-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Hta90jllJ8XjBgBAkmYoKQ0kMHPj0UuFVRM2tren7BaEiLop33PJxiRs5dtyxImr xB37BlAuaQvj0aObsjGQEQ== 0000894579-99-000012.txt : 19990126 0000894579-99-000012.hdr.sgml : 19990126 ACCESSION NUMBER: 0000894579-99-000012 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981125 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990125 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL KNIFE & SAW INC CENTRAL INDEX KEY: 0001027909 STANDARD INDUSTRIAL CLASSIFICATION: CUTLERY, HANDTOOLS & GENERAL HARDWARE [3420] IRS NUMBER: 570697252 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 333-17305 FILM NUMBER: 99511714 BUSINESS ADDRESS: STREET 1: 1299 COX AVENUE CITY: ERLANGER STATE: KY ZIP: 41018 BUSINESS PHONE: 6063710333 MAIL ADDRESS: STREET 1: 1299 COX AVENUE CITY: ERLANGER STATE: KY ZIP: 41018 8-K/A 1 FORM 8-KA AMENDMENT TO FORM 8K =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A Amendment No. 1 Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Date of Report (date of earliest event reported) November 25, 1998 Commission file number: 333-17305 International Knife & Saw, Inc. (Exact name of registrant as specified in its charter) Delaware 57-0697252 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1299 Cox Avenue Erlanger, Kentucky 41018 (Address of principal executive offices) (606) 371-0333 (Registrant's telephone number, including area code) NONE - ------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) =============================================================================== Item 1. Not Applicable Item 2. Acquisition or Disposition of Assets. The Registrant filed on November 25, 1998 a current report on Form 8-K relating to its acquisition on November 12, 1998, of the shares of A.K. van der Wijngaart Beheer B.V. and subsidiaries. The purpose of this amendment is to provide the financial statements and information required by Item 7 of Form 8-K. Item 3-6. Not Applicable Item 7. Financial Statements and Exhibits. Item 7 (a) Financial Statements of Business Acquired Following are the audited consolidated balance sheets of A.K. van der Wijngaart Beheer B.V. and subsidiaries as of December 31, 1997 and 1996 and the related consolidated statements of income, cash flows and shareholder's equity for each of the two years in the period ended December 31, 1997. Also following is the unaudited consolidated balance sheet of A.K. van der Wijngaart Beheer B.V. and subsidiaries as of September 30, 1998 and the related consolidated statements of income, and cash flows for the nine months ended September 30, 1998, and 1997. 2 The Board of Directors and Shareholders of A.K. van der Wijngaart Beheer B.V. in Rotterdam Date Reference December 30, 1998 R.E. Zijderveld RA/ Dordrecht, The Netherlands A.P. van der Giessen RA INDEPENDENT AUDITOR'S REPORT We have audited the accompanying consolidated balance sheets of A.K. van der Wijngaart Beheer B.V. and subsidiaries (the "Company") as of December 31, 1997 and December 31, 1996 and the related consolidated statements of income, cash flows and shareholder's equity for each of the two years in the period ended December 31, 1997. 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 consolidated financial statements present fairly, in all material respects, the financial position of A.K. van der Wijngaart Beheer B.V. and subsidiaries as of December 31, 1997 and 1996 and the results of their operations and their cash flows for each of the two years in the period ended December 31, 1997 in conformity with generally accepted accounting principles. Deloitte & Touche Register Accountants 3 A.K. van der Wijngaart Beheer B.V. and subsidiaries Consolidated Balance Sheets (in thousands of Dutch guilders)
September 30, December 31, 1998 ---------------------------- 1996 1997 (unaudited) ----------- ------------- ------------- NLG NLG NLG Assets CURRENT ASSETS: Cash 170 186 173 Trade accounts receivable less allowances for doubtful accounts of NLG 85, NLG 101 and NLG 100 2,601 2,910 2,599 Inventories 1,159 1,399 1,314 Other current assets 437 377 318 ----------- -------------- ------------- Total current assets 4,367 4,872 4,404 PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment 6,336 6,855 7,358 Less: accumulated depreciation (2,104) (2,479) (2,723) ------------ --------------- ------------- Total property, plant and equipment 4,232 4,376 4,635 ------------ ---------------- -------------- 