-----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, ByM5iAlFoBQXNF5TESxEkyurM249GxwLvx20YZxktHQp6wXTdGacRxg03CiRdt8p QBPN03rKBFdNeNCJEy/wYg== 0000942708-96-000010.txt : 19960422 0000942708-96-000010.hdr.sgml : 19960422 ACCESSION NUMBER: 0000942708-96-000010 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960205 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960419 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: KINARK CORP CENTRAL INDEX KEY: 0000055805 STANDARD INDUSTRIAL CLASSIFICATION: COATING, ENGRAVING & ALLIED SERVICES [3470] IRS NUMBER: 710268502 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-03920 FILM NUMBER: 96548583 BUSINESS ADDRESS: STREET 1: 7060 S YALE CITY: TULSA STATE: OK ZIP: 74136 BUSINESS PHONE: 9184940964 MAIL ADDRESS: STREET 1: 7060 SOUTH YALE STREET 2: STE 603 CITY: TULSA STATE: OK ZIP: 741365723 FORMER COMPANY: FORMER CONFORMED NAME: KIN ARK OIL CO DATE OF NAME CHANGE: 19690601 FORMER COMPANY: FORMER CONFORMED NAME: KIN ARK OIL & GAS CO DATE OF NAME CHANGE: 19680906 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 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 5, 1996 KINARK CORPORATION (Exact name of registrant as specified in its charter) Delaware 1-3920 71-0268502 (State or other (Commission (I.R.S. Employer jurisdiction of File Number) Identification No.) incorporation) 7060 South Yale Avenue, Tulsa, OK 74136 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (918) 494-0964 N/A (Former name or former address, if changed since last report.) (Page 1 of 27 pages. Exhibit index appears on page ____.) Item 7 is hereby amended to read as follows: ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. Report of Independent Auditors Consolidated Balance Sheets as of September 30, 1995 and 1994 Consolidated Statements of Income and Retained Earnings for years ended September 30, 1995, 1994 and 1993 Consolidated Statements of Cash Flows for the years ended September 30, 1995, 1994 and 1993 Notes to Consolidated Financial Statements for the years ended September 30, 1995, 1994 and 1993 Condensed Consolidated Balance Sheet (Unaudited) as of December 31, 1995 Condensed Consolidated Statement of Income and Retained Earnings (Unaudited) for the three months ended December 31, 1995 Condensed Consolidated Statement of Cash Flows (Unaudited) for the three months ended December 31, 1995 Notes to Condensed Consolidated Financial Statements (Unaudited) for the three months ended December 31, 1995 INDEPENDENT AUDITORS' REPORT To the Board of Directors of Rogers Galvanizing Company: We have audited the accompanying consolidated balance sheets of Rogers Galvanizing Company and subsidiaries as of September 30, 1995 and 1994, and the related consolidated statements of income and retained earnings and cash flows for each of the three years in the period ended September 30, 1995. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated 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 audits 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Rogers Galvanizing Company and subsidiaries as of September 30, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 1995 in conformity with generally accepted accounting principles. /s/ Hogan & Slovacek, PC HOGAN & SLOVACEK, PC November 20, 1995 ROGERS GALVANIZING COMPANY Consolidated Balance Sheets September 30, 1995 and 1994 ASSETS 1995 1994 CURRENT ASSETS: Cash $ 312,326 $ 327,202 Cash-workers' compensation reserve 84,667 23,904 Certificate of deposit 50,000 50,000 Accounts receivable, less reserve for doubtful accounts of $58,181 in 1995 and $45,138 in 1994 2,414,986 2,156,576 Inventories 978,931 639,495 Income taxes receivable - 37,000 Deferred income taxes 202,000 178,500 Prepaid expenses 88,456 58,111 Total current assets 4,131,366 3,470,788 PROPERTY, PLANT AND EQUIPMENT, at cost: Land 175,172 75,172 Buildings 951,234 795,858 Shop equipment 5,584,697 4,883,002 Office equipment 238,876 216,631 Plant yard 198,868 177,898 Automobiles and trucks 123,009 108,481 Construction in progress 163,554 32,618 7,435,410 6,389,660 Less-accumulated depreciation 3,227,538 3,008,592 Total property, plant and equipment 4,207,872 3,381,068 OTHER ASSETS 132,341 - $8,471,579 $6,851,856 