Document/Exhibit Description Pages Size
1: 8-K/A Amendment to Current Report 29 86K
2: EX-2 Plan of Acquisition, Reorganization, Arrangement, 62 156K
Liquidation or Succession
3: EX-99.1 Miscellaneous Exhibit 1 6K
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): November 29, 1995
HARDINGE INC.
-------------------------------
(Exact name of registrant as specified in charter)
New York 0-15760 16-0470200
------------------------------ ---------------- ---------------------
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
One Hardinge Drive, Elmira, N.Y. 14902
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (607) 734-2281
-2-
Item 2. Acquisitions of Assets
On November 29, 1995, Hardinge Inc. ("Hardinge") acquired all of the
issued and outstanding shares of capital stock ("Kellenberger Stock") of
L. Kellenberger & Co., AG, a corporation organized and existing under the
laws of Switzerland ("Kellenberger"), and all of the issued and
outstanding shares of capital stock ("Kellenberger Inc. Stock") of
Kellenberger Incorporated, a New York corporation ("Kellenberger Inc.").
The acquisition of the Kellenberger Stock and the Kellenberger Inc. Stock
as well as the consummation of the transactions related thereto, are
sometimes referred to herein as the "Acquisition". The Acquisition was
consummated in accordance with the terms of a Stock Purchase Agreement,
dated as of November 16, 1995 (the "Stock Purchase Agreement"), by and
among Hardinge, Kellenberger and each of Leon Kellenberger, Ernst Albert
Weber, Leonhard Kellenberger and Ralph Kellenberger, Christina
Kellenberger, Gerda Kellenberger and Jurg Kellenberger (collectively
referred to herein as the "Selling Shareholders").
The total consideration paid by Hardinge to the Selling Shareholders
in respect of the Kellenberger Stock was S.fr. 21,000,000, including S.fr.
2,000,000 paid into an escrow account to secure for the benefit of
Hardinge, for a period of 18 months from the closing date, certain
indemnification obligations of the Selling Shareholders provided for in
the Stock Purchase Agreement. The total consideration paid by Hardinge for
the Kellenberger Inc. Stock was $1.00. The purchase prices paid by
Hardinge for the Kellenberger Stock and the Kellenberger Inc. Stock
-3-
were determined on the basis of arm's length negotiations between the
parties. As of the date of the Acquisition, Kellenberger and Kellenberger
Inc. became wholly-owned subsidiaries of Hardinge.
In connection with the Acquisition, Kellenberger entered into a
revised employment agreement with Jurg Kellenberger, who prior to the
Acquisition was the Managing Director of Kellenberger. Also in connection
with the Acquisition, Kellenberger Inc. entered into a revised employment
agreement with Kenneth Leach, who will continue as President of
Kellenberger Inc.
To finance the Acquisition, Hardinge borrowed S.fr. 20,900,000
under its Credit Agreement, dated August 1, 1994, with The Chase Manhattan
Bank (National Association), National Westminster Bank, USA, and Chemical
Bank.
The Stock Purchase Agreement and certain of the exhibits thereto is
filed as an exhibit to this Current Report on Form 8-K and is incorporated
herein by reference. The brief summaries of the material provisions of the
Stock Purchase Agreement set forth above are qualified in their entirety
by reference to the Stock Purchase Agreement filed as an exhibit hereto.
Kellenberger is principally involved in the design, manufacture and
sale of high precision grinding machines. Kellenberger Inc. is principally
a sales subsidiary for sale of Kellenberger products into the U.S. and
Canada. The press release issued by Hardinge Inc. in respect of the
Acquisition is filed as an exhibit hereto.
-4-
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired
The following financial statements of L. Kellenberger & Co., AG and
Subsidiary are filed herewith as Item 7(a):
Report of the Group Auditors, STG-Coopers & Lybrand
Consolidated Balance Sheet as of December 31, 1994 and 1993
Consolidated Statement of Income for the years ended December 31, 1994
and 1993
Consolidated Statement of Cash Flow for the years ended December 31,
1994 and 1993
Notes to Consolidated Financial Statements
Unaudited Consolidated Balance Sheet as of September 30, 1995 and 1994,
and unaudited Consolidated Statements of Income and of Cash Flow for.
the nine months ended September 30, 1995 and 1994.
Reconciliation of net income (loss) as reported for the years ended
December 31, 1994 and 1993 and the nine months ended September 30,
1995 to US GAAP.
(b) Pro Forma financial information
The Pro Forma Consolidated Balance Sheet as of September 30, 1995 and the
Pro Forma Consolidated Statement of Income for the nine months ended
September 30, 1995 and the year ended December 31, 1994 reflecting on a pro
forma basis the acquisition of L. Kellenberger & Co., AG by Hardinge Inc.