8,599 9,248 9,039 ============ ================ ============== Liabilities and shareholder's equity CURRENT LIABILITIES: Due to banks 436 1,446 1,130 Accounts payable 398 477 532 Accrued liabilities 709 763 1,443 Due to parent company 4,315 3,741 1,660 ------------ ---------------- -------------- Total current liabilities 5,858 6,427 4,765 PROVISIONS: Deferred tax liabilities 535 516 546 MINORITY INTEREST 254 271 226 SHAREHOLDER'S EQUITY: Common Stock, NLG 1,000 par value - authorized, issued and outstanding - 50 shares 50 50 50 Legal reserve 10 10 10 Retained earnings 1,892 1,974 3,442 ------------ ---------------- -------------- Total shareholder's equity 1,952 2,034 3,502 ------------ ---------------- -------------- 8,599 9,248 9,039 ============ ================ ============== See accompanying notes
4 A.K. van der Wijngaart Beheer B.V. and subsidiaries Consolidated Statements of Income (in thousands of Dutch guilders, except per share data)
Year ended December 31, Nine Months Ended September 30, ----------------------------------- --------------------------------- 1996 1997 1997 1998 (unaudited) (unaudited) ---------------- ---------------- ---------------- --------------- NLG NLG NLG NLG REVENUES: Net product sales 7,551 8,012 5,785 6,163 Net service sales 5,080 5,067 3,769 3,876 ---------------- ---------------- ---------------- --------------- 12,631 13,079 9,554 10,039 COST OF SALES: Cost of product sales 3,724 3,867 2,811 3,067 Cost of service sales 3,161 3,375 2,518 2,502 ---------------- ---------------- ---------------- --------------- 6,885 7,242 5,329 5,569 ---------------- ---------------- ---------------- --------------- Gross profit 5,746 5,837 4,225 4,470 Selling, general and administrative expenses 2,049 2,345 1,676 1,808 ---------------- ---------------- ---------------- --------------- Operating income 3,697 3,492 2,549 2,662 Interest income and expenses 113 154 108 117 Minority interest 326 344 264 287 ---------------- ---------------- ---------------- --------------- Income before income taxes 3,258 2,994 2,177 2,258 Income tax 1,146 1,043 766 790 ---------------- ---------------- ---------------- --------------- Net income 2,112 1,951 1,411 1,468 ================ ================ ================ =============== Net income per common share 42,240 39,020 28,220 29,360 See accompanying notes
5 A.K. van der Wijngaart Beheer B.V. and subsidiaries Consolidated Statements of Cash Flows (in thousands of Dutch guilders)
Year ended December 31, Nine Months Ended September 30, ----------------------------------- -------------------------------- 1996 1997 1997 1998 (unaudited) (unaudited) ---------------- ----------------- --------------- --------------- NLG NLG NLG NLG Operating activities Net income 2,112 1,951 1,411 1,468 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 317 375 277 303 Deferred income tax 23 (19) 26 30 Minority interest in income of subsidiary 10 17 (51) (45) Changes in operating assets and liabilities: Accounts receivable 578 (309) 133 311 Inventories 157 (240) (57) 85 Accounts payable (359) 79 412 55 Other current assets less accrued liabilities (291) 114 (233) 739 ---------------- ----------------- --------------- -------------- Net cash provided by operating activities 2,547 1,968 1,918 2,946 Investing activities Purchases of fixed assets (65) (519) (471) (562) Financing activities Decrease in amounts due to parent (1,469) (574) (1,146) (2,081) Net borrowing (repayments) under revolving line of credit 436 1,010 (339) (316) Dividends paid (2,069) (1,869) ---------------- ----------------- --------------- --------------- Net cash used in financing activities (3,102) (1,433) (1,485) (2,397) Increase (decrease) in cash (620) 16 (38) (13) Cash at beginning of period 790 170 170 186 ================ ================= =============== =============== Cash at end of period 170 186 132 173 ================ ================= =============== =============== See accompanying notes
6 A.K. van der Wijngaart Beheer B.V. and subsidiaries Consolidated Statements of Shareholder's Equity (in thousands of Dutch guilders)
Issued Legal Retained share capital reserve earnings Total ----------------- ----------------- ----------------- ----------------- NLG NLG NLG NLG Balance at December 31, 1995 50 10 1,849 1,909 Net income 1996 2,112 2,112 Dividends (2,069) (2,069) ----------------- ----------------- ----------------- ----------------- Balance at December 31, 1996 50 10 1,892 1,952 Net income 1997 1,951 1,951 Dividends (1,869) (1,869) ----------------- ----------------- ----------------- ----------------- Balance at December 31, 1997 50 10 1,974 2,034 ================= ================= ================= ================= See accompanying notes
