-----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, Rcfk5Jx7qyxs/eWk3YLOvCuhudMrMKnDGpK0snuS85usq8URCyyAUvbaaJ7A1qyN f2wJ9du4emGrYEa6rhFeHQ== 0000897101-96-000404.txt : 19960618 0000897101-96-000404.hdr.sgml : 19960618 ACCESSION NUMBER: 0000897101-96-000404 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960516 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960617 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INNOVEX INC CENTRAL INDEX KEY: 0000050601 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 411223933 STATE OF INCORPORATION: MN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-13143 FILM NUMBER: 96581770 BUSINESS ADDRESS: STREET 1: 1313 S FIFTH ST CITY: HOPKINS STATE: MN ZIP: 55343-9904 BUSINESS PHONE: 6129384155 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K/A AMENDMENT NO. 1 CURRENT REPORT Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): May 16, 1996 INNOVEX INC. (Exact name of registrant as specified in its charter) Minnesota 0-13143 41-1223933 (State or other jurisdiction (Commission File (IRS Employer of incorporation) Number) Identification No.) 1313 South Fifth Street, Hopkins, Minnesota 55343-9904 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (612) 938-4155 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On May 16, 1996, Innovex, Inc. ("Innovex") acquired substantially all of the assets of Litchfield Precision Components, Inc.("LPC"), an unrelated privately held Subchapter S corporation. The purchase price of approximately $8,500,000, was in the form of $3,500,000 in immediately available funds and the assumption of specified liabilities amounting to approximately $5,000,000. Approximately $4,000,000 of the assumed debt was paid off at the time of close. The purchase price was determined pursuant to arm's length negotiations between Innovex and LPC. The purchase was financed using internally available funds. LPC designs and manufactures highly complex flexible circuitry and chemically machined components. The purchased assets include several buildings and all of the manufacturing equipment required to continue to operate the business of LPC at its present headquarters and manufacturing location in Litchfield, Minnesota. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements of Business Acquired. (1) Audited Financial Statements of Litchfield Precision Components, Inc. as of December 31, 1995 and 1994 and for the years then ended (attached as Appendix A hereto). (2) Unaudited Financial Statements of Litchfield Precision Components, Inc. as of March 31, 1996 and for the three-month periods ended March 31, 1996 and March 31, 1995 (attached as Appendix B hereto). (b) Pro Forma Financial Information (1) Pro Forma Combined Financial Information consisting of a pro forma combined balance sheet as of March 31, 1996 and pro forma consolidated statements of income for the six month period ended March 31, 1996 and the year ended September 30, 1995 (attached as Appendix C hereto). (c) Exhibits.
2 Asset Purchase Agreement by and between Innovex, Inc. and Litchfield Precision Components, Inc. April 5, 1996 Incorporated by reference to Exhibit 10.1 of the Innovex Quarterly Report of Form 10-Q for the quarter ended March 31, 1996 (File No. 0-13143)
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 hereunto duly authorized. INNOVEX INC. Registrant Date: June 14, 1996 By \s\ Thomas W. Haley Thomas W. Haley Chairman and Chief Executive Officer By \s\ Douglas W. Keller Douglas W. Keller Corporate Controller INDEX TO EXHIBITS Exhibits Page 2 Asset Purchase Agreement by and between Innovex, Inc. and Previously Litchfield Precision Components, Inc. dated April 5, 1996 filed Appendix A LITCHFIELD PRECISION COMPONENTS, INC. FINANCIAL REPORT DECEMBER 31, 1995 CONTENTS Page INDEPENDENT AUDITOR'S REPORT F2 FINANCIAL STATEMENTS Balance sheets F3-F4 Statements of income F5 Statements of stockholders' equity F6 Statements of cash flows F7-F8 Notes to financial statements F9-F12 INDEPENDENT AUDITOR'S REPORT To the Board of Directors Litchfield Precision Components, Inc. Litchfield, Minnesota We have audited the accompanying balance sheets of Litchfield Precision