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $ 934,488 $ 877,464 Accounts payable 780,379 858,816 Accrued workers' compensation liability 334,504 310,680 Accrued employee health liability 110,718 79,953 Accrued retirement 27,347 25,252 Accrued payroll and payroll taxes 316,125 182,770 Other accrued liabilities 25,876 16,515 Income taxes payable 113,757 - Total current liabilities 2,643,194 2,351,450 DEFERRED INCOME TAXES 115,800 61,500 ACCRUED RETIREMENT 68,625 95,973 LONG-TERM DEBT 1,192,462 654,800 COMMITMENTS AND CONTINGENCIES - - SHAREHOLDERS' EQUITY: Common shares, $100 par value, 1,967 shares authorized, 1,172 shares outstanding 117,200 117,200 Capital surplus 103,451 103,451 Retained earnings, per accompanying statements 4,230,847 3,467,482 Total shareholders' equity 4,451,498 3,688,133 $8,471,579 $6,851,856 The accompanying notes are an integral part of these financial statements. ROGERS GALVANIZING COMPANY Consolidated Statements of Income and Retained Earnings For the Years Ended September 30, 1995, 1994 and 1993 1995 1994 1993 Sales $17,614,234 $12,624,796 $11,544,123 Costs and expenses: Costs of sales 12,764,067 9,447,974 7,806,927 Selling, general & administrative 2,443,072 2,127,505 1,713,037 Depreciation 807,278 671,681 550,108 Operating earnings 1,599,817 377,636 1,474,051 Other (income) expense: Interest expense, net 133,497 19,290 22,466 Other (107,869) (69,427) (66,389) Earnings before income taxes 1,574,189 427,773 1,517,974 Income tax expense 585,800 104,000 511,000 Net earnings 988,389 323,773 1,006,974 Retained earnings, beginning of year 3,467,482 3,603,133 2,821,183 Dividends paid ($192 per share in 1995, $392 per share in 1994 and $192 per share in 1993) (225,024) (459,424) (225,024) Retained earnings, end of year $4,230,847 $3,467,482 $3,603,133 The accompanying notes are an integral part of these financial statements. ROGERS GALVANIZING COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED SEPTEMBER 30, 1995, 1994 AND 1993 1995 1994 1993 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $988,389 $323,773 $1,006,974 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 807,278 671,681 550,108 Deferred income taxes 30,800 (29,000) (61,000) Changes in operating assets and liabilities: (Increase) in accounts receivable (258,410) (424,173) (470,087) (Increase) in inventories (339,436) (71,951) (62,672) (Increase) decrease in income taxes receivable 37,000 (17,000) 27,598 (Increase) in prepaid expenses (30,345) (20,365) (19,638) Increase (decrease) in accounts payable (78,437) 321,371 95,965 Increase in workers' compensation liability 23,824 57,827 118,702 Increase (decrease) in accrued employee health liability 30,765 (17,325) 97,278 Increase (decrease) in accrued payroll and payroll taxes 133,355 (142,875) 130,255 Increase (decrease) in other accrued liabilities 9,361 (10,836) 8,265 Increase (decrease) in income taxes payable 113,757 (129,745) 129,745 (Decrease) in accrued retirement (25,253) (23,317) (88,170) Total adjustments 454,259 164,292 456,349 Net Cash provided by operating activities 1,442,648 488,065 1,463,323 CASH FLOWS USED IN INVESTING ACTIVITIES: Additions to property, plant and equipment (1,144,082) (972,825) (922,582) Purchase of other assets (132,341) - - Net cash used in investing activities (1,276,423) (972,825) (922,582) CASH FLOWS FROM FINANCING ACTIVITIES: Dividends paid (225,024) (459,424) (225,024) Proceeds from debt 1,226,917 900,000 - Payments on debt (1,122,231) (83,375) (24,554) Net cash provided by (used in) financing activities (120,338) 357,201 (249,578) NET INCREASE (DECREASE) IN CASH 45,887 (127,559) 291,163 CASH, beginning of year 401,106 528,665 237,502 CASH, end of year $446,993 $401,106 $528,665 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid $149,759 $34,255 $29,941 Income taxes paid $397,835 $214,742 $414,657 The Accompanying notes are an integral part of these financial statements. ROGERS GALVANIZING COMPANY Notes to Consolidated Financial Statements For the Years Ended September 30, 1995, 1994 and 1993 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Rogers Galvanizing Company and its subsidiaries (the Company) is engaged in the hot dip galvanizing of steel structures and