-----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, J3ZY1JEcpXjACS+yS6qSSHyk1GryuRRc+XpR4PRUVMRGtOFagbysrbvnJ0zcjIT3 nFhAJyMdJrfNucQ885m2+g== 0000950115-96-000597.txt : 19960514 0000950115-96-000597.hdr.sgml : 19960514 ACCESSION NUMBER: 0000950115-96-000597 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960229 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960513 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PCI SERVICES INC/DE CENTRAL INDEX KEY: 0000879534 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 351724168 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-19795 FILM NUMBER: 96561227 BUSINESS ADDRESS: STREET 1: 1403 FOULK RD STE 102 CITY: WIMINGTON STATE: DE ZIP: 19803 BUSINESS PHONE: 3024790281 MAIL ADDRESS: STREET 1: 3001 RED LION RD CITY: PHILADELPHIA STATE: PA ZIP: 19114 8-K/A 1 AMENDMENT NO. 1 TO CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A Amendment No. 1 CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Date of Report (Date of earliest event reported): February 29, 1996 PCI SERVICES, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 0-19795 51-0336586 (State or Other (Commission File (IRS Employer Jurisdiction Number) Identification No.) of Incorporation) 1403 Foulk Rd., Suite 102 Wilmington, DE 19803 (Address of Principal (Zip Code) Executive Offices) (302) 479-0281 (Registrant's Telephone Number, Including Area Code) PCI Services, Inc., (the "Registrant") filed a Current Report on Form 8-K, dated March 13, 1996, reporting under Item 2, the acquisition of the stock of Unipack Limited ("Unipack") on February 29, 1996. Such Current Report on Form 8-K is hereby amended by the inclusion of the following information: Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (a) Financial Statements of Business Acquired Page 3 (b) Pro Forma Financial Information Page 26 (c) Exhibits 2.1 Agreement for the Sale and Purchase of Shares of Unipack Limited, dated as of February 29, 1996, by and between the Registrant and Speirs. (1) 2.2 Option Agreement, dated as of February 19, 1996, by and between the Registrant and Len Gillam. (1) 2.3 Option Agreement, dated as of February 23, 1996, by and between the Registrant and Robert Fleming Investment Trust Limited; The Fleming Mercantile Investment Trust plc; Bank of Scotland London Nominees Limited; Finserve Nominees Limited; Robert Fleming Nominees Limited; Fleming Private Nominees Limited; Glyns Nominees Limited; Lochside Nominees Limited; Ronald Marler; Bruce Peter Neville Gartside; Robert Hamilton Cooper and Mrs. Carol Mary Cooper and Ian Ross McGregor Ramsay. (1) 24 Consent of Arthur Andersen, Chartered Accountants and Registered Auditors. 99.1 Press Release issued by the Registrant on February 29, 1996. (1) - ------------------ (1) Filed with the Registrant's Current Report on 8-K, dated March 13, 1996. 2 Financial Statements of Unipack Limited Prepared in Accordance with The Companies Act 1985 (Accounting Standards of the United Kingdom) 3 Unipack Limited Accounts 31 December 1995 together with directors' and auditors' reports Registered number: 714877 Directors' Report For the year ended 31 December 1995 The directors present their annual report on the affairs of the company, together with the accounts and auditors' report, for the year ended 31 December 1995. Principal activity and business review The principal activity of the company continues to be the manufacture of pharmaceutical unit dose packages. During the year turnover increased by 20.6% (1994 - 8.2%) to (pound)12,351,720 (1994 - (pound)10,242,414), continuing the company's steady growth. Profit on ordinary activities before taxation increased by 8.7% (1994 - 1.9%) to (pound)1,854,173 (1994 - (pound)1,706,372). The directors expect the general level of activity to continue to increase. However, due to restraints on the availability of some materials, and the fluctuation of sterling against major European currencies, there will be pressure on margins. On 29 February 1996 the company joined the American group, PCI Services Inc., forming a very significant pharmaceutical group with access to world markets and providing of a complete range of pharmaceutical packaging. The company's combination with PCI permits it to expand its resources further and to service the global market. The impending opening of a new "state-of-the-art" facility in Manchester will further provide the availability of enhanced pharmaceutical contract services. Results and dividends Results are as follows: (pound) Retained profit at 1 January 1995 4,907,153 Profit for the year after taxation 1,306,792 Dividends paid (168,288) ---------- Retained profit at 31 December 1995 6,045,657 ========== During the year an interim dividend of (pound)168,288 (1994 - (pound)168,288) was paid. The directors do not recommend the payment of a final dividend for the year (1994 - (pound)168,288). Directors' Report (continued) Directors and their interests The directors who served throughout the year together with their interests in the shares of the company were: Ordinary shares of (pound)1 each -------------------------------- 31 December 1 January 1995 1995 (pound) (pound) D. Speirs (chairman) 13,957 13,957 P.M. Speirs 6,330 6,330 S. Booth - - M.J. O'Donnell - - ======= ======= All interests were beneficial interests. Mr B.J. Korman and Mr R.S. Sauter were also appointed as directors on 29 February 1996. Directors' responsibilities