UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
April 4, 2000
Date of Report (Date of earliest event reported)
OM GROUP, INC.
(Exact Name of Registrant as specified in its charter)
Delaware 0-22572 52-1736882
(State or other (Commission IRS Employer
jurisdiction of File No.) Identification No.)
incorporation)
50 Public Square
3500 Terminal Tower
Cleveland, Ohio 44113-2204
(Address of principal executive offices and zip code)
(216) 781-0083
(Registrant's telephone number, including area code)
N/A
Former name or former address, if changed since last report
EXPLANATORY NOTE: Pursuant to Item 7(a)(4) of Form 8-K, this Form 8-K/A amends
the Registrant's Form 8-K filed on April 18, 2000, to include the historical
financial statements and pro forma financial information required by
Item 7(a) and (b).
<PAGE>
ITEM 2 AQUISITION OR DISPOSITION OF ASSETS
On April 4, 2000, OM Group, Inc. (OMG) completed the acquisition of the
stock of Outokumpu Nickel Oy (OKN) for a cash purchase price of $173.2
million. OKN manufactures, distributes and sells a broad range of
nickel products, principally plating and alloy grade cathodes and
briquettes.
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
The following financial statements of OKN are filed as part of this
Current Report on Form 8-K/A:
1. Balance Sheets as of December 31, 1999 and March 31, 2000;
2. Statements of Operations for the year ended December 31, 1999
and the three months ended March 31, 2000 and 1999;
3. Statements of Division Equity for the year ended December 31,
1999 and the period ended March 31, 2000;
4. Statements of Cash Flows for the year ended December 31, 1999
and the three months ended March 31, 2000 and 1999.
(b) Pro Forma Financial Information
1. Pro Forma Combined Condensed Balance Sheet as of March 31,
2000;
2. Pro Forma Combined Statements of Income for the year ended
December 31, 1999 and the three months ended March 31, 2000.
(c) Exhibits
(23.1) Consent of Tilintarkastajien Oy Ernst & Young
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.
June 19, 2000 OM GROUP, INC
/s/ James M. Materna
-------------------------------
James M. Materna
Chief Financial Officer
(Duly authorized signatory of OM Group, Inc.)
<PAGE>
To the Board of Directors
OM Group, Inc.
We have audited the accompanying balance sheet of Outokumpu Nickel Oy (formerly
an operating division of Outokumpu Harjavalta Metals Oy, a wholly owned
subsidiary of Outokumpu Oyj) as of December 31, 1999, and the related
statements of operations, division equity and cash flows for the year then
ended. These financial statements are the responsibility of Division
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. 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 Outokumpu Nickel Oy at December
31, 1999, and the results of its operations and its cash flows for the year then
ended in conformity with accounting principles generally accepted in the United
States.
June 19, 2000 Tilintarkastajien Oy Ernst & Young
Helsinki, Finland Authorized Accounting Firm
/s/ Carl Gustaf af Hallstrom
----------------------------
Carl Gustaf af Hallstrom
Authorized Public Accountant
<PAGE)
Outokumpu Nickel Oy
Balance Sheets
(Millions of dollars)
December 31, March 31,
1999 2000
(Unaudited)
------------ ---------
ASSETS
Current assets
Cash and cash equivalents $ - $ -
Accounts receivable 63.7 84.0
Inventories 72.3 53.5
Deferred taxes 9.0 11.1
------ ------
Total current assets 145.0 148.6
Property, plant and equipment
Buildings 28.9 27.5
Machinery and equipment 102.4 98.5
Assets under construction 1.2 0.4
------ ------
132.5 126.4
Less accumulated depreciation 46.2 46.5
------ ------
86.3 79.9
Other assets 4.3 4.2
------ ------
Total assets $235.6 $232.7
====== ======
LIABILITIES AND DIVISION EQUITY
Current liabilities
Bank debt $ 7.9 $ -
Payable to parent company 42.6
Accounts payable 73.2 69.5
Other accrued expenses 3.0 2.1
------ ------
Total current liabilities 84.1 114.2
Payable to parent company 68.0 68.1
Deferred income taxes 13.7 12.7
Other long-term liabilities 0.2 0.2
Division equity 69.6 37.5
------ ------
Total liabilities and division equity $235.6 $232.7
====== ======
See accompanying notes to financial statements.
