<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM 8-K/A
Amendment 1
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
DATE OF REPORT: MARCH 31, 1997
(Date of earliest event reported)
______________________________
MITY-LITE, INC.
(Exact name of registrant as specified in its charter)
UTAH 0-23898 87-0448892
(State or other (Commission file (I.R.S. employer
jurisdiction of number) identification no.)
incorporation or
organization)
1301 West 400 North
Orem, Utah 84057
(Address of principal executive offices)
(801) 224-0589
(Registrant's telephone number, including area code)
______________________________
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
A. The DO Group Minority Interest Acquisition. On March
31, 1997, Mity-Lite, Inc., a Utah corporation (the "Registrant")
closed the transaction contemplated in the Contribution Agreement
dated March 24, 1997 (the "Contribution Agreement") and certain
other related transactions all of which are described in more
detail below (collectively, the "Transaction"). In connection
with the Transaction, the Registrant acquired 1,260.090 shares of
common stock (the "Shares") of DO Group, Inc., a Delaware
corporation ("DO Group") from certain shareholders of DO Group
(the "Acquisition"). The Registrant's acquisition of the Shares
represents 49.9% of DO Group's issued and outstanding capital
stock. Registrant acquired the Shares from (i) Xaio, Inc., a
Delaware corporation, (ii) Ellman Equities, Inc., an Arizona
corporation, (iii) Key Equity Capital Corporation, an Ohio
corporation, (iv) National City Capital Corporation, a Delaware
corporation, and (v) Cardinal Development Capital Fund I, an Ohio
corporation. The purchase price for the Shares consisted of cash
in the aggregate amount of $750,000 and was determined through
arms-length negotiations by and among the parties. Funds from
the Company's general working capital were used to fund the
purchase.
B. Post Transaction Ownership and Related Transactions.
Following the Acquisition, DO Group's issued and outstanding
common stock is owned (i) 49.9% by the Registrant and (ii) 50.1%
collectively by ChiCol Group, Inc., an Ohio corporation
("ChiCol") and Sican II Corp., a Delaware corporation ("Sican
II"). ChiCol's issued and outstanding common stock (the "ChiCol
Common Stock") is owned by three shareholders; David Kebrdle,
Mary M. Kebrdle and Martha S. Federico (collectively, the
"Majority Shareholders"). Sican II's issued and outstanding
common stock (the "Sican II Common Stock") is owned by ChiCol and
the Estate of Chester E. Dekko ("Dekko"). Other parties to the
Contribution Agreement include; Dennis Kebrdle and Domenic
Federico (collectively, the "DO Group Officers"); Sican Corp., a
Delaware corporation ("Sican"), DO Group Holding, Inc., a Utah
corporation ("Holding"), together with DO Group, ChiCol and Sican
II, the "DO Group Parties"; and the Majority Shareholders, the DO
Group Officers, the DO Group Parties and the Registrant are
referred to hereinafter as the "Parties."
The Registrant and the Majority Shareholders caused Holding
to be formed for the purpose of holding (i) all of the ChiCol
Common Stock contributed by the Majority Shareholders and (ii)
the Sican II Common Stock contributed by Dekko (collectively, the
"Majority Shares"). In exchange for the contribution, pursuant
to the Contribution Agreement, of all of the Majority Shares to
Holding by the Majority Shareholders, the Parties caused Holding
to issue the Majority Shareholders all of the Class A common
stock of Holding (the "Class A Common Stock"). Such Class A
<PAGE> 3
Common Stock is, subject to certain conditions and restrictions
and in accordance with Holding's Articles of Incorporation,
convertible into 115,000 shares of restricted common stock of the
Registrant (the "Mity-Lite Common Stock"). In exchange for the
Registrant's agreement (i) to issue Mity-Lite Common Stock upon
conversion of the Class A Common Stock; (ii) to provide up to
$1,000,000 of term debt financing to Sican, a subsidiary of DO
Group and (iii) to issue certain stock options to the DO Group
Officers, the Parties caused Holding to issue to Registrant all
of the authorized shares of Class B common stock of Holding (the
"Class B Common Stock").
