SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) July 31, 1996
ELECTRONIC MANUFACTURING SERVICES GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-23528 13-3421337
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification Number)
6638 Old Wake Forest Road, Raleigh, North Carolina 27604
(Address of principal executive offices)
(919) 876-6049
(Registrant's telephone number, including area code)
J.A. Industries, Inc., 34A-2755 Lougheed Highway, Port Coquitlam, B.C. V3B 5Y9
Canada
(Former name or former address, if changed since last report)
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
Except for the Unaudited Pro Forma Consolidated Operating Statement for the
nine months ended May 31, 1996, and the Unaudited Interim Consolidated Financial
Statements, all of which are filed with this report, the material listed in
Items 7(a) and 7(b) has been previously filed with the registrant's Proxy
Statement dated July 10, 1996.
(a) Financial Statements of Business Acquired.
Unaudited Interim Consolidated Financial Statements
Unaudited Consolidated Balance Sheets for the nine
months ended May 31, 1995 and 1996
Unaudited Consolidated Income Statements for the nine
months ended May 31, 1995 and 1996
Unaudited Consolidated Statements of Cash Flows for
the nine months ended May 31, 1995 and 1996
Notes to Unaudited Consolidated Financial Statements
Audited Annual Consolidated Financial Statements
Independent Auditors' Report
Consolidated Balance Sheets for the years ended
August 31, 1995 and 1994
Consolidated Statements of Income (Loss) for the
years ended August 31, 1995 and 1994
Consolidated Statements of Stockholders' Deficit for
the years ended August 31, 1995 and 1994
Consolidated Statements of Cash Flows for the years
ended August 31, 1995 and 1994
Notes to Consolidated Financial Statements
(b) Unaudited Pro Forma Financial Information
UnauditedPro Forma Condensed Consolidated Operating
Statement for the nine months ended May 31,
1996
UnauditedPro Forma Condensed Consolidated Balance
Sheet for the six months ended February 29,
1996
(c) Exhibits.
Exhibit No. Description of Exhibit
23 Consent of KPMG Peat Marwick LLP
2
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Unaudited interim consolidated financial statements of Kenmar, as of May 31,
1996:
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<TABLE>
<CAPTION>
KENMAR BUSINESS GROUPS, INC.
CONSOLIDATED BALANCE SHEETS
MAY 31, 1996 AND MAY 31, 1995
UNAUDITED
MAY 31, MAY 31,
1996 1995
ASSETS
<S> <C> <C>
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $ 498,313 $ 233,836
ACCOUNTS RECEIVABLE - TRADE, NET OF
ALLOWANCE OF $5,500 IN 1996 AND $16,181 IN 1995 538,546 2,199,531
INVENTORIES - NET OF RESERVES OF $163,734 IN 1996
AND $322,514 IN 1995 193,363 1,464,408
PREPAID EXPENSES AND OTHER CURRENT ASSETS 100,659 57,348
------------ -----------
TOTAL CURRENT ASSETS 1,330,881 3,955,123
------------ -----------
PROPERTY AND EQUUIPMENT - NET 616,072 848,592
------------ -----------
OTHER ASSETS
DEPOSITS AND OTHER ASSETS 122,932 39,466
COST IN EXCESS OF NET ASSETS OF ACQUIRED
BUSINEES - NET OF ACUMULATED AMORTIZATION
OF $217,125 IN 1996 AND $38,750 IN 1995 82,875 261,250
------------ -----------
TOTAL OTHER ASSETS 205,807 300,716
------------ -----------
TOTAL ASSETS $ 2,152,760 $ 5,104,431
============ ===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES
LINE OF CREDIT $ - $ 1,922,849
ACCOUNTS PAYABLE - TRADE 571,388 2,250,669
CURRENT MATURITIES OF LONG TERM DEBT 38,607 135,240
CURRENT OBLIGATIONS UNDER CAPITAL LEASES 72,517 35,203
OTHER ACCRUED LIABILITIES 60,994 143,366
------------ -----------
TOTAL CURRENT LIABILITIES 743,506 4,487,327
------------ -----------
LONG-TERM DEBT, LESS CURRENT MATURITIES 505,886 620,514
------------ -----------
LONG-TERM OBLIGATIONS - CAPITAL LEASES 134,094 85,365
------------ -----------
EMSG SYSTEMS DIVISION, INC. - PREFERRED SHARES 786,172 703,929
------------ -----------
STOCKHOLDERS' (DEFICIT)
COMMON STOCK, $1 PAR VALUE; AUTHORIZED 100,OOO
SHARES IN 1996 AND 1995 64,714 64,714
ADDITIONAL PAID-IN CAPITAL 243,226 243,226
RETAINED EARNINGS (324,838) (1,100,644)
------------ -----------
TOTAL STOCKHOLDERS' (DEFICIT) (16,898) (792,704)
------------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 2,152,760 $ 5,104,431
============= ===========
</TABLE>
3
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<TABLE>
<CAPTION>
KENMAR BUSINESS GROUPS, INC.
