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
February 16, 1999
Date of Report (Date of earliest event reported)
CONSOLIDATED DELIVERY & LOGISTICS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 0-26954 22-3350958
(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) Number) Identification No.)
380 Allwood Road, Clifton, New Jersey 07012
(Address of principal (Zip Code)
executive offices)
(Registrant's telephone number, including area code) (973) 471-1005
NOT APPLICABLE
(Former name or former address, if changed since last report.)
<PAGE>
This 8-K/A filing amends an 8-K filed on February 25, 1999. Item 7 is
hereby amended to state as follows:
ITEM 7. Financial Statements and Exhibits
a. Financial Statements of Businesses Acquired .
Audited financial statements for Gold Wings and Related Companies,
(collectively "Gold Wings").
Gold Wings Balance Sheets as of December 31, 1996, 1997 and 1998 and
the related Statements of Income and Retained Earnings and Cash
Flows for the years ended December 31, 1996, 1997 and 1998.
b. Pro Forma Financial Information.
Consolidated Delivery & Logistics, Inc. ("CDL") and Gold Wings Pro
Forma Condensed Combined Financial Statements (Unaudited).
Pro Forma Condensed Combined Balance Sheet as of December 31, 1998 and
Pro Forma Condensed Combined Statements of Operations for the year
ended December 31, 1998.
c. Exhibits
10.1* Purchase Agreement dated February 16, 1999 by and among
Consolidated Delivery & Logistics, Inc., Sureway, Darobin,
Richard Gold and the Trust.
10.2* 7% Subordinated Note Due April 16, 2001.
99.1* Press Release issued February 18, 1999 regarding acquisition .
_______________
* filed previously
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Gold Wings and Related Companies:
We have audited the accompanying combined balance sheets of Gold Wings and
Related Companies (Note 1) as of December 31, 1996, 1997 and 1998 and the
related combined statements of income, stockholders' equity and trust fund
balance and cash flows for the years 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 audits.
We conducted our audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Gold Wings and Related
Companies as of December 31, 1996, 1997 and 1998, and the results of their
operations and their cash flows for the years then ended, in conformity with
generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
Roseland, New Jersey
April 8, 1999
<PAGE>
<TABLE>
GOLD WINGS AND RELATED COMPANIES
COMBINED BALANCE SHEETS
AS OF DECEMBER 31, 1996, 1997 AND 1998
ASSETS 1996 1997 1998
- ------
---------------- ---------------- ------------
CURRENT ASSETS:
<S> <C> <C> <C>
Cash and cash equivalents $37,441 $38,130 $102,598
Accounts receivable, net of allowance for doubtful
accounts of $7,043, $17,570 and $30,201 in
1996, 1997 and 1998, respectively 1,199,702 1,270,883 1,398,697
Prepaid expenses and other current assets 124,227 62,602 144,130
---------- --------- ---------
Total current assets 1,361,370 1,371,615 1,645,425
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization 2,190,435 2,219,999 2,241,576
---------- --------- ---------
Total assets $3,551,805 $3,591,614 $3,887,001
========== ========= =========
LIABILITIES, STOCKHOLDERS' EQUITY AND TRUST FUND BALANCE
- --------------------------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt $34,409 $ 57,603 $119,768
Accounts payable 405,796 382,922 362,144
Accrued expenses and other current liabilities 269,250 350,409 392,803
Related party note payable 350,710 350,710 100,710
---------- --------- -------
Total current liabilities 1,060,165 1,141,644 975,425
LONG-TERM DEBT 19,903 49,368 0
---------- --------- --------
Total liabilities 1,080,068 1,191,012 975,425
---------- --------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY AND TRUST FUND BALANCE:
Common stock 6,001 6,001 6,001
Retained earnings 391,356 324,386 383,230
Trust fund balance 2,074,380 2,070,215 2,522,345
---------- --------- ---------
Total stockholders' equity and trust fund
balance 2,471,737 2,400,602 2,911,576
---------- --------- ---------
Total liabilities, stockholders' equity
and trust fund balance $3,551,805 $3,591,614 $3,887,001
========== ========= =========
The accompanying notes to combined financial statements are
an integral part of these combined balance sheets.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GOLD WINGS AND RELATED COMPANIES
COMBINED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
1996 1997 1998
---------- ----------- -----------
<S> <C> <C> <C>
REVENUES $10,996,335 $11,835,625 $14,849,837
COST OF REVENUES 9,535,644 10,237,665 12,273,657
---------- ---------- ----------
Gross profit 1,460,691 1,597,960 2,576,180
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 1,456,336 1,653,085 2,104,591
--------- ---------- ---------
Income (loss) from operations 4,355 (55,125) 471,589
--------- ----------- ---------
OTHER INCOME (EXPENSE):
Interest expense (1,435) (6,970) (9,619)
Other income 63,880 108,113 51,504
---------- ---------- ----------
62,445 101,143 41,885
---------- ---------- ---------
Income before provision
for income taxes 66,800 46,018 513,474
PROVISION FOR INCOME TAXES 1,911 2,452 2,500
--------- ---------- ----------
Net income $64,889 $43,566 $510,974
========= ========== ==========
The accompanying notes to combined financial statements are an integral part
of these combined statements.
