<PAGE>
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: APRIL 9, 1999
(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> 1
Item 2. Acquisition or Disposition of Assets.
On April 6, 1999, Mity-Lite, Inc., a Utah corporation (the
"Registrant"), issued the press release attached hereto as Exhibit 99.3,
announcing it would acquire certain assets and obligations of The CenterCore
Group, Inc. ("CenterCore"), a privately-owned designer, manufacturer and
marketer of call center furniture. The transaction closed on April 9, 1999.
Two wholly owned subsidiaries of Mity-Lite completed the transactions
contemplated in the Asset Purchase Agreement and the Subordinated Debt
Assignment Agreements as well as certain other related transactions. C Core,
Inc., a Utah corporation, purchased the accounts receivable, inventory,
machinery and equipment, intellectual property and certain other assets of
The CenterCore Group, Inc. for an estimated $5.0 million. The final purchase
price will be determined based on asset values at closing and will be adjusted
dollar for dollar for increases and/or decreases in the closing book values of
accounts receivable, inventory, and machinery and equipment. C Core will
continue to design and market call center furniture under the CenterCore
name. Product manufacturing will be transitioned to DO Group, Inc., a 49.9
percent owned affiliate of Mity-Lite.
BOCCC, Inc., also a Utah corporation and wholly owned subsidiary of
Mity-Lite, purchased the outstanding subordinated debt obligations of
CenterCore for $0.5 million. The outstanding subordinated debt obligations
of CenterCore totaled approximately $2.0 million at closing. In addition,
BOCCC, Inc. has purchased certain other unsecured claims.
Cash from Mity-Lite's general working capital was used to fund the
purchases.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements of Business Acquired.
<PAGE> 2
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders
The CenterCore Group, Inc.
North Plainfield, New Jersey
We have audited the statement of net assets in liquidation of The CenterCore
Group, Inc. as of December 31, 1998 and statements of operations and changes
in net liabilities in liquidation, and cash flows for the year 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 audit.
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
As described in Note 1 to the financial statements, on April 9, 1999, pursuant
to a three party agreement between and among the Company, the Company's bank
and a third-party purchaser, the Company's bank foreclosed on the Company's
debt and took possession of substantially all the Company's productive assets,
which were subsequently sold to a third-party and liquidation became imminent.
As a result, the Company has changed its basis of accounting at December 31,
1998 from the going-concern basis to a liquidation basis.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets in liquidation of The CenterCore Group,
Inc. as of December 31, 1998, the changes in its net assets in liquidation for
the year then ended, and the results of its operations and its cash flows for
the year then ended, in conformity with generally accepted accounting
principles applied on the bases described in the preceding paragraph.
Simione, Scillia, Larrow & Dowling LLC
New Haven, Connecticut
April 9, 1999
<PAGE> 3
THE CENTERCORE GROUP, INC.
(A Company in Liquidation)
STATEMENT OF NET LIABILITIES IN LIQUIDATION
December 31, 1998
(Dollars in thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 234
Accounts receivable 5,854
Inventories 1,219
Prepaid expenses and other current assets 204
--------------
Total current assets 7,511
PROPERTY AND EQUIPMENT 748
OTHER ASSETS 98
--------------
$ 8,357
==============
LIABILITIES AND NET LIABILITIES IN LIQUIDATION
ACCRUAL FOR ESTIMATED ADMINISTRATIVE EXPENSES $ 175
--------------
SECURED DEBT
Long-term debt 5,007
Capital leases 369
--------------
Total secured debt 5,376
--------------
SECURED SUBORDINATED DEBT 1,243
UNSECURED CREDITORS
Subordinated debt 500
Accounts payable 2,490
Accrued expenses 1,537
-------------
Total unsecured creditors 4,527
-------------
ACCRUAL FOR LOSS FROM OPERATIONS
THROUGH DATE OF FORECLOSURE 1,429
-------------
Total liabilities 12,750
-------------
NET LIABILITIES IN LIQUIDATION $ (4,393)
=============
See notes to financial statements.
