FORM 10-K/A
Amendment No. 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to __________
Commission File Number 0-23400
--------------------
DT INDUSTRIES, INC.
[Exact name of registrant as specified in its charter]
DELAWARE 44-0537828
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Corporate Centre, Suite 2-300
1949 E. Sunshine 65804
Springfield, MO (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (417) 890-0102
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange
Title of each class on which registered
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, par value $.01 per share
(Title of each class)
--------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes. X No.
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K X .
----
As of September 16, 1996, the aggregate market value of the voting stock
held by non-affiliates (5,521,104 shares) of the registrant was $179,435,880
(based on the closing sales price, on such date, of $32.50 per share).
As of September 16, 1996, there were 9,009,250 shares of common stock,
$0.01 par value outstanding.
--------------------
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement Dated October 1, 1996 (portion)(Part III).
Annual Report to Shareholders for the Fiscal Year
Ended June 30, 1996 (portion) (Parts I, II and IV).
<PAGE>
The Form 10-K for the Fiscal year ended June 30, 1996, filed with the
Commission on September 30, 1996, is hereby amended by inserting the enclosed
Exhibit 13 which was inadvertently omitted from the original filing.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.
DT INDUSTRIES, INC.
By /s/ Bruce P. Erdel
----------------------------------------
Bruce P. Erdel
Vice President - Finance and Secretary
Dated: October 10, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of DT Industries, Inc.
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of changes in stockholders'
equity and of cash flows present fairly, in all material respects, the financial
position of DT Industries, Inc. and its subsidiaries at June 30, 1996 and
June 25, 1995, and the results of their operations and their cash flows for
each of the three fiscal years in the period ended June 30, 1996, in conformity
with generally accepted accounting principles. 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 of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
St. Louis, Missouri
August 9, 1996
<PAGE>
(Dollars in thousands, except per share data)
_______________________________________________________________________________
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, June 25,
ASSETS 1996 1995
<S> <C> <C>
Current assets:
Cash $ 1,210 $ 646
Accounts receivable, net 32,092 28,936
Costs and estimated earnings in excess of amounts billed
($15,640 and $8,654, respectively) on uncompleted contracts 19,130 7,788
Inventories, net 31,403 23,822
Prepaid expenses and other 10,153 2,589
-------------------------
Total current assets 93,988 63,781
Property, plant and equipment, net 36,713 27,056
Goodwill, net 101,187 67,445
Other assets, net 1,955 981
-------------------------
$ 233,843 $ 159,263
-------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 8,481 $ 6,448
Accounts payable 19,621 12,773
Customer advances 13,850 12,581
Billings in excess of costs and earnings
($14,097) on uncompleted contracts 3,351
Accrued liabilities 22,524 15,188
-------------------------
Total current liabilities 67,827 46,990
-------------------------
Long-term debt 70,846 30,905
Deferred income taxes 4,756 3,756
Other long-term liabilities 2,530 2,592
-------------------------
78,132 37,253
-------------------------
Commitments and contingencies (Notes 2 and 11)
Stockholders' equity:
Preferred stock, $.01 par value; 1,500,000 shares
authorized; no shares issued and outstanding
Common stock, $.01 par value; 100,000,000 shares
authorized; 9,001,250 and 9,000,000 shares issued
and outstanding, respectively 90 90
Additional paid-in capital 61,255 61,162
Retained earnings 26,539 13,768
-------------------------
Total stockholders' equity 87,884 75,020
-------------------------
$ 233,843 $ 159,263
-------------------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
(Dollars in thousands, except per share data)
_______________________________________________________________________________
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Fiscal Year Ended
June 30, June 25, June 26,
1996 1995 1994
<S> <C> <C> <C>
Net sales $ 235,946 $ 147,369 $ 107,499
Cost of sales 172,568 109,678 79,555
----------------------------------------
Gross profit 63,378 37,691 27,944
Selling, general and administrative expenses 35,445 21,428 13,875
----------------------------------------
Operating income 27,933 16,263 14,069
Interest expense, net 4,799 1,849 3,506
----------------------------------------
Income before provision for income taxes
and extraordinary loss 23,134 14,414 10,563
Provision for income taxes 9,643 5,964 4,570
----------------------------------------
Income before extraordinary loss 13,491 8,450 5,993
Extraordinary loss on early extinguishment of
debt, net of income tax benefit of $135 (179)
----------------------------------------
Net income $ 13,491 $ 8,450 $ 5,814
----------------------------------------
Earnings per share:
Income before extraordinary loss $ 1.50 $ 0.94 $ 1.10
Extraordinary loss (.03)
----------------------------------------
Net income $ 1.50 $ 0.94 $ 1.07
----------------------------------------
Weighted average number of common shares 9,000,257 9,000,000 5,458,337
----------------------------------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
(Dollars in thousands, except per share data)
_______________________________________________________________________________
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional
Common paid-in Retained
stock capital earnings Total
<S> <C> <C> <C> <C>
BALANCE, JUNE 30, 1993 $ 43 $ 5,607 $ 404 $ 6,054
Issuance of common stock to
management 4 162 166
Contribution of common stock by
existing stockholders (2) 2
Issuance of common stock in initial
public offering on April 22, 1994 45 55,335 55,380
Cash dividend at $0.02 per
common share (180) (180)
Net income 5,814 5,814
--------------------------------------------------------------
BALANCE, JUNE 26, 1994 90 61,106 6,038 67,234
Payments on stock
subscriptions receivable 56 56
Cash dividend at $0.08
per common share (720) (720)
Net income 8,450 8,450
--------------------------------------------------------------
BALANCE, JUNE 25, 1995 90 61,162 13,768 75,020
Exercise of stock options 17 17
Payments on stock
subscriptions receivable 76 76
Cash dividend at $0.08
per common share (720) (720)
Net income 13,491 13,491
--------------------------------------------------------------
BALANCE, JUNE 30, 1996 $ 90 $ 61,255 $ 26,539 $ 87,884
--------------------------------------------------------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
(Dollars in thousands, except per share data)
