SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDING THE
CURRENT REPORT ON FORM 8-K
FILED JULY 5, 1996
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JUNE 20, 1996
BETTIS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-23568 76-0428239
(State of incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
18703 GH CIRCLE
WALLER, TEXAS 77484
(713) 463-5100
(Address and telephone number of principal executive office)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 20, 1996, Bettis Corporation ("Bettis" or the "Company")
acquired all of the issued and outstanding stock of Prime Actuator Control
Systems Ltd., a company incorporated in Scotland with number 95751 ("Prime UK")
and Prime Actuator Control Systems, Inc., a Delaware corporation ("Prime Inc.")
(collectively referred to as "Prime") from Sooner Pipe and Supply Corporation
("Sooner"), an Oklahoma corporation, pursuant to a Stock Purchase Agreement (the
"Agreement"). Pursuant to the Agreement, Bettis paid $4,000,000 in cash
consideration and caused Prime Inc. to issue and deliver a note in the principal
amount of $2,323,000 to Sooner for the shares of Prime UK and Prime Inc. The
cash portion of the purchase price was funded utilizing borrowings under the
Company's revolving line of credit with Bank One, Texas, N.A. The acquisition of
Prime was accounted for under the purchase method of accounting.
Prime UK manufactures and sells a line of valve actuators from a plant in
Glenrothes, Scotland. Prime Inc. sells valve actuators manufactured by Prime UK
from offices in Houston, Texas.
The Company is not aware of any pre-existing material relationships between
(i) Prime UK and Prime Inc. or their shareholders, on the one hand, and (ii) the
Company, any of the Company's affiliates, directors and officers or any
associate of such directors and officers on the other hand.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS OF THE COMPANY ACQUISITION
This Form 8-K/A is being filed to include in the Current
Report on Form 8-K filed by the Registrant with the Securities
and Exchange Commission on July 5, 1996 the financial statements
and pro forma financial information required by Item 7.
The required financial statements of Prime are included as
exhibits to this Form 8-K/A.
(B) PRO FORMA FINANCIAL INFORMATION
The required pro forma financial information of the
Registrant is included as an exhibit to this Form 8-K/A.
<PAGE>
(C) EXHIBITS
BETTIS CORPORATION:
Pro Forma Statement of Operations -
Six Months Ended June 30, 1996
(unaudited)..............................................F-1
Pro Forma Statement of Operations -
Year Ended December 31, 1995 (unaudited).................F-2
Notes to Pro Forma Financial Statements (unaudited)........F-3
PRIME ACTUATOR CONTROL SYSTEMS LIMITED AND
PRIME ACTUATOR CONTROL SYSTEMS, INC.
Report of Independent Accountants..........................F-4
Combined Balance Sheet - July 31, 1995 and 1994............F-5
Combined Statement of Operations -
Years ended July 31, 1995 and 1994.......................F-6
Combined Statement of Stockholders' Equity
Years Ended July 31, 1995 and 1994.......................F-7
Combined Statement of Cash Flows -
Years Ended July 31, 1995 and 1994.......................F-8
Notes to Combined Financial Statements.....................F-9
PRIME ACTUATOR CONTROL SYSTEMS LIMITED AND
PRIME ACTUATOR CONTROL SYSTEMS, INC.
Combined Balance Sheet - April 30, 1996 and July 31, 1995
(unaudited)..............................................F-16
Combined Statement of Operations -
Nine Months Ended April 30, 1996 and 1995 (unaudited)....F-17
Combined Statement of Cash Flows -
Nine Months Ended April 30, 1996 and 1995 (unaudited)....F-18
Notes to Combined Financial Statements (unaudited).........F-19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this Current Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
BETTIS CORPORATION
Dated: September 3,1996 By: /s/
Wilfred M. Krenek
Vice President and
Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
PAGE
BETTIS CORPORATION:
Pro Forma Statement of Operations -
Six Months Ended June 30, 1996 (unaudited)......................F-1
Pro Forma Statement of Operations -
Year Ended December 31, 1995 (unaudited)........................F-2
Notes to Pro Forma Financial Statements (unaudited)...............F-3
PRIME ACTUATOR CONTROL SYSTEMS LIMITED AND
PRIME ACTUATOR CONTROL SYSTEMS, INC.
