-----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, EbVmHNbZwJU6CSGLgK3Sp6byR3s1DAadcoWJ7eN8UTtTMBzY94GCvHjanW7wLnBg WZuoZq0UiemEhCmPuF3tIw== 0000950152-98-002661.txt : 19980331 0000950152-98-002661.hdr.sgml : 19980331 ACCESSION NUMBER: 0000950152-98-002661 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980217 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980330 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HICKOK INC CENTRAL INDEX KEY: 0000047307 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 340288470 STATE OF INCORPORATION: OH FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-00147 FILM NUMBER: 98577601 BUSINESS ADDRESS: STREET 1: 10514 DUPONT AVE CITY: CLEVELAND STATE: OH ZIP: 44108 BUSINESS PHONE: 2165418060 MAIL ADDRESS: STREET 1: 10514 DUPONT AVE CITY: CLEVELAND STATE: OH ZIP: 44108 FORMER COMPANY: FORMER CONFORMED NAME: HICKOK ELECTRICAL INSTRUMENT CO DATE OF NAME CHANGE: 19920703 8-K/A 1 HICKOK INCORPORATED FORM 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ---------------------------- FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): February 17, 1998 --------------------- Hickok Incorporated - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Ohio 0-147 34-0288470 - ----------------------------- ---------------------- ---------------------- (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification Number) 10514 Dupont Avenue Cleveland, Ohio 44108 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (216) 541-8060 ------------------ - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On February 17, 1998, a wholly owned subsidiary of Hickok Incorporated, an Ohio corporation ("Hickok") acquired substantially all of the assets of the automotive aftermarket business (the "Business") of Waekon Industries, Inc., a Pennsylvania corporation (the "Seller"). Hickok's subsidiary, Waekon Corporation, an Ohio corporation ("Waekon"), acquired the Business pursuant to the terms of an Asset Purchase Agreement dated February 6, 1998 (the "Agreement"). Waekon also assumed certain liabilities of the Seller, including $684,000 of the Seller's bank debt, as well as certain trade accounts payable and accrued expenses incurred in the ordinary course of business to the extent reflected or reserved for on the Closing Balance Sheet as defined in the Agreement. The Seller used the acquired assets in the manufacture of a variety of testing equipment used by automobile technicians in the automobile aftermarket business. Waekon intends to use the acquired assets in the same manner. As consideration for the acquisition of the Business, Waekon paid a purchase price of $1,500,000, subject to certain closing adjustments. In addition to the purchase price Waekon will pay an additional annual consideration to the Seller based on the operations of the Business for the five-year period following the closing (the "Earn Out Period"). The minimum annual payment during the Earn Out Period is $150,000. Hickok's available cash was used for the acquisition. The purchase price and the other terms of the Agreement were determined through arms-length negotiations. There are no material relationships between the Seller, and Hickok and Waekon, or any of their affiliates, directors or officers. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. Waekon Industries, Inc. Financial Statements for Year Ended December 31, 1997 Independent Auditors' Report Balance Sheet Statement of Income Statement of Changes in Stockholders' Equity Statement of Cash Flows Notes to Financial Statements Other Financial Information 3 (b) PRO FORMA FINANCIAL INFORMATION. Hickok Incorporated Pro Forma Combined Condensed Consolidated Financial Statements (Unaudited) Unaudited Pro Forma Combined Condensed Balance Sheet as of December 31, 1997 Unaudited Pro Forma Combined Condensed Income Statement for the Fiscal Year Ended September 30, 1997 Unaudited Pro Forma Combined Condensed Income Statement for the Three Months Ended December 31, 1997 Notes to Pro Forma Combined Condensed Financial Statements (c) Exhibits. EXHIBIT NO. DESCRIPTION ----------- ----------- 2.1 Asset Purchase Agreement, dated February 6, 1998, by and among Waekon Industries, Inc., a Pennsylvania corporation, Peter Vinci, and Waekon Corp., an Ohio corporation.