-----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, EL99Ss3mO/uNRlNn9zNsO0vJZ1tMFr2Y4vbKCe+Xp6CYvqf5Hxb2XhzHeeMdFLBf 7o6kQraOmCKHAefLM68xfQ== 0000275866-97-000017.txt : 19971001 0000275866-97-000017.hdr.sgml : 19971001 ACCESSION NUMBER: 0000275866-97-000017 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970929 ITEM INFORMATION: FILED AS OF DATE: 19970930 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: PACER TECHNOLOGY CENTRAL INDEX KEY: 0000275866 STANDARD INDUSTRIAL CLASSIFICATION: ADHESIVES & SEALANTS [2891] IRS NUMBER: 770080305 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-08864 FILM NUMBER: 97687962 BUSINESS ADDRESS: STREET 1: 9420 SANTA ANITA AVE CITY: RANCHO CUCAMONGA STATE: CA ZIP: 91730-6117 BUSINESS PHONE: 9099870550 MAIL ADDRESS: STREET 2: 9420 SANTA ANITA AVE CITY: RACHO CUCAMONGA STATE: CA ZIP: 91730 FORMER COMPANY: FORMER CONFORMED NAME: PACER TECHNOLOGY & RESOURCES INC DATE OF NAME CHANGE: 19841203 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-KA AMENDMENT TO FORM 8-K (Initial Report Date July 30, 1997) AMENDMENT TO CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Amended Report: September 29, 1997 PACER TECHNOLOGY (Exact name of registrant as specified in its charter) California (State or other jurisdiction of Incorporation or Organization) 0-8864 77-0080305 Commission File No. IRS Employer Identification No. 9420 Santa Anita Avenue, Rancho Cucamonga, California 91730 (Address of principal executive office) (Zip Code) 909-987-0550 (Registrant's telephone number, including area code) The following items supersede previously submitted information to the extent such is inconsistent therewith. Item 7. Financial Statements and Exhibits (a) Financial Statements of Business Acquired Independent Auditors' Report Audited Balance Sheet as of June 30, 1997 Audited Statement of Earnings and Retained Earnings for the year ended June 30, 1997 Audited Statement of Cash Flows for the year ended June 30, 1997 Notes to Financial Statements for the year ended June 30, 1997 (b) Pro Forma Financial Information Unaudited Pro Forma Combined Balance Financial Information Unaudited Pro Forma Combined Balance Sheet of Pacer Technology and Subsidiaries at June 30, 1997 Unaudited Pro Forma Combined Statement of Income of Pacer Technology and Subsidiaries for the year ended June 30, 1997 Notes to Unaudited Pro Forma Combined Financial Data as of June 30, 1997 (c) Exhibits: None CALIFORNIA CHEMICAL SPECIALTIES, INC. Financial Statements June 30, 1997 (With Independent Auditors' Report Thereon) INDEPENDENT AUDITORS' REPORT The Board of Directors California Chemical Specialties, Inc.: We have audited the accompanying balance sheet of California Chemical Specialties, Inc. as of June 30, 1997 and the related statements of earnings and retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of California Chemical Specialties, Inc. as of June 30, 1997 and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. August 11, 1997 CALIFORNIA CHEMICAL SPECIALTIES, INC. Balance Sheet June 30, 1997 Assets Current assets: Cash $ 293,752 Investments 79,069 Accounts receivable 193,700 Inventories (note 2) 128,946 $ 695,467 ========= Liabilities and Shareholder's Equity Current liabilities: Accounts payable and accrued expenses $ 115,894 Unearned revenue 2,855 Total liabilities $ 118,749 Shareholder's equity: Capital stock, 50,000 shares authorized, 1,000 shares issued $ 1,000 Retained earnings $ 575,718 Total shareholder's equity $ 576,718 Subsequent event (note 4) $ 695,467 ========= See accompanying notes to financial statements. CALIFORNIA CHEMICAL SPECIALTIES, INC. Statement of Earnings and Retained Earnings Year ended June 30, 1997 Net sales $ 2,773,145 Cost of sales 1,791,050 Gross profit 982,095 Sales and marketing expenses 29,401 General and administrative expenses 202,922 Earnings from operations 749,772 Other expense - interest 3,944 Earnings before income tax expense 745,828 Income tax expense (note 3) 13,000 Net earnings 732,828 Retained earnings at beginning of year 679,537 Distributions to shareholder (836,647) Retained earnings at end of year $ 575,718 ========= See accompanying notes to financial statements. CALIFORNIA CHEMICAL SPECIALTIES, INC. Statement of Cash Flows Year ended June 30, 1997 Cash flows from operating activities: Net earnings $ 732,828 Adjustments to reconcile net earnings to net cash provided by operating activities: Changes in assets and liabilities: Increase in accounts receivable (100,460) Increase in inventories (580) Decrease in accounts payable and accrued expenses (10,368) Increase in unearned revenue 2,855 Net cash