SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K/A
Amendment No. 1 to
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
August 5, 1996 (July 19, 1996)
Date of Report (Date of earliest event reported)
DT INDUSTRIES, INC.
(Exact name of registrant as specified in charter)
Delaware
(State or other jurisdiction of incorporation)
0-23400 44-0537828
(Commission File Number) (I.R.S. Employer Identification No.)
1949 East Sunshine, Suite 2-300, Springfield, MO 65804
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(417) 890-0102
- --------------------------------------------------------------------------------
(registrant's telephone number, including area code)
<PAGE>
On August 5, 1996, DT Industries, Inc. (the "Company") filed a current report on
Form 8-K (the "Current Report") pertaining to the acquisition of the issued and
outstanding stock of Mid-West Automation Enterprises, Inc. ("Mid-West") through
a subsidiary merger transaction on July 19, 1996. At the time of the filing
of the Current Report, it was impractical for the Company to provide financial
statements for Mid-West or pro forma financial information for the Company
relative to the acquisition of the issued and outstanding stock of Mid-West.
Pursuant to the instructions for Item 7 of the Current Report, the Company
hereby amends Item 7 to the Current Report to include the previously omitted
information, as follows:
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Mid-West for the fiscal years ended May 26, 1996,
May 28, 1995 and May 29, 1994.
(b) Unaudited pro forma financial information for the Company for the fiscal
year ended June 30, 1996.
(c) Agreement and Plan of Merger by and among Automation Acquisition
Corporation, DT Industries, Inc., Mid-West Automation Enterprises, Inc.
and the Stockholders.*
(d) Indemnification and Escrow Agreement.*
(e) Second Amended and Restated Credit Facilities Agreement.*
(f) Press Release of the Company dated July 22, 1996.*
- -------------------
* Previously filed on August 5, 1996.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Mid-West Automation Enterprises, Inc.
We have audited the accompanying consolidated balance sheets of MID-WEST
AUTOMATION ENTERPRISES, INC. AND SUBSIDIARY as of May 26, 1996 and May 28, 1995,
and the related consolidated statements of income and retained earnings and of
cash flows for each of the three fiscal years in the period ended May 26, 1996.
These financial statements are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Mid-West Automation Enterprises, Inc. and Subsidiary as of May 26, 1996 and May
28, 1995, and the consolidated results of their operations and cash flows for
each of the three fiscal years in the period ended May 26, 1996, in conformity
with generally accepted accounting principles.
/s/ Altschuler, Melvoin and Glasser LLP
Chicago, Illinois
August 20, 1996
<PAGE>
Exhibit A
MID-WEST AUTOMATION ENTERPRISES, INC.
AND SUBSIDIARY
Consolidated Balance Sheets
May 26, 1996 and May 28, 1995
<TABLE>
<CAPTION>
Assets 1996 1995
<S> <C> <C>
Current Assets:
Cash and cash equivalents $11,950,307 $12,757,771
Marketable securities (Note 1) 7,900,412 3,672,552
Contract receivables 17,710,964 19,944,716
Costs and estimated earnings in excess of
billings on contracts in process (Note 3) 7,700,864 3,374,471
Inventories (Notes 1 and 4) 2,241,270 3,100,957
Deposits on inventory purchases 611,814 469,510
Deferred income taxes (Note 5) 1,287,000 0
Other 395,628 435,523
----------- -----------
49,798,259 43,755,500
----------- -----------
Property and Equipment (net of accumulated
depreciation and amortization--Notes 1 and 7) 10,739,338 9,312,695
----------- -----------
Other Assets:
Security interest in insurance policies (Note 8) 663,206 476,078
Deferred income taxes (Note 5) 40,000
Other 10,500 130
----------- -----------
673,706 516,208
----------- -----------
$61,211,303 $53,584,403
=========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
<TABLE>
<CAPTION>
Liabilities and Stockholder's Equity 1996 1995
<S> <C> <C>
Current Liabilities:
Current portion of long-term debt (Note 9) $ 291,056 $ 400,575
Accounts payable 2,828,370 2,128,662
Billings in excess of costs and estimated
earnings on contracts in process (Note 3) 2,505,730 7,272,221
Accrued compensation 6,459,988 1,411,974
Income taxes payable 38,000 1,623,000
Deferred income taxes (Note 5) 0 2,578,000
Other current liabilities and accrued expenses
(Note 11) 3,979,131 2,658,611
----------- -----------
16,102,275 18,073,043
----------- -----------
Long-term Debt (Note 9) 5,499,650 5,171,032
----------- -----------
Deferred Income Taxes (Note 5) 313,000 0
----------- -----------
Commitments and Contingencies (Note 12)
Stockholder's Equity:
Common stock (100,000 shares of $.10 par
value authorized; 10,000 shares issued
and outstanding) 1,000 1,000
Retained earnings (Exhibit B) 39,295,378 30,339,328
----------- -----------
39,296,378 30,340,328
----------- -----------
$61,211,303 $53,584,403
=========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
Exhibit B
MID-WEST AUTOMATION ENTERPRISES, INC.
