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 31, 2003
ACETO CORPORATION
(Exact name of registrant as specified in charter)
One Hollow Lane, Lake Success, New York 11042
(Address of principal executive offices)
Registrant's telephone number, including area code (516) 627-6000
Not Applicable
(Former name or former address, if changed since last report.)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Aceto Corporation, a New York corporation ("Aceto" or the "Registrant"), hereby
amends its Current Report on Form 8-K filed with the Commission on January 14,
2004 in order to report the financial statements and pro forma financial
information required in connection with the Registrant's acquisition of all of
the capital stock of Pharma Waldhof Beteilingungs GmbH, and all of the
partnership interest of Pharma Waldhof GmbH & Co. KG. Pharma Waldhof
Beteilingungs GmbH is the general partner of Pharma Waldhof GmbH & Co. KG.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
See Page F-1 of this report for the audited financial statements of Pharma
Waldhof GmbH & Co. KG ("Pharma Waldhof") as of and for the year ended December
31, 2003.
(b) Pro Forma Financial Information.
See Page F-9 of this report for the unaudited pro forma financial information of
Aceto for the year ended June 30, 2003 and the six months ended December 31,
2003.
(c) Exhibits
23.1 Consent of PKF Pannell Kerr Forster GmbH
Aceto Corporation
Index to Item 7(a) and (b)
Financial Statements and Pro Forma Financial Information
--------------------------------------------------------
Audited Financial Statements of Acquired Business Pharma Waldhof GmbH & Co. KG,
Mannheim:
Independent Auditors' Report - PKF Pannell Kerr Forster GmbH F-1
Balance Sheet as of December 31, 2003 F-2
Income Statement for the period ending December 31, 2003 F-4
Notes to Financial Statements F-5
Unaudited Pro Forma Financial Information:
Introduction F-9
Unaudited Pro Forma Consolidated Statements of Income
for the Year ended June 30, 2003 and the Six Months
ended December 31, 2003 F-10
Notes to Pro Forma Consolidated Financial Statements F-12
INDEPENDENT AUDITORS' REPORT
To Pharma Waldhof GmbH & Co. KG, Mannheim/Germany:
We have audited the accompanying balance sheet of Pharma Waldhof GmbH & Co. KG
as of December 31, 2003, and the related statement of income, notes to the
financial statements and management report for the period then ended. 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 audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Pharma Waldhof GmbH & Co. KG,
Mannheim, as of December 31, 2003 and the results of their operations for the
year then ended in conformity with accounting principles generally accepted in
Germany (German GAAP).
Duisburg/Germany, March 12, 2004
/s/ PKF Pannell Kerr Forster GmbH
---------------------------------
PKF Pannell Kerr Forster GmbH
Wirtschaftsprufungsgesellschaft
F-1
Pharma Waldhof GmbH & Co. KG, Mannheim
Balance Sheet as of December 31, 2003
(In Euros)
ASSETS
A. Fixed assets
I. Intangible assets
Software 738,00
II. Tangible assets
Operational and office equipment 8.401,61
--------------
9.139,61
B. Current Assets
I. Inventory Merchandise 1.523.982,73
II. Receivables and other assets
1. Trade receivables 759.610,53
2. Receivables from affiliated
enterprises (thereof from
shareholders(euro)0,00) 0,00
3. Other assets (thereof with a
remaining term of more than
one year(euro)144.283) 244.761,51
--------------
1.004.372,04
III. Cash-in-hand, bank balances 307.894,88
--------------
2.836.249,65
--------------
2.845.389,26
--------------
F-2
Pharma Waldhof GmbH & Co. KG, Mannheim
Balance Sheet as of December 31, 2003
(In Euros)
EQUITY AND OTHER LIABILITIES
A. Equity
1. General partner's capital 0,00
2. Limited partner's capital 255.645,94
--------------
255.645,94
B. Accruals
1. Accruals for pensions 220.568,00
2. Tax accruals 294.735,00
3. Other accruals 490.000,00
--------------
1.005.303,00
C. Liabilities
1. Trade payables
(thereof due within
one year(euro)175.496,20) 175.496,20
2. Payables to affiliated enterprises
(thereof due to shareholders
(euro)1.274.899,70)
(thereof due within one year
(euro)1.274.899,70) 1.274.899,70
3. Other liabilities
(thereof due within one year
(euro)134.044,42)
(thereof from taxes
(euro)57.162,62)
(thereof relating to social security
(euro)25.882,11) 134.044,42
--------------
