-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, DPYkVavBcPvH+LfA8uC0Uw59oGmKnU/q+2tTpsouiZRmYiRuRLlwVBny8PVDeVlL XMWmmQxFwObpMiFLpomWDQ== 0000800459-94-000009.txt : 19940513 0000800459-94-000009.hdr.sgml : 19940513 ACCESSION NUMBER: 0000800459-94-000009 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940317 ITEM INFORMATION: Acquisition or disposition of assets FILED AS OF DATE: 19940512 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARMAN INTERNATIONAL INDUSTRIES INC /DE/ CENTRAL INDEX KEY: 0000800459 STANDARD INDUSTRIAL CLASSIFICATION: 3651 IRS NUMBER: 112534306 STATE OF INCORPORATION: A1 FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-09764 FILM NUMBER: 94527646 BUSINESS ADDRESS: STREET 1: 1101 PENNSYLVANIA AVENUE N W STREET 2: STE 1010 CITY: WASHINGTON STATE: DC ZIP: 20004 BUSINESS PHONE: 2023931101 MAIL ADDRESS: STREET 1: 1101 PENNSYLVANIA AVENUE NW STREET 2: SUITE 1010 CITY: WASHINGTON STATE: DC ZIP: 20004 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) March 17, 1994 Harman International Industries, Incorporated ------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware ------------------------------------------------------------------- (State or other jurisdiction of incorporation) 1-9764 11-2534306 - ------------------------ --------------------------------- (Commission File Number) (IRS Employer Identification No.) 1101 Pennsylvania Avenue, N.W., Suite 1010, Washington, D.C. 20004 - ------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (202) 393-1101 ---------------- Not Applicable - ------------------------------------------------------------------- (Former name or former address, if changed since last report) Item 2. Acquisition or Disposition of Assets On March 17, 1994, Harman International Industries, Incorporated ("Harman"), through its wholly owned subsidiary Harman Investment Company, Incorporated, completed its acquisition and acquired from Motor-Columbus AG and its affiliates ("Motor-Columbus") 100% of Studer Revox AG ("Studer Revox"), a leading company in the professional audio field, with particular strength in the recording and broadcast areas. Motor-Columbus retained the Revox Consumer Products division and the rights to use the Revox name. Under the terms of the Stock Purchase Agreement dated February 3, 1994 by and among Harman, Motor-Columbus and Studer Revox, as amended, Harman paid 100 Swiss Francs (approximately US $70.00) for all of the issued and outstanding stock in Studer Revox. Harman assumed post- acquisition indebtedness of Studer Revox of approximately 23 million Swiss Francs (approximately US $16 million). Studer Revox, which was founded in 1948, is headquartered in Regensdorf, Switzerland. The company manufactures analog and digital tape recorders, mixing consoles, switching systems, digital audio workstations, professional compact disc players and recorders and turnkey broadcasting studios. Its principal subsidiaries are located in France, the United States, Canada, Germany, the United Kingdom, Japan, Singapore and Austria. Harman currently intends to continue to use Studer Revox's facilities for the same purposes as they were previously used. Item 7. Financial Statements and Exhibits The financial statements required by Items 7 (a) and (b) are filed as a part of this Current Report on Form 8-K/A. The pro forma combined results of operations for Studer Revox and Harman are provided for the twelve month period ending December 31, 1993. The statement of operations data for Harman for the twelve month period ended December 31, 1993 has been derived from quarterly unaudited consolidated financial statements of the Company and its subsidiaries. The financial data for the Studer Revox statement of operations for the three month period ending March 31, 1994 and the balance sheet as of March 31, 1994 are included in the Company's Condensed Consolidated Financial Statements filed today in the Company's SEC Report on Form 10- Q. Prior to the acquisition, Studer Revox reported on a calendar fiscal year and due to the practices in existence for interim reporting at Studer Revox and the sale of assets by Studer Revox prior to the acquisition, the preparation of interim period pro forma financial statements is not practicable. 2 Item 7. Financial Statements and Exhibits (continued) Exhibit Description - -------- ------------ 1.1 Audited Consolidated Financial Statements of Studer Revox AG for the year ended December 31, 1993. 1.2 Proforma combined results of operations for the year ended December 31, 1993 to give effect to the Studer acquisition as though it occurred on January 1, 1993. 