<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 2
to
Current Report
Filed pursuant to Section 12, 13, or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 31, 1995
OWOSSO CORPORATION
------------------
(Exact name of issuer as specified in charter)
<TABLE>
<CAPTION>
<S> <C> <C>
PENNSYLVANIA 0-25066 23-2756709
(State or Other Jurisdiction Commission (I.R.S. Employer
of Incorporation or file number Identification
Organization) Number)
</TABLE>
2200 Renaissance Boulevard, Suite 150, King of Prussia, PA 19406
(Address of principal executive offices)
(610) 275-4500
(Registrant's telephone number, including area code)
<PAGE>
<TABLE>
<CAPTION>
Item 7. Financial Statements, Pro Forma
Financial Information and Exhibits
----------------------------------
<S> <C>
(a) Financial statements of businesses acquired. The following financial
statements of Stature Electric, Inc. are filed as part of this report:
Independent Auditors' Report
Balance Sheets as at February 28, 1994 and 1995
Statements of Income and Retained Earnings for the Years Ended
February 28, 1994 and 1995
Statements of Cash Flows for the Years Ended February 28, 1994 and
1995
Notes to Financial Statements
Balance Sheets as at August 31, 1994 and 1995
Statements of Income for the Six-Month Periods Ended August 31, 1994
and 1995.
Statements of Cash Flows for the Six-Month Periods Ended August 31,
1994 and 1995.
Notes to Financial Statements
(b) Pro forma financial information. The following pro forma financial
information is being filed as a part of this report:
Pro Forma Balance Sheet Data as at July 30, 1995
Pro Forma Statement of Earnings Data for the Year ended October 30,
1994
Pro Forma Statement of Earnings Data for the Nine Months ended July
30, 1995
Notes to Unaudited Pro Forma Condensed Financial Statements
(c) Exhibits
* 2.1 Agreement and Plan of Merger dated October 25, 1995 by and among
Owosso Corporation, Stature Electric, Inc. and the stockholders of
Stature Electric, Inc.
* 4.1 Designations of the Class A Convertible Preferred Stock of
Owosso Corporation.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
*10.1 Consulting Agreement dated October 31, 1995 by and between
Owosso Corporation and Lowell Huntsinger.
*10.2 Registration Rights Agreement dated October 31, 1995 by and
among Owosso Corporation, Lowell Huntsinger, Randall James and
Morris Felt.
</TABLE>
- ------------
*Previously filed.
3
<PAGE>
SIGNATURE
---------
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.
OWOSSO CORPORATION
Date: January 13, 1997 By: /s/ John H. Wert, Jr.
---------------------------------
John H. Wert, Jr., Senior Vice
President - Finance and Chief
Financial Officer
4
<PAGE>
STATURE ELECTRIC, INC.
FINANCIAL STATEMENTS
For the Years Ended
February 28, 1995 and 1994
<PAGE>
TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Balance Sheets 2
Statements of Income and Retained Earnings 4
Statements of Cash Flows 5
Notes to Financial Statements 7
AUDITOR'S REPORT ON SUPPLEMENTARY INFORMATION 14
SUPPLEMENTARY INFORMATION
Schedules of Cost of Goods Manufactured 15
Schedules of Engineering and
Administrative Expenses 16
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Stature Electric, Inc.
6727 Fisher Road
Watertown, New York 13601
We have audited the accompanying balance sheets of Stature Electric, Inc. (a New
York State corporation) as of February 28, 1995 and 1994, and the related
statements of income and retained earnings 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 financial statements referred to above present fairly, in
all material respects, the financial position of Stature Electric, Inc. as of
February 28, 1995 and 1994, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
DRAGON BENWARE & CO., P.C.
May 3, 1995
<PAGE>
STATURE ELECTRIC, INC.
BALANCE SHEETS
February 28, 1995 and 1994
1995 1994
---- ----
ASSETS
Current Assets
Cash on hand and in bank (Note A) $ 359,464 $ 166,324
Accounts receivable - trade (Notes A, D & E) 2,627,131 2,040,384
Accounts receivable - other (Note I) 1,210 1,051
Inventory (Notes A, B, D & E) 2,605,924 2,282,507
Prepaid expenses 333,186 297,318
Prepaid pension cost (Note G) 453,281 224,018
Prepaid income taxes 18,059 --
Deferred tax asset (Note F) 21,364 23,584
----------- -----------
Total Current Assets 6,419,619 5,035,186
----------- -----------
Property and Equipment (Notes A, C, D, E & J) 3,852,654 3,341,531
Other Asset
Cash surrender value of life insurance 24,362 16,253
----------- -----------
Total Assets $10,296,635 $ 8,392,970
=========== ===========
The accompanying notes are an integral part
of these financial statements.
2
<PAGE>
STATURE ELECTRIC, INC.
