-----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, BAV/uOVkfdahSK5dtXsumHZEmlJ8q0pagzUeuq75uLTus/16MiPZDL909tbiGGWw 2zA6tjmOqbw1qEgNZ0NPig== 0000950124-98-003532.txt : 19980623 0000950124-98-003532.hdr.sgml : 19980623 ACCESSION NUMBER: 0000950124-98-003532 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980408 ITEM INFORMATION: FILED AS OF DATE: 19980622 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORTON INDUSTRIAL GROUP INC CENTRAL INDEX KEY: 0000064247 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED METAL PRODUCTS [3490] IRS NUMBER: 380811650 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-13198 FILM NUMBER: 98651892 BUSINESS ADDRESS: STREET 1: 1021 WEST BIRCHWOOD STREET CITY: MORTON STATE: IL ZIP: 61550 BUSINESS PHONE: 3092667176 MAIL ADDRESS: STREET 1: 1021 WEST BIRCHWOOD STREET CITY: MORTON STATE: IL ZIP: 61550 FORMER COMPANY: FORMER CONFORMED NAME: MLX CORP /GA DATE OF NAME CHANGE: 19960823 FORMER COMPANY: FORMER CONFORMED NAME: MCLOUTH STEEL CORP DATE OF NAME CHANGE: 19850212 8-K/A 1 8-K/A 1 U.S. 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): April 8, 1998 MORTON INDUSTRIAL GROUP, INC. (Exact name of registrant as specified in its charter) Georgia 0-13198 38-0811650 ------------------------------------------------------------ State or other jurisdiction of (Commission (I.R.S. Employer incorporation or organization File Number) Identification No.) 1021 West Birchwood, Morton, Illinois 61550 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code 309-266-7176 ------------- - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. B & W FABRICATORS, INC., ACQUISITION As previously reported on a Current Report on Form 8-K filed with the Securities and Exchange Commission on April 14, 1998, the Company acquired all of the issued and outstanding capital stock of B&W Metal Fabricators, Inc., of Welcome, North Carolina, on April 8, 1998. This Current Report on Form 8-K/A amends the earlier filing by adding the financial statements identified in Item 7. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. The following financial statements are filed as Exhibits to this Form 8-K/A:
Exhibit No. Document ----------- -------- - --------------------------------------------------------------------------- 99.1 Unaudited Financial Statements of B&W Metal Fabricators, Inc., for the three months ended March 31, 1998 - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- 99.2 Audited Financial Statements of B&W Metal Fabricators, Inc., for the years ended December 31, 1997, and 1996 - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- 99.3 Pro Forma Condensed Combined Balance Sheet and Statement of Earnings - ---------------------------------------------------------------------------
2 3 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. MORTON INDUSTRIAL GROUP, INC. (Registrant) Date: June 22, 1998 By: /s/ Daryl R. Lindemann ---------------------------------------- Daryl R. Lindemann Vice President-Finance, Secretary, And Treasurer 3 4 EXHIBIT INDEX - ------------------------------------------------------------------------------- 99.1 Unaudited Financial Statements of B&W Metal Fabricators, Inc., for the three months ended March 31, 1998 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 99.2 Audited Financial Statements of B&W Metal Fabricators, Inc., for the years ended December 31, 1997, and 1996 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 99.3 Pro Forma Condensed Combined Balance Sheet and Statement of Earnings - -------------------------------------------------------------------------------
4 EX-99.1 2 EX-99.1 1 EXHIBIT 99.1 ACCOUNTANT'S REPORT Board of Directors B & W Metal Fabricators, Inc. Welcome, North Carolina We have compiled the accompanying unaudited balance of B & W Metal Fabricators, Inc. as of March 31, 1998, and the related of earnings and cash flows for the period then ended, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. A compilation is limited to presenting in the form of financial statements information that is the representation of management. We have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or any other form of assurance on them. Management has elected to omit substantially all of the disclosures required by generally accepted accounting principles. If the omitted disclosures were included in the financial statements, they might influence the user's conclusions about the Company's financial position, results of operations, and cash flows. Accordingly, these financial statements are not designed for those who are not informed about such matters. Clifton Guaderson L.L.C. Peoria, Illinois June 18, 1998 2 B & W METAL FABRICATORS, INC. BALANCE SHEET MARCH 31, 1998 (DOLLARS IN THOUSANDS) (UNAUDITED)