Exhibits:
Exhibit 2 Stock Purchase Agreement, made as of November 16, 1995,
by and among Leon Kellenberger, Ernst Albert Weber,
Leonhard Kellenberger, Ralph Kellenberger, Christina
Kellenberger, Gerda Kellenberger, Jurg Kellenberger,
L. Kellenberger & Co. AG, and Hardinge Inc., including
Exhibits 1.2, 2 and 3 thereto.
Exhibit 99.1 Press Release dated November 29, 1995
-5-
Item 7(a)
STG- Schweizerische Treuhandgesellschaft- St. Leonhard-Strasse 7
Coopers Coopers & Lybrand AG Postfach
& Lybrand CH-9001 St. Gallen
Telefon 071 30 08 00
Fax 071 30 08 10
Report of the Group Auditors to the
General Meeting of
Kellenberger-Group
St Gallen
We have audited the consolidated financial statements of Kellenberger-Group
presented by the board of directors for the year ended December 31, 1994 and
1993 in accordance with the provisions of the law. Our audit was conducted in
accordance with auditing standards promulgated by the profession. We confirm
that we meet the legal requirements concerning professional qualification and
independence.
Based on our examination we conclude that the consolidated financial
statements are in accordance with the provisions of the law and the
principles of consolidation and valuation described in the notes to the
consolidated financial statements.
We recommend that the consolidated financial statements submitted to you be
approved.
St. Gallen, December 22, 1995
Schweizerische Truehandgesellschaft-
Coopers & Lybrand AG
K. Fischer L. Lipp
Swiss Certified Swiss Certified
Public Accountant Public Accountant
Lead Auditor Lead Auditor
Enclosures:
Consolidated financial statements
I Consolidated balance sheet
II Consolidated profit and loss account
III Statement of Cash Flow
IV Notes to the consolidated financial statements
Basel, Aarau, Bern, Chur, Delsberg, Freiburg, Genf, Lausanne, Lugano, Luzern,
Neuenburg, Sitten, Solothurn, St. Gallen, Winterthur, Zurich
Weltweit: Mitglied von Coopers & Lybrand International
-6-
CONSOLIDATED BALANCE SHEET AS AT DECEMBER 31, 1994
31.12.1994 31.12.1993
--------- -----------
CHF CHF
ASSETS
CURRENT ASSETS
Cash and banks
Cash 18'558 5'571
Postal checking account 289'966 59'423
Banks 1'701'609 437'954
--------- -----------
2'010'133 502'948
--------- -----------
Accounts receivable
Trade accounts 8'252'297 7'728'474
Due from subsidiary USA 0 0
--------- -----------
8'252'297 7'728'474
--------- -----------
Other accounts receivable
Advances to suppliers 28'878 0
Prepaid expenses 201'912 254'995
Others 134'583 223'137
--------- -----------
365'373 478'132
--------- -----------
Inventory
Machines 4'662'265 7'442'222
Finished goods 358'777 366'253
--------- -----------
5'021'042 7'808'475
--------- -----------
Total CURRENT ASSETS 15'648'845 16'518'029
--------- -----------
FIXED ASSETS
Financial assets
Investment in subsidiary USA 0 0
Other investments 42'913 20'000
--------- -----------
42'913 20'000
--------- -----------
Tangible assets
Land and buildings 5'049'000 5'322'000
Machines and installations 2'004'000 2'653'000
Furniture, fixture and vehicles 543'522 691'444
Electronic equipment 545'000 719'000
--------- -----------
8'141'522 9'385'444
--------- -----------
Total FIXED ASSETS 8'184'435 9'405'444
--------- -----------
Total ASSETS 23'833'280 25'923'473
========= ===========
-7-
31.12.1994 31.12.1993
--------- -----------
CHF CHF
LIABILITIES AND
SHAREHOLDERS' EQUITY
LIABILITIES
Trade accounts payable 1'397'962 1'085'578
Other current liabilities
Bank overdrafts 4'202'755 1'774'464
Bank loan (fixed term) 6'000'000 5'900'000
Deposits from customers 1'089'861 2'615'706
Accrued liabilities 740'151 1'000'220
Due to pension fund 18'972 132'201
Other pension-related
liabilities 85'254 83'379
Due to shareholders 632'002 295'371
Other liabilities 69'769 83'906
--------- -----------
12'838'764 11'885'247
--------- -----------
Long-term liabilities
Loan from shareholders 0 595'000
Provisions
Allowance for doubtful accounts 1'040'000 840'000
Provision warranty 1'000'000 2'120'000
Deferred taxes 340'000 705'000
--------- -----------
2'380'000 3'665'000
--------- -----------
Total LIABILITIES 16'616'726 17'230'825
--------- -----------
SHAREHOLDERS' EQUITY
Share capital 3'000'000 3'000'000
Reserves
Legal reserve 1'500'000 1'500'000
Free reserve 6'010'646 5'973'687
Goodwill 270'300 300'000
Consolidation reserve -544'989 -591'904
--------- -----------
7'235'957 7'181'783
--------- -----------
Deficit/Retained earnings
Loss/Profit brought forward -1'489'135 33'826
Net loss for the year -1'530'268 -1'522'961
--------- -----------
