<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report February 9, 1998 (December 2, 1997)
(Date of earliest event reported) -------------------------------------------
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>
THE CURRENT REPORT ON FORM 8-K OF RENTAL SERVICE CORPORATION DATED DECEMBER 17,
1997 IS HEREBY AMENDED TO INCLUDE THE ADDITION OF THE FOLLOWING INFORMATION:
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired
The audited combined financial statements of Rent-It-Center, Inc. and
Affiliates d/b/a Center Rental & Sales ("Center") as of October 31,
1997 and 1996 and for each of the three years in the period ended
October 31, 1997 were filed as pages F-65 through F-78 of the
Company's Registration Statement on Form S-1 (Registration No. 333-
40707), and are incorporated herein by reference.
(b) Pro Forma Financial Information
The unaudited pro forma consolidated financial information of Rental
Service Corporation, including the acquisitions of Center, Industrial
Air Tool and Brute Equipment Co. d/b/a Foxx Hy-Reach, Inc., is
attached as Exhibit 99.1 to this Current Report on Form 8-K.
(c) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- ----------------------------------------------
<C> <S>
23.1 Consent of Ernst & Young LLP.
99.1 Rental Service Corporation Unaudited Pro Forma
Consolidated Financial Information.
</TABLE>
2
<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: February 9, 1998 By: /s/ Robert M. Wilson
---------------------------------
Robert M. Wilson
Senior Vice President
Chief Financial Officer
3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- ----------------------------------------------------
<C> <S>
23.1 Consent of Ernst & Young LLP.
99.1 Rental Service Corporation Unaudited Pro Forma
Consolidated Financial Information.
</TABLE>
4
<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 November 7, 1997, with
respect to the combined financial statements of Rent-It-Center, Inc. and
Affiliates d/b/a Center Rentals & Sales as of October 31, 1996 and 1997 and for
each of the three years in the period ended October 31, 1997, included in the
Registration Statement (Form S-1 No. 333-40707) and related Prospectus of Rental
Service Corporation for the registration of 4,000,000 shares of its common
stock, filed with the Securities and Exchange Commission on December 16, 1997.
/s/ ERNST & YOUNG LLP
Phoenix, Arizona
February 5, 1998
<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 nine months ended September 30, 1997, and the unaudited pro forma
consolidated balance sheet at September 30, 1997. The pro forma consolidated
statements of operations for the year ended December 31, 1996 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 ("IAT") (the "IAT Acquisition"), ii) the Company's acquisition of
substantially all of the assets of Brute Equipment Co. d/b/a Foxx Hy-Reach
Company ("Foxx") (the "Foxx Acquisition"), iii) the Company's acquisition of all
of the outstanding shares of Rent-It-Center, Inc. d/b/a Center Rentals & Sales
("Center") and substantially all of the assets of certain affiliated entities
(the "Center Acquisition") and iv) the pro forma effect of Center's acquisition
of Zuni Rental Enterprises, L.L.C. ("Zuni"), which was completed in October
1996. Such statements have been adjusted in each case as if such transactions
had occurred on January 1, 1996.
The pro forma consolidated statements of operations for the nine
months ended September 30, 1997 have been adjusted to give effect to the IAT
Acquisition, the Foxx Acquisition and the Center Acquisition, as if these
transactions had occurred on January 1, 1997. The pro forma consolidated balance
sheet gives effect to the Center Acquisition as if it had occurred on September
30, 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 related imputed purchase price adjustments. The Company
previously filed the audited combined financial statements of IAT and the
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 Company previously filed the
audited combined financial statements of Foxx and the unaudited pro forma
consolidated financial information, including the IAT Acquisition and the Foxx
Acquisition, in Current Report on Form 8-K dated June 18, 1997. The Center
Acquisition was completed on December 2, 1997 and Center's balance sheet was
consolidated with the Company's under the purchase method of accounting as of
that date. Pursuant to the acquisition agreements, the Company assumed effective
control of Center's operations on November 1, 1997 and has included Center's
revenues, costs and expenses from such date in its consolidated statements of
operations, net of related imputed purchase price adjustments.
