UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A AMENDMENT NO. 1 TO 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 10, 1996 (September 26, 1996) APPLIED POWER INC. ------------------ (Exact name of Registrant as specified in its charter) WISCONSIN 1-11288 39-0168610 --------- ------- ----------- (State of incorporation) (Commission File No.) (I.R.S. Employer Id. No.) 13000 WEST SILVER SPRING DRIVE BUTLER, WISCONSIN 53007 MAILING ADDRESS: P. O. BOX 325, MILWAUKEE, WISCONSIN 53201 ------------------------------------------------------------ (Address of principal executive offices) (Zip Code) (414) 781-6600 -------------- (Registrant's telephone number, including area code) The undersigned registrant hereby amends the following items, financial statements, exhibits or other portions of its Current Report dated as of October 11, 1996 on Form 8-K as set forth in the pages attached hereto to furnish the required information: Item 7. Financial Statements and Exhibits SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Amendment to be signed on its behalf by the undersigned, thereunto duly authorized. APPLIED POWER INC. Date: December 10, 1996 By: /s/Robert C. Arzbaecher ------------------------ Robert C. Arzbaecher, Vice President and Chief Financial Officer 2 Item 7. Financial Statements and Exhibits (a) Financial Statements of Business Acquired: (1) Everest Electronic Equipment, Inc. Balance Sheet as of December 31, 1995 and the related Statements of Earnings, Stockholders' Equity and of Cash Flows for the year then ended and Independent Auditors' Report. See Pages 4 - 8. (2) Notes to Financial Statements. See Pages 9 - 11. (3) Everest Electronic Equipment, Inc. Balance Sheet as of August 31, 1996 and the related Statements of Earnings, Stockholders' Equity and of Cash Flows for the eight month periods ended August 31, 1996 and 1995 (unaudited). See Pages 12 - 15. (4) Notes to Condensed Financial Statements (unaudited). See Page 16. (b) Pro Forma Financial Information: (1) Introduction to Pro Forma Condensed Consolidated Financial Statements of Applied Power Inc. and Everest Electronic Equipment, Inc. See Page 17. (2) Applied Power Inc. and Everest Electronic Equipment, Inc. Pro Forma Condensed Consolidated Balance Sheet as of August 31, 1996 and the related Pro Forma Condensed Consolidated Statement of Earnings for the year then ended (unaudited). See Pages 18 - 19. (3) Notes to Pro Forma Condensed Consolidated Financial Statements (unaudited). See Page 20. (c) Exhibits: See the Exhibit Index following the Signature page of this Report, which is incorporated herein by reference. 3 INDEPENDENT AUDITORS' REPORT To the Board of Directors of Everest Electronic Equipment, Inc.: We have audited the accompanying balance sheet of Everest Electronic Equipment, Inc. (the Company) as of December 31, 1995 and the related statements of earnings, stockholders' equity and of cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of Everest Electronic Equipment, Inc. as of December 31, 1995 and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP October 23, 1996 4 EVEREST ELECTRONIC EQUIPMENT, INC. STATEMENT OF EARNINGS FOR THE YEAR ENDED DECEMBER 31, 1995 NET SALES $38,780,460 COST OF GOODS SOLD 28,574,644 ----------- GROSS PROFIT 10,205,816 ENGINEERING, SELLING AND ADMINISTRATIVE EXPENSES (Notes 5 and 6) 3,442,366 ----------- EARNINGS FROM OPERATIONS 6,763,450 OTHER INCOME: Interest, net (Note 5) 28,101 Other, net 124,847 ----------- Total other income 152,948 ----------- EARNINGS BEFORE INCOME TAX PROVISION 6,916,398 INCOME TAX PROVISION (Note 7) 106,905 ----------- NET EARNINGS $6,809,493 ===========
See accompanying notes to financial statements 5 EVEREST ELECTRONIC EQUIPMENT, INC. BALANCE SHEET AS OF DECEMBER 31, 1995 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 3,148,490 Accounts receivable 4,436,335 Inventories (Note 2) 1,464,174 Prepaid expenses 119,617 ----------- Total current assets 9,168,616 PROPERTY, PLANT AND EQUIPMENT, net (Note 3) 4,317,347 OTHER ASSETS 104,500 ----------- $13,590,463 =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Trade accounts payable $ 1,218,823 Accrued compensation and benefits (Note 5) 576,708 Income taxes payable (Note 7) 6,271 Other current liabilities 16,352 ----------- Total current liabilities 1,818,154 STOCKHOLDERS' EQUITY: Class A voting common stock, $9.09 par value per share; 2,000 shares authorized; 500 shares issued and outstanding 4,545 Class B nonvoting common stock, $9.09 par value per share; 20,000 shares authorized; 5,611 shares issued and outstanding 51,004 Additional paid-in capital 244,451 Retained earnings 11,472,309 ----------- Total stockholders' equity 11,772,309 ----------- $13,590,463 ===========