-3'019'403 -1'489'135
--------- -----------
Total SHAREHOLDERS' EQUITY 7'216'554 8'692'648
--------- -----------
Total LIABILITIES AND
SHAREHOLDERS' EQUITY 23'833'280 25'923'473
========= ===========
-8-
CONSOLIDATED STATEMENT OF INCOME
for the year ended December 31, 1994
1994 1993
--------- -----------
CHF CHF
MACHINES
Sales 30'397'460 31'529'159
Material 14'467'568 11'262'030
Personnel 12'850'807 14'171'507
Other 4'268'244 5'419'831
--------- -----------
Total cost of sales 31'586'619 30'853'368
--------- -----------
Gross profit - machines -1'189'159 675'791
========= ===========
FINISHED GOODS
Sales 1'982'829 1'689'123
Material 972'461 718'112
Personnel 512'740 568'055
Other 298'505 336'961
--------- -----------
Total cost of sales 1'783'706 1'623'128
--------- -----------
Gross profit - finished goods 199'123 65'995
========= ===========
TOTAL COMPANY
Gross profit - machines -1'189'159 675'791
Gross profit - finished goods 199'123 65'995
--------- -----------
-990'036 741'786
Interest Income 123'120 97'446
Extraordinary income 1'275'000 171'848
--------- -----------
408'084 1'011'080
Interest expenses 542'674 681'736
Depreciations 1'313'835 1'798'945
Taxes 81'843 53'360
--------- -----------
LOSS FOR THE YEAR -1'530'268 -1'522'961
========= ===========
-9-
STATEMENT OF CASH FLOW
as at December 31, 1994
[Download Table]
31.12.1994 31.12.1993*
--------- ------------
CHF CHF
CASH FLOW FROM OPERATING ACTIVITIES
Net loss/income -1'530'268 -1'522'961
ADJUSTMENT TO RECONCILE NET LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Depreciation 1'313'835 1'798'945
Change in translation adjustment 54'174 -655'240
Change in assets and liabilities
Increase/Decrease in accounts receivable -523'823 89'382
Decrease/Increase in other accounts receivable 112'759 -234'587
Decrease in inventory 2'787'433 1'275'887
Increase/Decrease in accounts payable 312'384 -954'426
Decrease/Increase in deposits from customers -1'525'845 2'338'793
Decrease/Increase in accrued liabilities -260'069 106'478
Decrease/Increase due to pension fund -113'229 22'461
Increase/Decrease in other pension 1'875 -475'251
Increase/Decrease due to shareholders 336'631 -725'142
Decrease other liabilities -14'137 -370'451
Increase in allowance for doubtful accounts 200'000 20'000
Decrease in provision warranty -1'120'000 -80'000
Decrease deferred taxes -365'000 -25'000
Decrease other provisions 0 -20'000
--------- ------------
Total adjustments 1'196'988 2'111'849
--------- ------------
NET CASH USED IN OPERATING
ACTIVITIES -333'280 588'888
--------- ------------
CASH FLOW FROM INVESTING ACTIVITIES
Increase/Decrease in other investments -22'913 114'538
Increase in land and buildings -36'000 -2'693'373
Decrease/Increase in machines and installations 99'925 -72'644
Increase in furniture, fixtures and vehicles -13'853 -286'812
Increase in electronic equipment -119'985 -199'538
--------- ------------
NET CASH USED IN INVESTING ACTIVITIES -92'826 -3'137'829
--------- ------------
* not audited
-10-
31.12.1994 31.12.1993
--------- -----------
CHF CHF
CASH FLOW FROM FINANCING ACTIVITIES
Increase/Decrease in bank overdraft 2'428'291 -3'336'030
Increase in bank loan 100'000 5'900'000
Dividend paid to shareholders 0 -150'000
Decrease loan to shareholders -595'000 0
--------- -----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 1'933'291 2'413'970
--------- -----------
NET INCREASE/DECREASE IN CASH
AND CASH EQUIVALENTS 1'507'185 -134'971
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 502'948 637'919
--------- -----------
CASH AND CASH EQUIVALENTS AT END
OF YEAR 2'010'133 502'948
========= ===========
-11-
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
as at December 31, 1994
31.12.1994 31.12.1993
--------- -----------
CHF CHF
GUARANTEES, GUARANTEE OBLIGATIONS
AND PLEDGES
Guarantees 8'312 186'639
Guarantee obligations from export financing 405'816 488'251
Pledge for Carnet ATA and customs 158'000 150'000
Bank guarantees for customer deposits 145'773 317'867
Bank performance bonds 68'010 1'666'019
OWNERSHIP LIMITATIONS - LAND AND BUILDINGS
Balance-sheet value 5'049'000 5'322'000
Value for tax purposes 14'000'000 8'190'000
Pledges issued 6'175'000 6'175'000
Pledges in effect 6'175'000 6'175'000
FIRE INSURANCE VALUES OF
TANGIBLE ASSETS (AT REPLACEMENT VALUE)
Land and buildings 23'040'000 23'048'600
Machines, fixtures and tangible assets 38'037'960 38'260'100
OBLIGATIONS TO PENSION FUNDS 104'226 215'580
RELEASE OF HIDDEN RESERVES
Net release (without tangible assets) 3'193'000 3'281'000
Tangible assets p.m. p.m.
