<PAGE>
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): AUGUST 31, 1999
---------------
AZTEC MANUFACTURING CO.
-----------------------
(Exact name of Registrant as specified in its charter)
TEXAS 0-2733 75-0948250
----- ------ ----------
(State or other Commission File No. (I.R.S. Employer
jurisdiction of Identification Number)
incorporation or
organization)
400 NORTH TARRANT
CROWLEY, TEXAS 76036
----------------------
(Address of principal executive offices,
including zip code)
<PAGE>
Registrant's Telephone Number, including Area Code: (817) 297-4361
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K dated
September 13, 1999.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial statements of business acquired. On August 31, 1999, Aztec
Manufacturing Co., (the "Company") and certain of its subsidiaries
completed the acquisition (the "Acquisition") of certain assets of
Compressed Gas Insulated Transmission A Division of ABB Power T& D
Company, Inc. ("CGIT") pursuant to an Asset Purchase Agreement, dated
August 31, 1999. Such assets constitute substantially all of the
assets formerly used by CGIT in connection with its business of
manufacturing compressed gas insulated transmission bus duct. The
financial statements required to be filed by Item 7 (a) of Form 8-K
are filed herewith as Exhibit 99.1.
(b) Pro forma financial information. The pro forma financial information
required to be filed by Item 7 (b) of Form 8-K is filed herewith as
Exhibit 99.2.
(c) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------ -------
<S> <C>
23 Consent of Ernst & Young LLP
99.1 Financial Statements of CGIT as of the eight months ended
August 31, 1999 and 1998 (unaudited), and for the year ended
December 31, 1998 with Report of Independent Auditors.
99.2 Unaudited Pro Forma Combined Condensed Balance Sheet of the
Company and CGIT as of August 31, 1999; and Unaudited Pro Forma
Combined Condensed Statements of Operations of the Company and
CGIT for the six months ended August 31, 1999 and for the year
ended February 28, 1999.
</TABLE>
1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AZTEC MANUFACTURING CO.
DATE: 11/15/99 By: /s/ Dana Perry
-------- -------------------------------------
Dana Perry
Vice President Finance
Chief Financial Officer
2
<PAGE>
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ----------- -------
<S> <C>
23 Consent of Ernst & Young LLP.
99.1 Financial Statements of CGIT as of the eight months ended August
31, 1999 and 1998 (unaudited), and for the year ended December
31, 1998 with Report of Independent Auditors.
99.2 Unaudited Pro Forma Combined Condensed Balance Sheet of the
Company and CGIT as of August 31, 1999; and Unaudited Pro Forma
Combined Condensed Statements of Operations of the Company and
CGIT for the six months ended August 31, 1999 and the year ended
February 28, 1999.
</TABLE>
3
<PAGE>
EXHIBIT 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the use of our report dated October 29, 1999 with respect to the
financial statements of Compressed Gas Insulated Transmission included in Aztec
Manufacturing Co.'s Current Report on Form 8-K/A dated November 15, 1999.
By: /s/ Ernst & Young, LLP
--------------------------
Boston, Massachusetts
November 12, 1999
<PAGE>
Exhibit 99.1
Financial Statements
Compressed Gas Insulated Transmission
(A Division of ABB Power T&D Company, Inc.)
Eight Months Ended August 31, 1999 and 1998 (unaudited),
and Year ended December 31, 1998
Contents
Report of Independent Auditors......................................... 1
Financial Statements
Balance Sheets......................................................... 2
Statements of Income................................................... 3
Statements of Cash Flows............................................... 4
Notes to Financial Statements.......................................... 5
<PAGE>
Report of Independent Auditors
The Board of Directors
Aztec Manufacturing Co.
We have audited the accompanying balance sheet of Compressed Gas Insulated
Transmission (A Division of ABB Power T&D Company, Inc.) (the Company) as of
December 31, 1998, and the related statements of income and cash flows 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 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 Compressed Gas Insulated
Transmission at December 31, 1998, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
October 29, 1999 By: /s/ Ernst & Young, LLP
--------------------------
1
<PAGE>
Compressed Gas Insulated Transmission
(A Division of ABB Power T&D Company, Inc.)
