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
February 24, 1997
(Date of earliest event reported)
ELECTRONIC FAB TECHNOLOGY CORP.
(Exact name of registrant as specified in its charter)
Commission file number: 0-23332
Colorado 84-0854616
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7251 West 4th Street
Greeley, Colorado 80634-9763
(Address of principal executive offices)
(970) 353-3100
(Registrant's telephone number, including area code)
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
The following financial statements of Current Electronics, Inc
and Current Electronics Washington, Inc. are attached:
Appendix I Current Electronics, Inc. and Current Electronics
Washington, Inc., Combined Balance Sheets as of
September 30,1996 and 1995, and Combined Statements
of Income and Retained Earnings and Cash Flows for
the three years ended September 30,1996.
(b) Pro Forma Financial Information
The proforma financial information is attached as Appendix II.
Exhibits
23. Consent of Independent Public Accountants
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.
Electronic Fab Technology Corp.
\s\Stuart Fuhlendorf
Stuart Fuhlendorf
Date: May 2, 1997 V.P. Finance and CFO
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of
Current Electronics, Inc. and Current Electronics Washington, Inc.:
We have audited the accompanying combined balance sheets of Current
Electronics, Inc. (an Oregon Corporation) and Current Electronics
Washington, Inc. (a Washington S Corporation) as of September 30, 1996
and 1995, and the related combined statements of income and retained
earnings and cash flows for the years then ended. These combined
financial statements are the responsibility of the Companies'
management. Our responsibility is to express an opinion on these
combined financial statements and supplementary combining information
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 Current
Electronics, Inc. and Current Electronics Washington, Inc. as of
September 30, 1996 and 1995, and the results of their operations and
their cash flows for the years then ended in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Portland, Oregon,
November 25, 1996
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Current Electronics, Inc. and
Current Electronics Washington, Inc.:
We have audited the accompanying combined statements of income and retained
earnings and cash flows of Current Electronics, Inc. (an Oregon Corporation)
and Current Electronics Washington, Inc. (a Washington S Corporation) for the
year ended September 30, 1994. These combined financial statements are the
responsibility of the Companies' management. Our responsibility is to express
an opinion on these combined 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 statement are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statements. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall 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 results of operations and cash flows of Current
Electronics, Inc. and Current Electronics Washington, Inc. for the year
ended September 30, 1994, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Portland, Oregon,
April 4, 1997
<TABLE>
CURRENT ELECTRONICS, INC. AND
CURRENT ELECTRONICS WASHINGTON, INC.
COMBINED BALANCE SHEETS SEPTEMBER 30, 1996 AND 1995
ASSETS
<CAPTION>
1996 1995
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . $ 580,839 $ 252,323
Accounts receivable, net of allowance for doubtful
accounts of $34,000 and $6,774. . . . . . . . . . . 1,929,142 1,506,049
Inventories . . . . . . . . . . . . . . . . . . . . . 3,826,074 1,860,951
Prepaid expenses. . . . . . . . . . . . . . . . . . . 109,077 24,809
Total current assets. . . . . . . . . . . . . . . . 6,445,132 3,644,132
PROPERTY, PLANT AND EQUIPMENT, net. . . . . . . . . . . . 2,337,317 2,171,347
OTHER ASSETS. . . . . . . . . . . . . . . . . . . . . . . 140,201 73,197
Total assets. . . . . . . . . . . . . . . . . . . . . $8,922,650 $5,888,676
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable. . . . . . . . . . . . . . . . . . . . $1,386,274 $ 636,264
Accrued liabilities . . . . . . . . . . . . . . . . . . 766,020 643,863
Income taxes payable. . . . . . . . . . . . . . . . . . 99,953 247,764
Notes payable . . . . . . . . . . . . . . . . . . . . . 650,000 -
Current portion of long-term debt . . . . . . . . . . . 599,019 500,948
Total current liabilities . . . . . . . . . . . . . 3,501,266 2,028,839
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . 122,000 289,000
LONG-TERM DEBT. . . . . . . . . . . . . . . . . . . . . . 977,826 815,751
Total liabilities . . . . . . . . . . . . . . . . . 4,601,092 3,133,590
SHAREHOLDERS' EQUITY:
Preferred stock . . . . . . . . . . . . . . . . . . . . - -
Common stock. . . . . . . . . . . . . . . . . . . . . . 33,000 33,000
Retained earnings . . . . . . . . . . . . . . . . . . . 4,288,558 2,722,086
Total shareholders' equity. . . . . . . . . . . . . 4,321,558 2,755,086
Total liabilities and shareholders' equity. . . . . $8,922,650 $5,888,676
The accompanying notes are an integral part of these combined balance
sheets.
