINE, INC.
NOTES TO FIANNCIAL STATEMENTS
================================================================================
4. NOTES PAYABLE: Notes payable consists of the following:
<TABLE>
<S> <C>
Note payable - bank $1,024,920
Capital lease obligations 16,395
------------------------------------------------------------
$1,041,315
============================================================
</TABLE>
The notes payable are all classified as current
because on October 9, 1997 the notes were paid in
full in conjunction with Kolar, Inc.'s purchase of
substantially all of the assets and assumption of
substantially all of the liabilities of the
Company.
5. COMMITMENTS: The Company leased factory and office
facilities at various locations from its sole
shareholder under noncancelable operating leases.
Rent expense includes real estate taxes and other
expenses.
On October 9, 1997 the sole shareholder sold all
of the Company's factory and office facilities to
Kolar, Inc., and accordingly the leases were
cancelled.
Rent expense charged to operations for the period
ended October 9, 1997 and the year ended December
31, 1996, including escalation charges, amounted
to $177,855 and $152,928, respectively.
6. PROVISION FOR The benefit for income taxes consists of the
INCOME TAXES: following:
Period From
January 1 to Year Ended
October 9, December 31,
1997 1996
-------------------------------------------------
Current $18,000 $20,219
Deferred 12,499 11,737
-------------------------------------------------
$30,499 $31,956
=================================================
Reconciliation of income taxes:
Income taxes computed
at federal statutory rate $633,000 $918,000
Reduction from anticipated
effect related to S
corporation status (633,000) (918,000)
State income tax 30,499 31,956
-------------------------------------------------
Provision for income
taxes $ 30,499 $31,956
=================================================
The shareholder of the Company has elected to have
the Company taxed as an S Corporation under the
provisions of the federal and New York State
income tax laws. Pursuant to these elections, no
federal income taxes are payable by the Company;
income or loss is reported by the shareholder. The
Company is subject to state income taxes at
reduced rates.
The Company files its income tax returns on the
cash basis. The accompanying financial statements
have been prepared on the accrual basis of
accounting in accordance with generally accepted
accounting principles. Deferred income taxes have
been provided to reflect the tax effect of
temporary differences arising from the differences
between the financial statement and income tax
bases of various assets and liabilities.
<PAGE>
KOLAR MACHINE, INC.
NOTES TO FIANNCIAL STATEMENTS
================================================================================
7. MAJOR CUSTOMERS: During the period ended October 9, 1997, and the
year ended December 31, 1996, the Company had
sales to two customers that totaled approximately
75% and 74%, and 12% and 15% of net sales,
respectively.
These customers comprise approximately 89% of the
Company's accounts receivable at October 9, 1997.
8. PENSION PLANS: The Company has a defined contribution plan under
Section 401(k) of the Internal Revenue Service
Code, wherein qualified employees may contribute a
percentage of their pretax eligible compensation
to the plan and the Company will match a
percentage of each employee's contribution. The
amount of matching contributions made by the
Company for the period ended October 9, 1997 and
year ended December 31, 1996 amounted to $24,978
and $31,260 respectively.
Additionally, the Company has a profit-sharing
plan covering all eligible employees.
Contributions by the Company are at the discretion
of the Board of Directors. Contributions to the
plan for the period ended October 9, 1997 and year
ended December 31, 1996 amounted to $7,500 and
$7,700 respectively. The sole shareholder of the
Company and his spouse are the two trustees of the
Plan.
<PAGE>
CPI AEROSTRUCTURES,INC. (CPI)
and
KOLAR MACHINE, INC. (KMI)
PRO FORMA COMBINED FINANCIAL INFORMATION
(Unaudited)
The following pro forma combined summary of operations combines the results of
operations of CPI and KMI for the year ended December 31, 1996 and for the
nine-month period ended October 9, 1997. The pro forma combined financial
information should be read in conjunction with the historical statements.