BALANCE SHEETS
February 28, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities
Accounts payable $ 768,782 $ 745,580
Bank line of credit (Note D) -- 200,000
Notes payable - current portion (Note E) 45,000 44,193
Accrued expenses 286,200 296,117
Vacation accrual 93,099 86,334
Income taxes payable 103,922 314,038
Deferred tax liability (Note F) 365,118 269,892
------------ ------------
Total Current Liabilities 1,662,121 1,956,154
------------ ------------
Long-Term Liabilities
Notes payable - noncurrent portion (Note E) 11,249 26,316
JCIDA Industrial Development Revenue Bonds (Note H) 1,800,000 1,800,000
Deferred tax liability (Note F) 157,940 --
------------ ------------
Total Long-Term Liabilities 1,969,189 1,826,316
------------ ------------
Stockholders' Equity
Common stock, $100 par value
12,000 shares authorized, 770 shares issued and
620 shares outstanding 78,000 78,000
Retained earnings 6,603,325 4,548,500
Treasury stock, 150 shares (16,000) (16,000)
------------ ------------
Total Stockholders' Equity 6,665,325 4,610,500
------------ ------------
Total Liabilities and Stockholders' Equity $ 10,296,635 $ 8,392,970
============ ============
</TABLE>
The accompanying notes are an integral part
of these financial statements.
3
<PAGE>
STATURE ELECTRIC, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
For the Years Ended
February 28, 1995 and 1994
1995 1994
---- ----
Sales $ 17,119,556 $ 14,228,218
Cost of Goods Manufactured 11,995,087 10,344,166
------------ ------------
Gross Profit 5,124,469 3,884,052
Operating Expenses
Engineering and administrative expenses 2,121,251 1,768,255
------------ ------------
Income from Operations 3,003,218 2,115,797
------------ ------------
Other Income (Expenses)
Interest income 21,163 6,355
Miscellaneous income 11,660 14,647
Interest expense (143,819) (145,410)
------------ ------------
Total Other Income (Expenses) (110,996) (124,408)
------------ ------------
Income before Provision for Income Taxes 2,892,222 1,991,389
Provision for Income Taxes (Note F) 1,075,232 774,797
------------ ------------
Income before Cumulative Effect
of Change in Accounting Principal 1,816,990 1,216,592
Cumulative Effect on Prior Years of
Changing Methods of Recording (Note J):
Deferred income tax -- (63,649)
Depreciation method 237,835 --
------------ ------------
Net Income 2,054,825 1,152,943
Retained Earnings, Beginning of Year 4,548,500 3,395,557
------------ ------------
Retained Earnings, End of Year $ 6,603,325 $ 4,548,500
============ ============
The accompanying notes are an integral part
of these financial statements.
4
<PAGE>
STATURE ELECTRIC, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended
February 28, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Cash Flows from Operating Activities
Net income $ 2,054,825 $ 1,152,943
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization 617,200 617,580
Deferred income tax 106,496 105,102
Gain on sale of asset (2,353) (7,074)
Change in accounting method (237,835) 63,649
(Increase) decrease in:
Trade accounts receivable (586,747) (334,071)
Inventories (323,417) (396,685)
Prepaid expenses (65,871) (37,464)
Accounts receivable-other (159) 940
Prepaid pension cost (229,263) (224,018)
Increase (decrease) in:
Trade accounts payable 23,202 258,822
Accrued liabilities (9,917) (51,179)
Vacation accrual 6,765 11,336
Accrued pension costs -- (25,138)
Income taxes payable (210,116) 60,712
----------- -----------
Net Cash Provided (Used) by Operating Activities 1,142,810 1,195,455
----------- -----------
Cash Flows from Investing Activities
Purchases of property and equipment (net) (730,890) (1,564,935)
Proceeds on sale of asset 3,589 7,900
Increase in cash value of life insurance (8,109) (8,305)
----------- -----------
Net Cash Provided (Used) by Investing Activities (735,410) (1,565,340)
----------- -----------
Cash Flows from Financing Activities
Proceeds from issuance of short-term debt 40,000 300,000
Principal payments on long-term debt (15,067) (39,495)
Principal payments on short-term debt (239,193) (119,420)
----------- -----------
Net Cash Provided (Used) by Financing Activities (214,260) 141,085
----------- -----------
</TABLE>
The accompanying notes are an integral part
of these financial statements.
5
<PAGE>
STATURE ELECTRIC, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended
February 28, 1995 and 1994
(continued)
1995 1994
---------- ----------
Net Increase (Decrease) in Cash 193,140 (228,800)
Cash and Cash Equivalents at Beginning of Year 166,324 395,124
---------- ----------
Cash and Cash Equivalents at End of Year $ 359,464 $ 166,324
========== ==========
Supplemental Disclosures of Cash Paid During the Year:
Interest $ 143,819 $ 145,410
Income taxes paid (net of refunds) 1,196,911 609,053
The accompanying notes are an integral part
of these financial statements.