* 23.1 Consent of Independent Public Accountants. * Previously filed. 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HICKOK INCORPORATED By:/s/ Eugene T. Nowakowski ------------------------- Eugene T. Nowakowski Chief Financial Officer Date: March 30, 1998 5 American Institute of [Letterhead] Certified Public Accountants ROSS BUEHLER FALK& COMPANY, LLP Pennsylvania Institute of certified public accountants Certified Public Accountants Private Companies Practice Section, AICPA INDEPENDENT AUDITORS' REPORT Waekon Industries, Inc. Kirkwood, Pennsylvania We have audited the accompanying balance sheet of WAEKON INDUSTRIES, INC. (a Pennsylvania corporation) as of December 31, 1997, and the related statements of income, stockholders' equity, 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 Waekon Industries, Inc. as of December 31, 1997, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The other financial information in Exhibits F and G is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Ross Buehler Falk & Company, LLP January 22, 1998 ROSS BUEHLER FALK & COMPANY, LLP 6 WAEKON INDUSTRIES, INC. Exhibit "A" ----------------------- ----------- BALANCE SHEET ------------- DECEMBER 31, 1997 -----------------
ASSETS - ------ CURRENT Cash 77,966 Accounts receivable, net of allowance for doubtful accounts of $35,577 279,037 Inventories 607,152 Prepaid insurance 5,288 Prepaid taxes 1,954 ---------- Total Current Assets 971,397 ---------- PROPERTY AND EQUIPMENT, At cost Leasehold improvements 145,759 Equipment 217,634 Automobiles 144,026 Furniture and fixtures 136,862 ---------- Totals 644,281 Less depreciation taken to date 249,618 ---------- Net Property and Equipment 394,663 ---------- OTHER Intangibles, net of accumulated amortization of $3,496 40,053 Deposits 100 ---------- Total Other Assets 40,153 ---------- Total Assets 1,406,213 ========== LIABILITIES - ----------- CURRENT Notes payable, current 445,152 Accounts payable 208,584 Payroll taxes withheld and accrued 52,192 Accrued salaries and wages 27,253 Other accrued expenses 14,786 ---------- Total Current Liabilities 747,967 LONG-TERM Notes payable, less current portion 104,614 ---------- Total Liabilities 852,581 ---------- STOCKHOLDERS' EQUITY - -------------------- Common stock, .10 par, 10,000 shares authorized, 9,755 shares issued and outstanding 976 Contributions in excess of par 40,152 Retained earnings 512,504 ---------- Total Stockholders' Equity 553,632 ---------- Total Liabilities and Stockholders' Equity 1,406,213 ==========
The accompanying notes arc an integral part of the financial statements. 7 WAEKON INDUSTRIES, INC. Exhibit "B" ----------------------- ----------- STATEMENT OF INCOME ------------------- YEAR ENDED DECEMBER 31, 1997 ----------------------------
Percentage of Net Sales --------- SALES 4,957,390 101.73 Less discounts, returns and allowances 84,222 1.73 --------- ------ Net Sales 4,873,168 100.00 COST OF GOODS SOLD 2,986,886 61.29 --------- ------ GROSS MARGIN 1,886,282 38.71 --------- ------ OPERATING EXPENSES Marketing 282,989 5.81 General and administrative 1,208,251 24.79 --------- ------ Total Operating Expenses 1,491,240 30.60 --------- ------ INCOME FROM OPERATIONS 395,042 8.11 OTHER INCOME Interest 362 0.01 OTHER EXPENSES Interest (87,542) (1.80) --------- ------ NET INCOME 307,862 6.32 ========= ====== NET INCOME PER COMMON SHARE 31.30 ========= WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING 9,837 ========
The accompanying notes are an integral part of the financial statements. 8 WAEKON INDUSTRIES, INC. Exhibit "C" ----------------------- ----------- STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY -------------------------------------------- YEAR ENDED DECEMBER 31, 1997 ----------------------------
