<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended October 27, 1996
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______________________ to _____________________
Commission file number 0-25066
Owosso Corporation
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2756709
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
The Triad Building, 2200 Renaissance Boulevard, 19406
Suite 150, King of Prussia, PA (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (610) 275-4500
Securities registered pursuant to Section 12(b) of the Act:
None
Name of each exchange on which registered
Title of Class
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
Title of Class
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |_|
On January 23, 1997, the aggregate market value of the Registrant's
Common Stock, $.01 par value, held by nonaffiliates of the Registrant was
approximately $14,690,909.
On January 23, 1997, 5,808,676 shares of the Registrant's Common Stock,
$.01 par value, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement to be filed with the
Commission in connection with the Annual Meeting of Shareholders scheduled to be
held on March 12, 1997 are incorporated by reference into Part III of this Form
10-K.
<PAGE>
Item 8. Financial Statements and Supplementary Data
The Company's consolidated financial statements and supplemental
schedule are being refiled as set forth below at pages F-1 through F-25.
There is no change to any of the information set forth on pages F-1 through
F-25 herein from that contained in Item 8 of the Form 10-K as originally filed
on January 27, 1997, other than the correction of a typographical error on
page F-1.
<PAGE>
OWOSSO CORPORATION
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Page
INDEPENDENT AUDITORS' REPORT F-1
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED OCTOBER 27,
1996, OCTOBER 29, 1995 AND OCTOBER 30, 1994:
Balance Sheets F-2
Statements of Operations F-3
Statements of Stockholders' Equity F-4
Statements of Cash Flows F-5
Notes to Consolidated Financial Statements F-6-24
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders of
Owosso Corporation
King of Prussia, Pennsylvania
We have audited the accompanying consolidated balance sheets of Owosso
Corporation and subsidiaries as of October 27, 1996 and October 29, 1995, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the three fiscal years in the period ended October 27,
1996. Our audits also included the financial statement schedule listed in the
index at Item 14(a)2. These financial statements and financial statement
schedule 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, such consolidated financial statements present fairly, in all
material respects, the financial position of Owosso Corporation and subsidiaries
as of October 27, 1996 and October 29, 1995, and the results of their operations
and their cash flows for each of the three fiscal years in the period ended
October 27, 1996 in conformity with generally accepted accounting principles.
Also, in our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
December 5, 1996
F-1
<PAGE>
OWOSSO CORPORATION
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
October 27, October 29,
ASSETS 1996 1995
---------- ----------
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 839,889 $ 1,750,236
Receivables, net 18,415,245 18,190,026
Inventories, net 19,123,122 20,564,974
Prepaid expenses and other 1,608,169 1,164,617
Advances and interest receivable from affiliate 36,766 27,807
Deferred taxes 1,032,000 785,000
------------- -------------
Total current assets 41,055,191 42,482,660
PROPERTY, PLANT AND EQUIPMENT, NET 26,308,809 25,353,517
INTANGIBLES, NET 39,277,112 39,719,089
OTHER ASSETS 1,254,233 1,164,005
------------- -------------
TOTAL ASSETS $ 107,895,345 $ 108,719,271
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Payables - trade $ 6,597,061 $ 6,026,511
Accrued compensation and benefits 3,005,658 3,127,438
Accrued expenses 1,901,892 1,734,491
Accrued interest 419,565 363,827
Current portion of related party debt 5,975,000 8,950,000
Current portion of long-term debt 2,770,934 1,715,951
------------- -------------
Total current liabilities 20,670,110 21,918,218
RELATED PARTY DEBT, LESS CURRENT PORTION 4,150,000
LONG-TERM DEBT, LESS CURRENT PORTION 45,068,116 37,982,933
POSTRETIREMENT BENEFITS 1,593,950 1,412,298
DEFERRED TAXES 3,543,000 3,686,000
COMMTMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Convertible preferred stock Class A, 5% cumulative, $.0l par value; 10,000,000 shares
authorized; 1,071,428 shares issued and outstanding (aggregate liquidation value at
October 27, 1996 and October 29, 1995 - $15,000,000) 13,667,814 13,392,850
Common stock, $.0l par value; 15,000,000 shares authorized; 5,865,000 shares issued
and outstanding 58,650 58,650
Additional paid-in capital 21,611,701 21,611,701
Retained earnings 2,131,288 4,506,621
------------- -------------
Total 37,469,453 39,569,822
Less treasury stock, at cost (56,324 shares at October 27, 1996) (449,284)
------------- -------------
Total stockholders' equity 37,020,169 39,569,822
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 107,895,345 $ 108,719,271
============= =============
</TABLE>
See notes to consolidated finaincial statements.
F-2
<PAGE>
OWOSSO CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
--------------------------------------------------------
October 27, October 29, October 30,
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
Net sales $ 128,215,995 $ 108,000,652 $ 73,799,423
Costs of products sold 98,282,019 77,628,763 52,749,667
------------- ------------- -------------
Gross profit 29,933,976 30,371,889 21,049,756
Expenses:
Selling, general and administrative 19,488,114 13,919,978 9,487,211
Corporate 4,444,313 3,682,413 2,417,317
------------- ------------- -------------
Income from operations 6,001,549 12,769,498 9,145,228
Interest expense 4,080,762 2,876,317 1,855,449
Interest income 11,561 663,501
Other income 202,184 378,679 34,249
------------- ------------- -------------
Income before income tax provision (benefit) 2,122,971 10,283,421 7,987,529
Income tax provision (benefit) 1,275,000 3,900,000 (801,000)
------------- ------------- -------------
Net income 847,971 6,383,421 $ 8,788,529
=============
Dividends and accretion on preferred stock (1,024,964)
------------- -------------
Net (loss) income available for common stockholders $ (176,993) $ 6,383,421
============= =============
Net (loss) income per commom share $ (0.03) $ 1.09
============= =============
Weighted average number of common shares outstanding 5,839,000 5,865,000
============= =============
PRO FORMA
Pro forma income before pro forma tax provision $ 7,987,529
Pro forma tax provision 2,836,000
-------------
Pro forma net income $ 5,151,529
=============
Pro forma net income per share $ 1.06
=============
Pro forma common shares outstanding 4,847,000
=============
</TABLE>
See notes to consolidated finaincial statements.
F-3
<PAGE>
OWOSSO CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'EQUITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Additional
Preferred Common Paid-in Retained Treasury
Stock Stock Capital Earnings Stock Total
--------- -------- ---------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, OCTOBER 31, 1993 $ 516,929 $ 1,706,652 $ 11,604,400 $ (76,325) $ 13,751,656
Net income 8,788,529 8,788,529
Capital contributions 977,632 977,632
Distributions of current earnings (5,226,081) (5,226,081)
Capital distribution (10,000,000) (10,000,000)
Exchange of common stock (476,929) (792,499) 1,193,103 76,325
Purchase of Parker (4,500,000) (4,500,000)
Payment for warrant (1,000,000) (1,000,000)
Redemption of Dura-Bond stock (859,951) (859,951)
Initial public offering of common
stock 18,650 19,719,916 19,738,566
----------- ------------ ------------ ------------ ------------
BALANCE, OCTOBER 30, 1994 58,650 21,611,701 21,670,351
Net income 6,383,421 6,383,421
Dividends paid (1,876,800) (1,876,800)
Issuance of convertible preferred
stock $ 13,392,850 13,392,850
------------ ------------ ------------ ------------ ------------ ------------
BALANCE, OCTOBER 29, 1995 13,392,850 58,650 21,611,701 4,506,621 39,569,822
Net income 847,971 847,971
Dividends paid (2,856,331) (2,856,331)
Accretion on convertible preferred
stock 274,964 (274,964)
Treasury stock purchase (1,047,543) (1,047,543)
Issuance of treasury shares (92,009) 598,259 506,250
------------ ------------ ------------ ------------ ------------ ------------
BALANCE, OCTOBER 27, 1996 $ 13,667,814 $ 58,650 $ 21,611,701 $ 2,131,288 $ (449,284) $ 37,020,169
============ ============ ============ ============ ============ ============
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
OWOSSO CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
---------------------------------------------
October 27, October 29, October 30,
1996 1995 1994
------------ ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 847,971 $ 6,383,421 8,788,529
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred taxes (572,420) (242,193) (801,000)
Corporate expenses paid by Brynavon Group 977,632
Loss (gain) on sale of assets 233,803 (3,633) (87,387)
Depreciation 3,824,744 2,889,753 2,553,000
Amortization 2,473,543 1,323,584 232,928
Amortization of defeffed gain on sale and leaseback (77,183) (77,183)
Changes in assets and liabilities which provided (used) cash:
Accounts receivable (140,108) (290,237) (2,514,516)
Inventories 1,752,803 (567,265) (642,014)
Prepaid expenses and other (402,306) (152,301) (231,500)
Prepaid pension 15,727 32,174 25,000
Accounts payable 556,371 (1,745,924) 2,134,967
Accrued expenses 169,238 123,117 446,086
------------ ------------ ------------
Net cash provided by operating activities 8,759,366 7,673,313 10,804,542
------------ ------------ ------------
INVESTING ACTIVITIES:
Acquisition of businesses, net of cash acquired (1,675,200) (1,401,241) (12,726,982)
Proceeds from sale and leaseback of assets 113,003
Purchases of property, plant and equipment (4,346,267) (4,437,238) (2,000,024)
Purchase of Parker (4,500,000)
(Increase) decrease in other assets (759,538) (348,582) 57,907
------------ ------------ ------------
Net cash used in investing activities (6,781,005) (6,187,061) (19,056,096)
------------ ------------ ------------
FINANCING ACTIVITIES:
Payments to acquire treasury stock (245,000)
Payments on amounts due to/from affiliates (889,172) (11,598,730)
Borrowings from line of credit 8,900,000 7,100,000 14,000,000
Proceeds from long-term debt 150,000 18,278
Payments on long-term debt (1,712,377) (4,975,748) (4,402,026)
Payments on related party debt (7,125,000) (450,000) (200,000)
Dividends paid (2,856,331) (1,876,800) (5,226,081)
Payment for warrant (1,000,000)
Redemption of Dura-Bond stock (2,148,927)
Initial public offering of common stock 19,738,566
------------ ------------ ------------
Net cash (used in) provided by financing activities (2,888,708) (1,091,720) 9,181,080
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (910,347) 394,532 929,526
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,750,236 1,355,704 426,178
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 839,889 $ 1,750,236 $ 1,355,704
============ ============ ============
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
OWOSSO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED OCTOBER 27, 1996, OCTOBER 29, 1995 AND OCTOBER 30, 1994
- --------------------------------------------------------------------------------
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
The Company - The consolidated financial statements represent the
consolidated financial position, results of operations and cash flows of
Owosso Corporation and subsidiaries (the "Company"). The subsidiaries include
Motor Products-Owosso Corporation (Motor Products), Motor Products - Ohio
Corporation: (MP - Ohio), Sooner Trailer Manufacturing Co. (Sooner), Cramer
Company (Cramer), DewEze Manufacturing, Inc., including Parker Industries,
Inc. (DewEze), Snowmax, Incorporated (Snowmax), The Landover Company
(Dura-Bond), Great Bend Manufacturing, Inc. (Great Bend) and Stature
Electric, Inc. (Stature Electric) and Owosso Motor Group, Inc. (Motor Group).
