<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Date of report (Date of earliest event reported): March 6, 1998
-------------
AFTERMARKET TECHNOLOGY CORP.
----------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 0-21803 95-4486486
- -------------------------------- -------------- --------------------
(State or Other Jurisdiction of (Commission (I.R.S. Employer
Incorporation or Organization) File Number) Identification No.)
900 Oakmont Lane - Suite 100, Westmont, IL 60559
- ------------------------------------------ ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (630) 455-6000
--------------
None
----
(Former name or address, if changed since last report)
<PAGE>
AFTERMARKET TECHNOLOGY CORP.
FORM 8-K
Aftermarket Technology Corp. (the "Company") filed a current report on Form
8-K dated March 6, 1998 (the "Current Report") pertaining to the acquisition of
substantially all the assets of the OEM Division of Autocraft Industries, Inc.
("Autocraft"). At the time of the filing of the Current Report, it was
impractical for the Company to provide financial statements and pro forma
financial information for Autocraft. Pursuant to the instructions for Item 7
of the Form 8-K, the Company hereby amends Item 7 of the Current Report to
include the previously omitted information, as follows:
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements
1) Financial statements of Autocraft Industries, Inc. Original
Equipment Manufacturing Operations at June 30, 1997 and for
the year ended June 30, 1997.
2) Unaudited financial statements of Autocraft Industries, Inc.
Original Equipment Manufacturing Operations at December 31,
1997 and for the six months ended December 31, 1997.
(b) Pro forma financial information
1) Unaudited proforma financial information for the Company at
December 31, 1997 and for the year ended December 31, 1997.
(c) Exhibits
10.1 Asset Purchase Agreement, dated as of February 10, 1998, by and among
Autocraft Industries, Inc., Fred Jones Industries A Limited
Partnership, and Aftermarket Technology Corp. (previously filed as
Exhibit 10.49 to the Company's Annual Report on Form 10-K filed on
March 25, 1998 and incorporated herein by this reference).
10.2 Amendment No. 1 to Asset Purchase Agreement, dated as of February 10,
1998, by and among Autocraft Industries, Inc., Fred Jones Industries
A Limited Partnership, and Aftermarket Technology Corp. (previously
filed as Exhibit 10.50 to the Company's Annual Report on Form 10-K
filed on March 25, 1998 and incorporated herein by this reference).
<PAGE>
AFTERMARKET TECHNOLOGY CORP.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AFTERMARKET TECHNOLOGY CORP.
Dated: May 21, 1998
By: /s/ Joseph Salamunovich
-----------------------------------------
Joseph Salamunovich
Vice President
<PAGE>
FINANCIAL STATEMENTS
AND REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
AUTOCRAFT INDUSTRIES, INC.
ORIGINAL EQUIPMENT
MANUFACTURING OPERATIONS
June 30, 1997
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Autocraft Industries, Inc.
We have audited the accompanying balance sheet of the Original Equipment
Manufacturing Operations of Autocraft Industries, Inc. (Note A1), as of June
30, 1997, and the related statements of operations, changes in net assets, and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Original Equipment
Manufacturing Operations of Autocraft Industries, Inc., as of June 30, 1997,
and the results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
GRANT THORNTON LLP
Oklahoma City, Oklahoma
January 23, 1998
<PAGE>
AUTOCRAFT INDUSTRIES, INC.
ORIGINAL EQUIPMENT MANUFACTURING OPERATIONS - SEE NOTE A1
BALANCE SHEET
($ in thousands)
June 30, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Cash and cash equivalents $ 53
Trade accounts receivable 17,801
Receivable from affiliates 213
Inventories 20,244
Deferred income tax asset 2,011
Other current assets 479
--------
Total current assets 40,801
Property and equipment - at cost, net 21,568
Cost in excess of net assets of businesses acquired, net 1,995
Other assets 520
--------
$ 64,884
--------
--------
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES
Trade accounts payable $ 9,361
Accrued compensation 3,693
Accrued warranty obligations 609
Other accrued expenses 753
--------
Total current liabilities 14,416
Deferred income tax liability 577
--------
Total liabilities 14,993
COMMITMENTS AND CONTINGENCIES -
NET ASSETS 49,891
--------
$ 64,884
--------
--------
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
AUTOCRAFT INDUSTRIES, INC.
