<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(AMENDMENT NO. 1)
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 12, 1998 (February 27,
1998)
YOUNG INNOVATIONS, INC.
(Exact name of registrant as specified in its charter)
Missouri 000-23213 43-1718931
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
13705 Shoreline Court East, Earth City, Missouri 63045
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 314-344-0010
NONE
(Former name or former address, if changed since last report)
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BACKGROUND
This is an amendment to the Current Report on Form 8-K dated February 27, 1998
of Young Innovations, Inc. ( "Young") in which Young announced that it had
acquired the assets and assumed certain liabilities of Panoramic Corporation
("Panoramic"). The purpose of this Amendment is to submit financial statements
of Panoramic required by Item 7 (a) and pro forma financial information required
by Item 7 (b).
Item 7 - Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired
The required financial statements of the business acquired are set forth
below.
PANORAMIC CORPORATION
FINANCIAL STATEMENTS
DECEMBER 31, 1997
(With Independent Auditor's Report Thereon)
Independent Auditors' Report
To the Stockholders and Directors
Panoramic Corporation:
We have audited the accompanying balance sheet of Panoramic Corporation as of
December 31, 1997 and the related statements of income, stockholders' equity
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 Panoramic Corporation as of
December 31, 1997 and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
(signed) COOPERS & LYBRAND L.L.P.
Fort Wayne, Indiana
February 19, 1998
2
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PANORAMIC CORPORATION
BALANCE SHEET
AS OF DECEMBER 31, 1997
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
1997
------
<S> <C>
CURRENT ASSETS
CASH $ 375
ACCOUNTS RECEIVABLE, TRADE, LESS ALLOWANCE
FOR DOUBTFUL ACCOUNTS OF $37 IN 1997 1,129
NOTES RECEIVABLE, OTHER 41
INVENTORIES 541
PREPAID EXPENSES 101
------
TOTAL CURRENT ASSETS 2,187
PROPERTY, PLANT AND EQUIPMENT, AT COST
EQUIPMENT LEASED TO OTHERS 4,544
MACHINERY AND EQUIPMENT 742
BUILDINGS 743
OFFICE EQUIPMENT AND FIXTURES 410
AUTOMOTIVE 56
------
6,495
LESS ALLOWANCE FOR DEPRECIATION 2,090
------
4,405
LAND 81
------
4,486
OTHER 36
------
TOTAL ASSETS $6,709
======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
3
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<TABLE>
<CAPTION>
LIABILITIES 1997
------
<S> <C>
CURRENT LIABILITIES
CURRENT MATURITIES OF LONG-TERM OBLIGATIONS $ 13
ACCOUNTS PAYABLE 672
ACCRUED WARRANTY 155
ACCRUED COMPENSATION AND RELATED EXPENSES 342
ACCRUED EXPENSES 126
CUSTOMER DEPOSITS 128
DEFERRED INCOME 49
------
TOTAL CURRENT LIABILITIES 1,485
LONG-TERM OBLIGATIONS 2,209
------
3,694
------
STOCKHOLDERS' EQUITY
COMMON STOCK, NO PAR VALUE, 100,000 SHARES AUTHORIZED,
53,195 SHARES ISSUED AND OUTSTANDING 1,091
ADDITIONAL PAID-IN CAPITAL 387
RETAINED EARNINGS 1,537
------
TOTAL STOCKHOLDERS' EQUITY 3,015
------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $6,709
======
</TABLE>
4
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PANORAMIC CORPORATION
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1997
--------
<S> <C>
NET REVENUES:
PRODUCT SALES $ 7,851
LEASING 1,840
-------
9,691
COST OF PRODUCT SALES AND LEASING 5,408
-------
GROSS MARGIN 4,283
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 2,660
-------
OPERATING INCOME 1,623
OTHER INCOME (EXPENSE):
INTEREST EXPENSE (197)
INTEREST INCOME 1
STATE INCOME TAXES (30)
OTHER, NET 30
-------
(196)
-------
NET INCOME $ 1,427
=======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
5
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PANORAMIC CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Retained