_______________________________________________________________________________
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Fiscal Year Ended
June 30, June 25, June 26,
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 13,491 $ 8,450 $ 5,814
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 3,411 2,738 2,271
Amortization 2,705 1,823 1,086
Deferred income tax provision 981 3,921 826
Loss on refinancing of long-term debt 314
Other 116 36 16
(Increase) decrease in current assets, excluding
the effects of acquisitions:
Accounts receivable 4,274 (13,503) (4,328)
Costs and earnings in excess of amounts billed (8,520) (2,593)
Inventories 3,873 (3,937) 5,959
Prepaid expenses and other (5,797) (634) (499)
Increase (decrease) in current liabilities,
excluding the effect of acquisitions:
Accounts payable 838 2,444 1,619
Accrued liabilities 189 (3,068) (681)
Customer advances (3,765) 5,816 (8,751)
Billings in excess of costs and earnings
on uncompleted contracts 3,351
Other (62) 61 87
----------------------------------------
Net cash provided by operating activities 15,085 1,554 3,733
----------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (10,249) (7,718) (2,272)
Acquisition of Sencorp stock and Stokes net assets,
net of cash acquired of $359 (26,397)
Acquisition of AAA stock and net assets of Lakso,
net of cash acquired of $530 (29,181)
Acquisition of Kalish net assets, Arrow net assets,
Swiftpack stock and AMI stock, net of cash
acquired of $2,484 (29,614)
Other 113 44
----------------------------------------
Net cash used in investing activities (39,863) (36,786) (28,625)
----------------------------------------
</TABLE>
(continued)
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
(Dollars in thousands, except per share data)
_______________________________________________________________________________
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
<TABLE>
<CAPTION>
Fiscal Year Ended
June 30, June 25, June 26,
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of debt $ 37,031 $ 25,000 $ 21,752
Repayment of debt (13,854) (1,250) (29,334)
Net borrowings from (repayment of) revolving loans 3,633 13,116 (181)
Repayment of subordinated debt - related party (22,600)
Repayment of capital leases and other (209) (243) (252)
Debt issuance costs (632)
Net proceeds from issuance of common stock in
initial public offering 55,380
Dividends (720) (900)
Other 93 56 166
----------------------------------------
Net cash provided by financing activities 25,342 35,779 24,931
----------------------------------------
Net increase in cash 564 547 39
Cash at beginning of period 646 99 60
----------------------------------------
Cash at end of period $ 1,210 $ 646 $ 99
----------------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 4,280 $ 1,618 $ 4,054
Income taxes $ 6,369 $ 3,282 $ 2,453
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
In fiscal 1994, a total of 443,250 shares of common stock were issued to members
of management in exchange for capital contributions of $166 and notes receivable
totaling $575.
The Company purchased H. G. Kalish Inc., Arrow Precision Elements, Inc.,
Swiftpack Automation Limited and Assembly Machines, Inc. in fiscal 1996;
Advanced Assembly Automation, Inc., Lakso Division of Package Machinery Company
and Armac Industries, Ltd. in fiscal 1995; and Sencorp Systems, Inc. and
Stokes-Merrill, Inc. in fiscal 1994. In conjunction with the acquisition of
Swiftpack, the Company issued Loan Notes totaling approximately $13,974. See
Note 4. The following table represents summary information with respect to
these acquisitions:
<TABLE>
<CAPTION>
Fiscal Year
1996 1995 1994
<S> <C> <C> <C>
Fair value of assets acquired $ 25,447 $ 17,271 $ 14,137
Fair value assigned to goodwill 36,071 25,255 23,516
Cash paid (29,614) (29,181) (26,397)
----------------------------------------
Liabilities assumed and seller financing (See Note 4) $ 31,904 $ 13,345 $ 11,256
----------------------------------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
(Dollars in thousands, except per share data)
_______________________________________________________________________________
NOTE 1 ORGANIZATION
DT Industries, Inc. (DTI or the Company) was organized to acquire the
operations of Detroit Tool Group, Inc. (DTG), the predecessor company to DTI, in
August 1992 and the Peer Division of Teledyne, Inc. in July 1992. Manufacturing
operations are principally based in the U.S. with the exception of two foreign
entities acquired in fiscal 1996. Recent acquisitions including the foreign
acquisitions are described in Note 2. The Company and its subsidiaries operate
in two business segments, the Special Machines segment (including the Automation
Group and the Packaging Group) and the Components segment.
The Special Machines segment designs and builds custom equipment,
proprietary machines and integrated systems. The Components segment stamps and
fabricates a range of standard and custom metal components for the
transportation, appliance, heavy equipment, agricultural equipment and
electrical industries as well as wear parts for the textile industry.
On February 9, 1994, the Company split its shares of common stock at a
rate of 4.5 for 1, and increased authorized shares to 100,000,000. All share
and per share data in the consolidated financial statements have been adjusted
to reflect the stock split for all periods presented.
On April 22, 1994, an initial public offering (Offering) of DTI's common
stock was completed. The Company sold 4,500,000 shares of common stock at an
offering price of $13.50 per share. The net proceeds to the Company of $55,380
were used to repay substantially all indebtedness. In addition, Harbour Group
Investments II, L.P. (Investments L.P.), a significant stockholder of the
Company, under an option granted to the underwriters pursuant to the Offering
for the purpose of covering over-allotments, sold an additional 675,000 shares
at $13.50 per share less underwriting discounts and commissions. The net
proceeds of approximately $8,500 therefrom were paid directly to Investments
L.P.
_______________________________________________________________________________
NOTE 2 ACQUISITIONS
The following table summarizes certain information regarding the Company's
acquisitions during the past three years.
<TABLE>
<CAPTION>
Net cash
purchase
Date Business price
<S> <C> <C>
August 1993 Sencorp Systems, Inc. (Sencorp) $ 15,300
December 1993 Stokes-Merrill, Inc. (Stokes) 11,100
August 1994 Advanced Assembly Automation, Inc. (AAA) 22,100
February 1995 Lakso Division of Package Machinery Company (Lakso) 7,000
February 1995 Armac Industries, Ltd. (Armac) --
August 1995 H.G. Kalish Inc. (Kalish) 16,400
September 1995 Arrow Precision Elements Inc. (Arrow) 3,000
November 1995 Swiftpack Automation Limited (Swiftpack) 18,400*
January 1996 Assembly Machines Inc. (AMI) 6,700
</TABLE>
*Includes issuance of Loan Notes of $13,974 and approximately $930 related to
the exercise of the option to purchase the remaining 5% interest in Swiftpack.
See Note 4.
