-----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, FieAQHrJVen3eJONYjSYzlHFwDVbyT+2PhqJ+YSXp7Aq3XlnFYPkB8V3SkVfdqWa KQoZwq/mvm0u+Hl9EnaEOQ== 0000916797-97-000020.txt : 19970505 0000916797-97-000020.hdr.sgml : 19970505 ACCESSION NUMBER: 0000916797-97-000020 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970224 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970502 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ELECTRONIC FAB TECHNOLOGY CORP CENTRAL INDEX KEY: 0000916797 STANDARD INDUSTRIAL CLASSIFICATION: PRINTED CIRCUIT BOARDS [3672] IRS NUMBER: 840854616 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-23332 FILM NUMBER: 97594553 BUSINESS ADDRESS: STREET 1: 7251 WEST 4TH ST CITY: GREELEY STATE: CO ZIP: 80634-9763 BUSINESS PHONE: 3033533100 8-K/A 1 UNITED STATES 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 February 24, 1997 (Date of earliest event reported) ELECTRONIC FAB TECHNOLOGY CORP. (Exact name of registrant as specified in its charter) Commission file number: 0-23332 Colorado 84-0854616 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 7251 West 4th Street Greeley, Colorado 80634-9763 (Address of principal executive offices) (970) 353-3100 (Registrant's telephone number, including area code) ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Businesses Acquired The following financial statements of Current Electronics, Inc and Current Electronics Washington, Inc. are attached: Appendix I Current Electronics, Inc. and Current Electronics Washington, Inc., Combined Balance Sheets as of September 30,1996 and 1995, and Combined Statements of Income and Retained Earnings and Cash Flows for the three years ended September 30,1996. (b) Pro Forma Financial Information The proforma financial information is attached as Appendix II. Exhibits 23. Consent of Independent Public Accountants 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. Electronic Fab Technology Corp. \s\Stuart Fuhlendorf Stuart Fuhlendorf Date: May 2, 1997 V.P. Finance and CFO REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareholders of Current Electronics, Inc. and Current Electronics Washington, Inc.: We have audited the accompanying combined balance sheets of Current Electronics, Inc. (an Oregon Corporation) and Current Electronics Washington, Inc. (a Washington S Corporation) as of September 30, 1996 and 1995, and the related combined statements of income and retained earnings and cash flows for the years then ended. These combined financial statements are the responsibility of the Companies' management. Our responsibility is to express an opinion on these combined financial statements and supplementary combining information 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 Current Electronics, Inc. and Current Electronics Washington, Inc. as of September 30, 1996 and 1995, and the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Portland, Oregon, November 25, 1996 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareholders of Current Electronics, Inc. and Current Electronics Washington, Inc.: We have audited the accompanying combined statements of income and retained earnings and cash flows of Current Electronics, Inc. (an Oregon Corporation) and Current Electronics Washington, Inc. (a Washington S Corporation) for the year ended September 30, 1994. These combined financial statements are the responsibility