Company law requires the directors to prepare accounts for each financial year which give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing those accounts, the directors are required to: - - select suitable accounting policies and then apply them consistently; - - make judgements and estimates that are reasonable and prudent; - - state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the accounts; and - - prepare the accounts on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the accounts comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 2 Unipack Limited Directors' Report (continued) Fixed assets Information relating to changes in fixed assets is given in notes 10 and 11 to the accounts. In the opinion of the directors, the current market value of the company's freehold land and buildings is approximately (pound)300,000 less than the net book value. However, as this is regarded as being a temporary diminution in value only, no amount has been provided against the carrying value in these accounts. Auditors The directors will place a resolution before the annual general meeting to reappoint Arthur Andersen as auditors for the ensuing year. Hurricane Way By order of the Board, Wickford Business Park Shotgate Essex SS11 8UJ P.M. Speirs Director 26 April 1996 3 Unipack Limited Auditors' Report To the Shareholders of Unipack Limited: We have audited the accounts on pages 5 to 21 which have been prepared under the historical cost convention and the accounting policies set out in note 1 on pages 8 to 10. Respective responsibilities of directors and auditors As described in the directors' report on page 2 the company's directors are responsible for the preparation of the accounts. It is our responsibility to form an independent opinion, based on our audit, on those accounts and to report our opinion to you. Basis of opinion We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the accounts. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the accounts and of whether the accounting policies are appropriate to the circumstances of the company, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the accounts are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the accounts. Opinion In our opinion the accounts give a true and fair view of the state of affairs of the company at 31 December 1995 and of its profit and cash flows for the year then ended and have been properly prepared in accordance with the Companies Act 1985. Arthur Andersen Chartered Accountants and Registered Auditors 1 Surrey Street London WC2R 2PS 26 April 1996 4 Unipack Limited Profit and loss account For the year ended 31 December 1995
Notes 1995 1994 (pound) (pound) Turnover 2 12,351,720 10,242,414 Cost of sales (7,876,871) (6,154,064) ---------- ---------- Gross profit 4,474,849 4,088,350 Other operating expenses (net) 3 (2,597,475) (2,330,859) ---------- ---------- Operating profit 1,877,374 1,757,491 Investment income 4 112,145 67,697 Interest payable and similar charges 5 (135,346) (118,816) ---------- ---------- Profit on ordinary activities before taxation 6 1,854,173 1,706,372 Tax on profit on ordinary activities 8 (547,381) (578,839) ---------- ---------- Profit on ordinary activities after taxation for the financial year 1,306,792 1,127,533 Dividends paid and proposed 9 (168,288) (336,576) ---------- ---------- Retained profit for the year 1,138,504 790,957 Retained profit, at beginning of year 4,907,153 4,116,196 ---------- ---------- Retained profit, at end of year 6,045,657 4,907,153 ========== ==========
All operations of the company continued throughout both periods and no operations were acquired or discontinued. There are no recognized gains or losses other than the profit attributable to shareholders of the company of (pound)1,306,792 in the year ended 31 December 1995 (1994 - (pound)1,127,533). A statement of movements on reserves is given in note 18. A reconciliation of movements in shareholders' funds is given in note 19. The accompanying notes are an integral part of this profit and loss account. 5 Unipack Limited Balance sheet 31 December 1995
Notes 1995 1994 (pound) (pound) Fixed assets Tangible assets 10 6,707,944 5,443,481 Investments 11 140 140 ---------- ---------- 6,708,084 5,443,621 ---------- ---------- Current assets Stocks 12 749,465 779,237 Debtors: amounts due within one year 13 2,137,074 1,797,537 Debtors: amounts due after more than one year 13 21,486 155,559 Cash at bank and in hand 106,541 1,350,789 ---------- ---------- 3,014,566 4,083,122 Creditors: amounts falling due within one year 14 (2,270,657) (2,898,676) ---------- ---------- Net current assets 743,909 1,184,446 ---------- ---------- Total assets less current liabilities 7,451,993 6,628,067 Creditors: amounts falling due after more than one year 15 (812,324) (1,129,902) Provisions for liabilities and charges 16 (283,000) (280,000) ---------- ---------- Net assets 6,356,669 5,218,165 ========== ========== Capital and reserves Called-up share capital 17 42,072 42,072 Share premium account 18 268,940 268,940 Profit and loss account 18 6,045,657 4,907,153 ---------- ---------- Equity shareholders' funds 19 6,356,669 5,218,165 ========== ==========
Signed on behalf of the Board P.M. Speirs Director 26 April 1996 The accompanying notes are an integral part of this balance sheet. 6 Unipack Limited Cash flow statement For the year ended 31 December 1995
