<PAGE> 1
==============================================================================
U.S. 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 (Date of earliest event reported): April 1, 2000
MITY-LITE, INC.
(Exact name of registrant as specified in its charter)
Utah 0-23898 87-0448892
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification
of incorporation) No.)
1301 West 400 North
Orem, Utah 84057
(Address of principal executive offices, zip code)
Registrant's telephone number, including area code: (801) 224-0589
N/A
(Former name or former address, if changed since last report)
==============================================================================
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 31, 2000, Mity-Lite, Inc. announced that the Company had entered
into an agreement to acquire the remaining 50.1 percent of the stock of DO
Group, Inc., a privately-held manufacturer of specialty office seating and
office systems based in Elkhart, Indiana. DO Group markets its products under
the Domore, DO3, JG and Corel tradenames. The transaction closed on April 1,
2000.
The transaction calls for the exchange of approximately $2.2 million cash
and 41,000 shares of Mity-Lite stock for the remaining 50.1 percent of DO
Group stock from the DO Group shareholders. In addition, Mity-Lite will
assume approximately $1.0 million in long-term debt and $2.5 million in short
term borrowings. The acquisition will be treated for accounting purposes as a
purchase. DO Group, Inc. has become a wholly owned subsidiary of Mity-Lite.
For the twelve months ended March 31, 2000, DO Group will generate net sales
of nearly $13 million, excluding $5 million of intercompany sales. Cash for
the purchase was generated from operations. Attached hereto as Exhibit
2.12 is the Stock Purchase Agreement.
<PAGE> 3
ITEM 7. EXHIBITS.
(a) Financial statements of business acquired.
REPORT OF INDEPENDENT AUDITORS
Board of Directors
DO Group, Inc.
Elkhart, Indiana
We have audited the accompanying consolidated balance sheets of DO Group, Inc.
and Subsidiary as of March 31, 1999 and 1998, and the related consolidated
statements of income 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 DO Group,
Inc. and Subsidiary as of March 31, 1999 and 1998, 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
May 4, 1999
<PAGE> 4
DO GROUP, INC.
CONSOLIDATED BALANCE SHEETS
March 31, 1999 and 1998
1999 1998
---- ----
ASSETS
Current assets
Cash $ 66,810 $ 10,073
Accounts receivable (after allowance for
doubtful accounts: 1999 - $53,999; 1998
- $65,413) 2,889,524 1,899,306
Receivable from related party 28,393 -
Insurance proceeds receivable - 799,272
Inventories 1,629,794 1,443,257
Deferred tax asset 1,133,000 905,000
Prepaid expenses 223,663 153,787
--------- ---------
Total current assets 5,971,184 5,210,695
Net property, plant and equipment 1,456,271 1,315,306
Other assets
Receivables from related parties - 102,479
Deferred tax asset 567,000 845,000
Other assets 4,001 3,983
--------- ---------
571,001 951,462
--------- ---------
$7,998,456 $7,477,463
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Checks written in excess of bank balance $ 362,956 $ 223,788
Note payable 2,501,123 3,306,207
Current maturities of long-term debt 1,069,218 -
Accounts payable 808,313 1,400,478
Accrued salaries and commissions 347,556 248,736
Accrued other taxes 321,438 496,093
Customer deposits 111,992 13,232
Accrued warranty 129,313 274,000
Other current liabilities 101,442 125,408
--------- ---------
Total current liabilities 5,753,351 6,087,942
Long-term debt 35,261 1,000,000
Shareholders' equity
Common stock, no par value; 2,526 shares
authorized and 2,525.242 shares issued
and outstanding 2,474,308 2,474,308
Additional paid-in capital 721,921 824,400
Accumulated deficit (986,385) (2,909,187)
--------- ---------
2,209,844 389,521
$7,998,456 $7,477,463
========= =========
See accompanying notes to financial statements
<PAGE> 5
DO GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
AND ACCUMULATED DEFICIT
Years ended March 31, 1999 and 1998
1999 1998
---- ----
Sales $15,138,564 $12,145,282
Cost of goods sold 10,281,586 8,225,598
----------- -----------
Gross profit 4,856,978 3,919,684
Selling, general and administrative
expenses 2,509,209 2,272,017
----------- -----------
Income before interest expense and income taxes 2,347,769 1,647,667
Interest expense 374,967 445,142
----------- -----------
Income before income taxes 1,972,802 1,202,525
Provision for income taxes 50,000 -
----------- -----------
Net income 1,922,802 1,202,525
Accumulated deficit at
beginning of year (2,909,187) (4,111,712)
----------- -----------
Accumulated deficit at end of year $ (986,385) $(2,909,187)
=========== ===========
See accompanying notes to financial statements