of the Companies' management. Our responsibility is to express an opinion on these combined 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 statement are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Current Electronics, Inc. and Current Electronics Washington, Inc. for the year ended September 30, 1994, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Portland, Oregon, April 4, 1997 CURRENT ELECTRONICS, INC. AND CURRENT ELECTRONICS WASHINGTON, INC. COMBINED BALANCE SHEETS SEPTEMBER 30, 1996 AND 1995 ASSETS
1996 1995 CURRENT ASSETS: Cash and cash equivalents . . . . . . . . . . . . . . $ 580,839 $ 252,323 Accounts receivable, net of allowance for doubtful accounts of $34,000 and $6,774. . . . . . . . . . . 1,929,142 1,506,049 Inventories . . . . . . . . . . . . . . . . . . . . . 3,826,074 1,860,951 Prepaid expenses. . . . . . . . . . . . . . . . . . . 109,077 24,809 Total current assets. . . . . . . . . . . . . . . . 6,445,132 3,644,132 PROPERTY, PLANT AND EQUIPMENT, net. . . . . . . . . . . . 2,337,317 2,171,347 OTHER ASSETS. . . . . . . . . . . . . . . . . . . . . . . 140,201 73,197 Total assets. . . . . . . . . . . . . . . . . . . . . $8,922,650 $5,888,676 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable. . . . . . . . . . . . . . . . . . . . $1,386,274 $ 636,264 Accrued liabilities . . . . . . . . . . . . . . . . . . 766,020 643,863 Income taxes payable. . . . . . . . . . . . . . . . . . 99,953 247,764 Notes payable . . . . . . . . . . . . . . . . . . . . . 650,000 - Current portion of long-term debt . . . . . . . . . . . 599,019 500,948 Total current liabilities . . . . . . . . . . . . . 3,501,266 2,028,839 DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . 122,000 289,000 LONG-TERM DEBT. . . . . . . . . . . . . . . . . . . . . . 977,826 815,751 Total liabilities . . . . . . . . . . . . . . . . . 4,601,092 3,133,590 SHAREHOLDERS' EQUITY: Preferred stock . . . . . . . . . . . . . . . . . . . . - - Common stock. . . . . . . . . . . . . . . . . . . . . . 33,000 33,000 Retained earnings . . . . . . . . . . . . . . . . . . . 4,288,558 2,722,086 Total shareholders' equity. . . . . . . . . . . . . 4,321,558 2,755,086 Total liabilities and shareholders' equity. . . . . $8,922,650 $5,888,676 The accompanying notes are an integral part of these combined balance sheets.
CURRENT ELECTRONICS, INC. AND CURRENT ELECTRONICS WASHINGTON, INC. COMBINED STATEMENTS OF INCOME AND RETAINED EARNINGS FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
1996 1995 1994 NET SALES $32,520,438 $17,169,805 $11,066,863 COST OF SALES 27,075,305 13,471,626 8,611,474 Gross profit 5,445,133 3,698,179 2,455,389 SELLING, GENERAL ADMINISTRATIVE EXPENSES 2,792,814 1,976,702 1,796,962 Income from operations 2,652,319 1,721,477 658,427 OTHER INCOME (EXPENSE): Other income, net 9,345 34,603 9,218 Interest expense, net (101,192) (129,315) (63,121) Total other income (expense) (91,847) (94,712) (53,903) Income before income taxes 2,560,472 1,626,765 604,524 PROVISION (BENEFIT) FOR INCOME TAXES: Current 921,000 438,435 100,000 Deferred (167,000) 42,000 104,000 754,000 480,435 204,000 NET INCOME 1,806,472 1,146,330 400,524 RETAINED EARNINGS, beginning of year 2,722,086 1,650,756 1,250,232 DIVIDENDS (240,000) (75,000) - RETAINED EARNINGS, end of year $ 4,288,558 $ 2,722,086 $ 1,650,756 The accompanying notes are an integral part of these combined statements.