1.584.440,32
--------------
2.845.389,26
--------------
F-3
Pharma Waldhof GmbH & Co. KG, Mannheim
Income Statement for the period ending
December 31, 2003
(In Euros)
1. Sales 8.554.636,11
2. Other operating income 428.162,84
--------------
8.982.798,95
3. Cost of materials
a) Cost of good sold 3.577.779,49
b) Cost of purchased services 59.245,75
--------------
3.637.025,24
--------------
5.345.773,71
4. Personnel expenses
a) Wages and salary 853.917,71
b) Social security, pension
and other benefits
(thereof relating to pension
(euro)47.000,02) 156.655,91
--------------
1.010.573,62
5. Depreciation of intangible and
tangible fixed assets 9.558,33
6. Other operating expenses 950.176,86
--------------
3.375.464,90
7. Other interest and similar
income
(thereof from affiliated
enterprises(euro)44.061,53) 44.841,48
8. Interest and similar expenses
(thereof to affiliated enterprises
(euro)2.675,48) 2.680,12
--------------
42.161,36
--------------
9. RESULTS FROM ORDINARY ACTIVITIES 3.417.626,26
10. Taxes on income 625.000,00
--------------
11. NET INCOME FOR THE YEAR 2.792.626,26
F-4
Pharma Waldhof GmbH & Co. KG, Mannheim
Notes to the Financial Statements for the period ending
December 31, 2003
(in Euros)
GENERAL EXPLANATIONS
GENERAL PARTNER
General unlimited partner as of December 31, 2003 is Pharma Waldhof Beteiligungs
GmbH, Mannheim, without any capital contribution.
LIMITED PARTNER
Only limited partner is Corange Deutschland Holding GmbH, Mannheim, with a
capital contribution amounting to (euro)255.645,94. The capital contribution is
fully paid in.
GROUP AFFILIATION
The Company is affiliated to the Group of Roche Holding AG, Basel/Switzerland.
It belongs to the subgroup of Roche Deutschland Holding GmbH, Grenzach-Wyhlen,
or to its subholding Corange Deutschland Holding GmbH, Mannheim. The financial
statements of Corange Deutschland Holding GmbH, Mannheim, will be filed with the
commercial register at local court Mannheim, Section B, No. 6475. The
consolidated financial statement of Roche Holding AG, Basel/Switzerland, is
disclosed in Switzerland.
MANAGEMENT BOARD
Only the general partner - Pharma Waldhof Beteiligungs GmbH, Mannheim - is
authorized and obligated to perform management functions and to represent the
Company.
The following gentlemen were registered managers of the general partner during
the reporting year:
Ulf Bender, Willich; Pharmaceutical Businessman
Dr. Claus Schneider, Eppelheim; Chemist (until December 12, 2003)
The change on the management board is based on the shareholders' resolution of
December 12, 2003. The corresponding filing has not been made with the
commercial register as of balance sheet date.
F-5
Pharma Waldhof GmbH & Co. KG, Mannheim
Notes to the Financial Statements for the period ending
December 31, 2003
(in Euros)
EXPLANATIONS TO THE BALANCE SHEET
FIXED ASSETS
Intangible and tangible assets are stated at acquisition costs less scheduled
depreciation. Depreciation expenses are computed according to the straight-line
method, the basic useful life ranges from three to thirteen years. Additions of
movable assets in the first half of the year will be depreciated by the full
annual depreciation amount, additions in the second half of the year will be
depreciated by the half annual depreciation amount. Low value assets are fully
depreciated in the year of acquisition.
INVENTORIES
The inventories are stated at acquisition costs taking into account the
principle of lower of cost or market. All noticeable risks due to above average
time of storage, diminished utilization or lower replacement costs are covered
by reasonable allowances. In the reporting year individual allowances amounting
to (euro)561 have been set up. The general risk related to stockkeeping has been
accounted for by setting up a lump sum allowance amounting to 2,5% of the stock
value.
RECEIVABLES AND OTHER ASSETS
Receivables, trade receivables and other assets are stated at face value less
necessary allowances.
The general bad debt risk is accounted for by setting up a lump sum allowance of
4% for foreign receivables and of 2,5% for domestic receivables. The allowance
is set up for amounts not insured (retained amount).
Receivables denominated in foreign currencies are stated based on monthly
average foreign exchange rates. Losses due to foreign exchange rate fluctuations
are accounted for as of balance sheet date.