If all the holders of the Class A Common Stock (the "Class A
Holders") elect to convert the Class A Common Stock into the
Mity-Lite Common Stock, the Registrant will own 100% of the
outstanding capital stock of Holding. However, if Registrant
exercises its rights under a certain Put Agreement dated March
24, 1997 requiring any or all of the DO Group Parties to acquire
the Shares from Registrant, then the rights of the Class A
Holders to convert their Class A Common Stock into Mity-Lite
Common Stock will terminate. Holding owns all of the ChiCol
Common Stock, and owns all of the Sican II Common Stock formerly
held by Dekko. The remainder of the Sican II Common Stock is
owned by ChiCol. ChiCol and Sican II, together own 50.1% of DO
Group and the Registrant owns the other 49.9% of DO Group. DO
Group owns 100% of the capital stock of Sican. DO Group is a
holding company and its only asset is the capital stock of Sican.
Accordingly, all financial statement and pro forma financial
disclosures included herein represent the operations of Sican.
Registrant, as part of the Transaction, provided term
financing to Sican in the amount of $1,000,000 at 10.00% per
annum, interest payable quarterly maturing on March 24, 2000,
pursuant to a Term Loan Agreement and a Term Note (the "Loan").
Registrant funded the loan amount out of its general working
capital.
The foregoing description of the Acquisition and the related
Transaction is qualified in its entirety by reference to the
Contribution Agreement, the Stock Purchase Agreements and related
documents, which are attached hereto as Exhibits 2.1 through 2.8,
and are incorporated herein in their entirety by this reference.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Financial Statements of Business Acquired.
<PAGE> 4
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholder
Sican Corp.
Elkhart, Indiana
We have audited the accompanying consolidated balance sheets of Sican Corp. as
of December 31, 1996 and 1995 and the related consolidated statements of
operations and accumulated deficit 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 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 financial position of Sican
Corp. as of December 31, 1996 and 1995, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.
Crowe, Chizek and Company LLP
Elkhart, Indiana
April 3, 1997
<PAGE> 5
SICAN CORP.
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and 1995
1996 1995
-------------- --------------
ASSETS
Current assets
Cash $ 1,948 $ 39,425
Accounts receivable (after allowance for
doubtful accounts: 1996-$372,536;
1995-$358,024) 2,138,320 4,641,511
Inventories (Notes 3) 1,993,690 3,731,835
Refundable income taxes 54,000 170,500
Deferred tax asset 550,000 -
Prepaid expenses 79,765 204,847
-------------- --------------
Total current assets 4,817,723 8,788,118
Net property, plant and equipment (Note 4) 1,286,494 1,392,886
Other assets
Receivables from related parties 102,479 104,269
Assets held for sale (Note 2) - 6,235,918
Deferred tax asset (Note 6) 1,200,000 1,750,000
Other assets 4,001 51,637
-------------- --------------
1,306,480 8,141,824
-------------- --------------
$ 7,410,697 $18,322,828
============== ==============
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current liabilities
Checks written in excess of bank balance $ 391,571 $ 444,794
Notes payable (Note 5) 3,258,482 11,522,910
Payables to related parties 102,500 102,500
Accounts payable 2,591,341 3,094,716
Accrued salaries and commissions 131,754 361,726
Accrued other taxes 814,162 1,009,562
Accrued interest - 447,161
Customer deposits 104,043 185,959
Accrued warranty 460,000 651,261
Other current liabilities 410,402 172,140
-------------- --------------
Total current liabilities 8,264,255 17,992,729
Other liabilities - 703,915
Shareholder's deficit
Common stock, no par value; 3,000 shares
authorized and 1,850 shares issued and
outstanding 3,000,600 3,000,600
Additional paid-in capital 1,317,093 1,317,093
Accumulated deficit (5,171,251) (4,691,509)
-------------- --------------
(853,558) (373,816)
-------------- --------------
$7,410,697 $18,322,828
============== ==============
See accompanying notes to consolidated financial statements.