AND SUBSIDIARY
Consolidated Statement of Income and Retained Earnings
Fiscal Years Ended May 26, 1996, May 28, 1995 and May 29, 1994
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Contract Revenue (Note 1) $88,152,597 $69,878,020 $62,628,779
Contract Costs 58,052,861 45,260,030 40,516,042
----------- ----------- -----------
Gross Profit 30,099,736 24,617,990 22,112,737
Selling and General and
Administrative Expenses 15,522,748 11,606,867 7,671,831
---------- ----------- -----------
Income from Operations 14,576,988 13,011,123 14,440,906
Other Income (Expense), Net (Note 10) 373,062 ( 50,650) ( 158,082)
----------- ---------- -----------
Income before Income Taxes 14,950,050 12,960,473 14,282,824
Income Tax Provision (Notes 1 and 5) 5,994,000 4,938,000 5,513,000
---------- ----------- -----------
Income Before Cumulative Effect
of Accounting Change 8,956,050 8,022,473 8,769,824
Cumulative Effect of Accounting
Change (Note 5) 0 0 36,000
----------- ----------- -----------
Net Income for Fiscal Year 8,956,050 8,022,473 8,805,824
Retained Earnings, Beginning of
Fiscal Year 30,339,328 22,316,855 13,511,031
----------- ----------- -----------
Retained Earnings, End of Fiscal Year $39,295,378 $30,339,328 $22,316,855
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
Exhibit C
MID-WEST AUTOMATION ENTERPRISES, INC.
AND SUBSIDIARY
Consolidated Statement of Cash Flows
Fiscal Years Ended May 26, 1996, May 28, 1995 and May 29, 1994
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income for fiscal year $ 8,956,050 $ 8,022,473 $ 8,805,824
----------- ----------- -----------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,547,440 1,324,168 1,182,781
Gain on sale of fixed assets ( 299,856) 0 0
Unrealized (gain) loss on
marketable equity securities ( 6,933) 37,870 0
Deferred compensation 597,916 42,771 ( 292,689)
Deferred income taxes ( 3,512,000) 751,000 ( 212,000)
Increase (Decrease) in cash
from changes in:
Marketable equity securities ( 1,137,187) 1,539,972 0
Contract receivables 2,233,752 ( 14,922,661) 895,859
Cost and estimated earnings
in excess of billings on
contracts in progress ( 4,326,393) 281,480 ( 1,622,090)
Inventories 859,687 ( 829,082) 69,565
Deposits on inventory
purchases ( 142,334) 338,943 305,752
Income taxes refundable 0 100,000 ( 100,000)
Other assets 47,525 ( 248,507) 66,605
Accounts payable 401,613 154,577 ( 502,394)
Billings on contracts in
excess of costs and
estimated earnings ( 4,766,491) 5,799,261 ( 2,628,849)
Income taxes payable ( 1,585,000) 1,623,000 ( 2,224,000)
Other current liabilities
and accrued expenses 5,770,618 1,888,719 715,800
----------- ----------- -----------
Total adjustments ( 4,317,643) ( 2,118,489) ( 4,345,660)
----------- ----------- -----------
Net cash provided by operating
activities, forward $ 4,638,407 $ 5,903,984 $ 4,460,164
=========== =========== ===========
</TABLE>
<PAGE>
Exhibit C, Continued
MID-WEST AUTOMATION ENTERPRISES, INC.