components to customer specifications. On September 27, 1995, the Company acquired the business and operating assets of another galvanizing company. Principles of Consolidation The accompanying consolidated financial statements include the accounts of Rogers Galvanizing Company and its wholly-owned subsidiaries, Reinforcing Services, Inc., Spin-Galv, Inc. and Rogers Galvanizing Company - Kansas City, Inc. All significant intercompany balances and transactions have been eliminated in consolidation. Inventories Inventories are composed, primarily, of raw zinc "pigs", molten zinc in galvanizing kettles and other chemicals and materials used in the galvanizing process. Molten zinc is stated at the lower of cost or market, with cost determined by the last-in, first-out (LIFO) method. All other inventories are stated at the lower of cost or market, with cost determined by the first-in, first-out (FIFO) method. The molten zinc valued on a LIFO basis in the September 30, 1995 and 1994 financial statements was $661,631 and $503,623, respectively. The corresponding approximate replacement cost for this inventory was $1,258,970 and $952,300 at September 30, 1995 and 1994, respectively. Property, Plant and Equipment Depreciation is provided using accelerated and straight-line methods over the estimated useful lives of the related property, ranging from three to 20 years. During 1994, the Company capitalized $15,619 of interest incurred after entering into a capitalized equipment lease obligation until the equipment was placed in service. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Profit Sharing Plan The Company has a qualified 401(k) profit sharing plan for eligible employees. Eligible employees may defer a portion of their salary. At the discretion of the Board of Directors, the Company may make annual contributions to the plan, but is not required to do so. The Company made no contributions in 1994 or 1995. Other Assets Other assets represent goodwill, capitalized acquisition costs and a non- compete agreement relating to the formation of a wholly-owned subsidiary and the acquisition of the business and operating assets of another galvanizing company. The capitalized acquisition costs and non-compete agreement are being amortized over five years and the acquired goodwill is being amortized over fifteen years. 2. INCOME TAXES The provision for income taxes consists of the following for the years ended September 30, 1995 1994 1993 Current: Federal $542,700 $133,000 $572,000 State 12,300 - - 555,000 133,000 572,000 Deferred: Federal 30,800 (29,000) (61,000) State - - - $585,800 $104,000 $511,000 The income tax rate for financial reporting purposes varies from the federal statutory rate as follows: 1995 1994 1993 Percent of pretax income: Federal statutory income tax rate 34.0% 34.0% 34.0% State income taxes, net of federal benefit .8 - - Non-deductible permanent differences .4 1.7 .4 Adjustment of prior year's estimated liability - (9.7) - Other items 2.0 (1.7) (.7) Effective income tax rate for the year 37.2% 24.3% 33.7% Significant components of the Company's deferred tax liabilities and assets at September 30 are as follows: 1995 1994 Deferred tax liabilities: Tax over book depreciation $142,400 $ 98,500 Deferred tax assets: Accrued retirement 37,200 46,900 Self-insured insurance programs 168,800 151,100 Reserve for doubtful accounts 22,600 17,500 228,600 215,500 Net deferred tax assets $ 86,200 $117,000 Based on the Company's history of operating earnings and its expectations for future operations, management believes that operating income will be sufficient to allow the full realization of deferred tax assets. 