Balance Sheets
<TABLE>
<CAPTION>
August 31 December 31
1999 1998
----------------------- ----------------------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 3,651 $ 1,463,546
Accounts receivable, less allowance for doubtful accounts
of $25,790 in 1999 and $25,906 in 1998 1,361,814 3,436,024
Accounts receivable from affiliates 0 588,249
Inventories:
Work in process 311,068 360,963
Raw material and supplies 790,264 992,899
----------------------- ----------------------
1,101,332 1,353,862
Revenue in excess of billings 2,020,674 394,323
Prepaid expenses 63,554 39,470
Other current assets 3,128 0
----------------------- ----------------------
Total current assets 4,554,153 7,275,474
Property and equipment, at cost:
Machinery and equipment 2,309,879 2,550,431
Furniture and fixtures 483,174 119,206
Leasehold improvements 300,561 287,707
Construction in progress 84,154 139,147
----------------------- ----------------------
3,177,768 3,096,491
Less accumulated depreciation and amortization (2,449,524) (2,300,088)
----------------------- ----------------------
728,244 796,403
Other Assets 364,700 0
Total assets $ 5,647,097 $ 8,071,877
======================= ======================
Liabilities and ABB Power T&D investment
Liabilities:
Accounts payable $ 411,464 $ 212,406
Accrued liabilities:
Salaries, wages and employee benefits 633,958 352,247
Billings in excess of revenue 0 1,971,363
Deferred revenue from affiliate 0 228,906
Warranty costs 956,286 947,877
Other accrued expenses 245,042 457,954
----------------------- ----------------------
1,835,286 3,958,347
----------------------- ----------------------
Total current liabilities 2,246,750 4,170,753
Due to Parent 0 764,712
ABB Power T&D investment 3,400,347 3,136,412
----------------------- ----------------------
Total liabilities and ABB Power T&D investment $ 5,647,097 $ 8,071,877
======================= ======================
</TABLE>
See accompanying notes.
2
<PAGE>
Compressed Gas Insulated Transmission
(A Division of ABB Power T&D Company, Inc.)
Statements of Income
<TABLE>
<CAPTION>
Eight Months Eight Months
Ended Ended Year Ended
August 31 August 31 December 31
1999 1998 1998
--------------- -------------- -----------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Net sales to third parties $4,905,000 $6,702,000 $ 9,864,176
Net sales to affiliates 2,353,000 1,740,000 2,344,803
--------------- -------------- -----------------
Net sales 7,258,000 8,442,000 12,208,979
Cost of sales 4,877,000 5,856,000 8,964,363
--------------- -------------- -----------------
2,381,000 2,586,000 3,244,616
Operating expenses:
Selling, general and 902,000 864,000 1,023,899
administrative
Allocations from Parent 332,000 321,000 371,001
--------------- -------------- -----------------
Total operating expenses 1,234,000 1,185,000 1,394,900
--------------- -------------- -----------------
Operating income 1,147,000 1,401,000 1,849,716
Loss on advances to affiliate 0 104,000 297,917
--------------- -------------- -----------------
Income before income taxes 1,147,000 1,297,000 1,551,799
Provision for income taxes 430,000 486,000 630,000
--------------- -------------- -----------------
Net income $ 717,000 $ 811,000 $ 921,799
=============== ============== =================
</TABLE>
See accompanying notes.
3
<PAGE>
Compressed Gas Insulated Transmission
(A Division of ABB Power T&D Company, Inc.)
Statement of Cash Flows
<TABLE>
<CAPTION>
Eight Months Eight Months
Ended Ended Year Ended
August 31 August 31 December 31
1999 1998 1998
--------------- ------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Operating activities
Net income $ 717,000 $ 811,000 $ 921,799
Adjustments to reconcile net income to net
cash provided by Operating activities:
Loss on sale of equipment 0 0 10,817
Depreciation and amortization 149,000 151,000 272,107
Changes in assets and liabilities:
Accounts receivable 2,074,000 905,000 (1,793,052)
Accounts receivable from affiliates 588,000 201,000 248,629
Inventory 253,000 370,000 849,376
Prepaid expenses (24,000) (16,000) (977)
Revenues in excess of billings (1,626,000) 950,000 1,670,481
Other Assets (368,000) 692,000
Accounts payable 199,000 (927,000) (1,106,840)
Billings in excess of revenue (1,972,000) 497,000 1,010,829
Warranty costs 8,000 13,000 47,939
Deferred revenue from affiliates (228,000) 0 228,906
Income taxes 0 (26,000) 630,000
Other accrued liabilities 69,000 362,000 620,916
--------------- ------------- -------------
Net cash (used) provided by operating
activities (161,000) 3,983,000 3,610,930
Investing activities
Purchases of property and equipment (81,000) (144,000) (242,389)
--------------- ------------- -------------
Net cash used in investing activities (81,000) (144,000) (242,389)
Financing activities
Net cash paid to Parent (1,218,000) (1,476,000) (1,910,000)
--------------- ------------- -------------
Net cash used in financing activities (1,218,000) (1,476,000) (1,910,000)
--------------- ------------- -------------
Increase (Decrease) in cash and cash
equivalents (1,460,000) 2,363,000 1,458,541
Cash and cash equivalents at beginning of
year or period 1,464,000 5,000 5,005
--------------- ------------- -------------
Cash and cash equivalents at end of year
or period $ 4,000 $ 2,368,000 $ 1,463,546
=============== ============= =============
</TABLE>
See accompanying notes.
