-----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, n6KMvJcj6ehXi1Fd4gjxD9L3Gadeko1sHNDrrRq91JYxF5dBW1T3+16mAJOwLASg bzOdIU+M+ZgcQ42FvRUwMA== 0000950152-94-000715.txt : 19940721 0000950152-94-000715.hdr.sgml : 19940721 ACCESSION NUMBER: 0000950152-94-000715 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940715 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19940715 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMMERCIAL INTERTECH CORP CENTRAL INDEX KEY: 0000022470 STANDARD INDUSTRIAL CLASSIFICATION: 3590 IRS NUMBER: 340159880 STATE OF INCORPORATION: OH FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-10697 FILM NUMBER: 94539014 BUSINESS ADDRESS: STREET 1: 1775 LOGAN AVE STREET 2: PO BOX 239 CITY: YOUNGSTOWN STATE: OH ZIP: 44501-0239 BUSINESS PHONE: 2167468011 FORMER COMPANY: FORMER CONFORMED NAME: COMMERCIAL SHEARING INC DATE OF NAME CHANGE: 19880307 FORMER COMPANY: FORMER CONFORMED NAME: COMMERCIAL SHEARING & STAMPING CO DATE OF NAME CHANGE: 19720329 FORMER COMPANY: FORMER CONFORMED NAME: FIRST CALIFORNIA CO DATE OF NAME CHANGE: 19700106 8-K/A 1 COMMERCIAL INTERTECH CORP. 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A Amendment To Application Or Report Filed pursuant to Section 12, 13 or 15(d) of the Securities Exchange Act of 1934. COMMERCIAL INTERTECH CORP. -------------------------- (Exact name of registrant as specified in its charter) The undersigned Registrant hereby amends the following items, financial statements, exhibits or other portions of its Current Report dated May 17, 1994 on Form 8-K as set forth in the pages attached hereto: Item 5. Other Events (a) Disclosure of Negative Goodwill amortization period and explanation of the method used to determine the amount. (b) Disclosure of tax loss carryforward acquired. Item 7. Financial Statements and Exhibits (a) Financial Statements of Business Acquired Because Sachsenhydraulik Chemnitz GmbH and its wholly owned subsidiary Hydraulic Rochlitz GmbH, the companies acquired, operated in a different environment, Commercial Intertech Corp. requested and received a letter dated March 28, 1994 from the staff of the Securities and Exchange Commission a waiver to file audited financial statements for periods prior to the consummation of the acquisition. Audited balance sheets as of April 30, 1994 are attached hereto as Exhibit 7(a). (b) Pro Forma Financial Information Pro Forma Condensed Consolidated Balance Sheet of Commercial Intertech Corp. and Subsidiaries and Sachsenhydraulik Chemnitz GmbH and Subsidiary as of April 30, 1994 are attached hereto as Exhibit 7(b). Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. COMMERCIAL INTERTECH CORP. -------------------------- (Registrant) Date: July 15, 1994 ------------------------ /s/ Philip Winkelstern -------------------------- Philip N. Winkelstern Senior Vice President Chief Financial Officer 2 Item. 5 - Other Events a) Negative Goodwill (Operating loss indemnification) Under the terms of the agreement between Commercial Intertech Corp. ("TEC") and the Treuhandanstalt ("THA"), to acquire Sachsenhydraulik Chemnitz GmbH and its wholly owned subsidiary (Hydraulic Rochlitz GmbH), which are known as ORSTA Hydraulik, Commercial will receive approximately U.S. $31.0 million (51.5 million Deutsche marks) designed as an indemnification of estimated operating losses over a period of two years. The amount of operating loss indemnification available to TEC was adjusted for cash consumed by the ORSTA operations between January 1, 1994, the measurement date, and April 30, 1994, the acquisition date. The remaining indemnification will be amortized over a two year period starting May 1, 1994. The two year indemnification period was negotiated with the THA as part of the Purchase Agreement and was specified accordingly in the Agreement. The operating loss indemnification will be amortized based on estimated operating results of the ORSTA Hydraulik operations as acquired on April 30, 1994. The quarterly amortization value will remain unchanged as actual results are reported and will be translated from Deutsche marks into U.S. dollars at the average exchange rate for the period. Negative Goodwill Amortization