7 A.K. van der Wijngaart Beheer B.V. and subsidiaries Notes to Consolidated Financial Statements (in thousands of Dutch guilders) Activities The activities of the group consist primarily of the regrinding and trading of industrial knifes and the manufacturing of knives and moulds. Consolidation principles The accompanying consolidated financial statements include the financial data of A.K. van der Wijngaart Beheer B.V. and its subsidiaries Diacarb B.V., Mayemyton Trading B.V. and Diacarb Stansvormen. Any intercompany balances and transactions have been eliminated in consolidation. Minority interests in equity and results of group companies are separately disclosed in the consolidated financial statements. 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, if any, 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. General accounting principles The financial statements have been prepared under the historical cost convention. Unless otherwise mentioned, assets and liabilities are stated at face value. The gains on performances are recognised in the year of supply; losses are accounted for in the year in which they are foreseeable. Income and charges are attributed to the financial year to which they relate. Foreign currency translation Amounts denominated in foreign currencies are translated into Dutch guilders at the exchange rates prevailing at balance sheet date. Exchange differences resulting from translation are taken to the income statement. 8 A.K. van der Wijngaart Beheer B.V. and subsidiaries Notes to Consolidated Financial Statements (Continued) (in thousands of Dutch guilders) Receivables The receivables are stated at face value less a provision for bad debts, which is computed based on the age of the receivables. Inventories The inventories are valued at the lower of cost, cost of manufacture or market value, taking account of obsolescence. Work in progress includes material, direct labor and machine costs together with applicable production overhead. Property, plant and equipment Property, plant and equipment are valued at cost less straight-line depreciation based on the estimated economic useful lifetime of the assets concerned. Provisions The company provides deferred income taxes for temporary differences between amounts of assets and liabilities recognized for financial reporting purposes and such amounts recognized for income tax purposes. Net sales Net sales is defined as being the revenues from goods and services supplied in the financial year less taxes charged on the turnover. Taxes The company and the subsidiaries Diacarb B.V. and Mayemyton Trading B.V. form a fiscal unity for corporate income tax purposes. The tax is computed for the subsidiaries that are part of the fiscal unity as if they were independently liable for taxation. The tax reported in the profit and loss account is calculated at the applicable rate on the profits for the financial year, taking into account permanent differences between profits calculated for accounting and taxation purposes. 9 A.K. van der Wijngaart Beheer B.V. and subsidiaries Notes to Consolidated Financial Statements (Continued) (in thousands of Dutch guilders)
Inventories December 31, --------------------------------- 1996 1997 ---------------- ---------------- NLG NLG Raw materials 110 93 Work in progress 74 84 Finished products 975 1,222 ---------------- --------------- 1,159 1,399 ================ ================ Property Plant and Equipment Movements: Machinery Other Land and and operating Buildings equipment fixed assets Total ---------------- ---------------- ---------------- ---------------- NLG NLG NLG NLG Book value at December 31, 1995 2,394 1,928 162 4,484 Investments - 20 45 65 Depreciation (48) (213) (56) (317) ---------------- ---------------- ---------------- ---------------- Book value at December 31, 1996 2,346 1,735 151 4,232 Investments - 506 13 519 Depreciation (48) (279) (48) (375) ---------------- ---------------- ---------------- ---------------- Book value at December 31, 1997 2,298 1,962 116 4,376 ================ ================ ================ ================ Accumulated depreciation as at December 31, 1996 495 1,364 245 2,104 ================ ================ ================ ================ Accumulated depreciation as at December 31, 1997 543 1,643 293 2,479 ================ ================ ================ ================