</TABLE>
<TABLE>
CURRENT ELECTRONICS, INC. AND
CURRENT ELECTRONICS WASHINGTON, INC.
COMBINED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
<CAPTION>
1996 1995 1994
<S> <C> <C>
NET SALES $32,520,438 $17,169,805 $11,066,863
COST OF SALES 27,075,305 13,471,626 8,611,474
Gross profit 5,445,133 3,698,179 2,455,389
SELLING, GENERAL ADMINISTRATIVE EXPENSES 2,792,814 1,976,702 1,796,962
Income from operations 2,652,319 1,721,477 658,427
OTHER INCOME (EXPENSE):
Other income, net 9,345 34,603 9,218
Interest expense, net (101,192) (129,315) (63,121)
Total other income (expense) (91,847) (94,712) (53,903)
Income before income taxes 2,560,472 1,626,765 604,524
PROVISION (BENEFIT) FOR INCOME TAXES:
Current 921,000 438,435 100,000
Deferred (167,000) 42,000 104,000
754,000 480,435 204,000
NET INCOME 1,806,472 1,146,330 400,524
RETAINED EARNINGS, beginning of year 2,722,086 1,650,756 1,250,232
DIVIDENDS (240,000) (75,000) -
RETAINED EARNINGS, end of year $ 4,288,558 $ 2,722,086 $ 1,650,756
The accompanying notes are an integral part of these combined statements.
</TABLE>
<TABLE>
CURRENT ELECTRONICS, INC. AND
CURRENT ELECTRONICS WASHINGTON, INC.
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
<CAPTION>
1996 1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income. . . . . . . . . . . . . . . . . . . . . $1,806,472 $1,146,330 $400,524
Adjustments to reconcile net income to cash
provided by operating activities-
Depreciation and amortization . . . . . . . . . 576,378 475,944 350,874
Loss on sale of property. . . . . . . . . . . . 2,491 - 4,533
Deferred income taxes . . . . . . . . . . . . . (167,000) 42,000 104,569
Changes in operating accounts:
Accounts receivable. . . . . . . . . . . . . (423,093) (673,973) (100,461)
Inventories. . . . . . . . . . . . . . . . . (1,717,929) (902,338) (38,628)
Prepaid expenses . . . . . . . . . . . . . . (84,268) (13,042) 2,117
Accounts payable . . . . . . . . . . . . . . 750,010 458,679 11,889
Accrued liabilities. . . . . . . . . . . . . 122,157 295,885 (56,053)
Income taxes payable . . . . . . . . . . . . (147,811) 264,339 (199,826)
Net cash provided by operating activities 717,407 1,093,824 479,538
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment . . . . . . . . (768,867) (1,061,820) (777,128)
Proceeds from disposal of property and equipment. . 24,028 - -
Key Man Insurance . . . . . . . . . . . . . . . . . (67,004) (24,269) (48,928)
Net cash used in investing activities . . (811,843) (1,086,089) (826,056)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under lines of credit. . . . . . . . 650,000 - -
Proceeds from new long-term borrowings. . . . . . . 1,285,344 551,539 691,496
Repayments of long-term debt. . . . . . . . . . . . (1,272,392) (389,881) (409,334)
Dividends paid. . . . . . . . . . . . . . . . . . . (240,000) (75,000) -
Issuance of common stock. . . . . . . . . . . . . . - - 3,000
Net cash provided by financing activities 422,952 86,658 285,162
Net increase (decrease) in cash and cash
equivalents. . . . . . . . . . . . . . 328,516 94,393 (61,356)
CASH AND CASH EQUIVALENTS, beginning of period. . . . 252,323 157,930 219,286
CASH AND CASH EQUIVALENTS, end of period. . . . . . . $ 580,839 $ 252,323 $ 157,930
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for interest. . . . . . . . . . . . . . . $ 143,109 $ 129,239 $ 63,121
Cash paid for taxes . . . . . . . . . . . . . . . . 1,073,489 158,000 381,809
Issuance of note in exchange for inventories
(noncash operating activity) . . . . . . . . . . 247,194 - -
The accompanying notes are an integral part of these combined statements.