Shares Amount Capital Earnings
------- ------- --------- --------
<S> <C> <C> <C> <C>
December 31, 1996 53,740 $ 1,170 $ 387 $ 1,387
Common stock repurchased (545) ($79)
Stockholders' distributions ($24.01 per share) (1,277)
Net income 1,427
------- ------- --------- -------
December 31, 1997 53,195 $ 1,091 $ 387 $ 1,537
======= ======= ========= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
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PANORAMIC CORPORATION
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1997
--------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $ 1,427
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES :
DEPRECIATION AND AMORTIZATION 502
CHANGES IN ASSETS AND LIABILITIES :
ACCOUNTS RECEIVABLE (174)
INVENTORIES 83
PREPAID EXPENSES (27)
ACCOUNTS PAYABLE (117)
ACCRUED EXPENSES 132
CUSTOMER DEPOSITS (85)
DEFERRED INCOME 49
-------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,790
-------
CASH FLOWS FROM INVESTING ACTIVITIES:
ISSUANCE OF NOTES RECEIVABLE (41)
CAPITAL EXPENDITURES, NET (1,324)
-------
NET CASH USED FOR INVESTING ACTIVITIES (1,365)
-------
CASH FLOWS FROM FINANCING ACTIVITIES:
PAYMENTS ON LINE OF CREDIT (4,010)
BORROWINGS FROM LINE OF CREDIT 4,875
PAYMENTS ON LONG-TERM OBLIGATIONS (12)
STOCKHOLDERS' DISTRIBUTIONS (1,277)
PAYMENT FOR COMMON STOCK REPURCHASED (79)
-------
NET CASH USED FOR FINANCING ACTIVITIES (503)
-------
NET DECREASE IN CASH (78)
CASH, BEGINNING OF YEAR 453
-------
CASH, END OF YEAR $ 375
=======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
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PANORAMIC CORPORATION
NOTES TO FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. NATURE OF OPERATIONS: The Company operates as a manufacturer and
lessor of x-ray equipment to the dental industry primarily
throughout the United States. As more fully described in Note 4,
the Company currently subcontracts most assembly operations.
Certain parts are purchased and manufactured for use in the
equipment.
b. INVENTORIES: Equipment held for resale is stated at cost using the
specific identification method. Dental supplies held for resale
and manufactured and purchased parts are stated at the lower of
cost (moving average method) or market.
c. PROPERTY, PLANT AND EQUIPMENT: Depreciation is calculated using
the straight line method over the estimated useful lives of the
assets as follows:
Equipment leased to others 5-15 years
Machinery and equipment 3-10 years
Buildings 5-30 years
Office equipment and fixtures 3-7 years
Automotive 4-5 years
Accumulated depreciation on equipment leased to others at December
31, 1997 approximated $1,145. Expenditures for maintenance and
repairs and minor renewals are charged to expense; betterments and
major renewals are capitalized. Upon retirement or sale of assets,
the cost of the disposed assets and the related accumulated
depreciation are removed from the accounts and any resulting gain
or loss is credited or charged to income.
d. REVENUE RECOGNITION: Sales of x-ray equipment and supplies are
recognized when the goods are shipped. Revenues from leasing
activities are recognized as earned. The equipment leases are
considered to be operating, principally week to week agreements,
in which either party may terminate the lease with advance notice.
The lessee also may purchase such equipment anytime during the
lease. The purchase price is reduced based on credits earned from
leasing.
e. ADVERTISING EXPENSE: Advertising costs are expensed when incurred.
Advertising costs included in selling, general and administrative
expenses were approximately $656.
f. PRODUCT WARRANTY: The Company warrants its products against
defects in design, materials, and workmanship generally for two
years. Warranty expense included in cost of product sales and
leasing was approximately $200.