6
<PAGE>
STATURE ELECTRIC, INC.
NOTES TO FINANCIAL STATEMENTS
February 28, 1995 and 1994
NOTE A - Summary of Significant Accounting Policies
Stature Electric, Inc. (the Company) manufactures motors and gear
motors. The motors are designed to meet the customer's application
requirements and are manufactured in the Watertown plant. The
administrative offices and manufacturing plant are located in one
building in Watertown, New York.
Cash Equivalents
Cash equivalents consist primarily of treasury bills and notes,
government guaranteed securities, federal agency securities and
mortgage related securities purchased through a master repurchase
agreement with Lehman Brothers. The securities are purchased by
use of a "sweep" account and typically have a one to two day
maturity.
Accounts Receivable
The Company considers accounts receivable to be fully collectible;
accordingly, no allowance for doubtful accounts has been
established.
Inventories
Inventories of finished goods and work in process are stated at
the lower of standard cost (which approximates actual cost on the
first-in, first-out method) or market. Raw materials inventories
are stated at the lower of cost or market.
Property and Equipment
Property and equipment are carried at cost. Depreciation of
property and equipment is provided using the straight-line method
for financial statement purposes and the straight-line method and
accelerated methods for tax purposes. Prior to February 28, 1995,
depreciation was computed using straight-line and accelerated
methods for financial statement and income tax purposes. As
described in Note J, effective March 1, 1994, the Company adopted
the straight-line method for all depreciable assets for financial
statement purposes. Assets are depreciated over their estimated
useful lives as follows:
Building 5 to 40 years
Machinery and factory equipment 5 to 15 years
Factory fixtures 5 to 32 years
Patterns, jigs, dies, etc. 5 to 7 years
Office furniture and fixtures 5 to 10 years
Land improvements 10 to 20 years
Parking facilities 10 to 20 years
Automotive equipment 5 years
Laboratory equipment 5 to 15 years
Data processing equipment 5 years
7
<PAGE>
STATURE ELECTRIC, INC.
NOTES TO FINANCIAL STATEMENTS
February 28, 1995 and 1994
(continued)
NOTE A - Summary of Significant Accounting Policies (continued)
Prepaid Bond Costs
Prepaid bond costs which are included in prepaid expenses are
being amortized over a period of 120 months using the
straight-line method. Amortization expense which is included in
bond credit fee and bond costs was $11,944 and $10,824 for the
years ended February 28, 1995 and 1994, respectively.
Concentration of Credit Risk
The Company maintains its cash accounts in one commercial bank
located in Watertown, New York and maintains a master repurchase
agreement as explained above in which the Bank of New York acts as
custodian. The total cash balances in the commercial bank are
secured by the Federal Deposit Insurance Corporation (FDIC) up to
$100,000. The securities held in the master repurchase agreement
are not insured by FDIC.
NOTE B - Inventory
Inventory consists of the following:
1995 1994
---- ----
Raw materials $1,374,589 $1,048,801
Work-in-process 1,231,335 1,233,706
--------- ---------
Total Inventory $2,605,924 $2,282,507
========= =========
NOTE C - Property and Equipment
Property and equipment are summarized by major classifications as
follows:
1995 1994
---- ----
Building $2,061,476 $2,039,553
Machinery and factory equipment 4,509,801 3,916,801
Factory fixtures 217,986 213,793
Patterns, jigs, dies, etc. 473,647 417,614
Office furniture and fixtures 153,351 144,235
Data processing equipment 417,076 483,040
Land improvements 44,524 44,524
Parking facilities 125,624 125,624
Automotive equipment 85,130 85,130
Laboratory equipment 44,875 33,051
Land 50,000 50,000
---------- ---------
8
<PAGE>
STATURE ELECTRIC, INC.
NOTES TO FINANCIAL STATEMENTS
February 28, 1995 and 1994
(continued)
NOTE C - Property and Equipment (continued)
Total 8,183,490 7,553,365
Less: accumulated depreciation (4,330,836) (4,211,834)
---------- ----------
Net Property and Equipment $3,852,654 $3,341,531
========== ==========
Depreciation expense was $605,256 and $606,756 for the years ended
February 28, 1995 and 1994, respectively.
NOTE D - Bank Line of Credit
A line of credit with Chase Manhattan Bank, N.A. which bears
interest at the bank's prime rate plus 1/2% was provided for under
the terms of a credit agreement dated September 10, 1994. The
terms of such allows the Company to borrow up to $500,000. The
credit line is collateralized by accounts receivable, inventory
and equipment. The credit line was paid in full at February 28,
1995 and $200,000 was owed at February 28,1994 when the bank's
interest rate was 6.5%.