</TABLE>
CURRENT ELECTRONICS, INC.
CURRENT ELECTRONICS WASHINGTON, INC.
Notes to Combined Financial Statements
1. DESCRIPTION OF BUSINESS:
Current Electronics, Inc. (CEI) was incorporated on December 29, 1983
in the State of Oregon. CEI's primary business is contract
manufacturing of electronic circuit boards and other components for
its customers, who are located primarily in the Portland metropolitan
area.
Current Electronics Washington, Inc. (CEWI) was incorporated as an
S Corporation in the State of Washington in 1994 and is also a
contract manufacturer of electronic circuit boards. CEWI's primary
customer is in Redmond, Washington.
CEI and CEWI (the Companies) provide contract manufacturing on both a
consigned basis (customer retains title to the raw materials) and
turnkey basis (the Companies own the raw materials).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Combination
The financial statements combine the accounts of the Companies, after
elimination of intercompany items and transactions. These companies
are being combined as they are under common ownership and management.
The accounting policies referred to below represent the policies of
both companies, unless otherwise specified.
Cash Equivalents
Cash equivalents consists of short-term, highly liquid investments
with maturities at the date of purchase of 90 days or less.
Inventories
Inventories are valued at standard cost which approximates lower of
cost (first-in, first-out) or market, and include materials, labor and
manufacturing overhead.
Property and Equipment
Property and equipment are stated at cost. Depreciation and
amortization are provided using the straight-line method over the
estimated useful lives of the assets: Machinery and production
equipment--5 to 15 years and furniture, fixtures and computer
equipment--5 to 7 years. Leasehold improvements are amortized over
the estimated useful life of the asset.
Advertising
Advertising costs are expensed as incurred. For the fiscal years
ended September 30, 1996, 1995 and 1994, advertising costs were
$48,266, $24,642 and $33,357, respectively.
Revenue Recognition
Revenues are recognized when the product is shipped to the customer.
Concentrations of Credit Risk
The Companies' revenues are principally generated from a small number
of electronics companies based in Oregon and Washington. During 1996,
four of the Companies' customers accounted for 74% of combined net
sales. For the year ended September 30, 1995, three customers
accounted for 52% of combined net sales. For the year ended September
30, 1994, four customers accounted for 63% of combined net sales.
Historically, the Companies have not incurred significant losses
related to its accounts receivable. However, the loss of any one
customer could have a significant impact on the future results of the
Companies' operations.
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 at the date of the financial statements and the reported
amounts of expenses during the reporting period. Actual results may
differ from those estimates and such differences could be material to
the financial statements.
Recent Pronouncement
In 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 (SFAS 121), "Accounting for the
impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of." SFAS 121 requires an assessment of impairment of long-lived
assets under certain conditions and recognition of loss in the event the
net book value of such assets exceeds the future undiscounted cash flows
attributable to such assets. In such instances a loss would be recorded
based on the fair market value of the applicable asset. SFAS 121 is
effective for the Companies' fiscal year ending September 30, 1997.
Adoption of SFAS 121 is not expected to have a material impact on the
Company's financial position or results of operations.
Reclassifications
Certain balances for prior periods have been reclassified to be
consistent with the September 30, 1996 presentation.
