-----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, NKhRd8s54lmjHh5Ymy76ympVWNaCdU3VF6e4o0h5AODs0EMg8EWSQntQz+HIjz6R Eo57EsTPJCVb1N+ca9Pz1Q== 0000950131-98-001060.txt : 19980218 0000950131-98-001060.hdr.sgml : 19980218 ACCESSION NUMBER: 0000950131-98-001060 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 ITEM INFORMATION: FILED AS OF DATE: 19980213 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOKHEIM CORP CENTRAL INDEX KEY: 0000098559 STANDARD INDUSTRIAL CLASSIFICATION: REFRIGERATION & SERVICE INDUSTRY MACHINERY [3580] IRS NUMBER: 350712500 STATE OF INCORPORATION: IN FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-06018 FILM NUMBER: 98539987 BUSINESS ADDRESS: STREET 1: 10501 CORPORATE DRIVE STREET 2: P O BOX 360 CITY: FORT WAYNE STATE: IN ZIP: 46845 BUSINESS PHONE: 2194704600 8-K/A 1 FORM 8-K/A 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): December 31, 1997 TOKHEIM CORPORATION ------------------------------------- (Exact Name of Registrant as Specified in Charter) Indiana 1-6018 35-0712500 ------- ------ ---------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 10501 Corporate Drive, Fort Wayne, IN 46845 - --------------------------------------- -------- (Address of Principal Executive Office) (Zip Code) Registrant's telephone number, including area code (219)-470-4600 -------------- N/A ------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. On December 31, 1997, Tokheim Corporation (the "Company") completed the acquisition of Management Solutions, Inc., a Colorado corporation ("MSI"). MSI develops and distributes retail automation systems (including point-of-sale systems), primarily for the convenience store, petroleum dispensing and fast food service industries. The transaction was reported on a Form 8-K filed on January 15, 1998. The required financial statements and pro forma financial information were not available at that time. The following financial statements and pro forma financial information are filed as part of this Form 8-K. (a) Financial Statements of MSI. - Balance Sheets as of November 30, 1997 and December 31, 1996. - Statements of Operations for the eleven months ended November 30, 1997 and the year ended December 31, 1996. - Statements of Cash Flows for the eleven months ended November 30, 1997 and the year ended December 31, 1996. - Statements of Stockholders' Equity for the eleven months ended November 30, 1997 and the year ended December 31, 1996. - Notes to the financial statements. (b) Unaudited Pro Forma Financial Statements. - Unaudited Pro Forma Consolidated Condensed Statement of Operations for the year ended November 30, 1997. - Unaudited Pro Forma Consolidated Condensed Balance Sheet as of November 30, 1997. - Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements. 2 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 thereto duly authorized. TOKHEIM CORPORATION --------------------------------------------------- Registrant Date: February 12, 1998 By: /s/ Douglas K. Pinner ----------------------------------------------- Douglas K. Pinner Chairman, President and Chief Executive Officer Date: February 12, 1998 By: /s/ John A. Negovetich ----------------------------------------------- John A. Negovetich Executive Vice President, Finance and Administration 3 REPORT OF INDEPENDENT ACCOUNTANTS To the Boards of Directors of Management Solutions, Inc. and Tokheim Corporation: We have audited the accompanying balance sheets of Management Solutions, Inc. as of November 30, 1997 and December 31, 1996, and the related statements of operations, stockholders' equity and cash flows for the eleven months ended November 30, 1997 and the year ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Management Solutions, Inc. as of November 30, 1997 and December 31, 1996, and the results of its operations and its cash flows for the eleven months ended November 30, 1997 and the year ended December 31, 1996, in conformity with generally accepted accounting principles. Denver, Colorado December 31, 1997 MANAGEMENT SOLUTIONS, INC. BALANCE SHEETS AS OF NOVEMBER 30, 1997 AND DECEMBER 31, 1996