NOTE E - Notes Payable
Notes payable consist of the following:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Note payable to Chase Manhattan Bank, N.A. due
April 3, 1995, plus interest at prime. This note
was rolled over on April 3, 1995 into a new note
with the same terms, due October 3, 1995. $ 40,000 $ -
Note payable to Jefferson County Industrial Development Agency
(JCIDA), payable in monthly installments of $417 no interest,
final payment due
June 15, 1998. 16,249 21,249
Note payable to JCIDA, payable in monthly installments of $3,377
which includes interest at 4 1/4%, final payment due June 1, 1995,
secured by
machinery and equipment. - 49,260
-------- --------
Total 56,249 70,509
Less: current portion 45,000 44,193
-------- --------
Total Long-Term Notes Payable $ 11,249 $ 26,316
======== ========
</TABLE>
9
<PAGE>
STATURE ELECTRIC, INC.
NOTES TO FINANCIAL STATEMENTS
February 28, 1995 and 1994
(continued)
NOTE E - Notes Payable (continued)
Maturities of long-term debt are as follows for the next five
years ending February 28:
1996 $ 45,000
1997 5,000
1998 5,000
1999 1,249
2000 -
--------
$ 56,249
The Company's loan agreement with Chase Manhattan Bank, N.A.
includes various covenants, including a prohibition against paying
dividends in excess of 50% of net profits after tax, changes in
capital stock, and the transfer, sale, or lease of significant
assets. The notes are secured by accounts receivable, inventory,
equipment and fixtures.
NOTE F - Income Taxes
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Current taxes $ 968,736 $ 669,695
Deferred taxes 106,496 105,102
---------- ----------
Provision for Income Tax $1,075,232 $ 774,797
========= ==========
Deferred tax assets and liabilities consist of the following:
Deferred tax liability - noncurrent $ 157,940 $ -
Deferred tax liability - current 365,118 269,892
Deferred tax asset - current (21,364) (23,584)
------------ -----------
Total $ 501,694 $ 246,308
========== ==========
</TABLE>
The deferred tax liability - noncurrent results from timing
differences in the method of recording depreciation for financial
statement purposes and tax purposes as more fully explained in
Note J.
The deferred tax liability - current results from differences in
the recognition of pension expense for tax and financial statement
reporting purposes. The pension plan has a fiscal year which is
different then the Company's fiscal year. The pension plan's year
ends January 31, which allows the Company to deduct the pension
contribution for the next pension plan year beginning February 1,
for income tax purposes. In addition, FAS No. 87 calculates
pension expense differently than what is allowed for income tax
purposes.
10
<PAGE>
STATURE ELECTRIC, INC.
NOTES TO FINANCIAL STATEMENTS
February 28, 1995 and 1994
(continued)
NOTE F - Income Taxes (continued)
The deferred tax asset - current results from a difference in
inventory basis due to overhead costs capitalized in accordance
with tax law.
NOTE G - Defined Benefit Pension Plan
The Company maintains a defined benefit pension plan covering all
employees meeting minimum age and service requirements. Plan
benefits are based on the participant's years of service and
average annual earnings in the five consecutive highest paid years
of employment. The Company's funding policy is to contribute
annually the minimum required contribution as required by IRS
funding standard account provisions. Contributions are intended to
provide not only for benefits attributed to service to date but
also for those expected to be earned in the future.
The total pension plan expense charged to operations amounted to
$252,566 and $196,302 for the years ended February 28, 1995 and
1994, respectively.
The net periodic pension cost for the years ended February 28,
1995 and 1994 consists of the following:
1995 1994
---- ----
Service costs $257,697 $218,791
Interest costs on PBO 98,875 81,242
Actual loss (gain) on plan assets 87,186 (27,282)
Net amortization and deferral (195,512) (79,565)
PBG Corp. premium payment 4,320 3,116
-------- --------
Net Periodic Pension Costs $252,566 $196,302
======== ========
The following table sets forth the funding status of the plan and
the amount recognized in the Company's statement of financial
position at February 28, 1995 and 1994.
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Actuarial present value of benefit obligation:
Accumulated benefit obligations, including
vested benefits of $1,365,161 in 1995 and
$1,080,912 in 1994. $ 1,397,052 $ 1,113,103
=========== ===========
Projected benefit obligation for service
rendered to date. $(1,835,593) $(1,482,118)
Plan assets at fair value, held in mutual funds
in 1995 and insurance company general
account (unallocated contract) in 1994. 1,686,058 1,318,437
----------- -----------
Projected benefit obligation in excess of
assets (149,535) (163,681)
</TABLE>
11
<PAGE>
STATURE ELECTRIC, INC.
