t74615_8k.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 8-K

Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  September 18, 2012

Servotronics, Inc.
(Exact name of registrant as specified in its charter.)

Commission File Number: 001-07109
 
Delaware 16-0837866
(State or other jurisdiction
(IRS Employer
of incorporation)
Identification No.)
1110 Maple Street
Elma, New York 14059-0300
(Address of principal executive offices, including zip code)

(716) 655-5990
(Registrant's telephone number, including area code)

(Former name or former address, if changed since last report)

    Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
Item 1.01
Entry into a Material Definitive Agreement.
 
The information set forth in Item 2.01 of this Current Report on Form 8-K is incorporated by reference into this Item 1.01.

Item 2.01
Completion of Acquisition or Disposition of Assets.

On September 18, 2012, Queen Cutlery Company (“Queen Cutlery”), a wholly owned subsidiary of Servotronics, Inc., (the “Company”) entered into an asset purchase agreement (the “Sale Agreement”) and Agreement for the Sale of Real Estate (the “Real Estate Agreement”) with Daniels Family Cutlery Corporation (“Buyer”) pursuant to which Queen Cutlery agreed to sell to Buyer substantially all of its assets for $650,000 in aggregate cash consideration, including certain real property commonly known as 507 Chestnut Street, Titusville, PA for $185,000.    Neither the Company nor any of its affiliates has had a material relationship with the Buyer, other than in respect of the Sale Agreement and the Real Estate Sale Agreement.
 
Each of the Sale Agreement and the Real Estate Sale Agreement includes various representations, warranties, covenants and indemnities which are customary for a transaction of this nature.
 
The foregoing summary of each of the Sale Agreement and the Real Estate Sale Agreement is not intended to be complete and is qualified in its entirety by reference to the Sale Agreement which is attached hereto as Exhibit 2.1 and the Real Estate Sale Agreement which is attached hereto as Exhibit 2.2 to this Current Report on Form 8-K and is incorporated herein by reference (excluding schedules and exhibits, which the Company agrees to furnish supplementally to the Securities and Exchange Commission upon request).
 
Additionally, a copy of the related press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01
Financial Statements and Exhibits.

(b)           Pro-forma Financial Statements
 
The following unaudited Pro Forma Consolidated Financial Statements of the Company for the years ended December 31, 2011 and 2010 and as of and for the six months ended June 30, 2012 are attached hereto:
 
Page
Pro Forma Consolidated Financial Statements (Unaudited)
F- 1
Pro Forma Consolidated Balance Sheet (Unaudited) - As of June 30, 2012
F- 2
Pro Forma Consolidated Statement of Income (Unaudited) - for the Six Months Ended June 30, 2012
F- 3
Pro Forma Consolidated Statement of Income (Unaudited) - for the Year Ended December 31, 2011
F-4
Pro Forma Consolidated Statement of Income (Unaudited) - for the Year Ended December 31, 2010
F-5
 
 
 
 

(d)           Exhibits

2.1
Asset Purchase Agreement as of September 18, 2012 by and between Daniels Family Cutlery Corporation and Queen Cutlery Company

2.2
Agreement for the Sale of Real Estate dated September 18, 2012 by and between Daniels Family Cutlery Corporation and Queen Cutlery Company

99.1
Press release dated September 20, 2012


SIGNATURE(S)
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
DATED: September 24, 2012
 
 
  SERVOTRONICS, INC.  
       
       
 
By:
/s/ Cari L. Jaroslawsky, Chief Financial Officer  
    Cari L. Jaroslawsky  
    Chief Financial Officer  
 
 
 
 
 
SERVOTRONICS, INC.
Pro Forma Consolidated Financial Statements
(Unaudited)
 
 
On September 18, 2012, Queen Cutlery Company (“Queen Cutlery”), a wholly owned subsidiary of Servotronics, Inc. (“the Company”), entered into an Asset Purchase Agreement (the “Sale Agreement”) and an Agreement for the Sale of Real Estate (the “Real Estate Sale Agreement” and together with the Sale Agreement, the “Agreements”) with Daniels Family Cutlery Corporation (“Buyer”) pursuant to which the Queen Cutlery agreed to sell substantially all of its assets to Buyer (the “Transaction”).
 