Contributions Common in Excess Retained Treasury Stock of Par Earnings Stock Total --------- ------------- -------- --------- -------- Balance, beginning of year 1,000 40,152 225,018 (6,400) 259,770 Purchase of treasury stock - - - (14,000) (14,000) Retirement of treasury stock (24) - (20,376) 20,400 - Net income - - 307,862 - 307,862 --------- ------------- -------- --------- -------- Balance, end of year 976 40,152 512,504 - 553,632 ========= ============= ======== ========= ========
The accompanying notes are an integral part of the financial statements. 9 WAEKON INDUSTRIES, INC. Exhibit "D" ----------------------- ----------- STATEMENT OF CASH FLOWS ----------------------- YEAR ENDED DECEMBER 31, 1997 ----------------------------
CASH FLOWS FROM OPERATIONS: Net income 307,862 Adjustments to reconcile net income to net cash: Depreciation 87,071 Amortization 1,681 Write off of intangibles 35,761 Changes in operating assets and liabilities: Accounts receivable (2,831) Inventories (114,236) Cash overdraft (7,339) Prepaid expenses (5,086) Accounts payable (32,172) Accrued salaries and wages 5,401 Payroll taxes withheld and accrued expenses (35,337) ------------ NET CASH INFLOWS FROM OPERATING ACTIVITIES 240,775 ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (172,436) Deposits 5,706 ------------ NET CASH OUTFLOWS FROM INVESTING ACTIVITIES (166,730) ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Net payments under line of credit (10,000) Proceeds from notes payable 151,119 Payments on notes payable (123,198) Purchase of treasury stock (14,000) ------------ NET CASH INFLOWS FROM FINANCING ACTIVITIES 3,921 ------------ NET INCREASE IN CASH 77,966 CASH, BEGINNING OF YEAR - ------------ CASH, END OF YEAR 77,966 ============
The accompanying notes are an integral part of the financial statements. 10 WAEKON INDUSTRIES, INC. Exhibit "E" ---------------------- ----------- NOTES TO FINANCIAL STATEMENTS Page 1 of 4 ----------------------------- ----------- NOTE 1: CORPORATE DATA -------------- The Company was incorporated under the laws of the State of Pennsylvania on January 9, 1991. The Company develops vehicle testing devices used primarily by auto service centers, and distributes them nationally. NOTE 2: SIGNIFICANT ACCOUNTING POLICIES ------------------------------- Concentration of Credit Risk ---------------------------- The Company sells its products primarily to customers in the United States. The Company extends normal credit terms to its customers. Customers in the automotive industry (aftermarket distributors) comprise the customer base, with approximately 77% of their sales to one customer. The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. Cash balances are insured up to $100,000 by the Federal Deposit Insurance Corporation. Inventories ----------- Inventories are stated at the lower of cost or market determined on the first-in, first-out basis. Inventories consisted of the following at December 31, 1997:
Raw material 461,915 Work in progress 131,672 Finished goods 13,565 -------- 607,152 ========
Depreciation ------------ It is the Company's policy to use the accelerated methods of depreciation for all depreciable assets. Estimated useful lives of assets range from 5 to 39 years. Intangibles ----------- The costs of patents and trademarks are being amortized on the straight line method over a life of 15 years. Amortization expense charged to operations in 1997 was $1,681. Advertising ----------- Advertising costs are charged to operations when incurred. Research and Development ------------------------ Research and development costs are charged to operations when incurred and are included in operating expenses. The amount charged in 1997 was $481,627. 