<PAGE>
CPI AEROSTRUCTURES,INC. (CPI)
and
KOLAR MACHINE, INC. (KMI)
PRO FORMA COMBINED SUMMARY OF OPERATIONS
(Unaudited)
- --------------------------------------------------------------------------------
The Period Ended October 9, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Pro Forma
CPI KMI Adjustments Combined
--- --- ----------- --------
<S> <C> <C> <C> <C>
Revenues $ 7,346,072 $ 12,288,058 $ -- $ 19,634,130
Cost of sales 4,841,397 8,370,381 -- 13,211,778
------------ ------------ ------------ ------------
Gross profit 2,504,675 3,917,677 -- 6,422,352
(1,085,410) (D)
Operating expenses 1,060,394 2,042,804 959,569 (A) 2,977,357
------------ ------------ ------------ ------------
Income from operations 1,444,281 1,874,873 125,841 3,444,995
Other income (expense) (19,247) (14,132) (753,811) (B) (787,190)
Provision
for income taxes 570,000 (30,499) 462,623 (E) 1,063,122
------------ ------------ ------------ ------------
Net earnings $ 855,034 $ 1,830,242 $ (1,090,593) $ 1,594,683
============ ============ ============ ============
</TABLE>
<PAGE>
CPI AEROSTRUCTURES,INC. (CPI)
and
KOLAR MACHINE, INC. (KMI)
PRO FORMA COMBINED SUMMARY OF OPERATIONS
(Unaudited)
- -------------------------------------------------------------------------------
Year Ended December 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Pro Forma
CPI KMI Adjustments Combined
--- --- ----------- --------
<S> <C> <C> <C> <C>
Revenues $ 6,769,712 $ 13,864,920 $ -- $ 20,634,632
Cost of sales 4,179,823 9,222,720 -- 13,402,543
------------ ------------ ------------ ------------
Gross profit 2,589,889 4,642,200 -- 7,232,089
(930,672) (D)
Operating expenses 1,751,064 1,944,013 1,267,394 (A) 4,031,799
------------ ------------ ------------ ------------
Income from operations 838,825 2,698,187 (336,722) 3,200,290
Other income (expense) (67,349) 1,783 (1,239,934) (B) (1,305,500)
Extraordinary item 50,947 -- -- 50,947
Provision (benefit)
for income taxes 318,000 31,956 407,956 (E) 757,912
------------ ------------ ------------ ------------
Net earnings $ 504,423 $ 2,668,014 $ (1,984,612) $ 1,187,825
============ ============ ============ ============
</TABLE>
<PAGE>
CPI AEROSTRUCTURES,INC. (CPI)
and
KOLAR MACHINE, INC. (KMI)
PRO FORMA COMBINED BALANCE SHEET
(Unaudited)
- --------------------------------------------------------------------------------
October 9, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CPI KMI Adjustments Combined
--- --- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 3,034,555 $ 250,000 $(2,066,294)(C) $ 1,218,261
Accounts receivable 509,334 1,275,496 1,784,830
Inventory 2,055,469 2,055,469
Costs & est earnings in excess
of billings on uncompl contracts 13,516,654 13,516,654
Other current assets 35,796 26,149 28,234 (C) 90,179
------------ ------------ ------------ ------------
Total current assets 17,096,339 3,607,114 (2,038,060) 18,665,393
Property, plant & equipment, net 129,146 1,635,983 3,764,017 (C) 5,529,146
Other assets 325,797 0 232,250 (C) 558,047
Goodwill 0 0 7,760,654 (C) 7,760,654
------------ ------------ ------------ ------------
Total assets $ 17,551,282 $ 5,243,097 $ 9,718,861 $ 32,513,240
============ ============ ============ ============
LIABILITIES & SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 1,940,449 $ 312,880 $ $ 2,253,329
Accrued expenses and income taxes 574,022 281,578 855,600
Notes payable 0 1,041,315 (1,041,315)(C) 0
Current portion - long-term debt 0 0 1,812,500 (C) 1,812,500
Deferred income taxes 741,000 67,000 (67,000)(C) 741,000
------------ ------------ ------------ ------------
Total current liabilities 3,255,471 1,702,773 704,185 5,662,429
Long-term debt 0 0 12,562,500 (C) 12,562,500
Deferred income taxes 27,000 0 27,000
------------ ------------ ------------ ------------
Total liabilities 3,282,471 1,702,773 13,266,685 18,251,929
Shareholders' equity:
Common stock 7,675 75,000 (74,900)(C) 7,775
Additional paid-in-capital 11,612,756 (400,000) 392,400 (C) 11,605,156
Retained earnings 2,648,380 3,865,324 (3,865,324)(C) 2,648,380
------------ ------------ ------------ ------------
Total shareholders' equity 14,268,811 3,540,324 (3,547,824) 14,261,311
------------ ------------ ------------ ------------
Total liabilities and
Shareholders' equity $ 17,551,282 $ 5,243,097 $ 9,718,861 $ 32,513,240
============ ============ ============ ============
</TABLE>
<PAGE>
CPI AEROSTRUCTURES,INC. (CPI)
and
KOLAR MACHINE, INC. (KMI)
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
(Unaudited)
(A) To reflect depreciation of property, plant and equipment and
amortization of intangible assets based on market value adjustments in
connection with applying purchase accounting.
(B) To reflect additional interest expense for the cash purchase price of
the acquisition.
(C) To reflect the application of purchase accounting to the acquisition.
(D) Known reductions in officer's compensation.
(E) To reflect income tax provision as if acquired entity were not using
Subchapter S status.
<PAGE>
CPI AEROSTRUCTURES,INC.
================================================================================
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CPI AEROSTRUCTURES, INC.
Dated: December 16, 1997
By: /S/ Arthur August
--------------------------
Arthur August
President
(Principal Executive Officer)
Dated: December 16, 1997
By: /S/ Theodore J. Martines
--------------------------
Theodore J. Martines
Executive Vice President
(Principal Financial Officer)