provided by operating activities 624,275 Cash flows used in financing activities - distributions to shareholder (836,647) Net decrease in cash (212,372) Cash at beginning of year 506,124 Cash at end of year $ 293,752 ========= See accompanying notes to financial statements. CALIFORNIA CHEMICAL SPECIALTIES, INC. Notes to Financial Statements June 30, 1997 (1) Description of Business and Summary of Significant Accounting Policies California Chemical Specialties, Inc. (CCSI or the Company) is organized as an S Corporation in the State of California. CCSI is a producer of proprietary sculptured acrylic nail liquids and powders and related products for the nail care industry. Property, Plant and Equipment All property, plant and equipment have been fully depreciated and written off prior to July 1, 1996. No Depreciation expense was recorded for the year ended June 30, 1997. Inventories Inventories are stated at the lower of cost (first-in, first-out) or market (net realizable value). Investments Investments consist of an eight-month certificate of deposit maturing in December 1997. Revenue Recognition Revenue is recognized at the time of shipment. Income Taxes The Company has elected to be taxed for Federal income tax purposes as a Subchapter S Corporation under the Internal Revenue Code. Accordingly, no provision has been made for Federal income taxes in the accompanying financial statements. For state tax purposes, the Company is also taxed as an S Corporation. Use of Estimates The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Fair Value of Financial Instruments The carrying value of cash and cash equivalents, accounts receivable, investments, accounts payable and accrued expenses are measured at cost which approximates their fair value given their short-term maturities. (2) Inventories Inventories are summarized as follows: Raw materials $ 115,066 Finished goods 13,879 $ 128,946 ======= (3) Income Taxes The Company has elected to be treated as an S Corporation under the Internal Revenue Code. As such, the net earnings and any tax credits of the Company are included in the personal income tax returns of the Company's shareholders. Accordingly, no provision has been made for Federal income taxes. The Company is also taxed as an S Corporation in California at a statutory tax rate of 1.5% in 1997. State tax expense amounted to $13,000 for the yar ended June 30, 1997. Deferred income taxes are immaterial to the Company's financial statements. (4) Subsequent Event (Unaudited) On July 15, 1997, Pacer Technology acquired all the assets of the Company. The assets purchased primarily consisted of trade accounts receivable, inventory, and proprietary formulas. In addition, Pacer Technology assumed the liability for trade accounts payable as the closing date. The total purchase price consisted of approximately $2,550,000 cash, including transaction costs. The acquisition was accounted for as a purchase. UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION The following unaudited pro forma combined financial information presents the pro forma combined Balance Sheet at June 30, 1997, giving effect to the acquisition of California Chemical Specialties, Inc. (CCSI) as if the transaction had been consummated on July 1, 1996. Also presented is the pro forma combined statement of income for the fiscal year ended June 30, 1997 as if the transaction had been consummated on July 1, 1996. The pro forma data is based on the historical combined statements of Pacer Technology and CCSI, giving effect to such acquisition under the purchase method of accounting and the assumptions and adjustments (which the Company believes to be reasonable) described in the accompanying notes to unaudited pro forma combined financial data. The pro forma data is provided for comparative purposes only. It does not purport to be indicative of the results that actually would have occurred if the acquisition of CCSI had been consummated on the date indicated or that may be obtained in the future. The unaudited pro forma combined financial information should be read in conjunction with the notes thereto. PACER TECHNOLOGY AND SUBSIDIARIES Pro Forma Combined Balance Sheet (Unaudited) June 30, 1997 Pro Forma Historical Adjust. Adjust. Pacer Technology CCSI Inc.