3. ACCRUED RETIREMENT At September 30, 1992, the Company was making monthly retirement payments to two retired company executives. During the year ended September 30, 1993, one of the retired executives died. The liability to the remaining executive was adjusted to estimated remaining payments to be made as calculated by an insurance company using standard mortality tables and recorded at net present value using an 8 percent interest rate. 4. LINE OF CREDIT AND LONG-TERM DEBT The Company's line of credit and long-term debt consisted of the following at September 30: 1995 1994 Combined revolving bank line of credit, up to $3,000,000 through July 31, 1996, interest payable monthly at floating prime plus .5%, (9.25% at September 30, 1995) secured by certain of the Company's machinery and equipment, and its inventories and accounts receivable, restricts payment of cash dividends to not more than net income, line is limited to $2,425,000 by a $575,000 workers' compensation self-insurance letter of credit required by Oklahoma's Workers' Compensation Court as discussed in Note 5 $511,608 $650,000 Note payable to bank in monthly installments of $3,097 including interest at 7.2%, final payment due October, 1996, secured by specific equipment 30,411 69,029 Note payable to bank in monthly installments of $4,684 including interest at floating prime plus .5% (9.25% at September 30, 1995), final payment due June, 1997, secured by equipment, receivables, and inventory 95,749 142,828 Note payable to an unrelated Company, payable in monthly installments of $3,331 including interest at 3.5%, final payment due July, 1997, unsecured 70,875 107,661 Unsecured note payable to a Company, payable in monthly installments of $3,000, including interest at 8%, through March, 1998 80,957 109,324 Revolving bank line of credit, up to $750,000 through September, 2000, payable in monthly installments of principal and interest of $15,660 at floating prime plus .5% (9.25% at September 30, 1995) secured by certain of the Company's machinery and equipment and its inventories and accounts receivable, restricts payment of cash dividends to not more than net income. 448,489 - Note payable to unrelated party in monthly installments of $6,475 including interest at 10% through September, 2000, at which time unpaid principal is due. 490,000 - 4. LINE OF CREDIT AND LONG-TERM DEBT (CONTINUED) Note payable to Tulsa County Industrial Authority in monthly installments of $237 including interest at 6.8% due September, 2015, joint and severally guaranteed by co-makers 30,764 - Capitalized lease obligation for equipment 368,097 453,422 2,126,950 1,532,264 Less current maturities 934,488 877,464 $1,192,462 $654,800 The aggregate maturities of this debt are as follows: 1996 $ 934,488 1997 410,463 1998 288,777 1999 115,422 2000 350,501 Thereafter 27,299 $2,126,950 5. WORKERS' COMPENSATION INSURANCE The Company utilizes a self-insured program for workers' compensation. This program is limited to losses of $300,000 per claim, and aggregate losses of $5,000,000 over a two-year period through the use of a stop-loss policy. As required by Oklahoma's Workers' Compensation Court, the Company has a $575,000 letter of credit with a bank to ensure the Company's ability to pay workers' compensation claims. This letter of credit is included in the $3,000,000 revolving bank line of credit described in Note 4. Claims are accrued based on the Company's estimate of the aggregate liability for claims made and for potential claims. The Company provided $658,340, $813,195, and $329,499 for workers' compensation claims for the years ended September 30, 1995, 1994, and 1993, respectively. In addition, the Company incurred $83,574, $67,546, and $68,573 for reinsurance and administrative expenses for the years ended September 30, 1995, 1994, and 1993, respectively. 6. EMPLOYEE HEALTH INSURANCE The Company adopted a self-insured program for employee health benefits on June 1, 1993. Under this program, responsibility for employee health care costs are assumed by the Company with incurred costs above a specified amount covered by a stop-loss insurance policy. For the years ended September 30, 1995, 1994, and 1993, respectively, the Company provided $571,523, $475,615, and $155,228 for employee health care costs and paid out $293,754, $334,669, and $1,404 in employee health care claims and incurred $247,003, $158,241, and $56,725 in administrative costs and stop-loss insurance premiums. 7. NON-CASH TRANSACTIONS During 1994, the Company entered into a capital lease obligation for equipment totalling $466,519. In addition, the Company purchased inventory of $113,673 by issuing a note payable to an unrelated company. In 1995, the Company purchased the operating assets of another galvanizer for cash and the issuance of a note payable to an unrelated party in the amount $490,000. 