-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, WLmW6/C8i1iXbCUegHHaKcwbAe/ZAWJtTvn0Ur/M3ehaicZ+XjEXfOTCz5X+uCL4 7XOCKaJGOGsADAzeKLmOvw== 0000014637-94-000010.txt : 19940610 0000014637-94-000010.hdr.sgml : 19940610 ACCESSION NUMBER: 0000014637-94-000010 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940609 ITEM INFORMATION: Acquisition or disposition of assets FILED AS OF DATE: 19940609 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BROWN & SHARPE MANUFACTURING CO /DE/ CENTRAL INDEX KEY: 0000014637 STANDARD INDUSTRIAL CLASSIFICATION: 3540 IRS NUMBER: 050113140 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-05881 FILM NUMBER: 94533680 BUSINESS ADDRESS: STREET 1: PO BOX 456 STREET 2: PRECISION PK - 200 FRENCHTOWN RD CITY: NORTH KINGSTOWN STATE: RI ZIP: 02852 BUSINESS PHONE: 4018862000 8-K/A 1 8-K/A AMEND NO. 1 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A AMENDMENT NO. 1 TO CURRENT REPORT Pursuant to Section 13 and 15(d) of the Securities Exchange Act of 1943 BROWN & SHARPE MANUFACTURING COMPANY (Exact name of Registrant as specified in its charter) DELAWARE 1-5881 050113140 (State or other jurisdiction of (Commission (I.R.S. Employer incorporation of organization) File Number) Identification No.) Precision Park, 200 Frenchtown Road, North Kingstown, Rhode Island 02852 (Address of principal executive offices and zip code) Registrant's telephone number, including area code 401-886-2000 The registrant hereby amends Items 2 and 7 of its Current Report on Form 8-K (Date of Report: May 16, 1994) to read in their respective entireties as set forth in the pages attached hereto. Page 1 of 35 Pages 2 Item 2. Acquisition or Disposition of Assets Brown & Sharpe Manufacturing Company through its subsidiary Brown & Sharpe International Capital Corporation purchased, on March 24, 1994, the stock of the French company Ets. Pierre Roch, S.A. (Roch) and its German affiliate company, Mauser Prazisions - Messmittel GmbH, which together manufacture and market micrometers, calipers, height gages, digital indicators, and other similar precision measuring instrument products. The business is headquartered in Luneville, France which is its sole manufacturing site. The German operation is a sales office. These operations were purchased from Diehl GmbH & Co. of Nurnberg, Germany ("Diehl"). The Company intends to continue using the acquired assets in businesses in which they have been previously used. The purchase price was delivery to Diehl of 175,000 shares of Brown & Sharpe Class A Common Stock, subject to certain post closing adjustments and granting Diehl the right to receive additional 50,000 shares of such stock in the event the Company's Class A Common Stock attains a market price of $15 or more per share for a total of 30 days or more during any twelve month period within the five years following the purchase. The purchase price was determined through negotiation by the parties subject to adjustment based on specified closing balance sheet changes. Roch entered into a nine year lease agreement to lease the Luneville facility from Societe Immobiliere Lunevilloise S.A.R.L., a subsidiary of Diehl, for about $34,000 annually and has options to purchase the facility during the lease term. The acquisition has been accounted for by the purchase method of accounting, and accordingly, the purchase price has been allocated to assets acquired and liabilities assumed based on an estimate of their fair values at the date of acquisition. The book value of the net assets exceeded the purchase price before allocation by approximately $2,100. The estimated fair values of assets and liabilities after allocation are summarized as follows: Cash $ 1,408,000 Accounts receivable 2,552,000 Inventory 3,398,000 Machinery and equipment 726,000 Other assets 259,000 Accounts payable and accruals 3,175,000 Pensions 516,000 Short-term debt 867,000 Long-term debt 1,250,000 Item 7. Financial Statements, ProForma Financial Information, and Exhibits (a) Financial Statements of Business Acquired This item is amended to include the following: Roch S.A. -- (i) Report of Independent Accountants (ii) Balance Sheets as of December 31, 1991, 1992 and 1993, and March 31, 1993 and 1994 (unaudited) (iii) Statements of Income (Loss) for the years ended December 31, 1991, 1992, and 1993, and for the quarters ended March 31, 1993 and 1994 (unaudited) (iv) Statements of Cash Flows for the years ended December 31, 1991, 1992, and 1993, and for the quarters ended March 31, 1993 and 1994 (unaudited) (v) Notes to Financial Statements 3 Mauser Praizionsmessmittel -- (i) Report of Independent Accountants (ii) Balance Sheet as of December 31, 1992 and 1993 (iii) Statements of Income (Loss) for the period September 1, 1992 through December 31, 1992, for the year ended December 31, 1993, and for the quarter ended March 31, 1994 (unaudited) (iv) Statements of Cash Flows for the period September 1, 1992 through December 31, 1992, for the year ended December 31, 1993, and for the quarter ended March 31, 1994 (unaudited) (v) Notes to Financial Statements (b) Pro Forma Financial Information This item is amended to include the following: (i) Unaudited ProForma Combined Income Statements for the quarter ended April 2, 1994 (ii) Unaudited ProForma Combined Income Statements for the year ended December 25, 1993 4 (c) Exhibits The Share Purchase and Transfer Agreement dated March 24, 1994, by and between Diehl GmbH & Co., a German company, and Brown & Sharpe Manufacturing Company and Brown & Sharpe International Capital Corporation, both Delaware corporations was submitted as an exhibit to Form 8-K filed on May 16, 1994. Except for Exhibit 13.3.1 to the foregoing Agreement, a Commercial Lease Agreement proposed to be entered into between Societe Immobiliere Lunevilloise S.A.R.L., a subsidiary of Diehl, and Ets. Pierre Roch S.A. as part of the transaction, no additional schedules or exhibits to the foregoing exhibit were filed, but are referred to in the schedule list included in the exhibit. A copy of such schedules will be furnished supplementally to the Commission by the registrant upon request. 5 KURT SCHLOTTHAUER DOCTEUR ES SCIENCES ECONOMIQUES WIRTSCHAFTSPRUFER EXPERT COMPTABLE DIPLOME COMMISSAIRE AUX COMPTES INSCRIT 155, boulevard Haussmann 75008 PARIS Tel. (1) 43.59.33.88 Telex 643 348 F Telecopie (1) 45.63.93.59 To the General Meeting ETABLISSEMENTS PIERRE ROCH societe anonyme Luneville - France Paris, May 10th, 1994 Dears Misters, In performing the duties entrusted to me by your General meeting of June 14th 1989, I hereby present my audit report concerning: * the audited balance sheet of Roch S.A. as of December 31, 1991, 1992, and 1993, and the audited statements of income (loss) and of cash flows for each of the three years ended December 31, 1991, 1992, and 1993. * specific controls and information required by law, relative to the accounting periods ended December 31, 1991, 1992, and 1993. I. OPINION ON THE FINANCIAL STATEMENTS In accordance with professional accounting and auditing standards, generally accepted in the United States, I hereby certify that the financial statements are accurate, honest and that they present a true and fair view of the results of the Company's operations and of its financial situation at the end of these accounting period, in conformity with U.S. generally accepted accounting principles. Auditor Kurt Schlotthauer 6 ROCH S.A. Balance Sheet At December 31, 1991; December 31, 1992; December 31, 1993; March 31, 1993; and March 31, 1994 (French Francs in thousands, U.S. Dollars in thousands)