ASSETS CURRENT ASSETS Cash $ 525 Temporary investments 24 Accounts receivable 1,056 Inventories 815 ---------- Total current assets 2,420 PROPERTY AND EQUIPMENT Land and improvements 88 Buildings and improvements 1,482 Machinery and equipment 2,841 Automobiles and trucks 181 Office furniture and fixtures 45 Computer equipment 67 ---------- Total, at cost 4,704 Less accumulated depreciation 2,585 Total property and equipment 2,119 CASH VALUE OF LIFE INSURANCE 66 TOTAL ASSETS $ 4,605 ==========
2 3
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 262 Current installments of long-term debt 376 Accrued profit sharing 37 Other accrued expenses 26 Accrued property taxes 16 Income taxes payable 37 Deferred income taxes 314 ---------- Total current liabilities 1,068 LONG-TERM DEBT, excluding current installments 1,228 ---------- Total liabilities 2,296 ---------- STOCKHOLDERS' EQUITY Common stock, $1 par value; 100,000 shares authorized and issued, 58,501 shares outstanding 59 Additional paid-in capital 10 Retained earnings 2,240 ---------- Total stockholders' equity 2,309 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,605 ==========
These financial statements should be read only in connection with the accompanying notes to interim financial statements. 3 4 B & W METAL FABRICATORS, INC. STATEMENT OF EARNINGS THREE MONTHS ENDED MARCH 31, 1998 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED) NET SALES $ 2,471 COST OF SALES 1,692 --------- Gross profit 779 OPERATING EXPENSES 414 --------- Income from operations 365 OTHER INCOME (EXPENSE) Interest expense 34 --------- Income before income taxes 331 INCOME TAXES 132 --------- NET EARNINGS $ 199 ========= EARNINGS PER SHARE $ 3.40 ========= WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 58,501 =========
These financial statements should be read only in connection with the accompanying notes to interim financial statements. 4 5 B & W METAL FABRICATORS, INC. STATEMENT OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 1998 (DOLLARS IN THOUSANDS)
(UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 199 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 93 Effects of changes in operating assets and liabilities: Receivables (360) Inventories (3) Income tax refund receivable 95 Accounts payable 75 Accrued expenses and other liabilities 2 Income taxes payable 37 ------------- Net cash provided by operating activities 138 ------------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (4) ------------- CASH FLOWS FROM FINANCING ACTIVITIES Payments on long-term debt (94) ------------- NET INCREASE IN CASH 40 CASH, BEGINNING OF PERIOD 485 ------------- CASH, END OF PERIOD $ 525 ============= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 34 ============= Income taxes $ - =============
These financial statements should be read only in connection with the accompanying notes to interim financial statements. 5 6 B & W METAL FABRICATORS, INC. NOTES TO INTERIM FINANCIAL STATEMENTS MARCH 31, 1998 NOTE 1 In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of (a) the balance sheet at March 31, 1998, (b) the statement of earnings for the three-month period ended March 31, 1998, and (c) the statement of cash flows for the three-month period ended March 31, 1998 have been made. NOTE 2 The results for the three-month period ended March 31, 1998 are not necessarily indicative of the results for the entire year 1998. 6 EX-99.2 3 EX-99.2 1 EXHIBIT 99.2 B & W METAL FABRICATORS, INC. WELCOME, NORTH CAROLINA FINANCIAL STATEMENTS DECEMBER 31, 1997 AND 1996 2 B & W METAL FABRICATORS, INC. TABLE OF CONTENTS PAGE INDEPENDENT AUDITOR'S REPORT.....................................1 FINANCIAL STATEMENTS Balance Sheets..........................................2 Statements of Earnings..................................4 Statements of Stockholders' Equity......................5 Statements of Cash Flows................................6 Notes to Financial Statements...........................7 3 INDEPENDENT AUDITOR'S REPORT Board of Directors B & W Metal Fabricators, Inc. Welcome, North Carolina We have audited the accompanying balance sheets of B & W Metal Fabricators, Inc. as of December 31, 1997 and 1996, and the related statements of earnings, 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 B & W Metal Fabricators, Inc. as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Clifton Guaderson L.L.C. Peoria, Illinois June 4, 1998 4 B & W METAL FABRICATORS, INC. BALANCE SHEETS DECEMBER 31, 1997 AND 1996 ASSETS