Report of Independent Accountants.................................F-4
Combined Balance Sheet - July 31, 1995 and 1994.................F-5
Combined Statement of Operations -
Years ended July 31, 1995 and 1994..............................F-6
Combined Statement of Stockholders' Equity
Years Ended July 31, 1995 and 1994..............................F-7
Combined Statement of Cash Flows -
Years Ended July 31, 1995 and 1994..............................F-8
Notes to Combined Financial Statements............................F-9
PRIME ACTUATOR CONTROL SYSTEMS LIMITED AND
PRIME ACTUATOR CONTROL SYSTEMS, INC.
Combined Balance Sheet - April 30, 1996 and July 31, 1995
(unaudited).....................................................F-16
Combined Statement of Operations -
Nine Months Ended April 30, 1996 and 1995 (unaudited)...........F-17
Combined Statement of Cash Flows -
Nine Months Ended April 30, 1996 and 1995 (unaudited)...........F-18
Notes to Combined Financial Statements (unaudited)...............F-19
<PAGE>
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
Bettis Corporation ("Bettis" or the "Company") acquired all of the issued
and outstanding stock of Prime Actuator Control Systems Limited ("Prime UK") and
Prime Actuator Control Systems, Inc. ("Prime Inc."), (collectively referred to
as "Prime"), on June 20, 1996 from Sooner Pipe and Supply Corporation. Bettis
paid $4,000,000 in cash consideration and caused Prime Inc. to issue a note in
the principal amount of $2,323,000 to Sooner for the shares of Prime UK and
Prime Inc. The acquisition of Prime was accounted for under the purchase method
of accounting.
The accompanying Unaudited Pro Forma Statement of Operations for the six
months ended June 30, 1996 and the year ended December 31, 1995 includes the
accounts of the Company and reflects Prime accounted for on a pro forma basis as
if it had been acquired on January 1, 1996 and 1995, respectively. Prime has
historically used a fiscal July 31 year end for financial reporting purposes.
Included in the pro forma financial statements for the six months ended June 30,
1996 and for the year ended December 31, 1995 are Prime's results of operations
for the six months ended April 30, 1996 and for the twelve months ended October
31, 1995, respectively.
The accompanying Unaudited Pro Forma Financial Statements have been
prepared based upon certain assumptions and include adjustments as detailed in
the Notes to Unaudited Pro Forma Financial Statements. The Company has not
completed all the evaluations necessary for the final purchase price allocations
related to the acquisition of Prime; accordingly, actual adjustments that
reflect final evaluations of the purchased assets and assumed liabilities may
differ from the pro forma adjustments reflected herein.
The pro forma results included herein are not necessarily indicative of
actual results that might have occurred had the operations and management teams
of the Company and Prime been combined during all the periods presented.
<PAGE>
BETTIS CORPORATION
PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
BETTIS PROFORMA PROFORMA
CORPORATION PRIME ADJUSTMENTS TOTAL
<S> <C> <C> <C> <C>
Net revenues.............................................. $ 29,814 $ 2,294 $ - $ 32,108
-------- ------- ------ --------
Operating costs and expenses:
Manufacturing and direct............................. 19,859 2,292 (224)(A) 21,927
Selling, general and administrative.................. 7,192 1,207 (27)(A) 8,372
-------- ----- ------ --------
27,051 3,499 (251) 30,299
-------- ------- ------ ------
Operating income (loss)................................... 2,763 (1,205) 251 1,809
Other income (expense):
Interest, net........................................ (548) (6) (210)(B) (764)
Other, net........................................... (142) 25 - (117)
-------- ------- ------ --------
(690) 19 (210) (881)
-------- ------- ------ --------
Earnings (loss) before income tax provision............... 2,073 (1,186) 41 928
Income tax provision (benefit)............................ 992 (126) (89)(C) 777
-------- ------- ------ --------
Net earnings (loss)....................................... $ 1,081 $ (1,060) $ 130 $ 151
======== ====== ====== ========
Earnings per common share................................. $ .13 $ .02
======== =======
Weighted average common and common
equivalent shares outstanding........................ 8,611,299 8,611,299
=========== =========
</TABLE>
See the accompanying Notes to Pro Forma Financial Statements.