During the past three fiscal years, the Company made nine acquisitions
which have significantly expanded its product lines. These acquisitions were
each accounted for under the purchase method of accounting and financed
primarily through bank borrowings, resulting in an increase in the Company's
debt. Results of operations of each acquired company have been included in the
Company's statement of operations from the date of acquisition. The purchase
price of each acquisition was allocated to the assets acquired and liabilities
assumed, based on their estimated fair value at the date of acquisition. The
excess of purchase price over the estimated fair value of net assets acquired
was, in each instance, recorded as goodwill.
As part of the Kalish and Swiftpack acquisitions, DTI has agreed to make
additional payments of up to $3,000 and approximately $4,700, respectively, to
the sellers. The amount of the additional purchase prices will be determined by
a formula based on the earnings of the acquired businesses. The additional
purchase price specified within the Kalish purchase
<PAGE>
(Dollars in thousands, except per share data)
_______________________________________________________________________________
agreement, which is based on earnings for the three years after closing of the
acquisition, may be paid in DTI stock at the Company's option. The additional
purchase price specified within the Swiftpack purchase agreement, which is
based on earnings for the three or four years after closing of the acquisition,
is payable in cash. No amount has been accrued to date for any additional
purchase price. Any additional purchase price paid is expected to result in
additional goodwill related to these acquisitions.
The following table sets forth pro forma information for DTI as if all of
the previously discussed acquisitions, excluding Armac and Arrow, had taken
place on June 26, 1995 and June 27, 1994, respectively. The pro forma effect
of Armac and Arrow is immaterial. This information is unaudited and does not
purport to represent actual revenue, net income and earnings per share had
the acquisitions actually occurred on June 26, 1995, and June 27, 1994,
respectively.
<TABLE>
<CAPTION>
Pro Forma Information (unaudited)
Fiscal year ended June 30, June 25,
1996 1995
<S> <C> <C>
Net sales $ 253,757 $ 209,793
Net income 14,021 10,866
Net income per share $ 1.56 $ 1.21
Weighted average shares outstanding 9,000,257 9,000,000
</TABLE>
See Note 16 for the acquisition of Mid-West Automation Enterprises, Inc. in
July 1996.
_______________________________________________________________________________
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies utilized by the Company in the preparation of the
financial statements conform to generally accepted accounting principles, and
require that management 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 revenues and expenses during the reporting period.
Actual amounts could differ from these estimates.
The significant accounting policies followed by the Company are described
below.
REVENUE RECOGNITION
The percentage of completion method of accounting is used by the Company's
Special Machines segment to recognize revenues and related costs. Under the
percentage of completion method, revenues are measured based on the ratio of
engineering and manufacturing labor hours incurred to date compared to total
estimated engineering and manufacturing labor hours for each customer contract.
Any revisions in the estimated total costs or values of the contracts during the
course of the work are reflected when the facts that require the revisions
become known. Revenue from the sale of products manufactured by the Company's
Components segment is recognized upon shipment to the customer.
Prior to June 26, 1995, revenues from certain customer contracts of the
Special Machines segment were recognized upon shipment, utilizing the "units of
delivery" modification of the percentage of completion method. The change in
accounting method in fiscal 1996 reflects the trend in the Company's Special
Machines business for increasing engineering services provided on customer
contracts and did not have a material impact on the Company's financial
position and results of operations.
Costs and related expenses to manufacture the products are recorded as
cost of sales when the related revenue is recognized. Provisions for estimated
losses on uncompleted contracts are made in the period in which such losses
are determined.
Cash deposits received from customers on contracts in progress are
reflected as customer advances in the consolidated balance sheet until the
related revenue is recognized in accordance with the procedures described
above. Costs and estimated earnings in excess of amounts billed on percentage
of completion contracts represents costs incurred and earnings recognized in
excess of customer advances received. Billings in excess of costs incurred and
estimated earnings on uncompleted contracts represents customer advances
received in excess of costs incurred and earnings recognized.
<PAGE>
(Dollars in thousands, except per share data)
_______________________________________________________________________________
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany transactions
and balances have been eliminated.
FOREIGN CURRENCY TRANSLATION
The accounts of the Company's foreign subsidiaries are maintained in their
respective local currencies. The accompanying consolidated financial statements
have been translated and adjusted to reflect U.S. dollars on the basis
presented below.
Assets and liabilities are translated into U.S. dollars at year-end
exchange rates. Income and expense items are translated at average rates of
exchange prevailing during the year. Adjustments resulting from the process of
translating the consolidated amounts into U.S. dollars are accumulated in a
separate translation adjustment account included in stockholders' equity. Common
stock and additional paid-in capital are translated at historical U.S. dollar
equivalents in effect at the date of acquisition. Foreign currency transaction
gains and losses are included in earnings currently. The cumulative translation
adjustment account balance and foreign currency transaction gains and losses are
not considered material.
CASH AND CASH EQUIVALENTS
Book cash overdrafts on the Company's disbursement accounts totaling
$6,478 and $4,022 at June 30, 1996 and June 25, 1995, respectively, are
included in accounts payable. All highly liquid debt instruments purchased with
original maturities of three months or less are classified as cash equivalents.
CONCENTRATIONS OF CREDIT RISK
The Company sells a majority of its special machines to a wide range of
manufacturing companies. Components services are sold to customers primarily in
the transportation, agricultural equipment and textile industries. The Company
performs ongoing credit evaluations of its customers and generally does not
require collateral, although many customers of the Special Machines segment pay
deposits to the Company prior to shipment of its products. The Company maintains
reserves for potential credit losses and historically such losses have been
within management's expectations. At June 30, 1996, the Company had no
significant concentration of credit risk.
FAIR VALUE OF FINANCIAL INSTRUMENTS
For purposes of financial reporting, the Company has determined that the
fair value of financial instruments approximates book value at June 30, 1996,
based on terms currently available to the Company in financial markets.
INVENTORIES
Domestic inventories are stated at the lower of cost, determined using the
last-in, first-out (LIFO) method, or market, with the exception of raw material
inventories and the material component of work in process inventories at Detroit
Tool and Engineering, Inc. (DTE), Sencorp, Stokes, Peer, Lakso, Armac and AMI
totaling approximately $13,620, which are accounted for using the first-in,
first-out method (FIFO). For various tax and statutory reasons, inventories of
the Company's foreign subsidiaries are stated at FIFO costs. The effects on
financial position and results of operations from applying the FIFO method for
such material inventories and inventories of foreign subsidiaries are
immaterial. For other inventories maintained on a LIFO basis, cost under the
LIFO method approximates the FIFO method. Inventories include the cost of
materials, direct labor and manufacturing overhead.
