<PAGE>
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) June 18, 1997 (June 5, 1997)
------------------------------
RENTAL SERVICE CORPORATION
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 000-21237 33-0569350
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
14505 North Hayden Road, Suite 322, Scottsdale, Arizona 85260
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(602) 905-3300
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, including Area Code)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 5, 1997, Rental Service Corporation ("RSC" or the "Company")
acquired substantially all of the assets of Brute Equipment Co. d/b/a Foxx Hy-
Reach Company ("Foxx") for $32.7 million in cash and 284,250 shares of RSC
common stock, of which 233,034 shares were paid to the seller at closing, with
the remaining 51,216 shares to be issued one year from the date of closing. Up
to an additional 89,630 shares of RSC common stock may be paid to the seller
over a three year period if certain performance objectives are met. The purchase
price is subject to adjustment based on levels of accounts receivable, inventory
and equipment. Foxx specializes in the rental and sale of aerial equipment to
construction and industrial customers and operates a total of four locations in
Iowa and Illinois. This acquisition will be recorded under the purchase method
of accounting and is anticipated to result in approximately $19.6 million in
goodwill, which will be amortized over 40 years. Purchase accounting values have
been assigned on a preliminary basis, and are subject to adjustment when final
information as to the fair values of the net assets acquired is available.
ITEM 5. OTHER EVENTS.
On June 17, 1997, RSC completed the previously announced acquisition of
substantially all of the assets of Central States Equipment, Inc. and Equipment
Lessors, Inc. (collectively, "Central") for approximately $18.0 million in cash
and 204,867 shares of RSC common stock, of which 102,432 shares were paid to the
sellers at closing, with the remaining 102,435 shares to be paid to the sellers
over a five year period, which may be accelerated to three years if certain
performance objectives are met. The purchase price is subject to adjustment
based on levels of accounts receivable, inventory and equipment. Central
specializes in the rental and sale of aerial equipment, ladders and scaffolding
and operates a total of four locations in Kansas, Missouri and Oklahoma. This
acquisition will be recorded under the purchase method of accounting.
As previously announced in the Company's Registration Statement on Form S-1
(Registration No. 333-26753), effective with the completion of the Company's
secondary offering on June 4, 1997, John G. Quigley and Frederick J. Warren
resigned from the Company's Board of Directors.
2
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired
The audited financial statements of Brute Equipment Co. d/b/a Foxx Hy-
Reach Company as of and for the years ended December 31, 1996 and 1995
were filed as pages F-52 through F-61 of the Company's Registration
Statement on Form S-1 (Registration No. 333-26753), and are incorporated
herein by reference. The acquisition of Industrial Air Tool ("IAT") was
completed on April 25, 1997, and the Company previously filed audited
combined financial statements of IAT in a Current Report on Form 8-K/A
dated June 4, 1997.
(b) Pro Forma Financial Information
The unaudited pro forma consolidated financial information of Rental
Service Corporation, including the acquisitions of Industrial Air Tool
and Foxx, is attached as Exhibit 99.1 to this Current Report on Form
8-K. The Company previously filed unaudited pro forma consolidated
financial information, including the acquisition of IAT, in a Current
Report on Form 8-K/A dated June 4, 1997.
(c) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- ----------------------------------------------
<S> <C>
10.1* Asset Purchase Agreement by and among Brute
Equipment Co. d/b/a "Foxx Hy-Reach Company" as
"Seller," Rental Service Corporation, Walker
Jones Equipment Company as "Buyer" and Thomas H.
Foster, dated April 25, 1997.
23.1 Consent of McGladrey & Pullen, LLP.
99.1 Rental Service Corporation Unaudited Pro Forma
Consolidated Financial Information.
</TABLE>
- --------------------
* Filed as an exhibit to the Company's Current Report on Form 8-K dated
April 14, 1997, and incorporated herein by reference.
3
<PAGE>
SIGNATURES
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.