11 WAEKON INDUSTRIES, INC. Exhibit "E" ----------------------- ------------ NOTES TO FINANCIAL STATEMENTS Page 2 of 4 ----------------------------- ------------ NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (Continued) ------------------------------- Income Taxes - S Corporation ---------------------------- Waekon Industries, Inc. has elected to be treated as an S Corporation for federal and state income tax purposes. Under these provisions, the Company does not pay federal and state corporate income taxes on its taxable income. Instead, the stockholders are liable for individual federal and state income taxes on the Company's taxable income. Therefore, no provision or liability for federal or state taxes has been made. Income Per Common Share ----------------------- Income per common share information is computed on the weighted average number of shares outstanding during each period. Statement of Cash Flows ----------------------- For the purpose of reporting cash flows, cash and cash equivalents include cash on hand and amounts deposited in banks. Estimates --------- The process of preparing financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts. NOTE 3: NOTES PAYABLE ------------- A breakdown of notes payable at December 31, 1997 is as follows:
Portion Due Within One Total Year ---------- ------------ Note payable, bank, $600,000 line-of-credit, demand, interest at bank's prime plus 1.25% (9.75% at December 31, 1997), secured by accounts receivable, equipment and inventory. See Note A 310,000 310,000 Note payable, bank, $100,000 term loan, sixty principal payments of $1,667, plus interest at bank's prime plus 1.75% (10.25% at December 31, 1997), secured by accounts receivable, equipment and inventory, surety of majority stockholder 73,545 20,000 Note payable, bank, term loan, sixty payments of $2,132, including interest at 10%, secured by a second lien interest in accounts receivable, equipment and inventory. See Note B 49,585 21,803
12 WAEKON INDUSTRIES, INC. Exhibit "E" ----------------------- ----------- NOTES TO FINANCIAL STATEMENTS Page 3 of 4 ----------------------------- ----------- NOTE 3: NOTES PAYABLE (Continued) -------------
Portion Due Within One Total Year ---------- ----------- Note payable, bank, term loan, monthly payments of $788, which include principal and interest at 8.25%, secured by accounts receivable, equipment and inventory, general intangibles, guaranty of majority stockholder, limited to $25,000 13,311 8,682 Note payable, bank, monthly payments of $856, which include principal and interest at 9.5% secured by equipment and vehicle 25,156 8,285 Note payable, bank, monthly payments of $308, which include principal and interest at 8.5%, secured by 5,171 3,384 Note payable, stockholder, demand, non-interest bearing, unsecured 72,998 72,998 ---------- ----------- Total 549,766 445,152 =========== Less portion due within one year 445,152 ---------- Long-Term 104,614 ==========
Note A: Personally guaranteed by the majority stockholder, including a mortgage on the stockholder's personal residence. Note B: Personally guaranteed by the majority stockholder, including a second-lien interest in property owned by the stockholder, subject to a prior lien held by an individual. Maturities of long-term debt payments for each of the five years succeeding December 31, 1997 are as follows:
December 31, 1998 135,152 December 31, 1999 59,609 December 31, 2000 31,459 December 31, 2001 13,546 December 31.2002 -