Certain of the Company's subsidiaries were previously affiliated with the
Brynavon Group, due to those entities being under common control and common
management. The Company is a diversified manufacturer of products in narrowly
defined niche markets and currently operates in two business segments,
Engineered Component Products and Specialized Equipment. In the Engineered
Component Products segment, the Company's products are sold primarily to
original equipment manufacturers or service providers who use them in their
end product or service. These products are primarily motors, cam shaft
bearings, heat transfer "fin and tube" coils and air conditioning evaporator
units. The products sold in the Specialized Equipment segment are almost
exclusively final products sold through dealers to their users. These
products are primarily all-aluminum horse trailers and agricultural and turf
maintenance equipment. The majority of the Company's customers are located in
North America.
The Reorganization - On October 25, 1994 the Company sold 1,865,000 shares of
its common stock at $12 per share in an initial public offering (the
"Offering"). The proceeds of the Offering along with proceeds from a new line
of credit agreement with a bank were used to repay certain indebtedness,
complete the Reorganization (see below) and acquire Sooner.
Immediately prior to the closing of the Offering, the stockholders of certain
subsidiaries of the Company received an aggregate of 4,000,000 shares of
common stock of the Company, constituting all of the shares of the Company
outstanding prior to the completion of the Offering. At the same time,
substantially all of the assets of Parker, a division of Kuker Industries,
Inc. which was a wholly owned subsidiary of Brynavon Group, was purchased by
DewEze for $4,500,000 plus the assumption of certain liabilities. The
consolidated statements of earnings prior to the Reorganization include the
results of operations of Parker and the entire amount of the purchase price
reduced stockholders' equity. Cash payments between Brynavon Group and Parker
have been accounted for as capital contributions or distributions.
Prior to the Reorganization discussed above, shares of certain stockholders
of Dura-Bond were redeemed for approximately $4,300,000. The redemption of
such shares were considered a partial purchase of Dura-Bond for accounting
purposes. As such, a proportionate share of the assets and liabilities was
recorded at their fair values. The Company performed an analysis and
concluded that the current recorded values do not materially differ from
their fair values. The result of this accounting treatment is that the
premium paid of approximately $3,400,000 over the proportionate share of the
equity redeemed has been reflected as goodwill and stockholders' equity was
reduced by approximately $900,000. Goodwill arising from this transaction is
being amortized over 25 years.
F-6
<PAGE>
In 1989, Snowmax purchased its operating assets from a subsidiary of Brynavon
Group in exchange for consideration which included a promissory note (the
"Earn-Out Note") requiring Snowmax to pay amounts to Brynavon Group from 1990
through 1999 depending upon the future earnings of Snowmax. In 1991, Brynavon
Group acquired a warrant held by a third party to acquire a 10% interest in
Snowmax (the "Warrant"). In connection with the Reorganization, the Earn-Out
Note and the Warrant were canceled in consideration for a payment of
$2,150,000 to Brynavon Group, which was paid out of the proceeds of the
Offering. The Earn-Out Note was recorded in the historical financial
statements and the payment for the Warrant resulted in a reduction of
stockholders' equity of $1,000,000.
Motor Products distributed a dividend to certain stockholders in the form of
certain indebtedness owed to Motor Products by Brynavon Group of $10,000,000
which resulted in a reduction in stockholders' equity.
The corporate headquarters of Brynavon Group were assumed by the Company
subsequent to the Offering. As such, the cost of operating the Brynavon Group
corporate headquarters, except for an allocation to the remaining
subsidiaries and affiliates of Brynavon Group of approximately $150,000 per
year, has been included in the statement of operations for the fiscal year
ended October 30, 1994. Brynavon Group paid certain expenses on behalf of the
Company of approximately $978,000 for the fiscal year ended October 30, 1994.
This amount has been included as corporate expenses and capital contributions
in the accompanying consolidated financial statements.
Pro Forma Presentation (Unaudited):
The pro forma data for 1994 reflects the following:
o Pro forma tax provision represents the pro forma tax provision as if the
Company was subject to federal income tax.
o Pro forma net income represents the pro forma net income of the Company,
after consideration of the pro forma tax provision.
o Pro forma net income per share was based on 4,000,000 shares outstanding
upon the completion of the Reorganization, an additional 833,000 shares to
give effect to the number of shares required to fund the $10,000,000
distribution to the Motor Products stockholders and the effect of shares
issued in the Offering.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation - The consolidated financial statements of the Company include
the accounts of Owosso Corporation and its wholly owned subsidiaries. All
intercompany balances and transactions have been eliminated in consolidation.
Fiscal Year - The Company's year-end is the last Sunday in October. Fiscal
years 1996, 1995 and 1994 constituted 52-week years.
Cash and Cash Equivalents - consist of cash and highly-liquid investments
with an original maturity of three months or less.
Inventories - Inventories of the Company are recorded at cost, which is not
in excess of market. At October 27, 1996 and October 29, 1995, cost for 17%
and 14%, respectively, of the inventories are determined on the last-in,
first-out (LIFO) basis, and the remainder on the first-in, first-out (FIFO)
basis.
Information related to the FIFO method may be useful in comparing operating
results to those of companies not on LIFO. If the FIFO method of inventory,
which approximates replacement cost, had
F-7
<PAGE>
been used by the Company for all inventories, inventory would have been
approximately $900,000 and $955,000 higher than reported at October 27, 1996
and October 29, 1995, respectively. Additionally, net income would have
(decreased) increased by approximately $(55,000), $(42,000) and $247,000 for
the years ended October 27, 1996, October 29, 1995 and October 30, 1994,
respectively. These amounts reflect the combined effects, in each year, of
changes in inventory quantities and unit costs.
Property, Plant and Equipment - Items of property, plant and equipment are
stated at cost and are depreciated principally on the straight-line method
over their estimated useful lives as follows:
Land improvements 10 - 20 years
Buildings 30 years
Machinery and equipment 3 - 10 years
Income Taxes - The Company elected to be taxed as an S corporation for
federal tax purposes prior to the Reorganization. As such, taxable income was
included on the income tax returns of the stockholders under those elections
(see pro forma presentation in Notes 1 and 12).