Obsolete or unsalable inventories are reflected at their estimated
realizable values.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recorded at cost and is depreciated using
the straight-line method over the estimated useful lives of the assets which
range from 3 to 39.5 years. Properties held under capital leases are recorded
at the present value of the non-cancelable lease payments over the term of the
lease and are amortized over the shorter of the lease term or the estimated
useful lives of the assets.
Expenditures for repairs, maintenance and renewals are charged to income
as incurred. Expenditures which improve an asset or extend its estimated useful
life are capitalized. When properties are retired or otherwise disposed of, the
related cost and accumulated depreciation are removed from the accounts and any
gain or loss is included in income.
GOODWILL
The excess of the purchase price over the fair value of net assets
acquired in business
<PAGE>
(Dollars in thousands, except per share data)
_______________________________________________________________________________
combinations (goodwill) is capitalized and amortized on a straight-line basis
over periods ranging from 15 to 40 years. Goodwill amortization charged to
income for the years ended June 30, 1996, June 25, 1995 and June 26, 1994 was
approximately $2,386, $1,660 and $1,008 respectively. Accumulated amortization
at June 30, 1996, and June 25, 1995 was approximately $5,574 and $3,188,
respectively. Including the full year effect of the acquisitions of Kalish,
Arrow, Swiftpack and AMI, the Company estimates annual amortization of goodwill
to be approximately $2,733.
The carrying value of goodwill is assessed for recoverability by
management based on an analysis of future expected cash flows from the
underlying operations of the Company. Management believes that there has been
no impairment at June 30, 1996.
ENVIRONMENTAL LIABILITIES
Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate to an existing
condition caused by past operations, and that do not contribute to current or
future revenue generation, are expensed. Liabilities are recorded when
environmental assessments and/or remedial efforts are probable, and the costs
can be reasonably estimated. Generally, the timing of these accruals coincides
with completion of a feasibility study or the Company's commitment to a formal
plan of action.
POSTRETIREMENT BENEFITS
The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" (OPEB or SFAS 106). This standard requires recognition of the cost of
providing postretirement benefits during an employee's period of service. As
part of adopting the standard as of the acquisition of DTG, the Company recorded
an accrual of approximately $1,584 in other long-term liabilities in its balance
sheet representing the discounted present value of expected future retiree
benefits attributed to employees' service rendered in periods prior to DTI's
acquisition (see Note 9).
INCOME TAXES
The Company files a consolidated federal income tax return which includes
its subsidiaries. The Company has adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS 109). Under SFAS 109, the
current or deferred tax consequences of a transaction are measured by applying
the provisions of enacted laws to determine the amount of taxes payable
currently or in future years. Deferred income taxes are provided for temporary
differences between the income tax bases of assets and liabilities, and their
carrying amounts for financial reporting purposes.
EARNINGS PER SHARE
Earnings per share is based upon the weighted average number of common
shares outstanding during the period, after giving effect to the stock split
described in Note 1.
Options under the Company's Employee Stock Option Plan and the Director's
Non-Qualified Stock Option Plan are not included as common stock equivalents
for earnings per share purposes since they do not have a material dilutive
effect.
STOCK-BASED COMPENSATION
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123), which addresses accounting for stock option, purchase
and award plans. SFAS 123 specifies that companies utilize either the "fair
value based method" or the "intrinsic value based method" for valuing stock
options granted. The Company will adopt SFAS 123 in fiscal 1997 and expects to
utilize the "intrinsic value based method" for valuing stock options granted.
The Company anticipates that, when adopted, SFAS 123 will have no material
effect on its financial position or results of operations.
INTEREST RATE
SWAP AGREEMENT
The Company is a party to an interest rate swap agreement used to hedge
interest rate fluctuations on a portion of its floating rate revolving credit
facility and term loans. This agreement is accounted for on the accrual basis
of accounting. Net cash payments or receipts under the agreement are recorded
as an adjustment to interest expense when such amounts become due or receivable.
FISCAL YEAR
Beginning with fiscal 1994, the Company implemented a 52-53 week fiscal
year that ends on the last Sunday in June.
<PAGE>
(Dollars in thousands, except per share data)
_______________________________________________________________________________
NOTE 4 FINANCING
Long-term debt consists of the following:
<TABLE>
<CAPTION>
June 30, June 25,
1996 1995
<S> <C> <C>
Notes payable to bank under a term loan and
revolving credit facility agreement,
as amended November 22, 1995, secured by
virtually all assets:
Term loan - Principal due in quarterly installments $ 41,550 $ 23,750
Revolving credit facility - Principal due in full
on August 16, 2000 14,983 13,116
Loan Notes 13,974
Sterling pound denominated facility, payable
in quarterly installments 6,367
Foreign currency denominated revolving loans to banks 1,766
Capital lease obligations 88 218
Other long-term debt 599 269
--------- ----------
79,327 37,353
(Less) current portion of long-term debt,
including $88 and $164, respectively, of
capital lease obligations (8,481) (6,448)
--------- ----------
$ 70,846 $ 30,905
--------- ----------
</TABLE>
On November 22, 1995 the Company entered into an amendment to the Amended
and Restated Credit Facilities Agreement (Amended Credit Agreement) which
expires August 16, 2000. The amended facility of $90,000 is provided by six
institutions. The Amended Credit Agreement provides for a $25,000 revolving
credit facility, a $43,500 term loan and a letter of credit denominated in a
foreign currency of approximately $21,500 to secure loans to finance the
Swiftpack acquisition. Borrowings under the Amended Credit Agreement bear
interest at the bank's base rate or LIBOR (at the option of DTI) plus a
specified percentage based on the ratio of funded debt to operating cash flow.
At June 30, 1996, interest rates on these facilities ranged from 6.9% to 8.25%.
Borrowing availability for the revolver is based on percentages of the Company's
eligible accounts receivable, eligible inventory and outstanding letters of
credit. The Company had excess borrowing availability of $7,241 relating to the
revolving credit facility at June 30, 1996. The term loan requires quarterly
principal payments with the remaining balance due on August 16, 2000. The
principal payments range from $1,700 to $2,500. Borrowings under the Amended
Credit Agreement are secured by substantially all of the assets of DTI and its
subsidiaries. The Amended Credit Agreement contains certain financial and other
covenants and restrictions for which the Company was in compliance with such
covenants and restrictions at June 30, 1996.