4
<PAGE>
Compressed Gas Insulated Transmission
(A Division of ABB Power T&D Company, Inc.)
Notes to Financial Statements
December 31, 1998
1. Background and Description of Business
Compressed Gas Insulated Transmission (the Company), a division of ABB Power T&D
Company, Inc., manufactures custom-compressed, gas-insulated transmission bus
ducts which carry high-voltage electricity as an alternative to the conventional
overhead electric cables. The Company also is a supplier of products for the
bus ducts market. The first commercial system was installed by the Company in
1972. Compressed Gas Insulated Transmission is a division of ABB Power T&D
Company, Inc. (the Parent), which, in turn, is a subsidiary of Asea Brown Boveri
of Switzerland.
On August 31, 1999, ABB Power T&D Company, Inc. signed a purchase and sale
agreement with Aztec Manufacturing Company (Aztec) under which Aztec would
acquire certain assets and liabilities of the Company for a purchase price of
$10,747,000 (the Transaction). ABB Power T&D Company, Inc. has agreed to retain
certain assets and liabilities related to the Company, including cash, prepaid
insurance, workers' compensation, pension and postretirement obligations. The
accompanying financial statements do not reflect any aspect of the Transaction.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. The most significant of these estimates and assumptions
relate to allocation of Parent-shared services costs, valuation of inventory and
certain accrued liabilities, including, among others, those for warranties.
Actual results could differ from those estimates.
Cash and Cash Equivalents
All highly liquid investments with a maturity of three months or less at time of
issuance are classified as cash equivalents.
Inventories
Inventories are stated at the lower of cost, using the average cost method, or
market.
5
<PAGE>
Compressed Gas Insulated Transmission
(A Division of ABB Power T&D Company, Inc.)
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is computed
using the straight-line method over the following estimated useful lives:
<TABLE>
<S> <C>
Machinery and equipment 7 years
Furniture and fixture 5 years
Leasehold improvements Lesser of lease term or useful life
</TABLE>
Impairment of Long-Lived Assets
In accordance with Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets to be Disposed Of (SFAS No.
121), the Company reviews its long-lived assets, including property and
equipment, whenever events or change in circumstances indicate that the carrying
amount of the assets may not be fully recoverable. To determine the
recoverability of its long-lived assets, the Company evaluates the probability
that the future undiscounted net cash flows will be less than the carrying
amount of the assets. Impairment is measured at fair value. SFAS No. 121 has
had no effect on the Company's financial statements.
Concentration of Credit Risk
The Company sells to companies engaged in the production of electricity
worldwide. Credit evaluations of customers are performed by ABB Power T&D
Company, Inc. Reserves are maintained for potential credit losses, and such
losses have been within management's expectations.
Revenue Recognition
Sales of products under long-term contracts are recognized under the percentage-
of-completion method of accounting. Under this method, the revenue to be
recognized is determined by multiplying the percentage of the contract value by
the physical completion to date. Percentage of completion to date is determined
by dividing actual costs incurred to date by the total estimated costs of
completion. Costs associated with contracts are expensed as incurred.
6
<PAGE>
Compressed Gas Insulated Transmission
(A Division of ABB Power T&D Company, Inc.)
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Warranty
The Company provides warranties on its products for various periods between one
and five years. The Company reserves for future warranty costs based on
estimates established by management. Anticipated costs related to warranties
are charged to cost of sales at the time of shipment.