Subsequent to the Reorganization, taxes on income are provided based upon
Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for
Income Taxes, which requires an asset and liability approach to financial
accounting and reporting for income taxes. Deferred income tax assets and
liabilities are computed for differences between the financial statement and
tax bases of assets and liabilities that will result in taxable or deductible
amounts in the future. Such deferred income tax asset and liability
computations are based on enacted tax laws and rates applicable to periods in
which the differences are expected to affect taxable income. Valuation
allowances are established when necessary to reduce deferred tax assets to
the amounts expected to be realized. Income tax expense is the tax payable or
refundable for the period plus or minus the change during the period in
deferred tax assets and liabilities.
Fair Value of Financial Instruments - The following disclosures of the
estimated fair value of financial instruments were made in accordance with
the requirements of SFAS No. 107, Disclosures about Fair Value of Financial
Instruments. The estimated fair value amounts have been determined by the
Company using available market information and appropriate valuation
methodologies.
Cash and Cash Equivalents, Accounts Receivable, and Accounts Payable -
The carrying amount of these items are a reasonable estimate of their
fair value.
Short-term Debt and Long-term Debt - Rates currently available to the
Company for debt with similar terms and remaining maturities are used to
estimate the fair value for debt issues. Accordingly, the carrying
amount of debt is a reasonable estimate of its fair value.
Derivatives - The Company's interest rate swap agreements have an
aggregate notional amount of $15,000,000 and were in a liability
position of $360,000 at October 27, 1996.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results may differ from those estimates
and assumptions.
F-8
<PAGE>
Intangibles - Items are amortized on a straight-line basis over their
estimated useful lives as follows:
Noncompetition agreements 3-6 years
Customer lists 20 years
Goodwill 20-25 years
Other 5-20 years
The Company evaluates the carrying value of long-term assets, including
goodwill and other intangible assets, based upon current and anticipated
undiscounted cash flows, and recognizes an impairment when such estimated
cash flows will be less than the carrying value of the asset. Measurement of
the amount of impairment, if any, is based upon the difference between
carrying value and fair value. The Company must adopt SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of in fiscal 1997. Adoption of SFAS No. 121 is not expected to
have a significant effect on the consolidated financial position or results
of operations of the Company.
Revenue Recognition - Revenue is recognized at the time the product is
shipped. An allowance for doubtful accounts of approximately $509,000 and
$155,000 has been recorded as of October 27, 1996 and October 29, 1995,
respectively.
Stock-Based Compensation - In October 1995, the Financial Accounting
Standards Board issued SFAS No. 123, Accounting for Stock-Based Compensation.
SFAS No. 123 defines a fair value method of accounting for stock options and
other equity instruments. Under the fair value method, compensation cost is
measured at the grant date based on the fair value of the award and is
recognized over the service period, which is usually the vesting period.
Under SFAS No. 123, the Company is permitted to continue to account for
employee stock-based transactions under Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees ("APB No. 25"), but will be
required to disclose in a note to the consolidated financial statements pro
forma net income and income per share information as if the Company had
applied the new method of accounting. SFAS No. 123 also requires increased
disclosures for stock-based compensation arrangements regardless of the
method chosen to measure and recognize compensation for employee stock-based
arrangements.
The Company has determined that it will continue to account for such
transactions under APB No. 25 and will provide the disclosures required by
SFAS No. 123 during the year ending October 26, 1997.
Reclassifications - Certain reclassifications were made to the 1995 and 1994
consolidated financial statements to conform to 1996 classifications.
3. SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments in 1996, 1995 and 1994 included payments for interest of
$4,025,024, $2,596,438 and $1,773,307, respectively. Cash payments in 1996
and 1995 included payments for taxes of $1,880,000 and $4,708,000.
In 1996, in connection with the repurchase of common stock from the former
chief operating officer, the Company issued a promissory note totaling
$802,543.
In 1996, in connection with the purchase of Motor Group, the Company reissued
75,000 shares of treasury stock.
F-9
<PAGE>
In 1995, in connection with the acquisition of Great Bend, subordinated notes
totaling $1,700,000 were issued to certain selling stockholders and a
noncompetition agreement totaling $600,000 was entered into with the
president.
In 1995, in connection with the acquisition of Stature Electric 1,071,428
shares of Class A convertible preferred stock with a fair market value of
$13,392,850 and $12,500,000 of promissory notes were issued to the selling
stockholders.
In 1994, in connection with the Reorganization, shares of Dura- Bond were
redeemed for approximately $4,300,000 of which approximately $2,100,000 was
in the form of a note payable. In addition, Motor Products distributed a
dividend to certain stockholders in the form of certain indebtedness to Motor
Products by Brynavon Group of $10,000,000.
In 1994, in connection with the acquisition of Sooner, subordinated notes
totaling $5,000,000 were issued to certain selling stockholders.
4. BUSINESS ACQUISITIONS
All acquisitions have been accounted for as purchases and, accordingly, the
aggregate prices were allocated to assets and liabilities acquired based on
their fair values at the date of acquisition. The results of operations have
been included in the consolidated results of the Company from the effective
dates of each acquisition.
Acquisition of Sooner - Effective October 30, 1994, the Company acquired all
of the issued and outstanding capital stock of Sooner, a manufacturer of
all-aluminum horse trailers. The purchase price was $17,000,000, including
$12,000,000 paid in cash and $5,000,000 payable under a seven-year promissory
note bearing interest at 7.67%. One of the former principal stockholders and
management employees of Sooner received $1,000,000 in consideration for his
covenant not to compete with the Company.
Acquisition of Great Bend - Effective May 1, 1995, the Company acquired all
of the issued and outstanding capital stock of Great Bend which manufactures
and markets front-end loaders. The purchase price was $4,300,000, including
$2,600,000 paid in cash and $1,700,000 of subordinated promissory notes, with
a term of 10 years bearing interest at 8% annually. The president of Great
Bend entered into a six-year employment agreement with Great Bend and
received $600,000 in consideration for his covenant not to compete with the
Company.
Acquisition of Stature Electric- Effective October 29, 1995, the Company
acquired all of the issued and outstanding capital stock of Stature Electric,
a manufacturer of permanent magnet gear motors. As such, the consolidated
balance sheet includes the assets and liabilities of Stature Electric. The
purchase price was $25,900,000, including $12,500,000 of promissory notes,
with a term not exceeding 10 years bearing interest at 8% annually, and the
issuance of 1,071,428 shares of Class A convertible preferred stock of the
Company, with a fair value of $12.50 per share.
F-10
<PAGE>
The following unaudited pro forma financial information shows the results of
the Company's operations for the period presented as though the purchase of
Great Bend and Stature Electric had been made at the beginning of the period.
October 29,
1995
Net sales $133,058,000
Income from operations 15,699,000
Net income 7,086,000
Dividends and accretion on preferred stock 1,025,000
Net income available for common stockholders 6,061,000
Net income per common share $ 1.03
Number of shares 5,865,000
5. INVENTORIES
Inventories are summarized as follows:
October 27, October 29,
1996 1995
Raw materials and purchased parts $ 8,468,218 $10,187,479
Work in process 4,316,588 4,957,924
Finished goods 6,338,316 5,419,571
----------- -----------
Total $19,123,122 $20,564,974
=========== ===========
6. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is summarized by major classification as
follows:
October 27, October 29,
1996 1995
Land and improvements $ 1,165,459 $ 1,200,243
Buildings 15,131,406 14,786,844
Machinery and equipment 32,457,930 28,195,307
Construction in progress 638,574 748,258
------------ ------------
Total 49,393,369 44,930,652
Accumulated depreciation and amortization (23,084,560) (19,577,135)
------------ ------------
Property, plant and equipment, net $ 26,308,809 $ 25,353,517
============ ============
Depreciation expense was approximately $3,825,000, $2,890,000 and $2,553,000
for the years ended October 27, 1996, October 29, 1995 and October 30, 1994,
respectively.
F-11
<PAGE>
7. INTANGIBLES
Intangibles are summarized as follows:
October 27, October 29,
1996 1995
Noncompetition agreements $ 2,220,000 $ 2,220,000
Goodwill 32,876,500 30,878,865
Customer lists 8,000,000 8,000,000
Other 897,734 863,793
----------- -----------
Total 43,994,234 41,962,658
Accumulated amortization (4,717,122) (2,243,569)
----------- -----------
Intangibles, net $39,277,112 $39,719,089
=========== ===========
Amortization expense was approximately $2,474,000, $1,324,000 and $234,000
for the years ended October 27, 1996, October 29, 1995 and October 30, 1994,
respectively.