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g. CASH FLOW: For purposes of the statement of cash flows, cash
includes currency on hand, demand deposits with financial
institutions and investments with maturities of three months or
less at the time of acquisition. Cash paid for interest was $193.
h. 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 could differ from those estimates.
i. CONCENTRATIONS OF CREDIT RISK: Financial instruments which
potentially subject the Company to concentrations of credit risk
consist principally of cash maintained at financial institutions
in amounts which at times may exceed federally insured limits. The
Company does not believe it is significantly vulnerable to certain
business concentrations with respect to suppliers, products,
markets, or geographic areas with risk of a near-term severe
impact.
j. INCOME TAXES: The Company, with the consent of its stockholders,
has elected to be taxed as an S corporation. All Company profits
and losses are included in the stockholders' personal tax returns
and the Company is not subject to federal or most state income
taxes.
k. STOCK OPTIONS: The Company accounts for stock options at their
intrinsic value under the provisions of APBO No. 25. Accordingly,
no compensation cost has been recognized for the existing stock
options under the provisions of SFAS No. 123. Under APBO No. 25,
because the option terms are fixed and the exercise price was
assumed to approximate the market price on the date of the grant,
no compensation expense was recorded.
l. FAIR VALUE OF FINANCIAL INSTRUMENTS: Cash, receivables,
inventories, other assets, accounts payable and accrued expenses
are reflected in the financial statements at fair value because of
the short-term duration of these instruments. The carrying value
of the long-term obligations approximates fair value due to the
notes bearing interest rates which are currently available to the
Company for notes with similar terms and maturities.
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2. INVENTORIES:
Inventory consists of the following:
<TABLE>
<CAPTION>
1997
<S> <C>
Equipment held for resale $ 352
Dental supplies held for resale 43
Manufacturing and purchased parts 156
Obsolescence reserve (10)
--------
$ 541
========
</TABLE>
3. LONG-TERM OBLIGATIONS:
Long-term obligations consist of the following:
<TABLE>
<CAPTION>
1997
<S> <C>
Revolving line of credit $ 2,005
Mortgage note due in monthly principal
and interest payments of $2.585 through
September 30, 2008, at FWNB's five year
CD rate plus 3.5% (8.5% effective rate at
December 31, 1997) 217
--------
2,222
Less current maturities 13
--------
$ 2,209
========
</TABLE>
Fort Wayne National Bank (FWNB) is considered a related party as one of
its past chairmen and presidents is a member of the immediate family of
an officer/stockholder of the Company. Also, a stockholder of the
Company is a director of the bank.
The Company has available a $3,500 revolving line of credit agreement
(revolver). The agreement, which expires April 6, 2000, is subject to
annual renewal and requires monthly interest payments at the lenders
reference rate plus 1/4 percent (8.75% effective rate at December 31,
1997). The revolver is collateralized by accounts receivable,
inventory, equipment and an assignment of equipment rentals. Borrowings
are subject to availability based on a borrowing base calculation
including eligible receivables, inventories, and certain equipment. The
amount of total additional eligible borrowings available at December
31, 1997 was $1,495. The agreement also requires the assignment of $500
of life insurance on the Company president.
The revolver contains covenants common to such agreements including
requirements to maintain a minimum tangible net worth, liabilities to
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tangible net worth ratio, and debt service coverage ratio.
Maturities of long-term debt during the ensuing five years approximate:
1998 $ 13
1999 14
2000 2,021
2001 17
2002 18
Thereafter 139
------
$2,222
======
4. RELATED PARTY AND SIGNIFICANT SUPPLIER TRANSACTIONS:
Medical Capital Corporation (Medcap), an affiliate, provides financing
services for selected purchasers of the Company's products. Sales
through Medcap approximated $84.
The Company charges Medcap an administrative fee based on the number of
outstanding notes financed. Interest was also charged at the national
prime rate plus 1/2 percent (9.0% effective rate at December 31, 1997).