3. Income Taxes
The Company's operations are included in the consolidated federal and combined
state income tax returns of the Parent. However, in accordance with Statement
of Financial Accounting Standards No. 109, Accounting for Income Taxes (SFAS No.
109), for the purposes of these financial statements, the provision for income
taxes is calculated as if the Company were a separate taxpayer. Accordingly,
the provision for income taxes is based upon the Company's reported income
before income taxes. Income taxes are considered to have been paid or charged
to ABB Power T&D Company, Inc. and are recorded through the Due to Parent
account.
4. Related-Party Transactions
The Company is involved in material transactions with ABB Power T&D Company,
Inc. and its affiliates as follows:
Division Support
The Company has funded the operating losses of IPB, a division of ABB Power T&D
Company, Inc. The cumulative losses through 1997 were $2,496,857. The loss of
the IPB division in 1998 totaled $297,917 ($0 and $104,000 for eight months
ended August 31, 1999 and 1998 respectively). The IPB division will be retained
by ABB Power T&D Company, Inc. subsequent to the Transaction.
Allocation of Parent Expenses
The Company relies on the Parent for certain services, including human
resources, employee benefits, legal, tax compliance, audit and general corporate
services to the Company. Allocated costs related to these services are included
in the accompanying financial statements and amounted to $371,000 in 1998
($332,000 and $321,000 for eight months ended August 31, 1999 and 1998
respectively). This amount would not be the same had the Company been an
independent entity.
7
<PAGE>
Compressed Gas Insulated Transmission
(A Division of ABB Power T&D Company, Inc.)
Notes to Financial Statements (continued)
4. Related-Party Transactions (continued)
Retirement Plan
The Company's employees participate in a Parent-sponsored, noncontributory
defined benefit retirement plan covering employees from multiple divisions of
ABB Power T&D Company, Inc. The Company's cost for the plan amounted to $94,164
in 1998 ($56,000 and $64,000 for eight months ended August 31, 1999 and 1998
respectively) and is included in the accompanying financial statements. While
ABB Power T&D Company, Inc. will retain any related obligations, this plan will
not continue with the Company subsequent to the Transaction.
Postretirement Health Care Plans
The Company's employees participate in Parent-sponsored healthcare and life
insurance plans for certain retired employees and dependents. The Company's
cost for the plans amounted to $12,547 in 1998 ($7,000 and $8,000 for eight
months ended August 31, 1999 and 1998 respectively) and is included in the
accompanying financial statements. While ABB Power T&D Company, Inc. will
retain any related obligations, this plan will not continue with the Company
subsequent to the Transaction.
Employee Savings Plan
Under the employee savings plan sponsored by the Parent, the Company matches the
contributions of participating employees up to a designated level. The Company
matches 50% of the employee's contribution up to the first 6%. Employees are
immediately eligible for participation in the 401(k) plan and are 50% vested in
the matching portion after year two and fully vested after year three. The
matching contributions of the Company were $56,798 in 1998 ($34,000 and $39,000
for eight months ended August 31, 1999 and 1998 respectively). While ABB Power
T&D Company, Inc. will retain any related obligations, this plan will not
continue with the Company subsequent to the Transaction.
5. Income Taxes
The provision for income taxes consists of current federal taxes of $480,000
for the year ended December 31, 1998 ($319,000 and $361,000 for eight months
ended August 31, 1999 and 1998 respectively), and current state taxes of
$150,000 for the year ended December 31, 1998 ($111,000 and $125,000 for eight
months ended August 31, 1999 and 1998 respectively). There are no significant
deferred tax items.
8
<PAGE>
Compressed Gas Insulated Transmission
(A Division of ABB Power T&D Company, Inc.)
Notes to Financial Statements (continued)
6. Research and Development Expenses
Research and development expenses of $434,950 were charged to cost of products
sold as incurred.
7. Commitments
The Company leases facilities and equipment under long-term operating lease
agreements. Payments under these leases are charged to expense as the
obligation is incurred.
Future minimum rental payments required under leases with non-cancelable terms
in excess of one year at December 31, 1998 were as follows:
<TABLE>
<CAPTION>
Operating
Year Leases
- -------------------------------------------
<S> <C>
1999 through August 31, 1999 $ 171,232
August 31, 1999 85,616
2000 256,848
2001 264,553
2002 275,136
Thereafter 550,272
----------
$1,603,657
==========
</TABLE>
Total rental expense in 1998 was approximately $245,000 (for the eight months
ended August 31, 1999 and 1998 was approximately $171,000 and $163,000
respectively).