ORIGINAL EQUIPMENT MANUFACTURING OPERATIONS - SEE NOTE A1
STATEMENT OF OPERATIONS
($ in thousands)
Year ended June 30, 1997
<TABLE>
<CAPTION>
<S> <C>
Net sales $123,634
Cost of sales 94,885
--------
Gross profit 28,749
Selling, general, and administrative expenses 14,830
Net loss on sale of operating assets 50
Amortization of intangible assets 1,405
Nonrecurring operating expenses 1,399
--------
Operating profit 11,065
Interest income 2
Interest expense (3,165)
--------
Earnings before income taxes 7,902
Income tax expense 3,081
--------
NET EARNINGS $ 4,821
--------
--------
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
AUTOCRAFT INDUSTRIES, INC.
ORIGINAL EQUIPMENT MANUFACTURING OPERATIONS - SEE NOTE A1
STATEMENT OF CHANGES IN NET ASSETS
($ in thousands)
Year ended June 30, 1997
<TABLE>
<CAPTION>
<S> <C>
Balance at July 1, 1996 $ 40,944
Net earnings 4,821
Net contribution from Autocraft 4,126
--------
Balance at June 30, 1997 $ 49,891
--------
--------
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
AUTOCRAFT INDUSTRIES, INC.
ORIGINAL EQUIPMENT MANUFACTURING OPERATIONS - SEE NOTE A1
STATEMENT OF CASH FLOWS
($ in thousands)
Year ended June 30, 1997
<TABLE>
<CAPTION>
<S> <C>
Increase (Decrease) in Cash and Cash Equivalents
Cash flows from operating activities
Net earnings $ 4,821
Adjustments to reconcile net earnings to net
cash provided by operating activities
Depreciation 2,514
Amortization of intangible assets 1,405
Net loss on sale of operating assets 50
Provision for doubtful receivables 28
Deferred income taxes 28
Changes in assets and liabilities
Increase in
Accounts receivable (2,265)
Inventories (5,306)
Other current assets (199)
Other assets (338)
Accrued liabilities 875
Decrease in
Accounts payable (489)
--------
Net cash provided by operating activities 1,124
Cash flows from investing activities
Purchase of property and equipment (5,718)
Proceeds from sale of property and equipment 230
--------
Net cash used in investing activities (5,488)
Cash flows from financing activities
Net contribution from Autocraft 4,126
--------
NET DECREASE IN CASH AND
CASH EQUIVALENTS (238)
Cash and cash equivalents at beginning of year 291
--------
Cash and cash equivalents at end of year $ 53
--------
--------
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
AUTOCRAFT INDUSTRIES, INC.
ORIGINAL EQUIPMENT MANUFACTURING OPERATIONS - SEE NOTE A1
NOTES TO FINANCIAL STATEMENTS
($ in thousands)
June 30, 1997
NOTE A - NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES
The following is a summary of the significant accounting policies
consistently applied in the preparation of the accompanying financial
statements.
1. BASIS OF PRESENTATION AND NATURE OF OPERATIONS
The financial statements present the Original Equipment Manufacturing
Operations (OEM) of Autocraft Industries, Inc., an Oklahoma corporation
(Autocraft). The OEM operations include the following operating units: Ford
Transmissions, General Motors Transmissions, Materials Recovery, and Fred
Jones Electronics.
OEM engages in, among other things, (i) the contract remanufacturing of
transmissions and related drive train components for Ford Motor Company
(Ford) and General Motors Corporation (GM), (ii) the distribution and service
of cellular telephones, primarily for AT&T Wireless Services, (iii) the
distribution and service of automobile electronic control modules and
instrument display clusters for Ford and GM, and (iv) material recovery
processing for Ford.
Ford and GM constitute OEM's two largest single customers, and are
significant sources of supply for parts and other inventory items.
OEM has no separate legal status or existence, and its resources are
controlled by Autocraft. In the normal course of business, OEM had various
transactions with Autocraft and Autocraft's other divisions, including
various expense allocations and reimbursements, which are material in amount.