AND SUBSIDIARY
Consolidated Statement of Cash Flows
Fiscal Years Ended May 26, 1996, May 28, 1995 and May 29, 1994
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Net cash provided by operating
activities, forward $ 4,638,407 $ 5,903,984 $ 4,460,164
----------- ----------- -----------
Cash Flows from Investing Activities:
Capital expenditures ( 1,748,822) ( 1,505,539) ( 1,193,982)
Purchase of marketable securities ( 19,948,671) ( 8,509,650) ( 5,223,975)
Maturities of marketable securities 16,864,931 7,178,852 1,810,000
Payment of advances on security
interest in life insurance policies ( 187,128) ( 166,236) ( 31,234)
----------- ----------- -----------
Net cash used in investing activities ( 5,019,690) ( 3,002,573) ( 4,639,191)
----------- ----------- -----------
Cash Flows Used in Financing Activities:
Principal payments of industrial revenue
bond and capital lease obligations ( 426,181) ( 455,384) ( 422,715)
----------- ----------- -----------
Net Increase (Decrease) in Cash and
Cash Equivalents ( 807,464) 2,446,027 ( 601,742)
Cash and Cash Equivalents, Beginning of
Fiscal Year 12,757,771 10,311,744 10,913,486
----------- ----------- -----------
Cash and Cash Equivalents,
End of Fiscal Year $11,950,307 $12,757,771 $10,311,744
=========== =========== ===========
Supplemental Disclosure of Cash Flow
Information:
Cash paid during the year for:
Interest $ 552,254 $ 780,241 $ 819,353
Income taxes 11,090,894 3,164,000 8,012,793
Supplemental Schedule of Noncash
Investing and Financing Activities:
Building addition financed through
capital lease obligation 1,309,033 0 0
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
MID-WEST AUTOMATION ENTERPRISES, INC.
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
NOTE 1--NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Mid-West Automation Enterprises, Inc. and its subsidiary, Mid-West
Automation Systems, Inc. (collectively "the Corporation"), are engaged in
the design and manufacture of automated assembly machines. Operations are
conducted from leased facilities located in Buffalo Grove, Illinois
(Note 12).
On July 19, 1996, all of the parent company's outstanding common stock was
sold to DT Industries, a publicly owned corporation.
Two customers accounted for a substantial portion of the Corporation's net
sales in fiscal 1996 and 1995, respectively. One customer accounted for a
substantial portion of the Corporation's net sales in fiscal 1994.
A summary of significant accounting policies follows:
PRINCIPLES OF CONSOLIDATION--The accompanying financial statements
include the accounts of Mid-West Automation Enterprises, Inc. and
Mid-West Automation Systems, Inc. All significant intercompany
accounts and transactions have been eliminated. The fiscal year of
the Corporation ends on the last Sunday in May each year. Each of
the three fiscal years presented herein contained 52 weeks.
USE OF ESTIMATES--In preparing financial statements in conformity
with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements, as well as
the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
BASIS FOR RECORDING INCOME--Income from contracts is recognized
under the percentage of completion method (based on the ratio that
costs incurred on each contract to date bear to total estimated
costs). Anticipated losses, if any, are recognized fully when
identified. Because certain contracts may be long-term and will
extend over one or more years, revisions in cost and revenue
estimates are recorded in the accounting period in which the
relevant facts become known.
INVENTORIES--Inventories of raw materials and component parts
purchased, in process and manufactured are valued at the lower of
cost or market, with cost determined under the last-in, first-out
("LIFO") basis. The LIFO valuation is computed under the "dollar
value link-chain" method, whereby all inventories constitute a
single pool. All costs associated with specific contracts are
reflected as part of the contract cost.
<PAGE>
MID-WEST AUTOMATION ENTERPRISES, INC.
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
NOTE 1--NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
CONTINUED:
MARKETABLE SECURITIES--Marketable securities are recorded under
provisions of SFAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." The cumulative effect as of May 30,
1994 of adopting SFAS No. 115 was not material. Such securities
consist of municipal bonds and preferred stock. The bonds mature
within one year and are considered held to maturity investments
and are recorded at their amortized cost of $6,649,412 and
$7,360,422 at May 26, 1996 and May 28, 1995, respectively, which
carrying values approximates market. The preferred stock is
considered trading securities and is recorded at market. Gains or
losses are computed using the specific identification method.
DEPRECIATION AND AMORTIZATION--Provisions for depreciation and
amortization of property and equipment are computed on the
straight-line method for financial reporting purposes, based on
the estimated useful lives of the assets. For income tax reporting
purposes, depreciation and amortization are computed under both
accelerated and straight-line methods, as permitted by the
Internal Revenue Code.
INCOME TAXES--See Note 5 with respect to accounting for income
taxes.
RESEARCH AND DEVELOPMENT COSTS--Costs of research and development
are charged to expense as incurred. Such expenses amounted to
approximately $484,500, $496,900 and $110,400 for fiscal 1996,
1995 and 1994, respectively.
CASH EQUIVALENTS--For purposes of the consolidated statement of
cash flows, the Corporation considers all highly liquid
investments with a maturity of three months or less at the time of
purchase to be cash equivalents.
RECLASSIFICATIONS--Certain fiscal 1995 and 1994 items have been
reclassified to conform to fiscal 1996 classifications, with no
net effect.