RENTAL SERVICE CORPORATION
Date: June 18, 1997 By: /s/ Robert M. Wilson
-----------------------------
Robert M. Wilson
Senior Vice President
Chief Financial Officer
4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -------------------------------------------------
<S> <C>
10.1* Asset Purchase Agreement by and among Brute
Equipment Co. d/b/a "Foxx Hy-Reach Company" as
"Seller," Rental Service Corporation, Walker
Jones Equipment Company as "Buyer" and Thomas H.
Foster, dated April 25, 1997.
23.1 Consent of McGladrey & Pullen, LLP.
99.1 Rental Service Corporation Unaudited Pro Forma
Consolidated Financial Information.
</TABLE>
- --------------------
* Filed as an exhibit to the Company's Current Report on Form 8-K dated
April 14, 1997, and incorporated herein by reference.
5
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Current Report on Form 8-
K of Rental Service Corporation of our report dated April 26, 1997, with respect
to the financial statements of Brute Equipment Co. d/b/a Foxx Hy-Reach Company
as of December 31, 1995 and 1996 and for the years then ended, included in the
Registration Statement (Form S-1 No. 333-26753) and related Prospectus of Rental
Service Corporation for the registration of 5,520,000 shares of its common
stock, filed with the Securities and Exchange Commission on May 29, 1997.
/s/ McGLADREY & PULLEN, LLP
Moline, Illinois
June 17, 1997
<PAGE>
EXHIBIT 99.1
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial information of Rental
Service Corporation (the "Company") presents the unaudited pro forma
consolidated statements of operations for the year ended December 31, 1996 and
the three months ended March 31, 1997, and the unaudited pro forma consolidated
balance sheet at March 31, 1997. The pro forma consolidated statements of
operations for the year ended December 31, 1996 and the three months ended March
31, 1997 have been adjusted to give effect to the following acquisitions: i) the
Company's acquisition of all of the outstanding shares of Comtect, Inc. and
subsidiaries d/b/a Industrial Air Tool (the "IAT Acquisition") and ii) the
Company's acquisition of substantially all of the assets of Brute Equipment Co.
d/b/a Foxx Hy-Reach Company (the "Foxx Acquisition"). Such statements have been
adjusted in each case as if the acquisitions had occurred at the beginning of
the respective periods. The pro forma consolidated balance sheet gives effect to
these acquisitions as if they had occurred on March 31, 1997. The IAT
Acquisition was completed on April 25, 1997 and IAT's balance sheet was
consolidated with the Company's under the purchase method of accounting as of
that date. Pursuant to the acquisition agreement, the Company assumed effective
control of IAT's operations on March 1, 1997 and has included IAT's revenues,
costs and expenses from such date in its consolidated statements of operations,
net of imputed purchase price adjustments. The Company previously filed audited
combined financial statements of IAT and unaudited pro forma consolidated
financial information, including the IAT Acquisition, in a Current Report on
Form 8-K/A dated June 4, 1997. The Foxx Acquisition was completed on June 5,
1997.
The pro forma acquisition adjustments represent the Company's determination of
all adjustments necessary to present fairly the Company's pro forma results of
operations and financial position and are based upon available information and
certain assumptions considered reasonable under the circumstances. Purchase
accounting values have been assigned on a preliminary basis, and are subject to
adjustment when final information as to the fair values of the net assets
acquired is available. The pro forma consolidated financial information
presented herein does not purport to present what the Company's financial
position or results of operations would actually have been had such events
leading to the pro forma acquisition adjustments in fact occurred on the date or
at the beginning of the periods indicated or to project the Company's financial
position or results of operations for any future date or period.
The unaudited pro forma consolidated financial information should be read in
conjunction with the historical Consolidated Financial Statements of the Company
and the Notes thereto and management's discussion thereof contained in the
Company's Registration Statement on Form S-1 (Registration No. 333-26753), as
filed with the Securities and Exchange Commission on May 29, 1997.