Such expenses are allocated for corporate services, overhead, interest, and
income taxes.
The financial statements of OEM have been prepared from separate records
maintained by OEM as well as from the combined records of Autocraft and may
not necessarily be indicative of the results had OEM operated as an
independent entity.
2. ACCOUNTS RECEIVABLE
OEM extends credit to major automobile manufacturers, two of which constitute
OEM's two largest single customers.
3. INVENTORIES
Inventories are valued at the lower of cost or market, with cost determined
by the last-in, first-out ("LIFO") method for mechanical inventories and the
first-in, first-out ("FIFO") method for electronics inventories.
<PAGE>
AUTOCRAFT INDUSTRIES, INC.
ORIGINAL EQUIPMENT MANUFACTURING OPERATIONS - SEE NOTE A1
NOTES TO FINANCIAL STATEMENTS - CONTINUED
($ in thousands)
June 30, 1997
NOTE A - NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES - CONTINUED
4. PROPERTY AND EQUIPMENT AND DEPRECIATION
Depreciation is computed using both straight-line and accelerated methods
over estimated useful lives, ranging from five to twelve years for equipment
and furniture, and from fifteen to forty years for buildings and
improvements.
5. INTANGIBLE ASSETS
Covenants not to compete of approximately $6,583 are amortized using the
straight-line method over the contract periods of three to five years, and
are fully amortized at June 30, 1997. Cost in excess of net assets of
businesses acquired is being amortized using the straight-line method over
twenty years, and is presented net of accumulated amortization of $540 in
1997.
OEM assesses the recoverability of cost in excess of net assets of businesses
acquired whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable through the undiscounted future
operating cash flows of the acquired operation. The amount of the
impairment, if any, is measured based on projected discounted future
operating cash flows. OEM believes that no impairment has occurred and that
no reduction in the estimated useful life is warranted.
6. INCOME TAXES
OEM's operations have been included with the operations of Autocraft for
purposes of filing federal and state income tax returns. Income taxes have
been provided in the accompanying financial statements at a combined federal
and state rate of 39%, which would approximate the income tax effects on a
separate return basis.
Deferred income taxes are provided on temporary differences between the tax
basis of an asset or liability and its reported amount in the financial
statements that will result in taxable or deductible amounts in future years.
Deferred income tax assets or liabilities are determined by applying the
presently enacted tax rates and laws.
7. CASH AND CASH EQUIVALENTS
OEM considers all highly liquid debt instruments purchased with a maturity of
three months or less and money market funds to be cash equivalents. OEM
maintains its cash in bank deposit accounts, which may not be federally
insured. OEM has not experienced any losses in such accounts and believes it
is not exposed to any significant credit risks on cash and cash equivalents.
All significant cash inflows of OEM are swept from OEM's deposit accounts to
Autocraft's deposit accounts, and all significant cash outflows of OEM are
funded by Autocraft.
The carrying amounts of cash and cash equivalents approximate fair values of
such assets.
<PAGE>
AUTOCRAFT INDUSTRIES, INC.
ORIGINAL EQUIPMENT MANUFACTURING OPERATIONS - SEE NOTE A1
NOTES TO FINANCIAL STATEMENTS - CONTINUED
($ in thousands)
June 30, 1997
NOTE A - NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES - CONTINUED
8. STATEMENT OF CASH FLOWS
No separate disclosure is made of cash paid for interest and income taxes as
these amounts are included in net contributions from Autocraft.
9. USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosures; accordingly, actual
results could differ from those estimates.
10. CHANGE IN ACCOUNTING PRINCIPLES
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of", which requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the assets' carrying
amount. SFAS No. 121 also addresses the accounting for long-lived assets
that are expected to be disposed of. OEM adopted SFAS No. 121 on July 1,
1996; however, the initial review disclosed no indicators of impairment.
11. NONRECURRING OPERATING EXPENSES
In fiscal 1997, OEM incurred approximately $1,399 of nonrecurring operating
expenses in connection with its implementation of a streamlined management
structure and a more flexible manufacturing process designed to reduce
manufacturing expense and improve gross profit margins. Included in these
expenses are costs related to consolidation of facilities and severances.