<PAGE> 6
DO GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
March 31, 1999 and 1998
1999 1998
---- ----
Cash flows from operating activities
Net income $ 1,922,802 $ 1,202,525
Adjustments to reconcile net income to net cash
from operating activities
Depreciation 94,253 93,632
Gain on sale of assets (3,592) -
Provision for losses on accounts receivable (517) (37,709)
Deferred income taxes 50,000 -
Changes in assets and liabilities
Accounts receivable (1,018,094) (129,548)
Insurance proceeds receivable 799,272 (799,272)
Inventories (186,537) 435,666
Other assets (69,894) 7,977
Checks written in excess of bank balance 139,168 (466,317)
Accounts payable (592,165) (641,257)
Other liabilities (145,729) (647,743)
---------- ----------
Net cash from operating activities 988,967 (982,046)
Cash flows from investing activities
Capital expenditures (236,627) (167,968)
Proceeds from sale of assets 5,001 17,025
---------- ----------
Net cash from investing activities (231,626) (150,943)
Cash flows from financing activities
Net increase (decrease) in bank line of credit (805,085) 1,075,471
Borrowing on long-term debt 108,666 -
Principal payments on long-term debt (4,185) -
---------- ----------
Net cash from financing activities (700,604) 1,075,471
Net change in cash 56,737 (57,518)
Cash at beginning of year 10,073 67,591
---------- ----------
Cash at end of year $ 66,810 $ 10,073
========== ==========
Supplemental disclosure of cash flow information
Cash paid (received) during the year for
Interest $ 383,829 $ 423,927
Income taxes (5,941) (50,728)
Supplemental disclosure of non-cash activities
During the year ended March 31, 1999, accounts receivable to related
parties of $102,479 were transferred to a shareholder of DO Group, Inc. as a
return of capital.
See accompanying notes to financial statements
<PAGE> 7
DO GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999 and 1998
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
OPERATIONS: Do Group, Inc. (the Company) is a holding company for its wholly
owned subsidiary, Sican Corp., which primarily designs and manufactures office
modular systems and seating products and sells to dealers, commercial
businesses and government agencies throughout the country.
At March 31, 1999 and 1998, two customers accounted for 58% and 70%,
respectively, of the Company's total accounts receivable. The Company derived
48% and 46% of sales for the years ended March 31, 1999 and 1998,
respectively, from two customers. 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 with them would have a significant impact on the Company's
operations.
BASIS OF PRESENTATION: The Company is owned by three companies, of which one
company, Mity-Lite, Inc. is a public company with a minority ownership
position.
Mity-Lite, Inc. holds a put option to put back its investment in the Company
to the other shareholders at any time during the next year at a value
specified in the put agreement in exchange for cash. In May 2000, the
majority owners of the Company have the right to convert their interest in the
Company into stock of Mity-Lite, Inc.
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiary. All significant
intercompany accounts and transactions have been eliminated.
REVENUE RECOGNITION: Revenue is recognized upon shipment of product.
ALLOWANCE FOR DOUBTFUL ACCOUNTS: An allowance for doubtful accounts is 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: Income tax expense is 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.
WARRANTY RESERVES: A reserve for warranty costs is based upon estimates
regarding anticipated warranty expenses related to products sold and includes
analysis of historical warranty expense trends.
<PAGE> 8
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 results could differ. Estimates which are particularly susceptible
to change in the near term are the allowance for doubtful accounts, inventory,
deferred tax assets and accrued warranty.
NOTE 2 - INVENTORIES
Inventories at March 31 consist of the following:
1999 1998
---- ----
Raw materials $1,202,112 $1,300,621
Work-in-process 373,639 123,662
Finished goods 54,043 18,974
--------- ---------
$1,629,794 $1,443,257
========= =========
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
Net property, plant and equipment at March 31 consists of the following:
1999 1998
---- ----
Land $ 40,000 $ 40,000
Buildings 1,550,906 1,549,029
Tools, dies and molds 448,753 427,931
Machinery and equipment 771,250 733,730
Furniture and fixtures 600,248 428,841
Vehicles 98,451 86,642
--------- ---------
3,509,608 3,266,173
Accumulated depreciation 2,053,337 1,950,867
--------- ---------
$1,456,271 $1,315,306
========= =========
NOTE 4 NOTE PAYABLE
The Company has a 1% over prime demand revolving loan agreement with a bank.