-12-
GENERAL NOTES
The consolidated financial statements (Balance Sheet and valuation
guidelines) conform to the requirements of the Limited company law.
BASIS OF VALUATION
The consolidated financial statements are based upon book values as resulting
from the individual closing statements drawn up under commercial law. There
is therefore not a uniform valuation of all consolidated financial
statements. For the consolidation, the principle of governing authority is
used, that is to say, the financial statements which have been drawn up in
accordance with the relevant country's regulations are taken into the
consolidation without change.
BASIS OF CONSOLIDATION
Date of Balance Sheet
The consolidated companies close their financial year as at December 31, 1994
and 1993, respectively.
Content of consolidation
There is a full consolidation of the companies:
- L. Kellenberger & Co. AG, St. Gallen, Switzerland
- Kellenberger Inc., Elmsford / NY, USA
Kellenberger Inc. is a 100% subsidiary.
Capital consolidation
The capital consolidation of Kellenberger Inc. is performed in accordance
with the German method, i.e. the book value of the investment shown in the
Balance Sheet of L. Kellenberger & Co. AG is offset against the proportion of
shareholders' equity shown on the Balance Sheet date by the subsidiary,
excluding the year's income or loss. A positive difference between the
investment value and shareholders' equity is taken into assets as goodwill; a
negative goodwill is shown as a consolidation reserve. The share capital of
L. Kellenberger & Co. AG is the share capital of the group. There are no
third parties involved in the shareholders' equity of the group. The group
reserves contain the profits earned and retained by the group.
-13-
Calculation of foreign currencies
The valuation of foreign currencies is made for the Balance Sheet at the
rates of exchange at the year-end, and for the income statement at average
rates of exchange for the year.
Valuation USD / CHF 1993 1994
----------------------------------- ----- -------
- Balance Sheet positions 1.4000 1.3100
- Income Statement 1.5000 1.3300
Currency differences are shown separately in the income statement.
Intercompany profits
Intercompany profits are eliminated.
Intercompany relationships
The intercompany accounts receivable and payable, as well as the expenses and
income, are mutually eliminated.
-14-
CONSOLIDATED BALANCE SHEET AS AT SEPTEMBER 30, 1995
9/30/95 9/30/94
--------- -----------
CHF CHF
A S S E T S
CURRENT ASSETS
Cash and Cash equivalents 720'019 1'092'306
Accounts receivable
Trade accounts 6'017'435 4'453'465
Due from subsidiary USA 0 0
--------- -----------
6'017'435 4'453'465
--------- -----------
Other accounts receivable
Advances to suppliers 0 0
Prepaid expenses 135'362 94'625
Others 985'055 176'099
--------- -----------
1'120'417 270'724
--------- -----------
Inventory
Machines 7'058'038 7'037'360
Finished goods 371'691 643'129
--------- -----------
7'429'729 7'680'489
--------- -----------
Total CURRENT ASSETS 15'287'600 13'496'984
--------- -----------
FIXED ASSETS
Financial assets
Investment in subsidiary USA 0 0
Other investments 47'014 49'491
--------- -----------
47'014 49'491
--------- -----------
Tangible assets
Land and buildings 4'888'000 5'117'250
Machines and installations 1'426'000 2'166'250
Furniture, fixture and vehicles 547'009 580'502
Electronic equipment 375'000 588'500
--------- -----------
7'236'009 8'452'502
--------- -----------
Total FIXED ASSETS 7'283'023 8'501'993
--------- -----------
Total ASSETS 22'570'623 21'998'977
========= ===========
-15-
9/30/95 9/30/94
--------- -----------
CHF CHF
LIABILITIES AND
SHAREHOLDERS' EQUITY
LIABILITIES
Trade accounts payable 2'016'256 980'492
Other current liabilities
Bank overdrafts 2'372'622 2'172'473
Bank loan (fixed term) 7'000'000 6'000'000
Deposits from customers 1'821'577 342'414
Accrued liabilities 1'505'123 1'171'972
Due to pension fund 0 -8'642
Other pension-related liabilities 0 0
Due to shareholders 567'046 716'269
Other liabilities 676'940 364'507
--------- -----------
13'943'308 10'758'993
--------- -----------
Long-term liabilities
Loan from shareholders 0 0
Provisions
Allowance for doubtful accounts 900'000 840'000
Provision warranty 1'014'000 2'120'000
Deferred taxes 312'000 705'000
--------- -----------
2'226'000 3'665'000
--------- -----------
Total LIABILITIES 18'185'564 15'404'485
--------- -----------
SHAREHOLDERS' EQUITY
Share capital 3'000'000 3'000'000
Reserves
Legal reserve 1'500'000 1'500'000
Free reserve 6'010'646 6'010'646
Goodwill 270'300 277'725
Consolidation reserve -585'791 -578'519