Components, Inc. as of December 31, 1995 and 1994, and the related statements of income, stockholders' equity, and cash flows for the years 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 audits. We conducted our audits 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 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 Litchfield Precision Components, Inc. as of December 31, 1995 and 1994, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles. \s\ McGladrey & Pullen, LLP Minneapolis, Minnesota March 1, 1996, except for Notes 2(b) and 5, as to which the date is April 15, 1996 LITCHFIELD PRECISION COMPONENTS, INC. BALANCE SHEETS December 31, 1995 and 1994 ASSETS(Note 2) 1995 1994 Current Assets Trade receivables, less allowance for doubtful accounts of $30,000 (Note 4) $ 1,389,928 $ 1,361,909 Inventories 1,010,195 907,991 Prepaid expenses and other 31,202 74,051 Restricted cash (Notes 2 and 3) 4,950 3,637 ----------- ----------- Total current assets 2,436,275 2,347,588 ----------- ----------- Restricted Investment (Notes 2 and 3) 326,772 326,419 ----------- ----------- Property and Equipment, at cost Land and land improvements 407,455 407,455 Buildings 4,371,989 4,371,989 Equipment 5,377,269 5,032,383 Office furniture and equipment 574,982 594,186 ----------- ----------- 10,731,695 10,406,013 Less accumulated depreciation 6,710,489 6,356,916 ----------- ----------- 4,021,206 4,049,097 ----------- ----------- Intangible, bond issue costs, less accumulated amortization 1995 $72,500; 1994 $65,000 77,500 85,000 ----------- ----------- $ 6,861,753 $ 6,808,104 =========== =========== See Notes to Financial Statements. LITCHFIELD PRECISION COMPONENTS, INC. BALANCE SHEETS (continued) LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994 Current Liabilities Note payable to bank (Note 2) $ 917,915 $ 950,192 Current maturities of long-term debt 723,029 776,972 Accounts payable 913,600 610,132 Accrued expenses: Compensation 457,046 381,363 Taxes, other than income taxes 189,582 156,726 Interest and other 50,410 72,667 Dividends payable 42,600 13,070 ---------- ---------- Total current liabilities 3,294,182 2,961,122 ---------- ---------- Long-Term Debt, less current maturities (Note 2) 2,066,143 2,455,707 ---------- ---------- Contingency (Note 5) Stockholders' Equity (Note 2) Class A voting common stock, no par value; stated at $0.01 per share; authorized 100,000 shares; issued and outstanding 8,851 shares 89 89 Class B nonvoting common stock, no par value; stated at $0.01 per share; authorized 9,900,000 shares; issued and outstanding 876,249 shares 8,762 8,762 Additional paid-in capital 430,049 430,049 Retained earnings 1,062,528 952,375 ---------- ---------- 1,501,428 1,391,275 ---------- ---------- $6,861,753 $6,808,104 ========== ========== See Notes to Financial Statements. LITCHFIELD PRECISION COMPONENTS, INC. STATEMENTS OF INCOME Years Ended December 31, 1995 and 1994 1995 1994 Revenue: Net sales (Note 4) $ 11,860,043 $ 10,944,281 Other operating revenues 252 34,775 ------------ ------------ Total revenue 11,860,295 10,979,056 Cost of sales 9,388,390 8,770,453 ------------ ------------ Gross profit 2,471,905 2,208,603 Operating expenses 1,768,571 1,419,072 ------------ ------------ Operating income 703,334 789,531 ------------ ------------ Other income (expense): Interest income 23,768 19,129 Interest expense (375,187) (387,924) Loss on sale of equipment (29,935) -- Other 24,209 7,642 ------------ ------------ (357,145) (361,153) ------------ ------------ Net income $ 346,189 $ 428,378 ============ ============ See Notes to Financial Statements. LITCHFIELD PRECISION COMPONENTS, INC. STATEMENTS OF STOCKHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 1995 AND 1994