Notes 1995 1994 ----- ---------------------- ----------------------- (pound) (pound) (pound) (pound) Reconciliation of operating profit to net cash inflow from operating activities Operating profit 1,877,374 1,757,491 Depreciation charge for the year 654,293 615,566 Loss on disposal of tangible fixed assets 116,627 9,363 Decrease (increase) in stocks 29,772 (219,026) Increase in debtors (excluding taxation) (345,595) (11,236) (Decrease) increase in creditors (excluding taxation, dividends payable and finance obligations) (351,345) 82,899 --------- --------- Net cash inflow from operating activities 1,981,126 2,235,057 Returns on investments and servicing of finance Interest received 88,145 67,697 Interest paid (56,719) (63,100) Interest element of hire purchase rentals (78,627) (55,716) Dividends received from associated undertaking 24,000 - Dividends paid (336,576) (336,576) --------- --------- Net cash outflow from returns on investments and servicing of finance (359,777) (387,695) Taxation paid Corporation tax paid (net) (566,395) (592,314) Investing activities Purchase of tangible fixed assets (1,407,993) (780,317) Purchase of investments - (100) Sale of tangible fixed assets 18,800 144,579 --------- --------- Net cash outflow from investing activities (1,389,193) (635,838) ---------- ---------- Net cash (outflow) inflow before financing (334,239) 619,210 Financing Repayment of loan (474,173) (119,321) Capital element of hire purchase rentals (435,836) (372,919) --------- --------- Net cash outflow from financing 21 (910,009) (492,240) ---------- ---------- (Decrease) increase in cash and cash equivalents 20 (1,244,248) 126,970 ========== ==========
The accompanying notes are an integral part of this cash flow statement. 7 Unipack Limited Notes to Accounts 31 December 1995 1 Accounting policies A summary of the principal accounting policies, all of which have been applied consistently throughout the year and the preceding year, is set out below. a) Basis of accounting The accounts are prepared under the historical cost convention and in accordance with applicable accounting standards. b) Tangible fixed assets Freehold land and buildings, leasehold improvements, assets in the course of construction, plant, equipment and tooling are stated at cost, net of depreciation and provision for permanent diminution in value. Depreciation is provided at rates calculated to write off the cost, less estimated residual value, of each asset, over its estimated useful life as follows: Freehold land Nil Freehold buildings 4% per annum, straight-line basis Leasehold improvements 5% per annum, straight-line basis Assets in the course of construction Nil until completion Plant and equipment 15-33% per annum, reducing balance basis Tooling 25% per annum, straight-line basis c) Investments Fixed asset investments are shown at cost less any amounts written off. Undertakings in which the company has an interest comprising not less than 20% of the voting capital and over which it is in a position to exert significant influence are treated as associated undertakings unless otherwise stated. Such undertakings are also 'related' undertakings as defined in the Companies Act 1985. Investments in associated undertakings are stated at cost. Dividends received and receivable are included in investment income in the profit and loss account. d) Stocks Stocks are stated at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and condition are based on: Raw materials - purchase cost on a first-in, first-out basis Work-in-progress and finished goods - cost of direct materials and labour plus a reasonable proportion of manufacturing overheads based on normal levels of activity. Net realisable value is based on estimated normal selling price less further costs expected to be incurred to completion and disposal. Provision is made for obsolete, slow-moving or defective items where appropriate. Significant differences between balance sheet and replacement cost values are disclosed in note 12. For these purposes replacement cost is based on latest invoice prices before the balance sheet date. 8 Unipack Limited Notes to Accounts (continued) 1 Accounting policies (continued) e) Taxation Corporation tax payable is provided on taxable profits at the current rate. Advance corporation tax payable on dividends paid or provided for in the year is written off, except when recoverability against corporation tax payable is considered to be reasonably assured. Deferred taxation represents the amount required to allow for the effect of certain items of income and expense, primarily depreciation, being attributable for tax purposes to periods different from those in which credits or charges are recorded in the accounts, and is computed using the liability method, whereby such taxation is determined by applying to the accumulated timing differences the rates of tax likely to be in force at the time of reversal. Deferred tax is not provided on timing differences which, in the opinion of the directors, will probably not reverse. f) Pension costs The company provides pensions through defined contribution and defined benefit schemes. The amount charged to the profit and loss account for the defined contribution scheme comprises the contributions payable in respect of the year. The amount charged to the profit and loss account for the defined benefit scheme is the estimated regular cost of providing the benefits accrued in the year, adjusted to reflect variations from that cost. Further information on pension costs is provided in note 22c. g) Foreign currency Transactions denominated in foreign currencies are recorded in sterling at exchange rates as of the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates of exchange prevailing at that date. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the profit and loss account. h) Turnover Turnover comprises the value of sales (excluding VAT and trade discounts) of goods and services in the normal course of business. 9 Unipack Limited Notes to Accounts (continued) 1 Accounting policies (continued) i) Leases The company enters into operating and finance leases and hire purchase contracts as described in notes 10, 15 and 22b. Assets held under finance leases are initially reported at the fair value of the asset, with an equivalent liability categorized as appropriate under creditors due within or after one year. The asset is depreciated over the shorter of the lease term and its useful economic life. Finance costs are allocated to accounting periods over the period of the lease to produce a constant rate of return on the outstanding balance. Rentals are apportioned between finance charges and reduction of the liability, and allocated to cost of sales and other operating expenses as appropriate. Hire purchase transactions are dealt with similarly, except that assets are depreciated over their useful lives. Rentals under operating leases are charged on a straight-line basis over the lease term, even if the payments are not made on such a basis. Further information on charges in the year and future operating lease commitments is given in notes 5, 6, 14, 15 and 22b. 2 Segment information Turnover by destination was as follows: 1995 1994 (pound) (pound) United Kingdom 10,565,596 9,030,018 Europe -- EC 1,606,736 977,737 Other 179,388 234,659 ---------- ---------- 12,351,720 10,242,414 ========== ========== Contributions to turnover and profit on ordinary activities before taxation by continuing activities originated entirely in the UK but have not been separately disclosed, since in the view of the directors all activities of the company are similar. The net assets of the company are held in the UK. 3 Other operating expenses (net) 1995 1994 (pound) (pound) Distribution costs 396,993 367,536 Administrative expenses 2,200,482 1,963,323 ---------- ---------- 2,597,475 2,330,859 ========== ========== 10 Unipack Limited Notes to Accounts (continued) 4 Investment income
1995 1994 (pound) (pound) Interest receivable and similar income 112,145 67,697 ========== ========= 5 Interest payable and similar charges 1995 1994 (pound) (pound) On bank loans, overdrafts and other loans repayable within five years, by instalments 56,719 63,100 On all other loans 78,627 55,716 ---------- ---------- 135,346 118,816 ========== ==========
Included in the above is the interest element of charges payable under finance leases and hire purchase contracts amounting to (pound)78,627 (1994 -- (pound)55,716). 6 Profit on ordinary activities before taxation Profit on ordinary activities before taxation is stated after charging:
1995 1994 (pound) (pound) a) Depreciation and amounts written off tangible fixed assets i. owned 435,685 432,626 ii.held under finance leases and hire purchase contracts 218,608 182,940 ---------- ---------- 654,293 615,566 ---------- ---------- b) Loss on disposal of tangible fixed assets 116,628 9,363 c) Hire of plant and machinery under operating leases 7,716 5,228 d) Other operating lease rentals 143,969 143,969 e) Staff costs (see note 7) 4,551,269 3,913,993 f) Auditors' remuneration i. audit fees 30,000 30,000 ii.non-audit fees 11,000 18,000 ========== ==========
11 Unipack Limited Notes to Accounts (continued) 7 Staff costs Particulars of employees, including executive directors, are as shown below: 1995 1994 (pound) (pound) Employee costs during the year amounted to: Wages and salaries 3,936,055 3,352,789 Social security costs 340,441 312,441 Pension costs 274,773 248,763 ---------- ---------- 4,551,269 3,913,993 ========== ========== The average weekly number of persons employed by the company during the year was as follows: Number Number Production 293 276 Administration 43 47 ---------- ---------- 336 323 ========== ========== Directors' remuneration: Directors' remuneration (including pensions and pension contributions) was paid by the company in respect of directors as follows: (pound) (pound) Management remuneration 375,123 299,900 Pension contributions 154,665 173,367 Pensions paid to former directors - 23,552 ---------- ---------- 529,788 496,819 ========== ========== The directors' remuneration shown above (excluding pensions and pension contributions) included: (pound) (pound) Chairman 103,879 96,011 Highest paid director 146,211 Chairman ========== ========= 12 Unipack Limited Notes to Accounts (continued) 7 Staff costs (continued) Directors received emoluments (excluding pensions and pension contributions) in the following ranges: 1995 1994 Number Number (pound) 60,001 - (pound) 65,000 2 2 (pound) 75,001 - (pound 80,000 - 1 (pound) 95,001 - (pound) 100,000 - 1 (pound) 100,001 - (pound) 105,000 1 - (pound) 145,001 - (pound) 150,000 1 - ========= ======= 8 Tax on profit on ordinary activities The tax charge is based on the profit for the year and comprises:
1995 1994 (pound) (pound) Corporation tax at 33% (1994 - 33%) 586,000 572,000 Deferred taxation arising from - capital allowances (2,000) 13,000 - other timing differences 23,000 - ---------- ---------- 607,000 585,000 Adjustment of current taxation in respect of prior years (41,619) (1,161) Adjustment of deferred taxation in respect of prior years (18,000) (5,000) ---------- ---------- 547,381 578,839 ========== ==========
9 Dividends paid and proposed
1995 1994 (pound) (pound) Ordinary - interim paid of(pound)4.00 per share (1994 -- (pound)4.00 per share) 168,288 168,288 - final proposed of(pound)nil (1994 -- (pound)4.00 per share) - 168,288 ---------- ---------- 168,288 336,576 ========== =========
13 Unipack Limited Notes to Accounts (continued) 10 Tangible fixed assets Net book values representing cost less accumulated depreciation as shown in the balance sheet comprise:
Freehold Assets in the Plant, land and Leasehold course of equipment buildings improvements construction and tooling Total (pound) (pound) (pound) (pound) (pound) Cost Beginning of year 2,507,535 152,768 253,396 5,782,064 8,695,763 Transfers 253,396 - (253,396) - - Additions - - 955,736 1,098,447 2,054,183 Disposals - - - (512,553) (512,553) ---------- ---------- ---------- ---------- ---------- End of year 2,760,931 152,768 955,736 6,367,958 10,237,393 ---------- ---------- ---------- ---------- ---------- Depreciation Beginning of year 215,980 66,901 - 2,969,401 3,252,282 Charge for the year 53,994 20,308 - 579,991 654,293 Disposals - - - (377,126) (377,126) ---------- ---------- ---------- ---------- ---------- End of year 269,974 87,209 - 3,172,266 3,529,449 ---------- ---------- ---------- ---------- ---------- Net book value Beginning of year 2,291,555 85,867 253,396 2,812,663 5,443,481 ========== ========== ========== ========== ========= End of year 2,490,957 65,559 955,736 3,195,692 6,707,944 ========== ========== ========== ========== =========
Freehold land amounting to (pound)1,157,688 (1994 -- (pound)1,157,688) has not been depreciated. The net book value of plant, equipment and tooling includes (pound)1,390,464 (1994 -- (pound)1,145,819) of assets held under finance leases and hire purchase contracts. 11 Fixed asset investments The following are included in fixed asset investments:
Country of Principal Proportion of Associated undertakings: registration activity shares held Toolrite (Romford) Limited England & Wales Toolmaking and precision 49% engineering Trade investment: 0.38% Processing and Packaging England & Wales Trade Association Machinery Association
14 Unipack Limited Notes to Accounts (continued) 11 Fixed asset investments (continued) 1995 1994 (pound) (pound) Cost brought forward 140 40 Additions at cost (trade investment) - 100 ---------- ---------- Cost carried forward 140 140 ========== ========== The company's 49% share of the total net assets of Toolrite (Romford) Limited (based on the management accounts to 31 December 1995) amounted to (pound)338,000 (28 February 1995 -- (pound)271,000 -- audited accounts). 12 Stocks The following are included in the net book value of stocks: 1995 1994 (pound) (pound) Raw materials and consumables 557,313 533,620 Work-in-progress 93,098 135,190 Finished goods and goods for resale 99,054 110,427 ---------- ---------- 749,465 779,237 ========== ========== In the opinion of the directors, the estimated replacement cost of stocks is not materially different from their balance sheet value. 15 Unipack Limited Notes to Accounts (continued) 13 Debtors The following are included in the net book value of debtors:
1995 1994 (pound) (pound) Amounts falling due within one year: Trade debtors 2,013,597 1,689,988 Other debtors 27,638 40,121 Prepayments and accrued income 92,148 57,679 Corporation tax recoverable 3,691 9,749 ---------- ---------- 2,137,074 1,797,537 ---------- ---------- Amounts falling due after more than one year: ACT on proposed dividends - 134,073 Employee loan 21,486 21,486 ---------- ---------- 21,486 155,559 ---------- ----------
14 Creditors: amounts falling due within one year The following amounts are included in creditors falling due within one year:
1995 1994 (pound) (pound) Obligations under finance leases and hire purchase contracts (see note 15) 401,604 318,624 Bank loan (see note 15) 83,041 112,262 Trade creditors 397,055 701,236 Amounts due to associated undertaking 35,757 23,284 Other creditors - UK corporation tax payable 507,856 572,000 - ACT on paid and proposed dividends 36,072 134,073 - VAT 161,781 181,572 - social security and PAYE 114,060 102,503 - other 155,320 128,918 Dividends payable - 168,288 Accruals and deferred income 378,111 455,916 --------- ---------- 2,270,657 2,898,676 ---------- ----------
16 Unipack Limited Notes to Accounts (continued) 15 Creditors: amounts falling due after more than one year The following amounts are included in creditors falling due after more than one year:
1995 1994 (pound) (pound) Obligations under finance leases and hire purchase contracts (see below) 626,123 498,749 Bank loans (see below) 186,201 631,153 ---------- ---------- 812,324 1,129,902 ---------- ----------
The bank loan is from the European Investment Bank and is repayable by monthly installments until 1 January 2001 at an interest rate of 1.5% above the E.I.B. base rate, subject to a minimum interest rate. The loan is secured by fixed charges over the freehold land.