</TABLE>
<PAGE>
GOLD WINGS AND RELATED COMPANIES
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY AND TRUST FUND BALANCE
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997AND 1998
<TABLE>
<CAPTION>
Common Stock Retained Trust Fund
------------------------------
Shares Amount Earnings Balance Total
------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1995 6,100 $6,001 $374,751 $2,171,984 $2,552,736
Distributions to trust beneficiaries 0 0 0 (145,888) (145,888)
Net income 0 0 16,605 48,284 64,889
------------- ------------- ------------- -------------- -------------
BALANCE, December 31, 1996 6,100 6,001 391,356 2,074,380 2,471,737
Distributions to trust beneficiaries 0 0 0 (114,701) (114,701)
Net income 0 0 (66,970) 110,536 43,566
------------- ------------- ------------- -------------- -------------
BALANCE, December 31, 1997 6,100 6,001 324,386 2,070,215 2,400,602
Net income 0 0 58,844 452,130 510,974
------------- ------------- ------------- -------------- -------------
BALANCE, December 31, 1998 6,100 $6,001 $383,230 $2,522,345 $2,911,576
============= ============= ============= ============== =============
</TABLE>
The accompanying notes to combined financial statements are an integral part of
these combined statements.
<PAGE>
<TABLE>
<CAPTION>
GOLD WINGS AND RELATED COMPANIES
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
1996 1997 1998
--------------- --------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $64,889 $43,566 $510,974
Adjustments to reconcile net income to net cash
provided by (used in) operations-
Depreciation and amortization 190,656 236,912 227,458
Gain on sale of investments (12,567) (57,961) 0
(Increase) decrease in-
Accounts receivable, net (295,833) (71,181) (127,814)
Prepaid expenses and other current assets (22,484) 17,524 (81,528)
Increase (decrease) in-
Accounts payable (59,189) (22,874) (20,778)
Accrued expenses and other current liabilities 133,795 81,159 42,394
--------------- --------------- ---------------
Net cash provided by (used in)
operating activities (733) 227,145 550,706
--------------- --------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (62,884) (141,710) (132,867)
Proceeds from sale of investments 21,767 102,062 0
--------------- --------------- ---------------
Net cash used in investing activities (41,117) (39,648) (132,867)
--------------- --------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of long-term debt (20,657) (72,107) (103,371)
Distributions to trust beneficiaries (145,888) (114,701) 0
Repayment of note payable to trust beneficiary 0 0 (250,000)
--------------- --------------- ---------------
Net cash used in financing activities (166,545) (186,808) (353,371)
--------------- --------------- ---------------
Net increase (decrease) in cash and
cash equivalents (208,395) 689 64,468
CASH AND CASH EQUIVALENTS,
beginning of year 245,836 37,441 38,130
--------------- --------------- ---------------
CASH AND CASH EQUIVALENTS, end of year $37,441 $38,130 $102,598
=============== =============== ===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1996 1997 1998
--------------- --------------- ---------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for-
<S> <C> <C> <C>
Interest $1,435 $6,970 $9,619
Income taxes 1,911 2,452 2,450
=============== =============== ===============
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Notes payable incurred to acquire transportation
equipment $65,802 $124,766 $116,168
=============== =============== ===============
</TABLE>
The accompanying notes to combined financial statements are an integral part
of these combined statements.