1991 1992 1993 1993 ASSETS Current assets: Cash and cash equivalents FF 563 FF 129 FF 86 $ 15 Accounts receivable, net of allowance for doubtful debts 17,010 19,048 11,804 2,032 Other receivables 1,390 6,335 1,217 210 Inventories 28,390 26,331 22,838 3,932 Other current assets -- -- -- -- -------- -------- -------- ------- Total current assets 47,353 51,843 35,945 6,189 Non current assets: Property, plant and equipment, net of accumulated depreciation 6,037 4,793 5,574 959 Other assets and deferred charges 1,217 861 1,522 261 --------- -------- -------- ------- Total non-current assets 7,254 5,654 7,096 1,222 --------- -------- -------- -------- Total assets FF 54,606 FF 57,496 FF 43,042 $ 7,409 ========= ======== ======== ======== LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: Borrowings and current maturities of debt FF 21,258 FF 24,310 FF 15,891 $ 2,736 Accounts payable 5,082 5,076 4,242 730 Other payables 2,747 2,123 1,785 307 Accrued expenses and other liabilities 8,725 7,645 7,161 1,233 -------- -------- -------- ------- Total current liabilities 37,812 39,154 29,079 5,006 Non current liabilities: Long term debt 3,164 2,970 7,266 1,251 Retirement indemnities 3,000 3,000 3,000 516 -------- -------- -------- ------- Total liabilities 43,976 45,125 39,345 6,772 STOCKHOLDERS' EQUITY Stock 11,750 11,750 11,750 2,023 Additional Paid in Capital Earnings employed in the business 941 (2,643) (1,013) (174) Current period earnings (2,883) 1,716 (8,783) (1,512) Reserves 822 1,548 1,743 299 Currency translation -- -- -- -- -------- -------- -------- ------- Total Shareholders' equity 10,630 12,371 3,697 636 -------- -------- -------- ------- Total liabilities and equity FF 54,606 FF 57,496 FF 43,042 $ 7,409 ======== ======== ======== =======
1993 1994 1994 (Unaudited) ASSETS Current assets: Cash and cash equivalents FF 140 FF 171 $ 30 Accounts receivable, net of allowance for doubtful debts 16,373 13,834 2,382 Other receivables 4,804 2,497 430 Inventories 26,612 21,955 3,781 Other current assets -- -- -- -------- -------- ------- Total current assets 47,929 38,457 6,623 Non current assets: Property, plant and equipment, net of accumulated depreciation 4,931 4,064 700 Other assets and deferred charges 1,538 1,736 299 -------- -------- ------- Total non-current assets 6,469 5,800 999 -------- -------- -------- Total assets FF 54,398 FF 44,258 $ 7,623 ======== ======== ======== LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: Borrowings and current maturities of debt FF 19,988 FF 19,060 $ 3,282 Accounts payable 4,935 3,814 657 Other payables 4,307 3,814 656 Accrued expenses and other liabilities 6,329 5,952 1,024 -------- -------- ------- Total current liabilities 35,559 32,640 5,619 Non current liabilities: Long term debt 5,162 7,267 1,251 Retirement indemnities 3,000 3,000 516 -------- -------- ------- Total liabilities 43,722 42,907 7,386 STOCKHOLDERS' EQUITY Stock 11,750 11,750 2,023 Additional Paid in Capital Earnings employed in the business (927) (9,796) (1,686) Current period earnings (1,695) (2,347) (404) Reserves 1,548 1,743 299 Currency translation -- -- -- -------- -------- ------- Total Shareholders' equity 10,676 1,350 232 -------- -------- ------- Total liabilities and equity FF 54,398 FF 44,258 $ 7,618 ======== ======== ======== The convenience translation into U.S. Dollars has been made using the exchange rate of 5.81 French Francs to U.S. $1. See notes to financial statements.
7 ROCH S.A. Statement of Income (Loss) For the Years Ended December 31, 1991; December 31, 1992; December 31, 1993; and Quarters Ended March 31, 1993 and March 31, 1994 (French Francs in thousands, U.S. Dollars in thousands)
For the Years 1991 1992 1993 1993 Net sales FF 97,771 FF 79,072 FF 57,311 $ 9,868 Operating costs: Cost of products sold 55,245 42,683 32,752 5,639 Selling, general and administration 42,215 36,135 30,394 5,233 Restructuring costs -- -- -- -- Depreciation and amortization 1,106 504 203 34 -------- -------- -------- ------- Total operating costs 98,566 79,322 63,349 10,906 Operating (loss) income (795) (250) (6,038) (1,038) Interest expense, net (3,672) (3,139) (2,590) (447) Other (expenses) income, net 1,584 5,105 (155) (27) -------- -------- -------- ------- Net loss FF (2,883) FF 1,716 FF (8,783) $(1,512) ========= ======== ======== ========
For the Quarters 1993 1994 1994 (Unaudited) Net sales FF 16,757 FF 15,753 $ 2,713 Operating costs: Cost of products sold 8,873 8,481 1,461 Selling, general and administration 8,296 8,196 1,411 Restructuring costs -- -- -- Depreciation and amortization 320 840 145 -------- -------- ------- Total operating costs 17,489 17,517 3,017 Operating (loss) income (732) (1,764) (304) Interest expense, net (981) (632) (108) Other (expenses) income, net 17 49 9 -------- -------- ------- Net loss FF (1,695) FF (2,347) $ (403) ======== ======== ======= The convenience translation into U.S. Dollars has been made using the exchange rate of 5.81 French Francs to U.S. $1. See notes to financial statements.
8 ROCH S.A. Combined Statements of Cash Flows For the Years Ended December 31, 1991; December 31, 1992; December 31, 1993; and Quarters Ended March 31, 1993 and March 31, 1994 (French Francs in thousands, U.S. Dollars in thousands)
For the Years 1991 1992 1993 1993 Cash provided by (used in) operations: Net loss FF (2,883) FF 1,716 FF (8,783) $ (1,512) Adjustments to reconcile net income to net cash provided: Depreciation and amortization 3,826 245 1,385 238 Other non cash expenses (926) (4,014) (109) (19) Gain on sale of fixed assets -- -- (82) (14) Changes in working capital - (Increase) decrease in: accounts receivable 551 (6,480) 7,355 1,266 inventories 1,095 2,597 2,090 360 other current assets 357 (460) 612 105 accounts payable (4,759) (441) 3,109 535 -------- ------- ------- ------ Net cash used in operating activities(2,739) (6,837) 5,577 959 -------- ------- ------- ------ Cash flows from investing activities: Fixed assets additions (2,381) (1,019) (1,669) (287) Proceeds from sale of fixed assets 1,036 4,428 162 28 Other investing activities 138 137 10 2 -------- ------- ------- ------ Net cash (used in) investing activities (1,207) 3,546 (1,497) (257) -------- ------- ------- ------ Cash flows from financing activities: Borrowings and current maturities of long term debt 8,246 5,159 2,120 365 Payment of long term debt (4,023) (2,301) (6,243) (1,075) -------- ------- ------- ------ Net cash provided from financing activities 4,223 2,858 (4,123) (710) -------- ------- ------- ------ Effect of exchange rate changes Cash and cash equivalents - Net increase (decrease) in: cash and cash equivalents 277 (433) (43) (7) beginning of period 285 562 129 22 -------- ------- ------- ------ end of period FF 562 FF 129 FF 86 $ 15 ======== ======= ======= ====== Supplementary cash flow information: Net interest paid FF 3,021 FF 2,791 FF 2,616 $ 450 ======== ======= ======= ====== Income taxes paid FF 1,440 FF 1,505 FF 1,033 $ 178 ======== ======= ======= ======
For the Quarters 1993 1994 1994 (Unaudited) Cash provided by (used in) operations: Net loss FF (1,695) FF (2,347) $ (404) Adjustments to reconcile net income to net cash provided: Depreciation and amortization 60 1,510 260 Other non cash expenses -- -- -- Gain on sale of fixed assets -- -- -- Changes in working capital - (Increase) decrease in: accounts receivable 4,206 (3,310) (570) inventories (281) 883 152 other current assets -- -- -- accounts payable 728 394 68 ------- ------- ------ Net cash used in operating activities 3,018 (2,870) (494) ------- ------- ------ Cash flows from investing activities: Fixed assets additions (198) -- -- Proceeds from sale of fixed assets -- -- -- Other investing activities (677) (214) (37) ------- ------- ------ Net cash (used in) investing activities (875) (214) (37) ------- ------- ------ Cash flows from financing activities: Borrowings and current maturities of long term debt -- 3,169 545 Payment of long term debt (2,192) -- -- ------- ------- ------ Net cash provided from financing activities (2,192) 3,169 545 ------- ------- ------ Effect of exchange rate changes Cash and cash equivalents - Net increase (decrease) in: cash and cash equivalents 11 85 14 beginning of period 129 86 15 ------- ------- ------ end of period FF 140 FF 171 $ 29 ======= ======= ====== Supplementary cash flow information: Net interest paid FF -- FF -- $ -- ======= ======= ====== Income taxes paid FF -- FF -- $ -- ======= ======= ====== The convenience translation into U.S. Dollars has been made using the exchange rate of 5.81 French Francs to U.S. $1. See notes to financial statements.