NOTE 2--LINE OF CREDIT:
The Corporation had an unsecured line of credit of $5,000,000 with The
Northern Trust Co. of Chicago ("Northern") until October 24, 1995, when it
expired and was not renewed. No borrowings were made against this line of
credit during fiscal 1996, 1995 or 1994.
NOTE 3--CONTRACTS IN PROCESS:
Contracts in process at May 26, 1996 and May 28, 1995 consisted of the
following:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Accumulated costs and estimated earnings $23,652,007 $17,216,440
Progress billings 18,456,873 21,114,190
----------- -----------
Net variation $ 5,195,134 ($ 3,897,750)
=========== ===========
</TABLE>
<PAGE>
MID-WEST AUTOMATION ENTERPRISES, INC.
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
NOTE 3--CONTRACTS IN PROCESS, CONTINUED:
The foregoing variation has been segregated, and classified in the
accompanying balance sheets, as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
For contracts in process on which costs
and estimated earnings exceed billings
(under current assets) $ 7,700,864 $3,374,471
For contracts in process on which billings
exceed costs and estimated earnings
(under current liabilities) 2,505,730 7,272,221
----------- ----------
$ 5,195,134 ($3,897,750)
=========== ==========
</TABLE>
NOTE 4--INVENTORIES:
Inventories at May 26, 1996 and May 28, 1995 consisted of the following:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Raw materials $ 120,714 $ 167,056
Purchased and manufactured component parts 1,477,054 1,987,083
Component parts in process 1,210,383 1,368,787
----------- -----------
Total valued on first-in, first-out
(FIFO) basis 2,808,151 3,522,926
Less reduction to last-in, first-out
(LIFO) basis 566,881 421,969
----------- -----------
Inventories on last-in, first-out
(LIFO) basis $ 2,241,270 $ 3,100,957
=========== ===========
</TABLE>
NOTE 5--INCOME TAXES:
Mid-west Automation Enterprises, Inc. and its wholly owned subsidiary file
a consolidated federal income tax return.
Effective May 31, 1993, the Corporation adopted the provisions of Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes"
(SFAS No. 109). SFAS No. 109 requires recognition of deferred income tax
assets and liabilities for the expected future tax consequences of events
that have been included in the financial statements or tax returns. Under
this method, deferred income tax assets and liabilities are determined
based on the financial statement and tax based of assets and liabilities.
<PAGE>
MID-WEST AUTOMATION ENTERPRISES, INC.
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
NOTE 5--INCOME TAXES, CONTINUED:
The cumulative effect of adopting SFAS No. 109 increased the net income for
the fiscal year ended May 29, 1994 by $36,000, and is reflected separately
in the consolidated statement of income and retained earnings.
The provisions for income taxes, for the fiscal years ended May 26, 1996,
May 28, 1995 and May 29, 1994, consisted of the following:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Currently payable $9,506,000 $4,187,000 $5,689,000
Deferred (benefit) ( 3,512,000) 751,000 ( 176,000)
---------- ---------- ----------
$5,994,000 $4,938,000 $5,513,000
========== ========== ==========
</TABLE>
The primary difference between the federal statutory rate and the effective
income tax rate relates to state income taxes.
At May 26, 1996 and May 28, 1995, components of the Corporation's deferred
tax assets and deferred tax liabilities consist of the following:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Current:
Deferred tax assets:
Accrued vacation $ 189,000 $ 153,000
Accrued health insurance 14,000
Shareholder bonus 1,553,000
Warranty reserve 62,000
Inventory reserve 207,000
Deferred compensation 258,000 26,000
---------- ----------
2,283,000 179,000
---------- ----------
Deferred tax liabilities:
Variation in gross profit between
tax and financial reporting
purposes due to different methods
of revenue recognition ( 996,000) ( 2,739,000)
Accrued health insurance 0 ( 18,000)
---------- ----------
( 996,000) ( 2,757,000)
---------- ----------
$1,287,000 ($2,578,000)
========== ==========
Noncurrent:
Deferred tax assets:
Variation of capital lease value
between tax and financial
reporting purposes $ 553,000 $ 648,000
Deferred tax liabilities:
Variation of net fixed assets
between tax and financial
reporting purposes ( 866,000) ( 608,000)
---------- ----------
($ 313,000) $ 40,000
========== ==========
</TABLE>
<PAGE>
MID-WEST AUTOMATION ENTERPRISES, INC.