<PAGE>
GOLD WINGS AND RELATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(1) Organization and Business:
The combined financial statements as of December 31, 1996, 1997 and 1998
and for the years then ended include the accounts of Gold Wings Trust
("Gold Wings" or the "Trust") and affiliated companies, which include
Victory Messenger Service, Inc. ("Victory") and Darobin Freight Agency,
Inc. ("Darobin") (collectively referred to herein as the "Company").
These companies have common ownership and management and are being
accounted for as one economic entity in the accompanying combined
financial statements.
The Company provides an extensive network of next-day ground and air
delivery services mostly to a wide range of financial services, retail
and professional customers. The Company's operations are concentrated
mostly on the East Coast with a strategic presence in the West and
Midwest.
In February 1999, the Company entered into a definitive agreement with
Consolidated Delivery & Logistics, Inc. ("CDL") pursuant to which CDL
acquired certain assets and liabilities of the Trust and Victory and the
common stock of Darobin (see Note 11).
(2) Summary of Significant Accounting Policies:
Principles of Combination-
The accompanying combined financial statements include the accounts of
Gold Wings, Victory and Darobin. All significant intercompany balances
and transactions have been eliminated.
Use of Estimates-
The preparation of the combined financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the combined financial statements and the reported amounts
of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
Concentration of Credit Risk-
Financial instruments that potentially expose the Company to
concentrations of credit risk, as defined by Statement of Financial
Accounting Standards No. 105, "Disclosure of Information about
Financial Instruments with Off-Balance Sheet Risk and Financial
Instruments with Concentrations of Credit Risk," consists primarily of
trade accounts receivable. The Company's customers are concentrated in
the financial services, retail and professional services industries.
<PAGE>
The Company establishes its allowance for doubtful accounts based upon
factors surrounding the credit risks of specific customers, historical
trends and other information. The Company does not require collateral
for its trade accounts receivable.
Cash and Cash Equivalents-
The Company considers all highly-liquid temporary investments with a
maturity of three months or less to be cash equivalents. The Company
maintains its cash in bank deposit accounts, which, at times, may
exceed Federally insured limits. At December 31, 1996, 1997 and 1998,
substantially all of the Company's cash was held by one financial
institution.
Property and Equipment-
Property and equipment is recorded at cost. Depreciation is computed
using the straight-line method over the estimated lives of the related
assets. The cost and related accumulated depreciation and amortization
of assets retired or sold are removed from the respective accounts and
any resulting gain or loss is reflected in the combined statements of
income at that time.
Long-Lived Assets-
Under the provisions of Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of," the Company is required, among
other things, to review its long-lived assets for impairment whenever
changes in circumstances indicate that the carrying amount of an asset
may not be fully recoverable. The Company does not believe that any
such change has occurred.
Fair Value of Financial Instruments-
Due to short maturities of the Company's cash receivables and payables,
these financial instruments approximate their face values. The Company
intends to repay all outstanding vehicle loans during 1999 (see
Note 5). Accordingly, due to the short maturity of these loans, these
financial instruments approximate their fair values.
Revenue Recognition-
Revenue is recognized upon completion of the shipment and expenses are
recorded as incurred.
Income Taxes-
Under the provisions of Gold Wings election as a trust, Gold Wings is
not responsible for the payment of Federal and state income taxes on
its taxable income. Instead, the beneficiaries of Gold Wings are liable
for individual Federal and state income taxes on their respective
shares of the Trust's taxable income or include their respective shares
of the Trust's Federal and state net operating losses on their
individual income tax returns. Accordingly, no provision for Federal
and state income taxes for Gold Wings has been reflected in the
accompanying combined financial statements.
Victory has elected to be treated for Federal and state income tax
purposes as an S Corporation. Accordingly, Victory does not pay Federal
and state corporate income taxes on its taxable income. Instead, the
stockholders of Victory are liable for individual Federal and state
income taxes on their respective shares of Victory's taxable income or
include their respective shares of Victory's Federal and state net
operating losses on their individual income tax returns. Accordingly,
no provision for Federal and state income taxes for Victory has been
reflected in the accompanying combined financial statements.