F-12
<PAGE>
8. LONG-TERM DEBT AND RELATED PARTY DEBT
Long-term debt and related party debt consists of the following:
<TABLE>
<CAPTION>
October 27, October 29,
1996 1995
<S> <C> <C>
THIRD-PARTY DEBT:
Banks:
Unsecured revolving credit agreement $30,000,000 $21,100,000
Promissory note payable in monthly installments of $4,100 to $7,400 due April 1997
with interest at 9% due monthly, collateralized by certain real property 633,938 735,085
Promissory note in monthly installments of $8,864 due February 2009,
with a variable interest rate
(7.7% at October 27, 1996) due monthly, collateralized by certain real property 873,705 911,360
Industrial revenue bonds:
Series 1993, interest at 4.50% to 6.75%, payable in annual installments increasing from
$120,000 to $190,000; commencing in September 1994 and final payment due September 2003
collateralized by building and equipment 1,125,000 1,255,000
Series 1988-A; issued August 25, 1988, payable in annual installments of $500,000 commencing
in January 1997 and final payment due January 1, 2006, collateralized by building
and equipment 5,000,000 5,000,000
Series 1985, interest at 88% of prime, payable semiannually in amounts increasing from $10,000 to
$25,000; final payment due December 1997 74,780 118,364
Series 1984, interest at 75% of prime payable in monthly installments; final payment
due December 1999, collateralized by building and equipment 128,862 166,320
Series 1984 A & B, payable in annual installments ranging from $100,000 to $155,000, plus
interest payable semi-annually at rates from 4.25% to 6.75%; final payment due March 2004,
collateralized by building and equipment 1,045,000 1,150,000
Series 1989, interest at 7.5% , payable semiannually, with principal amount due
in August 1999, collateralized by certain real property 1,800,000 1,800,000
Former and current stockholders:
Noncompetition agreement, payable in quarterly installments of
$25,000 through December 1996, noninterest bearing 37,500 125,000
Noncompetition agreement, payable in quarterly installments of
$25,000 through May 2001, noninterest bearing 450,000 550,000
Subordinated promissory notes, principal and interest of $20,054
and $13,281 payable in quarterly installments, interest at 9%
with final payment due April 1999 221,887 332,830
Subordinated promissory notes, payable in monthly installments of $77,107,
interest at 7.67% with final payment due October 2001 3,882,859 4,487,099
Subordinated promissory notes, payable in quarterly installments of $42,585 plus interest at
8% with final payment due April 2005 1,447,903 1,618,245
Subordinated promissory note, payable in August 1998, interest payable in quarterly
installments at 8% 802,543
Other:
Capital lease obligations 134,516 281,042
Other long-term debt 180,557 68,539
----------- -----------
Total third-party debt 47,839,050 39,698,884
----------- -----------
RELATED PARTY DEBT:
Promissory notes, payable to preferred stockholders in installments ranging from $3,125,000 in January
1996 and $1,875,000 quarterly through October 1996, interest at 8%, with final payment of $3,750,000
thereafter due on demand, due no later than October 2005 5,625,000 12,500,000
Subordinated promissory notes payable to a director, interest only at 10%, due December 1996 350,000 350,000
Subordinated notes payable to a director, annual payments of $137,500 to $200,000 due October 1992
through October 1996 with interest at 15% due quarterly 250,000
----------- -----------
Total related party debt 5,975,000 13,100,000
----------- -----------
Total long-term debt 53,814,050 52,798,884
Less current portion 8,745,934 10,665,951
----------- -----------
Total $45,068,116 $42,132,933
=========== ===========
</TABLE>
F-13
<PAGE>
The Company has a $55,000,000 unsecured revolving credit agreement with two
banks, which expires on March 31, 2000 of which $30,000,000 was outstanding
at October 27, 1996. On December 5, 1996, the Company amended the agreement
in order to meet certain financial covenants with which the Company would not
have been in compliance as of October 27, 1996. Interest is payable monthly,
at the Company's option, at either the bank's prime rate (8.25% at October
27, 1996) or a variable spread (1.75% at October 27, 1996) over the London
Interbank Offered Rate. The effective rate at October 27, 1996 was 7.4%. The
agreement includes financial and other covenants, including leverage, fixed
charge, cash flow and net worth ratios, restrictions on certain asset sales,
mergers and other significant transactions and a negative pledge on fixed
assets. Repayment of the Industrial Revenue Bonds of certain of the
subsidiaries has been guaranteed by the Company.
Derivative Interest Rate Contracts - The Company entered into two interest
rate swap agreements, each with a $7.5 million notional amount. Beginning in
fiscal year 1997, the Company will receive floating interest rate payments at
the three month London Interbank Offered Rate in exchange for quarterly fixed
interest rate payments of 7.0675% and 7.09% over the life of the agreements.
The Company enters into these interest rate swap agreements to change the
fixed/variable interest rate mix of the debt portfolio to reduce the
Company's aggregate risk to movements in interest rates. The agreements are
accounted for using settlement accounting.
The aggregate amount of required payments on long-term debt, excluding
capital lease obligations, is as follows:
Year ending October:
1997 $ 8,650,159
1998 2,796,174
1999 3,750,469
2000 31,976,689
2001 1,816,038
Thereafter 4,690,005
-----------
Total $53,679,534
===========
Future capital lease obligations are as follows:
1997 $106,657
1998 41,676
--------
Total 148,333
Amount representing interest 13,817
--------
Present value of payments 134,516
Less current portion 95,775
--------
Long-term capital lease obligations $ 38,741
========
Equipment with a net book value of $253,255 and $276,240 at October 27, 1996
and October 29, 1995 (net of accumulated amortization of $539,646 and
$452,644 at October 27, 1996 and October 29, 1995), has been leased under
capital leases.
9. TRANSACTIONS WITH RELATED PARTIES
Advances and interest receivable from affiliate represent amounts owed to the
Company for the cash balances advanced to Brynavon Group. Prior to the
Reorganization (see Note 1) interest income was
F-14
<PAGE>
received on these balances at the prime rate and was approximately $614,000
for the year ended October 30, 1994.
During 1995, the Company and Brynavon Group settled all remaining amounts
outstanding, including a subordinated note payable to Brynavon Group, which
resulted in a gain of $200,000, which has been included as other income in
the 1995 consolidated statement of operations.
Interest expense related to amounts owed to Brynavon Group were
approximately $83,000 and $809,000 for the years ended October 29, 1995 and
October 30, 1994.
10. PENSION AND POSTRETIREMENT PLANS
Pension Plans - In July 1995, the Company established a defined contribution
401(k) plan covering substantially all of its employees, except for Motor
Products' hourly employees who are covered under the defined benefit pension
plan described below. Eligible employees may contribute up to 15% of their
compensation to this plan and their contributions are matched by the Company
at a rate of 50% on the first 4% of the employees' contribution. The plan
also provides for a fixed contribution of 3% of eligible employees'
compensation. The expense for the years ended October 27, 1996 and October
29, 1995 under this plan was approximately $686,000 and $206,000,
respectively. All existing 401(k) and defined contribution plans were merged
into the newly created 401(k) plan. These other plans are described below.
Great Bend sponsors a 401(k) savings plan covering substantially all of its
employees. Employees can contribute up to 15% of their salary and their
contributions are matched at a rate of 25% on the first 4% of the employees'
contribution. Expense for the years ended October 27, 1996 and October 29,
1995 under this plan was approximately $16,000 and $7,000, respectively.
Motor Products, Snowmax, Cramer and other affiliated entities of Brynavon
Group had participated in a defined contribution plan covering substantially
all of their employees, except for Motor Products hourly employees who are
covered under a defined benefit pension plan described below. This plan
provided for contributions which, when added to forfeitures which have
become available for allocation, totaled 4.5% of eligible employees'
compensation. The sponsors' fund costs accrued currently. The expense for
the years ended October 29, 1995 and October 30, 1994 under this plan was
approximately $228,000 and $280,000, respectively.
DewEze sponsored a 401(k) savings plan covering substantially all of its
employees. Employees could contribute up to 10% of their salary, of which up
to 3% was matched by DewEze. Expense for the years ended October 29, 1995
and October 30, 1994 under this plan was approximately $30,000 for each
year-end.
Dura-Bond sponsored a defined contribution pension plan covering
substantially all of its employees. Contributions were determined as 4% of
each covered employee's compensation, net of employee forfeitures. Dura-Bond
also sponsored, beginning in fiscal 1992, a 401(k) savings plan covering
substantially all of its employees. Employees could contribute up to 15% of
their salary, of which 1/2%
F-15
<PAGE>
was matched by Dura-Bond. Expense for the Dura-Bond plans for the years
ended October 29, 1995 and October 30, 1994 was approximately $38,000 and
$120,000, respectively.