10 A.K. van der Wijngaart Beheer B.V. and subsidiaries Notes to Consolidated Financial Statements (Continued) (in thousands of Dutch guilders) Due to banks This includes the current account with ING Bank N.V. The total credit line is NLG 2,700. The entire facility is secured by: o first mortgage of NLG 1,500 on the real property located at Hoofdweg 50 in Capelle aan den IJssel; o pledging of accounts receivable and operating equipment; o pledging of inventories Diacarb Stansvormen (at 1997 year-end NLG 87 and 1996 year-end NLG 101); o compte-joint and co-liability agreement between A.K. van der Wijngaart Beheer B.V., Diacarb B.V., A.K. van der Wijngaart B.V. and Mayemyton Trading B.V.; o joint and several liability of Mayemyton Trading B.V. for the credit line granted to Diacarb Stansvormen (at 1997 year-end NLG 17 and 1996 year end NLG 0); o non-dividend declaration to the effect that no dividend will be distributed as long as solvency is below 30%. Due to parent company On the liability an interest rate of 6% is charged. No securities have been granted. Provisions The provision for deferred taxation should be regarded as long-term. Temporary differences between statutory and tax accounting are mainly caused by different depreciation periods. Minority interest This Item concerns the capital participation by third parties in the partnership firm (vennootschap onder firma - vof) Diacarb Stansvormen in Capelle aan den IJssel. The following movements occurred in this Item: 1996 1997 ---------------- ---------------- NLG NLG Balance at January 1 244 254 Share in the result 326 344 Withdrawals (316) (327) ----------------- ----------------- Balance at December 31 254 271 ================= ================= 11 A.K. van der Wijngaart Beheer B.V. and subsidiaries Notes to Consolidated Financial Statements (Continued) (in thousands of Dutch guilders) Shareholder's equity The issued share capital consists of 50 shares of NLG 1,000. The shares have been fully paid in. Personnel Pension charges amounted to NLG 126 (1996 NLG 115). The personnel pension insurance is placed with the Industrial Pension Fund for the Metal Industry, a multi-employer pension fund to which yearly premiums have to be paid. Interest Year ended December 31, --------------------------------- 1996 1997 ---------------- ---------------- NLG NLG Loans granted (31) (15) Group companies 133 142 Bank and third parties 11 27 ================ ================ Charge on balance 113 154 ================ ================ 12 Item 7 (b) Pro Forma Financial Information (Unaudited) On November 12, 1998 International Knife & Saw, Inc. and its consolidated subsidiaries ("the Company") acquired from Lembo (Internationaal) B. V. ("the Seller") all of the shares of A.K. van der Wijngaart Beheer B.V. and its subsidiaries ("Diacarb"). Diacarb's business includes the regrinding and distribution of industrial knives in The Netherlands, Belgian and Luxembourg markets. Diacarb is also involved in the manufacture of stansformen (molds to punch holes) for the carton industry. Diacarb is located in Rotterdam, The Netherlands. The purchase price consisted of 12.0 million Dutch guilders in cash (approximately $6.3 million), financed from existing lines of credit, .9 million Dutch guilders (approximately $.6 million) in assumed debt, and a 5% promissory note to the Seller for 5.0 million Dutch guilders (approximately $2.6 million), subject to post closing adjustments. The promissory note is payable in installments of 1.0 million Dutch guilders (approximately $.5 million) on January 15, 2000, and 2.0 million Dutch guilders (approximately $1.0 million) on January 15, 2001 and 2002. Following are the unaudited pro forma consolidated balance sheet at September 30, 1998, and the unaudited pro forma consolidated statements of income of the Company for the year ended December 31, 1997 and for the nine months ended September 30, 1998. The following pro forma consolidated balance sheet and consolidated statements of income (collectively, the "pro forma consolidated statements") are based on the historical consolidated financial statements of the Company, adjusted to give effect to the acquisition of Diacarb. The pro