--------- -----------
7'195'155 7'209'852
--------- -----------
Deficit / Retained earnings
Loss / Profit brought forward -3'019'403 -1'489'135
Net loss for the period -2'790'693 -2'126'225
--------- -----------
-5'810'096 -3'615'360
--------- -----------
Total SHAREHOLDERS' EQUITY 4'385'059 6'594'492
--------- -----------
Total LIABILITIES AND
SHAREHOLDERS' EQUITY 22'570'623 21'998'977
========= ===========
-16-
CONSOLIDATED STATEMENT OF INCOME
for the period ended September 30, 1995 and 1994
(9 months) (9 months)
1995 1994
------------ --------------
CHF CHF
MACHINES
Sales 19'138'829 22'798'095
Material 7'478'782 10'850'676
Personnel 10'432'581 9'638'105
Other 3'402'275 3'201'183
------------ --------------
Total cost of sales 21'313'638 23'689'964
------------ --------------
Gross profit - machines -2'174'809 -891'869
============ ==============
FINISHED GOODS
Sales 3'433'234 1'487'122
Material 1'674'330 729'346
Personnel 417'303 384'555
Other 238'159 223'879
------------ --------------
Total cost of sales 2'329'792 1'337'780
------------ --------------
Gross profit - finished goods 1'103'442 149'342
============ ==============
TOTAL COMPANY
Gross profit - machines -2'174'809 -891'869
Gross profit - finished goods 1'103'442 149'342
------------ --------------
-1'071'367 -742'527
Interest income 64'745 92'340
Extraordinary income -198 0
------------ --------------
-1'006'820 -650'187
Interest expenses 463'391 407'005
Depreciations 1'285'104 1'007'651
Taxes 35'378 61'382
------------ --------------
LOSS FOR THE PERIOD -2'790'693 -2'126'225
============ ==============
-17-
STATEMENT OF CASH FLOW
for the period ended September 30, 1995 and 1994
[Download Table]
(9 months) (9 months)
1995 1994
------------ --------------
CHF CHF
CASH FLOW FROM OPERATING ACTIVITIES
Net loss / income -2'790'693 -2'126'225
ADJUSTMENT TO RECONCILE NET LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Depreciation 1'285'104 1'007'651
Change in translation adjustment -40'802 -13'385
Change in assets and liabilities
Decrease in accounts receivable 2'234'862 3'275'009
Increase/Decrease in other accounts receivable -755'044 207'408
Increase/Decrease in inventory -2'408'687 127'986
Increase/Decrease in accounts payable 618'294 -105'086
Increase/Decrease in deposits from customers 731'716 -2'273'292
Increase in accrued liabilities 764'972 171'752
Decrease due to pension fund -18'972 -140'843
Decrease in other pension -85'254 -83'379
Decrease/Increase due to shareholders -64'956 420'898
Increase in other liabilities 607'171 280'601
Decrease in allowance for doubtful accounts -140'000 0
Increase in provision warranty 14'000 0
Decrease deferred taxes -28'000 0
------------ --------------
Total adjustments 2'714'404 2'875'320
------------ --------------
NET CASH USED IN / PROVIDED BY
OPERATING ACTIVITIES -76'289 749'095
------------ --------------
CASH FLOW FROM INVESTING ACTIVITIES
Increase in other investments -4'101 -29'491
Increase in land and buildings 0 0
Increase/Increase in machines an installations -29'503 -6'691
Increase in furniture, fixtures and vehicles -164'467 0
Increase in electronic equipment -185'621 -26'564
------------ --------------
NET CASH USED IN INVESTING ACTIVITIES -383'692 -62'746
------------ --------------
-18-
(9 months) (9 months)
1995 1994
------------ --------------
CHF CHF
CASH FLOW FROM FINANCING ACTIVITIES
Decrease/Increase in bank overdraft -1'830'133 398'009
Increase in bank loan 1'000'000 100'000
Decrease loan to shareholders 0 -595'000
------------ --------------
NET CASH USED IN FINANCING
ACTIVITIES -830'133 -96'991
------------ --------------
NET DECREASE/INCREASE IN CASH
AND CASH EQUIVALENTS -1'290'114 589'358
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 2'010'133 502'948
------------ --------------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD 720'019 1'092'306
============ ==============
-19-
RECONCILIATION OF LOSS
for the years ended December 31, 1994 and 1993
[Download Table]
1994 1993
--------- -----------
USD USD
Loss according to audited
financial statements -1'168'144 -1'087'829
Adjustments
Current assets
Increase/Decrease in allowance for doubtful accounts -326'718 65'000
Net dissolution of hidden reserves in inventory -1'200'763 -1'595'714
Variation in valuation of intercompany stock 21'061 0
Fixed assets
Adjustment on depreciation -365'649 -42'857
Proceeds from sales 105'344 0
Liabilities
Dissolution of provision for pension liability 9'924 10'000
Dissolution of provision for warranty 17'557 0
Dissolution of provision for deferred taxes 777'099 315'714