<PAGE>
Outokumpu Nickel Oy
Statements Of Operations
(Millions of dollars)
Year Ended Three Months Ended
December 31, March 31,
1999 1999 2000
------------ -------------------
(Unaudited)
Net sales $341.5 $63.9 $150.0
Cost of products sold 330.1 58.9 127.0
------ ----- ------
11.4 5.0 23.0
Selling, general and administrative expense 6.1 1.5 2.0
------ ----- ------
Income from operations 5.3 3.5 21.0
Other income (expense)
Interest expense (6.5) (1.7) (1.7)
Interest income 1.9 0.4 0.9
Foreign exchange loss (11.5) (5.7) (6.0)
------ ----- ------
(16.1) (7.0) (6.8)
------ ----- ------
(Loss) income before income taxes (10.8) (3.5) 14.2
Income (benefit) taxes (3.0) (1.0) 4.1
------ ----- ------
Net (loss) income $ (7.8) $(2.5) $ 10.1
====== ===== ======
See accompanying notes to financial statements.
Outokumpu Nickel Oy
Statements Of Division Equity
(Millions of dollars)
Division equity at January 1, 1999 $72.4
Net loss (7.8)
Translation adjustment 0.4
Transfer from Parent 4.6
----
Division equity at December 31, 1999 69.6
Net income (unaudited) 10.1
Translation adjustment (unaudited) (3.6)
Transfer to Parent (unaudited) (38.6)
-----
Division equity at March 31, 2000 (unaudited) $37.5
=====
See accompanying notes to financial statements.
<PAGE>
Outokumpu Nickel Oy
Statements Of Cash Flows
(Millions of dollars)
Year Ended Three Months Ended
December 31, March 31,
1999 1999 2000
------------ -------------------
(Unaudited)
OPERATING ACTIVITIES
Net (loss) income $ (7.8) $ (2.5) $ 10.1
Adjustment to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 12.5 3.3 2.6
Deferred income taxes (6.2) 3.4 (2.7)
Change in operating assets and liabilities:
Increase in accounts receivables (50.0) (28.6) (23.7)
(Increase) decrease in inventories (26.4) (14.5) 15.5
Decrease in other assets - - 0.3
Increase (decrease) in accounts payable
and other accrued expenses 66.7 19.6 (1.1)
------ ------ ------
Net cash (used in )provided by
operating activities (11.2) (19.3) 1.0
INVESTING ACTIVITIES
Purchase of property, plant and equipment (4.2) (1.1) (1.9)
Proceeds from sales of equipment 0.7
------ ------ ------
Net cash used in investing activities (3.5) (1.1) (1.9)
FINANCING ACTIVITIES
Bank borrowings 7.0 - -
Repayments of bank debt - (1.4) (7.7)
Transfer from parent, net 4.6 22.4 7.4
------ ------ ------
Net cash provided by (used in)
financing activities 11.6 21.0 (0.3)
Effect of exchange rate changes on cash
and cash equivalents 3.1 (0.6) 1.2
Increase in cash and cash equivalents 0.0 0.0 0.0
Cash and cash equivalents at beginning
of period 0.0 0.0 0.0
------ ------ ------
Cash and cash equivalents at end of period $ 0.0 $ 0.0 $ 0.0
====== ====== ======
See accompanying notes to financial statements.
<PAGE>
Outokumpu Nickel Oy
Notes To Financial Statements
(Millions of dollars)
A. ORGANIZATION AND BUSINESS
Outokumpu Nickel Oy (the "Company") owns and operates a nickel refinery
plant in Harjavalta, Finland. The Company was formerly an operating division
of Outokumpu Harjavalta Metals Oy ("OKHA" or "Parent"), a subsidiary of
Outokumpu Oyj ("OKO"). As a result of a de-merger process, the nickel
refining operations were transferred by OKHA to a new legal entity,
Outokumpu Nickel Oy, as of March 31, 2000.
B. SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
The Company recognizes revenue from sales at the time of shipment to the
customer.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined
principally by the last-in, first-out ("LIFO") method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at historical cost less accumulated
depreciation. Depreciation is provided by the straight-line method over the
estimated useful life of the assets, which range from 10 to 25 years for
buildings and 5 to 15 years for machinery and equipment.
Property, plant and equipment is assessed for impairment when operating
profits for the related business indicate that the carrying value may not be
recoverable. If events and circumstances indicate that property, plant and
equipment might be impaired, an undiscounted cash flow methodology would be
used to determine whether an impairment loss should be recognized.
INCOME TAXES
Income (loss) before income taxes is included in the consolidated income tax
returns of OKHA. For financial reporting purposes, income tax expense is
allocated to the Company by OKHA on a separate return basis giving effect to
permanent differences, which are not taxable or deductible. Deferred income
taxes are recorded by OKHA and allocated to the Company in amounts
corresponding to the Company's underlying temporary differences.
FOREIGN CURRENCY TRANSLATION
The functional currency of the Company is the Euro. Accordingly, the
accompanying financial statements are translated into U.S. dollars at year
end exchange rates as to assets and liabilities and weighted average
exchange rates as to revenues and expenses. The resulting translation
adjustments are recorded as a component of division equity.
<PAGE>
RESEARCH AND DEVELOPMENT
Selling, general and administrative expenses include an allocation of OKHA's
research and development costs of $2.3 in 1999.
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 amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
UNAUDITED INTERIM FINANCIAL INFORMATION
The accompanying unaudited financial statements of the Company as of March
31, 2000, and for the three-month periods ended March 31, 1999 and 2000 have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three-months
ended March 31, 2000 are not necessarily indicative of the results that may
be expected for the year ending December 31, 2000.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" was issued. SFAS No. 133 provides a comprehensive and
consistent standard for the recognition and measurement of derivatives and
hedging activities. The Company must adopt SFAS No. 133 no later than the
first quarter of 2001. Adoption of this Statement is not expected to have a
material effect on earnings or the financial position of the Company.
C. INVENTORIES
Inventories are classified as follows:
(Unaudited)
December 31, March 31,
1999 2000
----------- ----------
Raw material $ 61.9 $ 40.4
Work in process 23.5 37.5
Finished goods 16.1 10.4
------ ------
101.5 88.3
LIFO reserve (29.2) (34.8)
------ ------
Total inventories $ 72.3 $ 53.5
====== ======
<PAGE>
D. FINANCIAL INSTRUMENT
Bank debt at December 31, 1999 accrues interest at 6.3%, which is paid
quarterly. The debt was repaid in March 2000.
E. INCOME TAXES
The Company's effective tax rate of 28% and 29% in 1999 and 2000,
respectively, is equal to the statutory tax rate in Finland for these
respective years.
F. EMPLOYEE BENEFIT PLANS
The Company has a defined contribution plan covering all employees. Plan
expenses were $1.3 in 1999.
G. RELATED PARTIES
The Company's Harjavalta, Finland production facility is situated on
property owned by OKHA. OKN and OKHA share certain physical facilities,
services and utilities under agreements with varying expiration dates. The
land on which the OKN plant is located is leased with an initial term of
50 years and annual lease costs of $.1.
Certain raw materials are procured from or with the assistance of OKHA.
Amounts paid to OKHA affiliates pursuant to these arrangements amounted to
approximately $14.9 in 1999. As a result of the de-merger process (see
Note A), OKN has entered into a raw material tolling agreement with OKHA.
Amounts paid to OKHA pursuant to this tolling arrangement are expected to
approximate $13.8 in 2000. OKN sells certain finished products and by-
products to OKHA. Amounts received from OKO and affiliates, pursuant to
these arrangements, amounted to approximately $134.4 in 1999. OKN also
sells certain finished products to OMG Kokkola Chemicals Oy (OKC), a
subsidiary of OM Group, Inc. ("OMG")(see Note J). Amounts received from OKC
pursuant to these arrangements approximated $31.7 in 1999.