forma consolidated balance sheet assumes that all transactions occurred as of September 30, 1998. The pro forma consolidated statements of income assumes that all transactions occurred as of the first day of 1997. The pro forma consolidated statements reflect the purchase method of accounting for the acquisition of Diacarb using estimated purchase accounting adjustments which are subject to revision once appraisals, actuarial reviews and other studies of the fair value of the assets and liabilities of Diacarb are completed. The purchase price of Diacarb is also subject to post-closing adjustments. Final purchase accounting adjustments may differ from the pro forma adjustments presented herein and described in the accompanying notes. The pro forma consolidated statements do not purport to present what the Company's financial position and results of operations would actually have been had the acquisition of Diacarb occurred on September 30, 1998 for the pro forma consolidated balance sheet, or had the acquisition of Diacarb occurred on the first day of 1997 for the pro forma consolidated statements of income, or purport to project the Company's results of operations for any future period. The pro forma consolidated statements reflect certain assumptions described in the accompanying notes. The pro forma consolidated statements and accompanying notes should be read in conjunction with the audited consolidated financial statements of the Company and the related notes thereto which are included in the Company's Annual Report on Form 10-K for its fiscal year ended December 31, 1997, and the Company's Current Report on Form 8-K dated November 25, 1998 (both filed with the Securities and Exchange Commission), and the consolidated financial statements of Diacarb that are filed herewith as Item 7(a). 13 International Knife & Saw, Inc. and Subsidiaries Pro Forma Consolidated Balance Sheet (Unaudited) (in thousands)
September 30, 1998 --------------------------------------------------------------------------- International Historical Acquisition Knife & Saw, Inc. International Historical Pro Forma and Diacarb Knife & Saw, Inc. Diacarb (a) Adjustments Consolidated ----------------- ----------- ----------- ------------------ Assets Current assets: Cash and cash equivalents $ 2,903 $ 91 $ - $ 2,994 Accounts receivable, trade, less allowances for doubtful accounts 23,856 1,361 - 25,217 Inventories 30,607 688 - 31,295 Other current assets 4,386 167 - 4,553 ----------------------------------------------------------------------------- Total current assets 61,752 2,307 - 64,059 Other assets: Goodwill 13,065 - 4,642 (d) 17,707 Debt issuance costs 3,320 - - 3,320 Other noncurrent assets 2,738 - - 2,738 ----------------------------------------------------------------------------- 19,123 - 4,642 23,765 Property, plant and equipment-net 41,317 2,427 2,507 (d) 46,251 ----------------------------------------------------------------------------- Total assets $122,192 $ 4,734 $ 7,149 $ 134,075 =============================================================================
See notes to Pro Forma Consolidated Balance Sheet. 14 International Knife & Saw, Inc. and Subsidiaries Pro Forma Consolidated Balance Sheet (Continued) (Unaudited) (in thousands)
September 30, 1998 ---------------------------------------------------------------------- International Historical Acquisition Knife & Saw, Inc. International Historical Pro Forma and Diacarb Knife & Saw, Inc. Diacarb(a) Adjustments Consolidated ----------------- ---------- ----------- ----------------- Liabilities and Shareholder's deficit Current liabilities: Notes payable $ 3,882 $ 592 $ - $ 4,474 Current portion of long-term debt 2,163 - 2,163 Accounts payable 9,241 279 - 9,520 Accrued liabilities 13,460 755 - 14,215 Due to parent 499 869 (869) (c) 499 ---------------------------------------------------------------------- Total current liabilities 29,245 2,495 (869) 30,871 Long-term debt, less current portion 103,802 - 8,900 (b) 112,702 Other liabilities 4,864 286 877 (d) 75 (b) 6,102 ---------------------------------------------------------------------- Total liabilities 137,911 2,781 8,983 149,675 Minority interest 2,223 119 - 2,342 Shareholder's (deficit) equity: Common stock 5 1,834 (8,975) (b) 1,630 (d) 869 (c) 4,642 (d) 5 Additional paid-in capital 10,153 - - 10,153 Retained (deficit) earnings (22,513) - - (22,513) Accumulated other comprehensive loss: Cumulative foreign currency translation adjustment (2,155) - - (2,155) Treasury stock, at cost (3,432) - - (3,432) ---------------------------------------------------------------------- Total shareholder's (deficit) equity (17,942) 1,834 (1,834) (17,942) ---------------------------------------------------------------------- Total liabilities and shareholder's $ 122,192 (deficit) equity $ 4,734 $ 7,149 $ 134,075 ======================================================================