Reversal of dissolution of provision for deferred taxes -259'542 0
Provision for federal Tax 1994 -19'084 0
Reversal of dissolution of general provision -713'740 0
Dissolution of provision for Indemnity Lutz 11'450 0
--------- -----------
LOSS FOR THE YEAR
according to US GAAP -3'111'205 -2'335'686
========= ===========
Foreign exchange rate: 1 USD equals CHF 1.31 CHF 1.40
-20-
RECONCILIATION OF LOSS
for the period ended September 30, 1995 and 1994
[Download Table]
(9 months) (9 months)
1995 1994
------------ --------------
USD USD
Loss according to financial statements -2'325'578 -1'623'071
Adjustments
Current assets
Net dissolution of hidden reserves in inventory 0 -900'573
Fixed assets
Adjustment on depreciation 0 -274'237
Proceeds from sales 0 105'344
Liabilities
Dissolution of provision for pension liability 0 7'443
Dissolution of provision for warranty 0 13'168
Dissolution of provision for deferred taxes 0 582'824
Provision for federal Tax 1994 0 -14'313
------------ --------------
LOSS FOR THE YEAR
according to US GAAP -2'325'578 -2'103'415
============ ==============
Foreign exchange rate: 1 USD equals CHF 1.20 CHF 1.31
-21-
Item 7(b)
PRO FORMA FINANCIAL INFORMATION
On November 29, 1995, Hardinge Inc. ("Hardinge" or "the Company") completed
the acquisition of 100% of the stock of L. Kellenberger & Co., AG and its
subsidiary, Kellenberger, Inc. (collectively, "Kellenberger") for
approximately $18,800,000 in cash. Approximately $1,800,000 of the acquisition
price has been set aside in an escrow account to be released to the sellers
after eighteen months, subject to specific post-closing adjustments provided for
in the purchase agreement. The acquisition was financed principally through use
of Hardinge's revolving credit agreement. However, Hardinge anticipates
replacing that financing with longer term financing in the first quarter of
1996.
The following pro forma consolidated financial statements and accompanying
notes should be read in conjunction with the audited consolidated financial
statements of Hardinge and the related notes thereto which are included in
the Company's Annual Report on Form 10-K for its year ended December 31,
1994, the Company's Current Report on Form 8-K dated November 29, 1995 (each
as filed with the Securities and Exchange Commission) and the audited
consolidated financial statements of Kellenberger that are filed herewith as
Item 7(a).
The unaudited pro forma consolidated financial statements do not necessarily
reflect the actual results which would have occurred if the acquisition had
taken place on the assumed dates, nor are they necessarily indicative of the
results of future combined operations.
The pro forma adjustments to the Statement of Operations do not include any
increases in revenue or decreases in costs that may occur as a result of the
manufacturing, marketing and engineering synergies of the combined
businesses, the effect of which have not yet been quantified by management.
-22-
HARDINGE INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 1995
(Unaudited)
(In thousands)
[Enlarge/Download Table]
Acquisition Hardinge &
Historical Historical Pro Forma Kellenberger
Hardinge Inc. Kellenberger (1) Combined Adjustments Consolidated
--------------- ---------------- -------- ----------- -------------
Assets
Current assets:
Cash $ 4,701 $ 621 $ 5,322 $ -- $ 5,322
Accounts receivable 32,920 5,187 38,107 (776)(3) 37,331
Notes receivable 5,060 -- 5,060 -- 5,060
Inventories 67,886 6,405 74,291 6,746(2) 81,037
Deferred income taxes 981 -- 981 1,534(4) 2,515
Prepaid expenses 1,482 966 2,448 -- 2,448
--------------- ---------------- -------- ----------- -------------
Total current assets 113,030 13,179 126,209 7,504 133,713
Property, plant and equipment, net 34,895 6,238 41,133 10,436(2) 51,569
Other assets:
Notes receivable 10,403 -- 10,403 -- 10,403
Deferred income taxes 1,365 -- 1,365 -- 1,365
Other 760 41 801 -- 801
--------------- ---------------- -------- ----------- -------------
12,528 41 12,569 -- 12,569
--------------- ---------------- -------- ----------- -------------
Total assets $160,453 $19,458 $179,911 $17,940 $197,851
=============== ================ ======== =========== =============
-23-
HARDINGE INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 1995
(Unaudited)
(In thousands)
[Enlarge/Download Table]
Acquisition Hardinge &
Historical Historical Pro Forma Kellenberger
Hardinge Inc. Kellenberger (1) Combined Adjustments Consolidated
--------------- ---------------- -------- ------------ -------------
Liabilities and shareholders'
equity
Current Liabilities:
Accounts payable $ 9,131 $ 1,738 $ 10,869 $ -- $ 10,869