3 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. HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED By: _______________________ Sandra B. Robinson Vice President - Financial Operations Date: May 12, 1994 4 EXHIBIT INDEX ------------- Exhibit Description Page - -------- ------------- ----- 1.1 Audited Consolidated Financial Statements of Studer Revox AG for the year ended December 31, 1993. 6-22 1.2 Pro forma combined results of operations for the Company and Studer for the year ended December 31, 1993 to give effect to the Studer Acquisition as though it occurred on January 1, 1993. 23-26 5 EX-99 2 EXHIBIT 1.1 Exhibit 1.1 6 STUDER REVOX AG AND SUBSIDIARIES ================================ CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1993 TOGETHER WITH AUDITORS' REPORT 7 REPORT OF INDEPENDENT PUBLIC ACCOUNTANT To the Board of Directors of Studer Revox AG We have audited the accompanying consolidated balance sheet of Studer Revox AG (a Swiss corporation) and subsidiaries as of December 31, 1993, and the related consolidated statements of income, shareholders' equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fair- ly, in all material respects, the financial position of Studer Revox AG and subsidiaries as of December 31, 1993, and the results of their operations and their cash flows for the year then ended in accordance with the accounting principles generally accepted in the United States. ARTHUR ANDERSEN AG /s/ Thomas Stenz /s/ Louis Siegrist Thomas Stenz Louis Siegrist Zurich, March 17, 1994 8 STUDER REVOX AG AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET - DECEMBER 31, 1993 (in thousands of Swiss Francs) A S S E T S CURRENT ASSETS: Cash 5,246 Marketable securities 3,307 Receivables (net of allowance for doubtful accounts of 7,807) 33,430 Inventories 49,072 Prepaid expenses and other current assets 4,318 ------- Total current assets 95,373 ------- NON-CURRENT ASSETS: Property, plant and equipment, net 47,253 Excess of cost over fair value of assets acquired, net of accumulated amortization of 382 3,113 Other assets 3,070 ------- Total non-current assets 53,436 ------- 148,809 ======= The accompanying notes are an integral part of this consolidated balance sheet. 9 STUDER REVOX AG AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET - DECEMBER 31, 1993 (in thousands of Swiss Francs) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term borrowings 20,097 Accounts payable 21,441 Payable to parent company 2,079 Accrued liabilities 25,224 ------- Total current liabilities 68,841 ------- NON-CURRENT LIABILITIES: Loan from parent company 52,511 Mortgages 36,800 Other long-term debt 8,865 ------- Total non-current liabilities 98,176 ------- MINORITY INTERESTS 845 ------- SHAREHOLDERS' EQUITY: Share capital, 277,000 registered shares issued at S.Fr. 100 each 27,700 Accumulated deficit (47,625) Cumulative translation adjustments 872 ------- Total shareholders' equity (19,053) ------- 148,809 ======= The accompanying notes are an integral part of this consolidated balance sheet. 10 STUDER REVOX AG AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1993 (in thousands of Swiss Francs except share and per share amounts) NET SALES 134,739 COST OF SALES (83,501) ------- Gross profit 51,238 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (79,229) ------- Operating loss (27,991) ------- OTHER EXPENSES: Interest, net (8,835) Foreign exchange differences (253) Other (2,433) ------- (11,521) ------- Loss before taxes (39,512) TAXES 2,083 ------- Net loss before minority interests (37,429) MINORITY INTERESTS (54) ------- Net loss (37,483) ======= Average number of shares outstanding 277,000 ======= Net loss per share (135.32) ====== The accompanying notes are an integral part of this consolidated statement. 11 STUDER REVOX AG AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY FOR THE YEAR ENDED DECEMBER 31, 1993 (in thousands of Swiss Francs) Share Accumulated Translation Capital deficit adjustment ------- ----------- ----------- Balance, December 31, 1992 27,700 (10,142) - Translation differences 872 Net loss (37,483) ------- -------- ----- Balance, December 31, 1993 27,700 (47,625) 872 ======= ======== ===== The accompanying notes are an integral part of this consolidated statement. 