F-1
<PAGE>
BETTIS CORPORATION
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
BETTIS PROFORMA PROFORMA
CORPORATION PRIME ADJUSTMENTS TOTAL
<S> <C> <C> <C> <C>
Net revenues.............................................. $ 55,142 $ 6,543 $ - $ 61,685
-------- ------- ------ --------
Operating costs and expenses:
Manufacturing and direct............................. 35,882 4,908 (521)(A) 40,269
Selling, general and administrative.................. 14,235 2,226 (54)(A) 16,407
-------- ------- ------ --------
50,117 7,134 (575) 56,676
-------- ------- ------ --------
Operating income (loss)................................... 5,025 (591) 575 5,009
Other income (expense):
Interest............................................. (1,094) (70) (360)(B) (1,524)
Other, net........................................... 32 3 - 35
-------- ------- ------ --------
(1,062) (67) (360) (1,489)
-------- ------- ------ ------
Earnings (loss) before income tax provision
(benefit)............................................ 3,963 (658) 215 3,520
Income tax provision (benefit)............................ 1,683 (235) (178)(C) 1,270
-------- ------- ------ --------
Net earnings (loss)....................................... $ 2,280 $ (423) $ 393 $ 2,250
======== ======= ====== ========
Earnings per common share................................. $ .27 $ .27
======== =======
Weighed average common and common
equivalent shares outstanding........................ 8,536,355 8,536,355
========= ===========
</TABLE>
See the accompanying notes to Pro Forma Financial Statements.
F-2
<PAGE>
BETTIS CORPORATION
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
THE PRO FORMA ADJUSTMENTS TO THE ACCOMPANYING STATEMENTS OF OPERATIONS ARE
SUMMARIZED BELOW:
(A) Adjustments to depreciation expense related to the preliminary allocation of
the purchase price.
(B) To record the effects of historical interest expense related to intercompany
debt with Sooner not assumed in the acquisition and to record interest expense
on the amount drawn down on the Company's revolving credit facility in
connection with the acquisition of Prime net of cash available.
(C) To record the income tax benefit that would have been realized if Prime
would have been acquired at the beginning of the period presented.
F-3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Bettis Corporation
We have audited the accompanying combined balance sheet of Prime Actuator
Control Systems Limited and Prime Actuator Control Systems, Inc. (collectively,
the "Company") as of July 31, 1995 and 1994, and the related combined statements
of operations, stockholders' equity, and cash flows for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
upon 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.
As discussed in Note 1, the Company entered into a stock purchase agreement
on June 20, 1996 for the sale of all of the outstanding common stock of the
Company to Bettis Corporation. The purchaser's basis in the assets will differ
from that reflected in the Company's historical financial statements at July 31,
1995. No adjustments have been made in the accompanying financial statements to
reflect this transaction.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of Prime Actuator
Control Systems Limited and Prime Actuator Control Systems, Inc. as of July 31,
1995 and 1994, and the combined results of their operations and their cash flows
for the years then ended in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Houston, Texas
September 3, 1996
<PAGE>
PRIME ACTUATOR CONTROL SYSTEMS LIMITED
AND
PRIME ACTUATOR CONTROL SYSTEMS, INC.
COMBINED BALANCE SHEET
JULY 31, 1995 AND 1994
1995 1994
ASSETS ---- ----
(IN THOUSANDS)
Current assets:
Cash and cash equivalents.............. $ 6,123 $ 2,830
Short term investments................. 766 -
Accounts receivable ................... 2,081 4,762
Inventories ........................... 3,995 2,922
Other current assets................... 343 452
--------- --------
Total current assets................. 13,308 10,966
Property, plant and equipment, net.......... 2,639 2,947
Other assets................................ 6 5
--------- --------
$ 15,953 $ 13,918
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade............... $ 788 $ 1,342
Accounts payable - Sooner.............. 411 1,593
Accrued liabilities.................... 373 488
Short-term borrowings from Sooner...... 6,045 2,485
--------- --------
Total current liabilities........... 7,617 5,908
--------- --------
Commitments and contingencies
Stockholders' equity:
Common Stock.......................... 10,349 10,349
Additional paid in capital............ 3,883 3,883
Accumulated deficit................... (6,553) (6,531)
Cumulative translation adjustment..... 657 309
--------- --------
Total stockholders' equity.......... 8,336 8,010
--------- --------
$ 15,953 $ 13,918
========= ========
The accompanying notes are an integral part of
the combined financial statements.