Motor Products has a defined benefit pension plan covering substantially all
of its hourly employees. The benefits are based on years of service, the
employee's compensation during the last three years of employment and
accumulated employee contributions. Net pension expense included in the
consolidated statements of operations for the years ended October 27, 1996,
October 29, 1995, and October 30, 1994 was determined as follows:
<TABLE>
<CAPTION>
October 27, October 29, October 30,
1996 1995 1994
<S> <C> <C> <C>
Service cost $ 68,600 $ 52,500 $ 63,200
Interest cost on projected benefit obligation 186,543 187,088 175,112
Expected return on assets (220,463) (197,459) (207,225)
Amortization of unrecognized net credit (41,235) (41,235) (41,235)
Amortization of prior service cost 12,641 12,641 12,641
Amortization of unrecognized loss 9,641 18,639 23,212
--------- --------- ---------
Net pension expense $ 15,727 $ 32,174 $ 25,705
========= ========= =========
</TABLE>
The following is a reconciliation of the plan's funded status:
<TABLE>
<CAPTION>
October 27, October 29,
1996 1995
<S> <C> <C>
Projected benefit obligation $ 2,656,200 $ 2,752,500
Plan assets at market value - consisting primarily of mutual funds 3,036,722 2,755,787
----------- -----------
Funded status 380,522 3,287
Unrecognized initial net credit (371,110) (412,345)
Unrecognized prior service cost 161,721 174,362
Unrecognized net loss 226,349 647,905
----------- -----------
Prepaid pension $ 397,482 $ 413,209
=========== ===========
</TABLE>
Additional disclosures and assumptions:
October 27, October 29,
1996 1995
Accumulated benefit obligation $ 2,174,200 $ 2,186,900
Vested benefit obligation 2,127,500 2,169,700
Discount rate 7.50% 7.25%
Expected long-term rate of return 8.0 8.0
Salary increases 5.0 5.0
Stature Electric had a defined benefit pension plan covering substantially
all of its employees. Upon the acquisition, the Company initiated a plan to
freeze the benefits, terminate the plan and provide new retirement benefits
under the Company's 401(k) plan.
F-16
<PAGE>
Postretirement Plan - Motor Products provides postretirement medical benefits
and life insurance benefits to current and former employees who retire from
Motor Products. No contributions from retirees are required and the Plan is
funded on a pay-as-you-go basis.
Motor Products has adopted SFAS No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions (SFAS 106). SFAS 106 requires
recognition during employees' active service periods of the expected cost of
providing such postretirement benefits. Motor Products paid $64,500, $44,400
and $33,900 in such benefits during the years ended October 27, 1996, October
29, 1995 and October 30, 1994, respectively.
The following table sets forth the funded status of the plan reconciled with
the amount shown in the consolidated balance sheet as of October 27, 1996 and
at October 29, 1995:
<TABLE>
<CAPTION>
October 27, October 29,
1996 1995
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 454,800 $ 407,300
Fully eligible active plan participants 171,900 225,300
Other active plan participants 1,067,900 1,054,200
----------- -----------
Total 1,694,600 1,686,800
Plan assets at fair value 0 0
----------- -----------
Accumulated postretirement benefit obligation in excess
of plan assets 1,694,600 1,686,800
Unrecognized net gain from past experience different from that
assumed and from changes in assumptions 185,290 27,318
Prior service cost not yet recognized in net periodic
postretirement benefit cost (285,940) (301,820)
----------- -----------
Accrued postretirement benefit cost $ 1,593,950 $ 1,412,298
=========== ===========
</TABLE>
Net periodic postretirement benefit cost included the following components
for the years ended October 27, 1996 and October 29, 1995:
October 27, October 29,
1996 1995
Service cost $ 115,600 $ 97,100
Interest cost 113,700 109,100
Amortization of prior service cost 15,880 15,880
Amortization of unrecognized loss (2,500)
--------- ---------
Total $ 245,180 $ 219,580
========= =========
For measurement purposes, a 9.4% and 10.4% annual rate of increase in the per
capita cost of covered health care benefits was assumed for the years ended
October 27, 1996 and October 29, 1995, respectively; the rate was assumed to
decrease gradually to 4.9% for 2015 and 5.2% for 2012, and remain
F-17
<PAGE>
at that level thereafter. The health care cost trend rate assumption has a
significant effect on the amounts reported. To illustrate, increasing the
assumed health care cost trend rates by one percentage point in each year
would increase the accumulated postretirement benefit obligation as of
October 27, 1996 by $361,000 and the aggregate of the service cost and
interest cost components of the net periodic postretirement benefit cost for
the year then ended by $60,300.
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.5% and 7.25%, as of October 27, 1996
and October 29, 1995, respectively.
11. COMMITMENTS AND CONTINGENCIES
The Company leases office space, a production facility and certain equipment
under operating leases. Operating lease expense was approximately
$1,061,000, $702,000 and $574,000 for the years ended October 27, 1996,
October 29, 1995 and October 30, 1994, respectively, net of sublease rentals
and reimbursements of utilities of $99,000, $269,000 and $260,000,
respectively. The lease on the corporate headquarters office space expires
in September 2006 with a base rent of approximately $186,000 in 1996, which
adjusts annually through October 1999 to $305,000. Cramer leases its
facilities under an operating lease which is scheduled to expire in 1999,
with an additional 10 year renewal option beyond 1999. The lease requires
Cramer to pay the property taxes, insurance, utilities and maintenance
expenses. Future minimum rental payments under non-cancellable operating
leases are as follows:
Year ending October:
1997 $ 909,163
1998 963,297
1999 773,694
2000 353,741
2001 305,160
Thereafter 1,500,370
---------
$4,805,425
==========
At October 27, 1996, outstanding letters of credit totaled approximately
$8,111,000. These letters of credit primarily guarantee certain notes and
performance of contracts associated with acquisitions made by the Company.
The Company is subject to federal, state and local environmental regulation
with respect to its operations. The Company believes that it is operating in
substantial compliance with applicable environmental regulations.
In December 1990, Dura-Bond was issued a non-binding request for certain
investigative and remediation measures by the California Regional Water
Quality Control Board relating to a facility it formerly operated. Since the
issuance of the request, the State has taken no further action against
Dura-Bond. In the event the State were to seek further remediation,
Dura-Bond may face claims from the State or claims for contribution to its
former lessor. Dura-Bond believes that it has substantial defenses to any
such claim.
The lessor of Cramer's facility is engaged in negotiations with the State of
Connecticut regarding additional investigative or remedial measures at this
facility. Cramer may be required to bear a portion of the costs of any such
investigative or remedial measures, the amount of which cannot currently be
F-18
<PAGE>
reasonably estimated. Cramer is also engaged in the closure of waste
handling facilities at this location in accordance with State regulations.
Closure is expected to be completed in 1997 at a cost which is not expected
to be significant.
Cramer has been named as a potentially responsible party with respect to a
hazardous substance disposal site being cleaned up by the U.S. Environmental
Protection Agency under its "Superfund" program, which they expect to settle
through the payment of minor amounts.
A portion of Sooner's manufacturing facility was used in the past to store
containers of waste oil and solvents, and an above-ground diesel fuel
storage tank is currently located at the facility. The Company intends to
establish a well at the facility for the purpose of monitoring the ground
water for any contamination, and the Company estimates such monitoring will
cost approximately $12,500 per year.
Current historic manufacturing and other operations at the Company's various
facilities may result and may have resulted in the discharge and release of
hazardous substances and waste from time to time. The Company routinely
responds to such incidents as deemed appropriate pursuant to applicable
federal, state and local environmental regulations.
Sooner and DewEze have arrangements with a number of financial institutions
to provide floor plan financing for its dealers, which require them to
repurchase repossessed products from the financial institutions in the event
of a default by the financed dealer. Their obligation is typically to
repurchase the equipment at 90% of the purchase price for the first 180
days, 80% for the next 90 days and 70% for the next 90 days, after which the
obligation expires. Neither subsidiary has taken possession on any equipment
pursuant to the repurchase obligations in these contracts.
In addition to the matters reported herein, the Company is involved in
litigation dealing with the numerous aspects of its business operations. The
Company believes that settlement of such litigation will not have a material
effect on its consolidated financial position or results of operations.
12. TAXES ON INCOME
Effective with the Reorganization, taxes on income are provided based upon
SFAS No. 109. As such, the Company established deferred taxes at the date of
the Reorganization in the amount of $801,000 which was reflected in the
consolidated statement of operations for the year ended October 30, 1994.