CASH-IN-HAND, BANK BALANCES
Deposits denominated in foreign currencies are calculated into EURO based on the
average exchange rate as of balance sheet date.
CAPITAL SHARE
The complete capital share equals the contributed capital of the limited
partners. The general partner has not made any capital contributions.
ACCRUALS
Pension accruals were computed in accordance with Article 6a EStG (German Income
Tax Law) using an interest rate of 6 %.
The accruals consider all obligations, risks and losses which became evident
until the preparation of the annual financial statements and which are
determined according to sound business judgement. Other accruals were mainly set
up for invoices not yet received, personnel costs such as bonus, remuneration of
employees, warranties, and research and development cost.
F-6
Pharma Waldhof GmbH & Co. KG, Mannheim
Notes to the Financial Statements for the period ending
December 31, 2003
(in Euros)
LIABILITIES
Liabilities are disclosed at the repayable amount.
Payables denominated in foreign currencies are stated based on monthly average
foreign exchange rates. Losses due to foreign exchange rate fluctuations are
accounted for as of balance sheet date.
Payables due to affiliated companies comprise the available shares in profits
shown on the capital account of Corange Deutschland Holding GmbH, Mannheim, and
offset current receivables. This position can analysed as below:
Profit of the reporting year 2.793
Cash pool-receivables and running clearing -1.518
------
1.275
As of December 31, 2003 all accounts receivable and all amounts payable have
been offset as they have the same maturity due to the change of the shareholder.
EXPLANATIONS TO PROFIT AND LOSS STATEMENT
The profit and loss statement is based on the full-cost method.
OTHER OPERATING INCOME
The other operating income comprises mainly the release of accruals and foreign
exchange gains.
OTHER OPERATING EXPENSES
The other operating expenses mainly consist of storage and transportation costs,
service cost for using office space, IT and telecommunication, payroll
accounting, and foreign exchange losses.
OTHER EXPLANATION AND INFORMATION
OTHER FINANCIAL COMMITMENTS
As of December 31, 2003 commitments related to lease contracts amount to
(euro)10.
NUMBER OF EMPLOYEES
The annual average number of employees was 9.
DISCUSSION OF MATERIAL DIFFERENCES TO US GAAP
All variations in accounting principles, practices and methods used in preparing
the financial statements from the principles, practices and methods generally
accepted in the United States have been found immaterial.
Mannheim, January 9, 2004
Pharma Waldhof Beteiligungs GmbH
as general partner of Pharma Waldhof GmbH & Co. KG
Management board
F-7
Pharma Waldhof GmbH & Co. KG, Mannheim
Fixed Assets Movement Schedule for the Period
January 1, 2003 to December 31, 2003
(In Euros)
Acquisition Costs Depreciation Net Book Value
----------------- ------------ --------------
01.01.2003 Additions 31.12.2003 01.01.2003 Additions 31.12.2003 31.12.2003
---------- --------- ---------- ---------- --------- ---------- ----------
Intangible
assets
Software 1.478,00 0,00 1.478,00 247,00 493,00 740,00 738,00
Tangible
assets
Operational
and office
equipment 47.528,79 2.715,80 50.244,59 32.777,65 9.065,33 41.842,98 8.401,61
--------- -------- --------- --------- -------- --------- --------
49.006,79 2.715,80 51.722,59 33.024,65 9.558,33 42.582,98 9.139,61
F-8
(b) Pro Forma Financial Information
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(In thousands)
On December 31, 2003, Aceto Corporation ("Aceto" or the "Company"), through its
wholly owned subsidiary Aceto Holding GmbH ("Aceto Holding"), acquired from
Corange Deutschland Holding GmbH ("Seller"), a corporation formed under the laws
of Germany, all of the capital stock of Pharma Waldhof Beteiligungs GmbH and all
of the partnership interest of Pharma Waldhof GmbH & Co. KG. (collectively
"Pharma Waldhof").
The purchase price for the capital stock of Pharma Waldhof Beteilingungs GmbH
was $30. The purchase price for the partnership interest of Pharma Waldhof GmbH
& Co. KG was $2,970. These payments were made at the end of December 2003.
Additionally, the Company is to pay the Seller an amount equal to certain
acquired accounts receivable, other receivables, inventory, inventory in
transit, and cash on hand less certain accounts payable and other liabilities,
which is estimated to be $321.