F-5
<PAGE>
PRIME ACTUATOR CONTROL SYSTEMS LIMITED
AND
PRIME ACTUATOR CONTROL SYSTEMS, INC.
COMBINED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED JULY 31, 1995 AND 1994
1995 1994
---- ----
(IN THOUSANDS)
Net revenues............................... $ 7,814 $ 8,706
--------- ---------
Operating costs and expenses:
Manufacturing and direct............. 5,624 6,533
Selling, general and administrative.. 2,194 2,367
--------- ---------
7,818 8,900
--------- ---------
Operating income (loss).................... (4) (194)
--------- ---------
Other income (expense):
Interest, net........................ (81) 79
Other, net........................... 58 21
--------- ---------
(23) 100
--------- ---------
Loss before income tax provision (benefit). (27) (94)
Income tax provision (benefit)............. (5) 15
--------- ---------
Net loss................................... $ (22) $ (109)
========= =========
The accompanying notes are an integral part of
the combined financial statements.
F-6
<PAGE>
PRIME ACTUATOR CONTROL SYSTEMS LIMITED
AND
PRIME ACTUATOR CONTROL SYSTEMS, INC.
COMBINED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JULY 31, 1995 AND 1994
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
CUMULATIVE
COMMON STOCK PAID IN ACCUMULATED TRANSLATION
SHARES ISSUED AMOUNT CAPITAL DEFICIT ADJUSTMENT TOTAL
<S> <C> <C> <C> <C> <C> <C>
Balances at August 1, 1993........... 10,823,560 $ 10,349 $ 3,883 $(6,422) $ - $ 7,810
Net loss............................. - - - (109) - (109)
Cumulative translation adjustment.... - - - - 309 309
------------ --------- -------- ------- -------- --------
Balances at July 31, 1994............ 10,823,560 10,349 3,883 (6,531) 309 8,010
Net loss............................. - - - (22) - (22)
Cumulative translation adjustment.... - - - - 348 348
------------ --------- -------- ------- -------- --------
Balances at July 31, 1995............ 10,823,560 $ 10,349 $ 3,883 $ (6,553) $ 657 $ 8,336
============ ========= ======== ===== ======== ========
</TABLE>
The accompanying notes are an integral part of
the combined financial statements.
F-7
<PAGE>
PRIME ACTUATOR CONTROL SYSTEMS LIMITED
AND
PRIME ACTUATOR CONTROL SYSTEMS, INC.
COMBINED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED JULY 31, 1995 AND 1994
1995 1994
---- ----
(IN THOUSANDS)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................................. $ (22) $ (109)
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Depreciation......................................... 716 640
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net... 2,815 (1,049)
Increase in inventories........................... (971) (1,418)
(Increase) decrease in other current assets....... 124 (437)
Increase (decrease) in accounts payable, trade.... (596) 436
Increase (decrease) in accrued liabilities........ (131) 185
Increase (decrease) in accounts payable - Sooner.. (1,183) 1,632
-------- -------
Net cash provided by (used in)
operating activities............................ 752 (120)
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment........... (307) (580)
Proceeds from sale of assets......................... 13 9
Purchase of short term investments................... (766) -
-------- -------
Net cash used by investing activities........... (1,060) (571)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term
borrowings from Sooner............................. 3,560 (651)
-------- -------
Net cash provided by (used in)
financing activities............................ 3,560 (651)
-------- -------
Effect of exchange rate changes on cash.............. 41 6
-------- -------
Net increase (decrease) in cash and cash equivalents. 3,293 (1,336)
Cash and cash equivalents at beginning of year....... 2,830 4,166
-------- -------
Cash and cash equivalents at end of year............. 6,123 $ 2,830
======== =======
The accompanying notes are an integral part of
the combined financial statements.