1997 1996 ---- ---- CURRENT ASSETS Cash $ 485,438 $ 219,190 Temporary investments 24,250 23,062 Accounts receivable 696,276 804,882 Income tax refunds receivable 95,129 70,135 Inventories 811,897 832,154 Prepaid expenses and other current assets - 410 ------------- --------------- Total current assets 2,112,990 1,949,833 ------------- --------------- PROPERTY AND EQUIPMENT Land and improvements 87,680 87,680 Buildings and improvements 1,482,384 1,482,384 Machinery and equipment 2,841,247 2,327,726 Automobiles and trucks 180,936 163,828 Office furniture and fixtures 44,706 44,155 Computer equipment 63,073 64,158 ------------- --------------- Total, at cost 4,700,026 4,169,931 Less accumulated depreciation 2,491,569 2,191,813 ------------- --------------- Net property and equipment 2,208,457 1,978,118 ------------- --------------- CASH VALUE OF LIFE INSURANCE 66,034 60,076 OTHER ASSETS - 12,577 ------------- --------------- TOTAL ASSETS $ 4,387,481 $ 4,000,604 ============= ===============
2 5 LIABILITIES AND STOCKHOLDERS' EQUITY
1997 1996 ---- ---- CURRENT LIABILITIES Accounts payable $ 187,158 $ 141,615 Note payable to bank - 80,000 Notes payable to stockholders 2,015 2,015 Current installments of long-term debt 365,451 187,567 Accrued salaries and bonuses 21,640 13,267 Accrued profit sharing 39,500 40,000 Accrued payroll taxes withheld 2,630 8,541 Accrued property taxes 16,000 16,000 Deferred income taxes 313,851 309,798 -------------- --------------- Total current liabilities 948,245 798,803 LONG-TERM DEBT, excluding current installments 1,330,411 1,297,842 -------------- --------------- Total liabilities 2,278,656 2,096,645 -------------- --------------- STOCKHOLDERS' EQUITY Common stock, $1 par value; 100,000 shares authorized; 58,501 shares issued and outstanding 58,501 58,501 Additional paid-in capital 10,000 10,000 Retained earnings 2,040,324 1,835,458 -------------- --------------- Total stockholders' equity 2,108,825 1,903,959 -------------- --------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,387,481 $ 4,000,604 ============== ===============
These financial statements should be read only in connection with the accompanying notes to financial statements. 3 6 B & W METAL FABRICATORS, INC. STATEMENTS OF EARNINGS YEARS ENDED DECEMBER 31, 1997 AND 1996
1997 1996 ---- ---- NET SALES $ 7,698,793 $ 7,662,327 COST OF SALES 5,725,348 5,449,849 -------------- -------------- Gross profit 1,973,445 2,212,478 OPERATING EXPENSES 1,505,843 1,513,453 -------------- -------------- Income from operations 467,602 699,025 -------------- -------------- OTHER INCOME (EXPENSE) Interest income 1,188 1,123 Interest expense (122,135) (134,320) Gain (loss) on disposal of property and equipment 666 (140,535) Miscellaneous (1,198) 1,222 -------------- -------------- Total other income (expense) (121,479) (272,510) -------------- -------------- Earnings before income taxes 346,123 426,515 INCOME TAXES 141,257 182,818 -------------- -------------- NET EARNINGS $ 204,866 $ 243,697 ============== ============== EARNINGS PER SHARE - BASIC AND DILUTED $ 3.50 $ 4.17 ============== ============= WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED 58,501 58,501 ============== ==============
These financial statements should be read only in connection with the accompanying notes to financial statements. 4 7 B & W METAL FABRICATORS, INC STATEMENTS OF STOCKHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 1997 AND 1996
COMMON STOCK ADDITIONAL TOTAL ------------------ PAID-IN RETAINED STOCKHOLDERS' SHARES AMOUNT CAPITAL EARNINGS EQUITY ------ ------ ------- -------- ------ BALANCE, DECEMBER 31, 1995, as previously reported 58,501 $ 58,501 $ 10,000 $ 1,118,641 $ 1,187,142 Prior period adjustment - - - 473,120 473,120 -------- ----------- ---------- -------------- ------------- BALANCE, DECEMBER 31, 1995, as restated 58,501 58,501 10,000 1,591,761 1,660,262 Net earnings - - - 243,697 243,697 -------- ----------- ---------- -------------- ------------- BALANCE, DECEMBER 31, 1996 58,501 58,501 10,000 1,835,458 1,903,959 Net earnings - - - 204,866 204,866 -------- ----------- ---------- -------------- ------------- BALANCE, DECEMBER 31, 1997 58,501 $ 58,501 $ 10,000 $ 2,040,324 $ 2,108,825 ======== =========== ========== ============== =============