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
NOTE 6--EMPLOYEE BENEFIT PLANS:
The Corporation maintains for the benefit of its eligible employees, two
benefit plans, both of which conform to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA), as follows:
EMPLOYEES' PROFIT-SHARING PLAN--The plan is maintained for the
benefit of all eligible employees. The employer makes
discretionary annual contributions in such amounts as may be
determined by its Board of Directors, limited to amounts
deductible for federal income tax purposes. Benefits vest in
participants over a period of years, and distributions are made to
participants (or to their beneficiaries) upon death, retirement or
severance of employment. Employer contributions for the fiscal
years 1996, 1995 and 1994 amounted to $300,000, $250,000 and
$150,000, respectively.
EMPLOYEES' 401(k) PLAN--This plan, established under the
provisions of Section 401(k) of the Internal Revenue Code,
provides for the Corporation to contribute twenty-five cents
(25(cent)) for every dollar ($1.00) that a participant elects to
defer, up to 4% of a participants' eligible compensation. The
employer contribution to the plan for the fiscal years ended 1996,
1995 and 1994 amounted to $278,839, $114,383 and $97,040,
respectively.
The Corporation maintains a key employees' bonus plan for the benefit of
certain employees. A portion of the declared bonuses under such plan is
deferred. Such deferred portion of a participant's account is adjusted
annually by the percentage change to the equity of the Corporation (not to
exceed a 25% annual increase), and initially vested over a period of 10
years. As a result of the sale of the Corporation's stock (Note 1), (a) all
participants in this plan became fully vested and (b) each participants'
account balance has been increased by a "multiplier" (as defined), which
amount has been reflected in the consolidated financial statements as of
May 26, 1996. The charge to expense under this plan for such vested
deferred portion, for the fiscal years ended 1996, 1995 and 1994 amounted
to $597,916, $42,771 and $25,000, respectively.
<PAGE>
MID-WEST AUTOMATION ENTERPRISES, INC.
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
NOTE 7--PROPERTY AND EQUIPMENT:
Property and equipment at May 26, 1996 and May 28, 1995, stated at
acquisition cost, consisted of the following:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Machinery and equipment $ 5,445,628 $ 5,113,145
Furniture and fixtures 1,998,235 1,599,981
Transportation equipment 151,650 207,124
Leasehold improvements 1,876,648 1,194,751
Data processing equipment 2,842,417 2,318,171
----------- -----------
Total owned assets 12,314,578 10,433,172
----------- -----------
Building in Buffalo Grove,
Illinois capitalized under
lease obligation (Note 9) 7,177,166 5,868,133
Building in Wheeling, Illinois
capitalized under lease
obligation (Note 9) 0 1,214,451
----------- -----------
7,177,166 7,082,584
----------- -----------
19,491,744 17,515,756
Less accumulated depreciation
and amortization 8,752,406 8,203,061
----------- -----------
$10,739,338 $ 9,312,695
=========== ===========
</TABLE>
Depreciation and amortization of property and equipment, for the fiscal
years ended 1996, 1995 and 1994 amounted to $1,547,440, $1,324,168 and
$1,182,781, respectively.
See Note 9 for pledges of property and equipment to secure certain
obligations.
NOTE 8--LIFE INSURANCE:
As of May 26, 1996 and May 28, 1995, the Corporation has made advances of
$663,206 and $476,078, respectively, as payment of premiums on insurance
policies carried on the life of an officer/stockholder of the Corporation.
The Corporation, which does not own the policies, has a security interest
in them to the extent of such advances.
<PAGE>
MID-WEST AUTOMATION ENTERPRISES, INC.
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
NOTE 9--LONG-TERM DEBT:
Long-term debt at May 26, 1996 and May 28, 1995 was as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Capitalized lease obligation of Buffalo Grove, Illinois
building and building addition relating to facility
leased from officer/stockholder; payable in monthly
installments of $55,000 through November 30, 1992,
$73,333 through November 30, 1995 and $113,200
thereafter; present value of lease obligations
imputed on basis of interest at 12.99%, 22.76% and
43.31% per annum; final payment due August 1, 2005
(lease terminated in fiscal year 1997--Note 12). $5,790,706 $4,756,949
Capitalized lease obligation of Wheeling, Illinois
building relating to facility leased from officer/
stockholder (lease terminated in fiscal 1996--
Note 12) 0 722,537
Note payable to Northern on behalf of the Illinois
Development Finance Authority (repaid in full during
fiscal 1996) 0 92,121
---------- ----------
Total 5,790,706 5,571,607
Less portion due currently 291,056 400,575
---------- ----------
Noncurrent portion $5,499,650 $5,171,032
========== ==========
</TABLE>
Following is a summary of future minimum maturities under the foregoing
obligation as of May 26, 1996:
<TABLE>
<CAPTION>
Fiscal:
<S> <C>
1997 $ 1,358,400
1998 1,358,400
1999 1,358,400
2000 1,358,400
2001 1,358,400
Subsequent periods 5,292,467
-----------
12,084,467
Less imputed interest thereon 6,293,761
-----------
$ 5,790,706
===========
</TABLE>
<PAGE>
MID-WEST AUTOMATION ENTERPRISES, INC.