The weighted average interest rate on short-term financing was 9.4% for the year ended December 31, 1997. NOTE 4: TREASURY STOCK -------------- During the year, the Company acquired 180 shares of its previously issued stock for the treasury at a cost of $14,000. This acquisition brought the total number of shares in treasury to 245 shares with a total cost of $20,400. During November 1997, the stockholders elected to retire their treasury stock which generated a charge to retained earnings of $20,376. 13 WAEKON INDUSTRIES, INC. Exhibit "E" ----------------------- ----------- NOTES TO FINANCIAL STATEMENTS Page 4 of 4 ----------------------------- ----------- NOTE 5: OPERATING LEASE --------------- The Company leases its operating facilities from a stockholder under an operating lease, on a month to month basis, currently at $7,417 per month. Rental expense charged to operations for the year ended December 31, 1997 was $89,000. NOTE 6: RELATED PARTY ------------- Waekon Industries, Inc. and Innovative Products of America (IPA) are related through common ownership. During the year ended December 31, 1997, Waekon Industries, Inc. had $83,781 of sales to IPA. At December 31, 1997, accounts receivable includes $36,297 due from IPA. NOTE 7: CONTINGENCIES ------------- The Company is the defendant in certain claims and litigation arising from the ordinary course of business. It is the opinion of management that any material claims with merit are adequately covered by insurance. NOTE 8: STATEMENT OF CASH FLOWS ----------------------- The Company disbursed cash for interest in the amount of $87,542 for the year ended December 31, 1997. NOTE 9: SUBSEQUENT EVENT ---------------- The Company is in the process of negotiating the sale of the majority of the Company's assets, for an amount in excess of book value. The proposed pending sale has been approved by the stockholders of the Company. 14 WAEKON INDUSTRIES, INC. Exhibit "F" ----------------------- ----------- OTHER FINANCIAL INFORMATION --------------------------- COST OF GOODS SOLD ------------------ MANUFACTURING COST
Percentage of Net Sales ---------- Direct material and services Raw materials inventory, January 1 421,229 8.64 Outside work and purchased operations 2,340,336 48.03 ------------ ---------- Total Direct Material and Services 2,761,565 56.67 Less raw material inventory, December 31 461,915 9.48 ------------ ---------- Total Cost of Material and Services 2,299,650 47.19 ------------ ---------- Direct Labor 465,115 9.54 ------------ ---------- Manufacturing expenses: Salaries, supervision 50,357 1.03 Payroll taxes 53,384 1.10 Freight 40,150 0.82 Production supplies 42,238 0.87 Utilities 7,719 0.16 Repairs on machinery and equipment 15,264 0.31 Insurances 12,172 0.25 Rent, building 44,500 0.91 Rent, equipment 1,120 0.02 Depreciation 25,304 0.52 Amortization 1,681 0.04 Taxes, other 1,782 0.04 ------------ ---------- Total Manufacturing Expenses 295,671 6.07 ------------ ---------- Total Manufacturing Costs 3,060,436 62.80 Add inventory, work in process, January 1 56,443 1.16 Less inventory, work in process, December 31 131,672 2.70 ------------ ---------- Cost of Goods Manufactured 2,985,207 61.26 Add inventory, finished goods, January 1 15,244 0.31 Less inventory, finished goods, December 31 13,565 0.28 ------------ ---------- COST OF GOODS SOLD 2,986,886 61.29 ============ ==========
15 WAEKON INDUSTRIES, INC. Exhibit "G" ----------------------- ----------- OTHER FINANCIAL INFORMATION --------------------------- OPERATING EXPENSES ------------------
Percentage of MARKETING EXPENSES Net Sales ---------- Advertising 144,814 2.97 Commissions 13,637 0.28 Meals 8,578 0.18 Sales promotions 37,601 0.77 Sales shows 32,869 0.67 Travel 45,490 0.94 ---------- ---------- Total Marketing Expenses 282,989 5.81 ========== ========== GENERAL AND ADMINISTRATIVE EXPENSES Salaries, office and administrative 392,219 8.05 Tax, payroll 90,929 1.87 Freight 2,784 0.06 Depreciation 61,767 1.27 Fees 12,886 0.26 Insurance 13,171 0.27 Research and development 481,627 9.88 Office 19,792 0.41 Computer expense 2,203 0.04 Postage 7,646 0.16 Professional fees 17,063 0.35 Rent, building 44,500 0.91 Repairs and maintenance 2,791 0.06 Tax, other 2,101 0.04 Telephone 17,606 0.36 Utilities 7,719 0.16 Miscellaneous 31,447 0.64 ---------- ---------- Total General and Administrative Expenses 1,208,251 24.79 ========== ==========