Common Common Stock Stock Additional Common Class A Class B Paid-In Retained Stock Voting Nonvoting Capital Earnings Total ----------- ----------- ----------- ----------- ----------- ----------- Balance, December 31, 1993 $ 9,025 $ -- $ -- $ 438,503 $ 660,860 $ 1,108,388 Redemption of common stock (174) -- -- (8,454) (21,372) (30,000) Common stock recapitalization (8,851) 89 8,762 -- -- -- Dividends -- -- -- -- (115,491) (115,491) Net income -- -- -- -- 428,378 428,378 ---------- ----------- ----------- ----------- ----------- ----------- Balance, December 31, 1994 -- 89 8,762 430,049 952,375 1,391,275 Dividends -- -- -- -- (236,036) (236,036) Net income -- -- -- -- 346,189 346,189 ---------- ----------- ----------- ----------- ----------- ----------- Balance, December 31, 1995 $ -- $ 89 $ 8,762 $ 430,049 $ 1,062,528 $ 1,501,428 =========== =========== =========== =========== =========== ===========
See Notes to Financial Statements. LITCHFIELD PRECISION COMPONENTS, INC. STATEMENTS OF CASH FLOWS Years Ended December 31, 1995 and 1994 1995 1994 Cash Flows From Operations Net Income $ 346,189 $ 428,378 Adjustments to reconcile net income to net cash provided by operating activities: Provision for doubtful receivables 1,339 16,750 Depreciation and amortization 522,354 469,322 Loss on sale of equipment 29,935 -- Decrease (increase) in: Trade receivables (29,358) (120,244) Inventories (102,204) (81,557) Prepaid expenses and other 42,849 (72,992) Increase (decrease) in: Accounts payable 221,468 131,231 Accrued expenses 73,212 (113,459) ----------- ----------- Net cash provided by operating activities 1,105,784 657,429 ----------- ----------- Cash Flows From Investing Activities Proceeds from sale of equipment 1,400 -- Purchase of property and equipment (405,314) (516,359) Purchase of restricted investment (318,563) (319,938) Maturity of restricted investment 319,938 317,100 (Increase) decrease in restricted cash and investments (3,041) 59,470 ----------- ----------- Net cash used in investing activities (405,580) (459,727) ----------- ----------- Cash Flows From Financing Activities Net (payments) borrowings on note payable to bank (32,277) 274,651 Proceeds from long-term borrowings 300,000 500,000 Principal payments on long-term debt (774,491) (862,432) Cash paid for redemption of common stock -- (7,500) Dividends paid (193,436) (102,421) ----------- ----------- Net cash used in financing activities (700,204) (197,702) ----------- ----------- Increase (decrease) in cash -- -- Cash Beginning -- -- ----------- ----------- Ending $ -- $ -- =========== =========== LITCHFIELD PRECISION COMPONENTS, INC. STATEMENTS OF CASH FLOWS(CONTINUED) YEARS ENDED DECEMBER 31, 1995 AND 1994 1995 1994 Supplemental Disclosures of Cash Flow Information Cash payments for interest $374,119 $425,997 ======== ======== Supplemental Schedules of Noncash Financing Activities Issuance of note payable in connection with redemption of common stock $ -- $ 22,500 Dividends payable 42,600 13,070 Equipment purchases included in accounts payable 82,000 -- Capital lease incurred for new equipment 30,984 -- ======== ======== See Notes to Financial Statements. LITCHFIELD PRECISION COMPONENTS, INC. NOTES TO FINANCIAL STATEMENTS NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES NATURE OF BUSINESS: The Company's operation is principally the production and assembly of components to customer specifications in the electronic, computer peripheral, medical, and related industries. The Company sells the components primarily to customers in the Midwest region of the United States on credit terms that the Company establishes for its customers. A summary of the Company's significant accounting policies follows: INVENTORIES: Inventories are stated at the lower of cost (first-in, first-out method) or market. At December 31, the composition of inventories was as follows: 1995 1994 Raw materials $ 695,193 $ 450,053 Work in process 315,002 457,938 ---------- ---------- $1,010,195 $ 907,991 ========== ========== BOND ISSUE COSTS: Bond issue costs are being amortized on the straight-line method over the 20-year term of the Industrial Revenue Bond. DEPRECIATION: Depreciation of property and equipment is computed on the straight-line and accelerated methods over the following estimated useful lives: Years Land improvements 10 Buildings 30-35 Equipment 5 Office furniture and equipment 3-7 FAIR VALUE OF FINANCIAL INSTRUMENTS: At December 31, 1995, the Company adopted Financial Accounting Standards Board Statement No. 107, Disclosures About Fair Value of Financial Instruments, which requires disclosure