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
NOTE 10--OTHER INCOME (EXPENSE) NET:
Other income (net) for the fiscal years ended 1996, 1995 and 1994 consisted
of the following:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Interest income $1,007,635 $ 728,499 $ 287,030
Rental income 42,552 141,312 141,312
Interest expense ( 943,357) ( 778,435) ( 817,424)
Depreciation expense on
rental property ( 55,857) ( 67,305) ( 67,305)
Reversal of deferred
compensation liability 0 0 317,689
Gain on termination of capital
lease (Note 12) 287,791 0 0
Other 34,298 ( 74,721) ( 19,384)
---------- ---------- ----------
$ 373,062 ($ 50,650) ($ 158,082)
========== ========== ==========
</TABLE>
NOTE 11--RELATED PARTY TRANSACTIONS:
Beginning in fiscal 1995, all of the Corporation's foreign sales are
subject to commissions charged by a company related to the Corporation due
to common ownership. During fiscal 1996 and 1995, the Corporation incurred
foreign sales commissions of $3,522,000 and $1,874,000, respectively.
See Note 12 for other related-party transactions.
NOTE 12--COMMITMENTS AND CONTINGENCIES:
The cost of the Buffalo Grove facility occupied by the Corporation was
financed with industrial development revenue bond issue proceeds received
by an officer/ stockholder. The Corporation has guaranteed the
aforementioned obligations which, as of May 26, 1996, aggregated
$3,265,000. Such Buffalo Grove premises were leased from the
officer/stockholder under a lease, as amended on December 1, 1995, which
was scheduled to expire on November 30, 1998, at monthly base rentals of
$113,200, plus the payment of real estate taxes and other operating
expenses. Such lease is accounted for as a capital lease (Notes 7 and 9),
pursuant to which the lease term was based upon the repayment term of the
underlying officer/stockholder debt (see above), which debt matures on
August 1, 2005. Effective as of July 19, 1996, the aforementioned lease was
terminated and a new lease was executed. Such lease, which expires on July
31, 2003, provides for increasing monthly base rentals ranging from
$113,200 to $124,982. In addition, the Corporation has the option to
extend the lease term through July 31, 2008.
During fiscal 1996, a related-party lease pertaining to a facility located
in Wheeling, Illinois, was terminated, which resulted in a gain of $287,791
(see Note 10). Such lease had been reflected in the consolidated financial
statements as a capital lease (Note 7).
<PAGE>
NOTE 12--COMMITMENTS AND CONTINGENCIES, CONTINUED:
During fiscal 1996, the Corporation entered into a four-year operating
lease for a facility in Buffalo Grove, Illinois. The lease, from an
unrelated party, commenced on November 14, 1995 and provides for monthly
rentals of $10,089 through February 28, 1997 and $10,930 through
February 28, 2000. The Corporation is also required to pay real estate
taxes and other occupancy expenses. Effective as of June 26, 1996, the
aforementioned lease was amended to adjust the monthly rentals to $10,089
for the period from March 1, 1997 through February 28, 1998. In addition,
the Corporation has the option to extend the lease term through February
28, 2003.
During fiscal 1996, the Corporation entered into an operating lease for a
parking facility with a related party, which commenced March 15, 1996. The
lease provides for monthly payments of $5,500 through March 15, 1997.
Effective as of July 19, 1996, the aforementioned lease term was amended to
extend through July 31, 2003, with annual rental increases of 2% per annum
beginning November 30, 1998. In addition, the Corporation has the option
to extend the lease term through July 31, 2008.
Future minimum rentals applicable to the above operating leases in effect
as of May 26, 1996, are as follows:
<TABLE>
<CAPTION>
Unrelated Related
Fiscal Year Party Party Total
<S> <C> <C> <C>
1997 $ 123,591 $ 52,250 $ 175,841
1998 131,160 131,160
1999 131,160 131,160
2000 98,370 98,370
--------- --------- ---------
$ 484,281 $ 52,250 $ 536,531
========= ========= ==========
</TABLE>
NOTE 13--SUBSEQUENT EVENT:
During July 1996, the Corporation adopted a bonus plan covering certain key
employees. Concurrent with the sale of the Corporation, in consideration of
past services performed, certain key employees are to receive bonuses
aggregating $750,000, to be paid over a three-year period by the surviving
corporation. This amount has not been accrued in the accompanying
consolidated financial statements.