3. RELATED PARTY TRANSACTIONS:
CEI and CEWI lease office and factory space from Hewitson, Hewitson
and Hewitson (HHH), a partnership which is comprised of the majority
shareholders of CEI. Lease rates between the Companies and these
shareholders are based on estimated fair market values. Rents paid to
the partnership for the years ended September 30, 1996, 1995 and 1994
were $428,402, $259,720 and $182,520, respectively.
CEI provides selling, general and administrative services to CEWI.
Services totaling $150,000, $60,000 and $0 were allocated to CEWI for
the years ended September 30, 1996, 1995 and 1994, respectively.
CEI owes HHH a combined total of $59,066 under a note (see Note 9) as
of September 30, 1996. CEI owed the partnership $113,055 under two
notes at September 30, 1995. CEI owed HHH a total of $39,190 under a
note as of September 30, 1994.
4. OPERATING LEASES:
Total rental expense under operating leases was $472,212, $362,241 and
$232,516 during fiscal 1996, 1995 and 1994, respectively. Future
minimum lease payments under noncancelable operating leases as of
September 30, 1996 are as follows:
Year Ended September 30, CEI CEWI
1997 $266,778 $ 96,000
1998 73,408 16,000
1999 3,186 --
$343,372 $112,000
The Companies' lease payments principally represent commitments under
the related party facility lease agreement described in Note 3.
5. INVENTORIES:
Inventories consisted of the following at September 30:
1996 1995
Raw materials $2,892,338 $1,163,165
Work in process 827,437 484,555
Finished goods 106,299 213,231
$3,826,074 $1,860,951
6. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consisted of the following at
September 30:
1996 1995
Machinery and equipment $2,897,719 $ 2,771,774
Leasehold improvements 705,557 575,149
Computer equipment 626,032 279,188
Furniture and fixtures 138,184 121,414
4,367,492 3,747,525
Less--Accumulated depreciation and
amortization 2,030,175 1,576,178
$2,337,317 $ 2,171,347
7. OTHER ASSETS:
Other assets include the cash surrender value of key man life
insurance policies where the Company is the beneficiary. At
September 30, 1996, the face amounts of these policies total
$5,019,005.
8. NOTES PAYABLE:
CEI has a revolving line of credit arrangement with Wells Fargo Bank
which allows for borrowings up to $900,000 with interest payable at
1.25% above the existing prime rate at the date of draw down. The
line expired September 30, 1996. Upon expiration, this line of credit
arrangement was converted to term debt bearing interest at 7.75%,
payable in monthly installments of $5,583 including interest through
September 2001, secured by machinery and equipment and personally
guaranteed by the shareholders of CEI.
CEI has an additional revolving line of credit arrangement with Wells
Fargo Bank which allows for borrowings up to $1,200,000 with interest
payable at 1.00% above the existing prime rate at the date of draw
down. The line expires March 31, 1997. The line of credit is
personally guaranteed by the shareholders of CEI. There was $650,000
outstanding at September 30, 1996 under the line of credit.
The loan agreements contain restrictive covenants for certain items,
such as borrowings and dividends. As of September 30, 1996, CEI was
in compliance with such covenants.