In connection with the acquisition of Swiftpack on November 23, 1995,
DT Industries (UK) Limited (DTUK) issued five fixed rate guaranteed promissory
notes (Loan Notes) with certain of the prior shareholders. The aggregate
principal amount of the Loan Notes is $13,974. The Loan Notes bear interest at
5.3%, are redeemable by the noteholders between November 25, 1996 and
December 23, 1996 and are guaranteed by a credit agreement with a foreign bank
(Foreign Credit Agreements). The Foreign Credit Agreements, entered into on
November 23, 1995, provide the guarantee of the Loan Notes and provide a loan
facility denominated in a foreign currency in the aggregate principal amount
of approximately $21,000. The facility was used for the cash portion of the
purchase price of Swiftpack and will be used for funding the redemption of the
Loan Notes. As such, the Loan Notes are presented as long term debt on the
consolidated balance sheet. The Foreign Credit Agreements bear interest at
LIBOR plus a specified percentage (approximately 8.0% including letter of
credit fees at June 30, 1996). Principal payments thereunder ranging from
$155 to $400 are due quarterly with the remaining principal due August 16,
2000.
In connection with the issuance of the Loan Notes, the Company entered
into a foreign exchange forward contract to offset exchange gains and losses
related to the Loan Notes recorded by the foreign subsidiary. The contract
matures November 26, 1996 and provides the purchase of the equivalent of $13,974
of Pounds Sterling at a rate of $1.5457 per Pound Sterling.
In addition, the Company has revolving credit facilities through its
foreign subsidiaries of approximately $3,000, of which approximately $1,766
was outstanding at June 30, 1996.
To manage its exposure to fluctuations in interest rates, on June 28,
1995, the Company
<PAGE>
(Dollars in thousands, except per share data)
_______________________________________________________________________________
entered into an interest rate swap agreement for a notional principal amount of
$30,000, maturing June 29, 1998. Swap agreements involve the exchange of
interest obligations on fixed and floating interest-rate debt without the
exchange of the underlying principal amount. The differential paid or received
on the swap agreement is recognized as an adjustment to interest expense when
such amount becomes payable or receivable. The swap agreement provides a fixed
rate of 6.06% with a floating rate payment equal to the three month LIBOR
determined on a quarterly basis with settlement occurring on specific dates.
Amounts accruing under the swap agreement did not result in a material amount
of additional interest expense for fiscal 1996. Management believes that the
Company's exposure to credit loss in the event of nonperformance by the
counterparty to this agreement is not material.
In conjunction with the repayment of a term loan from the net proceeds of
the Offering as described in Note 1, the Company recognized a loss of $179
attributable to the write-off of $314 unamortized deferred financing fees, net
of related $135 tax benefit, which is reported as an extraordinary item in the
Consolidated Statement of Operations in fiscal 1994.
At June 30, 1996, the minimum principal payments of long-term debt,
excluding capital lease obligations, for the five subsequent fiscal years are
as follows:
<TABLE>
<CAPTION>
Foreign Revolving
Term Credit Credit Other
Loan Facility Facilities Debt Total
<S> <C> <C> <C> <C> <C>
1997 $ 7,050 $ 1,319 $ --- $ 24 $ 8,393
1998 8,600 1,319 104 10,023
1999 9,800 1,242 113 11,155
2000 10,000 1,474 115 11,589
2001 and thereafter 6,100 14,987 16,749 243 38,079
--------- --------- --------- ------- ---------
$41,550 $20,341 $16,749 $ 599 $79,239
--------- --------- --------- ------- ---------
</TABLE>
See Note 16 for further amendment to the Amended Credit Agreement pursuant to
the acquisition of Mid-West Automation Enterprises Inc. in July 1996.
_______________________________________________________________________________
NOTE 5 LEASE OBLIGATIONS
The Company leases certain of its machinery, equipment, computer systems
and related software under noncancelable lease agreements that extend for terms
of up to five years. The leases are reflected in the financial statements as
capitalized leases in accordance with the requirements of Statement of Financial
Accounting Standards No. 13, "Accounting for Leases". In addition, certain
facilities and equipment are leased under noncancelable operating leases having
terms up to 20 years.
Minimum lease payments under noncancelable leases at June 30, 1996 are
as follows:
<TABLE>
<CAPTION>
Fiscal year Capital Operating
<S> <C> <C>
1997 $ 95 $ 3,322
1998 2,296
1999 1,656
2000 1,395
2001 and thereafter 13,142
------- ----------
Total minimum lease payments 95 $ 21,811
----------
Less amount representing interest (7)
-------
Present value of net minimum lease payments $ 88
-------
</TABLE>
Rental expense for operating leases for the fiscal years ended June 30,
1996, June 25, 1995, and June 26, 1994, was approximately $3,103, $2,098 and
$1,288, respectively.
<PAGE>
(Dollars in thousands, except per share data)
_______________________________________________________________________________
NOTE 6 INCOME TAXES
Income before provision for income taxes and extraordinary loss was taxed
under the following jurisdictions:
<TABLE>
<CAPTION>
Fiscal Year Ended
June 30, June 25, June 26,
1996 1995 1994
<S> <C> <C> <C>
Domestic $ 20,539 $ 14,414 $ 10,563
Foreign 2,595
---------- ---------- -----------
$ 23,134 $ 14,414 $ 10,563
</TABLE>
The provision for income taxes charged to operations was as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended
June 30, June 25, June 26,
1996 1995 1994
<S> <C> <C> <C>
CURRENT
U.S. Federal $ 6,474 $ 1,641 $ 3,074
State 1,373 402 535
Foreign 815
---------- ---------- ----------
Total current 8,662 2,043 3,609
DEFERRED
U.S. Federal 734 3,203 727
State 125 718 99
Foreign 122
---------- ---------- ----------
Total deferred 981 3,921 826
---------- ---------- ----------
Total provision $ 9,643 $ 5,964 $ 4,435
---------- ---------- ----------
</TABLE>
The provision for income taxes for the fiscal year ended June 26, 1994 is
net of income tax benefits of $135 related to the extraordinary loss as
described in Note 4 and $565 related to the utilization of an operating loss
carryforward.