See accompanying notes to financial statements 6 EVEREST ELECTRONIC EQUIPMENT, INC. STATEMENT OF STOCKHOLDERS' EQUITY FOR THE YEAR ENDED DECEMBER 31, 1995
Series A Series B Additional common common paid-in Retained stock stock capital earnings --------- ---------- ----------- ------------ BALANCE, January 1, 1995 $4,545 $51,004 $244,451 $8,916,519 Net earnings 6,809,493 Distributions to stockholders (4,253,703) --------- ---------- ----------- ------------- BALANCE, December 31, 1995 $4,545 $51,004 $244,451 $11,472,309 ========= ========== =========== =============
See accompanying notes to financial statements 7 EVEREST ELECTRONIC EQUIPMENT, INC. STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 6,809,493 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 1,119,805 Amortization 5,767 Gain on disposal of equipment (100,928) Changes in operating assets and liabilities: Accounts receivable (894,328) Inventories (564,943) Prepaid expenses and other assets 48,653 Trade accounts payable 630,354 Other liabilities (809,503) ------------- Net cash provided by operating activities 6,244,370 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisitions of property, plant and equipment (3,247,687) Proceeds from sale of equipment 114,950 ------------- Net cash used in investing activities (3,132,737) CASH FLOWS FROM FINANCING ACTIVITIES- Distributions to stockholders (4,253,703) ------------- NET DECREASE IN CASH AND CASH EQUIVALENTS (1,142,070) CASH AND CASH EQUIVALENTS, beginning of year 4,290,560 ------------- CASH AND CASH EQUIVALENTS, end of year $ 3,148,490 ============= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid $ 93,571 ============= Income taxes paid $ 87,031 =============
See accompanying notes to financial statements 8 EVEREST ELECTRONIC EQUIPMENT, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1995 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business - Everest Electronic Equipment, Inc. (the Company) manufactures custom and standard electronic enclosures sold in North America and used primarily by the computer, telecom and datacom industries. Manufacturing facilities are located in California and New Hampshire. Cash and Cash Equivalents - The Company considers all highly-liquid investments with original maturities of 90 days or less to be cash equivalents. Accounts Receivable - An allowance for bad debts has not been recorded as the Company has a policy of directly writing off all receivables considered to be uncollectible. Inventories - Inventories are comprised of material, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or market. Property, Plant and Equipment - Property, plant and equipment are stated at cost. With the exception of leasehold improvements, plant and equipment are depreciated over the estimated useful lives of the assets under accelerated methods over periods ranging from five to seven years. Leasehold improvements are amortized using the straight-line method over the lesser of the lease term or the estimated useful life of the asset. Depreciation is computed using the same methods for both financial reporting and tax purposes. Expenditures for maintenance and repairs not expected to extend the useful life of an asset beyond its normal useful life are expensed. Revenue Recognition - Revenues and costs of products sold are recognized as the related products are shipped. Income Taxes - The Company has elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code (IRC) for both federal and California state, whereby taxes are paid by the stockholders of the Company. The Company provides for New Hampshire income taxes as if it were a C corporation under the IRC (Note 7). Use of Estimates - The financial statements have been prepared in accordance with generally accepted accounting principles and necessarily include amounts based on estimates and assumptions by management. Actual results could differ from those amounts. Fair Value of Financial Instruments - The recorded amounts of cash and cash equivalents, accounts receivable, trade accounts payable and accrued liabilities at December 31, 1995 approximate fair value in accordance with Statement of Financial Accounting Standards (SFAS) No. 107, Disclosures About Fair Value of Financial Instruments. 2. INVENTORIES Inventories consist of the following at December 31, 1995: Raw materials $ 651,493 Work in process 812,681 ---------- Total inventory $1,464,174 ==========