Notes payable to bank -- 8,080 8,080 -- 8,080
Accrued expenses 8,675 3,941 12,616 2,073(3,5) 14,689
Accrued pension plan expense 368 -- 368 -- 368
Accrued income taxes 677 -- 677 -- 677
Current portion long-term debt 714 -- 714 -- 714
--------------- ---------------- -------- ------------ -------------
Total current liabilities 19,565 13,759 33,324 2,073 35,397
Other liabilities:
Long-term debt 3,013 -- 3,013 18,366 (6) 21,379
Deferred taxes -- 269 269 2,931 (2) 3,200
Accrued employee benefits 6,074 -- 6,074 -- 6,074
Other liabilities -- 1,650 1,650 (1,650)(2,3,5) --
--------------- ---------------- -------- ------------ -------------
9,087 1,919 11,006 19,647 30,653
Shareholders' equity
Common stocks 65 2,586 2,651 (2,586) (7) 65
Additional paid-in capital 54,933 -- 54,933 -- 54,933
Retained earnings 82,543 1,194 83,737 (1,194) (7) 82,543
Treasury shares (627) -- (627) -- (627)
Cumulative foreign currency
translation adjustment (1,640) -- (1,640) -- (1,640)
Deferred employee benefits (3,473) -- (3,473) -- (3,473)
--------------- ---------------- -------- ------------ -------------
Total shareholders' equity 131,801 3,780 135,581 (3,780) 131,801
--------------- ---------------- -------- ------------ -------------
Total liabilities and
shareholders' equity $160,453 $19,458 $179,911 $ 17,940 $197,851
=============== ================ ======== ============ =============
-24-
HARDINGE INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(Unaudited)
(In thousands, except per share amounts)
[Enlarge/Download Table]
Acquisition Hardinge &
Historical Historical Pro Forma Kellenberger
Hardinge Inc. Kellenberger Combined Adjustments Consolidated
-------------- ----------- ------- ---------- -------------
Net Sales $124,405 $18,968 $143,373 $143,373
Cost of Sales 81,846 15,513 97,359 (293) (8) 97,066
-------------- ----------- ------- ---------- -------------
Gross Profit 42,559 3,455 46,014 293 46,307
S G & A 26,311 5,416 31,727 (548) (8) 31,179
-------------- ----------- ------- ---------- -------------
Income from Operations 16,248 (1,961) 14,287 841 15,128
Interest Expense 1,145 389 1,534 500 (8) 2,034
Interest (income) (622) (54) (676) (676)
(Gain) on sale of assets (326) (326) (326)
-------------- ----------- ------- ---------- -------------
Income Before Income Taxes 16,051 (2,296) 13,755 341 14,096
Income Taxes 6,290 30 6,320 (613) (8) 5,707
-------------- ----------- ------- ---------- -------------
Net Income $ 9,761 $(2,326) $ 7,435 $ 954 $ 8,389
============== =========== ======= ========== =============
Earnings Per Share $ 2.11 $ 1.81
Weighted average shares outstanding 4,634 4,634
-25-
HARDINGE INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
(Unaudited)
(In thousands, except per share amounts)
[Enlarge/Download Table]
Acquisition Hardinge &
Historical Historical Pro Forma Kellenberger
Hardinge Inc. Kellenberger Combined Adjustments Consolidated
-------------- ----------- ------- ---------- -------------
Net Sales $117,336 $24,367 $141,703 $141,703
Cost of Sales 76,937 21,536 98,473 (315) (8) 98,158
-------------- ----------- ------- ---------- -------------
Gross Profit 40,399 2,831 43,230 315 43,545
S G & A 27,882 6,301 34,183 (705) (8) 33,478
-------------- ----------- ------- ---------- -------------
Income from Operations 12,517 (3,470) 9,047 1,020 10,067
Interest Expense 1,479 408 1,887 605 (8) 2,492
Interest (income) (453) (81) (534) (534)
(Gain) on sale of assets (442) (442) (442)
-------------- ----------- ------- ---------- -------------
Income Before Income Taxes 11,933 (3,797) 8,136 415 8,551
Income Taxes 5,214 (686) 4,528 (314) (8) 4,214
-------------- ----------- ------- ---------- -------------
Net Income $ 6,719 $(3,111) $ 3,608 $ 729 $ 4,337
============== =========== ======= ========== =============
Earnings Per Share $ 1.88 $ 1.21
Weighted average shares outstanding 3,573 3,573
-26-
HARDINGE INC.
Notes to Pro Forma Financial Information
(Unaudited)
(1) The pro forma consolidated balance sheet (unaudited) at September 30,
1995 and pro forma consolidated statements of operations (unaudited) for the
year ended December 31, 1994 and the nine months ended September 30, 1995
give pro forma effect to the acquisition by Hardinge Inc. and Subsidiaries
("Hardinge") of 100% of the stock of L. Kellenberger & Co., AG and its
subsidiary, Kellenberger, Inc. (collectively, "Kellenberger"). The following
unaudited pro forma consolidated balance sheet of Hardinge as of September
30, 1995 has been prepared as if the transaction had occurred on that date
using the purchase method of accounting.