9 ROCH S.A. Notes to Financial Statements (French francs in thousands; U.S. Dollars in thousands) The main difference between French and U.S. results in 1991 consists in the booking of a retirement provision of FF 3,000. This provision is only a commitment in France. So, the French result in 1991 amounts to FF 117; the U.S. one to FF (2,993).The financial statements for the quarters ended March 1993 and March 1994 are unaudited and do not form part of the opinion expressed by the auditors; it is management opinion that they include all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of the results of these periods. I. BALANCE SHEET I. ASSETS 1. FIXED ASSETS See Note No. 1 Depreciation is recorded by the straight-line and the accelerated methods. The depreciation terms are as follows:
Years Buildings 20 - 10 Machinery and equipment 5 - 8 Cars and trucks (straight-line only) 2 - 3 Office and EDP equipment (straight-line only) 5 - 10
2. CURRENT ASSETS Inventories December 31, 1991
Gross value Depreciation Net value Net value Raw materials and consumables FF 8,626 FF 1,772 FF 6,854 $ 1,180 Work in progress 4,315 -- 4,315 743 Finished goods 13,702 1,487 12,215 2,102 Goods for sale 5,245 905 4,340 747 Payments on account 666 -- 666 115 --------- -------- --------- --------- FF 32,554 FF 4,164 FF 28,390 $ 4,886 ========= ======== ========= ========= Inventories December 31, 1992 Gross value Depreciation Net value Net value Raw materials and consumables FF 7,166 FF 1,767 FF 5,399 $ 929 Work in progress 4,769 -- 4,769 821 Finished goods 13,818 1,467 12,351 2,126 Goods for sale 3,537 852 2,685 462 Payments on account 1,127 -- 1,127 194 --------- -------- --------- --------- FF 30,417 FF 4,086 FF 26,331 $ 4,532 ========= ======== ========= ========= Inventories December 31, 1993 Gross value Depreciation Net value Net value Raw materials and consumables FF 7,600 FF 2,141 FF 5,459 $ 940 Work in progress 2,667 99 2,568 442 Finished goods 14,394 1,732 12,662 2,179 Goods for sale 2,540 664 1,876 323 Advance payments to suppliers 274 -- 274 47 --------- -------- --------- --------- FF 27,475 FF 4,636 FF 22,839 $ 3,931 ========= ======== ========= =========
10 Physical inventory count A physical inventory count took place on December 31st 1993, 1992, and 1991. Valuation principles Raw materials and consumables and goods for sale are valued at purchasing cost. Purchasing cost is determined on a "weighted average cost" basis. Indirect purchasing costs amounting to 5 or 3% are also included, according to the geographic origin of the goods concerned. Work in progress and finished goods are valued at manufacturing cost, which includes: * Cost of raw materials and consumables consumed * Individual and global costs based on an hourly rate applied to the average production time.
Depreciation of inventories December 31, 1991 and 1992 Depreciation Depreciation Depreciation Depreciation 1991 expenses recoveries 1992 Raw materials and consumables FF 1,772 FF 1,767 FF 1,772 FF 1,767 Finished goods 1,487 1,467 1,487 1,467 Goods for sale 905 852 905 852 -------- -------- -------- -------- FF 4,164 FF 4,086 FF 4,164 FF 4,086 ======== ======== ======== ======== Depreciation of inventories December 31, 1992 and 1993 Deprec- Deprec- Deprec- Deprec- Deprec- iation iation iation iation iation 1992 allowance recoveries 1993 1993 Raw materials and consumables FF 1,767 FF 2,141 FF 1,767 FF 2,141 $ 369 Work in progress -- 99 -- 99 17 Finished goods 1,467 1,732 1,467 1,732 298 Goods for sale 852 664 852 664 114 -------- --------- --------- -------- ------- FF 4,086 FF 4,636 FF 4,086 FF 4,636 $ 798 ======== ========= ========= ======== =======
11 Depreciation principles The following method is applied to determine the amount of the depreciation of inventories: Rate of depreciation Inventories without movements within a year 100% Inventories covering 60 months or more of average consumption 90% Inventories covering between 36 and 60 months of average consumption 75% Inventories covering between 24 and 36 months of average consumption 50% Inventories covering between 12 and 24 months of average consumption 25% Accounts receivables - --------------------
Trade debtors 1991 1992 1993 1993 Trade receivables FF 13,547 FF 13,979 FF 10,988 $ 1,891 Short terms notes receivable 3,184 4,808 485 83 Doubtful accounts 2,051 1,904 1,864 321 Gross value 18,782 20,692 13,337 2,296 Allowance for doubtful accounts 1,771 1,644 1,533 264 --------- --------- --------- -------- Net value FF 17,010 FF 19,048 FF 11,804 $ 2,032 ========= ========= ========= ======== The depreciation of doubtful accounts is recorded without V.A.T., on a net basis. Other debtors 1991 1992 1993 1993 Advances to employees FF 35 FF 35 FF 164 $ 28 Prepaid V.A.T. -- 694 355 61 Taxes 1,128 474 362 62 Other accounts receivable 177 254 299 51 Group companies 49 4,877 37 6 -------- --------- -------- -------- FF 1,389 FF 6,334 FF 1,217 $ 208 ======== ========= ========= ======== Taxes mainly consist of V.A.T. and state compensation for part time unemployment.
12 Cash - ----
1991 1992 1993 1993 Bank accounts FF 511 FF 89 FF 47 $ 8 Petty cash 52 40 39 7 -------- ------- ------ ------- FF 563 FF 129 FF 86 $ 15 ======== ======= ====== ======= Prepaid expenses - ---------------- They consist of: 1991 1992 1993 1993 Consumables FF 140 FF 123 FF 115 $ 20 Advertising equipment 562 314 506 87 Price lists 103 -- -- -- Prepaid lease 43 91 116 20 Other expenses 78 82 57 10 ------- ------- ------- ------ FF 926 FF 610 FF 794 $ 137 ======= ======== ======= ======
13 STOCKHOLDERS' EQUITY Net income appropriation December 31, 1991:
1990 Plus Minus 1991 Capital stock FF 11,750 FF -- FF -- FF 11,750 Revaluation reserve 519 -- -- 519 Statutory or contractural reserves -- 50 -- 50 Long term capital gains reserves 79 -- -- 79 Retained earnings (4,033) 4,974 -- 941 Profit and loss account 5,023 (2,883) 5,023 (2,883) Investment subsidies 36 235 97 174 -------- ------- -------- -------- FF 13,374 FF 2,376 FF 5,120 FF 10,630 ======== ======= ======== ======== Capital stock consists of 235,000 ordinary shares of F 50 each. The shareholders' list is analysed below: Number of shares Diehl GmbH & Co. 234,250 Plachez 180 Marchal 61 Heckel 50 Hederer 50 Hobrecker 50 Niethammer 50 Around 26 people who own less than 50 shares each 309 ------- 235,000 ======= Net income appropriation December 31, 1992: 1991 Plus Minus 1992 Capital stock FF 11,750 FF -- FF -- FF 11,750 Revaluation reserve 519 -- -- 519 Statutory or contractural reserves 50 5 -- 55 Long term capital gains reserves 79 695 -- 774 Retained earnings 941 (2,643) 941 (2,643) Profit and loss account (2,883) 1,716 (2,883) 1,716 Investment subsidies 174 138 112 200 -------- ------- -------- --------- FF 10,630 FF (89) FF (1,830) FF 12,371 ======== ======= ======== ========= Capital stock consists of 235,000 ordinary shares of F 50 each. The shareholders' list is analysed below: Number of shares Diehl GmbH & Co. 234,313 Plachez 180 Marchal 61 Heckel 50 Hederer 50 Hobrecker 50 Niethammer 50 Around 26 people who own less than 50 shares each 246 --------- 235,000 ========= Net income appropriation December 31, 1993: 1992 Plus Minus 1993 1993 Capital stock FF 11,750 FF -- FF -- FF 11,750 $ 2,022 Revaluation reserve 519 -- -- 519 89 Statutory or contractural reserves 55 86 -- 141 24 Long term capital gains reserves 774 -- -- 774 133 Retained earnings (2,643) 1,630 -- (1,013) (174) Profit and loss account 1,716 (8,783) 1,716 (8,783) (1,512) Investment subsidies 200 170 61 309 53 --------- -------- ------- -------- ------- FF 12,371 FF (6,897) FF 1,777 FF 3,697 $ 635 ========= ======== ======= ======== ======= Capital stock consists of 235,000 ordinary shares of F 50 each. The shareholders' list is analysed below: Number of shares Diehl GmbH & Co. 234,313 Plachez 180 Marchal 61 Heckel 50 Hederer 50 Hobrecker 50 Niethammer 50 Around 26 people who own less than 50 shares each 246 --------- 235,000 =========
13> CONTINGENCY AND LOSS PROVISIONS
Contingency provisions 1991 1992 1993 1993 Litigation with staff members FF 287 FF 135 FF 422 $ 73 Dissolution costs of an American subsidiary 50 50 50 9 Unrealized foreign exchange loss 67 8 63 11 ------ ------ ------ ----- FF 404 FF 193 FF 535 $ 93 ======= ======= ====== ===== Loss provisions 1991 1992 1993 1993 Lay-off compensation FF 315 FF 124 FF 124 $ 21 Product warranty 580 580 530 91 Major repairs 700 -- -- -- F.N.E. (tax on elderly people lay-off) 167 -- -- -- ------- ------ ------ ----- FF 1,762 FF 704 FF 654 $ 112 ======= ======= ====== =====
BANK LOANS AND OVERDRAFT At December 31, 1991, 1992, and 1993, the Company's long term borrowings consisted of the following:
1991 1992 1993 1993 Lordex 1 FF 345 FF 230 FF 115 $ 20 Lordex 2 358 187 -- -- Banque Nationale de Paris 1 600 469 326 56 Banque Nationale de Paris 2 900 756 598 103 SNVB 125 -- 422 73 Banque du Credit Mutuel 1,363 1,069 746 128 Accrued interest payable 46 38 16 3 ------- ------- ------- ------ FF 3,737 FF 2,749 FF 2,223 $ 383 ======== ======= ======= ======
The installments of long term borrowings is described in the note No. 2. At December 31, 1991, 1992, and 1993, the Company's short term borrowings consisted of the following:
1991 1992 1993 1993 Bank Accounts: Banque Nationale de Paris FF 3,037 FF 1,656 FF 452 $ 78 Foreign receivables 2,122 2,082 2,216 381 Societe Nanceienne Varin Bernier 20 306 1 -- Societe Nanceienne Varin Bernier -- -- 102 18 Foreign currency account 813 569 327 56 Commerzbank, Paris (DM) 131 -- -- -- Commerzbank, Paris 7,266 15,055 9,659 1,662 Credit du Nord foreign receivables 985 -- -- -- Credit du Nord, Paris 2,312 648 -- -- Banque du Credit Mutuel 629 554 525 90 Bayerische Vereinsbank 208 -- -- Accrued interest payable 206 483 387 67 -------- -------- -------- -------- FF 17,521 FF 21,561 FF 13,669 $ 2,352 ======== ======== ======== ========
14 MISCELLANEOUS DEBTS
1991 1992 1993 1993 Diehl GmbH & Co. (current account) FF 1,468 FF 2,595 FF -- $ -- Diehl GmbH & Co. (loan) -- -- 1,670 287 Bayerische Vereinsbank 1,196 -- 5,113 880 Aprodi 500 375 375 65 Accrued interest payable -- -- 108 19 ------- --------- --------- -------- FF 3,164 FF 2,970 FF 7,266 $ 1,251 ======== ========= ========= ========
OTHER CREDITORS
1991 1992 1993 1993 Credit notes FF 823 FF 725 FF 405 $ 70 Unbilled credit notes 166 172 311 54 Fees 467 427 419 72 Mauser Werke GmbH -- 69 57 10 Kiehl GmbH & Co. KG 145 87 27 5 Research 390 205 -- -- Other 478 285 374 64 --------- --------- -------- ------- FF 2,469 FF 1,970 FF 1,593 $ 275 ========= ========= ======== ========
15 II. PROFIT AND LOSS ACCOUNT - --------------------------- A. OPERATING INCOME - -------------------- 1. Turnover
1991 1992 1993 1993 Sales of goods FF 29,099 FF 22,894 FF 16,686 $ 2,872 Sales of manufactured goods 68,672 56,178 40,625 6,992 --------- --------- --------- -------- FF 97,771 FF 79,072 FF 57,311 $ 9,864 ========= ========= ========= ======== 2. Change in finished goods 1991 1992 1993 1993 FF (1,723) FF 571 FF (1,527) $ (263) ========= ========= ========= ======== 3. Own work capitalized 1991 1992 1993 1993 FF 22 FF 10 FF -- $ -- ========= ========= ========= ======== 4. Subsidies 1991 1992 1993 1993 FF 353 FF -- FF -- $ -- ========= ========= ========= ========
5. Excess depreciation and expense transfer
1991 1992 1993 1993 Depreciation recovery FF 67 FF FF 1,040 $ 179 Recovery on doubtful debts provision 391 1,268 762 131 Decrease in product warranty 680 580 580 100 Decrease in lay-off compensation -- 293 -- -- Recovery on inventory losses provision -- 77 -- -- Other 295 137 91 16 --------- --------- --------- -------- FF 1,433 FF 2,355 FF 2,473 $ 426 ========= ========= ========= ======== 6. Other operating income 1991 1992 1993 1993 FF 1,160 FF 786 FF 853 $ 147 ========= ========= ========= ======== This income represents the invoicing of freight, supplies, and rents.