8. COMMITMENTS AND CONTINGENCIES The Company is involved in various claims and legal actions arising from time to time in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's financial position, liquidity or results of operations. The Company has long-term operating lease agreements for the use of facilities at its subsidiaries which were entered into during 1994. Future related lease obligations are as follows for the years ended September 30, 1996 - $156,000, 1997 - $68,000, 1998 - $27,000, 1999 - $27,000, 2000 - $27,000 and $134,775 thereafter. Rent expense for these facilities during 1995 and 1994 were $134,227 and $29,210, respectively. 9. OBLIGATIONS UNDER CAPITAL LEASE The Company acquired certain equipment under provisions of a long-term lease. For financial reporting purposes, minimum lease rentals for the assets have been capitalized. The following is a schedule of leased equipment under the capital lease: Capitalized cost $466,519 Less accumulated depreciation 68,034 $398,485 The following is a schedule by years of future minimum lease payments, including renewal options, together with the present value of the net minimum lease payments as of September 30, 1995: Year Ended September 30, 1996 $116,514 1997 116,514 1998 116,514 1999 75,838 Total minimum lease payments 425,380 Less amount representing interest 57,283 Present value of net minimum lease payments $368,097 Current portion $ 90,331 Long-term portion 277,766 $368,097 The present value of net minimum lease payments are combined with other long- term debt in the accompanying financial statements and Note 4. ROGERS GALVANIZING COMPANY CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) DECEMBER 31,1995 ASSETS CURRENT ASSETS: Cash $ 263,438 Accounts receivable, net 2,750,834 Inventories 1,071,700 Prepaid expenses 110,126 Total current assets 4,196,098 PROPERTY, PLANT AND EQUIPMENT, at cost: Land 175,172 Galvanizing plants and equipment 6,851,668 Other 576,945 Construction in progress 569,925 8,173,710 Less accumulated depreciation (3,445,599) Total property, plant and equipment 4,728,111 Deferred income taxes 202,000 Intangible assets 173,194 $9,299,403 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $1,371,487 Accounts payable 1,147,339 Accrued liabilities 787,660 Total current liabilities 3,306,486 DEFERRED INCOME TAXES 115,800 ACCRUED RETIREMENT 61,991 LONG-TERM DEBT 1,298,101 COMMITMENTS AND CONTINGENCIES - SHAREHOLDERS' EQUITY: Common shares, $100 par value, 1,967 shares authorized, 1,172 shares outstanding 117,200 Capital surplus 103,451 Retained earnings 4,296,374 Total shareholders' equity 4,517,025 $9,299,403 See notes to consolidated financial statements. ROGERS GALVANIZING COMPANY CONDENSED CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS (UNAUDITED) FOR THE THREE MONTHS ENDED DECEMBER 31, 1995 Sales $4,498,107 Costs and expenses: Costs of sales 3,464,688 Selling, general and administrative 577,668 Depreciation 216,181 Operating earnings 239,570 Other (income) expense: Interest expense, net 56,972 Other (13,825) Earnings before income taxes 196,423 Income tax expense 74,640 Net earnings 121,783 Retained earnings, beginning of period 4,230,847 Less: Dividends paid 56,256 Retained earnings, end of period $4,296,374 See notes to consolidated financial statements. ROGERS GALVANIZING COMPANY CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) FOR THE THREE MONTHS ENDED DECEMBER 31, 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 121,783 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 218,360 Changes in operating assets and liabilities: Increase in accounts receivable (335,848) Increase in inventories (92,769) Increase in prepaid expenses (21,669) Increase in accounts payable 366,960 (Decrease) in accrued liabilities (145,817) Total adjustments (10,783) Net cash provided by operating activities 111,000 CASH FLOWS USED IN INVESTING ACTIVITIES: Additions to property, plant and equipment (777,496) Net cash used in investing activities (777,496) CASH FLOWS FROM FINANCING ACTIVITIES: Dividends paid (56,256) Proceeds from debt 562,982 Payments on debt (23,785) Net cash provided