12 STUDER REVOX AG AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1993 (in thousands of Swiss Francs) CASH FLOW FROM OPERATING ACTIVITIES: Net loss (37,483) Depreciation and amortization 6,738 Gain on sale of property (3,366) (Increase) decrease in- Receivables 2,813 Inventories 10,728 Other current assets 1,105 Increase (decrease) in- Accounts payable 6,202 Accrued liabilities (18,969) ------- Net cash used in operating activities (32,232) ------- CASH FLOW FROM INVESTING ACTIVITIES: Proceeds from sale of property, plant and equipment 20,816 Investment in mutual funds (3,307) Capital expenditures for property, plant and equipment (2,781) Purchase of minorities (1,697) ------- Net cash provided by investing activities 13,031 ------- CASH FLOW FROM FINANCING ACTIVITIES: Net borrowings under lines of credit (28,908) Repayments of mortgages (7,600) Borrowings from parent company 39,011 Foreign currency translation and other (530) ------- Net cash provided by financing activities 1,973 ------- Net increase (decrease) in cash (17,228) Cash at beginning of year 22,474 ------- Cash at end of year 5,246 ======= SUPPLEMENTAL INFORMATION: Total interest paid 3,618 Total taxes paid 542 ======= The accompanying notes are an integral part of this consolidated statement. 13 STUDER REVOX AG AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1993 (in thousands of Swiss Francs unless otherwise stated) 1. Operations and ownership The Company's predominant business is the design, manufacture and distribution of high fidelity audio and video products for the con- sumer electronics and professional studio markets. Products are manufactured and distributed in Switzerland and internationally under the "Studer" and "Revox" brand names. The Company is wholly owned by Motor-Columbus AG, Baden, Switzerland as of December 31, 1993. As more fully described in Note 17, the Company subsequently sold its Revox Consumer Electronics business and the Swiss real estate to other companies owned by Motor-Columbus. At the same time, the Company was recapitalized and sold to Harman International Industries Inc. 2. Summary of significant accounting policies Presentation of the financial statements ---------------------------------------- In connection with the acquisition of the Company by Harman International Industries Inc., the Company is required to present consolidated financial statements in accordance with U.S. generally accepted accounting principles. Such consolidated financial statements have been prepared for the first time at December 31, 1993. For this reason, no comparative financial information is available. Consolidation principles ------------------------ The consolidated balance sheet and income statement of Studer Revox AG includes all majority owned subsidiaries. All intercompany balances and transactions as well as intercompany profit in inventories have been eliminated. Minority interests in Studer Revox Japan are shown separately in the consolidated balance sheet and income statement. Foreign currency translation ---------------------------- Assets and liabilities of foreign subsidiaries are translated to Swiss Francs at the foreign exchange rate in effect at the balance sheet date. Income statements of foreign subsidiaries are translated at the average rate for the year. Translation gains and losses resulting from the application of this method in 1993 are shown in a separate component of shareholders' equity. Cumulative 14 - 2 - translation adjustments from previous years have not been separately calculated. Income recognition ------------------ Revenue is recognized upon shipment of goods. For certain long term contracts, revenue is also recognized upon specific and identified partial shipments being made. Marketable securities --------------------- Marketable securities are stated at cost which approximates market values. Inventories ----------- Inventories are stated at the lower of cost or market. Cost is determined principally by the first-in, first-out method. Reserves for slow moving and obsolete articles are provided by using a systematic reserve calculation based on production dates or other appropriate procedures. Property, plant and equipment ----------------------------- Property, plant and equipment is recorded at cost or in case of major capital leases at the present value of the minimum future lease payments. Depreciation and amortization is provided primarily using the straight-line method over the estimated useful lives of the property. Excess of cost over fair value of assets acquired ------------------------------------------------- Goodwill resulting from an acquisition in the United States is amortized over a period of 40 years, using the straight line method. Income taxes ------------ Income taxes payable are currently provided for based on the taxable results reported by each individual subsidiary. Deferred taxes are provided on timing differences between the results reported for tax and financial purposes using the liability method. No deferred taxes are recognized for future benefits resulting from net operating losses because the realizability is highly uncertain due to the history of losses. No deferred taxes are accrued relating to undistributed earnings of S.Fr. 7 Mio. from foreign subsidiaries because the Company has no intention to repatriate such earnings in the foreseeable future. 