ASSETS 1997 1996 ------ ---------- ---------- Current assets: Cash and cash equivalents.............................. $1,020,285 $ 32,237 Trade accounts receivable, net of allowance of $110,403 and $64,603 at November 30, 1997 and December 31, 1996, respectively.................................... 1,061,527 1,098,540 Notes receivable from related party.................... 850,000 313,000 Inventory, net of reserve of $8,386 at November 30, 1997.................................................. 160,859 154,781 Interest receivable.................................... 90,591 68,892 Other.................................................. 6,776 37,281 ---------- ---------- Total current assets................................. 3,190,038 1,704,731 Property and equipment, net of accumulated depreciation of $247,875 and $194,576 at November 30, 1997 and December 31, 1996, respectively......................... 255,027 107,320 Capitalized software, net of accumulated amortization of $10,000 at November 30, 1997............................ 42,000 -- Other long-term assets................................... 6,950 6,000 ---------- ---------- Total assets......................................... $3,494,015 $1,818,051 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable....................................... $ 170,349 $ 108,584 Bonuses payable........................................ 958,411 -- Deferred revenue....................................... 171,749 191,870 Customer deposits...................................... 26,428 36,421 Other.................................................. 45,876 8,445 ---------- ---------- Total current liabilities............................ 1,372,813 345,320 ========== ========== Commitments (Note 4) Stockholders' equity: Common stock, no par value, 1,000,000 shares authorized; 500,000 shares issued and outstanding..... 300,200 300,200 Retained earnings...................................... 1,821,002 1,172,531 ---------- ---------- Total stockholders' equity........................... 2,121,202 1,472,731 ---------- ---------- Total liabilities and stockholders' equity........... $3,494,015 $1,818,051 ========== ==========
The accompanying notes are an integral part of these financial statements. A-1 MANAGEMENT SOLUTIONS, INC. STATEMENTS OF OPERATIONS FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1997 AND THE YEAR ENDED DECEMBER 31, 1996
1997 1996 ---------- ---------- Revenues: Licenses............................................... $3,580,394 $ 963,911 Hardware............................................... 2,063,433 2,346,438 Services............................................... 2,159,514 1,280,573 ---------- ---------- Total revenues....................................... 7,803,341 4,590,922 Costs and expenses:...................................... Direct hardware and software costs..................... 3,820,270 2,750,351 Selling, general and administrative and other.......... 3,161,254 1,132,420 ---------- ---------- Operating income..................................... 821,817 708,151 Interest and other income, net........................... 63,567 30,164 ---------- ---------- Net income........................................... $ 885,384 $ 738,315 ========== ========== Pro forma net income..................................... $ 555,136 $ 462,924 ========== ========== Pro forma net income per share........................... $ 1.11 $ .93 ========== ========== Weighted average common shares outstanding............... 500,000 500,000 ========== ==========
The accompanying notes are an integral part of these financial statements. A-2 MANAGEMENT SOLUTIONS, INC. STATEMENTS OF CASH FLOWS FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1997 AND THE YEAR ENDED DECEMBER 31, 1996
1997 1996 ---------- --------- Cash flows from operating activities: Net income............................................ $ 885,384 $ 738,315 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization....................... 63,299 50,676 Provision for bad debts and inventory............... 54,186 64,603 Change in operating assets and liabilities: Trade accounts receivable......................... (8,787) (671,967) Inventory......................................... (14,464) (135,334) Interest receivable............................... (21,699) (29,009) Other current assets.............................. 30,505 (19,165) Other long-term assets............................ (950) -- Accounts payable.................................. 61,765 53,827 Bonuses payable................................... 958,411 -- Deferred revenue.................................. (20,121) 191,870 Customer deposits................................. (9,993) 18,408 Other current liabilities......................... 37,431 (29,734) ---------- --------- Net cash provided by operating activities....... 2,014,967 232,490 ---------- --------- Cash flows from investing activities: Purchase of property and equipment.................... (201,006) (12,150) Capitalized software.................................. (52,000) -- Notes receivable from related party................... (537,000) 250,798 ---------- --------- Net cash (used in) provided by investing activities..................................... (790,006) 238,648 ---------- --------- Cash flows from financing activities: Distributions......................................... (236,913) (495,889) ---------- --------- Net cash used in financing activities........... (236,913) (495,889) ---------- --------- Net increase (decrease) in cash and cash equivalents.................................... 988,048 (24,751) Cash and cash equivalents, beginning of year............ 32,237 56,988 ---------- --------- Cash and cash equivalents, end of year.................. $1,020,285 $ 32,237 ========== =========