NOTES TO FINANCIAL STATEMENTS
February 28, 1995 and 1994
(continued)
NOTE G - Defined Benefit Pension Plan (continued)
Unamortized net obligation at
transition, net of amortization 7,875 8,571
Unrecognized net loss (gain) 753,054 550,048
Unrecognized prior service cost (158,113) (170,920)
---------- ---------
Prepaid pension cost recognized $ 453,281 $ 224,018
========== ==========
The actuarial present value of the projected benefit obligation
was determined assuming a weighted-average discount rate of 7.5%
for 1995 and 1994, annual salary increases of 4.5%, and an
expected long-term rate of return of 7.5% for 1995 and 1994.
NOTE H - Jefferson County Industrial Development Agency Revenue Bonds
This is a duly authorized issue of 1989 Industrial Development
Revenue Bonds of the Company, issued in the aggregate principal
amount of $1,800,000. The bonds were issued and authorized for the
purpose of financing the costs of the construction and equipping
of the addition to the Company's Watertown manufacturing plant.
The bonds are fully registered without coupons, and the principal
sum is due August 1, 1999. The outstanding principal bears
interest at the rate of 7.5% calculated on the basis of a 360 day
year, payable semiannually on the first day of February and August
in each year commencing February 1, 1990 until the bonds are paid
in full. The purchaser of the bonds is Merrill Lynch, Pierce,
Fenner & Smith and the trustee is Key Trust Company, Albany, New
York.
The Jefferson County Industrial Development Agency (JCIDA) was
created under Title I of Article 18-A of the General Municipal Law
of the State of New York. The aforesaid act authorizes the JCIDA
to lease it's facilities on such terms and conditions as it deems
advisable. It is authorized to issue bonds and to mortgage it's
facilities as security for payment of principal and interest.
The construction and equipping of the Company's facility in
Watertown met the criterion of an industrial development and,
accordingly, the Company conveyed the Watertown facility to the
JCIDA, which in turn leased the facility back to the Company. The
Company has the option to terminate the lease at anytime with
proper notice to the JCIDA subject to the terms of the lease. This
leaseback arrangement allows the Company to qualify for the
payment in lieu of tax (PILOT) program which has the effect of
reducing the real property tax payments normally required.
For generally accepted accounting principles this leaseback
arrangement does not constitute a sale and lease. Accordingly, the
Company is still the owner of the Watertown facility and is liable
on the Industrial Development Revenue Bonds in full.
12
<PAGE>
STATURE ELECTRIC, INC.
NOTES TO FINANCIAL STATEMENTS
February 28, 1995 and 1994
(continued)
NOTE I - Transactions with Related Party
Accounts receivable - other at February 28, 1995 and 1994,
includes transactions with related parties. The following is a
breakdown of the ending balances:
1995 1994
---- ----
Officers - see below for transactions $ 521 $ 762
Employees 689 289
------- -------
Total Accounts Receivable - Other $ 1,210 $ 1,051
====== =======
The transactions representing the activity for officers above were
as follows for February 28, 1995 and 1994:
1995 1994
---- ----
Beginning balance $ 762 $ 1,740
Personal bills paid by Company 15,559 28,744
Payback through payroll deductions (15,800) (29,722)
------ ------
Ending balance $ 521 $ 762
======= ========
NOTE J - Accounting Changes
Effective March 1, 1993, the Company elected to change its method
of accounting for income taxes to conform to the asset/liability
approach required by Statement of Accounting Standards No. 109,
Accounting for Income Taxes. In prior years, income taxes were
provided using the income statement approach as required by
Accounting Principles Board Opinion, No. 11, Accounting for Income
Taxes. The change had no effect on income from operations.
Effective March 1, 1994, the Company elected to adopt the
straight-line method of computing depreciation for all depreciable
assets. In prior years depreciation was computed using
straight-line and accelerated methods. The new method was adopted
to more fairly reflect depreciation charges to the assets, and has
been applied retroactively to property and equipment acquisitions
of prior years. The effect of the change in 1995 was to increase
income from operations by approximately $23,500. The adjustment of
approximately $237,835, after reduction for income taxes of
$148,890, to apply retroactively, the new method is included in
the income of February 28, 1995. Deferred taxes of approximately
$148,890 has been provided due to timing differences resulting
from the change in method.
13
<PAGE>
STATURE ELECTRIC , INC.