by financing activities 482,941 NET DECREASE IN CASH (183,555) CASH, BEGINNING OF PERIOD 446,993 CASH, END OF PERIOD $ 263,438 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid $ 59,668 Income taxes paid $ 62,437 See notes to consolidated financial statements. ROGERS GALVANIZING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED DECEMBER 31, 1995 1. BASIS OF PRESENTATION The accompanying consolidated financial statements have been prepared by Rogers Galvanizing Company (the "Company") pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting and include all normal and recurring adjustments which are, in the opinion of management, necessary for a fair presentation. These financial statements have not been audited by an independent accountant. The consolidated financial statements include the accounts of the Company and its subsidiaries, Reinforcing Services, Inc., Spin-Galv, Inc. and Rogers Galvanizing Company - Kansas City, Inc., which was acquired on September 27, 1995. All significant intercompany balances and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations for interim reporting. The Company believes that the disclosures are adequate to make the information presented not misleading. However, these consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the years ended September 30, 1995, 1994, and 1993, included elsewhere in this Form 8-K/A. The financial data for the interim periods presented may not necessarily reflect the results to be anticipated for the complete year. 2. INVENTORIES Inventories are composed primarily of raw zinc "pigs," molten zinc in galvanizing kettles and other chemicals and materials used in the galvanizing process. Molten zinc is stated at the lower of cost or market, with cost determined by the last-in, first-out (LIFO) method. All other inventories are stated at the lower of cost or market, with cost determined by the first-in, first-out (FIFO) method. 3. ACQUISITION BY KINARK CORPORATION On February 5, 1996, Kinark Corporation ("Kinark") acquired 51.2% of the outstanding common stock of the Company for $4.3 million in cash from Trusts that held such stock, and concurrently assumed control of the Board of Directors. Additionally, on February 16, 1996, pursuant to five separate option agreements, Kinark acquired an additional 16% of the Company's outstanding common stock for $1.3 million in cash. The acquisition will be accounted for using the purchase method of accounting. Under the purchase agreement with the Trusts, Kinark has agreed to purchase the Company's remaining outstanding shares of common stock from its minority stockholders for cash at a price per share equivalent to that paid in the transactions described above. (B) PRO FORMA FINANCIAL INFORMATION. Pro Forma Consolidated Financial Data (Unaudited) Pro Forma Condensed Consolidated Balance Sheet as of December 31, 1995 (Unaudited) Pro Forma Condensed Consolidated Income Statement for the year ended December 31, 1995 (Unaudited) Notes to Pro Forma Condensed Consolidated Financial Statements for the year ended December 31, 1995 (Unaudited) PRO FORMA CONSOLIDATED FINANCIAL DATA (UNAUDITED) The following Pro Forma Consolidated Financial Data of Kinark Corporation (the "Company") consists of a Pro Forma Condensed Consolidated Balance Sheet (unaudited) as of December 31, 1995 (the "Pro Forma Balance Sheet"), and the Pro Forma Condensed Consolidated Statement of Operations (unaudited) for the year ended December 31, 1995 (the "1995 Pro Forma Statement of Operations"). The Pro Forma Balance Sheet reflects the combination of the balance sheets of the Company as of December 31, 1995, and Rogers Galvanizing Company ("Rogers") as of September 30, 1995, as adjusted for the issuance of 2,280,000 shares of the Company's common stock under a Private Placement the proceeds of which were used to acquire 67.2% of the outstanding common stock of Rogers in two transactions on February 5 and February 16, 1996. The Pro Forma Balance Sheet is presented as if the Rogers acquisition and the Private Placement had been consummated on December 31, 1995. The 1995 Pro Forma Statement of Operations reflects the combination of the income statements of the Company for the year