Administrative fees charged to Medcap were $15 and are included
as a reduction in administrative expenses in the accompanying statement
of income. Interest charged to Medcap was $65 and is included
as interest income in the accompanying statement of income.
FWNB also provides financing services for selected purchasers of the
Company's products. FWNB financed on a non-recourse basis 1997 sales of
approximately $3,500. The amount due from FWNB approximated $472 at
December 31, 1997 and is included in accounts receivable in the
accompanying balance sheet.
The Company has a product manufacturing contract with D&N Micro
Products, Inc. (D&N), whereby D&N manufactures and the Company
purchases all dental x-ray machines which account for substantially all
of the Company's product sales and leasing income.
Purchases from D&N approximated $3,800. The amount owed to D&N
at December 31, 1997 approximated $324 and is included in accounts
payable in the accompanying balance sheets. The amount due from D&N at
December 31, 1997 approximated $5 and is included in accounts
receivable in the accompanying balance sheet.
During 1997, the Company loaned $35 to Centadent, another affiliate.
The note bears interest at 8.75%. The entire principal and interest
balance is expected to be collected during 1998 and is included in
notes receivable, other, in the accompanying balance sheet.
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5. RESEARCH AND DEVELOPMENT:
Expenses incurred for research and development approximated $239
and are included in administrative expenses in the accompanying
statement of income.
6. 401(k) PLAN:
The Company has a defined contribution 401(k) plan covering
substantially all full time employees meeting service and age
requirements. Contributions to the Plan can be made by an employee
through deferred compensation and through a discretionary employer
contribution. Approximately $35 was charged to operations for
Company contributions.
7. CAPITAL TRANSACTIONS:
Certain stockholders have financed their purchases of Company stock as
collateral through FWNB. The Company is required to repurchase these
shares in the event of a stockholder default subject to certain
limitations. The total amount financed through FWNB approximated $475.
The total amount outstanding at December 31, 1997 related to this
contingency approximated $261.
The Company has granted stock options to certain employees. Options are
fully vested at the date of the grant. Pertinent information covering
the Plan is as follows:
<TABLE>
<CAPTION>
WEIGHTED
FISCAL AVERAGE
NUMBER OF OPTION PRICE YEAR OF EXERCISE
SHARES PER SHARE EXPIRATION PRICE
----------- --------------- ---------- --------
<S> <C> <C> <C> <C>
OUTSTANDING & EXERCISABLE
AT DECEMBER 31, 1996 5,711 $133.44-$173.64 $ 155.56
CANCELLED (1,200) $173.64 $ 173.64
----------- --------------- --------
OUTSTANDING & EXERCISABLE
AT DECEMBER 31, 1997 4,511 $133.44-$173.64 2004-2005 $ 150.75
=========== =============== ========
OPTIONS OUTSTANDING & EXERCISABLE
AT DECEMBER 31, 1997 CONSIST OF :
1,826 $ 133.44
918 $ 150.99
1,200 $ 166.09
567 $ 173.64
-----------
4,511
===========
</TABLE>
As of December 31, 1996, the Company had determined the value of the
options to be insignificant and did not update this analysis at December 31,
1997 since the options were all exercised upon the sale of the Company as
described in Note 8.
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8. SUBSEQUENT EVENTS
On February 16, 1998, Young Innovations, Inc. ("Young") agreed to
acquire the net assets of the Company for $11 million in cash and
$1 million in stock.
Prior to the sale of the Company, all the options were exercised. The
difference between the cumulative exercise price of the options and the
calculated value upon the sale approximated $320.
(b) Pro Forma Financial Information
The required pro forma financial information is set forth below.
In February, 1998, Young purchased substantially all of the assets of Panoramic.