NOTE B - INVENTORIES
Inventories are summarized as follows at June 30, 1997:
<TABLE>
<CAPTION>
<S> <C>
New parts $12,027
Finished goods 8,217
-------
$20,244
-------
-------
</TABLE>
If the FIFO method of valuation (which approximates current cost) had been
used by the Company for all inventories, such amounts would have been $182
higher than reported at June 30, 1997. Approximately 92% of inventory costs
were accounted for by the LIFO method at June 30, 1997.
<PAGE>
AUTOCRAFT INDUSTRIES, INC.
ORIGINAL EQUIPMENT MANUFACTURING OPERATIONS - SEE NOTE A1
NOTES TO FINANCIAL STATEMENTS - CONTINUED
($ in thousands)
June 30, 1997
NOTE C - PROPERTY AND EQUIPMENT
Major classes of property and equipment consisted of the following at June 30,
1997:
<TABLE>
<CAPTION>
<S> <C>
Buildings and fixtures $ 9,337
Machinery and equipment 10,724
Office equipment, furniture, and fixtures 6,351
Transportation equipment 1,035
Leasehold and land improvements 3,185
--------
30,632
Less accumulated depreciation and amortization 9,414
--------
21,218
Land 350
--------
$ 21,568
--------
--------
</TABLE>
NOTE D - INCOME TAXES
The components of income tax expense are as follows for June 30, 1997:
<TABLE>
<CAPTION>
<S> <C>
Current
Federal $ 2,656
State 397
--------
3,053
Deferred 28
--------
$ 3,081
--------
--------
</TABLE>
Deferred tax assets and liabilities consisted of the following at June 30,
1997:
<TABLE>
<CAPTION>
<S> <C>
Assets
Accrued expenses $ 558
Inventory 450
Allowances and reserves 461
Other 542
--------
$ 2,011
--------
--------
Liabilities
Property and equipment $ 512
Other 65
--------
$ 577
--------
--------
</TABLE>
<PAGE>
AUTOCRAFT INDUSTRIES, INC.
ORIGINAL EQUIPMENT MANUFACTURING OPERATIONS - SEE NOTE A1
NOTES TO FINANCIAL STATEMENTS - CONTINUED
($ in thousands)
June 30, 1997
NOTE D - INCOME TAXES - CONTINUED
The effective tax rate on earnings before income taxes differs from the
federal statutory tax rate. The following summary reconciles taxes at the
federal statutory tax rate with actual taxes for the year ended June 30,
1997:
<TABLE>
<CAPTION>
<S> <C> <C>
Income taxes at federal statutory rate $ 2,687 34%
Increase in taxes resulting from state taxes,
net of federal income tax benefit 394 5%
--------- ---
Total income tax expense $ 3,081 39%
--------- ---
--------- ---
</TABLE>
A valuation allowance for deferred tax assets is required when it is more
likely than not that some portion or all of the deferred tax assets will not
be realized. The ultimate realization of this deferred tax asset depends on
OEM's ability to generate sufficient taxable income in the future.
Management believes that the deferred tax assets will be realized by future
operating results. If OEM is unable to generate sufficient taxable income in
the future through operating results or tax-planning opportunities, a
valuation allowance will be required through a charge to expense.
NOTE E - RELATED PARTY TRANSACTIONS
Autocraft has allocated to OEM various expenses it incurred for corporate
services and administration, information systems services, workers'
compensation benefits, employee health and disability benefits, interest, and
income taxes. Such allocations are comprised of executive and other
salaries, workers' compensation benefits, employee health and disability
benefits, and depreciation. These costs have been allocated on the basis of
various factors, which take into consideration, among other things, total
assets, total revenues, and number of employees.
Management believes that the amounts allocated to OEM have been computed and
charged to OEM on a reasonable basis. The following is a summary of
allocated costs:
<TABLE>
<CAPTION>
<S> <C>
Corporate services and administration, information
systems services, workers' compensation benefits,
and employee health and disability benefits $ 2,419
Interest expense 3,165
Current income tax expense 3,053
--------
$ 8,637
--------
--------
</TABLE>
NOTE F - SIGNIFICANT CUSTOMERS
Sales to two significant customers for June 30, 1997 accounted for 61% and
21% of net sales. These customers accounted for 89% of accounts receivable
at June 30, 1997.