9. LONG-TERM DEBT:
<TABLE>
Long-term debt at September 30, 1996 and 1995 is comprised of the following:
<CAPTION>
1996 1995
<S> <C> <C>
Note payable to Wells Fargo Bank, converted upon
expiration of line of credit at September 30, 1996
(see Note 8) $ 335,000 $ --
Note payable to Hewitson, Hewitson, Hewitson and
Hewitson, a related party, payable on demand, with
interest at 10% per annum 59,066 106,171
Note payable to Wells Fargo Bank, maturing April 2001,
payable in monthly installments of $2,157 including
interest at 7.75% per annum; secured by machinery
and equipment 99,590 --
Note payable to Wells Fargo Bank, maturing June 2000,
payable in monthly installments of $14,841 including
interest at 8.75% per annum; secured by machinery
and equipment 567,597 675,451
Note payable to Wells Fargo Bank, maturing September
1999, payable in monthly installments of $7,430
including interest at 9.5% per annum; secured by
machinery and equipment 231,960 290,680
Note payable to Wells Fargo Bank, maturing November
1997, payable in monthly installments of $2,289,
including interest at 9.0% per annum; secured by
machinery and equipment 30,288 51,998
Note payable to Wells Fargo Bank, maturing November
1997, payable in monthly installments of $350
including interest at 7.0% per annum 4,683 8,108
Unsecured noninterest-bearing note payable to
customer, maturing May 1997, payable in monthly
installments of $41,199 247,194 --
Note payable to Hewitson, Hewitson and Hewitson,
repaid in 1996 -- 6,884
Note payable to Wells Fargo Bank, maturing October
1996, payable in monthly installments of $1,496
including interest at 7.75% per annum; secured by
machinery and equipment 1,467 17,210
Note payable to Wells Fargo Bank, repaid in 1996 -- 57,718
Note payable to Wells Fargo Bank, repaid in 1996 -- 72,588
Note payable to customer, repaid in 1996 -- 21,523
Note payable to Wells Fargo Bank, repaid in 1996 -- 8,368
1,576,845 1,316,699
Less--Current portion 599,019 500,948
Long-term debt $ 977,826 $ 815,751
</TABLE>
Future payments under long-term debt arrangements, by year, are as
follows:
Year Ended September 30,
1997 $ 599,019
1998 294,141
1999 315,208
2000 205,840
2001 72,282
Thereafter 90,355
$1,576,845
10. PROFIT SHARING PLAN:
The Companies maintain a contributory employees' profit sharing plan
which covers all eligible employees of the Company. The plan provides
for annual contributions in an amount to be determined by the
Companies' Board of Directors at its discretion. CEI's contribution
for the years ended September 30, 1996, 1995 and 1994 was
approximately $285,000, $125,000 and $92,000 , respectively.
11. INCOME TAXES:
CEI accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes"
(SFAS 109). Under the liability method specified by SFAS 109, the
deferred tax assets and liabilities are determined based on the
temporary differences between the financial statement and tax bases of
assets and liabilities as measured by the enacted tax rates for the
years in which the taxes are expected to be paid. At September 30,
1996 and 1995, total deferred tax liabilities were $122,000 and
$289,000, respectively. In 1995, deferred tax liabilities primarily
represent tax depreciation differences and utilization of cash method
for tax purposes on consigned sales. In 1996, these deferred tax
liabilities primarily represent book/tax depreciation differences.
There were no significant deferred tax assets at September 30, 1996
and 1995.
CEWI has elected to be taxed as an S corporation. Earnings and losses
for federal tax purposes will be included in the personal income tax
returns of the shareholders. Accordingly, there is no provision for
income taxes or deferred taxes reflected in the accompanying combined
financial statements related to CEWI.
CEI's effective tax rate of 33%, 39% and 48% for fiscal 1996, 1995
and 1994, respectively, differs from the federal statutory rate
primarily due to state taxes and nondeductible officer life insurance
premiums. The 1996 effective rate is lower than the 1995 effective
rate principally due to a one-time credit allowed by the State of
Oregon and corrections of prior year estimates.
12. SHAREHOLDERS' EQUITY:
Both CEI and CEWI have 2,000,000 shares common stock authorized and
1,000,000 shares preferred stock authorized, with a par value of $.01
per share. At September 30, 1996 and 1995, 300 shares of common stock
were issued and outstanding for both Companies. Subsequent to
September 30, 1996, the Board of Directors approved a 100-for-one
stock split for CEI. CEWI paid $240,000, $75,000 and $0 of dividends
for the years ended September 30, 1996, 1995 and 1994, respectively.
CEI and CEWI maintain shareholder agreements which restrict the
nature in which shares can be disposed. In accordance with these
agreements, the Company and/or its shareholders have right of first
refusal as to the purchase of any shares being disposed. The purchase
price of such shares is based on the estimated fair market due at date
of disposition, as determined by the Companies' Board of Directors or
independent appraiser.
