-----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, bAPnAACVnIg2CdUa6qrbaQLFIouR/0CnJJDUz1dvOgZxMhtHlqRVSDh/bVvquRvV Fc+EhHKwPlvJeFp+ow3EZg== 0000912057-95-001173.txt : 19950612 0000912057-95-001173.hdr.sgml : 19950612 ACCESSION NUMBER: 0000912057-95-001173 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950303 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19950303 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARMON INDUSTRIES INC CENTRAL INDEX KEY: 0000045635 STANDARD INDUSTRIAL CLASSIFICATION: 3669 IRS NUMBER: 440657800 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-07916 FILM NUMBER: 95518239 BUSINESS ADDRESS: STREET 1: 1300 JEFFERSON CT CITY: BLUE SPRINGS STATE: MO ZIP: 64015 BUSINESS PHONE: 8162293345 MAIL ADDRESS: STREET 1: 1300 JEFFERSON INC CITY: BLUE SPRINGS STATE: MO ZIP: 64015 FORMER COMPANY: FORMER CONFORMED NAME: HARMON ELECTRONICS INC DATE OF NAME CHANGE: 19780823 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Amendment No. 1 CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Date of Report: March 3, 1995 HARMON INDUSTRIES, INC. IRS Identification No. 44-0657800 State or Other Jurisdiction of Incorporation: Missouri Commission File No. 0-7916 Address of Principal Executive Offices: 1300 Jefferson Court, Blue Springs, MO 64015 Registrant's Telephone Number, including Area Code: 816-229-3345 1 of 14 This Amendment No. 1 amends, in the manner indicated below, the Form 8-K (the "8-K") filed with the Commission in January 1995 on behalf of Harmon Industries, Inc. Terms used herein and not defined herein have the same meaning that is set forth in the 8-K. ITEM 2. ACQUISITION OF ASSETS The following information updates the information previously set forth in Item 2 of the 8-K: The 260,000 shares of unregistered common stock of the Registrant issued to Servo pursuant to the Asset Acquisition Agreement documenting the transaction (the "Acquisition") were valued at $11.25 per share by an independent investment and securities firm retained to provide a fair market value analysis. This price reflects a discount because the shares are unregistered. In addition to the aforementioned shares, Servo received $6,661,000 in cash and the Registrant assumed certain liabilities of Servo, including accrued payables and product warranties, totaling approximately $.7 million. The assets purchased from Servo include certain tangible assets that the Registrant intends to continue using for the same purposes after the Acquisition. The Registrant anticipates that it will ultimately transfer and consolidate such assets with its existing facilities and operations in California. The compensation paid to Servo described above was determined by negotiation between the parties. No material relationship exists between the Registrant and Servo or their affiliates, directors, officers or their associates. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS The information set forth in Item 7 of the 8-K is hereby amended to read as follows: (a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED Audited financial statements of the Transportation Segment of Servo Corporation of America as of and for the year ended October 31, 1994 are attached hereto as EXHIBIT 1. (b) PRO FORMA FINANCIAL INFORMATION (UNAUDITED) The unaudited pro forma statements of earnings for the fiscal year ended December 31, 1994 give effect 2 of 14 to the Acquisition as if it had occurred at the beginning of the period presented. The Servo financial statements utilized in the pro forma information are for the year ended October 31, 1994. The unaudited pro forma financial statements were prepared utilizing available information and certain assumptions which management believes are reasonable. The unaudited pro forma financial statements may not be indicative of the Registrant's results of operations had the Acquisition actually occurred on the dates indicated. 3 of 14 HARMON INDUSTRIES, INC. UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS YEAR ENDED DECEMBER 31, 1994 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Pro forma Harmon Servo adjustments Pro forma ------ ----- ----------- --------- Net sales $119,703 11,321 - 131,024 Cost of sales 81,023 6,353 - 87,376 Research and development expenditures 4,561 1,248 - 5,809 -------- ----- ----- -------- Gross profit 34,119 3,720 - 37,839 Selling, general and administrative expenses 21,176 2,358 - 23,534 Amortization of cost in excess of fair value of net assets of subsidiary acquired 78 - 531 (1) 609 Miscellaneous (income) expense, net (34) - - (34) -------- ----- ----- -------- Operating income 12,899 1,362 (531) 13,730 Interest expense (264) (338) - (602) Investment income 50 816 (237) (2) 629 -------- ----- ----- -------- Earnings before income taxes 12,685 1,840 (768) 13,757 Income tax expense 5,046 855 (296) (3) 5,605 -------- ----- ----- -------- Net earnings $ 7,639 985 (472) 8,152 -------- ----- ----- -------- Net earnings per share $ 1.16 1.19 -------- -------- Weighted average common shares outstanding 6,567 6,827 -------- -------- NOTES: (1) Amortization of goodwill resulting from the acquisition. (2) Recognition of foregone interest income resulting from this transaction (interest rate assumed to be 3.5%). (3) Income tax benefit to be derived from pro forma adjustments listed above assuming a rate of 38.5%.