16 B. OPERATING EXPENSES
1. Cost of purchased merchandise 1991 1992 1993 1993 FF 18,273 FF 12,338 FF 9,376 $ 1,614 ========= ========= ======= ======= The merchandises consist in manufactured goods bought in foreign countries. 2. Change in goods inventory 1991 1992 1993 1993 FF (364) FF 1,708 FF 997 $ 172 ========= ========= ======= ======= 3. Cost of raw materials, consumables, and supplies 1991 1992 1993 1993 FF 13,925 FF 9,912 FF 7,273 $ 1,252 ========= ========= ========= ======== 4. Change in raw materials inventory and other supplies expenses 1991 1992 1993 1993 FF (265) FF 1,459 FF (434) $ (75) ========= ========= ========= ========
5. Other purchases and external charges
1991 1992 1993 1993 Energy expenses FF 1,239 FF 1,090 FF 959 $ 165 Supplies and minor equipment 1,308 817 740 127 Packaging 302 302 239 41 Office supplies 320 295 196 34 Cost of purchased service 4,782 2,955 3,997 688 Maintenance and repairs 775 550 516 89 Leasing 1,861 1,499 1,275 219 Insurance premium 488 469 321 55 Research studies 1,079 1,095 306 53 Outside and temporary employees 203 286 45 8 Sundry expenses 1,467 896 493 85 Fees 724 780 509 88 Advertising expenses 2,140 1,484 788 136 Purchases freight costs 549 454 289 50 Sales freight costs 1,847 1,696 1,372 236 Travelling expenses 983 804 508 87 Telephone expenses 907 922 566 97 Dues 259 124 48 8 Bank fees 151 157 144 25 Other 208 125 99 17 Company's fees 764 -- -- -- ---------- -------- -------- --------- FF 22,356 FF 16,800 FF 13,410 $ 2,308 ========== ======== ======== =========
17 6. Taxes and similar expenses
1991 1992 1993 1993 Employment tax in France to enhance continuing education FF 558 FF 315 FF 314 $ 54 Social construction tax -- -- 12 2 Employment tax in France for training 39 39 36 6 Tax on corporate cars 81 -- 954 164 Business use tax 1,359 1,430 80 14 Real estate tax 81 75 -- -- Tax stamps 6 1 -- -- Local construction tax (137) 8 89 15 ORGANIC (Social security compensating tax) 94 77 59 10 Sundry taxes 30 152 27 5 ------- --------- -------- ------- FF 2,111 FF 2,097 FF 1,571 $ 270 ======= ========= ======== ========
7. Wages and salaries
1991 1992 1993 1993 Gross wages FF 8,237 FF 7,678 FF 6,258 $ 1,077 Vacation expenses for workers 1,372 1,202 1,019 175 Wages premium and bonus for workers 1,770 1,861 1,755 302 Compensation 10,059 9,019 8,550 1,472 Independant salesmen provisions 2,132 1,810 924 159 Vacation expenses for employees 855 723 496 85 Wages premium and bonus for employees 1,315 1,372 1,123 193 Lay-off compensation 1,115 638 204 35 Other expenses 131 58 79 14 Independant salesmen provisions 48 -- -- -- --------- -------- --------- -------- FF 27,034 FF 24,361 FF 20,408 $ 3,512 ========= ========= ========= ========
18 8. Social Security and pension expenses
1991 1992 1993 1993 Social Security charges in France FF 9,283 FF 8,985 FF 8,110 $ 1,396 Social Security charges in Oberndorf 413 360 -- -- Personnel committee fees 313 272 250 43 Medical labor charges 60 58 57 10 ------- --------- -------- --------- FF 10,069 FF 9,675 FF 8,417 $ 1,449 ======== ========= ======== ========= 9. Fixed assets depreciation allowance 1991 1992 1993 1993 FF 2,240 FF 1,718 FF 1,425 $ 245 ======== ========= ======== ========= 10. Depreciation on current assets expenses 1991 1992 1993 1993 FF 300 FF 1,142 FF 1,251 $ 215 ======== ========= ======== =========
At December 31, 1993, the depreciation on current assets consisted of the following:
1993 1993 Doubtful accounts FF 651 $ 112 Depreciation of inventories 550 95 Depreciation of other debtors 50 9 -------- --------- FF 1,251 $ 216 ========= =========
11. Depreciation on contingency and loss provisions
1991 1992 1993 1993 Product warranty FF 580 FF 580 FF 530 $ 91 Lay-off compensation -- -- 212 36 -------- -------- ------- ------ FF 580 FF 580 FF 742 $ 127 ======== ======== ======= ======
12. Other operating expenses
1991 1992 1993 1993 Loss on doubtful debts FF 278 FF 1,029 FF 457 $ 79 Retirement Indemnities 3,000 -- -- -- Directors' fees 34 33 35 6 License fees 33 33 112 19 Other expenses 222 158 110 19 -------- -------- ------ ----- FF 3,567 FF 1,253 FF 714 $ 123 ========= ======== ====== =====
19 C. INTEREST, DIVIDENDS, AND OTHER FINANCIAL INCOME - ---------------------------------------------------
1. Interest and other income 1991 1992 1993 1993 FF 198 FF 209 FF 175 $ 30 ======= ======== ====== ===== 2. Excess provisions charged 1991 1992 1993 1993 FF 159 FF 67 FF 8 $ 1 ======= ======== ====== ===== This line item recorded the recovery on unrealized foreign currency losses booked in 1991, 1992, and 1993. 3. Foreign exchange gains 1991 1992 1993 1993 FF 137 FF 69 FF 119 $ 20 ======= ======== ====== ===== This line item recorded the foreign currency gains realized during 1991, 1992, and 1993.
20 D. INTEREST AND OTHER FINANCIAL CHARGES - ----------------------------------------
1. Financial provisions 1991 1992 1993 1993 FF 67 FF 8 FF 63 $ 11 ======= ======== ======== ===== This line item recorded the provision on foreign currency losses at December 1991, 1992, and 1993.
2. Interest and other financial charges
1991 1992 1993 1993 Bank interest paid FF 2,517 FF 2,442 FF 2,377 $ 409 Discounting of notes 919 537 154 27 Interest paid on loans 504 350 239 41 Sundry expenses 4 2 5 1 -------- --------- -------- -------- FF 3,944 FF 3,331 FF 2,775 $ 478 ======== ========= ======== ========= 3. Foreign exchange losses 1991 1992 1993 1993 FF 289 FF 145 FF 53 $ 9 ======= ======== ======== ===== This line item recorded the foreign currency losses realized during 1991, 1992, and 1993.
E. EXTRAORDINARY INCOME - ------------------------
1. Extraordinary gains in operations 1991 1992 1993 1993 FF 113 FF 11 FF 1 $ -- ======= ======== ====== =====
2. Proceeds of assets sold and other capital gains
1991 1992 1993 1993 Effect of exchange rate changes on the financial statements of Oberndorf FF 91 FF -- FF -- $ -- Portion of capital subsidies reported as income 6 112 61 10 Proceeds from sales of assets 1,036 356 39 7 Income from the sale of the permanent establishment in Oberndorf -- 4,007 -- -- ------- -------- -------- ------ FF 1,132 FF 4,475 FF 100 $ 17 ======= ======== ====== =====
1991 1992 3. Excess provisions charged and expense transfers FF 1,561 FF 926 ========= ======== ======= =======
21 F. EXTRAORDINARY EXPENSES - ------------------------- 1. Extraordinary losses in operations 1991 1992 1993 1993 FF 353 FF 3 FF 3 $ 1 ======= ======== ====== ===== 2. Book vlaue of assets sold and other capital losses 1991 1992 1993 1993 FF 81 FF 294 FF 178 $ 31 ======= ======== ====== ===== 3. Extraordinary depreciation and regulated provisions 1991 1992 1993 1993 Lay-off compensation FF 606 FF 10 FF 75 $ 13 ======= ======== ====== =====
III. COMMITMENTS - ---------------- 1. Operating lease See the note 3. 2. Discounted notes not yet matured
1991 1992 1993 1993 These notes amounted to FF 3,173 FF 444 FF 4,011 $ 690 ======= ======== ====== =====
21 ROCH S.A. LONG TERM DEBTS SCHEDULE (French Francs in thousands, U.S. Dollars in thousands)