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
IAT FOXX PRO FORMA
HISTORICAL ACQUISITION ACQUISITION ACQUISITION PRO FORMA
COMPANY (1) (1) ADJUSTMENTS COMBINED
---------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Equipment rentals...................... $ 94,218 $ 7,319 $11,842 $ -- $113,379
Sales of parts, supplies and equipment. 34,136 41,694 7,976 -- 83,806
-------- ------- ------- ------- --------
Total revenues.......................... 128,354 49,013 19,818 -- 197,185
Cost of revenues:
Cost of equipment rentals, excluding
equipment rental depreciation......... 55,202 5,170 4,228 -- 64,600
Depreciation, equipment rentals........ 17,840 445 2,718 (246)(2) 20,757
Cost of sales of parts, supplies and
equipment............................. 24,070 33,307 5,308 -- 62,685
-------- ------- ------- ------- --------
Total cost of revenues.................. 97,112 38,922 12,254 (246) 148,042
-------- ------- ------- ------- --------
Gross profit............................ 31,242 10,091 7,564 246 49,143
Selling, general and administrative
expense................................ 12,254 7,107 5,782 (4,145)(3) 20,998
Depreciation and amortization,
excluding equipment rental
depreciation........................... 2,835 164 258 -- 3,257
Amortization of intangibles............. 2,379 -- -- 1,062 (4) 3,441
-------- ------- ------- ------- --------
Operating income........................ 13,774 2,820 1,524 3,329 21,447
Non-operating income.................... -- (373) -- 373 (5) --
Interest expense, net................... 7,063 67 235 5,118 (6) 12,483
-------- ------- ------- ------- --------
Income before income taxes and
extraordinary item..................... 6,711 3,126 1,289 (2,162) 8,964
Provision for income taxes.............. 2,722 150 -- 767 (7) 3,639
-------- ------- ------- ------- --------
Income before extraordinary item........ 3,989 2,976 1,289 (2,929) 5,325
Redeemable preferred stock accretion.... 1,643 -- -- -- 1,643
-------- ------- ------- ------- --------
Income before extraordinary item
available to common stockholders....... $ 2,346 $ 2,976 $ 1,289 $(2,929) $ 3,682
======== ======= ======= ======= ========
Income before extraordinary item per
common and common equivalent share .... $ .33 $ .48
======== ========
Weighted average common and common
equivalent shares..................... 7,218 7,691
(8) (9)
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Statement of
Operations
2
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(1) Represents the results of the IAT Acquisition and the Foxx Acquisition
prior to their acquisition by the Company. The results of operations for
the IAT Acquisition represent the results for IAT's fiscal year ended
March 31, 1997.
(2) Represents the elimination of the historical carrying value of rental
depreciation of the IAT Acquisition and the Foxx Acquisition of $3,163,000
and the Company's estimate of $2,917,000 for rental depreciation assuming
the rental fleet acquired was recorded to fair market value at the
beginning of the period presented. As a result, pro forma rental
depreciation decreased by $246,000.
(3) Represents the elimination of $2,000,000 of certain stockholders' salaries
associated with the Foxx Acquisition, as one stockholder will not be
employed by the Company and one stockholder will be employed under a lower
contractual rate. Also, represents the elimination of $2,320,000 of
nonrecurring litigation judgement expense associated with the Foxx
Acquisition.
(4) Represents the Company's estimate of the amortization of goodwill for the
IAT Acquisition and the Foxx Acquisition, as if these acquisitions were
consummated at the beginning of the period presented.
(5) Represents the elimination of income earned on assets not acquired in the
IAT Acquisition.
(6) Represents the elimination of historical interest expense of $302,000 and
the effects on interest expense from borrowing to fund the above
acquisitions of $5,420,000, as if the acquisitions were consummated at the
beginning of the period presented. As a result, pro forma interest expense
increased by $5,118,000.
(7) Represents the adjustment to provide income taxes at the Company's
effective tax rate of 40.6%.
(8) The acquisition agreements for the IAT Acquisition and the Foxx
Acquisition provide for the potential issuance of up to 108,108 and 89,630
shares of the Company's Common Stock, respectively, over three year
periods following the acquisitions if certain performance objectives are
met. The effects of the potential issuance of these shares are not
considered in the pro forma consolidated financial statements, as the
related performance objectives have not currently been achieved.
(9) Weighted average common and common equivalent shares includes 189,189 and
284,250 shares of the Company's Common Stock issued for the IAT
Acquisition and the Foxx Acquisition, respectively.