These financial statements should be read only in connection with the accompanying notes to financial statements. 5 8 B & W METAL FABRICATORS, INC. STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1997 AND 1996
1997 1996 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 204,866 $ 243,697 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 373,403 261,272 (Gain) loss on disposal of property and equipment (666) 140,535 Deferred income taxes 4,053 5,372 Effects of changes in operating assets and liabilities: Receivables 108,606 (167,883) Inventories 20,257 30,009 Income tax refund receivable and other assets (12,417) (8,014) Prepaid expenses and other current assets 410 16,831 Accounts payable 45,543 (78,631) Accrued expenses and other liabilities 1,962 1,061 Income taxes payable - (128,926) ------------ ------------- Net cash provided by operating activities 746,017 315,323 ------------ ------------- CASH FLOWS FROM INVESTING ACTIVITIES Increase in cash value of life insurance (5,958) (5,835) Proceeds from sale of equipment 3,500 1,000 Capital expenditures (606,576) (638,086) Purchase of temporary investments (1,188) (1,123) ------------ ------------- Net cash used in investing activities (610,222) (644,044) ------------ ------------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from line-of-credit agreement - 105,000 Principal payments on line-of-credit agreement (80,000) (25,000) Proceeds from long-term debt 495,525 471,150 Principal payments on long-term debt (285,072) (250,784) ------------ ------------- Net cash provided by financing activities 130,453 300,366 ------------ ------------- NET INCREASE (DECREASE) IN CASH 266,248 (28,355) CASH, BEGINNING OF YEAR 219,190 247,545 ------------ ------------- CASH, END OF YEAR $ 485,438 $ 219,190 ============ ============ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the year for: Interest $ 122,135 $ 134,320 ============ ============= Income taxes $ 162,198 $ 315,539 ============ =============
These financial statements should be read only in connection with the accompanying notes to financial statements. 6 9 B & W METAL FABRICATORS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997 AND 1996 NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (A) DESCRIPTION OF BUSINESS B & W Metal Fabricators, Inc. was incorporated on January 14, 1978 in the state of North Carolina. The Company's principal business activity is to fabricate and bend sheet metal for equipment used in the construction and farming industry. The Company grants credit on sales of its products, which are sold directly to various enterprises located in the United States. The Company's fiscal year ends on December 31. Significant accounting policies followed by the Company are presented below. (B) USE OF ESTIMATES IN PREPARING 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. (C) TEMPORARY INVESTMENTS Temporary investments consist of certificates of deposit with original maturities from three months to one year. These investments are stated at cost which approximates market. (D) INVENTORIES Inventories are stated at the lower of cost or market with cost determined on a first-in, first-out (FIFO) basis. (E) PROPERTY AND EQUIPMENT Depreciation of property and equipment is calculated over the estimated useful lives of the respective assets using accelerated methods. (F) INCOME TAXES Deferred income taxes are provided on temporary differences between financial statement and income tax reporting. Temporary differences are differences between the amounts of assets and liabilities reported for financial statement purposes and their tax bases. Deferred tax assets are recognized for temporary differences that will be deductible in future years' tax returns and for operating loss and tax credit carryforwards. Deferred tax assets are reduced by a valuation allowance if it is deemed more likely than not that some or all of the deferred tax assets will not be realized. Deferred tax liabilities are recognized for temporary differences that will be taxable in future years' tax returns. 7 10 B & W METAL FABRICATORS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997 AND 1996 NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (G) FAIR VALUE OF FINANCIAL INSTRUMENTS The Company considers the recorded value of its financial assets and liabilities, which consist primarily of cash, accounts receivable, accounts payable, notes payable, and long-term debt, to approximate the fair value of the respective assets and liabilities. (H) EARNINGS PER SHARE Earnings per share is computed under the provisions of Statement of Financial Accounting Standards No. 128, Earnings Per Share, which was adopted retroactively by the Company at December 31, 1997. Amounts reported as earnings per share for the years ended December 31, 1997 and 1996 reflect the earnings available to stockholders for the year divided by the weighted average number of common shares outstanding during the year. The Company has no dilutive securities as defined under SFAS No. 128, therefore, a single earnings per share amount is presented in the financial statements. NOTE 2 - INVENTORIES Inventories at December 31, 1997 and 1996 consist of the following:
1997 1996 ---- ---- Raw materials $ 230,930 $ 235,994 Work in process 231,578 239,073 Finished goods 349,389 357,087 ------------ ------------- TOTAL INVENTORIES $ 811,897 $ 832,154 ============ =============
NOTE 3 - DEBT NOTE PAYABLE TO BANK The note payable to bank is a $100,000 revolving line of credit, of which $0 and $80,000 was used at December 31, 1997 and 1996, respectively. The line of credit expires September 17, 1998 and bears interest at the local prime lending rate plus 0.5 percent (10 percent at December 31, 1997). Accrued interest is payable monthly. The line of credit is collateralized by all of the Company's accounts receivable and inventories. NOTES PAYABLE TO STOCKHOLDERS The notes payable to stockholders is an unsecured demand note and was paid in full in 1998. 8 11 B & W METAL FABRICATORS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997 AND 1996 NOTE 3 - DEBT (CONTINUED) LONG-TERM DEBT Long-term debt at December 31, 1997 and 1996 consists of the following:
1997 1996 ---- ---- Note payable to bank, due in monthly installments of $1,011, which includes interest at 8.5 percent, through December 2, 2001, secured by automobiles $ 32,025 $ - Note payable to finance company, due in monthly installments of $9,519, which includes interest at 7.85 percent, through May 18, 2001, secured by specific equipment 341,366 425,194 Note payable to bank, due in monthly installments of $9,509, which includes interest at 8.5 percent, through September 15, 2002, secured by specific equipment 444,689 - Mortgage note payable to bank, due in monthly installments of $21,919, which includes interest at 8.25 percent through November 15, 2001, secured by real estate and substantially all assets of the Company and a personal guarantee by the Company's stockholders 877,782 1,060,215 -------------- --------------- Total 1,695,862 1,485,409 Less current portion 365,451 187,567 -------------- --------------- LONG-TERM PORTION $ 1,330,411 $ 1,297,842 ============== =============== Future maturities of long-term debt are as follows: 1998 $ 365,451 1999 409,988 2000 444,963 2001 380,712 2002 94,748 --------------- TOTAL $ 1,695,862 ===============
9 12 B & W METAL FABRICATORS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997 AND 1996 NOTE 4 - EMPLOYEE BENEFIT PLAN The Company has a profit sharing plan covering substantially all employees. Benefits are based on the value of the account at retirement based upon plan earnings and employer contributions. Plan assets consist primarily of listed stocks and U.S. bonds. The Company's contributions are voluntary. Eligible employees will receive a share of the Employer's contribution based on their total compensation and a fixed compensation level. The fixed compensation level is defined as the Social Security Wage Base in effect on the first day of the Plan Year. The expense charged to operations was $39,500 and $40,000 for the years ended December 31, 1997 and 1996, respectively. NOTE 5 - INCOME TAXES Income taxes consist of the following for the years ended December 31:
CURRENT DEFERRED TOTAL ------- -------- ----- 1997: Federal $ 126,665 $ 3,273 $ 129,938 State 10,539 780 11,319 ------------ ---------- ------------- $ 137,204 $ 4,053 $ 141,257 ============ ========== ============= 1996: Federal $ 144,148 $ 4,308 $ 148,456 State 33,298 1,064 34,362 ------------ ---------- ------------- $ 177,446 $ 5,372 $ 182,818 ============ ========== =============
A reconciliation of income taxes at the statutory federal tax rates to the Company's actual income taxes is as follows:
1997 1996 ---- ---- Computed at federal statutory rates $ 117,682 $ 145,015 State income taxes, net of federal tax benefit 7,471 22,679 Nondeductible expenses 16,084 15,124 Other 20 - ------------ ------------ TOTAL INCOME TAXES $ 141,257 $ 182,818 ============ =============
The source of deferred tax liabilities and the tax effect of each at December 31, 1997 and 1996 are as follows:
1997 1996 ---- ---- Deferred tax liabilities: Inventories, additional costs inventoried for book purposes $ 313,851 $ 309,798 ============ =============
10 13 B & W METAL FABRICATORS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997 AND 1996 NOTE 6 - LEASES The Company leases vehicles under noncancelable operating leases expiring in various years through 1999. The leases contain renewal options for periods from three to five years at their fair rental value at the time of renewal. Future minimum lease payments under these leases are as follows: 1998 $ 23,367 1999 686 ----------- TOTAL $ 24,053 ===========
Minimum lease payments exclude rentals under renewal options which, as of December 31, 1997, are not reasonably assured of being exercised. Total rental expense for the years ended December 31, 1997 and 1996 was $26,937 and $23,677, respectively. NOTE 7 - CONCENTRATIONS OF CREDIT Sales to customers in excess of 10 percent of total net sales for the years ended December 31, 1997 and 1996 are as follows:
CUSTOMER A CUSTOMER B ---------- ---------- Years ended: December 31, 1997 54% 11% December 31, 1996 30% 25%
The accounts receivable from one customer which totaled $318,705 and $366,305 exceeded 5 percent of the Company's stockholders' equity at December 31, 1997 and 1996, respectively. NOTE 8 - PRIOR PERIOD ADJUSTMENT Retained earnings at December 31, 1995 has been restated by $473,120 to correct errors related to inventory made in 1995 and prior years. The error had no effect on net earnings for 1996 or 1997. The inventory at December 31, 1995 was understated by $788,533 and the tax effect of such adjustment was $315,413. NOTE 9 - SUBSEQUENT EVENT Effective April 8, 1998, all of the outstanding common stock of the Company was acquired by Morton Industrial Group, Inc. in a business combination which will be accounted for using the purchase method. This information is an integral part of the accompanying financial statements. 11 EX-99.3 4 EX-99.3 1 EXHIBIT 99.3 PRO FORMA CONDENSED COMBINED BALANCE SHEET The following unaudited pro forma condensed combined balance sheet combines the consolidated balance sheet of Morton Industrial Group, Inc. (Morton) at April 4, 1998 with the balance sheet of B & W Metal Fabricators, Inc. (B & W) at March 31, 1998 as though the merger had occurred on April 4, 1998. The Morton balance sheet at April 4, 1998 reflects the acquisition of Carroll George, Inc. which was consummated on March 30, 1998.
HISTORICAL ---------------- PRO FORMA MORTON B & W ADJUSTMENTS COMBINED ------ ----- ------------ -------- ASSETS (In Thousands) CURRENT ASSETS Cash $ 1,069 $ 525 $ -- $ 1,594 Temporary investments -- 24 -- 24 Accounts, notes, and other receivables, less allowance for doubtful accounts of $100 in 1998 and 1997 12,977 1,056 (199) (20) 13,814 Inventories 10,602 815 -- 11,417 Prepaid expenses 1,420 -- -- 1,420 Refundable income taxes 994 -- -- 994 Deferred income taxes 1,421 -- 73 (2) 1,494 -------- ------- ------- --------- Total current assets 28,483 2,420 (146) 30,757 DEFERRED INCOME TAXES 2,263 -- 221 (2) 2,484 PROPERTY, PLANT, AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION 24,456 2,119 4,901 (3) 31,476 OTHER 3,317 66 68 (9) 50 (8) (66)(6) 3,635 -------- ------- ------ -------- TOTAL ASSETS $ 58,519 $ 4,605 $ 5,228 $ 68,352 ======== ======= ======= =========
2
HISTORICAL LIABILITIES AND ---------------------- PRO FORMA STOCKHOLDERS' MORTON B & W ADJUSTMENTS COMBINED EQUITY (DEFICIT) ------ ----- ------------ --------- (In Thousands) CURRENT LIABILITIES Note payable to bank $ 18,000 $ - $ 4,050 (1) $ 22,050 Current installments of long-term debt, obligations under capital leases, and covenants payable 2,378 376 262 (1) 3,016 Accounts payable 14,697 262 (199) (5) 14,760 Accrued salaries and wages 1,242 63 - 1,305 Other accrued expenses 1,840 53 350 (4) 2,243 Deferred income taxes - 314 (314) (2) - --------- ----------- --------- ------------- Total current liabilities 38,157 1,068 4,149 43,374 LONG-TERM DEBT, EXCLUDING CURRENT INSTALLMENTS 12,587 1,228 3,388 (1) 17,203 OBLIGATIONS UNDER CAPITAL LEASES, EXCLUDING CURRENT INSTALLMENT 187 - - 187 OTHER 2,056 - - 2,056 --------- ---------- --------- ------------- Total liabilities 52,987 2,296 7,537 62,820 --------- ----------- --------- ------------- STOCKHOLDERS' EQUITY (DEFICIT) Class A common stock 38 59 (59) (7) 38 Class B common stock 2 - - 2 Additional paid-in capital 19,308 10 (10) (7) 19,308 Retained earnings (deficit) (13,816) 2,240 (2,240) (7) (13,816) --------- ----------- --------- ------------- Total stockholders' equity (deficit) 5,532 2,309 (2,309) 5,532 --------- ----------- --------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 58,519 $ 4,605 $ 5,228 $ 68,352 ========= =========== ========= =============