The income tax provision consists of the following:
October 27, October 29,
1996 1995
Current:
Federal $ 1,810,000 $ 3,899,000
State 40,000 178,000
Deferred - federal (575,000) (177,000)
----------- -----------
Total income tax provision $ 1,275,000 $ 3,900,000
=========== ===========
F-19
<PAGE>
The reconciliation to the statutory federal income tax rate is as follows:
October 27, October 29,
1996 1995
Federal income tax provision at statutory rate 35.0% 35.0%
State income taxes, net of federal income tax benefit 1.2 1.1
Amortization of excess cost of net assets acquired 23.5 2.4
Other 0.4 (0.6)
---- ---
Provision for income taxes 60.1% 37.9%
==== ===
The components of the Company's net deferred tax assets and liabilities,
including the deferred tax liability recorded upon the acquisition of Stature
Electric are as follows:
October 27, October 29,
1996 1995
Deferred tax asset:
Intangibles $ 615,000 $ 615,000
Accruals and reserves 1,540,000 1,369,000
Tax credits and loss carryforwards 683,000 315,000
Other 484,000 121,000
----------- -----------
3,322,000 2,420,000
Valuation allowance (1,397,000) (961,000)
----------- -----------
Total $ 1,925,000 $ 1,459,000
=========== ===========
Deferred tax liabilities:
Intangibles $ 2,888,000 $ 3,040,000
Pension 135,000 140,000
Property, plant and equipment 1,413,000 1,180,000
----------- -----------
Total $ 4,436,000 $ 4,360,000
=========== ===========
Net deferred tax liability $(2,511,000) $(2,901,000)
=========== ===========
These amounts are included in the accompanying consolidated financial
statements as follows:
October 27, October 29,
1996 1995
Current assets $ 1,032,000 $ 785,000
Long-term liabilities (3,543,000) (3,686,000)
----------- -----------
Net deferred tax liability $(2,511,000) $(2,901,000)
=========== ===========
The Company's valuation allowance relates primarily to intangibles and state
deferred tax assets on which management believes realization may be
unlikely.
F-20
<PAGE>
Prior to the Reorganization, the Company had elected to be taxed as an S
corporation for federal income tax purposes. As such, current taxable income
had been included on the income tax returns of the stockholders under these
elections. The completion of the Reorganization, (see Note 1) resulted in a
termination of the S corporation election. The pro forma provision for
federal income tax presented below reflects the provision for income taxes
the Company would have reported had the Company been taxed on its income.
The pro forma tax provision for 1994 consists of the following:
October 30,
1994
Current $ 3,206,000
Deferred (370,000)
-----------
Total $ 2,836,000
===========
The pro forma effective income tax rate differs from the federal statutory
tax rate due to adjustments for amortization of goodwill, officers' life
insurance premiums, state income taxes and meals and entertainment.
13. CONVERTIBLE PREFERRED STOCK
As part of the Stature Electric acquisition, the Company issued 1,071,428 of
its 10,000,000 authorized preferred shares as Class A convertible preferred
stock, with a stated value of $14 per share. The stock was recorded at its
fair market value of $12.50 per share. The convertible preferred stock is
entitled to quarterly cash dividends as a percentage of the stated value of
$15,000,000 as follows:
November 1996 to October 2000 5% per annum
November 2000 to October 2001 6% per annum
November 2001 to October 2002 7% per annum
November 2002 to October 2003 8% per annum
November 2003 to October 2004 9% per annum
November 2004 and thereafter 10% per annum
The Company may not pay any common stock dividends unless all preferred
dividend requirements have been met. At October 27, 1996, there are no
accrued preferred dividends. The Class A convertible preferred stock has a
liquidation preference of $14 per share at October 27, 1996. At any time
prior to October 26, 2000, the holders of the preferred stock have a right
to convert all, or any portion of the preferred stock into shares of common
stock on a one to one ratio, (subject to adjustment under certain
conditions). At any time after October 29, 2000, the Company may, at its
option, redeem all, or any portion of the then outstanding preferred stock.
The redemption price and the liquidation preference of the preferred stock
is initially equal to the stated value of $14 per share and increases after
November 2000 by 5% each year for ten years to a maximum of 150% of stated
value. The convertible preferred stockholders are entitled to vote as a
class to elect one member of the Board of Directors of the Company so long
as at least 40% of the originally issued Class A preferred stock is
outstanding. The convertible preferred stock has liquidation priority over
common stock.
F-21
<PAGE>
14. STOCK OPTION PLAN
The Company's 1994 Stock Option Plan (the "Stock Option Plan") provides for
the grant of options to purchase an aggregate of up to 500,000 shares of
common stock of the Company. The Stock Option Plan is designed to serve as
an incentive for retaining qualified and competent employees and directors.
Eligible participants under the Stock Option Plan are all employees and
directors of the Company. The Stock Option Plan is administered by the
Company's Compensation Committee of the Board of Directors.
The Stock Option Plan contains a provision for the automatic acceleration of
the exercisability of all outstanding options upon the occurrence of a
change in control (as defined in the Stock Option Plan) and a provision for
the cancellation of options and cash payment to the holders of such canceled
options upon the occurrence of certain of the events constituting a change
in control. The Compensation Committee may generally amend, alter or
discontinue the Stock Option Plan at any time, but no amendment, alteration
or discontinuation will be made which would impair the rights of an optionee
with respect to an outstanding stock option without the consent of the
optionee.
The following schedule summarizes stock option activity and status:
<TABLE>
<CAPTION>
October 27, October 29, October 30,
1996 1995 1994
<S> <C> <C> <C>
Outstanding at beginning of year 284,340 264,340 264,340
Granted 175,500 30,000 0
Cancelled (135,000) (10,000) 0
-------- ------- ---------
Outstanding at end of year 324,840 284,340 264,340
======= ======= =======
Exercise price of options outstanding at the
end of year $5.875-$12.00 $11.375-$12.00 $ 12.00
============= ============== ==========
</TABLE>
At October 27, 1996, a total of 175,160 shares were available for issuance
under the Stock Option Plan to be granted in the future. At October 27,
1996, 88,340 options were fully vested and exercisable.
F-22
<PAGE>
15. BUSINESS SEGMENTS
Business segment information is as follows:
<TABLE>
<CAPTION>
Engineered Specialized Corporate
Components Equipment Expenses
<S> <C> <C> <C>
Net sales:
1996 $ 71,987,398 $ 56,228,597
1995 57,374,938 50,625,714
1994 58,406,532 15,392,891
Income (loss) from operations:
1996 6,811,929 3,633,933 $ (4,444,313)
1995 9,666,192 6,785,719 (3,682,413)
1994 9,930,971 1,631,574 (2,417,317)
Identifiable assets:
1996 67,231,968 38,491,159 2,172,218
1995 67,109,265 40,014,760 1,595,246
1994 34,351,722 29,951,268 1,815,316
Capital additions:
1996 2,794,999 1,123,560 427,708
1995 2,352,722 1,719,327 365,189
1994 1,366,781 571,935 61,308
Depreciation and amortization expense:
1996 4,056,704 2,052,157 189,426
1995 2,334,540 1,768,610 110,187
1994 2,360,817 425,111
</TABLE>
F-23
<PAGE>
16. QUARTERLY INFORMATION (UNAUDITED)
The following table details net sales, gross profit, income (loss) before
taxes, net income (loss) and net income (loss) per share on a quarterly
basis for 1996 and 1995:
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended Quarter Ended Quarter Ended
January 1996 April 1996 July 1996 October 1996
<S> <C> <C> <C> <C>
Net sales $ 27,919,402 $ 33,442,895 $ 33,294,650 $ 33,559,048
Gross profit 7,030,686 7,967,068 8,526,174 6,410,048
Income (loss) before taxes 607,107 968,311 1,592,208 (1,044,655)
Net income (loss) 367,300 539,180 844,180 (902,689)
Net income (loss) available
for common shareholders 112,986 283,598 587,305 (1,160,882)
Net income (loss) per
common share $ 0.02 $ 0.05 $ 0.10 $ (0.20)
Quarter Ended Quarter Ended Quarter Ended Quarter Ended
January 1995 April 1995 July 1995 October 1995
Net sales $ 21,492,937 $ 26,819,155 $ 29,549,940 $ 30,138,620
Gross profit 6,403,949 7,993,514 7,872,238 8,102,188
Income before taxes 2,212,819 3,381,216 2,609,923 2,079,463
Net income 1,383,014 2,096,476 1,612,933 1,290,998
Net income per share $ 0.24 $ 0.36 $ 0.28 $ 0.21
</TABLE>
Fourth Quarter Adjustments
In the fourth quarter of fiscal 1996, the Company recorded $600,000 in
selling, general and administrative expenses due to write-offs of doubtful
accounts and additions to its reserve for doubtful accounts at its Snowmax
subsidiary. At the end of fiscal 1996, the Company also recognized a
reduction in inventory value of $1,093,000, consisting of physical inventory
adjustments ($267,000), lower inventory valuations due to lower material,
labor and overhead costs and a change in the method of valuing Sooner's
finished goods ($576,000), and an additional reserve for obsolete inventory
($250,000). These adjustments were made in connection with the Company's
year-end physical inventory valuation process and charged to cost of
products sold. During the second half of fiscal 1996, the Company undertook
an inventory reduction program at its Snowmax subsidiary. This led to an
increase in cost of products sold of $240,000 in the third quarter and
$493,000 in the fourth quarter. The Company's effective tax rate for the
full year was 60.1%, a higher rate than had been expensed during the first
three quarters of the year. The effect of increasing income tax expense in
the fourth quarter to bring the full year rate to that level was
approximately $300,000.