9 3. PROPERTY, PLANT AND EQUIPMENT Property consists of the following at December 31, 1995: Production equipment $ 8,498,539 Office equipment 1,159,718 Automotive 440,828 Leased improvements 740,012 ------------- 10,839,097 Less accumulated depreciation (6,521,750) ------------- Property, plant and equipment, net $ 4,317,347 =============
4. LINE OF CREDIT On February 2, 1995, Everest Electronic Equipment, Inc. entered into an agreement with Bank of America National Trust and Savings Association for a $3,000,000 line of credit. The agreement calls for interest on the outstanding balance at the Bank's reference rate (8.5% at December 31, 1995) unless the Company elects either a fixed rate or an offshore rate agreed upon by both parties. The line of credit expires April 30, 1997. As of December 31, 1995, there were no amounts outstanding under this agreement. 5. DEFERRED COMPENSATION On June 30, 1991, the Board of Directors of the Company adopted a nonqualified deferred compensation plan (the Plan). The only two participants of the Plan are the Company's founders. Under the provisions of the Plan, the Company agrees to pay a total of $2,000,000 to each participant over the five-year period beginning July 1, 1991. The participants of this Plan shall be entitled to receive interest on the outstanding balance at a rate equal to 9.5% per annum compounded monthly from June 30, 1991 until the deferred compensation has been fully distributed to the participants under the terms of the Plan. Interest paid to Plan participants during the year was $93,571. The remaining amount outstanding under the agreement as of December 31, 1995 was $486,643. 6. COMMITMENTS The Company leases certain office, warehouse and plant facilities under noncancelable operating leases with original maturities greater than one year. The leases contain cost of living escalation clauses and require the Company to pay the property taxes, insurance, maintenance and other fees related to the leased property. Two of these facilities are leased from related parties and expire in fiscal years 1996 and 1998, respectively. Total rent expense was approximately $1,242,000 for the year ended December 31, 1995, of which approximately $1,172,000 was paid to the related parties. 10 As of December 31, 1995, minimum future lease obligations are as follows:
RELATED NONRELATED PARTY PARTY Year ending December 31: 1996 $1,394,890 $136,840 1997 251,926 136,840 1998 167,951 101,044 1999 29,460 2000 29,460 Thereafter 14,730 ---------- -------- Total future minimum lease payments $1,814,767 $448,374 ========== ========
7. INCOME TAXES The Company has elected by consent of its stockholders to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under those provisions, the Company does not pay federal corporate income taxes on its taxable income and is not allowed a net operating loss carryover or carryback as a deduction. Instead, each stockholder is liable for individual income taxes on his respective share of the Company's taxable income and includes his respective share of the Company's net operating loss in his individual income tax return. California has conformed to federal tax law which allows domestic corporations to be taxed under provisions similar to Subchapter S of the Internal Revenue Code. Unlike the federal provisions, a 1.5% tax on the net income of the Company is still maintained for California purposes. New Hampshire treats federal Subchapter S corporations as if they were C corporations. Under New Hampshire provisions, the Company pays tax at a rate of 7% on the business profits apportioned to that state. The current year tax provision has been calculated under present tax laws for both federal and state reporting purposes. The provision consists of the following: California $103,139 New Hampshire 3,766 -------- Total tax provision $106,905 ========