(in thousands) Fiscal Quarters Deutsche Marks U.S. Dollars --------------- -------------- ------------ Third Quarter, 1994 3,297 $1,995 Fourth Quarter, 1994 7,015 4,245 First Quarter, 1995 6,855 4,148 Second Quarter, 1995 6,500 3,934 Third Quarter, 1995 5,410 3,274 Fourth Quarter, 1995 4,745 2,871 First Quarter, 1996 3,745 2,266 Second Quarter, 1996 1,504 910 ------- ------- Total 39,071 $23,643 ======= =======
b) Operating Loss Carryforward Tax loss carryforwards were also acquired with the ORSTA Hydraulik operations. The loss carryfowards at April 30, 1994 were 173.9 million Deutsche marks (approximately U.S. $105.2 million). The losses can be carried forward indefinitely. 3 Item 7. Financial Statements and Exhibits a) Financial Statements of Business Acquired Audited Consolidated Balance Sheet And Report of Independent Auditors Sachsenhydraulik Chemnitz GmbH and Subsidiary As Of April 30, 1994 4 SACHSENHYDRAULIK CHEMNITZ GmbH AND SUBSIDIARY CONSOLIDATED BALANCE SHEET
(000's Omitted) April 30, 1994 -------------- ASSETS CURRENT ASSETS Cash (including equivalents of $1,807,000). . . . . $ 11,140 Notes and accounts receivables. . . . . . . . . . . 7,519 Less: Allowance . . . . . . . . . . . . . . . . 2,384 -------- 5,135 Inventories . . . . . . . . . . . . . . . . . . . . 4,044 Prepaid expenses and other current assets . . . . . 1,177 Current receivable from Treuhandanstalt . . . . . . 21,480 -------- TOTAL CURRENT ASSETS. . . . . . . . . . . . . 42,976 NONCURRENT ASSETS Restricted assets-capital investment programs by Treuhandanstalt. . . . . . . . . . . . . . . . . 5,487 -------- TOTAL NONCURRENT ASSETS . . . . . . . . . . . 5,487 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment - cost. . . . . . . . 42,089 Less: Allowance for depreciation . . . . . . . . . 21,056 -------- NET PROPERTY, PLANT AND EQUIPMENT . . . . . . 21,033 -------- $ 69,496 ======== CURRENT LIABILITIES Bank loans. . . . . . . . . . . . . . . . . . . . . $ 1,455 Accounts payable . . . . . . . . . . . . . . . . . 4,097 Accrued payroll and related taxes . . . . . . . . . 2,524 Accrued expenses. . . . . . . . . . . . . . . . . . 8,905 Accrued income taxes. . . . . . . . . . . . . . . . 0 Current portion of long-term debt . . . . . . . . . 973 -------- TOTAL CURRENT LIABILITIES . . . . . . . . . . 17,954 LONG-TERM DEBT . . . . . . . . . . . . . . . . . . . . 1,379 SHAREHOLDER EQUITY Common stock Authorized and issued: one share . . . . . . . . 5,447 Capital surplus . . . . . . . . . . . . . . . . . . 144,721 Retained earnings (deficit) . . . . . . . . . . . . (100,005) -------- TOTAL SHAREHOLDER EQUITY . . . . . . . . . . 50,163 -------- $ 69,496 ========
See notes to consolidated balance sheet. 5 NOTES TO CONSOLIDATED BALANCE SHEET SACHSENHYDRAULIK CHEMNITZ GmbH AND SUBSIDIARY Note A - Accounting Policies Basis of Presentation - - --------------------- The accounts of Sachsenhydraulik Chemnitz GmbH and its wholly owned subsidiary, Hydraulik Rochlitz GmbH (collectively referred to as the "Company") are included in the consolidated balance sheet. The Company is a manufacturer of hydraulic cylinders, piston and gear pumps, and industrial valves and does business as ORSTA Hydraulik. All intercompany accounts have been eliminated. Subsequent Event - - ---------------- Commercial Intertech Corp. acquired the common stock of the Company, effective May 1, 1994, from the Treuhandanstalt ("THA") the regulatory agency of the Federal Republic of Germany responsible for the privatization of former East German state-owned enterprises. Inventories - - ----------- Inventories are stated at the lower of cost or market. Inventories are valued using the weighted average cost method which approximates first-in, first-out. Inventories as of April 30, 1994 consisted of the following:
(in thousands) -------------- Raw materials $1,655 Work in progress 1,817 Finished goods 572 ------ $4,044 ======
Property and Depreciation - - ------------------------- Property, plant and equipment are recorded at cost. Buildings and equipment are depreciated over their useful lives by use of the straight-line method. Sachsenhydraulik Chemnitz GmbH and its wholly owned subsidiary were East German entities prior to July 1, 1990. On July 1, 1990, the fixed assets of the Company were revalued based on market value appraisals. These fair value adjustments represented the establishment of the cost basis for former East German companies, as the financial records of former East German companies did not previously reflect Western historical cost accounting principles. 6 Note A - Accounting Policies (continued) Revenue Recognition - - ------------------- Revenue is recognized when the earning process is complete and the risks and rewards of ownership have transferred to the customer, which is generally considered to have occurred upon shipment of the finished product. Bank and Cash Equivalents - - ------------------------- The Company considers all highly liquid investments with a maturity of three months or less, when purchased, to be cash equivalents. The carrying amounts reported in the balance sheet for cash and cash equivalents approximate fair value. Translation of Foreign Currencies - - --------------------------------- The financial statements are translated in accordance with Financial Accounting Standards Board Statement No. 52. Under this method, all asset and liability accounts are translated into U.S. dollars at the current exchange rate. Note B - Long-Term Debt Long-term debt obligations consist of capital lease agreements with payment through the year 1998. The liability equates to the net present value of the future payments and the anticipated residual value of the assets at the end of the leases. The value of the capitalized assets included in fixed assets is $1,717,000. Note C - Deferred Tax Asset The tax net operating loss carryforward amounts to $105,200,000. The resultant deferred tax assets amount to approximately $46,300,000. Net operating losses may be carried forward indefinitely. However, due to the uncertainty as to the realization of the asset, a 100 percent valuation allowance has been provided. 7 Note D - Other Current Liabilities
Accrued payroll and related taxes consist of the following: Severance and termination (Social Plan) $ 982 Payroll tax and insurance 622 Other 920 ------ $2,524 ====== Accrued expenses consist of the following: Relocation / rearrangement accruals $4,164 Accrued contract losses 1,659 Other 3,082 ------ $8,905 ======