STATEMENTS OF INCOME
NINE-MONTH PERIODS ENDED MAY 31, 1996 AND MAY 31, 1995
UNAUDITED
NINE
MONTHS ENDING
MAY 31, MAY 31,
1996 1995
<S> <C> <C>
SALES $ 2,151,951 $ 12,515,593
COST OF GOODS SOLD 2,169,631 11,274,714
------------- ------------
GROSS PROFIT (LOSS) (17,680) 1,240,879
------------- ------------
GENERAL, SELLING AND ADMINISTRATIVE EXPENSES 656,640 670,274
------------- ------------
OPERATING INCOME (LOSS) (674,320) 570,605
------------- ------------
OTHER INCOME (EXPENSE)
INTEREST INCOME 35,460 3,097
INTEREST EXPENSE (43,250) (224,448)
OTHER INCOME - -
----------- ------------
OTHER INCOME (EXPENSE), NET (7,790) (221,351)
----------- ------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM AND
INCOME TAXES (682,110) 349,254
EXTRAORDINARY ITEM 1,728,552 -
INCOME TAXES 1,050 -
----------- -----------
NET INCOME 1,047,492 349,254
ACCRETION OF PREFERRED STOCKS (43,920) (40,500)
UNDECLARED DIVIDEND ON PREFERRED STOCK (12,408) (37,221)
----------- -----------
NET INCOME APPLICABLE TO COMMON STOCKHOLDERS 991,164 271,533
----------- -----------
WEIGHTED AVERAGE NUMBER OF SHARES 64,714 61,817
----------- -----------
INOME (LOSS) PER COMMON SHARE BEFORE
EXTRAORDINARY ITEM (11.39) 4.39
EXTRAORDINARY ITEM PER COMMON SHARE 26.71
NET INCOME PER COMMON SHARE 15.32 4.39
</TABLE>
4
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<TABLE>
<CAPTION>
KENMAR BUSINESS GROUPS, INC.