Analysis of borrowings: Borrowings are repayable as follows: (pound) (pound) Due within five years - - within 1 year - bank loan 83,041 112,262 - finance leases and hire purchase contracts 401,604 318,624 - - within 2-5 years - bank loan 186,201 552,931 - finance leases and hire purchase contracts 626,123 498,749 ---------- ---------- 1,296,969 1,482,566 Due wholly or in part by instalments after five years - - bank loans - 78,222 ---------- ---------- Total borrowings 1,296,969 1,560,788 ========== ==========
Of this total, amounts due within one year are included in Creditors: amounts falling due within one year (see note 14). 17 Unipack Limited Notes to Accounts (continued) 16 Provisions for liabilities and charges Full provision has been made for deferred taxation as follows:
1995 1994 (pound) (pound) Excess of tax allowances over book depreciation of fixed assets 293,000 287,000 Other short term timing differences (10,000) (7,000) ---------- ---------- 283,000 280,000 ========== ========== The movement on deferred taxation comprises: (pound) (pound) Beginning of year 280,000 262,000 Charged (credited) to profit and loss in respect of: - capital allowances 6,000 19,000 - other timing differences (3,000) (1,000) ---------- ---------- 283,000 280,000 ========== ==========
17 Called-up share capital Equity capital:
1995 1994 (pound) (pound) Authorised, allotted, called-up and fully-paid Ordinary equity shares of(pound)1 each 42,072 42,072 ---------- ----------
18 Reserves The movement on reserves comprises:
Share premium Profit and account loss account Total (pound) (pound) (pound) Beginning of year 268,940 4,907,153 5,176,093 Retained profit for the year - 1,138,504 1,138,504 ---------- ---------- ---------- End of year 268,940 6,045,657 6,314,597 ========== ========== ==========
18 Unipack Limited Notes to Accounts (continued) 19 Reconciliation of movements in equity shareholders' funds
1995 1994 (pound) (pound) Beginning of year 5,218,165 4,427,208 Retained profit for the year 1,138,504 790,957 ---------- ---------- End of year 6,356,669 5,218,165 ========== ==========
20 Analysis of changes in cash and cash equivalents during the year
Cash at bank and in hand (pound) Balance at 1 January 1994 1,223,819 Net cash inflow 126,970 ---------- Balance at 1 January 1995 1,350,789 Net cash outflow (1,244,248) ---------- Balance at 31 December 1995 106,541 ==========
21 Analysis of changes in financing during the year
Finance lease Bank loan obligations Total (pound) (pound) (pound) Balance at 1 January 1994 862,736 586,688 1,449,424 Repayment of loan (119,321) - (119,321) Repayment of capital element of hire purchase and finance lease agreements - (372,919) (372,919) Inception of finance lease and hire purchase contracts - 603,604 603,604 ---------- ---------- ---------- Balance at 1 January 1995 743,415 817,373 1,560,788 Repayment of loan (474,173) - (474,173) Repayment of capital element of hire purchase and finance lease agreements - (435,836) (435,836) Inception of finance lease and hire purchase contracts - 646,190 646,190 ---------- ---------- ---------- Balance at 31 December 1995 269,242 1,027,727 1,296,969 ========== ========== ==========
19 Unipack Limited Notes to Accounts (continued) 22 Guarantees and other financial commitments a) Capital commitments At the end of the year, capital commitments were: 1995 1994 (pound) (pound) Contracted but not provided for 2,536,000 120,000 ---------- ---------- Authorized but not contracted for 249,500 2,691,500 ---------- ---------- The company's capital commitments in 1995 primarily related to continuing construction of new purpose built premises at Westhoughton, Manchester. The building will be completed during 1996 with the move expected to occur in the last quarter of 1996. b) Lease commitments The company leases certain land and buildings on short-term leases. The annual rental on these leases was (pound)143,969 (1994 -- (pound)143,969). The rents payable under these leases are subject to renegotiation at various intervals specified in the leases. The company pays all insurance, maintenance and repairs of these properties. The minimum annual rentals under the foregoing leases are as follows: 1995 1994 (pound) (pound) Operating leases which expire - within 2-5 years 36,100 36,100 - after 5 years 111,500 111,500 ========= ======== c) Pension arrangements The company contributes to two pension schemes, as follows: i. Unipack Limited Pension Fund - a defined contributions scheme which is fully insured with the Scottish Widows Fund and Life Assurance Company. The scheme is non-contributory for senior management, and for middle management. The company contributes 5% to 15% of gross employee salary. The pension cost charge