The following unaudited pro forma consolidated financial statements were
prepared to illustrate the estimated effects of Aceto's acquisition of Pharma
Waldhof. The unaudited pro forma consolidated statement of income for the year
ended June 30, 2003 is derived from Aceto's historical results for the year
ended June 30, 2003 and Pharma Waldhof's historical results for the twelve-month
period ended June 30, 2003, giving the effect to the transactions as if they
occurred as of July 1, 2002, the first day of Aceto's most recently completed
year-end. The unaudited pro forma consolidated statement of income for the six
months ended December 31, 2003 is derived from Aceto's historical results for
the six months ended December 31, 2003 and Pharma Waldhof's historical results
for the six months ended December 31, 2003, also giving effect to the
transactions as if they occurred as of July 1, 2002.
The pro forma adjustments are based upon available information and certain
assumptions that Aceto believes are reasonable under the circumstances. The
unaudited pro forma consolidated financial statements do not purport to be
indicative of the operating results that would have been achieved had the
acquisition taken place on the dates indicated or the results that may be
obtained in the future.
The pro forma consolidated statements are based on, and should be read in
conjunction with, the audited consolidated financial statements and the
unaudited interim consolidated financial statements, including the notes
thereto, of Aceto as previously filed and the Pharma Waldhof audited financial
statements, included herein. The pro forma adjustments related to the purchase
price allocation of the Pharma Waldhof acquisition are preliminary
and based on information obtained to date that is subject to revision as
additional information becomes available.
Pharma Waldhof entered into a supply agreement effective January 1, 2004 which
will increase the future cost of certain products sold by Pharma Waldhof. The
effect of the supply agreement is not reflected in the unaudited pro forma
financial statements. If the supply agreement had been in place for the twelve
months ended June 30, 2003 and the six months ended December 31, 2003, the cost
of goods sold would have increased approximately by $750 and $375, respectively.
F-9
ACETO CORPORATION
Unaudited Pro Forma Consolidated Statement of Income
for the year ended June 30, 2003
(In thousands, except per share amounts)
Pro Forma
Aceto Pharma Waldhof(A) Adjustments Pro Forma
----- ----------------- ----------- ---------
Net sales $271,276 $ 9,108 $ - $280,384
Cost of sales 225,980 4,062 - 230,042
-------- ------- ----- --------
Gross profit 45,296 5,046 - 50,342
Selling, general and administrative
expenses 32,359 1,811 356(C) 34,526
-------- ------- ----- --------
Operating income 12,937 3,235 (356) 15,816
Other income (expense):
Interest expense (284) - - (284)
Interest and other income 713 36 (33)(D) 716
-------- ------- ----- --------
429 36 (33) 432
-------- ------- ----- --------
Income before income taxes and cumulative
effect of accounting change 13,366 3,271 (389) 16,248
Provision for income taxes 3,898 635 (76)(E) 4,457
-------- ------- ----- --------
Income before cumulative effect of
accounting change 9,468 2,636 (313) 11,791
Cumulative effect of accounting change 1,873 - - 1,873
-------- ------- ----- --------
Net income $ 7,595 $ 2,636 $(313) $ 9,918
======== ======= ===== ========
Basic income per common share:
Income before accounting change $ 0.64 $ 0.80
Cumulative effect of accounting change 0.13 0.13
-------- --------
Net income $ 0.51 $ 0.67
======== ========
Diluted income per common share:
Income before accounting change $ 0.62 $ 0.77
Cumulative effect of accounting change 0.12 0.12
-------- --------
Net income $ 0.50 $ 0.65
======== ========
Weighted average shares outstanding:
Basic 14,864 14,864
Diluted 15,175 15,175
See accompanying notes to the Unaudited Pro Forma Consolidated Financial Statements.
F-10
ACETO CORPORATION
Unaudited Pro Forma Consolidated Statement of Income
for the six months ended December 31, 2003
(In thousands, except per share amounts)
Pharma Pro Forma
Aceto Waldhof (B) Adjustments Pro Forma
----- ----------- ----------- ---------
Net sales $141,539 $4,554 $ - $146,093
Cost of sales 116,271 1,950 - 118,221
-------- ------ ----- --------
Gross profit 25,268 2,604 - 27,872
Selling, general and administrative
expenses 17,458 948 178(C) 18,584
-------- ------ ----- --------
Operating income 7,810 1,656 (178) 9,288
Other income (expense):
Interest expense (68) - - (68)
Interest and other income 888 147 (17)(D) 1,018
-------- ------ ----- --------
820 147 (17) 950
-------- ------ ----- --------
Income before income taxes 8,630 1,803 (195) 10,238
Income taxes 2,548 372 (41)(E) 2,879
-------- ------ ----- --------
Net income $ 6,082 $1,431 $(154) $ 7,359
======== ====== ===== ========
Net income per common share:
Basic $ 0.39 $ 0.47
======== ========
Diluted $ 0.38 $ 0.46
======== ========
Weighted average shares outstanding:
Basic 15,711 15,711
Diluted 16,125 16,125
See accompanying notes to the Unaudited Pro Forma Consolidated Financial Statements.