15 - 3 - Research and development ------------------------ Research and development costs are expensed as incurred. The company's expenditures for research and development for the year ended December 31, 1993, amounted to S.Fr. 18.6 Mio. Loss per share -------------- The loss per share is calculated based on the average number of shares outstanding during the year ended December 31, 1993. 3. Inventories Inventories consist of the following: Raw material, supplies and spare parts S.Fr. 32,310 Work in process 15,178 Finished goods 33,224 Reserves for slow moving and obsolete items (31,640) ------------- S.Fr. 49,072 ============= 4. Property, plant and equipment Property, plant and equipment is set up as follows: At cost- Land and buildings S.Fr. 58,553 Machinery and tooling 24,426 Office furniture and equipment 17,875 Vehicles and other 1,399 ------------- S.Fr. 102,253 Less- Accumulated depreciation 55,000 ------------- S.Fr. 47,253 ============= Depreciation is calculated over the following estimated useful lives. Buildings 20-50 years Machinery and tooling 5-10 years Office furniture and equipment 3-10 years Vehicles 3- 5 years 16 - 4 - 5. Short-term borrowings Short-term borrowings predominantly reflect bank overdrafts under available credit lines and other short-term bank loans. At December 31, 1993, formally approved credit lines amount to S.Fr. 16.8 Mio. of which S.Fr. 16.0 Mio. were used as at that date. A significant portion of the credit lines are guaranteed by the Company's ultimate parent company, Motor-Columbus. In addition, bank borrowings in Austria and Germany are secured by mortgages for an amount of S.Fr. 2 Mio. Credit lines are cancellable at short notice and bear interest at respective market rates applicable in each country. 6. Accrued liabilities Accrued liabilities include the following major items: S.Fr. Restructuring and personnel lay-off 6,049 Social security and other personnel benefits 3,822 Legal costs and pending legal claims 2,792 Warranty and other risks 7,194 Income taxes 540 Real estate taxes 1,350 Other accruals 3,477 ------ 25,224 ====== 7. Loan from parent company Loans from the parent company are denominated in German Marks 27.0 Mio. and S.Fr. 29.5 Mio. The loans bear interest at 7.625% and 6.75%, respectively. No repayment dates are contractually speci- fied. In connection with the sale of the Company to Harman International Industries Inc. and the related sale of the Revox Consumer Electronics business as more fully described in Note 17, the loan has been partly transferred to other companies owned by Motor-Columbus; the remaining balance has been waived as part of a recapitalization of the Company. 17 - 5 - 8. Mortgages Mortgages are set up as follows at December 31, 1993: - First preferred mortgage on Swiss real estate; interest rate 6.25% S.Fr. 29,400 - First preferred mortgage on Swiss real estate; interest rate 7.75% S.Fr. 4,500 - Second mortgage on Swiss real estate; interest rate 6.75% S.Fr. 2,900 -------------- S.Fr. 36,800 ============== In connection with the sale of the Swiss real estate as more fully explained in Note 17, the mortgages have been assumed by another company owned by Motor-Columbus AG. 9. Other long-term debt Other long-term debt is comprised of the following: - amount due under capital leases, due in installments until July 31, 2005 (excluding short-term portion) S.Fr. 4,620 - loan granted by the pension fund of Studer Revox AG, interest bearing at 6.25%, no repayment date fixed S.Fr. 2,000 - other S.Fr. 2,245 -------------- S.Fr. 8,865 ============== 10. Share capital The Company's share capital is comprised of 277,000 registered shares, issued at a nominal value of S.Fr. 100 each. 11. Leases Property accounted for under capital leases at December 31, 1993, amounted to S.Fr. 5,555 less accumulated depreciation of S.Fr. 1,450 and is included under property, plant and equipment. 