STATEMENTS OF CASH FLOW
UNAUDITED
NINE
MONTHS ENDING
MAY 31, MAY 31,
1996 1995
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
NET INCOME: $ 1,047,492 $ 349,254
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 171,171 226,780
CHANGES IN OPERATING ASSETS AND LIABILITIES:
(INCREASE) IN ACCOUNTS RECEIVABLE (265,484) (60,410)
(INCREASE) DECR. IN DEPOSITS AND OTHER ASSETS (84,534) 123,754
DECREASE (INCREASE) IN INVENTORIES 138,177 (87,416)
DECREASE IN RECOVERABLE INCOME TAX - 103,205
DECREASE (INCR.) IN PREPAID EXP AND OTHER ASSETS 5,619 (35,860)
(DECREASE) IN ACCOUNTS PAYABLE (1,635,147) (703,763)
(DECREASE) IN OTHER ACCRUED LIABILITIES (364,962) (11,341)
------------ ----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (987,668) (95,797)
------------ ----------
CASH FLOW FROM INVESTING ACTIVITIES:
CAPITAL EXPENDITURES, NET OF WRITE-OFFS (177,800) (40,177)
----------- ----------
CASH FLOW FROM FINANCING ACTIVITIES:
PROCEEDS FROM ISSUANCE OF COMMON STOCK - 6,517
NET BORROWING ON LINE OF CREDIT - 525,896
PRINCIPAL PAYMENTS ON LONG TERM DEBT (37,887) (194,552)
PRINCIPAL PAYMENTS ON CAPITAL LEASE OBLIGATIONS (34,649) (42,529)
NEW CAPITAL LEASE 138,400 -
REPURCHASE OF COMMON STOCK (625) -
CANCELLATION OF CAPITAL LEASE (9,272) -
DIVIDENDS PAID (24,816) -
----------- ----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 31,151 295,332
----------- ----------
NET INCREASE (DECR.) IN CASH AND CASH EQUIVALENTS (1,134,317) 159,358
----------- ----------
CASH AND CASH EQUIVALENTS:
BEGINNING OF PERIOD 1,632,630 74,478
----------- ----------
END OF PERIOD $ 498,313 $ 233,836
----------- ----------
</TABLE>
5
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KENMAR BUSINESS GROUPS, INC.
NOTES TO UNAUDITED CONSOLIDATED CONDENSED STATEMENTS
(1) BASIS OF PRESENTATION
The accompanying Consolidated Condensed Financial Statements are unaudited.
In management's opinion, all adjustments necessary for a fair presentation have
been made. The accompanying financial information should be read in conjunction
with Kenmar Business Group's ("Kenmar's") annual audited financial statements
for the year ended August 31, 1995.
(2) INVENTORIES
August 31, May 31,
1995 1996
---------- --------
Raw materials............................... $193,649 $114,263
Work-in-process............................. 111,330 67,324
Finished goods.............................. 26,561 11,776
---------- --------
$331,540 $193,363
---------- --------
(3) EXTRAORDINARY ITEMS:
On September 18, 1995, Kenmar signed an agreement with its larger customer.
The provisions of the agreement relieved Kenmar of trade accounts payable to the
customer and other suppliers of $1,217,162. The agreement provided the customer
relief of trade payables to Kenmar of $48,000 and required the customer to pay
cash to Kenmar in the amount of $250,000. This agreement also provided for the
release of both parties from any claims that might arise from past business
relations or transactions.
During the nine months ended May 31, 1996, Kenmar renegotiated $1,097,881
of its accounts payable balances with its major suppliers. These renegotiations
resulted in the suppliers forgiving $511,390 of the amounts due in return for
payments of 25% of the remaining balance due principally in September and
October 1995 with a further 25% due in four quarterly installments beginning
January 1, 1996.
The above transactions resulted in an extraordinary gain of $1,728,552
(net of legal and other consulting fees of $107,400) or $26.71 per common share
and are included in the accompanying unaudited condensed statement of income for
the nine months ended May 31, 1996.
6
<PAGE>
Item 7(b)
Pro forma financial information, as of May 31, 1996:
ELECTRONIC MANUFACTURING SERVICES GROUP INC.
PRO FORMA CONDENSED CONSOLIDATED OPERATING STATEMENT
For The Nine Month Period Ending May 31, 1996
The Following represents the unaudited pro forma condensed consolidated
operating statement for May 31, 1996, assuming the transactions described in
this report were consummated on August 31, 1995:
(1) Record disposal of Hutronix, Inc. as of November 23, 1995.
<TABLE>
<CAPTION>
J.A.
Industries Kenmar
Inc. and Business
Subsidiaries Group, Inc.