<PAGE> 6
SICAN CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
Years ended December 31, 1996 and 1995
1996 1995
-------------- --------------
Sales $14,235,487 $24,631,007
Cost of goods sold (Note 2) 11,634,539 24,338,507
-------------- --------------
Gross profit 2,600,948 292,500
Selling, general and administrative
expenses 4,371,059 5,629,290
-------------- --------------
Loss before other income (expense), income
taxes and extraordinary item (1,770,111) (5,336,790)
Interest expense (1,080,949) (1,393,697)
Gain on divestiture of assets from wood
office furniture operations (Note 2) 584,094 -
-------------- --------------
Loss before income taxes and extraordinary
item (2,266,966) (6,730,487)
Provision for income taxes (Note 6) (7,244) (1,402,239)
-------------- --------------
Loss before extraordinary item (2,259,722) (5,328,248)
Extraordinary item-gain from debt
restructuring (net of income tax
of $0) (Note 2) 1,779,980 -
-------------- --------------
Net loss (479,742) (5,328,248)
Retained earnings (accumulated deficit) at
beginning of year (4,691,509) 636,739
-------------- --------------
Accumulated deficit at end of year $(5,171,251) $(4,691,509)
============== ==============
See accompanying notes to consolidated financial statements.
<PAGE> 7
SICAN CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1996 and 1995
1996 1995
-------------- --------------
Cash flows from operating activities
Net loss $ (479,742) $(5,328,248)
Adjustments to reconcile net loss to
net cash from operating activities
Depreciation 509,726 753,685
Gain on divestiture of assets from
wood office furniture operations (584,094) -
Extraordinary item-gain from debt
restructuring (1,779,980) -
Provision for losses on accounts
receivable 1,251,745 374,385
Deferred income taxes - (1,365,000)
Changes in assets and liabilities
Accounts receivable 1,251,446 (95,917)
Inventories 1,738,145 4,512,890
Refundable income taxes 116,500 (29,000)
Prepaid expenses 125,082 4,819
Other assets 47,636 24,155
Checks written in excess of bank balance (53,223) 139,645
Accounts payable (503,375) (398,971)
Accrued salaries and commissions (229,972) 126,327
Accrued other taxes (195,400) 614,978
Other liabilities (331,902) 1,155,146
-------------- --------------
Net cash from operating activities 882,592 488,894
-------------- --------------
Cash flows from investing activities
Advance to related parties 1,790 (19,290)
Proceeds from divestiture of assets from wood
office furniture operations 2,997,481 -
Capital expenditures (30,804) (54,673)
-------------- --------------
Net cash from investing activities 2,968,467 (73,963)
-------------- --------------
Cash flows from financing activities
Net borrowings (payments) on bank line of
credit (1,132,797) 131,279
Principal payments on notes payable (3,005,739) (619,258)
Borrowing on notes payable 250,000 -
Advances from related parties - 102,500
-------------- --------------
Net cash from financing activities (3,888,536) (385,479)
-------------- --------------
Net change in cash (37,477) 29,452
Cash at beginning of year 39,425 9,973
-------------- --------------
Cash at end of year $ 1,948 $ 39,425
============== ==============
(CONTINUED)
<PAGE> 8
SICAN CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Years ended December 31, 1996 and 1995
1996 1995
-------------- --------------
Supplemental disclosure of cash flow
information
Cash paid during the year for
Interest $ 693,991 $ 949,624
Income taxes (123,744) (8,230)
Supplemental disclosure of non-cash investing and financing activities
During 1996, assets having a carrying value of $3,450,000 were transferred as
settlement of $5,229,980 of nonrecourse loans.
See accompanying notes to consolidated financial statements.
<PAGE> 9
SICAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1996 and 1995
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
BASIS OF REPORTING: The financial statements for the years ended December 31,
1996 and 1995 include the accounts of Sican Corp. and its wholly-owned
subsidiaries, Prospect Street Company, Inc. and Kivett Drive Company, Inc.