Pursuant to the terms and conditions of the Agreements, on September 18, 2012, Queen Cutlery completed the disposition of substantially all of its assets to Buyer for aggregate cash consideration of $650,000, which includes the disposition of its real property to Buyer for cash consideration of $185,000.
 
The following pro forma consolidated balance sheet (unaudited) as of June 30, 2012 and pro forma consolidated statements of income (unaudited) of Servotronics, Inc. for the six months ended June 30, 2012 and the years ended December 31, 2011 and 2010, give effect to the Transaction.  The pro forma consolidated financial statements have been prepared by management of the Company based upon the historical financial statements of the Company and the adjustments and assumptions noted within.
 
The pro forma consolidated balance sheet sets forth the effects of the Transaction as if it had been consummated on June 30, 2012.
 
The pro forma consolidated statements of income set forth the effect of the Transaction as if it had been consummated on January 1, 2010.
 
These pro forma consolidated financial statements may not be indicative of the results that actually would have occurred if the Transaction had occurred on the dates indicated or which may be obtained in the future.  The pro forma consolidated financial statements should be read in conjunction with the consolidated financial statements and notes of the Company included in its annual report on Form 10-K for the year ended December 31, 2011.
 
 
F-1
 
 
SERVOTRONICS, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 2012
($000’s omitted except share and per share data)
 (Unaudited)
 
   
As Reported
    
Pro Forma Adjustments
    
Proforma
  
                   
Assets
                  
                   
Current Assets:
                  
   Cash and cash equivalents
   $ 4,266     $ 650     $ 4,916  
   Accounts receivable, net
     6,162       -       6,162  
   Inventories, net
     11,684       -       11,684  
   Prepaid income taxes
     447       -       447  
   Deferred income taxes
     754       -       754  
   Other assets
     808       -       808  
   Assets held for sale
     650       (650 )     -  
        Total current assets
     24,771       -       24,771  
                         
Property, plant and equipment, net
     5,881       -       5,881  
Other non-current assets
     353       -       353  
    $ 31,005     $ -     $ 31,005  
Total Assets
                        
                         
Liabilities and Shareholders' Equity
                        
                         
Current Liabilities:
                        
   Current portion of long-term debt
   $ 191     $ -     $ 191  
   Current portion of capital lease related party
     81       -       81  
   Accounts payable
     1,439       -       1,439  
   Accrued employee compensation and benefit costs
     1,515       -       1,515  
   Dividends payable
     358       -       358  
   Other accured liabilities
     191       -       191  
       Total current liabilities
     3,775       -       3,775  
                         
Long-term debt
     2,845       -       2,845  
Long-term portion of capital lease related party
     292       -       292  
Deferred income taxes
     496       -       496  
                         
Shareholders' equity:
                        
   Common Stock, par value $.20; authorized
                        
      4,000,000 shares; issued 2,614,506 shares;
                        
      outstanding 2,148,992 shares
     523       -       523  
   Capital in excess of par value
     13,926       -       13,926  
     Retained earnings
     12,158       -       12,158  
     Accumulated other comprehensive loss
     (67 )     -       (67 )
     Employee stock ownership trust commitment
     (1,266 )     -       (1,266 )
    Treasury stock, at cost 230,400 shares
     (1,677 )     -       (1,677 )
          Total shareholders' equity
     23,597       -       23,597  
Total Liabilities and Shareholders' Equity
   $ 31,005     $ -     $ 31,005  
 
 
F-2
 
 
SERVOTRONICS, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2012
($000’s omitted except per share data)
(Unaudited)
 