Maximum borrowings are $6,000,000 subject to a borrowing base formula. The
agreement is secured by accounts receivable, inventory, equipment, assignment
of life insurance proceeds of $1,000,000 each on policies covering three
officers, general intangibles and personal guarantees of three officers of the
Company for up to $500,000 each.
<PAGE> 9
NOTE 5 LONG-TERM DEBT
Long-term debt at March 31 consists of the following:
1999 1998
---- ----
10% subordinated note payable to related party;
interest due quarterly; principal due March 24,
2000; secured by substantially all assets of
the Company; the note increased during 1999 for
accrued interest converted to principal $1,051,479 $1,000,000
9.244% note payable to IBM Credit Corporation;
due in monthly installments of $1,825 including
interest through December 2001; secured by
software 53,000 -
--------- ---------
1,104,479 1,000,000
Current maturities 1,069,218 -
--------- ---------
$ 35,261 $1,000,000
========= =========
Maturities for the next three years are as follows:
2000 $1,069,218
2001 19,451
2002 15,810
The notes payable to bank and related party have covenants including reporting
requirements and minimum equity requirements. The Company was in compliance
with the loan covenants or has received appropriate waivers.
NOTE 6 - INCOME TAXES
The provision for income taxes for 1999 and 1998 consists of the following:
1999 1998
---- ----
Federal income tax $ - $ -
State income tax - -
Deferred income taxes 660,000 465,000
Change in valuation allowance (610,000) (465,000)
--------- ----------
$ 50,000 $ -
========= ==========
<PAGE> 10
The reconciliation of the statutory federal tax rate to the provision for
income taxes is as follows:
1999 1998
---- ----
Federal statutory rate 34.0% 34.0%
State taxes, net of federal benefit 5.0 5.0
Valuation allowance (30.9) (39.0)
Other (5.6) -
----- -----
2.5% -
Significant components of the Company's deferred tax assets at March 31 are
summarized as follows:
Assets
------
1999 1998
---- ----
Allowance for doubtful accounts $ 20,000 $ 25,000
Inventories 420,000 403,000
Warranty reserve 50,000 114,000
Other 85,000 (7,000)
Tax loss carryforwards 1,125,000 1,825,000
Less valuation allowance - (610,000)
--------- ---------
Total $1,700,000 $1,750,000
========= =========
The Company 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 at March 31, 1999 and 1998, $1,700,000 and
$1,750,000, respectively, of deferred tax assets will be realized and has
provided a valuation allowance on amounts in excess of this. As of March 31,
1999 no valuation allowance was provided, while at March 31, 1998 a valuation
allowance of $760,000 ($315,000 current, $445,000 long-term) was provided.
At March 31, 1999, the Company has a federal net operating loss carryforward
of approximately $2,885,000, which expires in 2011. Future changes in
ownership could limit the amount of net operating loss carryforwards available
in any one year.
NOTE 7 COMMITMENTS AND CONTINGENCIES
The Company leases a facility in Elkhart, Indiana from a related party. The
Company entered into a five year lease on April 1, 1997 with monthly payments
of $11,800. The Company pays utilities, insurance, property taxes and
maintenance costs. Future annual rental for these facilities is $141,600 for
a total of $424,800 through April 1, 2002.
The Company rents delivery vehicles on an as needed basis.
Rental expense for 1999 and 1998 was approximately $202,500 and $152,000.
Certain litigation arising in the ordinary course of business is pending
against the Company. The Company believes that the ultimate outcome of these
actions will not result in a material adverse effect on the Company's
financial position, results of operations or cash flows.
<PAGE> 11
NOTE 8 - BENEFIT PLANS
Substantially all of the Arkansas union shop employees are covered under a
multi-employer pension plan. The current contribution rate is 22.5 cents for
each hour compensated. Pension expense for 1999 and 1998 was $24,191 and
$27,705.
NOTE 9 - INSURANCE RECOVERY AND GAIN ON FIRE LOSS SETTLEMENT
The Company had a fire at the Elkhart facility on March 25, 1998 which damaged
inventory and a piece of equipment. The amount recorded as a receivable for
insurance recovery was based on a reasonable estimate at March 31, 1998 and
was received in 1999. A gain of approximately $160,000 was recognized at March
31, 1998 for the insurance value in excess of the inventory carrying value.