Term Interest Lender From To Amount Rate Lordex 1 11/01/80 11/15/94 FF 1,150 9.50% Lordex 2 01/01/86 07/01/93 1,100 9.75% Banque Nationale de Paris 1 01/01/91 12/31/95 600 8.75% Banque Nationale de Paris 2 900 Pibor+ 0.60% Credit Mutuel Lorraine 07/05/91 12/05/95 750 8.75% Credit Mutuel Lorraine 07/06/91 12/06/95 750 10.25% APRODI 1,500 8.75% SNUB 500
Long term debts' evolution Installment Lender 12/31/91 Incr. Refund 12/31/92 <1 Yr. 2-5 Yrs. >5 Yrs. Lordex 1 FF 345 FF -- FF 115 FF 230 Lordex 2 358 -- 170 188 Banque Nationale de Paris 1 600 -- 131 469 Banque Nationale de Paris 2 900 -- 144 756 Credit Mutuel Lorraine 681 -- 149 532 Credit Mutuel Lorraine 682 -- 145 537 APRODI 125 -- 125 -- SNUB 500 -- 125 375 Interest 46 -- 8 38 ----- ----- ------ ------ FF 4,237 -- FF 1,113 FF 3,125 ====== ===== ===== =======
22 ROCH S.A. LONG TERM DEBTS SCHEDULE (French Francs in thousands, U.S. Dollars in thousands)
Term Interest Lender From To Amount Rate Lordex 1 11/01/80 11/15/94 FF 1,150 9.50% Lordex 2 01/01/86 07/01/93 1,100 9.75% Banque Nationale de Paris 1 01/01/91 12/31/95 600 8.75% Banque Nationale de Paris 2 900 Pibor+ 0.60% Credit Mutuel Lorraine 07/05/91 12/05/95 750 8.75% Credit Mutuel Lorraine 07/06/91 12/06/95 750 10.25% APRODI SNUB
Long term debts' evolution Installment Lender 12/31/92 Incr. Refund 12/31/93 <1 Yr. 2-5 Yrs. >5 Yrs. Lordex 1 FF 230 FF -- FF 115 FF 115 FF 115 FF -- Lordex 2 187 -- 187 -- -- -- Banque Nationale de Paris 1 469 -- 143 326 156 170 Banque Nationale de Paris 2 756 -- 158 598 184 413 Credit Mutuel Lorraine 532 -- 162 370 177 193 Credit Mutuel Lorraine 537 -- 161 376 163 213 APRODI 375 -- -- 375 125 250 SNUB -- 450 28 422 84 338 Interest 38 16 38 16 -- -- ----- ----- ----- ------ ------ ----- FF 3,124 FF 466 FF 993 FF 2,598 FF 1,004 FF1,577 ===== ===== ====== ====== ====== =====
Term Interest Lender From To Amount Rate Lordex 1 11/01/80 11/15/94 $ 198 9.50% Lordex 2 01/01/86 07/01/93 189 9.75% Banque Nationale de Paris 1 01/01/91 12/31/95 103 8.75% Banque Nationale de Paris 2 155 Pibor+ 0.60% Credit Mutuel Lorraine 07/05/91 12/05/95 129 8.75% Credit Mutuel Lorraine 07/06/91 12/06/95 129 10.25% APRODI SNUB
Long term debts' evolution Installment Lender 12/31/92 Incr. Refund 12/31/93 <1 Yr. 2-5 Yrs. >5 Yrs. Lordex 1 $ 40 $ -- $ 20 $ 20 $ 20 $ -- Lordex 2 32 -- 32 -- -- -- Banque Nationale de Paris 1 81 -- 25 56 27 29 Banque Nationale de Paris 2 130 -- 27 103 32 71 Credit Mutuel Lorraine 92 -- 28 64 30 33 Credit Mutuel Lorraine 92 -- 28 65 28 37 APRODI 65 -- -- 65 22 43 SNUB -- 77 5 73 14 58 Interest 7 3 7 3 -- -- ------ ----- ----- ----- ------ ----- $ 539 $ 80 $ 172 $ 449 $ 173 $ 271 ====== ===== ===== ===== ====== =====
23 ROCH S.A. ASSETS SCHEDULE (French Francs in thousands, U.S. Dollars in thousands)
Acquisition Costs 12/31/91 Acquisitions Sales 12/31/92 Concessions, patents, similar rights FF 349 FF 31 FF -- FF 380 Payments on account -- -- -- -- ------- ------ ------- ------- TANGIBLE ASSETS 349 31 -- 380 ------- ------ ------- ------- Lands 656 -- -- 656 Buildings 1,450 -- -- 1,450 Plant & machinery 16,505 345 66 16,784 Other assets 3,624 109 -- 3,733 Cars & trucks 318 154 314 158 Computer & office equipment 2,333 137 539 1,931 Payment on account 59 34 93 -- ------- ------ ------- -------- INTANGIBLE ASSETS 24,946 779 1,011 24,713 ------- ------ ------- -------- Other fixed securities 9 -- -- 9 Other loans 116 95 -- 211 Other investments 76 2 65 13 -------- ------- ------- -------- INVESTMENTS 201 97 65 233 --------- ------- ------- -------- FIXED ASSETS FF 25,495 FF 907 FF 1,077 FF 25,325 ========= ======= ======== ========
Amortization Book Value 12/31/91 Allowance Recovery 12/31/92 12/31/92 Concessions, patents, similar rights FF 317 FF 44 FF -- FF 361 FF 19 Payments on account -- -- -- -- -- -------- ------- ------ ------ -------- TANGIBLE ASSETS 317 44 -- 361 19 -------- ------- ------ ------ -------- Lands 103 -- -- 103 554 Buildings 1,408 21 -- 1,429 20 Plant & machinery 13,098 1,135 52 14,181 2,603 Other assets 2,500 211 -- 2,711 1,022 Cars & trucks 187 83 190 80 77 Computer & office equipment 1,612 223 421 1,414 516 Payment on account -- -- -- -- -- --------- ------- ------ ------- -------- INTANGIBLE ASSETS 18,909 1,674 663 19,918 4,793 --------- ------- ------ ------ ------ Other fixed securities 9 -- -- 9 1 Other loans -- -- -- -- 211 Other investments -- -- -- -- 13 -------- ---------- ------ -------- -------- INVESTMENTS 9 -- -- 9 224 -------- --------- ------ -------- -------- FIXED ASSETS FF 19,234 FF 1,718 FF 663 FF 20,288 FF 5,036 ======== ========= ====== ======== ========
Acquisition Costs 12/31/92 Acquisitions Sales 12/31/93 Concessions, patents, similar rights FF 380 FF 8 FF -- FF 388 Payments on account -- 342 -- 342 ------- ------ ------- ------ TANGIBLE ASSETS 380 350 -- 730 ------- ------ ------- ------ Lands 656 -- -- 656 Buildings 5,183 -- -- 5,183 Plant & machinery 16,784 1,138 102 17,820 Cars & trucks 158 78 126 110 Computer & office equipment 1,931 15 -- 1,946 ------- ------ ------ ------ INTANGIBLE ASSETS 24,713 1,231 228 25,715 ------- ------ ------ ------ Other fixed securities 9 -- -- 9 Other loans 211 90 -- 301 Other investments 13 -- 2 11 ------- ------ ------ ------ INVESTMENTS 233 90 2 321 ------- ------ ------ ------ FIXED ASSETS FF 25,325 FF 1,671 FF 230 FF 26,766 ======== ======= ======= ======
Amortization Book Value 12/31/92 Allowance Recovery 12/31/93 12/31/93 Concessions, patents, similar rights FF 361 FF 16 FF -- FF 377 FF 11 Payments on account -- -- -- -- 342 TANGIBLE ASSETS 361 16 -- 377 353 Lands 103 -- -- 103 554 Buildings 4,141 215 -- 4,356 827 Plant & machinery 14,181 967 1,142 14,006 3,814 Cars & trucks 81 75 46 110 -- Computer & office equipment 1,415 151 -- 1,566 380 ------- --------- ------- ------- ------- INTANGIBLE ASSETS 19,921 1,408 1,188 20,141 5,575 ------- --------- ------- ------- ------- Other fixed securities 9 -- -- 9 1 Other loans -- -- -- -- 301 Other investments -- -- -- -- 11 INVESTMENTS 9 -- -- 9 313 -------- --------- ------- -------- -------- FIXED ASSETS FF 20,291 FF 1,424 FF 1,188 FF 20,527 FF 6,241 ======== ========= ======= ======== ========
24 ROCH S.A. OPERATING LEASE SCHEDULE (French Francs in thousands, U.S. Dollars in thousands)
Lease Acquisition Amortization Cumulated Book rentals Assets cost of the year amortization value of the year Hardware FF 974 FF 288 FF 685 FF 290 FF 345 Cars 1,455 404 796 659 490 Total at -------- ------- -------- ------ ------ December 31, 1991 FF 2,429 FF 692 FF 1,481 FF 949 FF 835 Hardware FF 907 FF 170 FF 205 FF 702 FF 169 Cars 1,995 456 1,130 865 535 Total at -------- ------ -------- -------- ------- December 31, 1992 FF 2,902 FF 626 FF 1,335 FF 1,567 FF 704 Hardware FF 1,253 FF 334 FF 474 FF 779 FF 383 Cars 1,860 406 1,402 458 493 Total at -------- ------- --------- -------- ------- December 31, 1993 FF 3,113 FF 740 FF 1,876 FF 1,237 FF 876 Hardware $ 216 $ 57 $ 82 $ 134 $ 66 Cars 320 70 241 79 85 Total at --------- ---------- --------- -------- ------- December 31, 1993 $ 536 $ 127 $ 323 $ 213 $ 151