<PAGE>
Darobin has elected to be taxed as a C Corporation for both Federal and
state income tax purposes. Income taxes are determined pursuant to
Statement of Financial Accounting Standards No. 109 "Accounting for
Income Taxes" ("SFAS 109"). SFAS 109 requires recognition of deferred
tax assets and liabilities using the asset and liability method of
accounting for income taxes.
Under this method, deferred income taxes are recognized for differences
between the financial statement and tax bases of assets and liabilities
at enacted tax rates in effect for the year in which the differences
are expected to reverse. Darobin has no significant deferred income tax
assets or liabilities.
(3) Property and Equipment:
Property and equipment consist of the following at December 31-
<TABLE>
<CAPTION>
Lives 1996 1997 1998
----------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Building and improvements 20-31.5 years $2,582,392 $2,582,392 $2,582,392
Transportation equipment 4-5 years 729,854 987,686 1,198,006
Furniture and equipment 4-5 years 182,776 191,420 230,135
--------------- -------------- ---------------
3,495,022 3,761,498 4,010,533
Less- Accumulated depreciation and
amortization (1,304,587) (1,541,499) (1,768,957)
--------------- -------------- ---------------
$2,190,435 $2,219,999 $2,241,576
=============== ============== ===============
</TABLE>
(4) Accrued Expenses and Other Current Liabilities:
Accrued expenses and other current liabilities consist of the
following at December 31-
<TABLE>
<CAPTION>
1996 1997 1998
--------------- --------------- ---------------
<S> <C> <C> <C>
Payroll and related costs $136,942 $139,943 $134,779
Third party delivery costs 64,655 135,725 184,300
Other 67,653 74,741 73,724
--------------- --------------- ---------------
$269,250 $350,409 $392,803
=============== =============== ===============
</TABLE>
(5) FINANCING ARRANGEMENTS:
During the years ended December 31, 1996, 1997 and 1998, the Company
entered into various financing agreements in connection with certain of
its truck and automobile purchases during those periods. These notes bear
interest at rates ranging between 1.9% and 10.5% and expire periodically
through May 2001. Interest expense for the years ended December 31, 1996,
1997 and 1998 was $1,435, $6,970, and $7,388, respectively. In connection
with the acquisition of the Company by CDL (see Note 11), the Company
intends to pay off all outstanding notes during 1999. As such, these
amounts are classified as current liabilities in the accompanying
combined financial statements.
<PAGE>
In September 1997, the Company entered into a revolving credit agreement
(the "Agreement") with Fleet Bank, N.A. The Agreement provides for a
maximum line of credit of $300,000 and bears interest at the Fleet Bank,
N.A. prime rate. The Agreement expires in April 2000. There were no
borrowings outstanding under the Agreement at December 31, 1997 or 1998.
(6) COMMON STOCK:
Common stock consists of the following at December 31 -
<TABLE>
<CAPTION>
1996 1997 1998
------------ ----------- ------------
Darobin
<S> <C> <C> <C>
Common stock, no par value, 200 shares authorized, 100 shares
issued and outstanding $1 $1 $1
Victory
Common stock, $1 par value, 75,000 shares authorized, 6,000
shares issued and outstanding 6,000 6,000 6,000
------------ ----------- ------------
$6,001 $6,001 $6,001
============ =========== ============
</TABLE>
(7) Related Party Transactions:
Affiliated Company-
The Company conducts business with an affiliated company (the
"Affiliate"). One of the beneficiaries of the Trust owns 50% of the
Affiliate. The Company provided the Affiliate with certain ground
transportation services totaling $62,359, $65,626 and $72,012 for the
years ended December 31, 1996, 1997 and 1998, respectively. The
Affiliate also provided the Company with certain international
transportation services. Such services provided to the Company totaled
$31,128, $27,379 and $35,738 for the years ended December 31, 1996,
1997 and 1998, respectively. The fees for these services are included
in revenues and cost of revenues in the accompanying combined
financial statements.