The accompanying notes are an integral part of these financial statements. A-3 MANAGEMENT SOLUTIONS, INC. STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1997 AND THE YEAR ENDED DECEMBER 31, 1996
COMMON STOCK TOTAL ---------------- RETAINED STOCKHOLDERS' SHARES AMOUNT EARNINGS EQUITY ------- -------- ---------- ------------- Balance, January 1, 1996............. 500,000 $300,200 $ 930,105 $1,230,305 Net income......................... -- -- 738,315 738,315 Distributions ($.99 per share)..... -- -- (495,889) (495,889) ------- -------- ---------- ---------- Balance, December 31, 1996........... 500,000 300,200 1,172,531 1,472,731 Net income......................... -- -- 885,384 885,384 Distributions ($.47 per share)..... -- -- (236,913) (236,913) ------- -------- ---------- ---------- Balance, November 30, 1997........... 500,000 $300,200 $1,821,002 $2,121,002 ======= ======== ========== ==========
The accompanying notes are an integral part of these financial statements. A-4 MANAGEMENT SOLUTIONS, INC. NOTES TO FINANCIAL STATEMENTS 1. NATURE OF BUSINESS: Management Solutions, Inc. (the "Company") was founded in 1985 and develops point of sale software for companies involved in the convenience store industry. The Company also offers hardware and software installation, software support and consulting services. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Revenue Recognition: The Company's revenue consists of sales of software products, hardware, and fees for maintenance and services. Revenue from licenses and hardware is recognized upon delivery and completion of significant vendor obligations. Prepaid amounts for post-contract customer support are deferred at the time of receipt and are recognized as revenue over the term of the contract on a straight-line basis. Cash and Cash Equivalents: The Company considers all highly liquid instruments with an original maturity of three months or less to be cash equivalents. Inventory: Inventory consists of computer hardware that is held for resale to customers. Inventories are carried at cost on a first-in, first-out basis and are periodically assessed for obsolescence. 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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Concentration of Credit Risk: Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash maintained at financial institutions in amounts which at times may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk in this area. The Company sells its products to various end users in different geographic locations located within the United States. Approximately 52% and 74% of the November 30, 1997 and the December 31, 1996 accounts receivable balances, respectively, are comprised of three customers. Property and Equipment: Property and equipment are stated at cost. Depreciation of property and equipment are computed using the straight-line method over the estimated useful lives of the assets as follows: Furniture and fixtures........... 7 years Equipment and automobiles........ 5 years Computer equipment............... 3 years
A-5 MANAGEMENT SOLUTIONS, INC. NOTES TO FINANCIAL STATEMENTS--(CONTINUED) Maintenance and repairs are charged to expense as incurred. Upon retirement or sale, the costs of assets disposed of and the related accumulated depreciation are eliminated and the related gain or loss is reflected in income. Income Taxes: The Company has elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code, effective in 1985. Taxable income or loss for federal tax reporting is reported by the stockholders. Accordingly, no provision for federal income taxes has been provided for in the financial statements. Software Capitalization: The cost of establishing the technological feasibility of new products or product enhancements are expensed as incurred as research and development costs ($405,000 in 1997 and 1996). The costs incurred subsequent to the establishment of the technological feasibility of the product and prior to its general release are capitalized. Capitalized costs are amortized on a product- by-product basis using the greater of (a) the ratio that current revenues for a product bear to the total current and anticipated future revenues or (b) the straight-line method over the estimated useful life of three years. Amortization expense related to capitalized software development costs is included in direct hardware and software costs in the accompanying statement of operations and was $10,000 in 1997. There were no software development costs capitalized in 1996 and