For The For The
Six Month Nine Month
Period Period
Ended Record J.A. Ended
December Disposal Industries, May Pro Forma Pro Forma
31, of Hutronix, Inc., 31, Merger Consolidated
1995 (a) Inc. (1) As Adusted 1996 (a) Adjustments Amounts
------- ------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenue ...............................$ 709,747 $ (709,747) $ -- $ 2,151,951 $ 2,151,951
Cost of Sales ....................... 606,707 (606,707) -- 2.169,631 2,169,631
----------- ----------- -----------
Gross Profit (Loss) .............. 103,040 -- (17,680) (17,680)
General, Selling and Administrative ... 550,879 (157,231) 393,648 656,640 1,050,288
----------- ----------- ----------- -----------
Operating Loss .................. (447,839) (393,648) (674,320) (1,067,968)
Other Expense ......................... (74,591) (86) (74,677) (7,790) (82,467)
----------- ----------- ----------- -----------
Loss before Income Taxes .............. (522,430) (468,325) (682,110) (1,150,435)
----------- -----------
Income Taxes .......................... 1,050 1,050
----------- -----------
Net Income from Continuing ............ --
Operations ..................... (522,430) (468,325) (681,060) (1,149,385)
Accretion of Perferred Stock
-- -- (43,920) (43,920)
Undeclared Dividends on Preferred
Stock ......................... -- -- (12,408) (12,408)
----------- ----------- ----------- -----------
Net Loss from Continuing
Operations Applicable to Common
Shareholders ..................$ (522,430) $ (468,325) $ (737,388) $(1,205,713)
=========== =========== =========== ===========
Net Loss per Share from Continuing
Operations ....................$ (0.07) $ (.06) $ (11.39) $ (.21)
=========== =========== =========== ===========
Weighted Average Shares Outstanding.. 7,696,310 7,696,310 64,714 5,527,452
</TABLE>
(a) J.A. Industries, Inc.'s operating statement was prepared using the Company's
December 31, 1995 six month operating Statement. Kenmar Business Group, Inc.'s
operating statement was prepared using their May 31, 1996 nine month operating
statement. J.A. Industries, Inc. did not enter into any significant transactions
subsequent to December 31, 1995 that would materially distort the operating
results of the pro forma combined company for the nine month period ended May
31, 1996.
7
<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.
ELECTRONIC MANUFACTURING SERVICES GROUP, INC.
October 15, 1996 /s/ Kenneth H. Marks
Date Kenneth H. Marks
Chief Executive Officer
8
<PAGE>
EXHIBIT INDEX
Exhibit Description
23 Consent of KPMG Peat Marwick LLP
EXHIBIT 23
[KPMG PEAT MARWICK LLP LETTERHEAD]
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Kenmar Business Groups, Inc.
(now known as EMSG Systems Divisions, Inc.)
We consent to incorporation by reference in the Form 8-K/A of Electronic
Manufacturing Services Group, Inc. dated July 31, 1996 of our report, dated
October 20, 1995, with respect to the consolidated balance sheets of Kenmar
Business Groups, Inc. as of August 31, 1995 and 1994 and the related
consolidated statements of income (loss), stockholders' deficit and cash
flows for the years then ended, which report appears in the Form DEFR 14A of
J.A. Industries, Inc. dated July 12, 1996.
We also consent to the incorporation by reference in the Registration Statement
related to the J.A. Industries, Inc. 1994 Employee Consultant and Advisor
Stock Compensation Plan on Form S-8 of J.A. Industries, Inc. (now known as
Electronic Manufacturing Services Group, Inc.) of our report, dated October
20, 1995, with respect to the consolidated balance sheets of Kenmar Business
Groups, Inc. as of August 31, 1995 and 1994 and the related consolidated
statements of income (loss), stockholders' deficit and cash flows for the years
then ended, which report is incorporated by reference in the Form 8-K/A of
Electronic Manufacturing Services Group, Inc. dated July 31, 1996.
Our report refers to the Company's adoption of Statement of Financial
Accounting Statements No. 121, "Accounting for the Impairment of Long-Lived
Assets and Long Lived-Assets to be disposed of" on September 1, 1994.
KPMG PEAT MARWICK LLP
Raleigh, North Carolina
October 15, 1996