8. SUBSEQUENT EVENT Effective September 26, 1996, all of the operating assets and liabilities of the Company were acquired by Applied Power Inc. The general operations of the Company will be assumed by Applied Power Inc. and proceeds from the sale will be distributed to the stockholders through a liquidating dividend. 11 EVEREST ELECTRONIC EQUIPMENT, INC. BALANCE SHEET UNAUDITED AUGUST 31, 1996 ASSETS Current Assets Cash and cash equivalents $ 5,912,832 Accounts receivable 5,652,772 Inventories 1,264,183 Prepaid expenses 223,867 ----------- Total Current Assets 13,053,654 Other Assets 110,448 Property, Plant and Equipment - net 3,566,825 ----------- Total Assets $16,730,927 =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Trade accounts payable $ 1,360,654 Accrued compensation and benefits 1,201,734 Other current liabilities 7,962 ----------- Total Current Liabilities 2,570,350 Stockholders' Equity Class A voting common stock, $9.09 par value per share, authorized 2,000 shares, issued and outstanding 500 shares 4,545 Class B nonvoting common stock, $9.09 par value per share, authorized 20,000 shares, issued and outstanding 5,611 shares 51,004 Additional paid-in capital 244,451 Retained earnings 13,860,577 ----------- Total Stockholders' Equity 14,160,577 ----------- Total Liabilities and Stockholders' Equity $16,730,927 ===========
See accompanying notes to condensed financial statements 12 EVEREST ELECTRONIC EQUIPMENT, INC. STATEMENT OF EARNINGS UNAUDITED FOR THE EIGHT MONTH PERIODS ENDED AUGUST 31,
1996 1995 ------------- -------------- Net Sales $30,504,395 $25,787,419 Cost of Products Sold 22,018,365 18,956,436 ------------- -------------- Gross Profit 8,486,030 6,830,983 Engineering, selling and administrative expenses 2,764,490 2,311,538 ------------- -------------- Operating Earnings 5,721,540 4,519,445 Other (Income) Expense Net financing costs (91,865) 329 Other - net 2,009 (108,151) ------------- -------------- Earnings Before Income Tax Expense 5,811,396 4,627,267 Income Tax Expense 89,300 48,750 ------------- -------------- Net Earnings $5,722,096 $4,578,517 ============= ==============
See accompanying notes to condensed financial statements 13 EVEREST ELECTRONIC EQUIPMENT, INC. STATEMENT OF STOCKHOLDERS' EQUITY UNAUDITED FOR THE EIGHT MONTH PERIODS ENDED AUGUST 31, 1996 AND 1995
Series A Series B Additional Common Common Paid-in Retained Stock Stock Capital Earnings ---------- ----------- ---------- ------------- Balances at January 1, 1995 $4,545 $51,004 $244,451 $8,916,519 Net earnings for the period - - - 4,578,517 Distributions to stockholders - - - (3,756,692) ---------- ----------- ---------- ------------- Balances at August 31, 1995 $4,545 $51,004 $244,451 $9,738,344 ========== =========== ========== ============= Balances at January 1,1996 $4,545 $51,004 $244,451 $11,472,309 Net earnings for the period - - - 5,722,096 Distributions to stockholders - - - (3,333,828) ---------- ----------- ---------- ------------- Balances at August 31, 1996 $4,545 $51,004 $244,451 $13,860,577 ========== =========== ========== =============
See accompanying notes to condensed financial statements 14 EVEREST ELECTRONIC EQUIPMENT, INC. STATEMENT OF CASH FLOWS UNAUDITED FOR THE EIGHT MONTH PERIODS ENDED AUGUST 31,
1996 1995 ------------ ------------- Net Earnings $5,722,096 $4,578,517 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 869,951 850,000 Amortization - 5,767 Other non-cash charges 20,860 (103,000) Changes in operating assets and liabilities: Accounts receivable (1,216,437) (514,057) Inventories 200,000 - Prepaid expenses and other assets (110,197) 11,903 Trade accounts payable 141,820 482,463 Other liabilities 610,362 451,491 ------------ ------------- Net Cash Provided by Operating Activities 6,238,455 5,763,084 Investing Activities Proceeds on the sale of property, plant and equipment 22,000 103,000 Additions to property, plant and equipment (162,285) (2,224,527) ------------ ------------- Net Cash Used in Investing Activities (140,285) (2,121,527) Financing Activities Distributions to stockholders (3,333,828) (3,756,692) ------------ ------------- Net Cash Used in Financing Activities (3,333,828) (3,756,692) ------------ ------------- Net Increase(Decrease) in Cash and Cash Equivalents 2,764,342 (115,135) Cash and Cash Equivalents - Beginning of Year 3,148,490 4,290,560 ------------ ------------- Cash and Cash Equivalents - End of Year $5,912,832 $4,175,425 ============ =============