The accompanying pro forma balance sheet as of December 31, 1997 gives effect
to the purchase of Panoramic by Young as if the purchase was consummated on
December 31, 1997. The related pro forma statement of income combines the
operations of Young and Panoramic for the year ended December 31, 1997 as if
the following had occurred on January 1, 1997: (i) the acquisition of Panoramic
and the incurrence of indebtedness related thereto under the assumptions set
forth in the accompanying notes; and (ii) the sale of Young Common Stock and
the application of the net proceeds therefrom to retire $25.2 million of
borrowings. The pro forma financial information has been based upon certain
assumptions and preliminary estimates which are subject to change.
The historical financial information for Panoramic has been restated in
accordance with the adjustments outlined in part (b) of this Form 8-K/A in order
to remove from the balance sheet those assets and liabilities which were not
purchased by Young.
The unaudited pro forma financial information is not necessarily indicative of
the results of operations of the combined companies as they may be in the future
or as they might have been had the sale of Common Stock and the acquisition been
effective January 1, 1997. The unaudited pro forma financial information should
be read in conjunction with the historical financial statements and notes
thereto of Young and Panoramic.
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YOUNG INNOVATIONS, INC.
AND
PANORAMIC CORPORATION
UNAUDITED PRO FORMA BALANCE SHEET
DECEMBER 31, 1997
(In thousands, except share data)
<TABLE>
<CAPTION>
AS REPORTED PRO FORMA PRO FORMA
YOUNG PANORAMIC ADJUSTMENTS COMBINED
------- --------- ----------- ----------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash $12,761 $ 375 ($375)(a) $ 0
equivalents
(12,761)(b)
Trade accounts receivable, net of
allowance
for doubtful accounts of $80 2,774 1,129 --- 3,903
Notes receivable, other --- 41 (10)(a) 31
Inventories 2,239 541 27 (c) 2,807
Other current assets 1,316 101 (1)(a) 1,416
------- -------- ----------- ---------
Total current 19,090 2,187 (13,120) 8,157
------- -------- ----------- ---------
assets
PROPERTY, PLANT AND EQUIPMENT 7,441 4,486 --- 11,927
------- -------- ---------
MARKETABLE SECURITIES 100 --- --- 100
------- ---------
OTHER ASSETS 656 36 --- 692
------- -------- ---------
INTANGIBLE ASSETS 18,142 --- 9,624 (d) 27,766
------- ----------- ---------
Total assets $45,429 $ 6,709 ($3,496) $ 48,642
======= ======== =========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term --- $ 13 ($13)(b) $ 0
debt
Accounts payable and accrued $ 2,715 1,472 (20)(a) 4,167
------- -------- ----------- ---------
liabilities
Total current liabilities 2,715 1,485 (33) 4,167
------- -------- ----------- ---------
LONG-TERM DEBT --- 2,209 (2,209)(b) 761
-------- ----------- ---------
761 (b)
NONCURRENT LIABILITIES 456 --- --- 456
------- ---------
DEFERRED INCOME TAXES 1,050 --- --- 1,050
------- ---------
STOCKHOLDERS' EQUITY :
Common stock, voting, $.01 par
value,
25,000,000 shares authorized,
6,710,296 shares issued and
outstanding in 67 1,091 (1,091)(e) 68
1997
1 (b)
Additional paid-in 25,131 387 (387)(e) 26,130
capital
999 (b)
Unrealized gain on marketable
securities,
net of tax 9 --- --- 9
Retained earnings 16,310 1,537 (1,537)(e) 16,310
Common stock in treasury, at
cost, 39,914 shares (309) --- --- (309)
------- -------- ----------- ---------
Total stockholders' equity 41,208 3,015 (2,015) 42,208
------- -------- ----------- ---------
Total liabilities and
stockholders' equity $45,429 $ 6,709 ($3,496) $ 48,642
======= ======== =========== =========
</TABLE>
The accompanying pro forma adjustments reflect adjustments for the following
items:
(a) Reduction for cash, notes receivable, other current assets and accounts
payable and accrued liabilities not acquired by Young.