PRO FORMA CONDENSED COMBINED BALANCE SHEET (CONTINUED) (1) Represents purchase price of $7,700 financed by a $4,050 draw on the bank line of credit and $3,650 of subordinated notes, of which $262 is current and $3,388 is long-term. (2) Represents a deferred tax asset recognized as part of the purchase price allocation and elimination of the deferred tax liability due to utilization of Morton's net operating loss carryforwards to offset future taxable income of B & W. (3) Represents increase in appraised value for property, plant, and equipment. (4) Represents reserves set up at the acquisition date for potential bad debts, environmental clean-up costs, factory rearrangement, and a new information system. (5) Elimination of intercompany receivables and payables. (6) Elimination of cash value of life insurance which was transferred to previous shareholders of B & W. (7) Elimination of stockholders' equity of B & W after payment of purchase price to previous shareholders of B & W. (8) Represents value assigned to the noncompete agreements with the previous stockholders of B & W. (9) Represents value assigned to goodwill from the acquisition. 3 PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS The following unaudited pro forma condensed combined statements of earnings combines the consolidated statement of earnings of Morton Industrial Group, Inc. (Morton) for the quarter ended April 4, 1998 and the year ended December 31, 1997 and the statement of earnings of Carroll George, Inc. (George) for the quarter ended April 4, 1998 and the year ended September 30, 1997 and the statement of earnings of B & W Metal Fabricators, Inc. (B & W) for the quarter ended March 31, 1998 and the year ended December 31, 1997, accounting for the purchases of George and B & W as though the purchases had occurred at the beginning of the respective period.
QUARTER ENDED APRIL 4, 1998 -------------------------- ---------------------------------------------- HISTORICAL PRO FORMA -------------------------- ADJUSTMENTS COMBINED B & W MORTON GEORGE ----------- --------- ----- -------- --------- (In Thousands, Except Per Share Amounts) Net sales $ 30,672 $ 6,941 $ - $ 37,613 $ 2,471 Cost of sales 25,956 6,173 - 32,129 1,692 ----------- ----------- --------- ----------- ----------- Gross profit 4,716 768 - 5,484 779 ----------- ----------- --------- ----------- ----------- Operating expenses: Selling expenses 767 370 - 1,137 120 Administrative expenses 2,395 428 - 2,823 294 ------------ ------------ Total operating expenses 3,162 798 - 3,960 414 ------------ ------------ --------- ----------- ----------- Operating income (loss) 1,554 (30) - 1,524 365 ------------ ------------ --------- ----------- ----------- Other income (expense): Interest expense (546) (75) (105) (2) (726) (34) Miscellaneous 22 3 - 25 - ------------ ----------- --------- ----------- ----------- Total other income (expense) (524) (72) (105) (701) (34) ------------ ----------- --------- ----------- ----------- Earnings (loss) before income taxes 1,030 (102) (105) 823 331 Income tax expense (benefit) 72 (40) - 32 132 ------------ ----------- NET EARNINGS (LOSS) $ 958 $ (62) $ (105) $ 791 $ 199 ============ =========== ========= =========== =========== Earnings (loss) per share: Basic $ 0.24 $ (8.35) $ 0.20 $ 3.40 ============ ============ =========== =========== Diluted $ 0.20 $ (8.35) $ 0.17 $ 3.40 ============ ============ =========== =========== Weighted average number of shares: Basic 4,001,944 7,424 4,001,944 58,501 ============ =========== =========== =========== Diluted 4,687,917 7,424 4,687,917 58,501 ============ =========== =========== ===========
QUARTER ENDED APRIL 4, 1998 ---------------------------------------- PRO FORMA ADJUSTMENTS COMBINED ----------- --------- (In Thousands, Except Per Share Amounts) Net sales $ (325) (5) $ 39,759 Cost of sales (325) (5) 74 (4) 33,570 -------- ------------- Gross profit (74) 6,189 -------- ------------- Operating expenses: Selling expenses - 1,257 Administrative expenses 7 (6) 3,124 -------- ------------- Total operating expenses 7 4,381 -------- ------------- Operating income (loss) (81) 1,808 -------- ------------- Other income (expense): Interest expense (133) (2) (893) Miscellaneous - 25 -------- ------------- Total other income (expense) (133) (868) -------- ------------- Earnings (loss) before income taxes (214) 940 Income tax expense (benefit) (132) (3) 32 -------- ------------- NET EARNINGS (LOSS) $ (82) $ 908 ======== ============= Earnings (loss) per share: Basic $ .23 ============= Diluted $ .19 ============= Weighted average number of shares: Basic 4,001,944 ============= Diluted 4,687,917 =============