ended December 31, 1995, and of Rogers for its fiscal year ended September 30, 1995, as if the transaction was consummated on January 1, 1995. The Company has not completed the purchase accounting for the acquisition, including its assessment of the fair values of Rogers' assets and liabilities, which, with the exception of a pro-rata adjustment to eliminate the LIFO valuation reserve on Roger's zinc inventory, are reflected at Rogers' historical cost in the accompanying Pro Forma Balance Sheet. The Company expects to finalize its fair value assessment in 1996. Accordingly, the final consolidated amounts may differ from those set forth herein. The Pro Forma Consolidated Financial Data should be read in conjunction with the separate historical financial statements of the Company, the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Company's Annual Report on Form 10-K, as well as the historical consolidated financial statements of Rogers appearing in this Form 8-K/A. The Pro Forma Consolidated Financial Data is based upon currently available information and upon certain assumptions that the Company believes are reasonable under the circumstances. The Pro Forma Consolidated Financial Data does not purport to represent what the Company's financial position or results of operations would actually have been if the aforementioned transactions in fact had occurred on such date or at the beginning of the periods indicated or to project the Company's financial position or results of operations at any future date or for any future period. KINARK CORPORATION PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET DECEMBER 31, 1995 (Unaudited) Historical Kinark Rogers(a) Pro-Forma Pro-Forma Adjustments Consolidated (in thousands) ASSETS Current assets: Cash $ 30 $ 447 $ 5,585 (b) $ 518 (5,544) (e) Accounts receivable, net 3,508 2,415 5,923 Net assets of discontinued operation 434 434 Inventories 2,615 979 401 (i) 3,995 Prepaid assets 566 88 (143) (e) 511 Deferred income taxes 202 202 Total current assets 7,153 4,131 299 11,583 Fixed assets 30,455 7,435 37,890 Less accumulated depreciation (21,448) (3,227) (24,675) Fixed assets, net 9,007 4,208 13,215 Other assets: Deferred income taxes 2,070 2,070 Other assets 145 132 277 Excess of cost over fair value of net assets acquired 2,889 (e) 2,889 Total other assets 2,215 132 2,889 5,236 Total $ 18,375 $ 8,471 $ 3,188 $30,034 See notes to pro forma condensed consolidated financial statements.(Continued) KINARK CORPORATION PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET DECEMBER 31, 1995 (Unaudited) Historical Kinark Rogers(a) Pro-Forma Pro-Forma Adjustments Consolidated (in thousands) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Long-term debt - current portion $ 628 $ 934 $ 1,562 Accrued retirement liabilities 27 27 Accounts payable 1,593 780 2,373 Accrued expenses - other 2,057 788 $ 377(e) 3,222 Accrued income taxes 114 114 Total current liabilities 4,278 2,643 377 7,298 Long-term debt 5,670 1,192 6,862 Accrued retirement 68 325(f) 393 Lease obligations 262 262 Deferred income taxes 116 116 Total long-term liabilities 5,932 1,376 325 7,633 Total liabilities 10,210 4,019 702 14,931 MINORITY INTEREST 1,353(e) 1,353 SHAREHOLDERS' EQUITY Common Stock 520 117 228(b) 748 (117)(c) Additional paid-in capital 10,531 104 5,472(b) 15,888 (104)(c) (115)(b) Treasury Stock (5,976) (5,976) Retained earnings 3,090 4,231 (4,231)(c) 3,090 Shareholders' equity 8,165 4,452 1,133 13,750 Total $18,375 $8,471 $ 3,188 $30,034 See notes to pro forma condensed consolidated financial statements.(Concluded) KINARK CORPORATION PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 1995 (Unaudited) Historical Kinark Rogers(a) Pro-Forma Pro-Forma Adjustments Consolidated (in thousands, except share and per share data) SALES $ 25,246 $17,614 $ 42,860 COSTS AND EXPENSES: Cost of sales 20,524 13,509 34,033 Selling, general and administrative 3,766 1,698 $(370)(d) 5,094 Depreciation and amortization 1,471 807 115(d) 2,393 Operating earnings (loss) (515) 1,600 255 1,340 OTHER (INCOME) EXPENSE: Interest expense, net 634 134 768 Other (income) expense, net - (108) (108) Other expenses, net 634 26 660 Earnings (loss) from continuing operations