of fair value information of financial instruments. The fair value of the Company's financial instruments and the underlying methods and assumptions are as follows: RESTRICTED CASH: The carrying amount approximates fair value because of the nature of the investment. NOTES PAYABLE AND LONG-TERM DEBT: The current and long-term notes payable have interest rates that are adjustable as the prime rate fluctuates and are at rates which approximate market; therefore, the carrying amount approximates the fair value. USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the 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. PROFIT SHARING AND 401(K) PLAN: The Company has a qualified profit sharing plan for those employees who meet the eligibility requirements set forth in the plan. Contributions to the plan are made at the discretion of the Board of Directors. There were no profit sharing contributions to the plan for the years ended December 31, 1995 and 1994. Effective January 1, 1994, the Company amended the plan to allow employees to contribute salary deferrals. The Company can also make a discretionary matching contribution. The Company made contributions of $29,362 and $27,568 for the years ended December 31, 1995 and 1994, respectively. INCOME TAXES: The stockholders have elected to be taxed as an S Corporation. Under these provisions, the stockholders report net income or losses of the Company on their individual income tax returns. Therefore, these statements do not include a provision for corporate income taxes. S CORPORATION DIVIDEND DISTRIBUTIONS: The Company intends to make S Corporation dividend distributions each year in amounts necessary to fund the stockholders' personal income tax liabilities associated with the Company's taxable income less tax credits. The amount of taxable income may be different than income for financial statement purposes due to differences in the tax bases of various assets and liabilities. RECLASSIFICATION: Certain 1994 amounts have been reclassified to be consistent with the 1995 presentation. NOTE 2. LINE OF CREDIT AND LONG-TERM DEBT LINE OF CREDIT: The line of credit agreement provides for advances of up to $1,500,000 based upon qualifying accounts receivable and inventory and expires December 31, 1996. The Company had advances under the revolving line of credit of $917,915 and $950,192 at December 31, 1995 and 1994, respectively. Advances issued under this line of credit accrue interest at a rate of 1.5 percent over the prime rate (b). LONG-TERM DEBT:
1995 1994 8.8% (blended) Industrial Revenue Bond, due in monthly installments of approximately $27,000, including interest, to August 2006, secured by related real estate, restricted cash and investment, and personal guarantees of stockholder (a) $2,122,917 $2,245,000 Term notes to bank, due in monthly installments of $50,000, plus interest, at prime plus 2.0% to December 1996 (b) 559,632 849,363 5% installment note, due in monthly installments of $1,888, including interest, to January 1999, secured by certain equipment and personal guarantee of stockholders 64,562 83,474 Others 42,061 54,842 ---------- ---------- 2,789,172 3,232,679 Less current maturities 723,029 776,972 ---------- ---------- $2,066,143 $2,455,707 ========== ==========
(a) The Industrial Revenue Bond debt agreement contains various restrictions as to adherence to financial ratios and covenants, indebtedness, dividends, compensation levels, capital stock, and related-party transactions. The agreement also contains covenants restricting additional liens and security interests on assets owned or acquired. (b) The line of credit and the term notes are part of the same agreement. The loans are secured by accounts receivable, inventory, certain equipment, certain property, and the personal guarantee of majority stockholders of $1,000,000. The agreement requires, among other things, various restrictions as to adherence to financial ratios and covenants, indebtedness, stock dividends, capital stock, and capital expenditures. At December 31, 1995, there were certain covenant violations, which were waived subsequent to year end. The approximate aggregate maturities