<PAGE> 4
CENTERCORE GROUP, INC.
(A Company in Liquidation)
STATEMENT OF OPERATIONS AND
CHANGES IN NET LIABILITIES IN LIQUIDATION
Year ended December 31, 1998
(Dollars in thousands)
REVENUES EARNED $ 23,676
COST OF REVENUES EARNED 14,846
-------------
GROSS PROFIT 8,830
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 9,023
LOSS ON INVESTMENT IN AFFILIATE 342
-------------
9,365
-------------
LOSS FROM OPERATIONS (535)
NONOPERATING EXPENSE
Interest expense (516)
-------------
LOSS BEFORE INCOME TAX EXPENSE (1,051)
INCOME TAX EXPENSE 244
-------------
NET LOSS BEFORE EFFECT OF LIQUIDATION (1,295)
EXCESS OF LIQUIDATION VALUE OVER GOING CONCERN
CARRYING AMOUNTS 238
ESTIMATED ADMINISTRATIVE COSTS IN LIQUIDATION (175)
LOSS FROM OPERATIONS THROUGH DATE OF FORECLOSURE (1,429)
-------------
CHANGE IN NET LIABILITIES IN LIQUIDATION (2,661)
DEFICIENCY IN ASSETS, January 1, 1998 (1,732)
-------------
NET LIABILITIES IN LIQUIDATION, December 31, 1998 $ (4,393)
=============
See notes to financial statements and report of independent auditors.
<PAGE> 5
THE CENTERCORE GROUP, INC.
(A Company in Liquidation)
STATEMENT OF CASH FLOWS
Year ended December 31, 1998
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES AND GAINS
Change in net assets $ (2,661)
Adjustments to reconcile changes in net assets
to net cash provided by operating activities
Excess of liquidation value over carrying costs (238)
Estimated administrative costs in liquidation 175
Loss from operations through date of foreclosure 1,429
Depreciation and amortization 228
Nonrecurring charge 342
Bad debt expense 39
Deferred income tax benefit 327
Changes in assets and liabilities:
Accounts receivable (112)
Inventories 143
Prepaid expenses and other current assets 110
Other assets (13)
Accounts payable 508
Accrued expenses (818)
Deferred revenues 394
-------------
Net cash used in operating activities (147)
-------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (46)
-------------
Net cash used in investing activities (46)
-------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt and
capital lease obligations, net 259
Principal payments of long-term debt and
capital lease obligations (712)
Decrease in other long-term liabilities (45)
-------------
Net cash used in financing activities (498)
-------------
Net decrease in cash and cash equivalents (691)
CASH AND CASH EQUIVALENTS, Beginning 925
-------------
CASH AND CASH EQUIVALENTS, Ending $ 234
=============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ 588
=============
See notes to financial statements and report of independent auditors.
<PAGE> 6
THE CENTERCORE GROUP, INC.
(A Company in Liquidation)
NOTES TO FINANCIAL STATEMENTS
(Dollars in thousands)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The CenterCore Group, Inc. (the Company), a Subchapter S Corporation, is a
manufacturer and designer of office furniture. Sales are conducted through a
distribution network of sales offices located in the United States, Canada and
the United Kingdom. A significant percentage of the Company's sales are made
to various U.S. Government agencies. The Company believes that purchase
decisions for the government agencies are made independently at each agency,
all of which are subject to budgetary constraints. Consequently, the Company
does not view the entire U.S. Government as a single customer. Sales to the
U.S. Department of Defense and other agencies of the U.S. Government were
approximately 41 percent of net sales in 1998. The Company does not depend on
any one supplier for a substantial part of its product line and believes that
alternative sources of supply are available for its products. Management is
pursuing an orderly liquidation including the possible filing for protection
under federal bankruptcy proceedings.