CURRENT ELECTRONICS, INC. AND CURRENT ELECTRONICS WASHINGTON, INC. COMBINED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
1996 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net income. . . . . . . . . . . . . . . . . . . . . $1,806,472 $1,146,330 $400,524 Adjustments to reconcile net income to cash provided by operating activities- Depreciation and amortization . . . . . . . . . 576,378 475,944 350,874 Loss on sale of property. . . . . . . . . . . . 2,491 - 4,533 Deferred income taxes . . . . . . . . . . . . . (167,000) 42,000 104,569 Changes in operating accounts: Accounts receivable. . . . . . . . . . . . . (423,093) (673,973) (100,461) Inventories. . . . . . . . . . . . . . . . . (1,717,929) (902,338) (38,628) Prepaid expenses . . . . . . . . . . . . . . (84,268) (13,042) 2,117 Accounts payable . . . . . . . . . . . . . . 750,010 458,679 11,889 Accrued liabilities. . . . . . . . . . . . . 122,157 295,885 (56,053) Income taxes payable . . . . . . . . . . . . (147,811) 264,339 (199,826) Net cash provided by operating activities 717,407 1,093,824 479,538 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment . . . . . . . . (768,867) (1,061,820) (777,128) Proceeds from disposal of property and equipment. . 24,028 - - Key Man Insurance . . . . . . . . . . . . . . . . . (67,004) (24,269) (48,928) Net cash used in investing activities . . (811,843) (1,086,089) (826,056) CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings under lines of credit. . . . . . . . 650,000 - - Proceeds from new long-term borrowings. . . . . . . 1,285,344 551,539 691,496 Repayments of long-term debt. . . . . . . . . . . . (1,272,392) (389,881) (409,334) Dividends paid. . . . . . . . . . . . . . . . . . . (240,000) (75,000) - Issuance of common stock. . . . . . . . . . . . . . - - 3,000 Net cash provided by financing activities 422,952 86,658 285,162 Net increase (decrease) in cash and cash equivalents. . . . . . . . . . . . . . 328,516 94,393 (61,356) CASH AND CASH EQUIVALENTS, beginning of period. . . . 252,323 157,930 219,286 CASH AND CASH EQUIVALENTS, end of period. . . . . . . $ 580,839 $ 252,323 $ 157,930 SUPPLEMENTAL CASH FLOW DISCLOSURES: Cash paid for interest. . . . . . . . . . . . . . . $ 143,109 $ 129,239 $ 63,121 Cash paid for taxes . . . . . . . . . . . . . . . . 1,073,489 158,000 381,809 Issuance of note in exchange for inventories (noncash operating activity) . . . . . . . . . . 247,194 - - The accompanying notes are an integral part of these combined statements.
CURRENT ELECTRONICS, INC. CURRENT ELECTRONICS WASHINGTON, INC. Notes to Combined Financial Statements 1. DESCRIPTION OF BUSINESS: Current Electronics, Inc. (CEI) was incorporated on December 29, 1983 in the State of Oregon. CEI's primary business is contract manufacturing of electronic circuit boards and other components for its customers, who are located primarily in the Portland metropolitan area. Current Electronics Washington, Inc. (CEWI) was incorporated as an S Corporation in the State of Washington in 1994 and is also a contract manufacturer of electronic circuit boards. CEWI's primary customer is in Redmond, Washington. CEI and CEWI (the Companies) provide contract manufacturing on both a consigned basis (customer retains title to the raw materials) and turnkey basis (the Companies own the raw materials). 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Principles of Combination The financial statements combine the accounts of the Companies, after elimination of intercompany items and transactions. These companies are being combined as they are under common ownership and management. The accounting policies referred to below represent the policies of both companies, unless otherwise specified. Cash Equivalents Cash equivalents consists of short-term, highly liquid investments with maturities at the date of purchase of 90 days or less. Inventories Inventories are valued at standard cost which approximates lower of cost (first-in, first-out) or market, and include materials, labor and manufacturing overhead. Property and Equipment Property and equipment are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the assets: Machinery and production equipment--5 to 15 years and furniture, fixtures and computer equipment--5 to 7 years. Leasehold improvements are amortized over the estimated useful life of the asset. Advertising Advertising costs are expensed as incurred. For the fiscal years ended September 30, 1996, 1995 and 1994, advertising costs were $48,266, $24,642 and $33,357, respectively. Revenue