18 - 6 - At December 31, 1993, the Company is liable for the following minimum lease commitments under non-cancellable operating and finance lease agreements: Operating leases Capital leases ---------------- -------------- 1994 985 631 1995 836 675 1996 722 716 1997 495 734 1998 304 734 1999 and following years 769 4,958 ----- ----- 4,111 8,448 ===== Less- interest element (3,661) ----- 4,787 ===== 12. Income taxes The income tax benefit of S.Fr. 2,083 is composed of the following: S.Fr. ----- Current Swiss local taxes (85) Current foreign taxes (481) Foreign research tax credit 788 Foreign carry back receivable 1,861 ----- 2,083 ===== Accrued liabilities include current tax accruals of S.Fr. 519. Tax assets included under "other assets" comprise of the following: S.Fr. ----- Foreign carry back receivable 1,769 Foreign deferred tax asset on retirement allowance 202 Other foreign deferred tax assets 64 ----- 2,035 ===== 19 - 7 - 13. Business segments The Company's predominant business is the design, manufacture and distribution of high fidelity audio and video products for the consumer and professional studio markets. The Company has operations in Switzerland and internationally. The following table shows net sales, operating income and assets by these geographic segments. The net sales for Switzerland include third party export sales in the amount of S.Fr. 39.8 Mio. S.Fr. Net sales: Switzerland 77,805 International 114,742 Intercompany elimination (57,808) ------- 134,739 ======= Operating loss: Switzerland (12,883) International (15,156) Intercompany elimination 48 ------ (27,991) ====== Assets: Switzerland 134,662 International 86,205 Intercompany elimination (72,058) ------- 148,809 ======= 14. Employee benefit plans The Company and its subsidiaries have various different pension schemes in place depending on local regulations and practices. Besides governmental pension plans in various countries for which only annual contributions are due, a defined benefit plan exists in Switzerland. This plan is organized in a separate legal entity. Total net assets of the plan at December 31, 1993, amount to S.Fr. 35.3 Mio. which exceeds the actuarially calculated required net assets by approximately S.Fr. 2 Mio. In addition, certain minor other plans exist in other countries. Net assets of such plans are not included in the amount stated above. Total contributions to governmental and other pension schemes for the year ended December 31, 1993, amounted to S.Fr. 4.7 Mio. Out of this amount, S.Fr. 3.0 Mio. are contributions to the Swiss defined benefit plan. 20 - 8 - 15. Committments and contingencies The Company and its subsidiaries are involved in several legal actions out of normal operations with customers, suppliers and former employees. The outcome of these actions cannot be predicted at this moment. However, management, based on legal advice, believes such actions are either without merit or do not represent a material liability in excess of amounts specifically reserved for such cases. 16. Related party transactions For the year ended December 31, 1993, the Company has been charged with a management fee of S.Fr. 1.3 Mio. by its parent company. 17. Subsequent event On March 17, 1994, Motor-Columbus AG has sold the Company to Harman International Industries Inc. (Harman) effective January 1, 1994. The agreement includes the following major provisions: - Harman acquires the Company's world wide professional studio business (Studer operations). The Revox consumer electronics business, primarily represented by the Company's subsidiary in Germany (Studer Revox GmbH) will be transferred to a new subsidiary owned by Motor-Columbus AG. - The Swiss real estate owned by the Company together with the respective mortgages have also been transferred to another company owned by Motor-Columbus AG. A lease agreement has been concluded with Studer Revox AG for one part of the real estate. The agreement provides for a 5 year lease term. For the first 3 years no rent is due by the Company. - The Company is recapitalized by Motor-Columbus AG by an amount of S.Fr. 17 Mio. through the waiver of the balance of the parent company loan after the transactions explained in the two preceding paragraphs. The consolidated balance sheet of the Company after such transactions at January 1, 1994, can be summarized as follows: Current assets S.Fr. 80,301 Non-current assets 16,653 Current liabilities (61,198) Non-current liabilities (8,163) ---------------- Equity (incl. minorities) S.Fr. 27,593 ================ 21 - 9 - It is Harman management's intention to continue to operate the recapitalized business of the Company and its subsidiaries on a going concern basis including respective financing if necessary. 