Significant Accounting Policies
Basis of Accounting - On April 9, 1999, pursuant to a three party agreement
between and among the Company, the Company's bank and third-party purchaser,
the Company's bank foreclosed on the Company's debt and took possession of
substantially all the Company's productive assets, which were subsequently
sold to the third-party. Because liquidation is imminent, the Company has
adopted the liquidation basis of accounting in which assets and liabilities
are measured at the amounts of cash expected in liquidation.
Adjustments of Estimated Values - Effective with the foreclosure of
substantially all the assets of the Company, management decided to liquidate
the Company. Effective with this decision, the carrying amounts of assets and
liabilities were adjusted from their historical basis to the amounts of cash
expected from their realization and settlement. This liquidation basis of
accounting has been applied to the financial statements for the year ended
December 31, 1998. Because of the short liquidation period expected, the
effects of discounting would not be significant and have been ignored. The
initial adjustment decreased the net liabilities from $3,027 to $4,393 is as
follows:
<PAGE> 7
Going Concern Liquidation
Basis Carrying Basis Carrying
Amount Amount
-------------- -------------
Cash and cash equivalents $ 234 $ 234
Accounts receivable, net of allowance 6,803 5,854
Inventories 1,305 1,219
Prepaid expenses and current assets 217 204
Property and equipment 422 748
Other assets 98 98
Secured bank debt (5,007) (5,007)
Capital leases (380) (369)
Secured subordinated debt (1,243) (1,243)
Unsecured subordinated debt (500) (500)
Accounts payable (2,490) (2,490)
Estimated administrative expenses - (175)
Estimated loss of operations through date of
foreclosure - (1,429)
Accrued expenses (2,092) (1,537)
Deferred revenue (394) -
------------- -------------
$ (3,027) $ (4,393)
============= =============
The liquidation values of accounts receivable, inventories, and property and
equipment were based on the third-party sale of those assets that was made on
April 9, 1999. In that sale, property and equipment was valued by an
independent appraiser. Accounts receivable and inventory were adjusted for
expected uncollectible accounts and obsolescence and have been stated at net
realizable value. Accounts receivable are reduced by amounts owed as
commissions to third-party dealers that are offsetable against amounts due to
the Company from such dealers.
Prepaid expenses are valued at their amortized cost in instances in which the
prepaid services will be utilized before ultimate liquidation.
Cash and Cash Equivalents - For purposes of the statements of cash flows, cash
and cash equivalents include cash on hand and in banks maturing within 90 days
of purchase.
Concentrations of Credit Risk - Financial instruments that potentially subject
the Company to concentrations of credit risk consist principally of cash
deposits and trade receivables. Cash is deposited in FDIC insured
depositories, however, at December 31, 1998, the amounts deposited exceeded
FDIC insurance by $134. Concentrations of credit risk with respect to trade
receivables are limited by the Company's large number of customers and the
fact that a significant portion is from various agencies of the U.S.
Government.
Inventories - Inventories are stated net realizable value.
<PAGE> 8
Property and Equipment - Property and equipment are stated at net realizable
value.
Depreciation on property and equipment for the year ended December 31, 1998
(prior to the decision to liquidate) is calculated using the straight-line
method over the estimated useful lives of the assets, generally three to seven
years. Capitalized software costs (prior to liquidation) are amortized on a
straight-line basis over five years. Prior to liquidation, property and
equipment held under capital leases and leasehold improvements are amortized
on a straight-line basis over the shorter of the lease term or estimated
useful lives of the assets.
Revenue Recognition - Prior to liquidation, sales of furnishings are
recognized when product is shipped and title and risk of loss is transferred.
Revenue from installation services is recognized when performed.
Income Taxes - The Company elected to file as a Subchapter S Corporation for
federal income tax reporting purposes in accordance with Section 1362 of the
Internal Revenue Code.
State income taxes are accounted for using the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credits carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes
the enactment date.