The Affiliate also pays certain expenses on behalf of the Company and
is subsequently reimbursed by the Company. These expenses amounted to
$204,999, $226,690 and $35,993 for the years ended December 31, 1996,
1997 and 1998, respectively. Such amounts are included in selling,
general and administrative expenses in the accompanying combined
financial statements.
The Company leases certain office space to the Affiliate on a month to
month basis. No formal lease agreement exists between the Company and
the Affiliate. For the years ended December 31, 1996, 1997 and 1998,
the Company received sublease income from the Affiliate totaling
$44,400, $44,400 and $46,050, respectively. Such sublease income is
included in other income in the accompanying combined financial
statements.
Payables due to the Affiliate as of December 31, 1996, 1997 and 1998
were $23,375, $7,726, and $19,000, respectively, and are included in
accounts payable in the accompanying combined financial statements.
Receivables due from the Affiliate as of December 31, 1996, 1997 and
1998 were $26,078, $8,519, and $37,393, respectively, and are included
in accounts receivable in the accompanying combined financial
statements.
<PAGE>
Note Payable-
The Company has a note payable totaling $350,710 as of December 31,
1996, 1997 and $100,710 as of December 31, 1998 due to one of the
beneficiaries of the Trust. The note payable is due on demand and is
non-interest bearing. During 1998, the Company repaid $250,000 of the
note payable. No repayments were made during 1996 and 1997.
(8) Income Taxes:
The provisions for income taxes in the accompanying combined statements
of operations are substantially lower than the amount that would result
from multiplying the reported income before income taxes by the statutory
Federal income tax rate (34%) primarily because of Gold Wing's trust
election and Victory's S Corporation election for Federal income tax
purposes.
(9) Commitments and Contingencies:
Leases-
The Company leases certain office space and transportation equipment
under noncancellable operating leases, which expire at various dates
through June 2003. Future minimum rental commitments under these leases
are as follows-
1999 $6,336
2000 4,304
2001 2,139
2002 1,316
2003 658
---------
$14,753
=========
The Company also leases certain equipment under several month to month
leases. For the years ended December 31, 1996, 1997 and 1998, rental
expense under all operating leases amounted to $114,316, $89,600 and
$115,158, respectively.
Employee Benefit Plan-
Effective January 1, 1997, the Company adopted a 401(k) Profit
Sharing Plan, which is available to all full-time employees who are
not covered by the terms of a collective bargaining agreement. Under
this plan, employees may make annual pre-tax contributions up to a
maximum of $9,500 or 12% of a participant's annual compensation. The
Company will make matching contributions equal to 50% of the
employees contribution, not to exceed 4% of the employees annual
compensation. The Company may also make profit sharing contributions
at the discretion of the trustees of Gold Wings. The Company made
matching contributions of approximately $7,054 and $11,601 to the
plan during the years ended December 31, 1997 and 1998, respectively.
The Company did not make any discretionary contributions to the plan
for the years ended December 31, 1997 and 1998.
<PAGE>
Litigation-
The Company is, from time to time, party to litigation arising in the
normal course of its business, most of which involves claims for
personal injury and property damage incurred in connection with the
Company's operations. Management believes that none of these actions
will have a material adverse effect on the financial position or
results of operations of the Company.
(10) Major Customers:
For the years ended December 31, 1996 and 1997, two customers accounted
for approximately 40% and 36% of revenues, respectively. For the year
ended December 31, 1998, one customer accounted for approximately 24%
of revenues. As of December 31, 1996, three customers accounted for
approximately 44% of accounts receivable. As of December 31, 1997 and
1998, one customer accounted for approximately 22% and 12%,
respectively, of accounts receivable.
(11) SUBSEQUENT EVENT:
On February 16, 1999, the Company entered into and consummated an asset
and stock purchase agreement with Sureway Air Traffic Corporation
("Sureway"), a wholly-owned subsidiary of CDL, whereby Sureway
purchased all of the outstanding shares of the capital stock of Darobin
and certain of the assets and liabilities of Victory and the Trust. The
purchase price was comprised of approximately $3.0 million in cash
including estimated direct acquisition costs, $1.65 million in a 7%
subordinated note and 200,000 shares of CDL common stock. In addition,
a contingent earn out in the aggregate amount of up to $520,000 is
payable based on the achievement of certain financial goals during the
two year period following the closing. The earn out is payable 55% in
cash and 45% in CDL common stock. The Company incurred approximately
$115,000 of professional fees during 1998 in connection with the sale,
which are included in selling, general and administrative expenses in
the accompanying combined financial statements.