The subsidiaries leased manufacturing and office facilities for the wood
office furniture operations to Sican Corp. until 1996 when these facilities
were divested. All significant intercompany accounts and transactions have
been eliminated in these financial statements.
Sican Corp. is a wholly-owned subsidiary of DO Group, Inc., a holding company.
These financial statements reflect only the activities of Sican Corp. and its
wholly-owned subsidiaries and does not reflect the activities of DO Group,
Inc. In March 1997, Mity-Lite, Inc. purchased a 49% interest in DO Group,
Inc.
OPERATIONS: Sican Corp. primarily designs and manufactures office modular
systems, wood office furniture and seating products. The Company sells to
dealers, commercial businesses and governmental agencies throughout the
country. As discussed in Note 2, the Company divested its wood office
furniture operations in 1996.
At December 31, 1996 and 1995, one customer accounted for 24% and 14% of the
Company's total accounts receivable. The Company derived 47% of 1996 sales
from three customers and 14% of 1995 sales from one customer. Although
management does not expect these customers to discontinue or reduce
substantially their business with the Company, the loss of these customers or
a significant decrease in the volume of business would have a significant
impact on the Company's operations.
REVENUE RECOGNITION: Revenue is recognized upon shipment of product.
ALLOWANCE FOR DOUBTFUL ACCOUNTS: The Company establishes an allowance for
doubtful accounts based upon estimates regarding collectibility of outstanding
accounts receivable including historical collection trends.
INVENTORIES: Inventories are valued at the lower of cost (first-in, first-out
method) or market.
PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION: Assets are recorded at cost.
Depreciation is provided using both accelerated and straight-line methods over
the estimated useful lives of the various assets.
ACCOUNTING FOR INCOME TAXES: The Company records income tax expense based on
the amount of taxes due on its tax return plus deferred taxes computed based
on the expected future tax consequences of temporary differences between the
carrying amounts and tax bases of assets and liabilities, using enacted tax
rates. The Company is a member of a consolidated group and will be included in
a consolidated tax return. Income tax expense is allocated to the Company
based on its proportionate share of taxable income.
WARRANTY RESERVES: The Company establishes a reserve for warranty costs based
upon estimates regarding anticipated warranty expenses related to products
sold which includes analysis of historical warranty expense trends.
<PAGE> 10
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
ESTIMATES: Management must make estimates and assumptions in preparing
financial statements that affect the amounts reported therein and the
disclosures provided. These estimates and assumptions may change in the
future and actual results could differ. Estimates which are particularly
susceptible to change in the near term are the reserves for accounts
receivable, inventory, and deferred tax assets and accrued warranty.
NOTE 2 - DIVESTITURE AND RESTRUCTURING
In the fourth quarter of 1995, Management decided to divest its wood office
furniture manufacturing operations. This operation had generated significant
losses since its acquisition in 1993. Assets associated with the decision
were classified as assets held for sale on the December 31, 1995 balance
sheet. The divestiture was completed in 1996 and resulted in the following
gains:
Extraordinary
Operating gain from
gain (loss) on debt
divestiture of assets restructuring
--------------------- ---------------
Machinery and equipment $1,243,456 $ -
Rough mill facility and veneer facility (890,865) 1,401,566
Main office and manufacturing facility 231,503 378,414
------------ ------------
$ 584,094 $1,779,980
============ ============
The operating gain (loss) on divestiture of assets consists of the difference
between the fair value of the assets divested of $6,447,482 and their net book
value of $5,863,388.
In 1996, the Company recorded an extraordinary gain of $1,779,980 as a result
of settling the debt financed with nonrecourse loans. The extraordinary gain
consists of the excess of the debt carrying amount of $5,229,980 on two
facilities of Kivett Drive Company, Inc. and Prospect Street Company, Inc.
over the fair market values of $3,450,000.
In addition to the divestiture of its wood office furniture manufacturing
operations, management has taken steps to reduce the Company's future overhead
and operating costs and provide for future financing needs. Management
believes that these actions will return the Company to profitability and
provide the necessary cash flow to meet its working capital requirements.