The insurance recovery was netted with cost of sales for the inventory
destroyed.
<PAGE> 12
DO GROUP, INC.
UNAUDITED CONSOLIDATED BALANCE SHEET
December 31, 1999
ASSETS
Current assets
Cash $ -
Accounts receivable 3,349,149
Receivable from related party 251,432
Inventories 4,649,585
Prepaid expenses 270,622
----------
Total current assets 8,520,788
Net property, plant and equipment 1,806,467
Other assets
Deferred tax asset 1,432,667
----------
1,432,667
----------
$11,759,922
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Checks written in excess of bank balance $ 542,491
Accounts payable 1,989,235
Accrued salaries and commissions 684,517
Accrued other taxes 3,950
Note payable 3,595,225
Note payable to affiliate 2,264,983
----------
Total current liabilities 9,080,401
Shareholders' equity
Common stock, no par value; 2,526 shares
authorized and 2,525.242 shares issued
and outstanding 2,474,308
Additional paid-in capital 721,921
Accumulated deficit (516,708)
----------
2,679,521
$11,759,922
==========
<PAGE> 12
DO GROUP, INC.
CONSOLIDATED STATEMENT OF INCOME
AND ACCUMULATED DEFICIT
Nine months ended December 31, 1999
Sales $12,268,046
Cost of goods sold 9,284,246
-----------
Gross profit 2,893,800
Selling, general and administrative
expenses 1,917,628
-----------
Income before interest expense and income taxes 1,066,172
Interest expense 296,193
-----------
Income before income taxes 769,979
Provision for income taxes 300,302
-----------
Net income 469,677
Accumulated deficit at
beginning of year (986,385)
-----------
Accumulated deficit at end of year $ (516,708)
===========
<PAGE> 13
DO GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
December 31, 1999
Cash flows from operating activities
Net income $ 469,678
Adjustments to reconcile net income to net cash
from operating activities
Depreciation 131,032
Deferred income taxes 271,334
Changes in assets and liabilities
Accounts receivable (431,232)
Inventories (3,019,791)
Other assets (298,391)
Checks written in excess of bank balance 179,535
Accounts payable 1,180,922
Other liabilities (323,274)
----------
Net cash from operating activities (1,840,187)
Cash flows from investing activities
Capital expenditures (481,228)
Increase in note receivable from affiliate 1,213,504
----------
Net cash from investing activities 732,276
Cash flows from financing activities
Net increase (decrease) in bank line of credit 1,076,362
Principal payments on long-term debt (35,261)
----------
Net cash from financing activities 1,041,101
Net change in cash (66,810)
Cash at beginning of year 66,810
----------
Cash at end of year $ -
==========
<PAGE> 14
(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 DO Group, Inc. (DO
Group), 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, 1999 and for the nine
months ended December 31, 1999 present the pro forma results of operations of
Mity-Lite as if the DO Group acquisition had been consummated as of April 1,
1998. The unaudited pro forma condensed balance sheet presents the pro forma
financial position of Mity-Lite as of December 31, 1999. 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.
<TABLE>
MITY-LITE, INC. AND
DO GROUP, INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE TWELVE MONTHS ENDED MARCH 31, 1999
<CAPTION>
Pro Forma
Mity-Lite, Inc.
Mity-Lite, DO Group Pro Forma and DO Group
Inc. Inc. Adjustments Inc.(1)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $29,467,000 $15,139,000 $ - $44,606,000
Cost of products sold 18,121,000 10,282,000 163,000 (3)
99,000 (4) 28,665,000
----------- ----------- ----------- -----------
Gross profit 11,346,000 4,857,000 (262,000) 15,941,000
Expenses:
Selling, general and
administrative 5,567,000 2,509,000 62,000 (5) 8,138,000
Research and development 549,000 - - 549,000
----------- ----------- ----------- -----------
Total expenses 6,116,000 2,509,000 62,000 8,687,000
----------- ----------- ----------- -----------
Income from operations 5,230,000 2,348,000 (324,000) 7,254,000
Other income (expense):
Interest expense (10,000) (375,000) 375,000 (6) (10,000)
Interest income 442,000 - (180,000)(7) 262,000
Equity in income of affiliate 480,000 - (480,000)(8) -
Other (38,000) - - (38,000)
----------- ----------- ----------- -----------
Total other income 874,000 (375,000) (285,000) 214,000
----------- ----------- ----------- -----------
Income before provision for
income taxes 6,104,000 1,973,000 (609,000) 7,468,000
Provision for income taxes 2,174,000 50,000 507,000 (9) 2,731,000
----------- ----------- ----------- -----------
Net income $ 3,930,000 $ 1,923,000 ($ 1,116,000) $ 4,737,000
=========== =========== =========== ===========
</TABLE>
<TABLE>
MITY-LITE, INC. AND
DO GROUP, INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED DECEMBER 31, 1999
<CAPTION>
Pro Forma
Mity-Lite, Inc.