Accrued Expenses - Administrative costs necessary for an orderly liquidation
are accrued in accrued expenses as follows:
Personnel costs during liquidation $ 55
Legal and other professional expenses 85
Other 35
-----------
$ 175
===========
Use of Estimates - Management of the Company has made a number of estimates
and assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting principles
presented on a liquidation basis of accounting. Actual results could differ
from those estimates.
<PAGE> 9
NOTE 2 - INVENTORIES
Inventories, at net realizable value, consist of the following at December 31,
1998:
Finished goods $ 734
Work in process 110
Raw materials 375
-----------
$ 1,219
===========
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31, 1998:
Furniture and fixtures $ 227
Machinery and equipment 483
Auto 38
-----------
$ 748
===========
<PAGE> 10
NOTE 4 - LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1998:
Secured debt
$6,500 revolving loan bearing interest at
prime plus 1.5 percent (a) (9.25 percent at
December 31, 1998) $ 5,007
Secured subordinated debt
$1,962 subordinated promissory note payable
in semiannual installments of $140 plus interest
commencing February 25, 1997, with final payment
of $981 due August 25, 2000, net of unamortized
discount of $132 and $211 at December 31, 1998
and 1997, respectively. Interest is payable at
8 percent commencing February 25, 1997 (b) 1,243
Unsecured debt
$500 subordinated promissory notes payable
to certain shareholders and JGFS, Inc. due on
December 31, 1998. Interest is payable at 12
Percent semiannually commencing June 30,
1998 (see Note 7) 500
-----------
$ 6,750
===========
(a) The Company borrows under a credit facility from a bank of $6,500 based on
a defined percentage of qualified accounts receivable plus the lessor of
$1,500 or a defined percentage of eligible inventory. The defined percentages
are scheduled to decline each month. The rate of interest is prime plus 1.50
percent. The credit facility contains various restrictive covenants and
requires the Company to maintain minimum working capital, minimum adjusted
tangible net worth and a minimum cash flows, as defined, limits on the amount
of annual capital expenditures and prohibits the Company from making any
loans. At December 31, 1998 the Company was not in compliance with the
minimum working capital, minimum adjusted tangible net worth and minimum cash
flow covenants under this credit facility.
At December 31, 1998 the bank agreed to forbear action on the defaults and
extend the maturity date to March 31, 1999. The borrowing base was also
amended, continuing the scheduled decline of the percentages applied to
qualified accounts receivable and eligible inventory and also limiting the
totals to be lent against accounts receivable from United Kingdom Customers
and inventory.
<PAGE> 11
(b) The Company also has a subordinated promissory note agreement with Core
Technologies, Inc. The note had an original face value of $1,962 and a fair
value of $1,568 (using a discount rate of 12 percent). Borrowings under the
subordinated promissory note are secured by a second priority lien on all of
the Company's fixed assets. In the event the Company's EBITDA, as defined,
exceeds $2,000 in any fiscal year during the five-year term, an additional
principal payment equal to 50 percent of the EBITDA excess over $2,000 is
required to be made and the final payment reduced by a corresponding amount.
NOTE 5 - INCOME TAXES
Components of income tax (benefit) expense for the year ended December 31,
1998 are as follows:
Current - state and local $ (83)
Deferred - state and local 327
-----------
$ 244
===========
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets at December 31, 1998 are as follows:
Deferred tax assets (liabilities) $ 23
Allowance for doubtful accounts 29
Inventory reserves (3)
Net operating loss carryforward 191
-----------
Total gross deferred assets $ 240
Valuation allowance (240)
-----------
Total net deferred tax asset -
===========
The valuation allowance for deferred tax assets as of December 31, 1998 was
$240. The net change in the total valuation allowance for the year ended
December 31, 1998 was an increase of $186. In assessing the realizability of
deferred tax assets, management considers whether it is more likely than not
that some portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the generation
of future taxable income during periods in which those temporary differences
become deductible. Management considers the scheduled reversal of deferred
tax liabilities, projected future taxable income, and tax planning strategies
in making this assessment. Due to the imminence of liquidation, the Company
will not realize the benefits of these deductible differences. At December
31, 1998, the deferred tax assets were fully reserved. At December 31, 1998,
the Company had capital loss carryforwards for state income tax purposes
totaling $600 which expire in 2004.