for the year under the scheme was (pound)94,773 (1994 -- (pound)63,211). ii. Unipack Limited Executive Pension Scheme - a defined benefit scheme constituting an independent trust for the benefit of selective executives. The pension cost charge for the year was (pound)160,000 (1994 -- (pound)112,000) under this scheme, which consists entirely of the regular cost. The pension cost is assessed in accordance with the advice of a professionally qualified actuary. The latest actuarial valuation was as at 16 June 1994. The main actuarial assumptions were that (a) salaries would increase by 1.5% p.a. above the Retail Prices Index. and (b) the return on scheme investments would be 2% p.a. above the Retail Prices Index on average. There were no unfunded actuarial liabilities as at 16 June 1994. 20 Unipack Limited Notes to Accounts (continued) 22 Guarantees and other financial commitments (continued) c) Pension arrangements (continued) iii. Unipack Limited made contributions into a Funded Unapproved Retirement Benefit Scheme (FURBS) during 1995 for the benefit of the managing director. The total amount contributed for the year was (pound)20,000 (1994 -- (pound)50,000). The total pension costs of the company for the year were (pound)274,773 (1994 -- (pound)248,763). 23 Related party transactions a) During the year, the company made property rental payments totalling (pound)20,000 (1994 -- (pound)30,000), on some of the company's premises, to the Unipack Limited Executive Pension Scheme, on an arm's length basis. b) During the year, the company purchased tooling from Toolrite (Romford) Limited, the associated undertaking, totalling (pound)246,905 (1994 -- (pound)174,784). 24 Subsequent events On 29 February 1996 - - the directors declared and paid a dividend totalling(pound)6,000,000. - - the company was acquired by the American group headed by PCI Services Inc., incorporated in Delaware, USA, who then became the ultimate parent company. - - the authorized and issued share capital of the company were increased by (pound)6,000,000. 21 Unipack Limited PCI SERVICES, INC. AND SUBSIDIARIES PRO FORMA FINANCIAL INFORMATION On February 29, 1996, PCI Services, Inc. (the "Company") acquired all of the outstanding capital stock of Unipack Limited ("Unipack"), a pharmaceutical packaging company located in the United Kingdom, for approximately $18,000,000 in cash and 60,000 shares of the Company's common stock (valued at $765,000 as of the date of the acquisition). The following unaudited pro forma condensed consolidated statements of operations of the Company for the six months ended March 31, 1996 and the year ended September 30, 1995 give effect to the acquisition of Unipack as if it had occurred as of October 1, 1994. A pro forma condensed consolidated balance sheet of the Company is not presented since the Company's balance sheet as of March 31, 1996, as reported in its Quarterly Report on Form 10-Q for the quarter then ended, reflects the acquisition of Unipack. The pro forma financial information presented herein is based on management's estimate of the effects of the acquisition of Unipack and the financing thereof. The pro forma financial information is based upon currently available information. The Company does not expect the receipt of additional information to have a material adverse effect on the pro forma financial data. The pro forma condensed consolidated statements of operations for the six months ended March 31, 1996 and the year ended September 30, 1995 are unaudited but, in the opinion of management, include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the pro forma results of operations for the periods presented. The pro forma condensed consolidated statements of operations for the six months ended March 31, 1996 and the year ended September 30, 1995 are not necessarily indicative of the results of operations of the Company which would have actually resulted had the transaction described been consummated as of the dates indicated, or that may be achieved in the future. 26 Some of the information presented in this report may constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from its expectations. Factors which could cause actual results to differ from expectations include the timing and amount of new product introductions by the Company's customers, the timing of orders received from customers, the dependence on major customers, the gain or loss of significant customers, changes in the mix of services provided, the cost of raw materials, and fluctuations in interest rates and currency exchange rates. For additional information concerning these and other important factors which may cause the Company's actual results to differ materially from expectations and underlying assumptions, please refer to reports filed by the Company with the Securties and Exchange Commission. 27 PCI SERVICES, INC. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1995 (unaudited)