Cumulated Lease rentals payable lease within 1 to 5 Total Repurchase Assets rentals a year years amount price Hardware FF 807 FF 267 FF 72 FF 339 FF 14 Cars 902 566 321 888 35 Total at -------- ------- ------ -------- ------- December 31, 1991 FF 1,709 FF 833 FF 393 FF 1,227 FF 49 Hardware FF 212 FF 280 FF 400 FF 679 FF 1 Cars 1,287 456 519 974 32 Total at ---------- ------- ------ -------- ------- December 31, 1992 FF 1,499 FF 736 FF 919 FF 1,653 FF 33 Hardware FF 546 FF 479 FF 413 FF 892 FF 18 Cars 2,573 295 185 480 33 Total at --------- ------- ------ -------- ------- December 31, 1993 FF 3,119 FF 774 FF 598 FF 1,372 FF 51 Hardware $ 94 $ 82 $ 71 $ 154 $ 3 Cars 443 51 32 83 6 Total at -------- ------ ------ ------- ------ December 31, 1993 $ 537 $ 133 $ 103 $ 237 $ 9
25 Report of Independent Accountants To the Stockholders and Board of Directors of Mauser Prazisionsmessmittel GmbH: We have audited the accompanying balance sheets of Mauser Prazisionsmessmittel GmbH as of December 31, 1992 and 1993, and the related statements of income (loss) and accumulated losses and cash flows for the period September 1, 1992 through December 31, 1992 and for the year ended December 31, 1993. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Mauser Prazisionsmessmittel GmbH as of December 31, 1992 and 1993, and the results of its operations and its cash flows for the period September 1, 1992 through December 31, 1992 and for the year ended December 31, 1993, in conformity with generally accepted accounting principles in the United States. As explained in Note 1 to the financial statements, on March 24, 1994, Brown & Sharpe Manufacturing Company acquired all the common stock of the Company from Diehl GmbH & Co., the Company's parent. The accompanying financial statements do not include any allocation of the purchase price or other adjustments to the Company's historical carrying values of assets and liabilities as a result of this transaction. Coopers & Lybrand Wirtschaftsprufungsgesellschaft Gesellschaft mit beschrankter Haftung Munich, Germany May 31, 1994 26 Mauser Prazisionsmessmittel GmbH Balance Sheet At December 31, 1992 and 1993 (Deutsch Marks in thousands, U.S. Dollars in thousands)
1992 1993 1993 ASSETS Current Assets: Cash and cash equivalents (Note 1) DM 3 DM 2 $ 1 Accounts receivable trade (net of allowances of DM 22 in 1992 and DM 110 in 1993) 614 477 286 Affiliates 696 14 8 Other 12 23 14 Inventories (Note 1) 267 195 117 Prepaid expenses 30 14 8 ------- ----- ----- Total current assets 1,622 725 434 ------- ----- ----- Machinery and equipment at cost 34 76 46 Less accumulated depreciation 8 33 20 ------- ----- ----- Machinery and equipment, net 26 43 26 Goodwill (net of accumulated amortization ------- ----- ----- of DM 32 in 1992 and DM 1,043 in 1993) (Note 1) 1,111 100 60 ------- ----- ----- DM 2,759 DM 868 $ 520 ======= ===== ===== LIABILITIES AND STOCKHOLDER'S EQUITY Current Liabilities: Current portion of long-term debt due to parent DM -- DM 25 $ 15 Accounts payable Affiliates (Note 2) 2,686 3,058 1,831 Other 144 30 18 Accrued and other current liabilities (Note 3) 94 192 109 ------- ----- ----- Total current liabilities 2,924 3,295 1,973 Long-term debt due to parent ------- ----- ----- less current portion (Note 4) -- 55 33 2,924 3,350 2,006 Stockholder's Equity (Deficit): ------- ----- ----- Common stock (Note 5) 50 50 30 Accumulated losses (215) (2,532) (1,516) ------- ----- ----- Total stockholder's equity (deficit) (165) (2,482) (1,486) Total liabilities and ------- ----- ----- stockholder's equity (deficit) DM 2,759 DM 868 $ 520 ======= ====== ===== The convenience translation into U.S. Dollars has been made using the exchange rate in effect at March 31, 1994 of 0.60 Deutsche Marks to U.S. $1. The accompanying notes are an integral part of the financial statements.
27 Mauser Prazisionsmessmittel GmbH Statement of Income (Loss) and Accumulated Losses For the Period September 1, 1992 through December 31, 1992; Year Ended December 31, 1993; and Quarter Ended March 31, 1994 (Unaudited) (Deutsch Marks in thousands, U.S. Dollars in thousands)
1992 1993 1993 1994 1994 (Unaudited) Net sales DM 2,039 DM 4,398 $ 2,634 DM 1,185 $ 710 Cost and expenses: Cost of goods sold 1,642 3,698 2,214 865 518 Selling, general and administrative expenses 627 1,931 1,157 617 370 Amortization of goodwill (Note 1) 32 1,010 605 2 1 ------ ------- ------- ----- ----- Operating loss (262) (2,242) (1,342) (299) (179) Other income (expense) Interest income 15 27 16 -- -- Interest expense -- (118) (71) -- -- Other income, net (Note 2) 15 16 10 2,502 1,498 ------ ------- ------- ----- ----- Net income(loss) (232) (2,317) (1,387) 2,203 1,319 Retained earnings(accumulated losses), beginning of period 17 (215) (129) (2,532) (1,516) Accumulated losses, ------ ------- ------- ----- ----- end of period DM (215) DM (2,532) $(1,516) DM (329) $ (197) ====== ======= ======= ===== ====== The convenience translation into U.S. Dollars has been made using the exchange rate in effect at March 31, 1994 of 0.60 Deutsche Marks to U.S. $1. The accompanying notes are an integral part of the financial statements.
28 Mauser Prazisionsmessmittel GmbH Statement of Cash Flows For the Period September 1, 1992 through December 31, 1992; Year Ended December 31, 1993; and Quarter Ended March 31, 1994 (Unaudited) (Deutsch Marks in thousands, U.S. Dollars in thousands)
1992 1993 1993 1994 1994 (Unaudited) Cash flows from operating activities: Net income(loss) DM (232) DM (2,317) $(1,387) DM 2,203 $ 1,319 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Forgiveness of accounts payable to parent -- -- -- (2,495) (1,494) Depreciation and amortization 40 1,036 621 7 4 Provision for losses on accounts receivable 22 88 53 (67) (40) Changes in operating assets and liabilities: Accounts receivable - trade (636) 49 29 (32) (19) - affiliates (625) 682 408 (35) (21) - other (12) (11) (7) 16 10 Inventories (267) 72 43 (14) (8) Prepaid expenses (30) 16 10 (7) (4) Accounts payable - affiliates 2,685 372 222 454 272 - other 144 (114) (68) (2) (1) Accrued and other current liabilities 91 88 53 280 167 ------- -------- ------ ------ ------ Net cash provided by (used in) operating activities 1,180 (39) (23) 308 185 ------- -------- ------ ------ ------ Cash flows from investing activities: Acquisition of branch assets (1,177) -- -- -- -- Additions to machinery and equipment -- (42) (26) -- -- ------- -------- ------ ------ ------ Net cash used in investing activities (1,177) (42) (26) -- -- ------- -------- ------ ------ ------ Cash flows from financing activities: Proceeds from borrowings -- 80 48 -- -- ------- -------- ------ ------ ------ Net cash provided by financing activities -- 80 48 -- -- ------- -------- ------ ------ ------ Net increase (decrease) in cash and cash equivalents 3 (1) (1) 308 185 Cash and cash equivalents, beginning of period -- 3 2 2 1 ------- -------- ------ ------ ------ Cash and cash equivalents, end of period DM 3 DM 2 $ 1 DM 310 $ 186 ======== ======== ====== ====== ====== The convenience translation into U.S. Dollars has been made using the exchange rate in effect at March 31, 1994 of 0.60 Deutsche Marks to U.S. $1. The accompanying notes are an integral part of the financial statements.