UNAUDITED PRO FORMA CONDENSED
FINANCIAL INFORMATION
The following unaudited pro forma condensed financial information is
based upon the historical financial statements of Electronic Fab
Technology Corp. ("EFTC") and the historical combined financial
statements of Current Electronics, Inc. and Current Electronics
(Washington), Inc. (collectively, the "CE Companies").
The unaudited pro forma condensed balance sheet presents the combined
financial position of EFTC as of December 31,1996 and the CE Companies
as of September 30, 1996 assuming EFTC had completed a business
combination with the CE Companies as of December 31,1996 using the
purchase method of accounting. Accordingly, the combined identifiable
assets and liabilities of the CE Companies have been adjusted to their
estimated fair values based upon a preliminary purchase price of
approximately $10.9 million.
The unaudited condensed pro forma statement of operations assumes
the business combination occurred on January 1, 1996 and includes the
historical operations of EFTC for the year ended December 31,1996 and
the historical operations of the CE Companies for the fiscal year
ended September 30, 1996, adjusted for the pro forma effects of the
business combination.
The following unaudited condensed pro forma financial information has
been prepared based upon assumptions deemed appropriate by EFTC and
are not necessarily indicative of the consolidated financial position
or results of operations if the business combination had been
consummated on the assumed dates and are not necessarily indicative of
the actual results of the future operations of the combined companies.
<TABLE>
Electronic Fab Technology Corp.
Unaudited Pro Forma Condensed Balance Sheet
December 31, 1996
<CAPTION>
Pro Forma Pro Forma
EFTC CE Companies Adjustments Combined
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents. . . . . . . . . $ 123,882 580,839 (4,900,000) (1) 704,721
4,900,000 (2)
Accounts receivable . . . . . . . . . . . . 3,866,991 1,929,142 -- 5,796,133
Inventories . . . . . . . . . . . . . . . . 9,146,505 3,826,074 -- 12,972,579
Income taxes receivable . . . . . . . . . . 616,411 -- -- 616,411
Other current assets. . . . . . . . . . . . 496,255 109,077 -- 605,332
Total current assets . . . . . . . . . . 14,250,044 6,445,132 -- 20,695,176
Property, plant and equipment, net . . . . . . 8,519,824 2,337,317 (476,351) (1) 10,380,790
Goodwill . . . . . . . . . . . . . . . . . . . -- -- 7,100,000 (1) 7,100,000
Other assets . . . . . . . . . . . . . . . . . 99,773 140,201 -- 239,974
$22,869,641 8,922,650 6,623,649 38,415,940
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable . . . . . . . . . . . . . . . $ 1,800,000 650,000 -- 2,450,000
Current portion of long-term debt . . . . . 170,000 599,019 -- 769,019
Accounts payable. . . . . . . . . . . . . . 2,320,871 1,386,274 -- 3,707,145
Income taxes payable. . . . . . . . . . . . -- 99,953 -- 99,953
Other current liabilities . . . . . . . . . 1,450,684 766,020 600,207 (1) 2,816,911
Total current liabilities. . . . . . . 5,741,555 3,501,266 600,207 9,843,028
Long-term debt, net of current portion . . . . 2,890,000 977,826 4,900,000 (2) 8,767,826
Deferred income taxes. . . . . . . . . . . . . 315,859 122,000 -- 437,859
8,947,414 4,601,092 5,500,207 19,048,713
Shareholders' equity:
Common stock and additional
paid-in capital. . . . . . . . . . . . . . 10,226,607 33,000 5,445,000 (1) 15,671,607
(33,000)(1)
Retained earnings . . . . . . . . . . . . . . 3,695,620 4,288,558 (4,288,558)(1) 3,695,620
13,922,227 4,321,558 1,123,442 19,367,227
$22,869,641 8,922,650 6,623,649 38,415,940
See Notes to Unaudited Pro Forma Condensed Financial Information.
</TABLE>
<TABLE>
Electronic Fab Technology Corp.