Recognition Revenues are recognized when the product is shipped to the customer. Concentrations of Credit Risk The Companies' revenues are principally generated from a small number of electronics companies based in Oregon and Washington. During 1996, four of the Companies' customers accounted for 74% of combined net sales. For the year ended September 30, 1995, three customers accounted for 52% of combined net sales. For the year ended September 30, 1994, four customers accounted for 63% of combined net sales. Historically, the Companies have not incurred significant losses related to its accounts receivable. However, the loss of any one customer could have a significant impact on the future results of the Companies' operations. Use of Estimates 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 at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results may differ from those estimates and such differences could be material to the financial statements. Recent Pronouncement In 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 121 (SFAS 121), "Accounting for the impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." SFAS 121 requires an assessment of impairment of long-lived assets under certain conditions and recognition of loss in the event the net book value of such assets exceeds the future undiscounted cash flows attributable to such assets. In such instances a loss would be recorded based on the fair market value of the applicable asset. SFAS 121 is effective for the Companies' fiscal year ending September 30, 1997. Adoption of SFAS 121 is not expected to have a material impact on the Company's financial position or results of operations. Reclassifications Certain balances for prior periods have been reclassified to be consistent with the September 30, 1996 presentation. 3. RELATED PARTY TRANSACTIONS: CEI and CEWI lease office and factory space from Hewitson, Hewitson and Hewitson (HHH), a partnership which is comprised of the majority shareholders of CEI. Lease rates between the Companies and these shareholders are based on estimated fair market values. Rents paid to the partnership for the years ended September 30, 1996, 1995 and 1994 were $428,402, $259,720 and $182,520, respectively. CEI provides selling, general and administrative services to CEWI. Services totaling $150,000, $60,000 and $0 were allocated to CEWI for the years ended September 30, 1996, 1995 and 1994, respectively. CEI owes HHH a combined total of $59,066 under a note (see Note 9) as of September 30, 1996. CEI owed the partnership $113,055 under two notes at September 30, 1995. CEI owed HHH a total of $39,190 under a note as of September 30, 1994. 4. OPERATING LEASES: Total rental expense under operating leases was $472,212, $362,241 and $232,516 during fiscal 1996, 1995 and 1994, respectively. Future minimum lease payments under noncancelable operating leases as of September 30, 1996 are as follows: Year Ended September 30, CEI CEWI 1997 $266,778 $ 96,000 1998 73,408 16,000 1999 3,186 -- $343,372 $112,000 The Companies' lease payments principally represent commitments under the related party facility lease agreement described in Note 3. 5. INVENTORIES: Inventories consisted of the following at September 30: 1996 1995 Raw materials $2,892,338 $1,163,165 Work in process 827,437 484,555 Finished goods 106,299 213,231 $3,826,074 $1,860,951 6. PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment consisted of the following at September 30: 1996 1995 Machinery and equipment $2,897,719 $ 2,771,774 Leasehold improvements 705,557 575,149 Computer equipment 626,032 279,188 Furniture and fixtures 138,184 121,414 4,367,492 3,747,525 Less--Accumulated depreciation and amortization 2,030,175 1,576,178 $2,337,317 $ 2,171,347 7. OTHER ASSETS: Other assets include the cash surrender value of key man life insurance policies where the Company is the beneficiary. At September 30, 1996, the face amounts of these policies total $5,019,005. 8. NOTES PAYABLE: CEI has a revolving line of credit arrangement with Wells Fargo Bank which allows for borrowings up to $900,000 with interest payable at 1.25% above the existing prime rate at the date of draw down. The line expired September 30, 1996. Upon expiration, this line of credit arrangement was converted to term debt bearing interest at 7.75%, payable in monthly installments of $5,583 including interest through September 2001, secured by machinery and equipment and personally guaranteed by the shareholders of CEI. CEI has an additional revolving line of credit arrangement with Wells Fargo Bank which allows for borrowings up to $1,200,000 with interest payable at 1.00% above the existing prime rate at the date of draw down. The line expires March 31, 1997. The line of credit is personally guaranteed by the shareholders of CEI. There was $650,000 outstanding at September 30, 1996 under the line of credit. The loan agreements contain restrictive covenants for certain items, such as borrowings and dividends. As of September 30, 1996, CEI was in compliance with such covenants. 9. LONG-TERM DEBT: Long-term debt at September 30, 1996 and 1995 is comprised of the following:
1996 1995 Note payable to Wells Fargo Bank, converted upon expiration of line of credit at September 30, 1996 (see Note 8) $ 335,000 $ -- Note payable to Hewitson, Hewitson, Hewitson and Hewitson, a related party, payable on demand, with interest at 10% per annum 59,066 106,171 Note payable to Wells Fargo Bank, maturing April 2001, payable in monthly installments of $2,157 including interest at 7.75% per annum; secured by machinery and equipment 99,590 -- Note payable to Wells Fargo Bank, maturing June 2000, payable in monthly installments of $14,841 including interest at 8.75% per annum; secured by machinery and equipment 567,597 675,451 Note payable to Wells Fargo Bank, maturing September 1999, payable in monthly installments of $7,430 including interest at 9.5% per annum; secured by machinery and equipment 231,960 290,680 Note payable to Wells Fargo Bank, maturing November 1997, payable in monthly installments of $2,289, including interest at 9.0% per annum; secured by machinery and equipment 30,288 51,998 Note payable to Wells Fargo Bank, maturing November 1997, payable in monthly installments of $350 including interest at 7.0% per annum 4,683 8,108 Unsecured noninterest-bearing note payable to customer, maturing May 1997, payable in monthly installments of $41,199 247,194 -- Note payable to Hewitson, Hewitson and Hewitson, repaid in 1996 -- 6,884 Note payable to Wells Fargo Bank, maturing October 1996, payable in monthly installments of $1,496 including interest at 7.75% per annum; secured by machinery and equipment 1,467 17,210 Note payable to Wells Fargo Bank, repaid in 1996 -- 57,718 Note payable to Wells Fargo Bank, repaid in 1996 -- 72,588 Note payable to customer, repaid in 1996 -- 21,523 Note payable to Wells Fargo Bank, repaid in 1996 -- 8,368 1,576,845 1,316,699 Less--Current portion 599,019 500,948 Long-term debt $ 977,826 $ 815,751
Future payments under long-term debt arrangements, by year, are as follows: Year Ended September 30, 1997 $ 599,019 1998 294,141 1999 315,208 2000 205,840 2001 72,282 Thereafter 90,355 $1,576,845 10. PROFIT SHARING PLAN: The Companies maintain a contributory employees' profit sharing plan which covers all eligible employees of the Company. The plan provides for annual contributions in an amount to be determined by the Companies' Board of Directors at its discretion. CEI's contribution for the years ended September 30, 1996, 1995 and 1994 was approximately $285,000, $125,000 and $92,000 , respectively. 11. INCOME TAXES: CEI accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109). Under the liability method specified by SFAS 109, the deferred tax assets and liabilities are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates for the years in which the taxes are expected to be paid. At September 30, 1996 and 1995, total deferred tax liabilities were $122,000 and $289,000, respectively. In 1995, deferred tax liabilities primarily represent tax depreciation differences and utilization of cash method for tax purposes on consigned sales. In 1996, these deferred tax liabilities primarily represent book/tax depreciation differences. There were no significant deferred tax assets at September 30, 1996 and 1995. CEWI has elected to be taxed as an S corporation. Earnings and losses for federal tax purposes will be included in the personal income tax returns of the shareholders. Accordingly, there is no provision for income taxes or deferred taxes reflected in the accompanying combined financial statements related to CEWI. CEI's effective tax rate of 33%, 39% and 48% for fiscal 1996, 1995 and 1994, respectively, differs from the federal statutory rate primarily due to state taxes and nondeductible officer life insurance premiums. The 1996 effective rate is lower than the 1995 effective rate principally due to a one-time credit allowed by the State of Oregon and corrections of prior year estimates. 