F-8
<PAGE>
PRIME ACTUATOR CONTROL SYSTEMS LIMITED
AND
PRIME ACTUATOR CONTROL SYSTEMS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying combined financial statements include the financial
statements of Prime Actuator Control Systems Limited, a company incorporated in
Scotland with Number 95751 ("Prime UK") and Prime Actuator Control Systems,
Inc., a Delaware corporation, ("Prime Inc.") (collectively referred to as
"Prime").
Prime UK manufactures and sells valve actuators, which are used to remotely
and automatically open and close quarter turn valves, from a facility located in
Glenrothes, Scotland. Prime Inc. sells valve actuators manufactured by Prime UK
from offices in Houston, Texas. Prime's market is principally the chemical,
petrochemical and refining industries where pipes are used to transport liquids
and gases.
Bettis Corporation ("Bettis" or the "Company") purchased 100% of the stock
of Prime UK and Prime Inc. from Sooner Pipe and Supply Corporation ("Sooner") on
June 20, 1996. Bettis paid $4,000,000 in cash consideration and caused Prime
Inc. to issue and deliver a note in the principal amount of $2,323,000 to Sooner
for the shares of Prime UK and Prime Inc. Prior to June 20, 1996, Prime repaid
with available cash a significant portion of the short-term borrowings from
Sooner. The acquisition of Prime was accounted for under the purchase method of
accounting.
Preparation of the Financial Statements
The combined financial statements have been prepared in accordance with
generally accepted accounting principles (GAAP) and include the accounts of
Prime Inc. and Prime UK as described above. On June 20, 1996, Bettis purchased
100% of the stock of Prime. The purchaser's basis in the assets will differ from
that reflected in Prime's historical financial statements at July 31, 1995. No
adjustments have been made in the accompanying financial statements to reflect
this transaction. All material intercompany transactions have been eliminated in
combination.
The preparation of financial statements requires management to make
estimates and assumptions that affect (1) the reported amounts of assets and
liabilities, (2) the disclosures of contingent assets and liabilities, and (3)
the reported amounts of revenues and expenses during the reporting periods.
Ultimate results could differ from those estimates.
F-9
<PAGE>
PRIME ACTUATOR CONTROL SYSTEMS LIMITED
AND
PRIME ACTUATOR CONTROL SYSTEMS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
(CONTINUED)
Cash and Cash Equivalents
Prime includes all highly liquid securities purchased with an original
maturity of three months or less in cash and cash equivalents. Cash equivalents
are stated at cost which approximates market. The Company maintains cash
deposits in banks which from time to time exceed the amount of deposit insurance
available. Management periodically assesses the financial condition of the
institutions and believes that any credit loss is minimal.
Short Term Investments
Short term investments consist of investments in commercial paper with
terms of less than one year and are classified as held to maturity. Such
investments are carried at amortized cost which approximates fair value.
Inventories
Inventories consisting of raw materials, supplies, finished parts and
sub-assemblies are stated at the lower of cost or market as determined by
management of Prime. Cost is determined by the average first-in, first-out
(FIFO) method.
Property, Plant and Equipment
Property, plant and equipment is recorded at cost and depreciated over its
estimated useful life by the use of the straight line method. Leasehold
improvements are amortized over the shorter of their useful lives or the term of
the related lease by use of the straight line method. Disposals are removed at
cost less accumulated depreciation with the resulting gain or loss being
reflected in operations.
Revenue Recognition
The Company recognizes revenues from product sales when goods are shipped
or when ownership is assumed by the customer.
Prime has a two year warranty on materials and workmanship on all products
manufactured. Prime has not experienced any material product warranty expense.
F-10
<PAGE>
PRIME ACTUATOR CONTROL SYSTEMS LIMITED
AND
PRIME ACTUATOR CONTROL SYSTEMS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
(CONTINUED)
Income Taxes
Prime UK and Prime Inc. each file income tax returns as members of the
consolidated group of Sooner, or Sooner subsidiaries, in the United Kingdom and
the United States, respectively. The income tax provisions for the periods
presented are calculated as if each had filed a separate tax return.
Fair Value of Financial Instruments
The Company includes fair value information in the notes to combined
financial statements when the fair value of its financial instruments are
different from the book value. The carrying value of cash and cash equivalents,
receivables and accounts payable approximate fair value due to the short term
maturities of these instruments. The carrying amount of the Company's short-term
borrowings from Sooner approximates its fair value at July 31, 1995.