with respect to long-term debt for years subsequent to December 31, 1995, are as follows: Amount 1996 $ 723,000 1997 178,000 1998 183,000 1999 173,000 2000 182,000 Thereafter 1,350,000 ----------- $ 2,789,000 =========== NOTE 3. RESTRICTED CASH AND INVESTMENTS The terms of the Company's Industrial Revenue Bond Agreement require the Company to maintain certain levels of cash and investments to be held in trust as a reserve fund and collateral for obligations under the Industrial Revenue Bond Agreement. The restricted cash has been classified as current to meet current payment obligations under the Industrial Revenue Bond Agreement. At December 31, 1995, the long-term restricted investment is an investment in a US Government Agency Security maturing in July 1996. This investment is recorded as a held-to-maturity security and is carried at amortized cost which approximates fair value. The amount required to be maintained as a long-term investment represents approximately one year of debt service. NOTE 4. MAJOR CUSTOMER Net sales made to and trade receivables due from a major customer (which individually accounts for 10 percent or more of net sales in 1995 or 1994) are summarized as follows:
Net Sales Trade Receivables ---------------------------------- ---------------------------------- Year Ended December 31 December 31 ---------------------------------- ---------------------------------- Customer 1995 1994 1995 1994 - ----------------------------------------------------------------------------------------- A $ 1,662,000 $ 2,415,000 $ 65,000 $ 221,000
NOTE 5. SUBSEQUENT EVENT On April 5, 1996, the Company signed an agreement to sell substantially all of the assets of the Company. The closing of this transaction is subject to the completion by the buyer of their due diligence. Appendix B LITCHFIELD PRECISION COMPONENTS, INC. FINANCIAL REPORT MARCH 31, 1996 LITCHFIELD PRECISION COMPONENTS, INC. UNAUDITED BALANCE SHEET MARCH 31, 1996 ASSETS Current Assets Trade receivables, less allowance for doubtful accounts of $30,000 $ 1,154,746 Inventories 1,263,359 Prepaid expenses and other 55,946 Restricted cash 2,870 ----------- Total current assets 2,476,921 ----------- Restricted Investment 331,342 ----------- Property and Equipment, at cost Land and land improvements 407,455 Buildings 4,371,989 Equipment 5,441,511 Office furniture and equipment 590,775 ----------- 10,811,730 Less accumulated depreciation 6,842,264 ----------- 3,969,466 ----------- Intangible, bond issue costs, less accumulated amortization of $74,375 75,625 ----------- $ 6,853,354 =========== See Notes to Financial Statements. LITCHFIELD PRECISION COMPONENTS, INC. UNAUDITED BALANCE SHEET (CONTINUED) MARCH 31, 1996 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Note payable to bank $1,218,746 Current maturities of long-term debt 576,063 Accounts payable 823,732 Accrued compensation 414,303 Other accrued liabilities 255,650 ---------- Total current liabilities 3,288,494 ---------- Long-Term Debt, less current maturities 2,023,484 ---------- Stockholders' Equity Class A voting common stock, no par value; stated at $0.01 per share; authorized 100,000 shares; issued and outstanding 8,851 shares 89 Class B nonvoting common stock, no par value; stated at $0.01 per share; authorized 9,900,000 shares; issued and outstanding 876,249 shares 8,762 Additional paid-in capital 430,049 Retained earnings 1,102,476 ---------- 1,541,376 ---------- $6,853,354 ========== See Notes to Financial Statements. LITCHFIELD PRECISION COMPONENTS, INC. UNAUDITED STATEMENTS OF INCOME Three Months Ended March 31, 1996 1995 Net sales $ 2,990,021 $ 3,116,413 Cost of sales 2,371,964 2,345,429 ----------- ----------- Gross profit 618,057 770,984 Operating expenses 476,450 395,288 ----------- ----------- Operating income 141,607 375,696 ----------- ----------- Other income (expense): Interest income 6,605 7,680 Interest expense (88,123) (99,785) Other 359 198 ----------- ----------- (81,159) (91,907) ----------- ----------- Net income $ 60,448 $ 283,789 =========== =========== See Notes to Financial Statements. LITCHFIELD PRECISION COMPONENTS, INC. UNAUDITED STATEMENT OF STOCKHOLDERS' EQUITY THREE MONTHS ENDED MARCH 31, 1996