Deferred tax liabilities (assets) are comprised of the following:
<TABLE>
<CAPTION>
June 30, June 25,
1996 1995
<S> <C> <C>
DEFERRED TAX LIABILITIES
Depreciation $ 3,995 $ 3,606
LIFO inventory and costing capitalization, net 759 862
Earnings recognized under percentage of completion 1,249 754
Goodwill and intangibles amortization 1,440 656
Other 347 154
---------- ----------
Total deferred tax liabilities 7,790 6,032
---------- ----------
</TABLE>
(continued)
<PAGE>
(Dollars in thousands, except per share data)
_______________________________________________________________________________
<TABLE>
<CAPTION>
June 30, June 25,
1996 1995
<S> <C> <C>
DEFERRED TAX ASSETS
Postretirement benefit accrual (701) (666)
Inventory reserves (795) (658)
Product liability reserves (750) (881)
Bad debt reserves (521) (328)
Other accruals (2,863) (1,272)
Other (1,394) (1,056)
---------- ----------
Total deferred tax assets (7,024) (4,861)
---------- ----------
Deferred tax assets valuation allowance 1,029 1,029
---------- ----------
Total net deferred tax liability 1,795 2,200
Less: current portion included in prepaid
expenses and other 2,961 1,556
---------- ----------
Long-term deferred tax liability $ 4,756 $ 3,756
---------- ----------
</TABLE>
The deferred tax assets valuation allowance has been recorded to reflect
the potential non-realization of certain deductible temporary differences.
The provision for income taxes differs from the amount of income tax
determined by applying the applicable U.S. statutory federal income tax rate
to pre-tax income as a result of the following differences.
<TABLE>
<CAPTION>
Fiscal Year Ended
June 30, June 25, June 26,
1996 1995 1994
<S> <C> <C> <C>
U.S. statutory rate $ 8,097 $ 4,901 $ 3,485
Increase in rate resulting from:
Non-deductible goodwill amortization 410 304 240
State taxes, net 974 739 418
Other 162 20 292
---------- ---------- ----------
$ 9,643 $ 5,964 $ 4,435
</TABLE>
_______________________________________________________________________________
NOTE 7 RETIREMENT PLANS
The Company offers substantially all of its domestic employees a retirement
savings plan under Section 401(k) of the Internal Revenue Code. Each employee
may elect to enter a written salary deferral agreement under which a maximum of
15% of their salary, subject to aggregate limits required under the Internal
Revenue Code, may be contributed to the plan. The Company will match a
percentage of the employee's contribution up to a specified maximum percentage
of their salary. In addition, the Company generally is required to make a
mandatory contribution and may make a discretionary contribution from profits.
During the fiscal years ended June 30, 1996, June 25, 1995 and June 26, 1994,
the Company made contributions of approximately $1,596, $1,224 and $906,
respectively.
<PAGE>
(Dollars in thousands, except per share data)
_______________________________________________________________________________
NOTE 8 RELATED PARTIES
Under the terms of a management consulting and advisory services agreement,
the Company paid affiliates of Investments, L.P. fees totaling $783, $459 and
$500 in fiscal 1996, 1995 and 1994, respectively, related to corporate
development services provided in identifying, negotiating and consummating the
Company's acquisitions. Fees paid to affiliates of Investments, L.P. related
to corporate development services were included in the costs of the related
acquisitions.
Under terms of management consulting and advisory services agreements,
Harbour Group Ltd. and Harbour Group Industries, Inc., charge the Company for
direct management and administrative services provided to the Company based on
actual, direct costs of such services. The charges, which are included in
selling, general and administrative expenses in the financial statements,
totaled approximately $285, $372 and $466 for the fiscal years ended June 30,
1996, June 25, 1995 and June 26, 1994, respectively.
Interest expense incurred with respect to a subordinated note payable to
Investments L.P. was $1,908 for the fiscal year ended June 26, 1994. The note
was repaid in full in April 1994 with proceeds from the Offering.
The Company issued 443,250 shares of the Company's common stock at prices
which approximated estimated fair value ranging from $1.26 to $2.57 per share
to members of management under agreements which allow management to pay for the
stock with cash and/or recourse notes receivable to the Company. The recourse
notes receivable were issued with interest rates ranging from 5.84% to 6.28% and
become due between September 2003 and January 2004. The notes are reflected as a
reduction to additional paid-in capital in the accompanying consolidated
financial statements.
_______________________________________________________________________________
NOTE 9 POSTRETIREMENT BENEFITS
DTI provides health care and life insurance benefits for former DTG
employees who retired prior to September 1, 1992 (less than 100 retirees at
June 30, 1996). Management plans to fund the premiums as incurred, net of
reimbursements received by plan participants.
The following table sets forth the status of the postretirement plans,
reconciled to the postretirement benefit obligation included in the
accompanying consolidated balance sheets:
<TABLE>
<CAPTION>
June 30, June 25,
1996 1995
<S> <C> <C>
Accrued postretirement benefit obligation $ 1,025 $ 1,097
Unrecognized net gain from changes in past
experience and assumptions 639 523
---------- ----------
Accrued postretirement benefit obligation recognized
in the consolidated balance sheet $ 1,664 $ 1,620
---------- ----------
</TABLE>
For measurement purposes, an 11% annual rate of increase in health care
premiums was assumed for 1997; this rate was assumed to decrease 1% per year to
6% by 2002 and remain at that level thereafter. An increase in the assumed
health care cost trend rates of 1% in each year would increase the accumulated
postretirement benefit obligations as of June 30, 1996, by approximately $58
and the interest cost comprising the periodic postretirement benefit cost for
the period then ended by approximately $5.
The weighted average discount rate used to determine the accumulated
postretirement benefit obligation was 8% at June 30, 1996 and June 25, 1995.
The periodic postretirement benefit cost for fiscal 1996, 1995 and 1994
charged to income was approximately $41, $41 and $65, respectively.