See notes to Pro Forma Consolidated Balance Sheet. 15 International Knife & Saw, Inc. and Subsidiaries Notes to Pro Forma Consolidated Balance Sheet (Unaudited) (in thousands) (a) The amounts in the "Historical Diacarb" column are derived from the unaudited consolidated balance sheet of Diacarb as of September 30, 1998, which was prepared based on accounting principles generally accepted in the United States. (b) The acquisition of Diacarb was financed as shown in the following table. Paid to Seller at closing, financed from existing revolving credit facilities....... $6,283 Promissory note to seller...................... 2,617 ----- Total consideration........................ $8,900 ====== The following tables depict the calculation of the Company's acquisition costs and its preliminary allocation to Diacarb's assets and liabilities using estimated purchase accounting adjustments which are subject to post closing adjustments once appraisals, actuarial reviews and other studies of the fair value of the assets and liabilities of Diacarb are completed. Final purchase accounting adjustments may differ from the amounts shown below. Under the terms of the share purchase agreement, the expected purchase price of Diacarb as of November 12, 1998 was $8,900. Calculation of acquisition cost: Purchase of Diacarb . . . . . . . . . . . . . $8,900 Accrual for transaction fees. . . . . . . . . 75 ----- Total acquisition cost . . . . . . . . . . . $8,975 ===== Allocation of acquisition cost: Cash and cash equivalents. . . . . . . . . . $ 91 Accounts receivable. . . . . . . . . . . . . 1,361 Inventories . . . . . . . . . . . . . . . . 688 Other current assets. . . . . . . . . . . . 167 Property, plant and equipment . . . . . . . 4,934 Goodwill. . . . . . . . . . . . . . . . . . 4,642 Minority Interest. . . . . . . . . . . . . (119) Deferred tax liabilities. . . . . . .. . . . (1,163) Historical liabilities assumed. . . . . . . (1,626) ------- Total acquisition cost . . . . . . . . . . . $ 8,975 ======= (c) Adjustment of Diacarb's historical balance sheet to exclude amount due to seller. (d) Purchase accounting adjustments to Diacarb's historical asset values as follows: Adjustment of property, plant and equipment to fair value ($2,507), net of deferred tax liabilities ($877). Recording of goodwill arising from the purchase of Diacarb by the Company of $4,642 million. 16 International Knife & Saw, Inc. and Subsidiaries Pro Forma Consolidated Statements of Income (Unaudited) (in thousands, except per share amounts)
Year ended December 31, 1997 ---------------------------------------------------------------------------------- International Historical Acquisition Knife & Saw, Inc. International Historical Pro Forma and Diacarb Knife & Saw, Inc. Diacarb (a) Adjustments Consolidated ----------------- ----------- ------------ ----------------- Net sales $ 142,265 $ 6,702 $ - $ 148,967 Cost of sales 99,176 3,711 577 (c) 103,464 ------------------------------------------------------------------------------------- Gross profit 43,089 2,991 (577) 45,503 Selling, general and administrative Expenses 27,681 1,202 306 (d) 29,189 ------------------------------------------------------------------------------------- Operating income 15,408 1,789 (883) 16,314 Other expenses (income): Interest income (261) (8) - (269) Interest expense 11,948 87 281 (b) 12,316 Minority interest 174 176 - 350 ------------------------------------------------------------------------------------- 11,861 255 281 12,397 ------------------------------------------------------------------------------------- Income before income taxes 3,547 1,534 (1,164) 3,917 Provision for income taxes 1,499 534 (483) (e) 1,550 ------------------------------------------------------------------------------------- Net income $ 2,048 $ 1,000 $ (681) $ 2,367 ===================================================================================== Net income per common share $ 4.25 $ 4.91