Note E - Shareholder Equity The Company may not pay dividends until the retained earnings deficit is eliminated. Note F - Receivable From Treuhandanstalt The receivable from the Treuhandanstalt is primarily attributable to the pledge of financial aid contained in the purchase agreement. The total amount pledged was approximately $36.0 million (59.0 million Deutsche marks) less amounts consumed by the operations during the four month period ended April 30, 1994. The net amount receivable at April 30 is $27.0 million. This balance will be received in installments over the remainder of 1994 and 1995. 8 Report of Independent Auditors The Board of Directors and Shareholder Sachsenhydraulik Chemnitz GmbH Chemnitz Federal Republic of Germany We have audited the accompanying consolidated balance sheet of Sachsenhydraulik Chemnitz GmbH and subsidiary, as of April 30, 1994. This balance sheet is the responsibility of the Company's management. Our responsibility is to express an opinion on this balance sheet 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 balance sheet is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the balance sheet. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe that our audit of the balance sheet provides a reasonable basis for our opinion. In our opinion, the balance sheet referred to above presents fairly, in all material respects, the consolidated financial position of Sachsenhydraulik Chemnitz GmbH and subsidiary at April 30, 1994 in conformity with United States generally accepted accounting principles. /s/Ernst & Young Leipzig, Germany June 24, 1994 9 Consent of Independent Auditors We consent to the incorporation by reference of our report dated June 24, 1994, with respect to the consolidated balance sheet of Sachsenhydraulik Chemnitz GmbH and subsidiary included in this Current Report on Form 8-K dated July 15, 1994, in the prospectuses contained in the following registration statements:
Registration Number Description Filing Date - - ------------ ----------------------------------- --------------- 2-66710 Savings and Stock Purchase Plan for Employees of Commercial Shearing, Inc. ---Form S-8 Registration Statement June 23, 1986 2-62512 Commercial Shearing, Inc. Stock Option and Award Plan of 1985 ---Form S-8 and S-3 Registration Statement April 24, 1986 33-25795 Non-Qualified Stock Purchase Plan of Commercial Intertech Corp. ---Form S-8 Registration Statement Nov. 29, 1988 33-29980 Commercial Intertech Corp. Stock Option and Award Plan of 1989 including Pre-Effective Amendment No.1 to Form S-8 Registration Statement filed July 24, 1989 July 10, 1989 33-43907 Commercial Intertech Corp. Retirement Stock Ownership and Savings Plan ---Form S-8 Registration Statement Nov. 13, 1991
/s/Ernst & Young Leipzig, Germany July 13, 1994 10 Exhibit 7. Financial Statements and Exhibits (b) Pro Forma Financial Information Pro Forma Condensed Consolidated Balance Sheet Commercial Intertech Corp. And Subsidiaries and Sachsenhydraulik Chemnitz GmbH And Subsidiary 11 Pro Forma Condensed Consolidated Balance Sheet (Unaudited) Commercial Intertech Corp. and Subsidiaries The following pro forma condensed consolidated balance sheet gives effect to the acquisition of Sachsenhydraulik Chemnitz GmbH and Subsidiary by Commercial Intertech Corp., accounted for as a purchase, as of April 30, 1994. The pro forma condensed consolidated balance sheet as of April 30, 1994, has been prepared by Commercial Intertech Corp. based upon the audited consolidated balance sheet of Sachsenhydraulik Chemnitz GmbH and Subsidiary included elsewhere herein. The pro forma condensed consolidated balance sheet should be read in conjunction with the audited consolidated balance sheet and notes of Sachsenhydraulik Chemnitz GmbH and Subsidiary and the unaudited condensed consolidated balance sheet of Commercial Intertech Corp. and Subsidiaries. 12 COMMERCIAL INTERTECH CORP. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET April 30, 1994