Foreign Currency Translation
Assets and liabilities of Prime UK are translated into U.S. dollars at the
exchange rate in effect at the end of each accounting period and income
statement accounts are translated at the average exchange rates prevailing
during the period. Gains and losses resulting from the translation of foreign
financial statements are reported as a separate component of stockholders'
equity. Gains and losses from foreign currency transactions are included in
other income and expense.
Concentration of Credit Risk
Prime performs ongoing credit evaluations of its customers' financial
condition and, generally, requires no collateral from its customers. The Company
has made no allowance for doubtful accounts at July 31, 1995 and 1994.
2. DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS
Information regarding certain balance sheet accounts at July 31, 1995 and
1994 is presented below:
1995 1994
---- ----
(IN THOUSANDS)
Inventories
Raw materials and supplies......... $ 1,954 $ 2,345
Finished parts and sub assemblies.. 2,041 577
------- ------
$ 3,995 $ 2,922
======= ======
F-11
<PAGE>
PRIME ACTUATOR CONTROL SYSTEMS LIMITED
AND
PRIME ACTUATOR CONTROL SYSTEMS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
(CONTINUED)
<TABLE>
<CAPTION>
ESTIMATED
1995 1994 LIVES
---- ---- -----
(IN THOUSANDS) (IN YEARS)
<S> <C> <C> <C>
Property, plant and equipment, at cost:
Land................................... $ 320 $ 306
Buildings and improvements............. 782 589 50
Machinery and equipment................ 5,214 4,913 3-10
------- -------
6,316 5,808
Less accumulated depreciation........ 3,677 2,861
------- -------
$ 2,639 $ 2,947
======= =======
1995 1994
---- ----
(IN THOUSANDS)
Accrued liabilities:
Salaries, wages and commissions....... $ 145 $ 317
Other................................. 228 171
------- -------
$ 373 $ 488
======= =======
</TABLE>
3. RELATED PARTY TRANSACTIONS
The combined financial statements include direct charges incurred by Sooner
on behalf of Prime for legal services, accounting fees, employee health and
insurance benefits, interest on net funds advanced to Prime and other expenses
which amounted to approximately $686,000 and $492,000 for the years ended July
31, 1995 and 1994, respectively. These direct charges were determined by
specific identification as representing actual costs incurred for Prime by
Sooner.
The long term payable to Sooner at July 31, 1995 and 1994 carried interest
rates which varied from approximately 3.5% to 7.5%.
Interest payments to Sooner in the years ended July 31, 1995 and 1994 were
$320,000 and $154,000, respectively.
F-12
<PAGE>
PRIME ACTUATOR CONTROL SYSTEMS LIMITED
AND
PRIME ACTUATOR CONTROL SYSTEMS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
(CONTINUED)
5. LEASE
Prime leases certain buildings on a short term operating lease which
expires in 1996. The operating lease provides that Prime pay taxes, maintenance,
insurance and other occupancy expenses applicable to leased premises. The lease
provides for renewal for various periods at stipulated rates. Rental expense
totaled $67,000 and $33,000 for the years ended July 31, 1995 and 1994,
respectively.
The approximate future minimum rental payments under the short term
operating lease for 1996 is $68,000.
6. COMMON STOCK
The Common Stock authorized, issued and outstanding of Prime consists of
the following at July 31, 1995 and 1994:
COMMON STOCK
(IN THOUSANDS)
Prime UK
Ordinary A - par value 1 UK pound each, 7,000,000
authorized and 6,965,000 issued and outstanding.......... $ 10,288
Ordinary B - par value .01 UK pound each, 100,000,000
authorized and 3,854,060 issued and outstanding.......... 56
Prime Inc.
Common Stock - par value $1.00 each, 10,000 authorized
and 4,500 issued and outstanding......................... 5
--------
$ 10,349
7. INCOME TAXES
Deferred income taxes are recorded to reflect the tax consequences on
future years of differences between the tax and financial reporting basis of
assets and liabilities and their financial reporting amounts.