See accompanying notes to condensed financial statements 15 EVEREST ELECTRONIC EQUIPMENT, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION The accompanying unaudited condensed financial statements of Everest Electronic Equipment, Inc. have been prepared in accordance with generally accepted accounting principles for interim financial reporting and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been made. Such adjustments consist of only those of a recurring nature. Operating results for the eight months ended August 31, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. 2. INVENTORIES Inventories consist of the following at August 31, 1996: Raw materials $ 451,493 Work in process 812,690 ---------- Total inventory $1,264,183 ==========
16 APPLIED POWER INC. AND EVEREST ELECTRONIC EQUIPMENT, INC. INTRODUCTION TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Unaudited As described under Item 2 of this report as originally filed on October 11, 1996, Applied Power Inc. (the "Company"), through its Wright Line subsidiary, acquired the net assets of Everest Electronic Equipment, Inc. ("Everest"). The transaction was completed on September 26, 1996 for cash consideration of approximately $52 million. The following unaudited pro forma condensed consolidated financial statement of earnings and balance sheet (the "pro forma statements") give effect to the acquisition of Everest using the purchase method of accounting and are based on the estimates and assumptions set forth in the notes to such pro forma statements. The pro forma statements have been prepared by the Company utilizing the historical financial statements of the Company and of Everest and accordingly, should be read in conjunction with such historical financial statements of the Company and notes thereto which were contained in the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1996 and the audited financial statements and notes thereto of Everest which are filed as item 7(a) of this Form 8-K/A. These pro forma statements have been prepared and included herein as required by the rules and regulations of the Securities and Exchange Commission and are provided for comparative purposes only. The pro forma statements are not necessarily indicative of the future consolidated financial position and results of operations or those which would have occurred had the acquisition been consummated as of the dates reflected in the pro forma statements. In reviewing the pro forma statements, the reader should consider the following: 1. Prior to the acquisition, Everest was operating as an S Corporation under the Subchapter S provisions of the Internal Revenue Code. Under such provisions, Everest was not subject to federal and certain state income taxes. The following pro forma statements reflect adjustments for the estimated corporate income tax effects during the periods Everest operated as an S Corporation. The resulting total estimated income tax effects reflect Everest as a separate taxpayer. As a result, the consolidated total income tax expense is not necessarily indicative of the result which would have occurred if Everest had been included in a consolidated US federal income tax return of the Company and its subsidiaries. 2. Everest had been a supplier to Wright Line prior to the acquisition. Approximately $1.0 million in sales to Applied Power Inc. was recorded by Everest during the fiscal year ended August 31, 1996, which has been eliminated in the adjustments to the pro forma Condensed Consolidated Statement of Earnings. 17 APPLIED POWER INC. AND SUBSIDIARIES AND EVEREST ELECTRONIC EQUIPMENT, INC. PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET UNAUDITED AUGUST 31, 1996 (DOLLARS IN THOUSANDS)