<PAGE> 11
NOTE 3 - INVENTORIES
Inventories at December 31, 1996 and 1995 consist of the following:
1996 1995
---- ----
Raw material $1,669,706 $1,640,243
Work-in-process 237,172 263,163
Finished goods 86,812 125,083
Wood office furniture inventories - 1,703,346
------------ ------------
$1,993,690 $3,731,835
============ ============
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT
Net property, plant and equipment at December 31, 1996 and 1995 consists of
the following:
1996 1995
---- ----
Land $ 40,000 $ 40,000
Buildings 1,523,899 1,523,899
Tools, dies and molds 391,031 388,906
Machinery and equipment 743,917 731,495
Furniture and fixtures 328,111 317,202
Vehicles 76,912 88,721
------------ ------------
3,103,870 3,090,223
Accumulated depreciation 1,817,376 1,697,337
------------ ------------
$1,286,494 $1,392,886
============ ============
NOTE 5 - BORROWING ARRANGEMENTS
Notes payable at December 31, 1996 and 1995 consists of the following:
1996 1995
---- ----
2.5% over prime revolving loan agreement with a
bank; interest due monthly; the agreement is
secured by accounts receivable, inventory,
equipment, assignment of life insurance proceeds
of $1,000,000 each for policies covering three
officers, general intangibles and is personally
guaranteed by three officers of the Company for
up to $1,000,000 each. $3,008,482 $4,141,279
Noninterest bearing note payable to a related
party; due December 31, 1996. The loan was
repaid in March 1997. 250,000 -
(CONTINUED)
<PAGE> 12
NOTE 5 - BORROWING ARRANGEMENTS (Continued)
1996 1995
---- ----
2% over prime term loan with a bank, dated
December 9, 1993; interest due monthly;
principal due in quarterly installments
of $100,000 beginning March 1994 with the
remaining principal due December 1996;
secured by accounts receivable, inventory,
equipment, assignment of life insurance
proceeds of $1,000,000 each for policies
covering three officers, general intangibles
and is personally guaranteed by three officers
of the Company for up to $1,000,000 each (paid
in full in 1996) $ - $1,400,000
2% over prime term loan with a bank, dated
December 16, 1994; interest due monthly;
principal due in monthly installments of $12,500
beginning January 1995 with remaining principal
due December 1996; secured by accounts receivable,
inventory, equipment, assignment of life insurance
proceeds of $1,000,000 each for policies covering
three officers, general intangibles and is secured
by certain real estate in Marked Tree, Arkansas
(paid in full in 1996) - 1,362,500
1.5% over prime promissory note with a bank, dated
April 2, 1993; interest and principal due in
monthly installments of approximately $16,000 from
May 1, 1995 through April 1, 1998; remaining
principal balance is due April 2, 1998; secured by
certain real estate on Kivett Drive in High Point,
North Carolina (Satisfied in full in 1996 by
returning the secured real estate to a bank under
the nonrecourse loan agreement) (see Note 2) - 1,989,979
1.5% over prime promissory note with a bank dated
April 2, 1993; interest and principal due in
monthly installments of approximately $19,100
from May 1, 1995 through April 1, 1998;
remaining principal balance is due April 2,
1998; secured by certain real estate on Prospect
Street in High Point, North Carolina (see Note 2) - 2,405,913
1.5% over prime promissory note with a bank,
dated February 1994; interest due monthly;
principal due in monthly installments of $2,083
with remaining principal due February 1997;
secured by certain real estate in High Point,
North Carolina (see Note 2) - 223,239
------------ ------------
$3,258,482 $11,522,910
============ ============
(CONTINUED)
<PAGE> 13
NOTE 5 - BORROWING ARRANGEMENTS (Continued)
The promissory notes of December 31, 1995 were subject to restrictive debt
covenants including payment terms, various financial ratios and reporting
requirements. At December 31, 1995, the Company was not in compliance with
certain covenants, therefore, the promissory notes are classified as current.