<PAGE>
AUTOCRAFT INDUSTRIES, INC.
ORIGINAL EQUIPMENT MANUFACTURING OPERATIONS - SEE NOTE A1
NOTES TO FINANCIAL STATEMENTS - CONTINUED
($ in thousands)
June 30, 1997
NOTE G - ACCOUNTS RECEIVABLE
The allowance for doubtful receivables was $93 at June 30, 1997. Provision
for doubtful receivables was $28, and charge-offs were $95 in 1997.
NOTE H - NET ASSETS
Net assets represent the cumulative earnings of OEM net of expenses allocated
to OEM and intracompany cash transactions with Autocraft. Also included in
net assets are all liabilities of OEM which are not separate legal
obligations of OEM, such as income taxes payable and employee benefit plan
obligations, which are legal obligations of Autocraft but which have been
charged to OEM.
NOTE I - COMMITMENTS AND CONTINGENCIES
1. LEASES
OEM leases certain properties and equipment used in operations. These leases
are classified as operating leases for financial reporting purposes. Lease
terms range from one to eight years and provide for payments as follows:
<TABLE>
<CAPTION>
<S> <C>
1998 $ 830
1999 795
2000 589
2001 438
2002 400
Thereafter 827
------
$3,879
------
------
</TABLE>
Rent expense for the year ended June 30, 1997 was $1,182.
2. OTHER
Autocraft is involved in various legal actions relating to its overall
operations. Management believes that losses, if any, arising from such
actions will not directly effect OEM's financial position or results of
operations.
<PAGE>
AUTOCRAFT INDUSTRIES, INC.
ORIGINAL EQUIPMENT MANUFACTURING OPERATIONS - SEE NOTE A1
NOTES TO FINANCIAL STATEMENTS - CONTINUED
($ in thousands)
June 30, 1997
NOTE J - SUBSEQUENT EVENTS (UNAUDITED)
In October 1997, Autocraft acquired Automotive Developments Limited (ADL), a
United Kingdom company, in a business combination accounted for as a
purchase. ADL is primarily engaged in the remanufacture of vehicle engines,
and has annual sales of approximately $22,000. The cost of the acquisition
was $20,325; however, the purchase price could be increased by approximately
$1,600 if certain sales and earnings goals are met in 1998. The estimated
fair value of assets acquired was $30,795, including goodwill of $14,705, and
liabilities assumed was $10,470.
Autocraft is currently negotiating the sale of substantially all of the net
assets of OEM to Aftermarket Technology Corporation.
<PAGE>
FINANCIAL STATEMENTS
AUTOCRAFT INDUSTRIES, INC.
ORIGINAL EQUIPMENT MANUFACTURING OPERATIONS
AT DECEMBER 31, 1997
AND FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
<PAGE>
AUTOCRAFT INDUSTRIES, INC.
ORIGINAL EQUIPMENT MANUFACTURING OPERATIONS
BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
December 31, 1997
-----------------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 1,553
Accounts receivable, net 22,268
Inventories 20,791
Prepaid and other assets 897
Deferred income taxes 2,735
--------
Total current assets 48,244
Property, plant and equipment: 43,731
Less accumulated depreciation and amortization (17,781)
--------
25,950
Cost in excess of net assets acquired, net 16,562
Other assets 391
--------
Total assets $ 91,147
--------
--------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 14,379
Other accrued expenses 7,026
--------
Total current liabilities 21,405
Deferred income taxes 656
Stockholders' equity:
Division capital 69,086
--------
Total stockholders' equity 69,086
--------
Total liabilities and stockholders' equity $ 91,147
--------
--------
</TABLE>
See Notes to Financial Statements
<PAGE>
AUTOCRAFT INDUSTRIES, INC.