Unaudited Pro Forma Condensed Statement of Operations
Year Ended December 31, 1996
<CAPTION>
Pro Forma Pro Forma
EFTC CE Companies Adjustments Combined
<S> <C> <C> <C> <C>
Net sales. . . . . . . . . . . . . . . . . $56,880,067 32,520,438 - 89,400,505
Cost of goods sold . . . . . . . . . . . . 53,980,067 27,075,305 (40,000)(5) 81,015,372
Gross profit. . . . . . . . . . . . . . 2,900,000 5,445,133 40,000 8,385,133
Selling, general and
administrative expenses. . . . . . . . . . 4,195,784 2,792,814 236,666 (4) 7,225,264
Impairment of fixed assets . . . . . . . . 725,869 - - 725,869
Operating income (loss) . . . . . . . . ( 2,021,653) 2,652,319 (196,666) 434,000
Other income (expense):
Interest expense. . . . . . . . . . . . (525,854) (101,192) (416,500)(3) (1,043,546)
Other income, net . . . . . . . . . . . 82,428 9,345 - 91,773
( 443,426) (91,847) (416,500) (951,773)
Income (loss) before income taxes . . (2,465,079) 2,560,472 (613,166) (517,773)
Income tax expense (benefit) . . . . . . . ( 872,114) 754,000 (45,000)(6) (163,114)
Net income (loss) . . . . . . . . . . $( 1,592,965) 1,806,472 (568,166) (354,659)
Loss per common share. . . . . . . . . . . $ (0.40) (.06) (1)
Weighted average common and common
equivalent shares outstanding. . . . . . . 3,942,139 1,980,000 (1) 5,922,139
See Notes to Unaudited Pro Forma Condensed Financial Information.
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Electronic Fab Technology Corp.
Notes to Unaudited Pro Forma Condensed Financial Information
(A) Basis of Presentation
On January 15, 1997, EFTC and CEI entered into the Merger
Agreement that provides for the merger of CEI with and into a newly
formed subsidiary of EFTC. Additionally, EFTC and the shareholders of
CEWI entered into a Purchase Agreement that provides for the
acquisition by EFTC of all of the outstanding common stock of CEWI.
The CE Companies are affiliates as a result of common ownership. The
Merger Agreement and Purchase Agreement were consummated on February
24,1997. Under the terms of the Merger Agreement and the Purchase
Agreement, EFTC paid approximately $4.9 million in cash and issued
1,980,000 shares of its common stock to the stockholders of the
CE Companies. The Merger and the Acquisition were both accounted for
using the purchase method of accounting for business combinations.
Actual adjustments may differ from those presented herein upon
finalization of the purchase accounting adjustments.
(B) Pro Forma Adjustments
The following pro forma adjustments have been made to the
accompanying pro forma condensed financial information:
1. To record goodwill in the amount of $7.1 million based upon the
allocation of the estimated $10.9 million cost of the Merger and the
Acquisition ($4.9 million in cash and 1,980,000 shares of Common Stock
at $2.75 per share, based upon an independent valuation and estimated
transaction costs) and to eliminate the equity accounts of the CE
Companies. No allocation was made to leasehold improvements with a
historical book value of $476,351, which are expected to be abandoned.
2. To record the borrowings for the Merger and the Acquisition of
$4.9 million.
3. To record interest expense on the borrowings for the Merger and the
Acquisition at an assumed interest rate of 8.5% per annum.
4. To record amortization of goodwill resulting from the Merger and the
Acquisition over a 30 year period.
5. Elimination of depreciation expense relating to certain leasehold
improvements that are expected to be abandoned after consummation
of the Merger and the Acquisition.
6. To record income tax expense (benefit) for the taxable income of CEWI,
an S Corporation, net of the effect of the pro forma adjustments.
EXHIBIT 23.1
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the inclusion
of our reports dated April 4, 1997 and November 25, 1996 on the combined
financial statements of Current Electronics, Inc. and Current Electronics
Washington, Inc. in this Report on Form 8-K/A of Electronic Fab Technology
Corp., amending the Report on Form 8-K, dated March 5, 1997, of Electronic
Fab Technology Corp.
ARTHUR ANDERSEN LLP
Portland, Oregon
April 30, 1997