A related party provided a $1,000,000 loan to Sican Corp. on March 31, 1997.
Also on March 31, 1997, the Company obtained a demand revolving line of credit
with a new bank. The line of credit debt to the old bank was paid off. The
new agreements will provide up to $6,000,000 in total borrowings, subject to
borrowing base formulas.
NOTE 6 - PROVISION FOR INCOME TAXES
The provision for income taxes for 1996 and 1995 consists of the following:
1996 1995
---- ----
Federal income tax $ (23,744) $ (63,588)
State income tax 16,500 26,349
Deferred income taxes - (1,365,000)
------------ ------------
$ (7,244) $(1,402,239)
============ ============
The deferred income tax expense and the income tax expense that was allocated
to the extraordinary gain from debt restructuring in 1996 was entirely offset
by the change in the valuation allowance. The valuation allowance began in
1995 for $967,000 and increased by $123,000 in 1996.
The reconciliation of the statutory federal tax rate and the rate of the
provision for income taxes before the extraordinary gain is as follows:
1996 1995
---- ----
Federal statutory rate (34.0)% (34.0)%
State income taxes, net of federal
tax benefit (5.0) (5.0)
Valuation allowance 35.7 14.4
Other 3.3 3.8
------------ ------------
-% (20.8)%
============ ============
Significant components of the Company's deferred tax assets and liabilities at
December 31, 1996 and 1995 are summarized as follows:
(CONTINUED)
<PAGE> 14
NOTE 6 - PROVISION FOR INCOME TAXES (Continued)
1996 1995
---- ----
Deferred tax assets
Allowance for doubtful accounts $ 145,000 $ 140,000
Inventories 508,000 1,778,000
Warranty reserve 140,000 275,000
Other 152,000 219,000
Net operating loss carryforward 1,995,000 618,000
------------ ------------
Gross deferred tax assets 2,940,000 3,030,000
Less valuation allowance (1,090,000) (967,000)
Deferred tax liability
Accumulated depreciation (100,000) (313,000)
------------ ------------
Net deferred tax asset $1,750,000 $1,750,000
============ ============
The Company, at December 31, 1996 and 1995, has assessed its past earnings
history and trends, sales backlog, budgeted sales, and expiration dates of
carryforwards and has determined that it is more likely than not that
$1,750,000 of the deferred tax assets will be realized and has provided a
valuation allowance on amounts in excess of this. The Company will continue
to review this valuation allowance on a quarterly basis and make adjustments
as appropriate.
At December 31, 1996, the Company has a tax net operating loss carryforward of
approximately $5,120,000 for federal income tax purposes. Such carryforwards,
which may provide future tax benefits, expire as follows: $1,585,000 in 2010
and $3,535,000 in 2011. Future changes in ownership, as defined by Section
382 of the Internal Revenue Code, could limit the amount of net operating loss
utilized in any one year.
NOTE 7 - LEASE COMMITMENTS
The Company had a lease for facilities in Elkhart, Indiana with a related
party through March 31, 2001 that was canceled on April 1, 1997. The Company
entered into a five year lease on April 1, 1997 with the related party for
monthly payments of $11,800. In addition, the Company is obligated to pay
utilities, insurance, property taxes and maintenance costs on the facility.
The future annual rental for these facilities is $141,600 for a total of
$743,400 through April 1, 2002.
The Company rents delivery vehicles on an as needed basis.
Rental expense for the years ended December 31, 1996 and 1995 was
approximately $300,000 and $260,000, respectively.
<PAGE> 15
NOTE 8 - EMPLOYEE BENEFIT PLANS
In 1996, the Company terminated the qualified savings and retirement 401(k)
plan covering substantially all employees. No contributions were authorized
by the Board of Directors for the year ended December 31, 1995.
Substantially all of the Arkansas union shop employees are covered under a
multi-employer pension plan agreement. The contribution rate currently in
effect is 22.5 cents for each hour compensated. Total pension expense for the
years ended December 31, 1996 and 1995 was $25,484 and $19,005, respectively.