Mity-Lite, DO Group Pro Forma and DO Group
Inc. Inc. Adjustments Inc.(1)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $33,925,000 $12,268,000 ($ 3,026,000)(10) $43,167,000
Cost of products sold 20,495,000 9,284,000 (3,026,000)(10)
75,000 (4) 26,828,000
----------- ----------- ----------- -----------
Gross profit 13,430,000 2,984,000 (75,000) 16,339,000
Expenses:
Selling, general and
administrative 7,781,000 1,918,000 46,000 (5) 9,745,000
Research and development 650,000 - - 650,000
----------- ----------- ----------- -----------
Total expenses 8,431,000 1,918,000 46,000 10,395,000
----------- ----------- ----------- -----------
Income from operations 4,999,000 1,066,000 (121,000) 5,944,000
Other income (expense):
Interest expense (23,000) (296,000) 296,000 (6) (23,000)
Interest income 333,000 - (135,000)(7) 198,000
Equity in income of affiliate 306,000 - (306,000)(8) -
Other (10,000) - - (10,000)
----------- ----------- ----------- -----------
Total other income 606,000 (296,000) (145,000) 165,000
----------- ----------- ----------- -----------
Income before provision for
income taxes 5,605,000 770,000 (266,000) 6,109,000
Provision for income taxes 2,080,000 300,000 (86,000)(9) 2,294,000
----------- ----------- ----------- -----------
Net income $ 3,525,000 $ 470,000 $ (180,000) $ 3,815,000
=========== =========== =========== ===========
</TABLE>
MITY-LITE, INC. AND
DO GROUP, INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEETS
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Pro Forma
Mity-Lite,
Mity-Lite, DO Group, Pro Forma Inc. and DO
Inc. Inc. Adjustments Group, Inc.(2)
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,284,000 $ - ($ 2,127,000)(11)
(1,269,000)(12) $ 888,000
Available-for-sale securities 2,326,000 - (2,326,000)(12) -
Accounts receivable 8,142,000 3,600,000 (251,000)(13) 11,491,000
Inventory 1,407,000 4,650,000 162,000 (14) 6,219,000
Deferred tax asset 250,000 - - 250,000
Prepaid expenses and other current
assets 723,000 271,000 (40,000)(11) 954,000
----------- ----------- ----------- -----------
Total current assets 17,132,000 8,521,000 (5,851,000) 19,802,000
Net property, plant and equipment 3,752,000 1,806,000 905,000 (4) 6,463,000
Deferred tax asset - 1,433,000 - 1,433,000
Investment in affiliate 1,709,000 - 3,107,000 (11)
(4,557,000)(15)
(259,000)(18) -
Note receivable from affiliate 2,280,000 - (2,265,000)(16) 15,000
Intangibles 2,690,000 - 1,232,000 (17) 3,922,000
----------- ----------- ----------- -----------
Total assets $27,563,000 $11,760,000 ($ 7,688,000) $31,635,000
=========== =========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable - trade $ 2,016,000 $ 1,989,000 (251,000)(13) 3,754,000
Accrued wages, taxes and other 1,610,000 689,000 - 2,299,000
Checks in excess of bank balance - 542,000 - 542,000
Notes payable 463,000 3,595,000 (3,595,000)(12) 463,000
Notes payable to related party - 2,265,000 (2,265,000)(16) -
----------- ----------- ----------- -----------
Total current liabilities 4,089,000 9,080,000 (6,111,000) 7,058,000
Deferred income tax liabilities 343,000 - (259,000)(18)
422,000 (19) 506,000
Shareholders' equity:
Common stock 48,000 2,474,000 (2,474,000)(20) 48,000
Paid-in-capital 7,934,000 722,000 940,000 (11)
(722,000)(20) 8,874,000
Retained earnings (deficit) 15,012,000 (516,000) 516,000 (20) 15,012,000
Accumulated other comprehensive income 137,000 - - 137,000
----------- ----------- ----------- -----------
Total Stockholders' Equity 23,131,000 2,680,000 (1,740,000) 24,071,000
----------- ----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $27,563,000 $11,760,000 ($ 7,688,000) $31,635,000
=========== =========== =========== ===========
See accompanying Notes to Unaudited Pro Forma Consolidated Condensed Financial Statements
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(1) The DO Group, Inc. acquisition was consummated effective April 1, 2000.