F-11
ACETO CORPORATION
Notes to the Unaudited Pro Forma Consolidated Financial Statements
(In thousands)
A consolidated unaudited pro forma balance sheet was not included in this filing
as the acquisition was previously reported in the December 31, 2003 Form 10-Q of
Aceto and in accordance with Rule S-X 11-02(c).
A. Reflects the historical operating results of Pharma Waldhof for the twelve
month period ended June 30, 2003. Pharma Waldhof's most recently completed
year-end was December 31, 2003. In order to conform to Aceto's June 30,
2003 year-end, the financial statements for Pharma Waldhof were derived by
removing the 6 months ended December 31, 2003 from Pharma Waldhof's year
ended December 31, 2003 and adding the six months ended December 31, 2002.
B. Reflects the historical operating results of Pharma Waldhof for the six
months ended December 31, 2003.
C. Reflects amortization of identifiable intangible assets utilizing estimated
amortization periods. The purchase price for Pharma Waldhof was allocated
to the acquired assets and assumed liabilities based on the fair values as
of the date of the acquisition. The excess of the fair value of the net
identifiable assets acquired over the purchase price paid represented
goodwill of approximately $265. This preliminary purchase price allocation
was determined with assistance from a third-party valuation firm. The
preliminary purchase price and purchase price allocation of the acquisition
are as follows:
Purchase price paid
Cash, including estimated transaction expenses $3,386
------
Purchase price allocation
Accounts receivable ........................................ 954
Inventory................................................... 1,914
Identifiable intangible assets.............................. 2,800
Cash........................................................ 387
Other receivables........................................... 307
Fixed assets................................................ 11
Liabilities assumed ........................................ (3,252)
------
Total allocation 3,121
------
Excess purchase price over identifiable
assets and liabilities $ 265
------
With assistance from the third party valuation firm, we have preliminarily
estimated that the purchase price for the Pharma Waldhof acquisition exceeded
the fair value of the net tangible assets acquired by approximately $3,100. We
have preliminarily allocated approximately $450 to trademarks, $350 to a
non-compete agreement, $2,000 to customer relationships and $265 to goodwill.
The unaudited pro forma financial statement of income reflects adjustments which
are based upon preliminary estimates of the allocation of the purchase price to
the acquired Pharma Waldhof assets. The final allocation of the purchase price,
which may be significantly different from the current estimate, will be based
F-12
upon appraisals prepared by the third-party valuation firm and a comprehensive
final evaluation of the fair value of the acquired intangible and tangible
assets and liabilities as of the closing date of the acquisition. The final
determination of tangible assets and intangible assets and their related
estimated useful lives may result in depreciation and amortization expenses that
are different than the preliminary estimates of these amounts.
D. Reflects the loss of interest income as a result of the cash payment of
approximately $3,386 that was used to purchase the Pharma Waldhof business.
E. Reflects the income tax effect of increased expenses at the historical
Pharma Waldhof effective tax rate, which approximates the statutory rate
applicable for its current legal structure.
F-13
Exhibit 23.1
CONSENT OF THE INDEPENDENT AUDITOR
We hereby consent to the use in the relevant form 8K/A of our Report dated March
12, 2004 relating to the Financial Statements of Pharma Waldhof GmbH & Co. KG,
Mannheim/Germany as per December 31, 2003.
/s/ PKF Pannell Kerr Forster GmbH
---------------------------------
PKF Pannell Kerr Forster GmbH March 12, 2004
Wirtschaftsprufungsgesellschaft
Duisburg/Germany,
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACETO CORPORATION
-----------------
Registrant)
By:/s/ Leonard S. Schwartz
------------------------
(Signature)
Leonard S. Schwartz,
Chairman, CEO, and President
Dated: March 15, 2004