3
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
IAT FOXX PRO FORMA
HISTORICAL ACQUISITION ACQUISITION ACQUISITION PRO FORMA
COMPANY (1) (1) ADJUSTMENTS COMBINED
---------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Equipment rentals...................... $27,527 $1,029 $2,856 $ -- $31,412
Sales of parts, supplies and equipment. 13,782 6,960 2,241 -- 22,983
------- ------ ------ ------- -------
Total revenues.......................... 41,309 7,989 5,097 -- 54,395
Cost of revenues:
Cost of equipment rentals, excluding
equipment rental depreciation........ 14,316 828 1,007 -- 16,151
Depreciation, equipment rentals........ 6,306 81 782 (154)(2) 7,015
Cost of sales of parts, supplies and
equipment............................. 9,709 5,595 1,482 -- 16,786
------- ------ ------ ------- -------
Total cost of revenues.................. 30,331 6,504 3,271 (154) 39,952
------- ------ ------ ------- -------
Gross profit............................ 10,978 1,485 1,826 154 14,443
Selling, general and administrative
expense................................ 3,784 1,194 417 -- 5,395
Depreciation and amortization, excluding
equipment rental depreciation......... 1,068 30 52 -- 1,150
Amortization of intangibles............. 624 -- -- 218 (3) 842
------- ------ ------ ------- -------
Operating income........................ 5,502 261 1,357 (64) 7,056
Non-operating income.................... -- (59) -- 59 (4) --
Interest expense, net................... 1,597 13 64 957 (5) 2,631
------- ------ ------ ------- -------
Income before income taxes and
extraordinary item..................... 3,905 307 1,293 (1,080) 4,425
Provision for income taxes.............. 1,722 37 -- 192 (6) 1,951
------- ------ ------ ------- -------
Income before extraordinary item........ $ 2,183 $ 270 $1,293 $(1,272) $ 2,474
======= ====== ====== ======= =======
Income before extraordinary item per
common and common equivalent share.... $ .19 $ .21
======= =======
Weighted average common and common
equivalent shares..................... 11,493 11,967
(7) (8)
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Statement of
Operations
4
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(1) Represents the results of the IAT Acquisition and the Foxx Acquisition
prior to their acquisition by the Company. Results of the IAT Acquisition
subsequent to the acquisition date are included in the Historical
Company's results for the three months ended March 31, 1997.
(2) Represents the elimination of the historical carrying value of rental
depreciation of the IAT Acquisition and the Foxx Acquisition of $863,000
and the Company's estimate of $709,000 for rental depreciation assuming
the rental fleet acquired was recorded to fair market value at the
beginning of the period presented. As a result, pro forma rental
depreciation decreased by $154,000.
(3) Represents the Company's estimate of the amortization of goodwill for the
IAT Acquisition and the Foxx Acquisition, as if these acquisitions were
consummated at the beginning of the period presented.
(4) Represents the elimination of income earned on assets not acquired in the
IAT Acquisition.
(5) Represents the elimination of historical interest expense of $77,000 and
the effects on interest expense from borrowing to fund the above
acquisitions of $1,034,000, as if the acquisitions were consummated at the
beginning of the period presented. As a result, pro forma interest expense
increased by $957,000.
(6) Represents the adjustment to provide income taxes at the Company's
effective tax rate of 44.1%.
(7) The acquisition agreements for the IAT Acquisition and the Foxx
Acquisition provide for the potential issuance of up to 108,108 and 89,630
shares of the Company's Common Stock, respectively, over three year
periods following the acquisitions if certain performance objectives are
met. The effects of the potential issuance of these shares are not
considered in the pro forma consolidated financial statements, as the
related performance objectives have not currently been achieved.
(8) Weighted average common and common equivalent shares includes 189,189 and
284,250 shares of the Company's Common Stock issued for the IAT
Acquisition and the Foxx Acquisition, respectively.