8. Industry and Significant Customers
Industry
The Company operates primarily in one industry segment, contract manufacturing,
with sales to customers in the United States and worldwide. Approximately 88%
of the Company's net sales in 1998 were in the United States, and the remaining
12% were export sales.
9
<PAGE>
Compressed Gas Insulated Transmission
(A Division of ABB Power T&D Company, Inc.)
Notes to Financial Statements (continued)
8. Industry and Significant Customers (continued)
Significant Customers
As a percentage of net sales, net sales to significant customers in 1998 were as
follows:
Southern California Edison 51%
Mitsubishi Electric 21%
ABB--Energie 12%
As a percent of net sales, net sales in the eight month periods in 1999 and 1998
were comparable to the 12 month period in 1998.
Accounts receivable pertaining to these customers as a percentage of total
accounts receivable were as follows at December 31, 1998:
Southern California Edison 12%
Mitsubishi Electric 63%
ABB--Energie 0%
As a percent of accounts receivable, accounts receivable in the eight month
periods in 1999 and 1998 were comparable to the 12 month period in 1998.
9. Year 2000
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs or hardware that has date-sensitive software or embedded chips
may recognize a date using "00" as the year 1900 rather than the year 2000.
This could result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices or engage in similar normal business activities.
Based on recent assessments, the Company does not believe that the Year 2000
Issue will have a material impact on its Information Technology (IT) and non-IT
systems. The Company's business systems have been reprogrammed to accommodate
dates into and through the year 2000. Integrated testing of these systems, with
user involvement, is scheduled throughout 1999. The Company believes that
installed upgrades will achieve Year 2000 compliance in each of these areas.
10
<PAGE>
Compressed Gas Insulated Transmission
(A Division of ABB Power T&D Company, Inc.)
Notes to Financial Statements (continued)
9. Year 2000 (continued)
The Company's facilities have been, or are in the process of being, inventoried
and assessed for Year 2000 issues within the manufacturing, environmental,
safety and security systems. Testing with the vendors will occur in 1999.
The Company's installed and in-process products have been assessed for Year 2000
readiness. Tests have revealed no Year 2000 issues. The Company is in the
process of contacting its critical vendors and suppliers.
The Company currently has no contingency plans in place in the event it does not
complete all phases of the Year 2000 program. The Company plans to evaluate the
status of completion of its Year 2000 program in 1999 and determine whether
contingency plans are necessary. In the opinion of management, the total cost
of addressing the Year 2000 Issue will not have a material impact on the
Company's financial position or results of operations.
10. Unaudited Financial Information
The unaudited Balance Sheet as of August 31, 1999, Statements of Income for the
eight months ended August 31, 1999 and August 31, 1998 and Statements of Cash
Flows for the eight months ended August 31, 1999 and August 31, 1998 were
prepared and inserted by management.
11
<PAGE>
EXHIBIT 99.2
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
The Acquisition will be accounted for as a purchase business combination by
the Company. The pro forma combined condensed financial statements are based on
the historical financial statements of the Company and CGIT. This exhibit to
the Company's Current Report on Form 8-K/A includes the following unaudited pro
forma combined condensed financial statements: (I) Unaudited Pro Forma Combined
Condensed Balance Sheet of the company and CGIT as of August 31, 1999; (ii)
Unaudited Pro Forma Combined Condensed Statements of Operations of the company
and CGIT for the six months ended August 31, 1999 and the year ended February
28, 1999. (iii) related notes thereto. The unaudited pro forma combined
condensed balance sheet assumes the Acquisition had been consummated on August
31, 1999. The unaudited pro forma combined condensed statements of operations
assume the Acquisition had been consummated on March 1, 1998.
The unaudited pro forma information is presented for illustrative purposes
only and is not necessarily indicative of the financial position or results of
operations that would have been reported if the Acquisition had been consummated
as presented in the accompanying unaudited pro forma combined condensed
financial statements, not is it necessarily indicative of the Company's future
financial position or results of operations. The pro forma adjustments and the
assumptions on which they are based are described in the accompanying notes to
unaudited pro forma combined condensed financial statements.