12. SHAREHOLDERS' EQUITY: Both CEI and CEWI have 2,000,000 shares common stock authorized and 1,000,000 shares preferred stock authorized, with a par value of $.01 per share. At September 30, 1996 and 1995, 300 shares of common stock were issued and outstanding for both Companies. Subsequent to September 30, 1996, the Board of Directors approved a 100-for-one stock split for CEI. CEWI paid $240,000, $75,000 and $0 of dividends for the years ended September 30, 1996, 1995 and 1994, respectively. CEI and CEWI maintain shareholder agreements which restrict the nature in which shares can be disposed. In accordance with these agreements, the Company and/or its shareholders have right of first refusal as to the purchase of any shares being disposed. The purchase price of such shares is based on the estimated fair market due at date of disposition, as determined by the Companies' Board of Directors or independent appraiser. UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION The following unaudited pro forma condensed financial information is based upon the historical financial statements of Electronic Fab Technology Corp. ("EFTC") and the historical combined financial statements of Current Electronics, Inc. and Current Electronics (Washington), Inc. (collectively, the "CE Companies"). The unaudited pro forma condensed balance sheet presents the combined financial position of EFTC as of December 31,1996 and the CE Companies as of September 30, 1996 assuming EFTC had completed a business combination with the CE Companies as of December 31,1996 using the purchase method of accounting. Accordingly, the combined identifiable assets and liabilities of the CE Companies have been adjusted to their estimated fair values based upon a preliminary purchase price of approximately $10.9 million. The unaudited condensed pro forma statement of operations assumes the business combination occurred on January 1, 1996 and includes the historical operations of EFTC for the year ended December 31,1996 and the historical operations of the CE Companies for the fiscal year ended September 30, 1996, adjusted for the pro forma effects of the business combination. The following unaudited condensed pro forma financial information has been prepared based upon assumptions deemed appropriate by EFTC and are not necessarily indicative of the consolidated financial position or results of operations if the business combination had been consummated on the assumed dates and are not necessarily indicative of the actual results of the future operations of the combined companies. Electronic Fab Technology Corp. Unaudited Pro Forma Condensed Balance Sheet December 31, 1996
Pro Forma Pro Forma EFTC CE Companies Adjustments Combined ASSETS Current assets: Cash and cash equivalents. . . . . . . . . $ 123,882 580,839 (4,900,000) (1) 704,721 4,900,000 (2) Accounts receivable . . . . . . . . . . . . 3,866,991 1,929,142 -- 5,796,133 Inventories . . . . . . . . . . . . . . . . 9,146,505 3,826,074 -- 12,972,579 Income taxes receivable . . . . . . . . . . 616,411 -- -- 616,411 Other current assets. . . . . . . . . . . . 496,255 109,077 -- 605,332 Total current assets . . . . . . . . . . 14,250,044 6,445,132 -- 20,695,176 Property, plant and equipment, net . . . . . . 8,519,824 2,337,317 (476,351) (1) 10,380,790 Goodwill . . . . . . . . . . . . . . . . . . . -- -- 7,100,000 (1) 7,100,000 Other assets . . . . . . . . . . . . . . . . . 99,773 140,201 -- 239,974 $22,869,641 8,922,650 6,623,649 38,415,940 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable . . . . . . . . . . . . . . . $ 1,800,000 650,000 -- 2,450,000 Current portion of long-term debt . . . . . 170,000 599,019 -- 769,019 Accounts payable. . . . . . . . . . . . . . 2,320,871 1,386,274 -- 3,707,145 Income taxes payable. . . . . . . . . . . . -- 99,953 -- 99,953 Other current liabilities . . . . . . . . . 1,450,684 766,020 600,207 (1) 2,816,911 Total current liabilities. . . . . . . 5,741,555 3,501,266 600,207 9,843,028 Long-term debt, net of current portion . . . . 2,890,000 977,826 4,900,000 (2) 8,767,826 Deferred income taxes. . . . . . . . . . . . . 315,859 122,000 -- 437,859 8,947,414 4,601,092 5,500,207 19,048,713 Shareholders' equity: Common stock and additional paid-in capital. . . . . . . . . . . . . . 10,226,607 33,000 5,445,000 (1) 15,671,607 (33,000)(1) Retained earnings . . . . . . . . . . . . . . 3,695,620 4,288,558 (4,288,558)(1) 3,695,620 13,922,227 4,321,558 1,123,442 19,367,227 $22,869,641 8,922,650 6,623,649 38,415,940 See Notes to Unaudited Pro Forma Condensed Financial Information.