ORIGINAL EQUIPMENT MANUFACTURING OPERATIONS
STATEMENT OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months
Ended
December 31,
1997
-----------
(Unaudited)
<S> <C>
Net sales $ 71,786
Cost of sales 56,276
-----------
Gross profit 15,510
Selling, general and
administrative expense 9,209
Amortization of intangible assets 231
-----------
Income from operations 6,070
Interest and other income 93
Interest expense 1,835
-----------
Income before income taxes 4,328
Provision for income taxes 1,688
-----------
Net income $ 2,640
-----------
-----------
</TABLE>
See Notes to Financial Statements
<PAGE>
AUTOCRAFT INDUSTRIES, INC.
ORIGINAL EQUIPMENT MANUFACTURING OPERATIONS
STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months
Ended
December 31,
1997
-----------
(Unaudited)
<S> <C>
OPERATING ACTIVITIES:
Net Income $ 2,640
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 1,841
Provision for losses on accounts receivable 69
Loss on sale of equipment 4
Deferred income taxes 261
Changes in operating assets and liabilities
(net of acquired businesses):
Accounts receivable (111)
Inventories 2,481
Prepaid and other assets (158)
Accounts payable and accrued expenses (3,481)
-----------
Net cash provided by operating activities 3,546
-----------
INVESTING ACTIVITIES:
Purchases of property and equipment (2,970)
Acquisition of companies, net of cash received (15,797)
Proceeds from sale of equipment 166
-----------
Net cash used in investing activities (18,601)
-----------
FINANCING ACTIVITIES:
Borrowings from parent company 16,555
-----------
Net cash provided by financing activities 16,555
-----------
Increase in cash and cash equivalents 1,500
Cash and cash equivalents at beginning of period 53
-----------
Cash and cash equivalents at end of period $ 1,553
-----------
-----------
</TABLE>
See Notes to Financial Statements
<PAGE>
AUTOCRAFT INDUSTRIES, INC.
ORIGINAL EQUIPMENT MANUFACTURING OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
Balance at June 30, 1997 $ 49,891
Net income 2,640
Net contribution from parent company 16,555
----------
Balance at December 31, 1997 $ 69,086
----------
----------
</TABLE>
See Notes to Financial Statements
<PAGE>
Autocraft Industries, Inc
Original Equipment Manufacturing Operations
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
($ in thousands)
December 31, 1997
1. BASIS OF PRESENTATION AND NATURE OF OPERATIONS
The financial statements present the Original Equipment Manufacturing
Operations (OEM) of Autocraft Industries, Inc., an Oklahoma corporation
(Autocraft). The OEM operations include the following operating units: Ford
Transmissions, General Motors Transmissions, Materials Recovery, and Fred
Jones Electronics.
OEM engages in, among other things, (i) the contract remanufacturing of
transmissions and related drive train components for Ford Motor Company (Ford)
and General Motors Corporation (GM), (ii) the distribution and service of
cellular telephones, primarily for AT&T Wireless Services, (iii) the
distribution and service of automobile electronic control modules and
instrument display clusters for Ford and GM, and (iv) material recovery
processing for Ford.
OEM has no separate legal status or existence, and its resources are
controlled by Autocraft. In the normal course of business, OEM had various
transactions with Autocraft and Autocraft's other divisions, including various
expense allocations and reimbursements, which are material in amount. Such
expenses are allocated for corporate services, overhead, interest, and income
taxes.
The financial statements of OEM have been prepared from separate records
maintained by OEM as well as from the combined records of Autocraft and may
not necessarily be indicative of the results had OEM operated as an
independent entity.
The balance sheet at December 31, 1997, and the statements of income, changes
in net assets and cash flows for the six months ended December 31, 1997, are
unaudited, but include all adjustments (consisting only of normal and
recurring accruals) which the Company considers necessary for fair
presentation.
The accompanying financial statements do not include all disclosures normally
provided in annual financial statements and, therefore, should be read in
conjunction with the June 30, 1997 financial statements.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes.