These unaudited pro forma combined condensed financial statements are based
on and should be read in conjunction with the historical consolidated financial
statements and related notes thereto of the Company and the financial statements
and notes thereto of CGIT for the year ended December 31, 1998.
<PAGE>
AZTEC MANUFACTURING CO.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
August 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
Purchase
Accounting
Aztec CGIT Adjustments Pro Forma
Historical Historical (Note 2) Combined
---------------------- ---------- ------------ ----------------
<S> <C> <C> <C> <C>
Assets
- ------
Current assets
Cash and cash equivalents $ 412 $ 4 $ - $ 416
Accounts receivable, net of allowance for
doubtful accounts of $511,855 14,521 1,363 15,884
Inventories:
Raw materials 6,829 790 7,619
Work-in process 1,293 311 1,604
Finished goods 1,984 - 1,984
Prepaid expenses and other 211 64 275
Revenue in excess of billings - 2,020 2,020
---------------------- ---------- ------------ ----------------
Total current assets 25,250 4,552 29,802
Long-term investments 200 - 200
Property, plant and equipment, net 22,830 728 775 (c) 24,333
Intangible assets, net 8,678 6,801 (d) 15,479
Other assets 337 365 (365) (c) 337
---------------------- ---------- ------------ ----------------
Total Assets $ 57,295 $5,645 $ 7,211 $ 70,151
====================== ========== ============ ================
Liabilities and Shareholders' Equity
- ------------------------------------
Current liabilities:
Accounts payable $ 5,228 $ 412 $ - $ 5,621
Other payables - 1,546 1,546
Other accrued liabilities 4,794 287 5,100
Long-term debt due within one year 3,135 - 3,135
---------------------- ---------- ------------ ----------------
Total current liabilities 13,157 2,245 15,402
Long-term debt due after one year 13,719 - 10,611 (a) 24,330
Net deferred income tax liability 493 - 493
Shareholders' equity:
Common stock, $1 par value
Shares authorized - 25,000,000
Shares issued - 6.304,580 6,304 - 6,304
Capital in excess of par value 11,353 - 11,353
Retained earnings 26,715 3,400 (3,400) (b) 26,715
Less common stock held in treasury, at cost
(1,555,636 shares) (14,446) - (14,446)
---------------------- ---------- ------------ ----------------
Total shareholders' equity 29,926 3,400 (3,400) 29,926
---------------------- ---------- ------------ ----------------
Total Liabilities and Shareholders' Equity $57,295.0 $5,645 $ 7,211 $ 70,151
====================== ========== ============ ================
</TABLE>
See Accompanying Notes
Page 1
<PAGE>
AZTEC MANUFACTURING CO.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED AUGUST 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
CGIT
------------------------------------------
Aztec Deduct
Historical Historical Historical Historical
Six Months Eight Months Two Months Six Months Purchase
Ended Ended Ended Ended Accounting
August 31, August 31, February 28, August 31, Adjustments Pro Forma
1999 1999 1999 1999 (Note 3) Combined
------------ ------------ -------------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Net Sales $ 41,657 $ 7,258 $ 1,788 $ 5,470 $ - $ 47,127
Costs and expenses:
Cost of Sales 30,841 4,877 874 4,003 49 (a) 34,893
Selling, general, and administrative 5,347 978 238 740 226 (a) 6,313
Allocation from Parent - 332 81 251 - 251
Interest expense (Income) 675 (76) (15) (61) 302 (b) 916
Other (income) expense, net 28 - - - - 28
Loss on Advances to affiliate 0 0 0 - - -
------------ ------------ -------------- ----------- ------------ -------------
36,891 6,111 1,178 4,933 577 42,401
------------ ------------ -------------- ----------- ------------ -------------
Income before income taxes 4,766 1,147 610 537 (577) 4,726
Income taxes:
Current expense 1,788 430 229 201 (213) (d) 1,776
Deffered (benefit) expense - - - - - -
------------ ------------ -------------- ----------- ------------ -------------
1,788 430 229 201 (213) 1,776
------------ ------------ -------------- ----------- ------------ -------------
Net Income $ 2,978 $ 717 $ 381 $ 336 $ (364) $ 2,950
============ ============ ============== =========== ============ =============
Earnings per common share:
Basic $ 0.63 $ 0.62
============ =============
Diluted $ 0.63 $ 0.62
============ =============
Shares used to compute per share data:
Basic 4,741,853
Diluted 4,760,329
</TABLE>
See Accompanying Notes
Page 2
<PAGE>