<PAGE> 12
NOTE 6 - BENEFIT PLAN
The Company maintains a 401(k) plan for the benefit of substantially all of
its employees. Employees may make voluntary tax-deferred contributions of not
less than 1 percent nor more than 15 percent of eligible compensation, as
defined. The Company matches 25 percent of the employee's contribution up to
4 percent of the employee's eligible compensation, and all costs of the plan
are paid by the plan. The employer contribution vests in three years. The
Company intends to terminate the Plan concurrent with liquidation of the
Company.
NOTE 7 - RELATED PARTY TRANSACTIONS AND NONRECURRING CHARGE
During 1998, the Company advanced $342 to JG Furniture Group, Inc. (JG) an
affiliate of the Company. Such amount was comprised of a $250 participation
in JG's revolving credit facility funded by certain shareholders of the
Company in the form of subordinated notes with terms identical to the $500
subordinated notes described in Note 4 and additional advances and expenses of
$92. This advance was not recoverable and was written off in 1998.
In 1998, the Company paid fees to and reimbursed expenses of affiliates of
$549 for accounting and other management services performed throughout the
year.
NOTE 8 - LEASES
The Company is obligated under various capital leases for certain of its
vehicles, computer hardware and software, and machinery and equipment. At
December 31, 1998, the gross amount of the plant and equipment and related
accumulated depreciation recorded under capital leases were as follows:
Furniture and fixtures $ 4
Automobiles 38
Information systems 327
-----------
$ 369
===========
Amortization on assets held under capital leases for the year ended December
31, 1998 (prior to the decision to liquidate) is included in depreciation
expense.
The Company also leases plant, office facilities and certain equipment under
operating leases with terms ranging from one to five years. Rental expense
for operating leases in 1998 was $365.
<PAGE> 13
NOTE 9 - CONTINGENCIES
The Company is involved in certain legal matters arising in the ordinary
course of business. Management believes that the Company has meritorious
defenses and that the ultimate disposition of these matters will not exceed
the aggregate amount of $100,000 accrued for their disposition.
The amounts estimated for administrative expenses have been based on an
orderly liquidation agreed to by any creditors' committee and the bankruptcy
court. It is not possible to anticipate all future costs that may arise.
<PAGE> 14
(b) Pro Forma Financial Information.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated condensed financial
statements are based upon the historical financial statements of Mity-Lite,
Inc. and The CenterCore Group, Inc., and should be read in conjunction with
those historical financial statements as they appear elsewhere. The unaudited
pro forma consolidated condensed statements of operations for the year ended
March 31, 1999 present the pro forma results of operations for Mity-Lite as if
The CenterCore Group acquisition had been consummated as of April 1, 1998.
The unaudited pro forma consolidated condensed balance sheet presents the pro
forma financial position of Mity-Lite as of March 31, 1999.
The final purchase value of the net assets has not yet been determined
and is still subject to closing adjustments. The final purchase price will be
determined based on asset values at closing and will be adjusted dollar for
dollar for increases and/or decreases in the closing book values of accounts
receivable, inventory, and machinery and equipment. Management anticipates
the final determination of asset values will be completed within 30 days of
this filing. The unaudited pro forma consolidated condensed balance sheet
information reflects adjustments that are based on asset values provided by
The CenterCore Group, Inc. These asset values have not been verified by C
Core and may be subject to material changes. Therefore, any changes in asset
values, if material, will cause the Registrant to file an amendment to this
Current Report on Form 8-K.
The unaudited pro forma consolidated 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 acquisition had
been effected on the dates indicated, nor are they indicative of the results
of future operations.