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL DATA
The accompanying unaudited pro forma condensed combined financial data of CDL
and Gold Wings has been prepared to present the effect of the acquisition of
Gold Wings by CDL. On February 16, 1999, CDL entered into and consummated an
asset and stock purchase agreement (the "Purchase Agreement") with its
subsidiary, Sureway Air Traffic Corporation ("Sureway") and Victory Messenger
Service, Inc., Richard Gold, Darobin Freight Forwarding Co., Inc., ("Darobin")
and The Trust Created Under Paragraph Third of the Last Will and Testament of
Charles Gold (the "Trust"), whereby Sureway purchased all of the outstanding
shares of the capital stock of Darobin and certain of the assets and liabilities
of the other sellers. The unaudited pro forma condensed combined balance sheet
as of December 31, 1998 was prepared as if the acquisition had occurred on
December 31, 1998. The unaudited pro forma condensed combined statement of
operations for the year ended December 31, 1998 combines the historical
statements of operations for CDL and Gold Wings as if the acquisitions
occurred on January 1, 1998.
The detailed assumptions used to prepare the unaudited pro forma condensed
combined financial information are contained herein. The pro forma adjustments
are described in the accompanying notes and are based upon available information
and certain assumptions that the Company believes are reasonable. The unaudited
pro forma condensed combined financial information reflects the use of the
purchase method of accounting for the acquisition. The purchase price allocation
used in the preparation of the pro forma financial information is preliminary
and subject to change based upon the final evaluation being performed.
The following unaudited pro forma financial data does not purport to be
indicative of the results of operations or financial position of the Company
that would have actually been obtained had the transaction been completed as of
the assumed dates and for the periods presented, or which may be obtained in the
future. This information and accompanying notes should be read in conjunction
with CDL's Annual Report on Form 10-K for the year ended December 31, 1998 and
the Gold Wings financial statements included elsewhere in this report on Form
8-K/A.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED DELIVERY & LOGISTICS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED BALANCE SHEET (UNAUDITED)
December 31, 1998
(In thousands except share information)
Historical
Pro Forma Pro Forma
CDL Gold Wings Adjustments Combined
-------------- --------------- --------------- -------------
ASSETS
CURRENT ASSETS
<S> <C> <C> <C> <C>
Cash and cash equivalents $295 $102 $ - $397
Accounts receivable, net 24,491 1,399 - 25,890
Prepaid expenses and other
current assets 2,560 144 (21)(b) 2,683
------ ----- -------- ------
Total current assets 27,346 1,645 (21) 28,970
EQUIPMENT AND LEASE-
HOLD IMPROVEMENTS, net 6,630 2,242 (1,987)(b) 6,885
INTANGIBLE ASSETS, net 16,491 - 5,093 (b) 21,584
OTHER ASSETS 1,621 - - 1,621
------- ------- ------- -------
Total assets $52,088 $3,887 $3,085 $59,060
======= ======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $13,577 $ - $3,000 (a) $ 16,577
Current maturities of long-term
debt 3,181 120 - 3,301
Accounts payable and accrued
liabilities 13,552 755 225 (a) 14,532
Related party note payable 101 (101)(b) -
Income taxes payable 1,232 - - 1,232
------ ------ ------- ------
Total current liabilities 31,542 976 3,124 35,642
LONG-TERM DEBT 6,383 - 1,650 (a) 8,033
OTHER LONG-TERM
LIABILITIES 2,756 - 447 (a) 3,203
------ ------ ------- ------
Total liabilities 40,681 976 5,221 46,878
------ ------ --------- ------
COMMITMENTS AND
CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock - - - -
Common stock 7 6 (6) (b) 7
Additional paid-in capital 9,670 - 775 (a) 10,445
Trust fund balance - 2,522 (2,522) (b) -
Treasury stock (162) - - (162)
Retained earnings 1,892 383 (383) (b) 1,892
------- ------ ------- ------
Total stockholders' equity 11,407 2,911 (2,136) 12,182
======= ====== ======== ======