<PAGE>
2. SUBSEQUENT EVENTS
On March 6, 1998, Autocraft sold the operating units as follows: (i) Ford
Remanufacturing, Materials Recovery and certain computer operations to Morgan
Road Acquisition Corp., a wholly-owned subsidiary of Aftermarket Technology
Corp. (which subsequently changed its name to Autocraft Industries, Inc.),
(ii) General Motors Remanufacturing to GM Remanufacturing Corp., a wholly-
owned subsidiary of Aftermarket Technology Corp. (which subsequently changed
its name to Autocraft Remanufacturing Corp.), (iii) Automotive Developments
Limited (ADL), a United Kingdom company and wholly owned subsidiary of
Autocraft, to Aftermarket Technology Holdings (U.K.) Limited, a wholly-owned
subsidiary of Aftermarket Technology Corp., and (iv) the Electronics
Remanufacturing business (including the AT&T wireless distribution business)
to ACI Electronics, L.P., also a wholly-owned subsidiary of Aftermarket
Technology Corp. (which subsequently changed its name to ATC Electronics &
Logistics, L.P.). The total cash purchase price for the sale was $112,500;
however, the purchase price could be increased by up to an additional $12,500
based on the performance of ADL in 1998.
<PAGE>
<TABLE>
<CAPTION>
AFTERMARKET TECHNOLOGY CORP.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
DECEMBER 31, 1997
(IN THOUSANDS)
Dr (Cr)
Aftermarket Autocraft Pro Forma Pro Forma Pro Forma
Technology Corp. OEM Adjustments Adj.Ref. Consolidated
---------------- --------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 78 $ 1,553 $ - $ 1,631
Accounts receivable, net 53,761 22,268 (1,044) (1) 74,985
Inventories 76,166 20,791 1,041 (1) 97,998
Prepaid and other assets 4,706 897 (226) (1) 5,377
Refundable income taxes 1,011 - 242 (8) 1,253
Deferred income taxes 3,478 2,735 (2,484) (2) 3,729
---------------- --------- ----------- ------------
Total current assets 139,200 48,244 (2,471) 184,973
Property, plant and equipment 31,244 43,731 (10,681) (3) 64,294
Less accumulated depreciation and amortization (6,830) (17,781) 10,681 (3) (13,930)
---------------- --------- ----------- ------------
24,414 25,950 - 50,364
Debt issuance costs, net 4,260 - 1,820 (4) 6,080
Cost in excess of net assets acquired, net 200,393 16,562 45,264 (5) 262,219
Other assets 410 391 1,466 (1) 2,267
---------------- --------- ----------- ------------
Total assets $ 368,677 $ 91,147 $ 46,079 $ 505,903
---------------- --------- ----------- ------------
---------------- --------- ----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 16,055 $ 14,379 $ (195) (1) $ 30,239
Other current liabilities 24,622 7,026 (1,703) (1) 29,945
---------------- --------- ----------- ------------
Total current liabilities 40,677 21,405 (1,898) 60,184
12% Series B and D Senior Subordinated Notes 121,288 - - 121,288
Acquisition notes payable 9,097 - - 9,097
Amount drawn on revolving credit facility 11,100 - 118,082 (6) 129,182
Deferred compensation 3,042 - - 3,042
Deferred income taxes 8,044 656 (656) (2) 8,044
Stockholders' equity:
Preferred stock - - - -
Common stock 195 - - 195
Additional paid-in capital 131,604 69,086 (69,086) (7) 131,604
Retained earnings 43,494 - (363) (8) 43,131
Cumulative translation adjustment 136 - - 136
---------------- --------- ----------- ------------
Total stockholders' equity 175,429 69,086 (69,449) 175,066
---------------- --------- ----------- ------------
Total liabilities and stockholders' equity $ 368,677 $ 91,147 $ 46,079 $ 505,903
---------------- --------- ----------- ------------
---------------- --------- ----------- ------------
</TABLE>
SEE ACCOMPANYING NOTES FOR PRO FORMA ADJUSTMENTS.
<PAGE>
Aftermarket Technology Corp.
Notes to Condensed Pro Forma Balance Sheet
The accompanying condensed pro forma balance sheet reflects the acquisition
of OEM as if the acquisition had occurred on December 31, 1997. The
adjustments reflect the acquisition as follows:
(1) Reflects changes to OEM balances from December 31, 1997 to the purchase
date.