prior years. Pro forma Net Income Per Share: Pro forma net income per share is computed using the weighted average number of common shares outstanding divided by pro forma net income. The Company did not have any common stock equivalents outstanding in 1997 or 1996. New Accounting Pronouncement: Effective December 15, 1997, the Company will adopt Statement of Financial Accounting Standards Statement No. 128, ("SFAS 128") Earnings per Share. SFAS 128 simplifies the standards for computing earnings per share found in Accounting Principles Board Opinion No. 15, Earnings per Share, and makes them comparable to international earnings per share standards. Had SFAS 128 been effective during the eleven months ended November 30, 1997 and December 31, 1996, "Basic earnings per share" and "Dilutive earnings per share" under SFAS 128 would have been identical to pro forma net income per share as presented on the statements of operations. 3. PROPERTY AND EQUIPMENT Fixed assets consist of the following:
NOVEMBER 30, DECEMBER 31, 1997 1996 ------------ ------------ Furniture and fixtures.......................... $ 90,071 $ 19,687 Equipment and automobiles....................... 130,079 86,121 Computer equipment.............................. 257,411 189,588 Other........................................... 25,341 6,500 --------- --------- 502,902 301,896 Accumulated depreciation........................ (247,875) (194,576) --------- --------- Property and equipment, net..................... $ 255,027 $ 107,320 ========= =========
Depreciation expense was approximately $53,000 for the eleven months ended November 30, 1997 and $51,000 for the year ended December 31, 1996. A-6 MANAGEMENT SOLUTIONS, INC. NOTES TO FINANCIAL STATEMENTS--(CONTINUED) 4. TRANSACTIONS WITH RELATED PARTIES: Operating Lease: As of November 30, 1997 and December 31, 1996, the Company leased its office and development facilities on a month-to-month basis with an officer and employee, who is the majority stockholder of the Company. Rental expense was approximately $110,400 for the eleven months ended November 30, 1997 and $87,900 for the year ended December 31, 1996. On December 1, 1997, the Company entered into a ten-year operating lease for its research and development facilities with the majority stockholder of the Company. Per the lease agreement, the Company is responsible for all tax, insurance, utility and maintenance costs associated with the facility. The yearly rent is subject to a CPI escalation starting December 2002. At the end of the initial ten-year term, the Company has two renewal options of five years each. Future minimum lease payments are as follows: 1998......................... $ 320,544 1999......................... 320,544 2000......................... 320,544 2001......................... 320,544 Thereafter................... 1,896,564 ----------- $3,178,740 ===========
Notes Receivable: As of November 30, 1997 and December 31, 1996, the Company had a note receivable of $850,000 and $263,000, respectively, bearing interest of 7.0%, from a minority stockholder of the Company. The note is due on demand and was subsequently repaid in December 1997. Interest earned during 1997 and 1996 was $28,000 and $26,600, respectively. As of December 31, 1996, the Company had a note receivable of $50,000 from an officer and employee, who is the majority stockholder of the Company. The full amount was repaid in November 1997. 5. SIGNIFICANT CUSTOMERS: Customers which had greater than 10% of total revenues are as follows:
1997 1996 ---- ---- Customer A..................................................... 18% 46% Customer B..................................................... -- 11 Customer C..................................................... 58 -- Customer D..................................................... 11 -- Customer E..................................................... -- 19
6. PRO FORMA NET INCOME: The pro forma net income and pro forma net income per share reflects the tax adjustment as if the Company had filed C corporation tax returns for all periods presented. The effect is as follows:
1997 1996 -------- -------- Net income before pro forma adjustments................ $885,384 $738,315 Pro forma provision for income taxes................... 330,248 275,391 -------- -------- Pro forma net income................................... $555,136 $462,924 ======== ========