The unaudited pro forma consolidated statements of operations for the year
ended December 31, 1994 and the nine months ended September 30, 1995, present
the results of Hardinge as if the acquisition was consummated as of January
1, 1994.
The pro forma information should be read in conjunction with the following
notes and the historical financial statements on which they are based. The
unaudited pro forma consolidated financial statements do not necessarily
reflect the actual results which would have occurred if the acquisition had
taken place on the assumed dates, nor are they necessarily indicative of the
results of future combined operations.
The financial information of Kellenberger included in these unaudited pro
forma condensed financial statements has been derived from financial
statements prepared in accordance with accounting principles generally
accepted in Switzerland ("Swiss GAAP") and stated in Swiss francs. The
financial statements have been translated to US dollars at the appropriate
rates. The pro forma balance sheet as of September 30, 1995 has been
translated at the exchange rate as of that day of $1:Sfr1.16. The pro forma
statements of operations for twelve months ended 12/31/94 and the nine months
ended 9/30/95 have been translated at the approximate average exchange rates
in effect for those periods which were $1:Sfr1.33 and $1:Sfr1.19,
respectively.
(2) Under purchase accounting, the assets and liabilities of the acquired
business are required to be adjusted from historical amounts to their
estimated fair values. The fair value of the assets and liabilities are based
on information currently available to management and are believed to be
reasonable. However, final purchase accounting adjustments may differ from
these pro forma amounts. The following summarizes the adjustments to assets
and liabilities of Kellenberger to bring them to fair value (including the
tax impacts of such adjustments):
Increase
Adjustments (in thousands) (Decrease)
------------------------------- ---------
Inventories $ 6,746
Property, plant and equipment 10,436
Deferred tax liability 2931
Other liabilities (96)
Swiss accounting and tax rules allow for aggressive write-off of inventories
and plant and equipment through what are referred to as "hidden reserves".
The increase in value of the inventory and $5,126 of the increase in
property, plant and equipment result from adding back these reserves.
-27-
(3) Accounts receivable has been decreased by $776,000 reflecting a
reclassification of allowance for doubtful accounts from other long term
liabilities.
(4) Deferred income tax assets have been increased by $1,534,000 to reflect
the tax benefit of net operating loss carryforwards. There is no valuation
allowance against that asset since there are sufficient deferred tax
liabilities to offset.
(5) Accrued expenses have been increased by $259,000 to reflect anticipated
restructuring costs, $190,000 for miscellaneous accruals of costs not booked,
and $846,000 to reflect transaction costs. Also, $778,000 representing a
reserve for warranty has been reclassified to accrued expenses from other
long term liabilities.
(6) Long term debt has been increased by $18,366,000 to reflect borrowings
under Hardinge's revolving loan agreement to finance the acquisition.
(7) The common stock and retained earnings of Kellenberger have been
eliminated in consolidation.
(8) For the purpose of determining the estimated pro forma effect of the
acquisition of Kellenberger, the income statements have been adjusted as
follow:
[Enlarge/Download Table]
Increase (decrease in income)
------------------------------------------
Nine Months ended Year ended
September 30, 1995 December 31, 1994
------------------ --------------------
Decrease in S.G.&A. to reflect restructuring benefits $450,000 $600,000
Net decrease in depreciation in Cost of Sales to
reflect remaining useful lives of fixed assets and
step-up in value $293,000 $315,000
Net decrease in depreciation in S.G.&A. to reflect
remaining useful lives of fixed assets and step-up in
value $ 98,000 $105,000
Increase in interest to reflect costs of borrowing
funds for acquisition ($500,000) ($605,000)
Increase in deferred tax asset to reflect the tax
benefit of net operating loss carryforwards and the
tax impact of acquisition adjustments $613,000 $314,000
------------------ --------------------
Total impact on Net Income $954,000 $729,000
================== ====================
-28-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned
hereunto duly authorized.
HARDINGE INC.
(Registrant)
By: /s/ Malcolm L. Gibson
--------------------------------------------
Malcolm L. Gibson
Senior Vice President, Chief Financial
Officer and Assistant Secretary
(Principal Financial Officer)
Dated: February 12, 1996
-29-
Index to Exhibits
Exhibits:
Exhibit 2 Stock Purchase Agreement, made as of November 16, 1995, by
and among Leon Kellenberger, Ernst Albert Weber, Leonhard
Kellenberger, Ralph Kellenberger, Christina Kellenberger,
Gerda Kellenberger, Jurg Kellenberger, L. Kellenberger & Co.
AG, and Hardinge Inc., including Exhibits 1.2, 2 and 3
thereto.
Exhibit 99.1 Press release dated November 29, 1995
Dates Referenced Herein and Documents Incorporated by Reference
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