<PAGE>
(Dollars in thousands, except per share data)
_______________________________________________________________________________
NOTE 10 STOCK OPTION PLANS
In conjunction with the Offering, the Company adopted the 1994 Executive
Stock Option Plan (Executive Plan) pursuant to which non-qualified stock options
were granted to certain existing shareholders as of the date the registration
statement relating to the Offering became effective to acquire an aggregate
379,134 shares of the Company's common stock, subject to adjustment, by
tendering existing common stock in payment therefor. The options were exercised
immediately after the Offering. The exercise price of all options was the
current market price on the date of exercise and all options were exercised by
exchanging shares of previously owned common stock. The grant and exercise of
options under the Executive Plan did not result in any increase in the
beneficial ownership of common stock by the plan participants from the number of
shares owned at the time of the Offering. Under the terms of the Executive Plan,
the shares of common stock issued pursuant to the exercise of the options became
freely transferable, subject to the restrictions of the Stockholder Agreements
with each of the Executive Stockholders, on the last day of the sixth full month
following the date of exercise of such options. The provisions of the
Stockholder Agreements, which are subject to modification or waiver by the
Company, generally prohibited the sale of 157,500 of such shares for a period of
two years after exercise of the options, an aggregate 223,997 of such shares for
a period of eighteen months after exercise and an aggregate 268,322 of such
shares for a period of one year after exercise of the options. The shares
tendered in exercise of options granted under the Executive Plan were issued
under promissory notes due in September 2003 through January 2004 as discussed
in Note 8.
In connection with the Offering, the Company established a 1994 Employee
Stock Option Plan (Employee Plan). The Employee Plan provides for the granting
of options to the Company's executive officers and key employees to purchase
shares of common stock at prices equal to the fair market value of the stock
on the date of grant. Options to purchase up to 900,000 shares of common stock
may be granted under the Employee Plan. Options outstanding at June 30, 1996
entitle the holders to purchase common stock at prices ranging between $10.25
and $20.75. Options shall become exercisable with respect to one-fourth of the
shares covered thereby on each anniversary of the date of grant, commencing on
the second anniversary of the date granted. The right to exercise the options
expires ten years from the date of grant or earlier if an option holder ceases
to be employed by the Company.
Also in connection with the Offering, the Company established a 1994
Directors Non-Qualified Stock Option Plan (Directors Plan) which provides for
the granting of options to the Company's directors, who are not employees of
the Company, to purchase shares of common stock at prices equal to the fair
market value of the stock on the date of grant. Options to purchase up to
100,000 shares of common stock may be granted under the Directors Plan. Options
aggregating 75,000 shares currently outstanding entitle the holders to purchase
common stock at prices ranging between $13.50 and $16.00 per share. Options
shall become exercisable with respect to one-fourth of the shares covered,
thereby on each anniversary of the date of grant, commencing on the second
anniversary of such date. All options granted under the Directors Plan expire
ten years from the date of grant.
A summary of stock option transactions pursuant to the Employee Plan and
Directors Plan follows.
<TABLE>
<CAPTION>
Shares
Average subject
price to option
<S> <C> <C>
SUMMARY OF STOCK OPTIONS
Beginning of year $ 13.71 465,750
Options granted 14.06 239,000
Options exercised 13.50 (1,250)
Options canceled 13.36 (41,250)
---------- ---------
End of year $ 13.86 662,250
---------- ---------
Exercisable at June 30, 1996 88,250
</TABLE>
<PAGE>
(Dollars in thousands, except per share data)
_______________________________________________________________________________
NOTE 11 COMMITMENTS AND CONTINGENCIES
The Company is a party to certain lawsuits. Management and legal counsel
do not expect the outcome of any litigation to have a material adverse effect
on the Company's financial position or results of operations.
The fiscal 1990, 1991, 1992 and 1993 federal income tax returns for DTG
and DTI have been audited by the Internal Revenue Service (the IRS). During the
fourth quarter of fiscal 1996, the Company reached an agreement in principle to
settle with the IRS. The additional taxes due under the agreement are not
material to the Company's financial position, results of operations or
liquidity. There are no other material audits underway or notification of
audits for DTI or any of its subsidiaries.
_______________________________________________________________________________
NOTE 12 DEPENDENCE ON SIGNIFICANT CUSTOMERS
Total net sales to a customer in the tire industry were $23,653 in fiscal
1996 and $26,829 in fiscal 1994 from the Special Machines segment. Total net
sales to a customer in the transportation industry were $14,754 and $12,172 in
fiscal 1995 and 1994, respectively, from the Components segment. Trade
receivables recorded for significant customers at June 30, 1996 and June 25,
1995 were $381 and $1,909, respectively. No other customers accounted for 10%
or more of consolidated sales in fiscal 1996, 1995 and 1994.
_______________________________________________________________________________
NOTE 13 SUPPLEMENTAL BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
June 30, June 25,
1996 1995
<S> <C> <C>
ACCOUNTS RECEIVABLE
Trade receivables $ 33,336 $ 29,687
(Less) allowance for doubtful accounts (1,244) (751)
---------- ----------
$ 32,092 $ 28,936
---------- ----------
INVENTORIES, NET
Raw materials $ 14,814 $ 6,419
Work in process 12,145 15,546
Finished goods 4,444 1,857
---------- ----------
$ 31,403 $ 23,822
---------- ----------
PROPERTY, PLANT AND EQUIPMENT
Machinery and equipment $ 26,963 $ 18,145
Buildings and improvements 14,282 7,029
Land and improvements 2,147 1,849
Property held under capital lease 1,270 1,270
Construction-in-progress 1,759 5,169
---------- ----------
46,421 33,462
---------- ----------
(Less) accumulated depreciation (including
$497 and $405, respectively, related to
property held under capital leases) (9,708) (6,406)
---------- ----------
$ 36,713 $ 27,056
---------- ----------
ACCRUED LIABILITIES
Accrued employee compensation and benefits $ 6,030 $ 5,160
Taxes payable and related reserves 5,120 2,827
Product liability 1,711 1,725
Other 9,663 5,476
---------- ----------
$ 22,524 $ 15,188
---------- ----------
</TABLE>
<PAGE>
(Dollars in thousands, except per share data)
_______________________________________________________________________________
NOTE 14 QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for fiscal 1996, 1995 and 1994 appears
below.
<TABLE>
<CAPTION>
Net sales Gross profit
1996 1995 1994 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
First quarter $ 44,788 $ 25,054 $ 17,196 $11,241 $ 6,733 $ 3,796
Second quarter 60,143 34,470 26,939 15,157 8,937 6,199
Third quarter 59,866 40,461 31,361 16,434 9,351 8,022
Fourth quarter 71,149 47,384 32,003 20,546 12,670 9,927
---------- ---------- ---------- --------- --------- ---------
$235,946 $147,369 $107,499 $63,378 $37,691 $27,944
</TABLE>
<TABLE>
<CAPTION>
Net income Earnings per share
1996 1995 1994 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
First quarter $ 2,226 $ 1,263 $ 406 $ .25 $ .14 $ .09
Second quarter 3,072 1,590 1,117 .34 .18 .24
Third quarter 3,396 1,977 1,690 .38 .22 .36
Fourth quarter 4,797 3,620 2,601 .53 .40 .32
-------- -------- ---------
$13,491 $ 8,450 $ 5,814
</TABLE>
The net income and earnings per share for the fourth quarters of fiscal 1994
includes the effect of the extraordinary loss on the early extinguishment of
debt as described in Note 4.