4 of 14 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. HARMON INDUSTRIES, INC. Date: March 3, 1995 By:/s/Charles M. Foudree --------------------- Charles M. Foudree Executive Vice President- Finance, Secretary and Treasurer 5 of 14 INDEX TO EXHIBITS Exhibit Sequentially number Description numbered - - ------ ----------- -------- page ---- 1 Audited Financial Statements of the Transportation 7 Segment of Servo Corporation of America as of and for the year ended October 31, 1994 2 Consent of Arthur Andersen LLP to filing of the 14 audited financial statements referred to above 6 of 14 EX-1 2 EXHIBIT 1 EXHIBIT 1 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors Servo Corporation of America: We have audited the accompanying statement of net assets related to the Transportation Segment of Servo Corporation of America (a Delaware corporation) and subsidiaries (the "Company") acquired by Harmon Industries, Inc. as of October 31, 1994 and the related statements of identified income and expenses 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. The Transportation Segment acquired by Harmon Industries, Inc. has been operated as an integral part of the Company and has no separate legal existence. The basis of preparation of these statements and the transaction with the Company are described in Note 1 to the financial statements. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets related to the Transportation Segment of the Company at October 31, 1994 that were acquired by Harmon Industries, Inc. and the results of its operations and its cash flows for the year then ended on the basis described in the preceding paragraph in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Melville, New York February 10, 1995 7 of 14 SERVO CORPORATION OF AMERICA AND SUBSIDIARIES STATEMENT OF NET ASSETS RELATED TO THE TRANSPORTATION SEGMENT ACQUIRED BY HARMON INDUSTRIES, INC. AS OF OCTOBER 31, 1994 INVENTORY, net $1,773,921 PROPERTY, PLANT AND EQUIPMENT, net 237,023 --------- Assets of the Transportation Segment Acquired 2,010,944 --------- ACCRUED VACATION EXPENSE 62,681 ACCRUED WARRANTY EXPENSE 137,192 CUSTOMER ADVANCES 300,000 -------- Liabilities of the Transportation Segment Assumed 499,873 -------- Net assets of the Transportation Segment Acquired $1,511,071 --------- ---------
The accompanying notes are an integral part of this statement. 8 of 14 SERVO CORPORATION OF AMERICA AND SUBSIDIARIES STATEMENT OF IDENTIFIED INCOME AND EXPENSES OF THE TRANSPORTATION SEGMENT ACQUIRED BY HARMON INDUSTRIES, INC. FOR THE YEAR ENDED OCTOBER 31, 1994 NET SALES $11,321,013 ----------- COSTS AND EXPENSES: Cost of sales 6,353,193 Selling expenses 1,206,367 Allocated administrative expenses 1,151,134 Research and development expenses 1,248,283 ----------- Total operating expenses 9,958,977 ----------- Income from operations 1,362,036 OTHER INCOME (EXPENSE): Allocated interest expense, net (337,793) Allocated other income, net 816,191 ----------- INCOME BEFORE PROVISION FOR INCOME TAXES 1,840,434 ALLOCATED PROVISION FOR INCOME TAXES 855,758 ----------- Net income $ 984,676 ----------- -----------
The accompanying notes are an integral part of this statement. 9 of 14 SERVO CORPORATION OF AMERICA AND SUBSIDIARIES STATEMENT OF CASH FLOWS OF THE TRANSPORTATION SEGMENT ACQUIRED BY HARMON INDUSTRIES, INC. FOR THE YEAR ENDED OCTOBER 31, 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 984,676 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 66,093 Changes in assets and liabilities: Inventory (194,055) Accrued vacation expense 4,476 Accrued warranty expense 36,280 Customer advances 137,214 ---------- Net cash provided by operating activities 1,034,684 ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (39,982) ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Contribution to Servo Corporation of America, Inc. (994,702) ---------- Change in cash and cash equivalents - CASH AND CASH EQUIVALENTS, beginning of year - ---------- CASH AND CASH EQUIVALENTS, end of year $ - ----------
The accompanying notes are an integral part of this statement. 10 of 14 SERVO CORPORATION OF AMERICA AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS OF THE TRANSPORTATION SEGMENT ACQUIRED BY HARMON INDUSTRIES, INC. OCTOBER 31, 1994 1. BASIS OF PRESENTATION: The accompanying financial statements present the net assets and the identified income and expenses of the Transportation Segment (the "Acquired Transportation Segment") of Servo Corporation of America and subsidiaries (the "Company") that were acquired by Harmon Industries, Inc. (the "Buyer") effective December 20, 1994 pursuant to an Asset Purchase Agreement (the "Agreement"). The net assets of the Acquired Transportation Segment as presented in the accompanying statement of net assets acquired, include the historical balances at October 31, 1994 of inventory and certain fixed assets that were