Common Common Stock Stock Additional Class A Class B Paid-In Retained Voting Nonvoting Capital Earnings Total ----------- ----------- ----------- ----------- ----------- Balance, December 31, 1995 $ 89 $ 8,762 $ 430,049 $ 1,062,528 $ 1,501,428 Dividends -- -- -- (20,500) (20,500) Net income -- -- -- 60,448 60,448 ----------- ----------- ----------- ----------- ----------- Balance, March 31, 1996 $ 89 $ 8,762 $ 430,049 $ 1,102,476 $ 1,541,376 =========== =========== =========== =========== ===========
See Notes to Financial Statements. LITCHFIELD PRECISION COMPONENTS, INC. UNAUDITED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, ---------------------- 1996 1995 --------- --------- Cash Flows From Operations Net Income $ 60,448 $ 283,789 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 133,650 124,911 Decrease (increase) in: Trade receivables 235,182 (143,862) Inventories (253,164) 14,785 Prepaid expenses and other (24,744) 14,631 Increase (decrease) in: Accounts payable (89,868) (165,132) Accrued expenses (47,585) 76,045 Net cash provided by operating activities 13,919 205,167 --------- --------- Cash Flows From Investing Activities Purchase of property and equipment (80,035) (78,780) Increase in restricted cash and investments (2,490) (4,246) --------- --------- Net cash used in investing activities (82,525) (83,026) --------- --------- Cash Flows From Financing Activities Net borrowings on note payable to bank 300,831 79,172 Principal payments on long-term debt (189,625) (201,313) Dividends paid (42,600) -- --------- --------- Net cash provided by (used in) financing activities 68,606 (122,141) --------- --------- Increase (decrease) in cash -- -- Cash Beginning -- -- --------- --------- Ending $ -- $ -- ========= ========= Supplemental Disclosures of Cash Flow Information: Cash payments for interest $ 88,048 $ 100,661 ========= =========
See Notes to Financial Statements. LITCHFIELD PRECISION COMPONENTS, INC. NOTES TO FINANCIAL STATEMENTS Note 1. - ACCOUNTING POLICIES The accompanying unaudited financial statements do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. The unaudited financial statements include the accounts of Litchfield Precision Components, Inc.. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of operating results have been made. Operating results for interim periods are not necessarily indicative of results which may be expected for the year as whole. For further information, refer to the audited financial statements and footnotes for the year ended December 31, 1995 included in Appendix A above. APPENDIX C INNOVEX INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS The following unaudited pro forma financial statements are based on the historical financial statements of Innovex, Inc. ("Innovex"). These statements also show the unaudited pro forma information to give effect to the acquisition of the assets of Litchfield Precision Components, Inc. ("LPC") which were acquired as of May 16, 1996. This acquisition was accounted for as a purchase. The accompanying unaudited consolidated balance sheet reflects this acquisition as if it occurred at March 31, 1996. The unaudited pro forma consolidated statement of operations for the six month period ended March 31, 1996 and for the year ended September 30, 1995 reflect the acquisition as if it occurred as of October 1, 1994. The unaudited pro forma consolidated financial statements are not necessarily indicative of the results of future operations. INNOVEX INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET MARCH 31, 1996 (dollars in thousands)