Balance Sheets
(unaudited)
<TABLE>
<CAPTION>
August 31, August 31,
1995 1995
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents $ 522,407 $ 282,894
Receivables, net 2,420,853 2,292,131
Inventories, net 3,062,847 2,307,356
Prepaid expenses and other 183,143 146,128
Prepaid pension cost 427,594 211,519
Prepaid income taxes 17,425 4,311
Deferred tax asset 21,364 23,584
Total current assets 6,655,633 5,267,923
------------ ------------
PROPERTY, PLANT AND EQUIPMENT 4,464,994 3,671,826
OTHER ASSET 24,362 16,253
TOTAL ASSETS $ 11,144,989 $ 8,956,002
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 953,369 $ 669,202
Bank line of credit 40,000 100,000
Notes payable - currrent portion 5,000 31,600
Accrued expenses 181,208 201,325
Vacation accrual 69,641 63,759
Income taxes payable (37,994) 66,561
Deferred tax liability 418,368 314,892
Total current liabilities 1,629,592 1,447,339
------------ ------------
LONG-TERM LIABILITIES:
Notes payable - noncurrent portion 8,749 13,749
Industrial revenue bonds 1,800,000 1,800,000
Deferred tax liability 157,940 148,890
Total Long-term liabilities 1,966,689 1,962,639
------------ ------------
STOCKHOLDERS' EQUITY
Common Stock, 12,000 shares authorized,
770 shares issued and 620 shares
outstanding 78,000 78,000
Retained earnings 7,486,708 5,484,024
Treasury stock, 150 shares (16,000) (16,000)
Total stockholders' equity 7,548,708 5,546,024
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 11,144,989 $ 8,956,002
------------ ------------
</TABLE>
<PAGE>
STATURE ELECTRIC , INC.
Statements of Income
(unaudited)
<TABLE>
<CAPTION>
Six months ended Six months ended
August 31, August 31,
1995 1994
<S> <C> <C>
Sales $ 9,034,496 $ 8,070,835
Cost of goods sold 6,471,666 5,801,204
----------- -----------
Gross profit 2,562,830 2,269,631
Engineering and administrative expenses 1,089,785 1,022,130
----------- -----------
Income from operations 1,473,045 1,247,501
Interest expense, net 36,553 71,676
Other expense (income), net 3,861 302
----------- -----------
Income before provision for income taxes 1,432,631 1,175,523
Provision for income taxes 549,250 477,837
----------- -----------
Income before cumulative effect of
changing methods of accounting principles $ 883,381 $ 697,686
Cumulative effect on prior years of
changing methods of accounting principles 237,835
-----------
Net income $ 883,381 $ 935,521
</TABLE>
<PAGE>
STATURE ELECTRIC , INC.
Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Six months ended Six months ended
August 31, August 31,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income $ 883,381 $ 935,521
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 284,802 302,630
Deferred income tax 53,250 45,000
Loss on sale of asset 617
Change in accounting method (237,835)
(Increase) decrease in:
Receivables 207,488 (250,696)
Inventories (456,923) (24,849)
Prepaid expenses and other 150,043 151,190
Prepaid pension cost 25,687 12,499
Prepaid income taxes 634 (4,311)
Increase (decrease) in:
Accounts payable 184,587 (76,378)
Accrued expenses (104,992) (94,792)
Vacation accrual (23,458) (22,575)
Income taxes payable (141,916) (247,477)
Net cash provided (used) by operating
activities: 1,062,583 488,544
---------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchases of property and equipment (net) 897,140 246,814
Net cash provided (used) by investing
activities: (897,140) (246,814)
---------- ----------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issuance of short-term debt 40,000
Principal payments on short-term debt (100,000)
Principal payments on long-term debt (42,500) (25,160)
Net cash provided (used) by financing
activities: (2,500) (125,160)
---------- ----------
Net increase (decrease) in cash: 162,943 116,570
---------- ----------
Cash and cash equivalents at beginning of
period: 359,464 166,324
Cash and cash equivalents at end of period: $ 522,407 $ 282,894
---------- ----------
Supplemental disclosures of cash paid
during the period:
Interest $ 67,500 $ 75,519
Income taxes paid (net of refunds) $ 628,886 $ 699,383
</TABLE>
<PAGE>
STATURE ELECTRIC INC.
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
SIX MONTHS ENDED AUGUST 31, 1995 and 1994
1. INTERIM FINANCIAL STATEMENTS
The unaudited interim financial statements as of August 31, 1995 and
for the six months ended August 31, 1995 and 1994 are unaudited and in
the opinion of management, include all adjustments (consisting only of
normal and recurring adjustments) necessary for a fair presentation of
results for these interim periods. The results for the six months ended
August 31, 1995 are not necessarily indicative of the results to be
expected for the entire year.
2. INVENTORY
Inventories of finished goods and work-in-process are stated at the
lower of standard cost (which approximates actual cost on the first-in,
first-out method) or market. Raw material inventories are stated at the
lower of cost or market. Inventory consists of the following:
August 31, February 28,
1995 1995
---- ----
Raw materials $ 1,632,665 $ 1,374,589
Work-in-process 1,430,182 1,231,335
----------- -----------
Total inventory $ 3,062,847 $ 2,605,924
=========== ===========
<PAGE>
OWOSSO CORPORATION
INTRODUCTION TO PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma balance sheet data gives effect to the
acquisition of Great Bend, and Stature Electric as though the acquisitions had
been as of July 30, 1995. Historical Consolidated data represents the actual
numbers as included in the Quarterly Report on Form 10-Q for the period ended
July 30, 1995. Great Bend data is included within the Historical Consolidated
data. Historical Stature Electric data represents actual numbers as of July 30,
1995. The unaudited pro forma statement of earnings data for the year ended
October 30, 1994 gives effect to the acquisitions of Great Bend and Stature
Electric as though the acquisitions had been made at the beginning of the
period. Historical Consolidated data reflects the results of operations as
included in the Annual Report on Form 10-K for the year ended October 30, 1994.