29 Mauser Prazisionsmessmittel GmbH Notes to Combined Financial Statements (Deutsch Marks in thousands; U.S. Dollars in thousands) 1. Business and Summary of Significant Accounting Policies Business: The Company distributes precision measuring instruments and associated tools throughout Germany. Formation of the Company: Mauser Prazisionsmessmittel GmbH, a wholly-owned subsidiary of Diehl GmbH & Co. ("Diehl"), was formed from its predecessor company, Elektrosil GmbH. On August 27, 1992, the Company's articles were rewritten in order to effect the change in name and business. With effect from September 1, 1992, the Company acquired certain assets of the former Oberndorf branch of Ets. Pierre Roch S.A., Luneville, France for DM 1,177. Consequently, the fiscal periods included in these financial statements are for the period September 1, 1992 to December 31, 1992 and for the year ended December 31, 1993, and for the quarter ended March 31, 1994. Sale of the Company: On March 24, 1994, Brown & Sharpe Manufacturing Company acquired all the common stock of the Company from Diehl. The financial statments do not include any allocation of the purchase price or other adjustments to the Company's historical carrying values of assets and liabilities as a result of this transaction. Interim Financial Statements: The financial statements for the quarter ended March 31, 1994 and the related notes are unaudited and in the opinion of management, include all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of the results of the period. These results are not necessarily indicative of the results to be expected for the entire year. Translation of Foreign Currencies: The functional currency for the accounts of the Company is the local currency, the Deutschmark (DM). A translation of convenience has been applied in translating the financial statements into US Dollars at the rate prevailing at March 31, 1994, US $1 - DM 1.67. (DM 1 = US $0.60). Revenue Recognition: Revenue is recognized upon shipment of product. Cash and Cash Equivalents: The Company considers all debt instruments purchased with an original maturity of three months or less at the time of acquisition to be cash equivalents. Inventories: Inventories of finished measuring instruments are carried at the lower of average cost or market. 30 Machinery and Equipment: Machinery and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is provided using the straight line method over the estimated useful lives of the assets of between two and six years. Depreciation expense was DM 8, DM 25 ($15), and DM 5 ($3) for the period September 1, 1992 through December 31, 1992, the year ended December 31, 1993, and the quarter ended March 31, 1994, respectively. Repair and maintenance costs are expensed, while additions and betterments are capitalized. The cost and related accumulated depreciation of assets sold or retired are eliminated from the accounts and any gains or losses are reflected in earnings. Goodwill: The excess of cost over the fair value of net assets of a purchased business is recorded as goodwill, which is included in intangible assets. In 1993, an adjustment was made to the valuation of goodwill to take account of the adverse development of the business, which had not previously been expected. Consequently, DM 1,010 ($605) was written off in order to revalue the remaining goodwill at DM 100 ($60), which is being amortized on a straight-line basis over 10 years. Income Taxes: Due to losses in 1992 and 1993, no income taxes are payable. In accordance with Statement of Financial Accounting Standards No. 109, deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns under the liability method. A valuation allowance is provided for when it is more likely than not that some portion or all of a deferred tax asset will not be realized. 2. Accounts Payable to Affiliates At December 31, the Company owed the following amounts to affiliates (excluding the long-term debt - see Note 4):
1992 1993 1993 Diehl GmbH & Co. Nurnberg, Germany DM 175 DM 2,414 $ 1,446 Mauser-Werke Oberndorf, Germany 5 21 12 Ets. Pierre Roch S.A., Luneville, France 2,506 623 373 ------- -------- ------ DM 2,686 DM 3,058 $ 1,831 ======= ======== ====== The Company purchases all goods for resale from Ets. Pierre Roch S.A. Amounts owed Diehl principally represent net operating expenditures incurred by Diehl on behalf of the Company. During the quarter ended March 31, 1994, Diehl forgave all amounts owed to Diehl by the Company. 3. Accrued and Other Current Liabilities 1992 1993 1993 Due to customer DM 46 DM 45 $ 27 Employees -- 21 13 Taxes other than income -- 18 11 Compensated absences 36 14 8 Miscellaneous accrued expenses 12 84 50 ------- -------- ------ DM 94 DM 182 $ 109 ======= ======== ====== 4. Long-term Debt due to Parent Long-term debt amounting to DM 80 ($48) is due to the Company's parent, Diehl GmbH & Co., Nurnberg, Germany and bears interest at 7.5% per annum. It is repayable as follows: in 1994, DM 25, 1995, DM 25, and 1996, DM 30. 5. Common Stock As a "GmbH" - form of company incorporated in Germany, the Company's common stock is not divided into individual shares. 6. Income Taxes Due to losses in 1992 and 1993, no income taxes are payable by the Company. At December 31, 1993, a deferred tax asset of DM 1,025 ($614) existed in connection with net German operating loss carryforwards, which do not expire. The Company has provided a valuation allowance in full for this asset due to the uncertainty of realizing the benefit of the loss carryforwards.
31 ProForma Combined Financial Statements The following ProForma Combined Income Statements for the quarter ended April 2, 1994 and the year ended December 31, 1993 are unaudited and are based on the Consolidated Financial Statements of Brown & Sharpe, the Financial Statements fo Roch and the Financial Statements of Mauser. These proforma financial statments have been adjusted to give effect to Roch and Mauser acquisitions as if such acquisitions had occurred on December 27, 1992. The proforma adjustments are based upon available information and certain assumptions that management of Brown & Sharpe believes are reasonable and are described in the notes to the Pro Forma Combined Income Statements. A proforma balance sheet has not been presented as the acquisitions of Roch and Mauser have been reflected in Brown & Sharpe's April 2, 1994 balance sheet filed previously on Form 10-Q. The Pro Forma Combined Income Statements do not purport to represent what the Company's results of operations would actually have been if the acquisitions of Roch and Mauser had occurred on December 27, 1992 or to project the Company's results of operations for any future period. 32 UNAUDITED PRO FORMA COMBINED INCOME STATEMENT for the quarter ended April 2, 1994 (U.S. Dollars in thousands)
Brown & ProForma Sharpe Roch Mauser Adjustments ProForma Operating Data Net sales $ 36,659 $ 2,713 $ 710 $ (518) A 39,564 Cost of goods sold 25,940 1,481 518 (610) B 27,309 Selling, general, and admin. expense 12,261 1,411 370 (484) C 13,558 Depreciation and amortization -- 145 1 (1) D 145 -------- ------- ------ -------- -------- Operating profit (loss) (1,542) (304) (179) 577 (1,448) Interest Expense (1,280) (108) -- (7) E (1,395) Other Income, net 48 9 1,498 1,555 -------- ------- ------ -------- -------- Income (loss) before income taxes (2,774) (403) 1,319 570 (1,288) Income tax provision 100 100 -------- ------- ------ -------- -------- Net income (loss) $ (2,874) $ (403) $ 1,319 $ 570 $ (1,388) ======== ======= ====== ======== ======== UNAUDITED PRO FORMA COMBINED INCOME STATEMENT for the quarter ended December 25, 1993 (U.S. Dollars in thousands) Brown & ProForma Sharpe Roch Mauser Adjustments ProForma Operating Data Net sales $157,035 $ 9,868 $ 2,634 $(2,214)A $ 167,323 Cost of goods sold 110,841 5,639 2,214 (2,584)B 116,110 Selling, general, and admin. expense 45,474 5,233 1,157 (1,938)C 49,926 Depreciation and amortization -- 34 605 (605)D 34 -------- ------- ------ -------- -------- Operating profit (loss) 720 (1,038) (1,342) 2,913 1,253 Interest Expense (5,100) (447) (55) 175 E (5,427) Other Income, net 2,764 (27) 10 2,747 -------- ------- ------ -------- -------- Income (loss) before income taxes (1,616) (1,512) (1,387) 3,088 (1,427) Income tax provision 800 800 -------- ------- ------ -------- -------- Net income (loss) $ (2,416) $(1,512) $(1,387) $ 3,088 $ (2,227) ======== ======= ====== ======== ======== A Adjustment to eliminate intercompany sales B Adjustment to reflect decreased research and development expenses result of expected reductions in personnel, decreased purchasing costs expected to result from greater purchasing power of the combined operations, and the elimination of intercompany purchases of Mauser from Roch C Adjustment to reduce selling and distribution expenses as a result of closing of facilities and resulting reductions in employees D Adjustment to reflect elimination of amortization of intercompany goodwill E Adjustment to reflect the change in interest expense resulting from the assumption or discharge of Roch and Mauser debt by Diehl in connection with the Roch and Mauser acquisition.
33 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BROWN & SHARPE MANUFACTURING COMPANY Date: June 9, 1994 By: /s/ Charles A. Junkunc -------------------------- Charles A. Junkunc Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----