4 PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1997 ------------------------------------------------ HISTORICAL PRO FORMA --------------------------- ADJUSTMENTS COMBINED B & W MORTON (1) GEORGE ----------- ---------- ----- -------- ------ (In Thousands, Except Per Share Amounts) Net sales $ 94,402 $ 22,839 $ - $ 117,241 $ 7,699 Cost of sales 83,267 19,163 - 102,430 5,725 ------------ ----------- ------- -------------- ----------- Gross profit 11,135 3,676 - 14,811 1,974 ------------ ----------- ------- -------------- ----------- Operating expenses: Selling expenses 2,231 1,210 - 3,441 281 Administrative expenses 13,746 1,223 - 14,969 1,225 ------------ ----------- ------- -------------- ----------- Total operating expenses 15,977 2,433 - 18,410 1,506 ------------ ----------- ------- -------------- ----------- Operating income (loss) (4,842) 1,243 - (3,599) 468 ------------ ----------- ------- -------------- ----------- Other income (expense): Interest expense (3,375) (198) (354) (2) (3,927) (122) Miscellaneous 84 - - 84 - ------------ ----------- ------- -------------- ----------- Total other income (expense) (3,291) (198) (354) (3,843) (122) ------------ ----------- ------- -------------- ----------- Earnings (loss) before income taxes (8,133) 1,045 (354) (7,442) 346 Income tax expense (benefit) (3,224) 375 (375) (3) (3,224) 141 ------------ ----------- ------- -------------- ----------- NET EARNINGS (LOSS) $ (4,909) $ 670 $ 21 $ (4,218) $ 205 ============ =========== ======= ============== =========== Earnings (loss) per share: Basic $ (2.52) $ 90.25 $ (2.17) $ 3.50 =========== =========== ============== =========== Diluted $ (2.52) $ 90.25 $ (2.17) $ 3.50 =========== =========== ============== =========== Weighted average number of shares: Basic 1,944,444 7,424 1,944,444 58,501 ============ =========== ============== =========== Diluted 1,944,444 7,424 1,944,444 58,501 ============ =========== ============== ===========
YEAR ENDED DECEMBER 31, 1997 ------------------------------------- PRO FORMA ADJUSTMENTS COMBINED ----------- --------- (In Thousands, Except Per Share Amounts) Net sales $ (16) (5) $ 124,924 Cost of sales (16) (5) 257 (4) 108,396 -------- --------------- Gross profit (257) 16,528 -------- --------------- Operating expenses: Selling expenses 27 (6) 3,722 Administrative expenses - 16,221 -------- --------------- Total operating expenses 27 19,943 -------- --------------- Operating income (loss) (284) (3,415) -------- --------------- Other income (expense): Interest expense (528) (2) (4,577) Miscellaneous - 84 -------- --------------- Total other income (expense) (528) (4,493) -------- --------------- Earnings (loss) before income taxes (812) (7,908) Income tax expense (benefit) (141) (3) (3,224) -------- --------------- NET EARNINGS (LOSS) $ (671) $ (4,684) ======== =============== Earnings (loss) per share: Basic $ (2.41) =============== Diluted $ (2.41) =============== Weighted average number of shares: Basic 1,944,444 =============== Diluted 1,944,444 ===============
(1) Amounts for Morton for the twelve month period ended December 31, 1997 were determined by adding results for the six months ended June 30, 1997 and the results for the six months ended December 31, 1997 adjusting the income tax provision to the estimated effective rate. Subsequent to June 30, 1997, Morton changed its fiscal year end from June 30 to December 31. (2) Represents incremental interest expense relating to the additional debt of Morton resulting from the completed acquisition of George and B & W, net of the interest savings resulting from refinancing existing George and B & W debt at a lower interest rate. (3) Represents adjustment of the income tax provision to the estimated amount. Morton has net operating loss carryforwards which could be utilized to offset the taxable income of George and B & W. A deferred tax asset would have been recorded as part of the purchase price allocation. (4) Represents incremental depreciation expense resulting from adjustments to asset bases and useful lives relating to the acquisition. (5) Elimination of sales and purchases between Morton and B & W. (6) Represents amortization of goodwill and the noncompete agreements. -----END PRIVACY-ENHANCED MESSAGE-----