Pro Forma ---------------------- ASSETS Innovex LPC Adjustments Combined - ------ ------- --- ----------- -------- Current assets: Cash and cash equivalents $ 7,349 $ -- $ (6,847)(1) $ 502 Short-term investments 17,765 -- -- 17,765 Accounts receivable 7,360 1,155 -- 8,515 Inventories 3,194 1,263 -- 4,457 Other current assets 2,240 59 (59)(1) 2,240 -------- -------- -------- -------- Total current assets 37,908 2,477 (6,906) 33,479 Property, plant and equipment 7,340 3,969 690(1) 11,999 Intangible and other assets 1,827 407 877(1) 3,111 -------- -------- -------- -------- $ 47,075 $ 6,853 $ (5,339) $ 48,589 ======== ======== ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities: Current maturities of long-term debt $ 108 $ 1,795 $ (1,795)(1) $ 108 Accounts payable 1,741 824 -- 2,565 Other accrued liabilities 2,513 670 -- 3,183 -------- -------- -------- -------- Total current liabilities 4,362 3,289 (1,795) 5,856 Long-term debt 1,119 2,023 (2,003)(1) 1,139 Other long-term liabilities 371 -- -- 371 Stockholders' equity: Common stock 283 9 (9)(1) 283 Capital in excess of par value 9,017 430 (430)(1) 9,017 Retained earnings 31,923 1,102 (1,102)(1) 31,923 -------- -------- -------- -------- Total stockholders' equity 41,223 1,541 (1,541) 41,223 -------- -------- -------- -------- $ 47,075 $ 6,853 $ (5,339) $ 48,589 ======== ======== ======== ========
See notes to Pro Forma Consolidated Financial Statements. INNOVEX INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in thousands)
For the Six Months Ended March 31, 1996 Pro Forma ----------------------- Innovex LPC Adjustments Combined -------- -------- ----------- -------- Net sales $ 27,786 $ 6,095 $ 33,881 Costs and expenses: Cost of sales 16,256 4,900 $ (65)(2) 21,091 Selling, general and administrative 2,557 996 60(3) 3,613 Engineering 1,216 -- -- 1,216 Net interest and other (income) expense (397) 173 29(4) (195) -------- -------- -------- -------- Income before taxes 8,154 26 (24) 8,156 Provision for income taxes 2,447 -- 1(5) 2,448 -------- -------- -------- -------- Net income $ 5,707 $ 26 $ (25) $ 5,708 ======== ======== ======== ======== Primary and fully dilutive net income per share: $ 0.79 $ 0.79 ======== ======== Common and Common Equivalent Shares Outstanding: Primary 7,229 7,229 ======== ======== Assuming full dilution 7,229 7,229 ======== ========
For the Year Ended September 30, 1995 Pro Forma ----------------------- Innovex LPC Adjustments Combined -------- -------- ----------- -------- Net sales $ 50,194 $ 11,512 $ 61,706 Costs and expenses: Cost of sales 28,631 9,038 $ (115)(2) 37,554 Selling, general and administrative 4,727 1,653 121 6,501 Engineering 2,464 -- -- 2,464 Net interest and other (income) expense (446) 388 16(4) (42) -------- -------- -------- -------- Income before taxes 14,818 433 (22) 15,229 Provision for income taxes 4,789 -- 148(5) 4,937 -------- -------- -------- -------- Net income $ 10,029 $ 433 $ (170) $ 10,292 ======== ======== ======== ======== Net income per share Primary: $ 1.40 $ 1.44 Assuming full dilution: $ 1.39 $ 1.42 Common and Common Equivalent Shares Outstanding: Primary 7,161 7,161 Assuming full dilution 7,228 7,228
INNOVEX INC. AND SUBSIDIARIES NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (1) To reflect the purchase of the assets of Litchfield Precision Components, Inc. based on the assumption that the transaction was completed as of March 31, 1996. The acquisition has been accounted for under the purchase method and , accordingly, the purchase price has been allocated to the assets acquired and the liabilities assumed based on their fair values. The excess of the purchase price above the fair value of the assets, approximately $1,284,000, has been assigned to intangible assets and is being amortized over ten years. (2) To decrease depreciation expense to reflect the restatement to fair value and adjustment in estimated useful lives of the fixed assets as a result of the acquisition. (3) To record the amortization of the portion of the purchase price allocated to intangible assets over 10 years and eliminate the amortization of the bond issue costs which related to bonds paid off at the time of acquisition. (4) To eliminate interest expense recorded on debt which was paid off at the time of acquisition and eliminate interest income on $6,847,000 of cash and short term investments used to complete the purchase. (5) To adjust income taxes as a result of the effects of the pro forma adjustments on income before taxes and to adjust for the change in Litchfield Precision Components, Inc.'s tax status from a Subchapter S corporation to filing as part of a consolidated Subchapter C corporation. -----END PRIVACY-ENHANCED MESSAGE-----