(Thousands of dollars) Sachsenhydraulik Commercial Chemnitz ASSETS Intertech GmbH Adjustments Consolidated - - ------ ---------- --------- ----------- ------------ CURRENT ASSETS: Cash and cash equivalents. . . . . . . . . . . $ 15,001 $ 11,140 $ 0 $ 26,141 Accounts receivable, less allowance. . . . . . 82,757 5,135 0 87,892 Inventories. . . . . . . . . . . . . . . . . . 54,122 4,044 0 58,166 Deferred income tax benefits . . . . . . . . . 13,008 0 0 13,008 Prepaid expenses . . . . . . . . . . . . . . . 3,698 1,177 0 4,875 Receivable from Treuhandanstalt. . . . . . . . 0 21,480 0 21,480 ---------------------------------------------------- TOTAL CURRENT ASSETS 168,586 42,976 0 211,562 PROPERTY, PLANT AND EQUIPMENT Land . . . . . . . . . . . . . . . . . . . . . 12,805 5,855 (5,855) 12,805 Building and equipment . . . . . . . . . . . . 224,508 35,303 (35,303) 224,508 Construction in progress . . . . . . . . . . . 9,209 931 (931) 9,209 Less allowance for depreciation. . . . . . . . (128,268) (21,056) 21,056 (128,268) ---------------------------------------------------- TOTAL PROPERTY, PLANT AND EQUIPMENT 118,254 21,033 (21,033) 118,254 NONCURRENT ASSETS: Intangible assets. . . . . . . . . . . . . . . 28,261 0 0 28,261 Pension assets . . . . . . . . . . . . . . . . 28,185 0 0 28,185 Other assets . . . . . . . . . . . . . . . . . 3,323 0 0 3,323 Restricted asset-capital investment program by Treuhandanstalt. . . . . . . . . . . . . 0 5,487 (5,487) 0 ---------------------------------------------------- TOTAL NONCURRENT ASSETS 59,769 5,487 (5,487) 59,769 ---------------------------------------------------- TOTAL ASSETS $ 346,609 $ 69,496 $(26,520) $ 389,585 ---------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY - - ------------------------------------ CURRENT LIABILITIES: Bank loans . . . . . . . . . . . . . . . . . . $ 17,353 $ 1,455 $ 0 $ 18,808 Accounts and notes payable . . . . . . . . . . 67,149 15,526 0 82,675 Accrued income taxes . . . . . . . . . . . . . 10,165 0 0 10,165 Dividends payable. . . . . . . . . . . . . . . 2,300 0 0 2,300 Current portion of long-term debt. . . . . . . 1,554 973 0 2,527 ---------------------------------------------------- TOTAL CURRENT LIABILITIES $ 98,521 $ 17,954 $ 0 $ 116,475 NONCURRENT LIABILITIES: Long-term debt . . . . . . . . . . . . . . . . 76,978 1,379 0 78,357 Deferred income taxes. . . . . . . . . . . . . 16,739 0 0 16,739 Postretirement benefit . . . . . . . . . . . . 20,529 0 0 20,529 Deferred credit - Operating loss indemnification . . . . . . . . . . . . . . 0 0 23,643 23,643 --------------------------------------------------- TOTAL NONCURRENT LIABILITIES 114,246 1,379 23,643 139,268 SHAREHOLDERS' EQUITY: Preferred stock, no par value: Series A. . . . . . . . . . . . . . . . . . 0 0 0 0 Series B. . . . . . . . . . . . . . . . . . 24,631 0 0 24,631 Common stock, $1 par value:. . . . . . . . . . 10,107 5,447 (5,447) 10,107 Capital surplus. . . . . . . . . . . . . . . . 39,973 144,721 (144,721) 39,973 Retained earnings. . . . . . . . . . . . . . . 79,697 (100,005) 100,005 79,697 Deferred compensation. . . . . . . . . . . . . (20,108) 0 0 (20,108) Translation adjustment . . . . . . . . . . . . (458) 0 0 (458) ---------------------------------------------------- 133,842 50,163 (50,163) 133,842 ---------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 346,609 $ 69,496 $(26,520) $ 389,585 ===================================================
13 Notes To Pro Forma Condensed Consolidated Balance Sheet (unaudited) a) The following pro forma adjustments are made to eliminate Commercial Intertech Corp's investment in Sachsenhydraulik Chemnitz GmbH, to apply the write-down of fixed assets in accordance with APB Opinion No. 16, and to record the operating loss indemnification as pledged in the purchase agreement. Shareholders' Equity $ 50,163 Operating loss indemnification (23,643) Fixed Assets (21,033) Asset in excess of fair value of company received - reduction of value of pre-existing capital investment program ( 5,487) -----END PRIVACY-ENHANCED MESSAGE-----