The pro forma acquisition adjustments represent, in the opinion of the
Company's management, 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. 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 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. 333-40707), as
filed with the Securities and Exchange Commission on December 16, 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 CENTER PRO FORMA
HISTORICAL ACQUISITION ACQUISITION ACQUISITION ACQUISITION PRO FORMA
COMPANY (1) (1) (1) ADJUSTMENTS COMBINED
---------- ----------- ----------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Equipment rentals....................... $ 94,218 $ 7,319 $ 11,842 $34,030 $ -- $147,409
Sales of parts, supplies and
equipment.............................. 34,136 41,694 7,976 11,772 -- 95,578
-------- ------- ------- ------- -------- --------
Total revenues............................. 128,354 49,013 19,818 45,802 -- 242,987
Cost of revenues:
Cost of equipment rentals, excluding
equipment rental depreciation......... 55,202 5,170 4,228 14,844 -- 79,444
Depreciation, equipment rentals......... 17,840 445 2,718 5,285 670 (2) 26,958
Cost of sales of parts, supplies and
equipment.............................. 24,070 33,307 5,308 10,236 -- 72,921
-------- ------- ------- ------- -------- --------
Total cost of revenues..................... 97,112 38,922 12,254 30,365 670 179,323
-------- ------- ------- ------- -------- --------
Gross profit............................... 31,242 10,091 7,564 15,437 (670) 63,664
Selling, general and administrative
expense................................... 12,254 7,107 5,782 7,101 (5,975)(3) 26,269
Depreciation and amortization, excluding
equipment rental depreciation............. 2,835 164 258 503 -- 3,760
Amortization of intangibles................ 2,379 -- -- 30 3,531 (4) 5,940
-------- ------- ------- ------- -------- --------
Operating income........................... 13,774 2,820 1,524 7,803 1,774 27,695
Non-operating (income) expense............. -- (373) -- 325 48 (5) --
Interest expense, net...................... 7,063 67 235 618 14,203 (6) 22,186
-------- ------- ------- ------- -------- --------
Income before income taxes and
extraordinary item........................ 6,711 3,126 1,289 6,860 (12,477) 5,509
Provision for income taxes................. 2,722 150 -- 2,369 (3,004) (7) 2,237
-------- ------- ------- ------- -------- --------
Income before extraordinary item........... 3,989 2,976 1,289 4,491 (9,473) 3,272
Redeemable preferred stock accretion....... 1,643 -- -- -- -- 1,643
-------- ------- ------- ------- -------- --------
Income before extraordinary item
available to common stockholders.......... $ 2,346 $ 2,976 $ 1,289 $ 4,491 $ (9,473) $ 1,629
======== ======= ======= ======= ======== ========
Income before extraordinary item per
common and common equivalent share........ $ .33 $ .20
======== ========
Weighted average common and common
equivalent shares......................... 7,218 8,174
(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, the Foxx Acquisition and the
Center 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. The results of operations for the Center
Acquisition represent the results for Center's fiscal year ended October
31, 1996, including the pro forma effect of Center's acquisition of Zuni.
(2) Represents the elimination of the historical carrying value of rental
depreciation of the IAT Acquisition, the Foxx Acquisition and the Center
Acquisition of $8,448,000 and the Company's estimate of $9,118,000 for
rental depreciation assuming the rental fleet acquired was adjusted to fair
market value at the beginning of the period presented. As a result, pro
forma rental depreciation increased by $670,000.
(3) Represents the elimination of salaries and other payments to officers
and/or stockholders of Foxx and Center, as such officers and/or
stockholders will either be employed at lower contractual rates or will not
be employed by the Company. 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 and
covenants not to compete for the IAT Acquisition, the Foxx Acquisition and
the Center Acquisition, as if these acquisitions were consummated at the
beginning of the period presented.
(5) Represents the elimination of income earned on, or expenses associated
with, assets or liabilities not acquired or assumed in the IAT Acquisition
and the Center Acquisition.
(6) Represents the elimination of historical interest expense of $920,000 and
the addition of $15,123,000 of interest expense on borrowings to fund the
above acquisitions, as if the transactions were consummated at the
beginning of the period presented. As a result, pro forma interest expense
increased by $14,203,000.
(7) Represents the adjustment to provide income taxes at the Company's 1996
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 were 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 955,754
shares of the Company's Common Stock for the IAT Acquisition, the Foxx
Acquisition and the Center Acquisition.