7. SUBSEQUENT EVENTS: On December 29, 1997, Tokheim Corporation ("Tokheim") paid $12 million to acquire all of the Company's common stock. In December 1997, prior to the acquisition by Tokheim, the Company distributed $850,000 ($1.70 per share) to the Company's shareholders. A-7 UNAUDITED PRO FORMA FINANCIAL STATEMENTS The following unaudited pro forma financial statements of the Company have been adjusted to reflect the effects of the MSI acquisition. The Unaudited Pro Forma Consolidated Condensed Statement of Earnings gives effect to the MSI acquisition as if it had occurred on December 1, 1996. The Unaudited Pro Forma Consolidated Condensed Balance Sheet gives effect to the MSI acquisition as if it had occurred on November 30, 1997. The statements do not purport to represent what the Company's results of operations or financial position actually would have been if the MSI acquisition had occurred as of such dates and are not necessarily indicative of future operating results or financial position. The Unaudited Pro Forma Consolidated Condensed Statement of Earnings for the year ended November 30, 1997 and Pro Forma Consolidated Condensed Balance Sheet as of November 30, 1997 were derived from the Company's audited Consolidated Financial Statements. The MSI acquisition has been accounted for using the purchase method of accounting. Therefore, MSI's equity has been eliminated in the pro forma financial statements. The allocation of the purchase price in the pro forma financial statements is preliminary. UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF EARNINGS FOR THE YEAR ENDED NOVEMBER 30, 1997 (AMOUNTS IN THOUSANDS EXCEPT DOLLARS PER SHARE)
MSI TOKHEIM PRO ACQUISITION FORMA FOR PRO FORMA MSI TOKHEIM MSI ADJUSTMENTS ACQUISITION -------- ------ ----------- ----------- Net sales........................... $385,469 $7,803 $ -- $393,272 Cost of sales, exclusive of items listed below....................... 283,932 3,820 -- 287,752 Selling, general and administrative expenses........................... 68,167 1,761 100 (a) 70,028 Depreciation and amortization....... 9,232 53 1,205 (b) 10,490 Merger and acquisition cost and other unusual items................ 3,493 1,347 (1,347)(c) 3,493 -------- ------ ------ -------- Operating income.................... 20,645 822 42 21,509 Interest expense, net .............. 16,451 (28) 912 (d) 17,335 Other income, net................... (1,003) (36) -- (1,039) -------- ------ ------ -------- Earnings (loss) before income taxes and extraordinary loss............. 5,197 886 (870) 5,213 Income taxes........................ 1,217 -- 2 (e) 1,219 -------- ------ ------ -------- Earnings (loss) before extraordinary loss............................... $ 3,980 $ 886 $ (872) $ 3,994 ======== ====== ====== ======== Preferred stock dividends ($1.94 per share)............................. $ (1,512) $ (1,512) Earnings (loss) before extraordinary loss applicable to common stock.... $ 2,468 $ 2,482 Earnings (loss) per common share: Primary Before extraordinary loss........ $ 0.31 $ 0.31 ======== ======== Weighted average number of shares outstanding..................... 8,083 8,083 ======== ======== Fully diluted Before extraordinary loss........ $ 0.27 $ 0.27 ======== ======== Weighted average number of shares outstanding..................... 9,067 9,067 ======== ========
A-8 UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET AS OF NOVEMBER 30, 1997 (AMOUNTS IN THOUSANDS)
MSI TOKHEIM PRO ACQUISITION FORMA FOR PRO FORMA MSI TOKHEIM MSI ADJUSTMENTS ACQUISITION -------- ------ ----------- ----------- ASSETS: Current assets: Cash and cash equivalents.......... $ 6,438 $1,020 $ -- (f) $ 7,458 Accounts receivable, net........... 83,011 2,002 (850)(g) 84,163 Net inventory...................... 64,347 161 -- 64,508 Other current assets............... 6,705 7 -- 6,712 -------- ------ ------- -------- Total current assets........... 160,501 3,190 (850) 162,841 Property, plant & equipment, net.... 41,966 255 -- 42,221 Other tangible assets............... 9,184 7 -- 9,191 Goodwill............................ 62,695 -- -- 62,695 Other noncurrent assets and deferred charges............................ 16,273 42 4,821 (h) 21,136 -------- ------ ------- -------- Total assets................... $290,619 $3,494 $ 3,971 $298,084 ======== ====== ======= ======== LIABILITIES AND SHAREHOLDERS' EQUITY: Liabilities: Current liabilities: Current portion of long-term debt............................ $ 2,391 $ -- $ -- $ 2,391 Notes payable, bank.............. 98 -- -- 98 Cash overdraft................... 10,575 -- -- 10,575 Accounts payable................. 54,597 170 -- 54,767 Accruals & reserves.............. 51,190 1,203 -- 52,393 -------- ------ ------- -------- Total current liabilities...... 118,851 1,373 120,224 Long-term debt..................... 4,397 -- -- 4,397 Bank credit facility............... 24,090 -- 12,000 (i) 36,090 Senior subordinated notes.......... 90,000 -- -- 90,000 Guaranteed ESOP obligation......... 9,429 -- -- 9,429 Postretirement benefits............ 14,378 -- -- 14,378 Minimum pension liability.......... 2,173 -- -- 2,173 Minority interest.................. 1,319 -- -- 1,319 Other long-term liabilities........ 