<PAGE>
DT INDUSTRIES, INC.
PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DTI MID-WEST
CONSOLIDATED CONSOLIDATED PRO FORMA
BALANCES AT BALANCES OF PURCHASE
JUNE 30, 1996 MAY 26, 1996 ACCOUNTING
AS REPORTED AS REPORTED ADJUSTMENTS PRO FORMA
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 1,210 $ 11,950 ($11,950) (a) $ 1,210
Marketable securities 7,900 (7,900) (a)
Accounts receivable, net 32,092 17,711 49,803
Costs and estimated earnings in excess
of amounts billed 19,130 7,701 26,831
Inventories, net 31,403 2,241 33,644
Prepaid expenses and other 10,153 2,295 663 (b) 13,111
--------- --------- --------- ---------
Total current assets 93,988 49,798 (19,187) 124,599
Property, plant & equipment, net 36,713 10,739 (4,366) (c) 43,086
Goodwill, net 101,187 58,062 (d) 159,249
Other assets, net 1,955 674 1,737 (b) 4,366
--------- --------- --------- ---------
$233,843 $ 61,211 $ 36,246 $331,300
========= ========= ========= =========
Liabilities and stockholders' equity
Current liabilities
Current portion of long term debt $ 8,481 $ 291 $ 4,109 (e) $ 12,881
Accounts payable 19,621 2,828 22,449
Customer advances 13,850 13,850
Billings in excess of costs and
earnings on uncompleted contracts 3,351 2,506 5,857
Accrued liabilities 22,524 10,477 33,001
--------- --------- --------- ---------
Total current liabilities 67,827 16,102 4,109 88,038
Long-term debt 70,846 5,500 70,900 (a)(e) 147,246
Deferred income taxes 4,756 313 533 (f) 5,602
Other long-term liabilities 2,530 2,530
Stockholder's equity 87,884 39,296 (39,296) (g) 87,884
--------- --------- --------- ---------
$233,843 $ 61,211 $ 36,246 $331,300
========= ========= ========= =========
</TABLE>
See Note 3 for Detail of Adjustments
<PAGE>
DT INDUSTRIES, INC.
PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DTI MID-WEST
CONSOLIDATED CONSOLIDATED PRO FORMA
BALANCES AT BALANCES OF PURCHASE
JUNE 30, 1996 MAY 26, 1996 ACCOUNTING
AS REPORTED AS REPORTED ADJUSTMENTS PRO FORMA
<S> <C> <C> <C> <C>
Net Sales $ 235,946 $ 88,152 $ 324,098
Cost of Sales 172,568 58,053 $ 1,055 (1) 231,676
---------- --------- --------- ----------
Gross profit 63,378 30,099 (1,055) 92,422
Selling, general and administrative expenses 35,445 15,214 (2,102) (2) 48,557
---------- --------- --------- ----------
Operating income 27,933 14,885 1,047 43,865
Interest expense (income), net 4,799 (65) 6,605 (3) 11,339
---------- --------- --------- ----------
Income before provision for income taxes 23,134 14,950 (5,558) 32,526
Provision for income taxes 9,643 5,994 (1,643) (4) 13,994
---------- --------- --------- ----------
Income before extraordinary items $ 13,491 $ 8,956 ($ 3,915) $ 18,532
========== ========= ========= ==========
Earnings per common share before
extraordinary items $ 1.50 $ 2.06
========== ==========
Weighted average number of common shares 9,000,257 9,000,257
</TABLE>
See Note 3 for Detail of Adjustments
<PAGE>
DT INDUSTRIES, INC.
NOTES TO JUNE 30, 1996 PRO FORMA
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
- --------------------------------------------------------------------------------
1. ACQUISITION OF MID-WEST
On July 19, 1996 DT Industries, Inc. (the "Company") completed the
acquisition of Mid-West Automation Enterprises ("Mid-West"), an
Illinois corporation. Mid-West is a leading designer and manufacturer
of integrated precision assembly machines. The purchase agreement
provided for an aggregate cash consideration of $77,000, net of cash
acquired. The purchase price has been preliminarily allocated to the
assets and liabilities acquired based on their estimated fair value.
The excess of purchase price over the estimated fair value of the net
assets acquired will be recorded as goodwill and amortized over a
40-year period.