<PAGE> 15
MITY-LITE, INC. AND
THE CENTERCORE GROUP, INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
Pro Forma
Mity-Lite,
Inc. and
Mity-Lite, The CenterCore Pro Forma The CenterCore
Inc. Group, Inc. Adjustments Group, Inc.(1)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $29,468,000 $23,676,000 $53,144,000
Cost of products sold 18,122,000 14,846,000 106,000(2) 33,074,000
----------- ----------- ----------- -----------
Gross profit 11,346,000 8,830,000 (106,000) 20,070,000
Selling, general and
administrative expenses 6,084,000 9,023,000 15,107,000
Loss on investment in affiliate - 342,000 342,000
----------- ----------- ----------- -----------
Income (loss) from operations 5,262,000 (535,000) (106,000) 4,621,000
----------- ----------- ----------- -----------
Other income (expense):
Interest expense (10,000) (516,000) (526,000)
Investment income 442,000 442,000
Equity in losses of affiliate 480,000 480,000
Amortization of intangibles (32,000) (42,000)(3) (74,000)
Other (38,000) (38,000)
----------- ----------- ----------- -----------
Total other income (expense) 842,000 (516,000) (42,000) 284,000
----------- ----------- ----------- -----------
Income (loss) before provision
for income taxes 6,104,000 (1,051,000) (148,000) 4,905,000
Provision for income taxes 2,174,000 244,000 (671,000)(4) 1,747,000
----------- ----------- ----------- -----------
Net income(loss) $3,930,000 ($1,295,000) 523,000 $3,158,000
=========== =========== =========== ===========
Basic earnings per share $1.21 $0.97
=========== ===========
Weighted average number of common
shares - basic 3,245,584 3,245,584
=========== ===========
Diluted earnings per share $1.17 $0.94
=========== ===========
Weighted average number of common and
common equivalent shares
- diluted 3,358,453 3,358,453
=========== ===========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Financial Statements
<PAGE> 16
MITY-LITE, INC. AND
THE CENTERCORE GROUP, INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEETS
AS OF MARCH 31, 1999
<TABLE>
<CAPTION>
Pro Forma
Mity-Lite,
Inc. and
Mity-Lite, Pro Forma The CenterCore
Inc. Adjustments Group, Inc.(5)
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 8,029,000 $(5,462,000) $ 2,567,000
Available-for-sales securities 3,899,000 3,899,000
Accounts receivable 3,596,000 3,148,000 (6) 6,744,000
Inventories 1,544,000 1,116,000 (7) 2,660,000
Deferred income taxes 250,000 250,000
Other current assets 233,000 233,000
----------- ----------- -----------
Total current assets 17,551,000 (1,198,000) 16,353,000
----------- ----------- -----------
Property and equipment, net 2,155,000 704,000 (8) 2,859,000
Investment in affiliate 1,483,000 1,483,000
Note received from affiliate 1,066,000 1,066,000
Intangible assets 1,208,000 844,000 (9) 2,052,000
----------- ----------- -----------
TOTAL ASSETS $23,463,000 350,000 $23,813,000
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS
EQUITY
Current liabilities:
Bank line of credit $ 286,000 $ 286,000
Accounts payable 1,569,000 350,000(10) 1,919,000
Accrued expenses 1,277,000 1,277,000
Current portion - long term debt 45,000 45,000
----------- ----------- -----------
Total current liabilities 3,177,000 350,000 3,527,000
Deferred income tax liabilities 271,000 271,000
Long term debt 97,000 97,000
----------- ----------- -----------
Total liabilities 3,545,000 350,000 3,895,000
Stockholders' equity:
Common stock 32,000 32,000
Additional paid-in capital 7,822,000 7,822,000
Retained earnings 12,009,000 12,009,000
Accumulated comprehensive income 55,000 55,000
----------- ----------- -----------
Total stockholders' equity 19,918,000 19,918,000
----------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $23,463,000 350,000 $23,813,000
=========== =========== ===========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Financial Statements
<PAGE> 17
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(1) The CenterCore Group, Inc. acquisition was consummated effective April 9,
1999. Pro forma income statement information is included for the year ended
March 31, 1999 as if the acquisition was consummated on April 1, 1998. These
pro forma financial statements reflect the necessary adjustments as if
Mity-Lite commenced consolidating The CenterCore Group, Inc. on April 1, 1998.