Total liabilities and
stockholders' equity $52,088 $ 3,887 $ 3,085 $59,060
======= ======= ======= =======
See notes to unaudited pro forma condensed combined financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED DELIVERY & LOGISTICS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1998
(Unaudited)
(In thousands except share information)
Historical
---------------------------------
Pro Forma Pro Forma
CDL Gold Wings Adjustments Combined
-------------- -------------- --------------- -----------
<S> <C> <C> <C> <C>
Revenue $185,739 $14,850 $ - $200,589
Cost of revenue 142,062 12,098 - 154,160
-------------- -------------- --------------- ----------
Gross profit 43,677 2,752 - 46,429
Selling, general and
Administrative expenses 35,709 2,053 204 (c) 37,966
Depreciation and amortizartion 3,121 227 - 3,348
-------------- -------------- --------------- ----------
Operating income 4,847 472 (204) 5,115
Other (income) expense:
Other income, net (126) (52) - (178)
Interest expense 1,246 10 425 (c) 1,681
-------------- -------------- --------------- ----------
Income before income taxes 3,727 514 (629) 3,612
Provision for income taxes 1,416 3 (47) (c) 1,372
============== ============== =============== ==========
Net income $2,311 $511 ($582) $2,240
============== ============== =============== ==========
Basic net income per share $.35 - - $.33
============== ============== =============== ==========
Weighted average shares
outstanding 6,662 - 200 6,862
============== ============== =============== ==========
Diluted net income per share $.34 - - $.32
============== ============== =============== ==========
Weighted average shares
outstanding 6,839 - 200 7,039
============== ============== =============== ==========
</TABLE>
See notes to unaudited pro forma condensed combined financial statements.
<PAGE>
<TABLE>
CONSOLIDATED DELIVERY & LOGISTICS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Unaudited)
(a) The following pro forma adjustments reflect CDL's purchase of Gold Wings.
(in thousands)
<S> <C>
Cash payment from proceeds of
short-term borrowings $3,000
7% Subordinated notes payable 1,650
Contingent earn out payable, net of discount 447
Common stock issued (200,000 shares at $3.875 per share)
775
Accrued transaction costs 225
------------
Total estimated purchase price $6,097
============
(b) The following pro forma adjustments reflect the excess of the purchase
price over book value, which is attributed to goodwill. The book value of
Gold Wings' net assets approximate the estimated fair value.
(in thousands)
Amount of purchase price allocated to goodwill $5,093
Elimination of real property not acquired (1,987)
Elimination of note payable
to related party not acquired 101
Elimination of other assets not acquired (21)
Elimination of Goldwing's common stock 6
Elimination of Goldwing's trust fund balance 2,522
Elimination of the Goldwing's retained earnings 383
------------
Total estimated purchase price $6,097
============
</TABLE>
<PAGE>
(c) The following pro forma adjustments are incorporated in the pro forma
condensed combined statements of operations (in thousands):
<TABLE>
<CAPTION>
Year ended
December 31,
1998
------------------
<S> <C>
1. Increase in interest expense on 7% note
payable. $(116)
2. Increase in interest expense on contingent earn out
payable. (36)
3. Increase in interest expense on short-term
borrowings for cash portion of purchase price. (273)
4. Increase in amortization expense resulting from
the acquired goodwill using a 25 year life. (204)
5. Decrease in income taxes associated with the above
adjustments and from the application of CDL's
historical effective tax rate for the periods
presented to the pretax income in the accompanying
pro forma condensed combined statements of
operations. 47
-----
($582)
=====
</TABLE>
<PAGE>
SIGNATURE
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, thereunto duly authorized.
Dated: May 1, 1999 CONSOLIDATED DELIVERY & LOGISTICS, INC.
(Registrant)
By: /s/ Albert W. Van Ness, Jr.
____________________________
Albert W. Van Ness, Jr.
Chairman of the Board, Chief
Executive Officer and Chief
Financial Officer