Electronic Fab Technology Corp. Unaudited Pro Forma Condensed Statement of Operations Year Ended December 31, 1996
Pro Forma Pro Forma EFTC CE Companies Adjustments Combined Net sales. . . . . . . . . . . . . . . . . $56,880,067 32,520,438 - 89,400,505 Cost of goods sold . . . . . . . . . . . . 53,980,067 27,075,305 (40,000)(5) 81,015,372 Gross profit. . . . . . . . . . . . . . 2,900,000 5,445,133 40,000 8,385,133 Selling, general and administrative expenses. . . . . . . . . . 4,195,784 2,792,814 236,666 (4) 7,225,264 Impairment of fixed assets . . . . . . . . 725,869 - - 725,869 Operating income (loss) . . . . . . . . ( 2,021,653) 2,652,319 (196,666) 434,000 Other income (expense): Interest expense. . . . . . . . . . . . (525,854) (101,192) (416,500)(3) (1,043,546) Other income, net . . . . . . . . . . . 82,428 9,345 - 91,773 ( 443,426) (91,847) (416,500) (951,773) Income (loss) before income taxes . . (2,465,079) 2,560,472 (613,166) (517,773) Income tax expense (benefit) . . . . . . . ( 872,114) 754,000 (45,000)(6) (163,114) Net income (loss) . . . . . . . . . . $( 1,592,965) 1,806,472 (568,166) (354,659) Loss per common share. . . . . . . . . . . $ (0.40) (.06) (1) Weighted average common and common equivalent shares outstanding. . . . . . . 3,942,139 1,980,000 (1) 5,922,139 See Notes to Unaudited Pro Forma Condensed Financial Information.
Electronic Fab Technology Corp. Notes to Unaudited Pro Forma Condensed Financial Information (A) Basis of Presentation On January 15, 1997, EFTC and CEI entered into the Merger Agreement that provides for the merger of CEI with and into a newly formed subsidiary of EFTC. Additionally, EFTC and the shareholders of CEWI entered into a Purchase Agreement that provides for the acquisition by EFTC of all of the outstanding common stock of CEWI. The CE Companies are affiliates as a result of common ownership. The Merger Agreement and Purchase Agreement were consummated on February 24,1997. Under the terms of the Merger Agreement and the Purchase Agreement, EFTC paid approximately $4.9 million in cash and issued 1,980,000 shares of its common stock to the stockholders of the CE Companies. The Merger and the Acquisition were both accounted for using the purchase method of accounting for business combinations. Actual adjustments may differ from those presented herein upon finalization of the purchase accounting adjustments. (B) Pro Forma Adjustments The following pro forma adjustments have been made to the accompanying pro forma condensed financial information: 1. To record goodwill in the amount of $7.1 million based upon the allocation of the estimated $10.9 million cost of the Merger and the Acquisition ($4.9 million in cash and 1,980,000 shares of Common Stock at $2.75 per share, based upon an independent valuation and estimated transaction costs) and to eliminate the equity accounts of the CE Companies. No allocation was made to leasehold improvements with a historical book value of $476,351, which are expected to be abandoned. 2. To record the borrowings for the Merger and the Acquisition of $4.9 million. 3. To record interest expense on the borrowings for the Merger and the Acquisition at an assumed interest rate of 8.5% per annum. 4. To record amortization of goodwill resulting from the Merger and the Acquisition over a 30 year period. 5. Elimination of depreciation expense relating to certain leasehold improvements that are expected to be abandoned after consummation of the Merger and the Acquisition. 6. To record income tax expense (benefit) for the taxable income of CEWI, an S Corporation, net of the effect of the pro forma adjustments. EX-23.1 2 EXHIBIT 23.1 Consent of Independent Public Accountants As independent public accountants, we hereby consent to the inclusion of our reports dated April 4, 1997 and November 25, 1996 on the combined financial statements of Current Electronics, Inc. and Current Electronics Washington, Inc. in this Report on Form 8-K/A of Electronic Fab Technology Corp., amending the Report on Form 8-K, dated March 5, 1997, of Electronic Fab Technology Corp. ARTHUR ANDERSEN LLP Portland, Oregon April 30, 1997 -----END PRIVACY-ENHANCED MESSAGE-----