before income taxes (1,149) 1,574 255 680 Income Taxes (446) 586 135(g) 275 Income (loss) from continuing operations before minority interest (703) 988 120 405 Minority interest - - 397(h) 397 Earnings (loss) from continuing operations $ (703) $988 $(277) $ 8 Earnings (loss) per share $ (0.19) $ - Weighted average shares outstanding 3,747,134 6,027,134 See notes to pro forma condensed consolidated financial statements. KINARK CORPORATION NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1995 (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (a) The historical information for Rogers Galvanizing Company ("Rogers") in the accompanying pro forma condensed consolidated financial statements for December 31, 1995 is based on that company's financial position as of September 30, 1995 and the results of their operations for the year then ended. (b) Issuance of 2,280,000 shares of Kinark Common Stock at $2.50 per share through a Private Placement resulting in an increase of common stock of $228 and additional paid-in capital of $5,357 (net of stock issuance costs of $115). (c) To reflect the elimination of Rogers' shareholders' equity in pro forma consolidation. (d) Adjustments to reflect (i) the amortization of the excess of cost over fair value of net assets acquired in the Rogers acquisition, using a straight-line method over 25 years, and (ii) the elimination of salary and benefits relating to Rogers' Chairman of the Board, who will retire effective upon the acquisition by the Company. (e) Adjustment to reflect the purchase of 67.2% of Rogers common stock by Kinark. For purposes of these pro forma statements, the historical amounts of Rogers' assets and liabilities have not been adjusted to fair value with the exception of those adjustments discussed in (f) and (i). Based upon current estimates, fair values are not expected to differ materially from such historical amounts. Adjustments based upon final determination of the fair values of assets acquired and liabilities assumed will be made during 1996. The excess of cost over fair value of net assets acquired is as follows: Purchase cost: Cash paid for Rogers common stock acquired (includes $50 of earnest monies paid prior to 1995) $ 5,594 Acquisition costs (including accrued costs of $377) 470 Total purchase cost 6,064 Liabilities assumed (including $325 from funding of retirement trust) 4,344 Minority interest 1,353 Total 11,761 Assets acquired (including an adjustment of $401 to eliminate pro-rata share of LIFO valuation on Rogers' zinc inventory) 8,872 Excess of cost over fair value of net assets acquired $ 2,889 (f) Adjustment to increase the liability related to the funding of certain life insurance premiums for the benefit of the Rogers' Chairman of the Board pursuant to a contractual requirement. (g) To reflect the tax effects of pro-forma adjustments. (h) Earnings from continuing operations attributable to minority interest. (i) Adjustment to eliminate pro-rata share of LIFO valuation reserve on Rogers' zinc inventory. (C) EXHIBITS. 2.1. Stock Purchase Agreement entered into as of August 3, 1994, by and among Kinark Corporation and The C.L. Simpson Inter Vivos Revocable Trust and The Alta Rogers Simpson Inter Vivos Revocable Trust, through their Interim Trustee, The Trust Company of Oklahoma 2.2 Option Agreement dated October 10, 1995 between Kinark Corporation and Deania L. Rogers and Paula Patterson, as trustee of the Deania L. Rogers Marital Trust 2.3 Option Agreement dated October 10, 1995 between Kinark Corporation and Ben C. Bishop 2.4 Option Agreement dated October 10, 1995 between Kinark Corporation and J.W. Carpenter 2.5 Option Agreement dated October 10, 1995 between Kinark Corporation and C.E. Story 2.6 Option Agreement dated October 10, 1995 between Kinark Corporation and Thelma Lee Morris 99.1 Order Confirming Sale of Personal Property entered on December 21, 1994 by The District Court in and for Tulsa County, State of Oklahoma SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Amendment to be signed on its behalf by the undersigned hereunto duly authorized. KINARK CORPORATION By: /s/ Ronald J. Evans Ronald J. Evans President Dated: April 19, 1996 -----END PRIVACY-ENHANCED MESSAGE-----