The payable to parent company is denominated in U.S. dollars. Accordingly,
this gives rise to foreign exchange gains and losses which appear in the
Statements of Operations. Interest is charged based upon OKO's base
borrowing rate; the interest rate at December 31, 1999 was 7.6%.
H. COMMITMENTS AND CONTINGENCIES
As a result of the de-merger process (see Note A) OKHA assigned all existing
raw material agreements to OKN. These include supply agreements with
Western Mining Corporation, OKO, and Mineracao Serra da Fortaleza Ltda. to
procure the Company's raw material needs. The cost of the raw materials
obtained will be based upon the prevailing market price as material is
received.
<PAGE>
I. REPORTABLE SEGMENT AND GEOGRAPHIC DATA
The Company manufactures and sells various nickel products, principally
plating and alloy grade cathodes and briquettes. These nickel products,
manufactured at the Company's nickel refinery plant in Harjavalta,
Finland, are used in a wide variety of end products including stainless
steel, non-ferrous alloys and alloy steels. The Company operates in a
single business segment serving numerous customers, the majority of which
are located in Europe. Two customers individually accounted for 33% and
12% of net sales in 1999.
J. SUBSEQUENT EVENT
On April 4, 2000, the Company was acquired by OMG, headquartered in
Cleveland, Ohio, for approximately $173.2 million. The acquisition will be
accounted for by the purchase method of accounting.
<PAGE>
OM Group, Inc. and Outokumpu Nickel Oy
Unaudited Pro Forma Combined Condensed Financial Statements
The following unaudited pro forma combined condensed financial statements have
been prepared by OMG's management. These financial statements reflect OMG's
acquisition of OKN and combine for the periods or date indicated the historical
consolidated financial statements of OMG and OKN, using the purchase method of
accounting.
The unaudited pro forma combined condensed balance sheet reflects the
adjustments as if the acquisition had occurred on March 31, 2000. The
unaudited pro forma combined statements of income reflect adjustments as if the
acquisition had occurred at the beginning of the period presented. These pro
forma financial statements should be read in conjunction with the historical
financial statements and related notes of OMG and OKN. The pro forma financial
statements include preliminary estimates and assumptions which OMG's management
believes are reasonable. The pro forma results are not necessarily indicative of
the results which would have occurred if the business combination had been in
effect on the dates indicated, or which may result in the future, and do not
include any cost savings or other effects of the planned integration of OMG and
OKN. OKN's 1999 statement of income is based on LIFO accounting during a period
in which the price of nickel rose from historic lows below $2.00/lb to nearly
$4.00/lb, and reflects the Euro as the functional currency. The results of
operations of OKN in 1999 and 2000 are not indicative of future results of OKN
given different nickel market conditions, functional currency and management.
The pro forma financial statements have been prepared using the following facts
and assumptions:
1. OMG acquires the assets and liabilities of OKN in exchange for a total
cash payment of $173.2 million.
2. OMG borrows $187.7 million to finance the acquisition price and
estimated financing and related transaction costs of $14.5 million.
3. The acquired assets and liabilities of OKN are recorded at estimated fair
values, as determined by OMG's management, based on information currently
available and on current tentative assumptions as to the future
operations of OKN. OMG will obtain independent appraisals of the
acquired property, plant and equipment, and estimate their remaining
useful lives. OMG will also be reviewing and determining the fair value
of the other assets acquired and liabilities assumed. Accordingly, the
allocation of the purchase price to the acquired assets and liabilities
of OKN is subject to revision as a result of the final determination of
the purchase price and of appraised and other fair values.