The information for the unaudited pro forma consolidated condensed statements
of operations includes Mity-Lite's results of operations for the year ended
March 31, 1999, and The CenterCore Group's results of operations for the year
ended December 31, 1998.
(2) Represents amounts resulting from increasing the value of finished goods
and work in process inventory to estimated selling prices less the sum of (a)
costs to complete the inventory, (b) costs of disposal, and (c) a reasonable
profit allowance for the finishing the inventory and selling efforts.
(3) Represents amortization of amounts related to the difference between
Mity-Lite's acquisition cost and the underlying value of net assets purchased.
The total difference, estimated at $844,000, will be amortized on a
straight-line bases over a 20 year period.
(4) Represents the incremental change in the entity's income tax provision
as a result of applying Mity-Lite's estimated tax rate of 35.6 percent to
CenterCore's net loss before effect of liquidation and the pretax pro forma
adjustments. This pro forma tax adjustment data reflects provisions for
federal and state income taxes as if CenterCore were treated as a C
Corporation on a going concern basis.
(5) 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. These pro forma financial statements reflect the necessary
adjustments as if Mity-Lite purchased the net assets of The CenterCore Group,
Inc. on March 31, 1999. The information for the unaudited pro forma
consolidated condensed balance sheets includes Mity-Lite's statement of
financial position as of March 31, 1999, and estimated purchase values of the
net assets of The CenterCore Group as of April 9, 1999.
(6) Represents the estimated present value of amounts to be received
determined using an 8 percent interest rate, less allowances for uncollectible
accounts.
(7) Represents the estimated value of inventory including $106,000 resulting
from increasing the value of finished goods and work in process inventory to
estimated selling prices less the sum of (a) costs to complete the inventory,
(b) costs of disposal, and (c) a reasonable profit allowance for the finishing
the inventory and selling efforts. Raw materials are valued at current
replacement costs.
<PAGE> 18
(8) Represents estimated orderly liquidation value from a recent machinery
and equipment appraisal.
(9) Represents the amount of intangible assets related to the difference
between Mity-Lite's acquisition cost and the underlying value of net assets
purchased. This difference will be amortized on a straight-line bases over a
20 year period.
(10) Represents the estimated costs of moving the manufacturing facility to
Marked Tree, Arkansas and other estimated liabilities assumed as part of the
acquisition.
(c) Exhibits. See Index to Exhibits incorporated herein in its entirety
by this reference.
<PAGE> 19
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 16, 1999 Its: Chief Financial Officer
INDEX TO EXHIBITS
2.10* Asset Purchase Agreement dated as of April 9, 1999, by and
among The CenterCore Group, Inc., a Delaware Corporation, Fleet
Capital Corporation, a Rhode Island Corporation, and C Core, Inc.,
a Utah Corporation and wholly owned subsidiary of Mity-Lite, Inc.
2.11* Form of Assignment Agreement by and among BOCCC, Inc., a Utah
Corporation and wholly owned subsidiary of Mity-Lite, Inc., and
various parties holding subordinated debt instruments of The
CenterCore Group, Inc. This form of Assignment Agreement is
substantially the same agreement that was signed by BOCCC, Inc.
and nine different subordinated debt holders.
23 Consent of Simione, Scillia, Larrow & Dowling
99.3* Mity-Lite, Inc. Press Release (April 6, 1999)
* Exhibit previously filed on April 23, 1999 on the Form 8-K dated April 9,
1999.
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 9, 1999 on the 1998 financial statements of The CenterCore Group,
Inc.
Simione, Scillia, Larrow & Dowling LLC
New Haven, Connecticut
June 16, 1999