Pro forma income statement information is included for the year ended March
31, 1999 and the nine months ended December 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 DO
Group, Inc. on April 1, 1998.
(2) Pro forma balance sheet information is included as of December 31, 1999.
These pro forma financial statements reflect any necessary adjustments as if
the acquisition was consummated on December 31, 1999.
(3) 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.
(4) Represents depreciation of amounts related to the difference between the
book value and fair value (based on appraisals) of DO Group's property, plant
and equipment. The difference for land and buildings, estimated at $489,000
will be depreciated on a straight-line basis over a 30 year period. The
difference for machinery and equipment, estimated at $416,000, will be
depreciated on a straight-line basis over a 5 year period.
(5) 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 $1,232,000 will be amortized on a straight-
line basis over a 20 year period.
(6) Represents interest expense that would not have been incurred due to
Mity-Lite's actions to pay off DO Group's entire note payable at the time of
acquisition.
(7) Represents estimated interest income lost from excess cash reserves used
to pay off DO Group's note payable at the time of acquisition.
(8) Represents the elimination of Mity-Lite's 49.9 percent interest in DO
Group's net income. Prior to acquisition, Mity-Lite utilized the equity
method of accounting for its investment. Under the equity method, Mity-Lite
recognized its proportionate share of the earnings or losses of DO Group as
incurred. After acquiring the remaining 50.1 percent interest in DO Group,
consolidation accounting is used.
(9) Represents the change in the income tax provision resulting from the
other pro forma adjustments to the income statement, except goodwill
amortization, utilizing a 39% estimated effective tax rate. For the twelve
months ended March 31, 1999, an additional adjustment of $720,000 was made to
increase the provision for income taxes of the DO Group. Prior to the
acquisition, DO Group was offsetting its income with a tax loss carryforward
for which a valuation allowance had been established. This adjustment was
made to reflect DO Group's results had they been fully taxed.
(10) Represents the elimination of DO Group sales to Center Core, Inc., a
wholly owned subsidiary of Mity-Lite, Inc.
(11) Represents the cash paid, stock issued, and prepaid acquisition expenses
incurred to complete the acquisition of DO Group, Inc.
(12) Represents the cash and available for sale securities used to pay off DO
Group's note payable.
(13) Represents the elimination of intercompany accounts receivable and
accounts payable between DO Group and Center Core respectively.
(14) Represents the estimated value of inventory 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 finishing the inventory
and selling efforts. Raw materials are valued at current replacement costs.
(15) Represents the elimination of Mity-Lite's investment in affiliate
account resulting from its 49.9 percent interest and its recent 50.1 percent
investment. Prior to acquisition, Mity-Lite utilized the equity method of
accounting for its 49.9 percent interest in DO Group. After acquisition of
the remaining 50.1 percent interest in DO Group, consolidation accounting is
used.
(16) Represents the elimination of intercompany notes receivable and notes
payable between Mity-Lite, Center Core and DO Group.
(17) 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 basis over a
20 year period.
(18) Represents the reversal of the deferred tax liability resulting from the
equity method of accounting for the historical equity in income of DO Group.
(19) Represents the current deferred tax liability based on the differences
in asset values of inventory, property, plant and equipment for book and tax
purposes.
(20) Represents the elimination of DO Group's stockholders equity as a result
of the acquisition.
(c) Exhibits. See Index to Exhibits incorporated herein in its entirety by
this reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MITY-LITE, INC.
Date: June 13, 2000 /s/ Bradley T Nielson
-------------------------------
Bradley T Nielson
Chief Financial Officer
(Principal Financial and
Accounting Officer)
INDEX TO EXHIBITS
2.12* Stock Purchase Agreement, By and Among DO Group Holding, Inc., David
Kebrdle, Mary M. Kebrdle, Martha S. Federico, Estate of Chester E.
Dekko, Dennis Kebrdle, Domenic Federico and Mity-Lite, Inc. dated March
17, 2000.
23 Consent of Crowe, Chizek and Company LLP
* Exhibit previously filed on the Form 8-K dated April 1, 2000.