2. DEBT RESTRUCTURING
In conjunction with the acquisition of Mid-West, the Company entered
into a Second Amended and Restated Credit Facilities Agreement (Amended
Facility) which replaced the Company's existing credit facility. The
Amended Facility of $200,000 is provided by two financial institutions,
and provides for $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 January
1997 with final maturity of the Amended Facility on July 23, 2001. The
Company incurred approximately $2,400 of financing fees related to the
restructuring, which will be recorded as deferred financing fees and
amortized over a five year life.
3. EXPLANATIONS OF PRO FORMA FINANCIAL STATEMENTS AND RELATED ADJUSTMENTS
The pro forma consolidated statement of operations for the year ended
June 30, 1996 gives effect to the acquisition of Mid-West as if such
event had occurred at the beginning of the period. The pro forma
unaudited consolidated balance sheet at June 30, 1996 reflects the
acquisition of Mid-West as if such event had occurred on that date. The
pro forma consolidated financial data, based on facts and circumstances
existing on September 19, 1996, may not be indicative of the results
that actually would have occurred if the transactions and adjustments
described in the following notes had occurred on the dates assumed and
does not project the Company's financial position or results of
operations at any future date. The pro forma consolidated financial
data should be read in conjunction with the reports of the independent
accountants, the Company's Current Report on Form 8-K dated September
18, 1996 related to the Company's consolidated financial statements for
the year ended June 30, 1996 and the Company's Current Report on Form
8-K dated as of August 5, 1996 related to the acquisition of Mid-West.
<PAGE>
DT INDUSTRIES, INC.
NOTES TO JUNE 30, 1996 PRO FORMA
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
- --------------------------------------------------------------------------------
PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
<S> <C>
(a) Amount represents the reclassification of the acquired cash and
marketable securities balances of Mid-West, as such amounts were
used immediately after the acquisition to repay a portion of the
acquisition debt.
(b) Amount reflects the following:
Reclassification of the cash surrender value of officer's
life insurance to a current receivable, as such amounts were
repaid to the company by the former Mid-West
shareholder after the acquisition $ (663)
Increase in deferred financing fees related to the
Company's debt restructuring concurrent with
the acquisition of Mid-West 2,400
-----------
Net increase to other long term assets $ 1,737
===========
(c) Amount represents the elimination of Mid-West's capitalized
building lease. The Company has entered into a new lease for the
facility, concurrent with the acquisition, that will be
treated as an operating lease for financial reporting purposes.
(d) Amount reflects the increase in goodwill related to the acquisition
of Mid-West, to be amortized over 40 years.
(e) Amount reflects the following:
Additional debt incurred to finance the Mid-West
acquisition, including acquisition costs $ 98,250
Deferred financing fees related to the debt restructuring
concurrent with the acquisition of Mid-West 2,400
Less: elimination of Mid-West debt related to the
capitalized building lease (5,791)
Less: cash acquired (19,850)
Less: adjustment of current and long-term debt to
correspond with the resultant terms after the debt
restructuring (4,109)
-----------
Net increase to long-term debt $ 70,900
===========
</TABLE>
<PAGE>
DT INDUSTRIES, INC.
NOTES TO JUNE 30, 1996 PRO FORMA
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
- --------------------------------------------------------------------------------
(f) Amount represents an adjustment to deferred taxes, primarily
related to the elimination of the deferred tax asset related to
the capitalized building lease.
(g) Amount represents the elimination of the historical
pre-acquisition stockholder's equity of Mid-West.
PRO FORMA UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C>
(1) Cost of sales has been increased (reduced) for the following:
Elimination of capitalized building lease depreciation $ (303)
Increase in operating lease expense related to the building 1,358
-----------
Net increase $ 1,055
===========
(2) Selling, general and administrative expenses have been
increased (reduced) for the following:
Elimination of sales commission paid to a company
related to Mid-West via common ownership (and not
acquired by DTI) $ (3,522)
Elimination of capitalized building lease depreciation (32)
Increase in goodwill amortization 1,452
-----------
Net decrease $ (2,102)
===========
(3) Interest expense has been increased (reduced) for the following:
Financing of purchase, including acquisition cost and
deferred financing costs, net of cash acquired $ 80,800
Average DTI interest rate for 1996 7.5%
-----------
6,060
Additional amortization related to deferred financing fees
(five year amortization life) 480
Elimination of historical Mid-West interest income, net 65
-----------
Net increase $ 6,605
===========
(4) Amount reflects the estimated income tax effect of pro forma
adjustments (excluding non-deductible goodwill amortization).
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DT INDUSTRIES, INC.
Date: September 23, 1996 by /s/ Bruce P. Erdel
----------------------------------------
Bruce P. Erdel
Vice President - Finance and Secretary