Seasonality
Sales of certain of the Company's specialized equipment tend to be seasonal
with lowest sales during the first fiscal quarter and higher sales during
the fourth fiscal quarter, corresponding with the fall harvest season for
farmers. Sales of the Company's engineered component products experience
less seasonality but generally have higher sales during the second fiscal
quarter while sales of these products are lowest during the first fiscal
quarter.
Cyclicality
The Company's Engineered Component Products segment is subject to changes in
the overall level of domestic economic activity. The Specialized Equipment
segment is subject to changes in certain sectors of the agricultural
economy, which may be influenced by climate changes and governmental policy.
The segment's horse trailer sales which have not tended to be affected by
changes in the agricultural economy, have had a moderating effect on the
results of the entire Specialized Equipment segment, but may be subject to
the overall domestic business cycle.
******
F-24
<PAGE>
Schedule II
Owosso Corporation
Valuation and Qualifying Accounts and Reserves
For the three years ended October 27, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Balance at Charged to Balance at
Beginning Costs and Deductions End of
of Period Expenses (a) Period
---------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
For the year ended October 27, 1996
Allowances on:
Accounts receivable $ 155,352 $ 646,547 $ (292,923) $ 508,976
Inventory 294,382 1,216,017 (945,437) 564,962
For the year ended October 29, 1995
Allowances on:
Accounts receivable $ 267,779 $ 94,104 $ (206,531) $ 155,352
Inventory 300,000 100,000 (105,618) 294,382
For the year ended October 30, 1994
Allowances on:
Accounts receivable $ 220,430 $ 115,335 $ (67,986) $ 267,779
Inventory 300,000 300,000
(a) Amounts written off against related assets
</TABLE>
F-25
<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
This Item 14 is being refiled as part of this Form 10-K/A for the sole purpose
of listing the financial statement schedule in Item 14(a)(2) that was set forth
on page F-25 of the Form 10-K as originally filed on January 27, 1997 and is set
forth on page F-25 of this Form 10-K/A.
(a) (1) Financial Statements
The financial statements being filed as part of this Form 10-K/A are listed in
the Index to Consolidated Financial Statements set forth under Item 8 above.
-36-
<PAGE>
(2) Schedules
The following consolidated financial statement schedule of the Company is filed
as part of this Form 10-K/A:
Schedule II -- Valuation and Qualifying Accounts.
(3) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- ------------
<S> <C>
* 3.1 Articles of Incorporation of the Company (Exhibit 3.1 to the Company's Form S-1
Registration Statement, No. 33-76964 (the "1994 Registration Statement")).
* 3.2 By-Laws of the Company (Exhibit 3.2 to the 1994 Registration Statement).
* 3.3 Designations of the Class A Convertible Preferred Stock of Owosso Corporation
(Exhibit 4.1 to the Company's Current Report on Form 8-K dated October 31,
1995 (the "October 31, 1995 Form 8-K")).
*10.1 1994 Stock Option Plan (Exhibit 10.1 to the Company's Annual
Report on Form 10-K for the year ended October 30, 1994 (the
"1994 Form 10-K ")).
*10.2 MIS Agreement dated October 31, 1994 by and between Owosso
Corporation and The Owosso Company (Exhibit 10.2 to the 1994
Form 10-K).
*10.3 Lease Agreement, by and between Gregory M. Cook and Kevin C.
Geenty, D/B/A Mill Rock Leasing, as Landlord, and Cramer
Company, as Tenant, dated November 1, 1995 (Exhibit 10.3 to
the Company's Annual Report on Form 10-K for the year ended
October 29, 1995 (the "1995 Form 10-K ")).
*10.4 Second Amended and Restated Credit Agreement by and among The Owosso
Company, Motor Products-Owosso Corporation, Cramer Company, The Macton
Corporation, Seajay Manufacturing Corporation, Redmond Financial Corporation,
Parker Industries, Inc., Kuker-Parker Industries, Inc., Tannewitz, Inc., Gluco, Inc.,
Snow Coil, Inc., Robert A. Martin Company, Inc., Copco, Inc., Beachmont
Company, Beachmont-Tabor Company, and NBD Bank, N.A., dated April 1,
1991, as amended July 31, 1992, and as amended March 21, 1994 (Exhibit 10.4 to
the 1994 Registration Statement).
*10.5 Loan Agreement between Director of the State of Nevada
Department of Commerce as Issuer and The Landover Company
D/B/A Dura-Bond Bearing Company, dated August 1, 1988
regarding the issuance of Series 1988-A Industrial Development
Revenue Bonds (Exhibit 10.5 to the 1994 Registration
Statement).
</TABLE>
-37-
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- ------------
<S> <C>
*10.6 Loan Agreement between the City of Jefferson, Iowa and Parker
Industries, Inc., dated December 1, 1985 regarding the
issuance of Series 1985 Industrial Development Revenue Bonds
(Exhibit 10.6 to the 1994 Registration Statement).
*10.7 Offering Statement regarding the City of Harper, Kansas, Industrial Revenue
Bonds issued to DewEze Manufacturing, Inc., dated October 1, 1993 (Exhibit
10.7 to the 1994 Registration Statement).
*10.8 Offering Statement regarding the Gregg County Development Corporation, Inc.
Revenue Bonds, issued to Greer & Snow Coil Manufacturers, Inc., dated May 17,
1984 (Exhibit 10-8 to the 1994 Registration Statement).
*10.9 Lease by and between Gregory M. Cook, D/B/A Mill Rock Leasing,
as Landlord, and Cramer Company, as Tenant, dated April 11,
1986 (Exhibit 10.9 to the 1994 Registration Statement).
*10.10 Equipment Lease Agreement, by and between X/L Datacomp, Inc. and The
Owosso Company, dated March 17, 1989 (Exhibit 10.13 to the 1994 Registration
Statement).
*10.11 Guaranty Agreement, dated as of October 31, 1994, by and
between Owosso Corporation and NBD Bank, N.A. (Exhibit 10.14
to the 1995 Form 10-K).
*10.12 Fourth Amendment to Reimbursement Agreement, dated as of September 30,
1995, by and between The Landover Company and NBD Bank, N.A. (Exhibit
10.15 to the 1995 Form 10-K).
*10.13 Third Amendment to Credit Agreement, dated as of October 31, 1995, by and
among NBD Bank, N.A., PNC Bank, N.A. and NBD Bank, N.A. as Agent, and
Owosso Corporation, Ahab Investment Company, Cramer Company, DewEze
Manufacturing, Inc., The Landover Company, Motor Products-Owosso
Corporation, Snowmax Incorporated, Sooner Trailer Manufacturing Co., Motor
Products-Ohio Corporation, Great Bend Manufacturing Company, Inc. and
Stature Electric, Inc. (Exhibit 10.16 to the 1995 Form 10-K).
*10.14 Reimbursement Agreement, dated as of December 1, 1995, by and between
Stature Electric, Inc. and NBD Bank, N.A. (Exhibit 10.22 to the 1995 Form
10-K).
</TABLE>
-38-
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- ------------
<S> <C>
*10.22 Irrevocable Guaranty Agreement, dated as of December 1, 1995, by and between
Owosso Corporation and NBD Bank, N.A. (Exhibit 10.32 to the 1995 Form
10-K).
*10.23 Management Services Agreement, by and between Snowmax,
Incorporated, and The Owosso Company, dated July 31, 1989
(Exhibit 10.33 to the 1994 Registration Statement).
*10.24 Subordinated promissory note of DewEze Manufacturing, Inc.,
issued to Howard Hershberger, dated December 18, 1991 (Exhibit
10.34 to the 1994 Registration Statement).
*10.25 Subordinated promissory note of DewEze Manufacturing, Inc.,
issued to Dewey Hostetler, dated December 18, 1991 (Exhibit
10.35 to the 1994 Registration Statement).
*10.26 Non-Competition Agreement by and between DewEze Manufacturing, Inc. and
Dewey Hostetler, dated December 18, 1991 (Exhibit 10.36 to the 1994
Registration Statement).
</TABLE>
-39-
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- ------------
<S> <C>
*10.27 Non-Competition Agreement by and between DewEze Manufacturing, Inc. and
Howard Hershberger, dated December 18, 1991 (Exhibit 10.37 to the 1994
Registration Statement).
*10.28 Extension agreement among Owosso Corporation, Richard R. Carr
and I. Wistar Morris, III, dated September 27, 1994 (Exhibit
2.7 to the 1994 Registration Statement).
*10.29 Promissory Note of Snowmax, Incorporated, dated April 7, 1992,
issued to Longview Bank and Trust Company, in the amount of
$1,000,000 (Exhibit 10.39 to the 1994 Registration Statement).