<PAGE> 16
(b) Pro Forma Financial Information.
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma condensed financial statements are
based upon the historical financial statements of Mity-Lite and Sican Corp.,
and should be read in conjunction with those historical financial statements
as they appear elsewhere. The unaudited pro forma condensed statements of
operations for the year ended March 31, 1997 present the pro forma results of
operations of Mity-Lite as if the Sican Corp. (DO Group) acquisition had been
consummated as of April 1, 1996. The unaudited pro forma condensed balance
sheet presents the pro forma financial position of Mity-Lite as of March 31,
1997. The pro forma condensed financial statements of Mity-Lite and Sican
Corp. have been prepared assuming Mity-Lite utilized the "equity" method of
accounting.
The unaudited pro forma condensed financial statements have been
included as required by the rules of the SEC and are provided for illustrative
purposes only. Such statements do not purport to be indicative of the results
which would actually have been obtained if the acquisitions had been effected
on the dates indicated, nor are they indicative of the results of future
operations.
<PAGE> 17
MITY-LITE, INC. AND
SICAN CORP.
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1997
Pro Forma
Mity-Lite,
Inc. and
Mity-Lite, Sican
Inc. Adjustments Corp.(1)
----------- ----------- -----------
Net Sales $18,680,000 $18,680,000
Cost of products sold 10,921,000 10,921,000
----------- ----------- -----------
Gross profit 7,759,000 7,759,000
Expenses:
Selling 2,969,000 2,969,000
General and administrative 865,000 865,000
Research and development 375,000 375,000
----------- ----------- -----------
Total expenses 4,209,000 4,209,000
----------- ----------- -----------
Income from operations 3,550,000 3,550,000
----------- ----------- -----------
Other income (expense):
Interest expense (2,000) (2,000)
Interest income 360,000 360,000
Equity in losses of affiliate ($1,127,000)(2)
(141,000)(3) (1,268,000)
Other (19,000) (19,000)
----------- ----------- -----------
Total other income (expense) 339,000 (1,268,000) (929,000)
----------- ----------- -----------
Income before provision for
income taxes 3,889,000 2,621,000
Provision for income taxes 1,404,000 (458,000)(4) 946,000
----------- ----------- -----------
Income before extraordinary item 2,485,000 (458,000) 1,675,000
Equity in extraordinary item
of affiliate, net of deferred
taxes of $321,000 -- 567,000 (5) 568,000
----------- ----------- -----------
Net income $2,485,000 ($243,000) $2,243,000
=========== =========== ===========
Net income per share $0.758 ($0.074) $0.684
=========== =========== ===========
Weighted average number of common
and common equivalent shares 3,279,335 3,279,335
=========== =========== ===========
<PAGE> 18
MITY-LITE, INC. AND
SICAN CORP.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEETS
AS OF MARCH 31, 1997
Pro Forma
Mity-Lite,
Inc. and
Mity-Lite, Sican
Inc. Adjustments(6) Corp.(1)
----------- ----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 7,646,000 $ 7,646,000
Accounts receivable 2,196,000 2,196,000
Inventories 700,000 700,000
Deferred income taxes 129,000 129,000
Other current assets 88,000 88,000
----------- ----------- -----------
Total current assets 10,759,000 10,759,000
----------- ----------- -----------
Property and equipment, net 1,629,000 1,629,000
Investment in and note
receivable from affiliate 1,862,000 1,862,000
Other assets 1,000 1,000
----------- ----------- -----------
TOTAL ASSETS $14,251,000 $14,251,000
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable $ 833,000 $ 833,000
Accrued expenses 485,000 485,000
----------- ----------- -----------
Total current liabilities 1,318,000 1,318,000
----------- ----------- -----------
Stockholders' equity:
Common stock 32,000 32,000
Additional paid-in capital 6,952,000 6,952,000
Retained earnings 5,949,000 5,949,000
----------- ----------- -----------
Total stockholders' equity 12,933,000 12,933,000
----------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $14,251,000 $14,251,000
=========== =========== ===========
<PAGE> 19
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
(1) The Sican Corp. (DO Group) investment was consummated effective March
31, 1997. Pro forma income statement information is included for the
year ended March 31, 1997 as if the acquisition was consummated on April
1, 1996. These pro forma financial statements reflect the necessary
adjustments as if Mity-Lite commenced utilizing the equity method of
accounting on April 1, 1996. The information for the unaudited pro
forma condensed statements of operations includes Mity-Lite's results of
operations for the year ended March 31, 1997, and Sican Corp.'s results
of operations for the year ended December 31, 1996.