(2) Reflects adjustments to OEM's deferred tax items.
(3) Reflects adjustment to fixed assets to net book values which approximates
fair value.
(4) Reflects debt issuance costs incurred in connection with new credit
facility of $2,425, net of amounts written off from the prior credit
facility.
(5) Records the preliminary goodwill arising from the acquisition of OEM, net
of adjustment to reduce OEM's goodwill by $14,613.
(6) Reflects amount drawn on revolving credit facility to finance the
acquisition of OEM and pay related debt issuance costs.
(7) Reflects elimination of prior equity of OEM.
(8) Reflects the charge of $363 ($605, net of related income tax benefit of
$242) related to the write-off of previously capitalized debt issuance
costs.
<PAGE>
<TABLE>
AFTERMARKET TECHNOLOGY CORP.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Dr (Cr)
Aftermarket Autocraft Pro Forma Pro Forma Pro Forma
Technology Corp. OEM Adjustments Adj.Ref. Consolidated
---------------- --------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
Net sales $ 346,110 $ 134,093 $ 480,203
Cost of sales 212,416 103,559 315,975
---------------- --------- ------------
Gross profit 133,694 30,534 164,228
Selling, general and
administrative expense 73,768 18,098 91,866
Amortization of intangible assets 4,501 750 $ 1,498 (1) 6,749
---------------- --------- ----------- ------------
Income from operations 55,425 11,686 (1,498) 65,613
Interest and other income 1,912 95 2,007
Interest expense 18,822 5,000 (5,000) (2)
8,266 (3) 27,088
---------------- --------- ----------- ------------
Income before income taxes
and extraordinary item 38,515 6,781 (4,764) 40,532
Provision for income taxes 15,512 2,645 (1,906) (4) 16,251
---------------- --------- ----------- ------------
Income before extraordinary item 23,003 4,136 (2,858) 24,281
Extraordinary item - net of income tax
benefit 3,749 - 363 (5) 4,112
---------------- --------- ----------- ------------
Net income $ 19,254 $ 4,136 $ (3,221) $ 20,169
---------------- --------- ----------- ------------
---------------- --------- ----------- ------------
Basic earnings per common share:
Income before extraordinary item $ 1.31 $ 0.24 $ (0.16) $ 1.39
Extraordinary item $ (0.21) - $ (0.03) (0.24)
---------------- --------- ----------- ------------
Net income $ 1.10 $ 0.24 $ (0.19) $ 1.15
---------------- --------- ----------- ------------
---------------- --------- ----------- ------------
Weighted average number of common shares
outstanding 17,496 17,496 17,496 17,496
---------------- --------- ----------- ------------
Diluted earnings per common share:
Income before extraordinary item $ 1.19 $ 0.21 $ (0.15) $ 1.25
Extraordinary item $ (0.20) - $ (0.01) (0.21)
---------------- --------- ----------- ------------
Net income $ 0.99 $ 0.21 $ (0.16) $ 1.04
---------------- --------- ----------- ------------
---------------- --------- ----------- ------------
Weighted average number of common and
common equivalent shares outstanding 19,335 19,335 19,335 19,335
---------------- --------- ----------- ------------
---------------- --------- ----------- ------------
</TABLE>
SEE ACCOMPANYING NOTES FOR PRO FORMA ADJUSTMENTS.
<PAGE>
Aftermarket Technology Corp.
Notes to Consolidated Pro Forma Statements of Income
The accompanying consolidated pro forma statements of income reflect the
acquisition of Autocraft as if the acquisition had occurred on January 1,
1997. The adjustments reflect the acquisition as follows:
(1) Reflects additional amortization expense from the goodwill recorded, net
of a $91 reduction to goodwill from the OEM.
(2) Eliminates interest on debt not assumed in the acquistion.
(3) Reflects additional interest expense on debt incurred in connection with
the acquisition.
(4) Reflects the adjustment to income taxes as a result of the pro forma
adjustments described in these Notes.
(5) Reflects the extaordinary item related to the writeoff of previously
capitalized debt issuance costs in connection with a restatement and
amendment of the credit agreeement for the revolving credit facility.