Historical as Adjusted data represents the effect of the Reorganization, the
Sooner Acquisition, the sale by the Company of 1,865,000 Common Shares and the
application of the estimated net proceeds therefrom, together with amounts
borrowed by the Company under the bank revolving line of credit as if the
transactions had occurred at the beginning of the period. Historical Great Bend
and Stature Electric data reflect the results of operations as if the company's
had been acquired at the beginning of the period. The unaudited pro forma
statement of earnings data for the nine months ended July 30, 1995 gives effect
to the acquisitions of Great Bend and Stature Electric as though the
acquisitions had been made at the beginning of the period. Historical
Consolidated data reflect the results of operations as included in the Quarterly
Report on Form 10-Q for the period ended July 30, 1995 less the results of
operations of Great Bend from the date of its acquisition. Historical Great Bend
and Stature Electric data reflect the results of operations as if the company's
had been acquired at the beginning of the period.
The unaudited pro forma financial information should be read in conjunction with
the notes included herewith, the financial statements of Stature Electric
included herewith and the Company's Annual Report on Form 10-K for the year
ended October 30, 1994 and the Company's Quarterly Report on Form 10-Q for the
nine months ended July 30, 1995.
The unaudited pro forma financial information does not purport to represent what
the Company's results or financial position actually would have been had such
acquisitions occurred on the dates specified, or to project the Company's
results of operations or financial position for any future period or date. The
pro forma adjustments are based upon available information and certain
adjustments that management believes are reasonable. In the opinion of
management, all adjustments have been made that are reasonable. In the opinion
of management, all adjustments that have been made are necessary to present
fairly the pro forma financial information.
<PAGE>
PRO FORMA BALANCE SHEET DATA
JULY 30, 1995
<TABLE>
<CAPTION>
Historical
Historical Stature Stature Pro
Consolidated Electric Adjustments Forma
(In thousands)
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $525 $1,176 ($500)(e) $1,201
Receivables, net 16,298 1,947 18,245
Inventories, net 19,269 3,010 22,279
Prepaid expenses and other 855 782 (452)(c) 1,185
Advances and interest receivable
from affiliate 25 25
Deferred Taxes 881 21 902
Restricted cash 670 670
Total current assets 38,523 6,936 (952) 44,507
OTHER ASSETS
Goodwill 17,628 17,754 (a) 35,382
Other 3,214 3,214
Total other assets 20,842 17,754 38,596
PROPERTY, PLANT & EQUIPMENT 18,121 4,170 2,338 (f) 24,629
TOTAL ASSETS $77,486 $11,106 $19,140 $107,732
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade Payables $5,875 $875 $6,750
Other accrued liabilities 3,674 471 200 (c) 4,345
Deferred Taxes 409 386 (p) 795
Current portion of long term
debt 2,381 45 2,426
Total current liabilities 11,930 1,800 586 14,316
LONG TERM DEBT, LESS
CURRENT PORTION 38,807 1,809 12,500 (b) 53,116
OTHER LONG TERM LIABILITIES 1,393 158 1,551
STOCKHOLDERS EQUITY:
Common stock, $.01 par value; 15,000,000
shares authorized; 5,865,000 shares issued
and outstanding 59 59
Common stock, $100 par value; 12,000
shares authorized; 770 shares issued
and 620 shares outstanding 78 (78)(d)
Convertible preferred stock class A, 5-10% cumulative, $.01 par
value; 10,000,000 shares authorized; 1,071,428 shares issued
and outstanding 13,393 (d) 13,393
Additional paid-in-capital 21,612 21,612
Retained earnings 3,685 7,277 (7,277)(d) 3,685
Total 25,356 7,355 6,038 38,749
Less treasury stock, at cost 16 (16)(d) 0
Total stockholders' equity 25,356 7,339 6,054 38,749
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $77,486 $11,106 $19,140 $107,732
</TABLE>
<PAGE>
PRO FORMA STATEMENT OF EARNINGS DATA
YEAR ENDED OCTOBER 30, 1994
<TABLE>
<CAPTION>
Historical
Historical Historical Historical Stature Great Bend Stature Pro
Consolidated as Adjusted(m) Great Bend Electric Adjustments Adjustments Forma
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