22 EX-99 3 EXHIBIT 1.2 Exhibit 1.2 23 Pro forma Consolidated Financial Data The following table presents consolidated statements of operations for the Company and Studer Revox AG for the twelve months ended December 31, 1993 and also includes pro forma consolidated statements for the same period to give effect to the Studer acquisition as though it occurred on January 1, 1993. The statement of operations data for Harman International has been derived from quarterly unaudited consolidated financial statements of the Company and its subsidiaries. The pro forma financial data presented does not purport to represent what the Company's results of operations would have been had such transactions occurred at the beginning of the period presented or to project the Company's results of operations for any future period. 24 Twelve Months Ended December 31, 1993 ---------------------------------------------------- (000 except per Studer share data) Studer Adjustments(1) Adjusted Harman ProForma ---------------------------------------------------- Statements of Operations: Net sales $91,176 (16,218) (2) 74,958 729,241 804,199 Cost of sales 56,504 (17,609) (2,5,7) 38,895 510,512 549,407 ---------------------------------------------------- Gross profit 34,672 1,391 36,603 218,729 254,792 Operating expenses 53,613 (19,203) (2,6,7) 34,410 165,428 199,838 ---------------------------------------------------- Operating income (loss) (18,941) 20,594 1,653 53,301 54,954 Interest expense 5,978 (4,729) (2,3,4) 1,249 24,061 25,310 Miscellaneous, net 1,818 81 (2) 1,899 (435) 1,464 ---------------------------------------------------- Income (loss) before taxes (26,737) 25,242 (1,495) 29,675 28,180 Income taxes (1,410) (35) (2) (1,445) 11,789 10,344 ---------------------------------------------------- Net income (loss) before extraordinary items and minority interest (25,327) 25,277 (50) 17,886 17,836 ---------------------------------------------------- Extraordinary items -- -- -- (748) (748) ---------------------------------------------------- Net income (loss) before minority interest (25,327) 25,277 (50) 17,138 17,088 Minority interest (37) -- (37) -- (37) ---------------------------------------------------- Net Income (Loss) $(25,364) 25,277 (87) 17,138 17,051 ==================================================== Net income per share before extraordinary items and minority interest $1.59 $1.58 ======= ====== Net income per share $1.52 $1.51 ======= ====== Shares Outstanding 11,274 11,274 25 Notes to Pro Forma Consolidated Financial Data (1) Pro forma statements of operations adjustments are based upon preliminary estimates by the Company. The actual amount of these adjustments may vary from these estimates, and will not be determined until the Company completes its review of Studer's business and valuation of assets and liabilities. The Company believes that the actual amount of these adjustments, in the aggregate, will not vary materially from these estimates. Swiss Francs were converted to U.S. dollars based on the average exchange rate for the period. (2) Reflects the elimination of the Revox Consumer Electronics Divisions, which were not purchased by the Company, thus eliminating sales of $16,218,000, cost of sales of $10,145,000, operating expenses of $14,153,000, interest and miscellaneous costs of $2,089,000 and income taxes of $35,000. (3) Represents the elimination of interest costs of approximately $1,600,000 and depreciation of approximately $1,490,000, real estate taxes of approximately $914,000 and real estate agents' fees of approximately $233,000 on buildings not purchased by the Company. The Company has leased from the seller a portion of the buildings previously owned rent-free for a period of three years. (4) Reflects interest expense of approximately $947,000 no longer required as a result of a capital contribution by the Seller of SFR 17,000,000 or about $11,800,000. (5) Reflects the elimination of payroll costs for the year 1993 of approximately $5,800,000 due to the termination of 120 employees in December 1993. (6) Reflects the elimination of management fees of approximately $866,000 which were paid by Studer Revox AG to the Seller in 1993. (7) Reflects the elimination of non-recurring expenses which were incurred by Studer Revox AG in 1993, including termination pay of approximately $1,650,000, non-trading losses in the Vienna operation of approximately $1,590,000 and other costs of approximately $225,000. 26 -----END PRIVACY-ENHANCED MESSAGE-----