   
As Reported
    
Pro Forma Adjustments
    
Proforma
  
                   
Revenue
   $ 16,007     $ -     $ 16,007  
                         
Cost, expenses and other income
                        
  Cost of good sold exclusive of depreciation and amortization
     11,991       -       11,991  
   Selling, general and administrative and administrative
     2,573       -       2,573  
   Interest expense
     27       -       27  
   Depreciation and amortization
     340       -       340  
   Other income, net
     (10 )     -       (10 )
Total Expenses
     14,921       -       14,921  
                         
Income from continuing operations
                        
   before income tax provision
     1,086       -       1,086  
Income tax provision
     309       -       309  
                         
Income from continuing operations
     777       -       777  
                         
Discontinued Operations:
                        
Loss from operations of a discontinued
                        
   component, net of income tax benefit
     (160 )     160       -  
Write-down of assets associated with a
                     -  
   discontinued component, net of income
                     -  
   tax benefit
     (268 )     268       -  
Loss from discontinued operations
     (428 )     428       -  
                         
Net income
   $ 349     $ 428     $ 777  
                         
                         
Income (Loss) Per Share:
                        
Basic
                        
   Income per share from continuing operations
     0.37       -       0.37  
   Loss per share from discontinued operations
     (0.20 )     0.20       -  
Total net income per share
   $ 0.17     $ 0.20     $ 0.37  
                         
Diluted
                        
   Income per share from continuing operations
     0.36       -       0.36  
   Loss per share from discontinued operations
     (0.20 )     0.20       -  
Total net income per share
   $ 0.16     $ 0.20     $ 0.36  
 
 
F-3
 
 
SERVOTRONICS, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2011
($000’s omitted except per share data)
(Unaudited)
 
   
As Reported
    
Pro Forma Adjustments
    
Proforma
  
                   
Revenue
   $ 34,181     $ (989 )   $ 33,192  
                         
Cost, expenses and other income:
                        
  Cost of good sold, exclusive of depreciation and amortization
     25,278       (1,463 )     23,815  
   Selling, general and administrative and administrative
     5,019       (102 )     4,917  
   Interest expense
     65       -       65  
   Depreciation and amortization
     686       (7 )     679  
   Other income, net
     (162 )     -       (162 )
      30,886       (1,572 )     29,314  
                         
Income before income tax provision
     3,295       583       3,878  
                         
Income tax provision
     669       198       867  
                         
Net income
   $ 2,626     $ 385     $ 3,011  
                         
Income Per Share:
                        
                         
Basic
                        
Net income per share
   $ 1.31     $ 0.20     $ 1.51  
                         
Diluted
                        
Net income per share
   $ 1.24     $ 0.19     $ 1.43  
 
 
F-4
 
 
SERVOTRONICS, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2010
($000’s omitted except per share data)
(Unaudited)
 
   
As Reported
    
Pro Forma Adjustments
    
Proforma
  
                   
Revenue
   $ 31,659     $ (1,475 )   $ 30,184  
                         
Cost, expenses and other income:
                        
  Cost of good sold, exclusive of depreciation and amortization
     22,900       (1,474 )     21,426  
   Selling, general and administrative and administrative
     5,001       (183 )     4,818  
   Interest expense
     74       -       74  
   Depreciation and amortization
     664       (9 )     655  
   Other income, net
     (28 )     -       (28 )
      28,611       (1,666 )     26,945  
                         
Income before income tax provision
     3,048       191       3,239  
                         
Income tax provision
     920       65       985  
                         
Net income
   $ 2,128     $ 126     $ 2,254  
                         
Income Per Share:
                        
                         
Basic
                        
Net income per share
   $ 1.08     $ 0.06     $ 1.14  
                         
Diluted
                        
Net income per share
   $ 1.01     $ 0.06     $ 1.07  
 
 
F-5
 
 
EXHIBIT INDEX
 
Exhibit No.                            Description
 
2.1
Asset Purchase Agreement as of September 18, 2012 by and between Daniels Family Cutlery Corporation and Queen Cutlery Company
 
2.2
Agreement for the Sale of Real Estate dated September 18, 2012 by and between Daniels Family Cutlery Corporation and Queen Cutlery Company
 
99.1
Press release dated September 20, 2012