AZTEC MANUFACTURING CO.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED FEBRUARY 28, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
CGIT
------------------------------------------------------
Aztec Deduct Add
Historical Historical Histrical
Year Historical Two Months Two Months Historical Purchase
Ended Year Ended Ended Ended Year Ended Accounting
February 28, December 31, February 28, February 28, February 28, Adjustments Pro Forma
1999 1998 1998 1999 1999 (Note 3) Combined
----------- ------------- ----------- --------- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales $ 80,922 $ 12,209 $ 2,606 $ 1,788 $ 11,391 $ - $ 92,313
Costs and expenses:
Cost of Sales 62,525 8,964 1,708 874 8,130 97 (a) 70,752
Selling, general, and administrative 9,710 1,024 193 319 1,150 453 (a) 11,313
Allocation from Parent - 371 - - 371 371
Net (gain) loss on asle of property,
plant and equipment (2) - - - - - (2)
Interest expense (Income) 982 - - (15) (15) 604 (b) 1,571
Other (income) expense, net (93) - - - - - (93)
Loss on Advances to affiliate - 298 - - 298 (298)(c) -
----------- ------------- ----------- --------- -------------- ----------- ---------
73,122 10,657 1,901 1,178 9,934 856 83,912
----------- ------------- ----------- --------- -------------- ----------- ---------
Income before income taxes 7,800 1,552 705 610 1,457 (856) 8,401
Income taxes:
Current expense 3,005 630 264 229 595 (304)(d) 3,296
Deffered (benefit) expense (79) - - - - - (79)
----------- ------------- ----------- --------- -------------- ----------- ---------
2,926 630 264 229 595 (304) 3,217
----------- ------------- ----------- --------- -------------- ----------- ---------
Net Income $ 4,874 $ 922 $ 441 $ 381 $ 862 $ (552) $ 5,184
=========== ============= =========== ========= ============== =========== =========
Earnings per common share:
Basic $ 0.87 $0.92
========== =========
Diluted $ 0.86 $0.92
========== =========
Shares used to compute per share data:
Basic 5,614,019
Diluted 5,650,744
</TABLE>
See Accompanying Notes
Page 3
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
1. GENERAL
The Acquisition will be accounted for as a purchase business combination by
the Company. The accompanying unaudited pro forma combined condensed
financial statements reflect an aggregate purchase price of approximately
$10.6 million, consisting of cash paid to ABB plus costs directly related
to the Acquisition as follows (in thousands):
<TABLE>
<S> <C>
Cash paid to ABB................................... $10,900
Investment advisor, legal,
accounting and other professional
fees and expenses................................ 140
Tax benefit from Acquisition........................ (429)
-----------
$10,611
</TABLE>
For purposes of the accompanying unaudited pro forma combined condensed
balance sheet, the aggregate purchase price has been allocated to the net
assets acquired, with the remainder recorded as excess cost over net assets
acquired on the basis of preliminary estimates of fair values. These
preliminary estimates of fair value were determined by the Company's
management based primarily on information furnished by management of CGIT
and an independent appraiser.
2. UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
The accompanying unaudited pro forma combined condensed balance sheet
assumes the Acquisition was consummated on August 31, 1999 and reflects the
following pro forma adjustments:
(a) To record new debt for purchase of CGIT
(b) Adjust assets to appraised values.
(c) To record excess cost over net assets acquired.
3. UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
The accompanying unaudited pro forma combined condensed statements of
operations have been prepared as if the Acquisition was consummated as of
March 1, 1999 and reflect the following adjustments:
4
<PAGE>
(a) To record additional depreciation due to increase in appraisal of
assets and amortization of goodwill.
(b) To record additional interest expense on debt related to the
Acquisition.
(c) To eliminate loss on advances to affiliate.
(d) To adjust taxes expense for effect of Purchase Accounting
Adjustments (a) through (c).
4. UNAUDITED PRO FORMA COMBINED EARNINGS PER COMMON SHARE DATA
The unaudited pro forma combined primary earnings per common share data is
computed by dividing pro forma combined income by the weighted average
number of common shares and common share equivalents represented by stock
options, if the exercise of such options would have a dilutive effect in
the aggregate.
5