(Dec.) (Ref.) Combined ---------------- --------- ----------- -------- --------- ASSETS Current Assets: Cash $ 294,298 293,752 (293,752) a(i) $ 294,298 Investments - 79,069 (79,069) a(i) - Trade Receivables 4,719,970 193,700 (12,125) a(ii) 4,901,545 Other Receivables 198,855 - - 198,855 Notes Receivables 248,220 - - 248,220 Inventories 4,347,497 128,946 (38,627) a(ii) 4,437,816 Prepaid Expenses 390,331 - - 390,331 Deferred Income Taxes 621,804 - - 621,804 ---------- --------- ---------- ----------- Total Current Assets 10,820,975 695,467 (423,573) 11,092,869 Equipment and Leasehold Improve- ments, Net: 1,444,631 - 29,000 a(iii) 1,473,631 Deferred Income Taxes 60,222 - - 60,222 Cost in Excess of Net Assets Acquired 1,690,878 - 2,276,592 a(iii) 3,967,470 Other Assets 9,344 - - 9,344 ----------- -------- ---------- ----------- Total Assets $ 14,026,051 $ 695,467 $ 1,882,019 $ 16,603,537 =========== ======== ========= ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Bank Loan $ 792,000 $ - $ 2,547,853 a(iv) $ 3,339,853 Accounts Payable 2,367,245 115,894 (86,261) a(ii) 2,396,878 Accrued Payroll 386,952 - - 386,952 Accrued Liabilities 1,233,439 2,855 (2,855) a(i) 1,233,439 Current Installment of Long-Term Debt 262,866 - - 262,866 ---------- -------- ---------- ---------- Total Current Liabilities 5,042,502 118,749 2,458,737 7,619,988 Long-Term Liabilities: Long-Term Debt 221,202 - - 221,202 Total Liabilities 221,202 - - 221,202 Stockholders' Equity: Notes Receivable from Directores (571,030) - - (571,030) Capital Stock - 1,000 (1,000) a(v) - Common Stock 8,260,973 - - 8,260,973 Retained Earnings 1,072,404 575,718 (575,718) a(v) 1,072,404 --------- -------- --------- ---------- Total Stockholders' Equity 8,762,347 576,718 (576,718) 8,762,347 Total Liabilities and Stock- holders' Equity $ 14,026,051 $ 695,467 $ 1,882,019 $ 16,603,537 =========== ========= ========= =========== PACER TECHNOLOGY & SUBSIDIARIES Pro Forma Combined Statement of Income (Unaudited) For Year Ended June 30, 1997 Pro Forma Historical Adjust. Adjust. Pacer Technology CCSI Inc. (Dec.) (Ref.) Combined ---------------- ------- ----------- --------- --------- Net Sales $ 25,677,840 2,773,145 - $ 28,450,985 Cost of Sales 16,520,294 1,791,050 4,140 b(i) 18,315,484 ----------- ---------- ------- ----------- Gross Profit 9,157,546 982,095 (4,140) 10,135,501 Selling Expenses 3,548,726 29,401 - 3,578,127 General and Administrative Expenses 3,046,787 202,922 113,830 b(ii) 3,363,539 ---------- --------- -------- ---------- Operating Income 2,562,033 749,772 (117,970) 3,193,835 Interest Expense & Other 75,752 3,944 218,750 b(iii) 298,446 --------- -------- --------- ---------- Income Before Taxes 2,486,281 745,828 (336,720) 2,895,389 Income Taxes 1,268,879 13,000 (171,098) b(iv) 1,452,977 ---------- --------- ---------- ----------- Net Income $ 1,217,402 732,828 (507,818) $ 1,442,412 ========== ======== ========= ========== PACER TECHNOLOGY AND SUBSIDIARIES Notes to Unaudited Pro Forma Combined Financial Data June 30, 1997 a. The pro forma combined balance sheet has been prepared to reflect the acquisition of California Chemical Specialties, Inc. (CCSI) by Pacer Technology for an aggregate cash purchase price of $2,547,853. The pro forma combined balance sheet has been adjusted to reflect the above as follows: (i) To eliminate assets and liabilities not acquired. (ii) To adjust trade receivables, inventories, and accounts payable balances in to reflect the actual assets and liabilities acquired. (iii) To record goodwill related to the acquisition for the difference between the purchase price and the estimated fair values of the identified net assets acquired. A summary of the allocation of the purchase price for CCSI is as follows: Purchase price $ 2,547,853 less historical cost of net assets acquired, as adjusted for net assets not acquired. $ 242,261 Excess cost $ 2,305,592 ========= Allocation of excess cost: Property and equipment $ 29,000 Cost in excess of net assets acquired ("Goodwill") 2,276,592 $ 2,305,592 ========= (iv) To record the indebtedness related to bank borrowings utilized to finance the acquisition. (v) To eliminate the equity of CCSI. b. The pro forma combined statements of operations give effect to the following adjustments: (i) To record the annual depreciation of fixed assets acquired. (ii) To adjust selling, general and administrative expenses to reflect goodwill amortization from July 1, 1996 with such goodwill of $2,276,592 amortized over 20 years by use of the straight line method. (iii) To record the annual interest expense related to the indebtedness of $2,547,853 to finance the acquisition of CCSI. (iv) To adjust income taxe expense to reflect Pacer Technology's effective income tax rate of 45%. 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 hereunto duly authorized. PACER TECHNOLOGY /s/Roberto J. Cavazos, Jr. Roberto J. Cavazos, Jr. Chief Financial Officer Date: September 29, 1997 -----END PRIVACY-ENHANCED MESSAGE-----