5
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, 1997
-----------------------------------------------------------------------------
PRO FORMA
HISTORICAL IAT FOXX ACQUISITION PRO FORMA
COMPANY ACQUISITION(1) ACQUISITION(1) ADJUSTMENTS COMBINED
---------- -------------- -------------- ------------ ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents.............. $ 1,578 $ 7,165 $ 3 $ (7,168)(2) $ 1,578
Accounts receivable, net............... 22,844 6,993 2,453 -- 32,290
Other receivables and prepaid expense.. 2,850 217 51 (51)(2) 3,067
Income tax receivable.................. 1,524 -- -- -- 1,524
Parts and supplies inventories, net.... 10,515 6,664 405 -- 17,584
Deferred taxes......................... 8,645 -- -- -- 8,645
Rental equipment, net.................. 155,395 1,010 13,841 1,359 (3) 171,605
Operating property and equipment,
at cost, net........................ 20,764 1,377 422 278 (3) 22,841
Intangible assets...................... 41,048 -- -- 42,479 (4) 83,527
Other assets........................... 2,380 716 237 (605)(2) 2,728
-------- ------- ------- -------- --------
$267,543 $24,142 $17,412 $ 36,292 $345,389
======== ======= ======= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable....................... $ 33,265 $ 2,513 $ 236 $ (236)(2) $ 35,778
Payroll and other accrued expenses..... 21,389 1,233 2,642 (2,642)(2) 22,622
Accrued interest payable............... 742 -- -- -- 742
Income taxes payable................... 939 -- -- -- 939
Deferred taxes......................... 12,863 -- -- -- 12,863
Bank debt and long term obligations.... 101,569 705 2,420 62,175 (5) 166,869
Obligations under capital leases....... 55 -- -- -- 55
-------- ------- ------- -------- --------
Total liabilities...................... 170,822 4,451 5,298 59,297 239,868
Redeemable common stock................ -- 10,775 -- (10,775)(2) --
Stockholders' equity:
Preferred stock....................... -- 891 -- (891)(6) --
Common stock (7)...................... 114 12 100 (108)(6) 118
Common stock issuable (8)............. -- -- -- 1 (8) 1
Additional paid-in capital............ 93,917 -- -- 8,795 (6) 102,712
Retained earnings..................... 2,690 8,013 12,014 (20,027)(6) 2,690
-------- ------- ------- -------- --------
Total stockholders' equity............. 96,721 8,916 12,114 (12,230) 105,521
-------- ------- ------- -------- --------
$267,543 $24,142 $17,412 $ 36,292 $345,389
======== ======= ======= ======== ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Balance Sheet
6
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(1) The purchase method of accounting has been used in preparing the Unaudited
Pro Forma Consolidated Financial Statements of the Company with respect to
the IAT Acquisition and the Foxx Acquisition. Purchase accounting values
have been assigned to the IAT Acquisition and the Foxx Acquisition on a
preliminary basis.
(2) Represents assets not acquired or liabilities not assumed in the IAT
Acquisition and the Foxx Acquisition.
(3) Represents preliminary estimates of the fair market value step-up for
assets acquired in the IAT Acquisition and the Foxx Acquisition.
(4) Represents the estimated fair market value of goodwill represented by the
excess purchase price (including the issuance of all shares which may be
paid over future time periods if certain performance objectives are met)
over the estimated fair market value of the net assets acquired in the IAT
Acquisition and the Foxx Acquisition.
(5) Represents borrowings under the Company's Revolver to fund the IAT
Acquisition and the Foxx Acquisition.
(6) Represents the elimination of the equity accounts of the IAT Acquisition
and the Foxx Acquisition and the effects of the issuance of 189,189 and
233,034 shares of the Company's Common Stock for the IAT Acquisition and
the Foxx Acquisition, respectively.
(7) The acquisition agreements for the IAT Acquisition and the Foxx Acquisition
provide for the potential issuance of up to 108,108 and 89,630 shares of
the Company's Common Stock, respectively, over three year periods following
the acquisitions if certain performance objectives are met. The effects of
the potential issuance of these shares are not considered in the pro forma
consolidated financial statements, as the related performance objectives
have not currently been achieved.
(8) The Common Stock issuable represents the 51,216 shares of the Company's
Common Stock for the Foxx Acquisition which will be issued one year from
the date of closing.
7