See Notes to Pro Forma Consolidated Statement of Income. 17 International Knife & Saw, Inc. and Subsidiaries Pro Forma Consolidated Statements of Income (Unaudited) (in thousands, except per share amounts)
Nine months ended September 30, 1998 ---------------------------------------------------------------------------------- International Historical Acquisition Knife & Saw, Inc. International Historical Pro Forma and Diacarb Knife & Saw, Inc. Diacarb (a) Adjustments Consolidated ----------------- ---------- ------------ ----------------- Net sales $ 111,881 $ 4,967 $ - $ 116,848 Cost of sales 78,023 2,755 409 (c) 81,187 ------------------------------------------------------------------------------------- Gross profit 33,858 2,212 (409) 35,661 Selling, general and administrative Expenses 22,015 894 218 (d) 23,127 ------------------------------------------------------------------------------------- Operating income 11,843 1,318 (627) 12,534 Other expenses (income): Interest income (77) (6) - (83) Interest expense 9,037 64 213 (b) 9,314 Minority interest 28 142 - 170 ------------------------------------------------------------------------------------ 8,988 200 213 9,401 ------------------------------------------------------------------------------------ Income before income taxes 2,855 1,118 (840) 3,133 Provision for income taxes 1,270 391 (358) (e) 1,303 ------------------------------------------------------------------------------------ Net income $ 1,585 $ 727 $ (482) $ 1,830 ===================================================================================== Net income per common share $ 3.29 $ 3.80
See Notes to Pro Forma Consolidated Statement of Income. 18 International Knife & Saw, Inc. and Subsidiaries Notes to Pro Forma Consolidated Condensed Statement of Income (Unaudited) (in thousands) (a) The amounts in the "Historical Diacarb" column are derived from the audited consolidated statement of income of Diacarb for the fiscal year ended December 31, 1997, and the unaudited consolidated statement of income for the nine months ended September 30, 1998 which were prepared based on accounting principles generally accepted in the United States. (b) Adjustments to interest expense include:
Year ended Nine Months Ended December 31, 1997 Sept. 30, 1998 (i) Interest expense on additional borrowings under existing revolving credit facilities $ 277 $ 200 (ii) Interest expense on promissory note to seller 128 93 (iii) Elimination of interest expense on amount due to seller that was excluded from liabilities acquired (124) (80) ------------------------------------------ $ 281 $ 213 ========================================== (c) Increase in depreciation expense to reflect the adjustment of the historical value of Diacarb's property, plant and equipment to fair value (see note (d) to the Pro Forma Consolidated Balance Sheet). (d) Adjustments to selling, general and administrative expenses include: Year ended Nine Months Ended December 31, 1997 Sept. 30, 1998 (i) Increase in depreciation expense to reflect the adjustment of the historical value of Diacarb's property, plant and equipment to fair value (see note (d) to the Pro Forma Consolidated Balance Sheet). $ 192 $ 136 (ii) Amortization charge related to acquisition basis goodwill (see note (d) to the Pro Forma Consolidated Balance Sheet). 114 82 ------------------------------------------ $ 306 $ 218 ========================================== (e) Adjustment to decrease the provision for income taxes as a result of the above adjustments (b) through (d) at an income tax rate of 41.5% for the year ended December 31, 1997 and 42.6% for the nine months ended September 30, 1998.
19 Item 8-9. Not Applicable EXHIBIT INDEX Exhibit No. Description 23 Consent of Independent Auditors 20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. INTERNATIONAL KNIFE & SAW, INC. By: /s/ John E. Halloran -------------------------- John E. Halloran President and Chief Executive Officer January 22, 1999 21 Exhibit No. 23 Consent of Independent Auditors Deloitte & Touche CONSENT OF INDEPENDENT AUDITORS We consent to the use of our report dated December 30, 1998, with respect to the consolidated financial statements of A.K. van der Wijngaart Beheer B.V. and subsidiaries, included in this Current Report on Form 8-K/A (Amendment No. 1) of International Knife & Saw, Inc. January 22, 1999 Deloitte & Touche Registeraccountants 22 -----END PRIVACY-ENHANCED MESSAGE-----