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<PAGE> 15
(b) Initial purchase transaction to show the payment by Young of $11,000 in
cash to Panoramic, the payment in cash of $2,222 by Young to eliminate
Panoramic's bank debt (which required additional bank borrowings by Young)
and the issuance of $1,000 (62,500 shares) of Young's common stock.
(c) Allocation of purchase price to the assigned fair value of this Panoramic
asset.
(d) Recognition of the excess of the purchase price over the net assets
acquired (goodwill, non-compete covenant and customer database).
(e) Elimination of items of equity.
YOUNG INNOVATIONS, INC.
AND
PANORAMIC CORPORATION
UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Young Panoramic
for the for the
Year Ended Year Ended Pro Forma Offering Pro Forma
Dec. 31, 1997 Dec. 31, 1997 Adjustments Pro Forma Adjustments As Adjusted
------------- ------------- ----------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Sales $ 24,986 $ 9,691 --- $ 34,677 --- $ 34,677
Cost of Goods Sold 10,129 5,408 $ 27(a) 15,587 --- $ 15,587
23(b)
------------- ------------- ----------- --------- ------------
Gross Profit 14,857 4,283 (50) 19,090 --- $ 19,090
Selling, General and
Administrative Expenses 7,333 2,660 254(c) 10,247 --- $ 10,247
------------- ------------- ----------- --------- ------------
Income from Operations 7,524 1,623 (304) 8,843 --- $ 8,843
Interest Expense 1,016 197 903(d) 2,116 ($ 1,727)(f) $ 389
Other Expense (Income),
Net (140) (1) --- (141) --- ($141)
------------- ------------- ----------- --------- -------- ------------
Income before Provision
for Income Taxes 6,648 $ 1,427 (1,207) 6,868 1,727 $ 8,595
Provision for Income Taxes 2,538 --- 84(e) 2,622 660(g) $ 3,281
Net Income $ 4,110 $ 1,427 ($1,291) $ 4,246 $ 1,067 $ 5,313
============= ============= =========== ========= ======== ============
Earnings per Share
(Basic) $ 0.86 $ 0.88 $ 0.78
============= ========= ============
Weighted Average
Shares Outstanding 4,775 4,838 6,773
============= ========= ============
Earnings per Share
(Diluted) $ 0.86 $ 0.88 $ 0.78
============= ========= ============
Weighted Average
Shares Outstanding 4,782 4,846 6,824
============= ========= ============
</TABLE>
The accompanying pro forma adjustments reflect adjustments for the following
items:
(a) Increase in Cost of Goods Sold related to the acquired inventory which was
adjusted to its fair value and sold during the year.
(b) Increase in expenses for installation and freight charges pertaining to
rental units over the average life of five years of a rental customer.
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(c) Amortization of goodwill over a period of forty years, of customer database
costs over a period of five years and of a covenant not to compete over a
period of two years.
(d) Elimination of Panoramic's interest expense ($197) as a result of Young's
payment of Panoramic's bank debt, and the recognition of
increased Young interest expense ($1,100) as a result of additional Young
bank debt ($13,584 at an interest rate of 8.1%) to effect this transaction.
(e) Increase in income tax expense for the income tax effect of the Panoramic
operating income to recognize its status as a "C" corporation versus its
status as a "S" corporation prior to the acquisition, assuming an income
tax rate of 38.2%.
The accompanying offering adjustments reflect adjustments for the following
items:
(f) Reduction of interest expenses as a result of Young's initial public
offering of 2,300,000 shares of its common stock and the application of the
net proceeds ($25,154) to its bank debt, with remaining bank debt of
$4,800 at an interest rate of 8.1%.
(g) Reduction in income tax expense as a result of the reduction in interest
expenses, assuming an income tax rate of 38.2%.
- -------------
Signature
- -------------
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
YOUNG INNOVATIONS, INC.
Dated: May 12, 1998 By: /s/ Michael W. Eggleston
----------- ------------------------------------
Michael W. Eggleston
Vice President, Treasurer,
Chief Financial Officer
16