5,511 -- -- 5,511 -------- ------ ------- -------- Total liabilities.............. 270,148 1,373 12,000 283,521 Redeemable convertible preferred stock.............................. 24,000 -- -- 24,000 Guaranteed ESOP obligation.......... (9,429) -- -- (9,429) Preferred treasury stock at cost.... (4,718) -- -- (4,718) -------- ------ ------- -------- Total preferred equity......... 9,853 9,853 Common stock........................ 21,158 300 (300)(j) 21,158 Minimum pension liability........... (2,173) -- -- (2,173) Foreign currency translation adjustments........................ (18,048) -- -- (18,048) Retained earnings (accumulated deficit)........................... 9,821 1,821 (7,729)(j) 3,913 Common treasury stock at cost....... (140) -- -- (140) -------- ------ ------- -------- Total common equity............ 10,618 2,121 (8,029) 4,710 -------- ------ ------- -------- Total liabilities and shareholders' equity.......... $290,619 $3,494 $ 3,971 $298,084 ======== ====== ======= ========
A-9 (a) Reflects additional compensation paid to the President of MSI pursuant to an employment agreement entered into at the time of the MSI acquisition.............................................. $ 100 (b) Reflects additional amortization expense related to $4,821 of the purchase price that has been allocated to internally developed software, which is being amortized over a 4 year period.......... $ 1,205 (c) Reflects the elimination of a non-recurring charge of $980 that relates to the forgiveness of debt owed by the principal shareholder. Also reflects the elimination of bonuses paid to employees of MSI in anticipation of the sale to Tokheim, offset by expected bonuses anticipated to be paid by Tokheim to senior management of MSI................................................ $(1,347) (d) Additional interest expense related to the $12,000 of additional borrowings under the Bank Credit Facility to fund the purchase of MSI at a 7.6% weighted average interest rate..................... $ 912 (e) MSI will be incorporated into Tokheim's consolidated federal tax return. As such, Tokheim has available approximately $24,669 of NOL carryforwards, which are offset by a corresponding valuation allowance. Therefore, federal tax provisions are only recorded for book purposes equal to the expected Alternative Minimum Tax ("AMT") liability. The pro forma provision for taxes is calculated as follows: State and local tax provision for MSI's pre-tax earnings at an 8.0% effective tax rate....................................... $ 71 Federal tax provision for MSI's pre-tax pro forma earnings reduced by 90% for utilization of Tokheim's Net Operating Loss ("NOL") carryforwards with the remaining amount taxed at a 20% AMT rate...................................................... 18 Reduction of state and local tax provision for pre-tax pro forma earnings at an 8.0% effective tax rate........................ (70) Federal tax provision for MSI's pre-tax pro forma earnings reduced by 90% for utilization of NOL carryforwards, with the remaining amount taxed at a 20% AMT rate...................... (17) ------- $ 2 ======= Note: In addition to the above Pro Forma adjustments, the Company will incur a one-time charge to operations for the writedown of in-process research and development, of which technological feasibility has not yet been determined and which has no alternative future use. This charge to earnings of approximately $5,908 will be recorded in the first quarter of 1998. (f) Pro forma adjustment to cash: Reflects the repayment of a loan from a minority shareholder..... $ 850 Reflects an adjustment to record a one-time distribution of cash dividends distributed to MSI shareholders................................. $ (850) ------- $ -- ======= (g) Reflects the repayment of a loan from a minority shareholder..... $ (850) (h) Reflects the purchase price allocation to capitalized software costs to be amortized over a four-year life............................................ $ 4,821 (i) To record additional borrowings under the Bank Credit Facility to fund the MSI acquisition......................................... $12,000 (j) Pro forma adjustment to shareholders' equity: Elimination of MSI's common stock................................ $ (300) ------- To record the one-time write down of in-process research and development..................................................... (5,908) Reflects an adjustment to record a one-time distribution of cash dividends distributed to MSI shareholders....................... (850) Elimination of MSI's retained earnings........................... (971) ------- Total adjustment to retained earnings........................... $(7,729) ------- Total adjustment to shareholders' equity........................ $(8,029) =======
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