<PAGE>
OM Group, Inc. and Outokumpu Nickel Oy
Unaudited Pro Forma Combined Condensed Balance Sheet
March 31, 2000
(Millions of dollars)
OMG OKN Pro Forma Pro Forma
Historical Historical Adjustments Combined
---------- ---------- ----------- ---------
ASSETS
Current assets
Cash and cash equivalents $ 5.5 $ - $ - $ 5.5
Accounts receivable 101.9 84.0 (19.8)(2h) 166.1
Inventories 333.1 53.5 4.6 (2a) 391.2
Other current assets 66.2 11.1 77.3
------ ------ ------ --------
Total current assets 506.7 148.6 (15.2) 640.1
Property, plant & equipment, net 332.8 79.9 46.5 (2b) 459.2
Other assets
Goodwill and other intangible
assets 182.5 182.5
Other assets 20.0 4.2 12.0 (2c) 36.2
-------- ------ ------ --------
TOTAL ASSETS $1,042.0 $232.7 $ 43.3 $1,318.0
======== ====== ====== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term debt $ 11.0 $ - $ - $ 11.0
Payable to parent company 42.6 (42.6)(2d)
Accounts payable 66.2 69.5 (19.8)(2h) 115.9
Other accrued expenses 44.6 2.1 46.7
-------- ------ ------ --------
Total current liabilities 121.8 114.2 (62.4) 173.6
Long-term debt 384.9 187.7 (1) 572.6
Payable to parent company 68.1 (68.1)(2d)
Deferred income taxes 33.3 12.7 16.1 (2e) 62.1
Other long-term liabilities 37.8 0.2 7.5 (2f) 45.5
Stockholders' equity 464.2 37.5 (37.5)(2g) 464.2
-------- ------ ------ --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,042.0 $232.7 $ 43.3 $1,318.0
======== ====== ====== ========
See accompanying notes.
<PAGE>
OM Group, Inc. and Outokumpu Nickel Oy
Notes to Unaudited Pro Forma Combined Condensed Balance Sheet
The adjustments to give pro forma effect to reflect OMG's acquisition of OKN and
the estimated purchase price allocation at March 31, 2000 are as follows:
1. The borrowing by OMG to finance the $173.2 million acquisition price
and estimated financing and related transaction costs of $14.5 million.
2. The allocation of the aggregate purchase price of OKN, and the
recognition of the excess of aggregate purchase price over the
estimated fair value of net assets acquired, is as follows (in
millions):
a. Adjust inventories to estimated fair value $ 4.6
b. Adjust property, plant and equipment to estimated
fair value 46.5
c. Record estimated financing costs 12.0
d. Eliminate debt not assumed 110.7
e. Establish deferred income tax liability resulting from
the application of purchase accounting, assuming a
29% tax rate (16.1)
f. Adjust environmental and related legal reserve (7.5)
g. Eliminate net equity, prior to purchase accounting
adjustments 37.5
h. Eliminate intercompany accounts, net -
------
Aggregate purchase price and related transaction costs $187.7
======
<PAGE>
OM Group, Inc. and Outokumpu Nickel Oy
Unaudited Pro Forma Combined Statement of Income
For the Year Ended December 31, 1999
(Millions of dollars, except per share data)
OMG OKN Pro Forma Pro Forma
Historical Historical Adjustments Combined
---------- ---------- ----------- ---------
Net sales $507.0 $341.5 $ $848.5
Cost of products sold 347.5 330.1 4.7 (1a) 682.3
------ ------ ------ ------
159.5 11.4 (4.7) 166.2
Selling, general and
administrative expenses 60.8 6.1 2.0 (1b) 68.9
------ ------- ------ ------
Income (loss) from operations 98.7 5.3 (6.7) 97.3
Other income (expense)
Interest expense (19.1) (6.5) (9.1)(1c) (34.7)
Interest income 0.2 1.9 2.1
Foreign exchange gain (loss) 0.5 (11.5) 11.5 (1d) 0.5
------ ------ ------ ------
(18.4) (16.1) 2.4 (32.1)
------ ------ ------ ------
Income (loss) before income taxes 80.3 (10.8) (4.3) 65.2
Income taxes (benefit) 24.5 (3.0) (1.2)(1e) 20.3
------ ------ ------ ------
Net income (loss) $ 55.8 $ (7.8) $ (3.1) $ 44.9
====== ====== ====== ======
Weighted average number of
common shares outstanding 23.8 23.8
(in millions)
Net income per common share $2.35 $1.89
Weighted average number of
common shares outstanding
(in millions) - assuming dilution 24.3 24.3
Net income per common share -
assuming dilution $2.30 $1.85
See accompanying notes.