16 HICKOK INCORPORATED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following unaudited pro forma combined condensed financial information of Hickok Incorporated (the "Company") adjusts the historical financial statements of the Company to give pro forma effect to the Company's purchase of Waekon Industries, Inc. ("Waekon") on February 12, 1998. The acquisition has been accounted for as an asset purchase and the purchase price has been allocated on a preliminary basis to the respective assets acquired and liabilities assumed based upon their estimated fair values as of the acquisition date. The Unaudited Pro Forma Combined Condensed Balance Sheet has been prepared as if the transaction occurred as of December 31, 1997. The Unaudited Pro Forma Combined Statements of Income have been prepared as if the transaction occurred as of the beginning of the periods presented. Waekon's income statement for the three months ended December 31, 1997 is included both as part of the fiscal year results and for the subsequent three month interim period. Total revenue and net income reported in both periods amounted to $1,526,767 and $76,608 after pro forma adjustments. The unaudited pro forma combined statements for the periods presented do not purport to represent what the Company's results of operations or financial position would actually have been had the transaction occurred on the aforementioned dates, or to project the Company's results of operations for any future periods. The unaudited pro forma combined results do not include any synergies that may be realized as a result of the combining of the entities. The Company does, however, expect some cost synergies to result in various areas of the combined businesses. The pro forma adjustments are based upon available information and upon certain assumptions that the Company's management believes are reasonable under the circumstances. The adjustments are directly attributable to the transaction and are expected to have a continuing impact on the financial position and results of operations of the Company. The unaudited pro forma combined condensed financial statements should be read in conjunction with the historical financial statements and related notes included in Form 8-K filed February 26, 1998 and the Company's Form 10-K for the year ended September 30, 1997 and Form 10-Q for the period ended December 31, 1997. 1 17 HICKOK INCORPORATED UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET AS OF DECEMBER 31, 1997
HICKOK INCORPORATED WAEKON PRO FORMA PRO FORMA AS REPORTED INDUSTRIES ADJUSTMENTS COMBINED (UNAUDITED) (AUDITED) (UNAUDITED) (UNAUDITED) ----------- ----------- ------------ ------------ ASSETS CURRENT ASSETS Cash and Cash Equivalents $ 2,750,423 $ 77,966 $ (77,966) (1) $ 550,657 (2,199,766) (4) Trade Accounts Receivable - Net 2,990,140 279,037 - 3,269,177 Inventories 4,971,771 607,152 - 5,578,923 Prepaid and Deferred Expenses 267,347 7,242 - 274,589 ----------- ----------- ------------ ------------ TOTAL CURRENT ASSETS 10,979,681 971,397 (2,277,732) 9,673,346 ----------- ----------- ------------ ------------ PROPERTY, PLANT AND EQUIPMENt Land 199,611 - - 199,611 Buildings 1,410,141 111,689 - 1,521,830 Machinery and Equipment 3,921,952 282,974 (14,563) (1) 4,190,363 ----------- ----------- ------------ ------------ 5,531,704 394,663 (14,563) 5,911,804 Less Allowance for Depreciation 3,322,206 - - 3,322,206 ----------- ----------- ------------ ------------ TOTAL PROPERTY - NET 2,209,498 394,663 (14,563) 2,589,598 ----------- ----------- ------------ ------------ OTHER ASSETS Prepaid Rent and Other Deposits 1,750 100 - 1,850 Deferred Charges - Net 98,129 40,053 - 138,182 Goodwill - Net of Amortization 220,209 - 1,774,788 (6) 1,994,997 ----------- ----------- ------------ ------------ TOTAL OTHER ASSETS 320,088 40,153 1,774,788 2,135,029 ----------- ----------- ------------ ------------ TOTAL ASSETS $13,509,267 $ 1,406,213 $ (517,507) $ 14,397,973 ----------- ----------- ------------ ------------ See accompanying notes to Unaudited Pro Forma Combined Condensed Financial Statements.