HISTORICAL PRO FORMA PRO FORMA API EVEREST ADJUSTMENTS CONSOLIDATED ---------- ------------ ------------ ------------ ASSETS Current Assets Cash and cash equivalents $ 1,001 $ 5,913 $ (5,913) (b) $1,001 Accounts receivable 68,747 5,653 74,400 Inventories 120,648 1,264 121,912 Prepaid income tax 10,734 - - 10,734 Prepaid expenses 5,775 224 - 5,999 ---------- ------------ --------- ------------ Total Current Assets 206,905 13,054 (5,913) 214,046 Investment in Everest Electronics, Inc. - - 53,500 (a) - (53,500) (b) Other Assets 6,370 110 - 6,480 Goodwill 58,266 - 43,552 (b) 101,818 Other Intangibles 33,464 - - 33,464 Property, Plant and Equipment - net 76,236 3,567 1,700 (b) 81,503 ---------- ------------ --------- ------------ Total Assets $381,241 $16,731 $ 39,339 $437,311 ========== ============ ========= ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Short-term borrowings $ 16,068 $ - $ - $16,068 Trade accounts payable 41,397 1,360 - 42,757 Accrued compensation and benefits 20,805 1,202 - 22,007 Income taxes payable 7,081 - - 7,081 Other current liabilities 22,378 8 1,500 (a) 23,886 ---------- ------------ --------- ------------ Total Current Liabilities 107,729 2,570 1,500 111,799 Long-term Debt 76,548 - 52,000 (a) 128,548 Deferred Income Tax 15,395 - - 15,395 Other Deferred Liabilities 13,114 - - 13,114 Shareholders' Equity Common stock 2,730 56 (56) 2,730 Additional paid-in capital 34,383 244 (244) 34,383 Retained earnings 126,392 13,861 (13,861) 126,392 Cumulative translation adjustments 4,950 - 4,950 ---------- ------------ --------- ------------ Total Shareholders' Equity 168,455 14,161 (14,161) (b) 168,455 ---------- ------------ --------- ------------ Total Liabilities and Shareholders' Equity $381,241 $16,731 $ 39,339 $437,311 ========== ============ ========= ============
18 APPLIED POWER INC. AND SUBSIDIARIES AND EVEREST ELECTRONIC EQUIPMENT, INC. PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS UNAUDITED YEAR ENDED AUGUST 31, 1996 (AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
HISTORICAL PRO FORMA PRO FORMA API EVEREST ADJUSTMENTS CONSOLIDATED --------- ----------- ----------------- --------------- Net sales $571,215 $43,570 $ (1,025) (c) $613,760 Cost of products sold 351,283 32,271 (782) (c),(d) 382,772 --------- ----------- ---------- --------------- Gross Profit 219,932 11,299 (243) 230,988 Engineering, selling and administrative expenses 158,485 3,867 - 162,352 --------- ----------- ---------- --------------- Operating Earnings 61,447 7,432 (243) 68,636 Other Expense(Income) Net financing costs 8,456 (120) 3,380 (d) 11,716 Amortization of intangible assets 4,054 - 1,742 (d) 5,796 Other - net (230) (68) - (298) --------- ----------- ---------- --------------- Earnings Before Income Tax Expense 49,167 7,620 (5,365) 51,422 Income Tax Expense 15,438 89 836 (d) 16,363 --------- ----------- ---------- --------------- Net Earnings $33,729 $7,531 $ (6,201) $35,059 ========= =========== ========== =============== Earnings Per Share $2.41 $2.51 ========= =============== Weighted Average Number of Shares Outstanding 13,983 13,983 ========= ===============
19 APPLIED POWER INC. AND EVEREST ELECTRONICS EQUIPMENT, INC. NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Unaudited (Dollars in Thousands) (a) The following pro forma adjustments reflect the Company's purchase of the Everest business. Pro forma adjustments include estimated direct costs of acquisition of $1,500. Purchase price of net assets $52,000 Accrued liabilities 1,500 -------- Investment in Everest Business $53,500 ========
(b) The following pro forma adjustments are made to reflect estimated fair value adjustments and to eliminate the investment in Everest Business. Everest Business net assets - as reported $14,161 Fair value adjustments: Eliminate cash balance (not acquired) (5,913) Increase carrying amount of plant and equipment to fair value 1,700 Record goodwill generated from purchase 43,552 ------- Investment in Everest Business $53,500 =======
(c) Elimination of $1,025 in sales of Everest product to the Company which was recorded during the year ended August 31, 1996. (d) The following pro forma adjustments are incorporated in the pro forma condensed consolidated statement of earnings. 1. Incremental interest expense on acquisition debt at a rate of 6.5% $(3,380) 2. Increase in depreciation expense resulting from adjustment to carrying amount of plant and equipment being depreciated over a 7 year life (243) 3. Reflect amortization of goodwill arising from this transaction, over a 25 year life (1,742) 4. Increase in income taxes applying a 41% effective US and California state income tax rate to the earnings of Everest, less the effect of pro forma adjustments in 1, 2 and 3 above (836) ------- $(6,201) =======
20