<PAGE>
OM Group, Inc. and Outokumpu Nickel Oy
Notes to Unaudited Pro Forma Combined Statement of Income
The adjustments to give pro forma effect to OMG's acquisition of OKN for the
year ended December 31, 1999 and the estimated purchase price
allocation are as follows:
1. To reflect OMG's acquisition of OKN (in millions):
a. Recognize over ten years additional depreciation for
write-up of property, plant and equipment to estimated
fair value $4.7
b. Amortize the estimated financing costs over 6 years 2.0
c. Recognize additional interest expense due to $187.7 million
increase in consolidated long-term debt to finance the
acquisition and related transaction costs, assuming an
interest rate of 8.3% 9.1
d. Reverse foreign exchange loss related to intercompany loans
not assumed (11.5)
e. Record the income tax benefit of the previous adjustments
assuming a 28% income tax rate 1.2
f. Pro forma net income per common share is computed by
dividing net income by the weighted average number of
shares outstanding
<PAGE>
OM Group, Inc. and Outokumpu Nickel Oy
Unaudited Pro Forma Combined Statement of Income
For the Three Months Ended March 31, 2000
(Millions of dollars, except per share data)
OMG OKN Pro Forma Pro Forma
Historical Historical Adjustments Combined
---------- ---------- ----------- ---------
Net sales $148.3 $150.0 $ $298.3
Cost of products sold 106.3 127.0 1.2 (1a) 234.5
------ ------ ----- ------
42.0 23.0 (1.2) 63.8
Selling, general and
administrative expenses 15.0 2.0 0.5 (1b) 17.5
------ ------- ----- ------
Income (loss) from operations 27.0 21.0 (1.7) 46.3
Other income (expense)
Interest expense (5.4) (1.7) (2.5)(1c) (9.6)
Interest income 0.1 0.9 1.0
Foreign exchange (loss) gain (0.1) (6.0) 4.2 (1d) (1.9)
------ ------ ----- ------
(5.4) (6.8) 1.7 (10.5)
------ ------ ----- ------
Income before income taxes 21.6 14.2 - 35.8
Income taxes 6.4 4.1 - (1e) 10.5
------ ------ ----- ------
Net income $ 15.2 $ 10.1 $ - $ 25.3
====== ====== ===== ======
Weighted average number of
common shares outstanding
(in millions) 23.9 23.9
Net income per common share $.63 $1.06
Weighted average number of
common shares outstanding
(in millions) - assuming
dilution 24.2 24.2
Net income per common share -
assuming dilution $.63 $1.05
See accompanying notes.
<PAGE>
OM Group, Inc. and Outokumpu Nickel Oy
Notes to Unaudited Pro Forma Combined Statement of Income
The adjustments to give pro forma effect to OMG's acquisition of OKN for the
three months ended March 31, 2000 and the estimated purchase price allocation
are as follows:
1. To reflect OMG's acquisition of OKN (in millions):
a. Recognize over ten years additional depreciation for
write-up of property, plant and equipment to estimated
fair value $1.2
b. Amortize the estimated financing costs over 6 years 0.5
c. Recognize additional interest expense due to $187.7 million
increase in consolidated long-term debt to finance the
acquisition and related transaction costs, assuming
an interest rate of 9.0%. 2.5
d. Reverse foreign exchange loss related to intercompany loans
not assumed (4.2)
e. Record the income tax effect of the previous adjustments
assuming a 29% income tax rate -
f. Pro forma net income per common share is computed by
dividing net income by the weighted average number of
shares outstanding
During the three months ended March 31, 2000, OKN inventory quantities were
reduced. This reduction resulted in a liquidation of LIFO inventory quantities
carried at lower costs prevailing in prior years as compared with the cost of
2000 purchases. The effect of this liquidation was to increase net income by
$6.1 ($0.25 per share).