sold to the Buyer and accrued vacation and warranty expenses and customer advances assumed by the Buyer effective December 20, 1994. The Transportation Segment has never been operated as a separate business entity but, rather, has been an integral part of the business of the Company. The statement of identified income and expenses of the Acquired Transportation Segment includes the specifically identitable net sales, cost of sales, selling expenses and research and development expenses that substantially relate directly to the transportation segment sold. All other income and expense items are allocated based on estimations and assumptions as if the Acquired Transportation Segment had been operated on a stand-alone basis during the periods presented. The basis for presenting the allocated income and expense items is as follows: (a) administrative expenses and other income and expense, including interest expense, are allocated based on the proportion of net sales volume of the Acquired Transportation Segment to the Company's total net sales for the year; (b) income taxes are provided assuming the activities of the Acquired Transportation Segment were those of a separate tax paying entity, including the allocation of a portion of a settlement with the Internal Revenue Service (see Notes 2 and 6). The above allocations are believed by management to be reasonable allocations under the circumstances; however, there can be no 11 of 14 assurances that such allocations will be indicative of future results of operations. In addition, the carrying values as reflected in the accompanying statement of net assets acquired do not include losses, if any, realized at the time of the December 20, 1994 sale. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: INVENTORY Inventory is stated at the lower of cost or market. Cost is determined by the first-in, first-out method. PROPERTY, PLANT AND EQUIPMENT Fixed assets are stated at cost less accumulated depreciation and amortization. Depreciation of building and building improvements is provided for on the straight-line basis over estimated useful lives of five to thirty years. Equipment is depreciated on the declining balance and straight-line methods over estimated useful lives ranging from three to ten years. The Company principally utilizes accelerated depreciation methods for tax reporting purposes. INCOME TAXES In February 1992, the financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes", which amended SFAS No. 96, which had previously significantly amended Accounting Principles Board Opinion No. 11. The Company has adopted this standard. 3. INVENTORY: The following is a summary of the components of inventory of the Acquired Transportation Segment at October 31, 1994: Work-in-process $ 969,265 Materials (parts and components) 1,079,039 ----------- 2,048,304 Less: reserve for obsolescence (274,383) ------------ $ 1,773,921 ------------ ------------
12 of 14 4. PROPERTY, PLANT AND EQUIPMENT: At October 31, 1994, property, plant and equipment of the Acquired Transportation Segment consisted of the following: Production equipment $1,311,348 Office equipment 572,717 ---------- 1,884,065 Less: accumulated depreciation 1,647,042 ---------- Property, plant and equipment, net $ 237,023 ---------- ----------
5. ALLOCATED OTHER INCOME: Allocated other income includes an allocation of $144,000 of the rent received from a tenant which rented office space in the Company's building, as well as an allocation of $653,000 of the Company's gain on the sale of its building to the tenant. 6. INCOME TAXES: The activities of the Company's DISC were terminated effective December 31, 1984. In accordance with Federal income tax statutes, all of the DISC's accumulated earnings, which totaled $1,105,000 at December 31, 1984, are permanently exempted from United States taxation. The Company did not provide taxes on DISC earnings. During the fourth quarter of fiscal 1988, the IRS completed an examination of the Company's and the DISC's 1984 Federal income tax returns and proposed adjustments. In December 1992, the Company received a formal notice of assessment from the IRS. On October 31, 1994, a decision was entered in the United States Tax Court in favor of the Commissioner of Internal Revenue Service and resulted in an additional tax and interest charge of approximately $600,000 which has been included in the provision for income taxes, a portion of which was allocated to the Acquired Transportation Segment in the accompanying Statement of Identified Income and Expenses (see Note 1). 13 of 14 EX-2 3 EXHIBIT 2 EXHIBIT 2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our report dated February 10, 1995 and to all references to our Firm included in or made a part of the Form 8-K of Harmon Industries, Inc. ARTHUR ANDERSEN LLP Melville, New York March 1, 1995 14 of 14 -----END PRIVACY-ENHANCED MESSAGE-----