2 18 HICKOK INCORPORATED UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET AS OF DECEMBER 31, 1997
HICKOK INCORPORATED WAEKON PRO FORMA PRO FORMA AS REPORTED INDUSTRIES ADJUSTMENTS COMBINED (UNAUDITED) (AUDITED) (UNAUDITED) (UNAUDITED) ------------ ------------ ------------- ------------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes Payable - Short-term $ 63,550 $ 445,152 $ (445,152) (2) $ 161,762 98,212 (5) Trade Accounts Payable 487,425 208,584 696,009 Accrued Payroll and Related Expenses 351,840 79,445 431,285 Dividends Payable 119,625 119,625 Accrued Expenses 91,137 14,786 105,923 Customer Deposits 83,249 - - 83,249 Accrued Income Taxes 246,743 - - 246,743 ------------ ------------ ------------- ------------- TOTAL CURRENT LIABILITIES 1,443,569 747,967 (346,940) 1,844,596 ------------ ------------ ------------- ------------- DEFERRED INCOME TAXES 174,000 - - 174,000 ------------ ------------ ------------- ------------- LONG-TERM DEBT Notes Payable - less current portion 106,828 104,614 (104,614) (2) 594,507 - - 487,679 (5) - ------------ ------------ ------------- ------------- 106,828 104,614 383,065 594,507 ------------ ------------ ------------- ------------- STOCKHOLDERS' EQUITY Capital Stock 1,195,850 976 (976) (3) 1,195,850 Contributed Capital 926,603 40,152 (40,152) (3) 926,603 Retained Earnings 9,662,417 512,504 (512,504) (3) 9,662,417 ------------ ------------ ------------- ------------- TOTAL STOCKHOLDERS' EQUITY 11,784,870 553,632 (553,632) 11,784,870 ------------ ------------ ------------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 13,509,267 $ 140,6213 $ (517,507) $ 14,397,973 ------------ ------------ ------------- ------------- See accompanying notes to Unaudited Pro Forma Combined Condensed Financial Statements.
3 19 HICKOK INCORPORATED UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT FOR THE FISCAL YEAR ENDED SEPTEMBER 30,1997
HICKOK INCORPORATED WAEKON AS REPORTED INDUSTRIES PRO FORMA PRO FORMA SEPT. 30,1997 DEC.31, 1997 ADJUSTMENTS COMBINED (AUDITED) (AUDITED) (UNAUDITED) (UNAUDITED) ----------- ------------ ----------------- ------------ NET SALES Product Sales $ 17,193,552 $ 4,873,168 $ - $ 22,066,720 Service Sales 3,965,546 - - 3,965,546 ----------- ------------ ----------------- ------------ Total Net Sales 21,159,098 4,873,168 - 26,032,266 ----------- ------------ ----------------- ------------ COSTS AND EXPENSES: Cost of Products Sold 9,874,129 2,986,886 - 12,861,015 Cost of Services Sold 3,528,069 - - 3,528,069 Product Development 3,263,857 481,627 (50,000) (7) 3,695,484 Operating Expenses 3,691,892 1,009,613 88,740 (8) 4,790,245 Interest Charges 10,966 87,542 (54,977) (9) 95,319 51,788 (10) 45,280 (11) Other Income (70,132) (362) 56,077 (12) (14,417) ----------- ------------ ----------------- ------------ 20,298,781 4,565,306 136,908 25,000,995 ----------- ------------ ----------------- ------------ Income before Provision for Income Taxes 860,317 307,862 (136,908) 1,031,271 PROVISION FOR INCOME TAXES: Current 305,000 - 120,081 (13) 371,687 (53,394) (14) Deferred (50,000) - - (50,000) ----------- ------------ ----------------- ------------ 255,000 - 66,687 321,687 ----------- ------------ ----------------- ------------ NET INCOME $ 605,317 $307,862 $ (203,595) $ 709,584 ----------- ------------ ----------------- ------------ Net Income per Common Share $ 0.51 $ 0.59 ----------- ------------ Weighted average Shares of Common Stock Outstanding 1,193,497 1,193,497 ----------- ------------ See accompanying notes to Unaudited Pro Forma Combined Condensed Financial Statements.