*10.30 Deed of Trust, dated April 7, 1992, on property of Snowmax,
Incorporated located in Upshur County, Texas (Exhibit 10.40 to
the 1994 Registration Statement).
*10.31 Deed of Trust, dated April 7, 1992, on property of Snowmax,
Incorporated located in Gregg County, Texas (Exhibit 10.41 to
the 1994 Registration Statement).
*10.32 Lender's Subordination Agreement, dated April 7, 1992, among Longview Bank
and Trust Company, Snowcoil, Inc. and Snowmax, Incorporated (Exhibit 10.42 to
the 1994 Registration Statement).
*10.33 Reimbursement Agreement, dated as of August 1, 1991, by The
Landover Company in favor of NBD Bank, N.A., as amended on
December 30, 1991 and March 1, 1993 (Exhibit 10.43 to the 1994
Registration Statement).
*10.34 Lease, dated March 21, 1995, between Motor Products - Ohio
Corporation and William Berhard Realty Company (Exhibit 10.44
to the 1995 Form 10-K).
*10.35 Confidentiality and Non-Solicitation Agreement between the
Company and Eugene P. Lynch, dated October 31, 1994 (Exhibit
10.45 to the 1994 Form 10-K).
*10.36 Confidentiality and Non-Solicitation Agreement between the
Company and Ellen D. Harvey, dated October 31, 1994 (Exhibit
10.46 to the 1994 Form 10-K).
*10.37 Confidentiality and Non-Solicitation Agreement between the
Company and George B. Lemmon, Sr., dated October 31, 1994
(Exhibit 10.47 to the 1994 Form 10-K).
*10.38 Confidentiality and Non-Solicitation Agreement between the
Company and George B. Lemmon, Jr., dated October 31, 1994
(Exhibit 10.48 to the 1994 From 10-K).
</TABLE>
-40-
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- ------------
<S> <C>
*10.39 Confidentiality and Non-Solicitation Agreement between the
Company and John H. Wert, Jr., dated October 31, 1994 (Exhibit
10.50 to the 1994 Form 10-K).
*10.40 Confidentiality and Non-Solicitation Agreement between the
Company and John R. Reese, dated October 31, 1994 (Exhibit
10.51 to the 1994 Form 10-K).
*10.41 Credit Agreement by and among NBD Bank, N.A., PNC Bank, N.A. and NBD
Bank, N.A. as Agent, and Owosso Corporation, Ahab Investment Company,
Cramer Company, DewEze Manufacturing, Inc., The Landover Company, Motor
Products-Owosso Corporation, Snowmax Incorporated and Sooner Trailer
Manufacturing Co. (Exhibit 10.52 to the 1994 Form 10-K).
*10.42 Third Amendment to Reimbursement Agreement, dated as of December 15, 1995,
by and between The Landover Company and NBD Bank, N.A. (Exhibit 10.53 to
the 1995 Form 10-K).
*10.43 Stock Purchase Agreement among Owosso Corporation, Richard R. Carr and I.
Wistar Morris, III, dated March 24, 1994 (Exhibit 2.2 to the 1994 Form 10-K).
*10.44 Asset Purchase Agreement among DewEze Manufacturing, Inc., Kuker-Parker
Industries, Inc. and The Owosso Company, dated October 31, 1994 (Exhibit 2.3 to
the 1994 Form 10-K).
*10.45 Subordinated promissory note of DewEze Manufacturing, Inc.,
issued to Howard Hershberger, dated October 31, 1994 (Exhibit
2.4 to the 1994 Form 10-K).
*10.46 Subordinated promissory note of DewEze Manufacturing, Inc.,
issued to Dewey Hostetler, dated October 31, 1994 (Exhibit 2.5
to the 1994 Form 10-K).
*10.47 The Owosso Group, Plan of Reorganization dated March 25, 1994 (Exhibit 2.1 to
the 1994 Registration Statement).
*10.48 Amendment No. 1 to The Owosso Group Plan of Reorganization dated September
26, 1994 (Exhibit 2.8 to the 1994 Registration Statement).
*10.49 Stock Purchase Agreement dated September 9, 1994 by and among Owosso
Corporation, Sooner Trailer Manufacturing Co., Michael S. Bernhardt, Billy J.
Bernhardt, Viola M. Bernhardt, Michael S. and Cynthia L. Bernhardt Charitable
Remainder Unitrust U/T/A 8/15/94, Billy J. and Viola M. Bernhardt Charitable
Remainder Unitrust U/T/A 8/15/94, Steven J. Bernhardt Trust U/T/A 8/15/94 and
Cynthia L. Bernhardt Trust U/T/A 8/15/94 (Exhibit 2.9 to the 1994 Registration
Statement).
</TABLE>
-41-
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- ------------
<S> <C>
*10.50 Letter Agreement by and among Owosso Corporation, The Owosso Company and
Sooner Trailer Manufacturing Co. dated October 25, 1994 (Exhibit 2.10 to the
1994 Form 10-K).
*10.51 Stock Purchase Agreement dated April 28, 1995 by and among Owosso
Corporation, Great Bend Manufacturing Inc. and the stockholders of Great Bend
Manufacturing Inc. (Exhibit 2.1 to the Company's Current Report on Form 8-K
dated May 1, 1995).
*10.52 Agreement and Plan of Merger dated October 25, 1995 by and among Owosso
Corporation, Stature Electric, Inc. and the stockholders of Stature Electric, Inc.
(Exhibit 2.1 to the October 31, 1995 Form 8-K).
*10.53 Consulting Agreement dated October 31, 1995 by and between Owosso
Corporation and Lowell Huntsinger (Exhibit 10.1 to the October 31, 1995 Form
8-K).
*10.54 Registration Rights Agreement dated October 31, 1995 by and among Owosso
Corporation, Lowell Huntsinger, Randall James and Morris Felt (Exhibit 10.2 to
the October 31, 1995 Form 8-K).
*10.55 Loan Agreement dated September 18, 1993 between Sooner Trailer
Manufacturing Co. and American National Bank, Duncan, Oklahoma, and
Amendment No. 1 to Loan Agreement dated December 13, 1994 between the
same parties (Exhibit 10.54 to the Company's Quarterly Report on Form 10-Q for
the quarter ended January 29, 1995).
*10.56 First Amendment to Credit Agreement by and among Owosso
Corporation, its subsidiaries, NBD Bank, PNC Bank, N.A., and
NBD Bank, as Agent, dated as of August 1, 1995 (Exhibit 10.56
to the Company's Quarterly Report on Form 10-Q for the quarter
ended July 30, 1995 (the "July 1995 Form 10-Q")).
*10.57 Second Amendment to Credit Agreement by and among Owosso
Corporation, its subsidiaries, NBD Bank, PNC Bank, N.A., and
NBD Bank, as Agent, dated as of September 1, 1995 (Exhibit
10.57 to the July 1995 Form 10-Q).
*10.58 Distribution Agreement by and among DewEze Manufacturing, Inc. and Airens
Company, dated as of July 21, 1995 (Exhibit 10.58 to the July 1995 Form 10-Q).
*10.59 Fourth Amendment to Credit Agreement by and among Owosso
Corporation, its subsidiaries, NBD Bank, PNC Bank, N.A., and
NBD Bank, as Agent, dated as of March 8, 1996. (Exhibit 10.71
to the Company's Quarterly Report on Form 10-Q for the quarter
ended April 28, 1996)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- ------------
<S> <C>
*10.60 Fifth Amendment to Credit Agreement by and among Owosso
Corporation, its subsidiaries, NBD Bank, PNC Bank, N.A., and
NBD Bank, as Agent, dated as of May 31, 1996. (Exhibit 10.72
to the Company's Quarterly Report on Form 10-Q for the quarter
ended July 28, 1996 (the "July 1996 Form 10-Q")).
*10.61 Separation and Confidentiality Agreement between Thomas L. French and
Owosso Corporation, dated as of June 14, 1996 (Exhibit 10.73 to the July 1996
Form 10-Q).
**10.62 Lease Agreement by and between Owosso Corporation and Philadelphia Freedom
Partners, L.P. dated September 6, 1996.
**21 Subsidiaries of the registrant.
**23 Consent of Deloitte & Touche LLP.
**27 Financial Data Schedule
</TABLE>
- --------------
* Incorporated by reference.
** Previously filed.
(b) Reports filed on Form 8-K during the last quarter of fiscal 1996:
The Company filed a Current Report on Form 8-K dated November 13, 1996
to report expected results of operations for fiscal 1996.
-43-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to
Annual Report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Philadelphia, Commonwealth of Pennsylvania, on the
31st day of January, 1997.
OWOSSO CORPORATION
By: /s/ John H. Wert, Jr.
------------------------------------------
John H. Wert, Jr., Senior Vice President -
Finance, Chief Financial Officer and
Treasurer and Secretary