_______________________________________________________________________________
NOTE 15 SEGMENT INFORMATION
Worldwide operations data, as required by Statement of Financial Accounting
Standards No. 14, "Financial Reporting for Segments of a Business Enterprise,"
are listed below. Profitability of the Company's foreign operations by
geographic area was determined based on ultimate sales to unaffiliated
customers. Total Company profit was included in the geographic area of the
entity transacting the final sale. Transfers between geographic areas are at
prices established by agreement between the affected parties. The Company's
foreign operations, as discussed in Notes 1 and 2, were acquired in fiscal
1996 and are located in Canada and the United Kingdom.
<TABLE>
<CAPTION>
Domestic Foreign Eliminations Consolidated
<S> <C> <C> <C> <C>
Sales to unaffiliated customers $ 217,380 $ 18,566 $ -- $ 235,946
Transfers between
geographic areas 10,723 (10,723)
----------- ---------- ---------- -----------
Total revenue $ 217,380 $ 29,289 $(10,723) $ 235,946
----------- ---------- ---------- -----------
Earnings from operations $ 24,327 $ 3,819 $ (213) $ 27,933
----------- ---------- ---------- -----------
Identifiable assets $ 192,383 $ 41,673 $ (213) $ 233,843
----------- ---------- ---------- -----------
</TABLE>
<PAGE>
(Dollars in thousands, except per share data)
_______________________________________________________________________________
The Company operates in two business segments, Special Machines (including
the Automation Group and the Packaging Group) and Components. The Special
Machines segment designs and builds custom equipment, proprietary machines and
integrated systems. The Components segment stamps and fabricates a range of
standard and custom metal components.
Financial information by business segment is as follows:
<TABLE>
<CAPTION>
Net Depreciation
revenues Earnings and
unaffiliated from Identifiable Capital amortization
customers operations assets expenditures expense
<S> <C> <C> <C> <C> <C>
FISCAL YEAR ENDED JUNE 30, 1996
Special machines $ 193,884 $ 26,557 $ 203,210 $ 6,145 $ 4,683
Components 42,062 6,934 28,528 2,138 1,038
Corporate (5,558) 2,105 1,966 395
----------- ----------- ----------- ---------- ----------
$ 235,946 $ 27,933 $ 233,843 $ 10,249 $ 6,116
----------- ----------- ----------- ---------- ----------
FISCAL YEAR ENDED JUNE 25, 1995
Special machines $ 112,170 $ 13,857 $ 135,328 $ 4,127 $ 3,452
Components 35,199 6,676 23,061 3,043 837
Corporate (4,270) 874 548 272
----------- ----------- ----------- ---------- ----------
$ 147,369 $ 16,263 $ 159,263 $ 7,718 $ 4,561
----------- ----------- ----------- ---------- ----------
FISCAL YEAR ENDED JUNE 26, 1994
Special machines $ 76,778 $ 11,506 $ 74,376 $ 750 $ 2,299
Components 30,721 5,789 22,251 1,392 771
Corporate (3,226) 1,001 130 287
----------- ----------- ----------- ---------- ----------
$ 107,499 $ 14,069 $ 97,628 $ 2,272 $ 3,357
----------- ----------- ----------- ---------- ----------
</TABLE>
Export revenues included in domestic net revenues to unaffiliated customers
were approximately $34,083, $14,905 and $8,562 in fiscal 1996, 1995 and 1994,
respectively.
_______________________________________________________________________________
NOTE 16 SUBSEQUENT EVENTS
During July 1996, the Company entered into a Second Amended and Restated
Credit Facilities Agreement which replaced the Amended Credit Agreement. The
amended facility of $200,000 is provided by two institutions. The agreement
provides for a $55,000 revolving credit facility, a $104,000 term loan, a
$20,000 acquisition facility and a $21,000 foreign currency denominated letter
of credit. The term loan requires quarterly principal payments ranging from
$4,750 to $5,500 commencing in January 1997 with final maturity on July 23,
2001. Borrowings under the agreement bear interest at prime or LIBOR (at the
option of DTI) plus a specified percentage based on the ratio of funded debt to
operating cash flow. In conjunction with entering into the new credit facility,
the Company recognized an extraordinary loss in July 1996 of $324 attributable
to the write-off of $540 unamortized deferred financing fees, net of related
$216 tax benefit.
On July 19, 1996, DTI purchased the outstanding stock of Mid-West
Automation Enterprises Inc. (Mid-West), a Chicago-area designer and manufacturer
of integrated precision assembly systems, in a transaction accounted for under
the purchase method of accounting. The purchase price of approximately $77,000,
net of cash acquired, was financed by borrowings under the Second Amended and
Restated Credit Facilities Agreement. As the transaction occurred subsequent to
the end of fiscal 1996, Mid-West's balance sheet and results of operations are
excluded from the consolidated balance sheet and results of operations of DTI.
<PAGE>
(Dollars in thousands, except per share data)
_______________________________________________________________________________
The unaudited pro forma combined condensed balance sheet of the Company
and Mid-West as of June 30, 1996 after giving effect to certain pro forma
adjustments is as follows:
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current assets $ 124,599
Property, plant and equipment, net 43,086
Goodwill, net 159,249
Other assets, net 4,366
-----------
$ 331,300
-----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 88,038
Long-term debt 147,246
Other long-term liabilities 8,132
Shareholders' equity 87,884
-----------
$ 331,300
-----------
</TABLE>
The pro forma combined results of operations of the Company and Mid-West
for the fiscal year ended June 30, 1996 after giving effect to certain pro forma
adjustments is shown below. This information is unaudited and does not purport
to represent actual revenue, net income and earnings per share had the
acquisition occurred on June 26, 1995.
<TABLE>
<CAPTION>
<S> <C>
Net Sales $ 324,098
Income before extraordinary items $ 18,532
Earnings per common share
before extraordinary items $ 2.06
</TABLE>