4 20 HICKOK INCORPORATED UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT FOR THE THREE MONTHS ENDED DECEMBER 31, 1997
HICKOK INCORPORATED WAEKON AS REPORTED INDUSTRIES PRO FORMA PRO FORMA DEC. 31, 1997 DEC. 31, 1997 ADJUSTMENTS COMBINED (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) ------------- ------------ ------------ ------------ NET SALES Product Sales $ 4,572,810 $ 1,526,767 $ - $ 6,099,577 Service Sales 232,206 - - 232,206 ------------- ------------ ------------ ------------ Total Net Sales 4,805,016 1,526,767 - 6,331,783 ------------- ------------ ------------ ------------ COSTS AND EXPENSES: Cost of Products Sold 2,544,998 912,663 - 3,457,661 Cost of Services Sold 188,053 - - 188,053 Product Development 753,515 137,230 (52,885) (7) 837,860 Operating Expenses 898,272 337,721 22,185 (8) 1,258,178 Interest Charges 8,468 23,102 (23,102) (9) 19,245 10,777 (10) Other Income (44,725) (283) 33,772 (12) (11,236) ------------- ------------ ------------ ------------ 4,348,581 1,410,433 (9,253) 5,749,761 ------------- ------------ ------------ ------------ Income before Provision for Income Taxes 456,435 116,334 9,253 582,022 PROVISION FOR INCOME TAXES: Current 169,000 - 45,370 (13) 217,979 3,609 (14) Deferred - - - - ------------- ------------ ------------ ------------ 169,000 - 48,979 217,979 ------------- ------------ ------------ ------------ NET INCOME $ 287,435 $ 116,334 $ (39,726) $ 364,043 ------------- ------------ ------------ ------------ Net Income per Common Share $ 0.24 $ 0.30 ------------- ------------ Weighted average Shares of Common Stock Outstanding 1,195,850 1,195,850 ------------- ------------
See accompanying notes to Unaudited Pro Forma Combined Condensed Financial Statements. 5 21 HICKOK INCORPORATED NOTES TO PROFORMA COMBINED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 1. To eliminate assets not acquired by the Company. 2. To reflect payment of Waekon bank debt by the Company. 3. To eliminate Waekon stockholders equity since the acquisition was an asset purchase. 4. To eliminate cash paid by the Company for the acquisition. 5. To reflect present value of $150,000 annual minimum earn out due Waekon over five years and to split the amount between current and long term debt. 6. To reflect goodwill incurred by the Company in its acquisition of Waekon. 7. To eliminate excess salary of Waekon employee per terms of employment agreement with the Company. 8. To reflect amortization of goodwill incurred by the Company in the acquisition. Amortization based on straight line, twenty year life. 9. To eliminate Waekon interest charges applicable to Waekon debt repaid at the closing. 10. To reflect interest cost applicable to earn out debt per note 5 above. 11. To reflect interest charges applicable to additional debt Company would have incurred early in the fiscal year to fund the Waekon acquisition. 12. To eliminate Hickok interest income on cash equivalent used to fund the acquisition. 13. To set up income tax provision at a 39% combined tax rate on Waekon pre tax income. Waekon was formerly a sub S corp and had no tax provision. 14. To change current period income tax provision based on increase (decrease) in pro forma costs and expenses. 6 EX-23.1 2 EXHIBIT 23.1 1 American Institute of [Letterhead] Certified Public Accountants ROSS BUEHLER FALK& COMPANY, LLP Pennsylvania Institute of certified public accountants Certified Public Accountants Private Companies Practice Section, AICPA CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our report (and to all references to our Firm) included in or made a part of this 8-K filing. /s/ Ross Buehler Falk and Company, LLP ROSS BUEHLER FALK AND COMPANY, LLP Lancaster, PA March 26, 1998 1500 Lititz Pike - Lancaster, PA 17601-6531 - (717)393-2700 - FAX (717)393-1743 -----END PRIVACY-ENHANCED MESSAGE-----