F-13
<PAGE>
PRIME ACTUATOR CONTROL SYSTEMS LIMITED
AND
PRIME ACTUATOR CONTROL SYSTEMS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
(CONTINUED)
The components of pretax earnings and the income tax provision (benefit)
for the periods were as follows:
YEAR ENDED JULY 31,
1995 1994
(in thousands)
Pretax earnings (loss)
Domestic.................................. $ (660) $ (625)
Foreign................................... 633 531
------- ------
$ (27) $ (94)
======= ======
Income tax provision (benefit):
Foreign................................... (5) 15
-------- ------
Total income tax benefit..................... $ (5) $ 15
======== ======
The difference between the income tax provision and the effective tax rate
of 34% is principally due to: (1) the utilization of net operating loss
carryforwards of approximately $527,000 and $919,000 at Prime UK for the years
ended July 31, 1995 and 1994, respectively, for which no tax benefit had been
accrued in previous years; and (2) current net operating losses of Prime US for
which no tax benefit would be recorded on a separate return basis. At July 31,
1995 and 1994, the balance of the unused tax loss carryforwards of Prime UK were
approximately $2,325,000 and $3,174,000, respectively, for which no deferred tax
benefit has been recorded and is available to reduce future taxable income.
F-14
<PAGE>
PRIME ACTUATOR CONTROL SYSTEMS LIMITED
AND
PRIME ACTUATOR CONTROL SYSTEMS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
(CONTINUED)
8. GEOGRAPHIC SEGMENT INFORMATION
The following table summarizes financial information by domestic and foreign
area:
YEAR ENDED JULY 31,
1995 1994
---- ----
(IN THOUSANDS)
Net revenues from unaffiliated customers:
Domestic operations........................ $ 521 $ 294
Foreign operations......................... 7,293 8,412
------ ------
$ 7,814 $ 8,706
====== ======
Operating income (loss):
Domestic operations........................ $ (585) $ (619)
Foreign operations......................... 581 425
------ ------
$ (4) $ (194)
====== ======
Earnings (loss) before income tax provision
(benefit):
Domestic operations........................ $ (660) $ (625)
Foreign operations......................... 633 531
------ ------
$ (27) $ (94)
====== ======
Depreciation:
Domestic operations........................ $ 28 $ 16
Foreign operations....................... 688 624
------ ------
$ 716 $ 640
====== ======
Identifiable assets:
Domestic operations........................ $ 3,626 $ 975
Foreign operations....................... 12,327 12,943
------ ------
$15,953 $13,918
====== ======
Capital expenditures:
Domestic operations........................ $ 31 $ 127
Foreign operations......................... 276 453
------ ------
$ 307 $ 580
====== ======
F-15
<PAGE>
PRIME ACTUATOR CONTROL SYSTEMS LIMITED
AND
PRIME ACTUATOR CONTROL SYSTEMS, INC.
COMBINED BALANCE SHEET (UNAUDITED)
APRIL 30, 1996
APRIL 30, JULY 31,
ASSETS 1996 1995
---- ----
(IN THOUSANDS)
Current assets:
Cash and cash equivalents....... $ 5,186 $ 6,123
Short term investments......... - 766
Accounts receivable............ 1,957 2,081
Inventories.................... 4,013 3,995
Other current assets........... 252 343
--------- ---------
Total current assets......... 11,408 13,308
Property, plant and equipment, net... 2,416 2,639
Other assets......................... 36 6
--------- ---------
$ 13,860 $ 15,953
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade....... $ 415 $ 788
Accounts payable - Sooner...... 661 411
Accrued liabilities............ 433 373
Short-term borrowings from
Sooner....................... 6,067 6,045
--------- ---------
Total current liabilities.... 7,576 7,617
--------- ---------
Commitments and contingencies
Stockholders' equity:
Common stock................... 10,349 10,349
Additional paid-in capital..... 3,883 3,883
Accumulated deficit............ (8,064) (6,553)
Cumulative translation gain.... 116 657
--------- ---------
Total Stockholders' equity:..... 6,284 8,336
--------- ---------
$ 13,860 $ 15,953
========= =========
See notes to combined financial statements.
F-16
<PAGE>
PRIME ACTUATOR CONTROL SYSTEMS LIMITED
AND
PRIME ACTUATOR CONTROL SYSTEMS, INC.
COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE NINE MONTHS ENDED APRIL 30, 1996 AND 1995
1996 1995
---- ----
(IN THOUSANDS)
Net revenues... ........................... $ 4,018 $ 6,266
-------- --------
Operating costs and expenses:
Manufacturing and direct............. 3,737 4,449
Selling, general and administrative.. 1,816 1,573
-------- --------
5,553 6,022
-------- --------
Operating income (loss).................... (1,535) 244
-------- --------
Other income (expense):
Interest, net........................ - (60)
Other, net........................... 24 86
-------- --------
24 26
-------- --------
Earnings (loss) before income tax benefit.. (1,511) 270
Income tax provision (benefit)............. - -
-------- -------
Net earnings (loss)........................ $ (1,511) $ 270
======== =======
See notes to combined financial statements.
F-17
<PAGE>
PRIME ACTUATOR CONTROL SYSTEMS LIMITED
AND
PRIME ACTUATOR CONTROL SYSTEMS, INC.
COMBINED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED APRIL 30, 1996 AND 1995
NINE MONTHS ENDED APRIL 30,
1996 1995
---- ----
(IN THOUSANDS)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss).............................. $ (1,511) $ 270
Adjustments to reconcile net earnings
(loss) to net cash used in operating
activities:
Depreciation..................................... 472 532
Gain on sale of assets........................... (8) -
Changes in assets and liabilities:
Decrease in accounts receivable, net........ 8 1,912
Increase in inventories..................... (171) (505)
Decrease in other current assets........... 44 59
Decrease in accounts payable - trade....... (316) (1,050)
Increase in accrued liabilities............ 81 6
Increase (decrease) accounts payable
- Sooner................................ 250 (1,437)
-------- --------
Net cash used in operating activities..... (1,151) (213)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment....... (403) (298)
Proceeds from sale of assets..................... 15 -
Maturities of short term investments............. 766 -
-------- --------
Net cash used in investing activities....... 378 (298)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in short-term borrowings from Sooner.... 22 3,287
-------- --------
Net cash provided by financing activities... 22 3,287
-------- --------
Effect of exchange rate changes on cash.......... (186) 278
-------- --------
Net increase (decrease) in cash and cash
equivalents................................. (937) 3,054
Cash and cash equivalents at beginning of period. 6,123 2,830
-------- --------
Cash and cash equivalents at end of period....... $ 5,186 $ 5,884
======== ========
See notes to combined financial statements.
F-18
<PAGE>
PRIME ACTUATOR CONTROL SYSTEMS LIMITED
AND
PRIME ACTUATOR CONTROL SYSTEMS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
APRIL 30, 1996
(UNAUDITED)
1. Business and Basis of Presentation
The accompanying combined financial statements include the accounts of
Prime Actuator Control Systems Limited, a company incorporated in Scotland with
Number 95751 ("Prime UK") and Prime Actuator Control Systems, Inc., a Delaware
corporation, ("Prime Inc."), collectively referred to as Prime. All material
intercompany transactions have been eliminated.
Prime UK manufactures and sells valve actuators from a facility located in
Glenrothes, Scotland. Prime Inc. sells valve actuators manufactured by Prime UK
from offices in Houston, Texas.
Bettis Corporation ("Bettis") purchased 100% of the stock of Prime UK and
Prime Inc. from Sooner Pipe and Supply Corporation ("Sooner") on June 20, 1996.
Bettis paid $4,000,000 in cash consideration and caused Prime Inc. to issue and
deliver a note in the principal amount of $2,323,000 to Sooner for the shares of
Prime UK and Prime Inc.
Prime utilizes a July 31 fiscal year-end. These interim financial
statements have not been audited; however, in the opinion of management, only
adjustments consisting of normal recurring accruals considered necessary for
fair presentation have been included. Results of interim periods are not
necessarily indicative of results to be expected for the full year.
This presentation is consistent with the accounting policies reflected in
the financial statements included in Note 1 to the July 31, 1995 and 1994
Combined Financial Statements and should be read in conjunction herewith.
2. Summary of Significant Accounting Policies
There have been no significant changes in the accounting policies of Prime
during the periods presented. For a description of these policies, see Note 1 to
the July 31, 1995 Combined Financial Statements.
F-19