NET SALES $73,799 $94,993 $13,198 15,386 $123,577
COST OF PRODUCTS SOLD 52,750 66,805 10,050 11,231 200 (o) $88,286
GROSS PROFIT 21,049 28,188 3,148 4,155 (200) 35,291
SELLING, GENERAL, AND ADMINISTRATIVE
EXPENSES 9,487 13,117 2,026 2,018 888 (i) $17,306
111 (j)
(128)(k) (826)(k)
100 (l)
CORPORATE EXPENSES 2,417 2,408 $2,408
INCOME FROM OPERATIONS 9,145 12,663 1,122 2,137 (83) (262) $15,577
INTEREST EXPENSE 1,855 2,453 206 171 370 (h) 1,000 (h) $4,200
OTHER INCOME 698 83 57 (7) $133
INCOME BEFORE INCOME TAXES 7,988 10,293 973 1,959 (453) (1,262) $11,510
INCOME TAX PROVISION (BENEFIT) (801) 3,654 388 961 (188)(g) (39)(g) $4,776
NET INCOME 8,789 6,639 585 998 (265) (1,223) 6,734
DIVIDENDS AND ACCRETION ON PREFERRED STOCK (1,025) (1,025) (1,025)
NET INCOME AVAILABLE FOR COMMON STOCKHOLDERS $7,764 $5,614 $5,709
NET INCOME PER SHARE $1.32 $0.96 $0.97
WEIGHTED AVERAGE SHARES OUTSTANDING 5,865 5,865 5,865
</TABLE>
<PAGE>
PRO FORMA STATEMENT OF EARNINGS DATA
NINE MONTHS ENDED JULY 30, 1995
<TABLE>
<CAPTION>
Historical
Historical Historical Stature Great Bend Stature Pro
Consolidated(n) Great Bend Electric Adjustments Adjustments Forma
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
NET SALES $75,071 $9,816 13,584 98,471
COST OF PRODUCTS SOLD 53,510 7,418 9,816 150 (o) 70,894
GROSS PROFIT 21,561 2,398 3,768 0 (150) 27,577
SELLING, GENERAL, AND ADMINISTRATIVE
EXPENSES 9,457 1,659 1,619 666 (i) 12,863
55 (j)
(64)(k) (579)(k)
50 (l)
CORPORATE EXPENSES 2,171 101 2,272
INCOME FROM OPERATIONS 9,933 739 2,048 (41) (237) 12,442
INTEREST EXPENSE 2,095 102 185 (h) 750 (h) 3,132
OTHER INCOME 363 54 23 440
INCOME BEFORE INCOME TAXES 8,201 691 2,071 (226) (987) 9,750
INCOME TAX PROVISION (BENEFIT) 3,109 211 891 (94)(g) (70)(g) 4,047
NET INCOME $5,092 $480 $1,180 ($132) ($917) $5,703
DIVIDENDS AND ACCRETION ON PREFERRED STOCK (767) (767)
NET INCOME AVAILABLE FOR COMMON STOCKHOLDERS $4,325 $4,936
NET INCOME PER SHARE $0.74 $0.84
WEIGHTED AVERAGE SHARES OUTSTANDING 5,865 5,865
</TABLE>
<PAGE>
(a) Represents the excess of the purchase price to be paid for Stature
Electric over the fair value of its net assets.
(b) Represents subordinated notes issued to the shareholders of Stature
Electric in connection with the acquisition.
(c) Reflects an adjustment to the prepaid pension asset and the pension
liability.
(d) Elimination of historical shareholders equity of Stature Electric and
the the issuance of preferred stock, at its fair value, issued to
shareholders of Stature Electric in connection with the acquisition.
(e) Represents acquisition expenses to be paid by the Company.
(f) Represents adjustment from historical value to fair value for property,
plant and equipment.
(g) Represents the adjustment in income tax expense to reflect the
adjustments above using the effective rate for the respective period.
(h) Represents the increase in interest expense as a result of new
borrowings under the existing line of credit and subordinated note
agreements to former shareholders of Great Bend and Stature Electric.
(i) Represents the amortization of goodwill over 20 years resulting from
the excess of the purchase price to be paid for Stature Electric over
the fair value of its net assets.
(j) Represents the amortization of goodwill over 20 years resulting from
the excess of the purchase price to be paid for Great Bend over the
fair value of its net assets.
(k) Represents a reduction in bonus and salary expense paid to President of
Great Bend, and former shareholders of Stature Electric, pursuant to
agreements.
(l) Represents the amortization of non-competition agreement for Great
Bend.
(m) Represents the effect of the Reorganization, the Sooner Acquisition,
the sale by the Company of 1,865,000 Common Shares and the application
of the estimated net proceeds therefrom, together with amounts borrowed
by the Company under the bank revolving line of credit as if the
transactions had occurred at the beginning of the period.
(n) Excludes Great Bend since the date of its acquisition.
(o) Represents increase in depreciation expense as a result of the increase
in fair value of property, plant and equipment.
(p) Represents adjustment in deferred tax liability as a result of
adjustments from historical value to fair value for certain items.