(2) Represents Mity-Lite's proportionate 49.9 percent interest in Sican
Corp.'s loss before extraordinary item.
(3) Represents amortization of amounts related to the difference between
Mity-Lite's investment cost and its share of the underlying equity in
Sican Corp.'s net assets. The total difference, estimated at
$1,270,000, will be amortized on a straight-line bases over a 1- to 30-year
period.
(4) Represents the incremental change in the entity's income tax provision
as a result of applying the estimated tax rate of 36.1 percent to the
pretax adjustments.
(5) Represents Mity-Lite's proportionate 49.9 percent interest in Sican
Corp.'s extraordinary item-gain from debt restructuring of $888,000, net
of deferred taxes of $321,000.
(6) According to SEC guidelines, pro forma adjustments related to the pro
forma condensed balance sheet should be computed assuming the
transaction was consummated at the end of the most recent period for
which a balance sheet has been presented. Since the transaction
occurred on March 31, 1997, the balance sheet as of March 31, 1997 filed
on Form 10-KSB includes adjustments directly attributable to the
transaction. Therefore, no pro forma adjustments are deemed necessary
since the transaction has been fully reflected.
(c) Exhibits. See Index to Exhibits incorporated herein in its
entirety by this reference.
<PAGE> 20
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 thereunto duly authorized.
MITY-LITE, INC.
(Registrant)
By: /s/ Bradley T Nielson
----------------------
Bradley T Nielson
Date: June 12, 1997 Its: Chief Financial Officer
<PAGE> 21
INDEX TO EXHIBITS
2.1* Contribution Agreement dated as of March 24, 1997 by and
among Estate of Chester E. Dekko, David Kebrdle, Dennis and
Mary M. Kebrdle, Domenic and Martha S. Federico, ChiCol
Group, Inc., DO Group, Inc., Sican Corp., Sican II Corp.,
DO Group Holding, Inc. and Mity-Lite, Inc.
2.2* Stock Purchase Agreement dated as of March 13, 1997 between
Mity-Lite, Inc. and Xaio, Inc.
2.3* Stock Purchase Agreement dated as of March 13, 1997 between
Mity-Lite, Inc. and Ellman Equities, Inc.
2.4* Stock Purchase Agreement dated as of March 13, 1997 between
Mity-Lite, Inc. and Key Equity Capital Corporation.
2.5* Stock Purchase Agreement dated as of March 13, 1997 between
Mity-Lite, Inc. and National City Capital Corporation.
2.6* Stock Purchase Agreement dated as of March 13, 1997 between
Mity-Lite, Inc. and Cardinal Development Capital Fund I.
2.7* Term Loan Agreement dated as of March 24, 1997 between
Mity-Lite, Inc. and Sican Corp.
2.8* Put Agreement dated as March 24, 1997 by and among Mity-
Lite, Inc. and Dennis Kebrdle, David Kebrdle, Domenic
Federico, ChiCol Group, Inc., Sican II Corp., and DO Group,
Inc.
23 Consent of Crowe, Chizek and Company LLP
* Exhibit previously filed on the Form 8-K dated March 31, 1997.
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Form 8-K/A of Mity-Lite, Inc. of our report
dated April 3, 1997 on the 1996 and 1995 financial statements of Sican Corp.
Crowe, Chizek and Company LLP
Elkhart, Indiana
June 6, 1997