PCI Services Pro Forma Historical Unipack(a) Adjustments Pro Forma ------------ ------- ----------- --------- Net revenue $129,785,000 $18,923,000 $148,708,000 Cost of goods sold 101,586,000 12,067,000 113,653,000 ------------- ----------- ------------ Gross profit 28,199,000 6,856,000 35,055,000 Selling, general and administrative expenses 16,613,000 3,979,000 456,000 (1) 21,082,000 34,000 (2) Interest expense 1,838,000 207,000 1,570,000 (3) 3,615,000 Other (income) expense 103,000 (172,000) (69,000) ------------- ----------- ------------ Income before income tax expense 9,645,000 2,842,000 10,427,000 Income tax expense 4,073,000 839,000 (680,000)(4) 4,232,000 ------------- ----------- ------------ Net income $5,572,000 $2,003,000 $6,195,000 ============= =========== ========== Earnings per share $0.91 $1.00 ============= ========== Weighted average shares outstanding (b) 6,138,000 6,198,000 ============= ==========
- -------------------------------------- Notes: (a) The historical financial data for Unipack was obtained from the audited statement of operations of Unipack for the year ended December 31, 1995 and translated into U.S. dollars at the appropriate exchange rate. (b) Pro forma weighted average shares outstanding reflects the issuance of 60,000 shares in connection with the acquisition of Unipack. Notes to Pro Forma Adjustments: (1) Reflects the amortization of goodwill related to the acquisition of Unipack over 20 years. (2) Reflects the amortization of deferred financing costs over the term of the credit facility (3 to 7 years). (3) Reflects interest expense related to long-term debt incurred in connection with the acquisition of Unipack. (4) Reflects the net tax benefit on pro forma adjustments at the effective tax rate for Unipack of 33%. 28 PCI SERVICES, INC. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS SIX MONTHS ENDED MARCH 31, 1996 (unaudited)
PCI Services Pro Forma Historical Unipack(a) Adjustments Pro Forma ------------ ------- ----------- --------- Net revenue $79,368,000 $7,885,000 $87,253,000 Cost of goods sold 59,327,000 5,028,000 64,355,000 ----------- ----------- ----------- Gross profit 20,041,000 2,857,000 22,898,000 Selling, general and administrative expenses 10,520,000 1,658,000 190,000 (1) 12,382,000 14,000 (2) Interest expense 1,348,000 86,000 654,000 (3) 2,088,000 Other income (80,000) (72,000) (152,000) ------------ ------------ ----------- Income before income tax expense 8,253,000 1,185,000 8,580,000 Income tax expense 2,891,000 350,000 (283,000)(4) 2,958,000 ------------ ------------ ----------- Net income $5,362,000 $835,000 $5,622,000 ============ ============ =========== Earnings per share $0.87 $0.91 ============ =========== Weighted average shares outstanding (b) 6,148,000 6,198,000 ============ ===========
- ------------------------------------ Notes: (a) The historical financial data for Unipack represents five months of activity and was derived from the statement of operations for the year ended December 31, 1995 and translated into U.S. dollars at the appropriate exchange rate. The operations of Unipack, from the date of acquisition, have been included in the historical financial data of PCI Services. (b) Pro forma weighted average shares outstanding reflects the issuance of 60,000 shares in connection with the acquisition of Unipack. Notes to Pro Forma Adjustments: (1) Reflects the amortization of goodwill related to the acquisition of Unipack over 20 years. (2) Reflects the amortization of deferred financing costs over the term of the credit facility (3 to 7 years). (3) Reflects interest expense related to long-term debt incurred in connection with the acquisition of Unipack. (4) Reflects the net tax benefit on pro forma adjustments at the effective tax rate for Unipack of 33%. 29 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. PCI SERVICES, INC. /s/ Michael F. Sandler ---------------------------------- Michael F. Sandler Vice President and Chief Financial Officer Date: May 10, 1996 Exhibit 24 Independent Auditors' Consent We consent to the incorporation by reference in the Registration Statement on Form S-3 (SEC File Number 33-82400) and Registration Statement on Form S-8 (SEC File Number 333-00336) of PCI Services, Inc. of our report dated April 26, 1996, on the accounts of Unipack Limited for December 31, 1995 included in the Amendment to Current Report on Form 8-K/A of PCI Services, Inc. Arthur Andersen Chartered Accountants and Registered Auditors -----END PRIVACY-ENHANCED MESSAGE-----