3
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
IAT FOXX CENTER PRO FORMA
HISTORICAL ACQUISITION ACQUISITION ACQUISITION ACQUISITION PRO FORMA
COMPANY (1) (1) (1) ADJUSTMENTS COMBINED
---------- ----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Equipment rentals...................... $ 111,549 $1,029 $4,760 $25,593 $ -- $142,931
Sales of parts, supplies and
equipment............................. 60,783 6,960 3,735 10,910 -- 82,388
-------- ------ ------ ------- ------- --------
Total revenues............................. 172,332 7,989 8,495 36,503 -- 225,319
Cost of revenues:
Cost of equipment rentals, excluding
equipment rental depreciation......... 57,506 828 1,678 11,903 -- 71,915
Depreciation, equipment rentals........ 24,493 81 1,303 4,771 (348) (2) 30,300
Cost of sales of parts, supplies
and equipment......................... 45,644 5,595 2,470 9,805 -- 63,514
-------- ------ ------ ------- ------- --------
Total cost of revenues..................... 127,643 6,504 5,451 26,479 (348) 165,729
-------- ------ ------ ------- ------- --------
Gross profit............................... 44,689 1,485 3,044 10,024 348 59,590
Selling, general and administrative
expense................................... 13,444 1,194 695 5,592 (1,373) (3) 19,552
Depreciation and amortization,
excluding equipment rental depreciation... 3,789 30 87 656 -- 4,562
Amortization of intangibles................ 2,463 -- -- 92 1,989 (4) 4,544
-------- ------ ------ ------- ------- --------
Operating income........................... 24,993 261 2,262 3,684 (268) 30,932
Non-operating (income) expense............. -- (59) -- 7 52 (5) --
Interest expense, net...................... 8,863 13 107 1,157 6,729 (6) 16,869
-------- ------ ------ ------- ------- --------
Income before income taxes and
extraordinary item........................ 16,130 307 2,155 2,520 (7,049) 14,063
Provision for income taxes................. 7,172 37 -- 868 (1,819) (7) 6,258
-------- ------ ------ ------- ------- --------
Income before extraordinary item........... $ 8,958 $ 270 $2,155 $ 1,652 $(5,230) $ 7,805
======== ====== ====== ======= ======= ========
Income before extraordinary item per
common and common equivalent share........ $ .68 $.57
======== ========
Weighted average common and common
equivalent Shares......................... 13,150 13,795
(8)(9)
</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 NINE MONTHS ENDED SEPTEMBER 30, 1997
(1) Represents the results of the IAT Acquisition, the Foxx Acquisition and the
Center Acquisition prior to their acquisition by the Company. Results of
the IAT Acquisition and the Foxx Acquisition subsequent to their respective
acquisition dates are included in the Historical Company's results for the
nine months ended September 30, 1997. The results of operations for the
Center Acquisition represent the results for Center's fiscal nine months
ended July 31, 1997.
(2) Represents the elimination of the historical carrying value of rental
depreciation of the IAT Acquisition, the Foxx Acquisition and the Center
Acquisition of $6,155,000 and the Company's estimate of $5,807,000 for
rental depreciation assuming the rental fleet acquired was adjusted to fair
market value at the beginning of the period presented. As a result, pro
forma rental depreciation decreased by $348,000.
(3) Represents the elimination of salaries and other payments to officers
and/or stockholders of Center, as such officers and/or stockholders will
either be employed at lower contractual rates or will not be employed by
the Company.
(4) Represents the Company's estimate of the amortization of goodwill and
covenants not to compete for the IAT Acquisition, the Foxx Acquisition and
the Center Acquisition, as if these acquisitions were consummated at the
beginning of the period presented.
(5) Represents the elimination of income earned on, or expenses associated
with, assets or liabilities not acquired or assumed in the IAT Acquisition
and the Center Acquisition.
(6) Represents the elimination of historical interest expense of $1,277,000 and
the addition of $8,006,000 of interest expense on borrowings to fund the
above acquisitions, as if the transactions were consummated at the
beginning of the period presented. As a result, pro forma interest expense
increased by $6,729,000.
(7) Represents the adjustment to provide income taxes at the Company's
1997 effective tax rate of 44.5%.
(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 were 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 955,754
shares of the Company's Common Stock for the IAT Acquisition, the Foxx
Acquisition and the Center Acquisition.
5
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-------------------------------------------------------
PRO FORMA
HISTORICAL CENTER ACQUISITION PRO FORMA
COMPANY ACQUISITION(1) ADJUSTMENTS COMBINED
---------- -------------- ------------ ---------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents................ $ 4,887 $ 347 $ -- $ 5,234
Accounts receivable, net................. 43,694 4,971 -- 48,665
Other receivables and prepaid expense.... 3,941 511 -- 4,452
Income tax receivable.................... 1,117 -- -- 1,117
Parts and supplies inventories, net...... 20,701 2,977 -- 23,678
Deferred taxes........................... 8,787 99 -- 8,886
Rental equipment, net.................... 229,894 35,301 -- 265,195
Operating property and equipment,
at cost, net.......................... 30,640 4,848 -- 35,488
Intangible assets........................ 115,279 1,474 89,423 (2) 206,176
Other assets............................. 3,637 220 (220)(3) 3,637
--------- ------- -------- --------
$ 462,577 $50,748 $ 89,203 $602,528
========= ======= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable......................... $ 16,168 $ 2,811 $ -- $ 18,979
Payroll and other accrued expenses....... 29,461 3,051 -- 32,512
Accrued interest payable................. 1,473 -- -- 1,473
Income taxes payable..................... 6,478 -- -- 6,478
Deferred taxes........................... 12,573 3,931 -- 16,504
Bank debt and long term obligations...... 224,504 18,068 100,881 (4) 343,453
Obligations under capital leases......... 31 -- -- 31
--------- ------- -------- ---------
Total liabilities........................ 290,688 27,861 100,881 419,430
Stockholders' equity:
Preferred stock....................... -- -- -- --
Common stock.......................... 149 12 (8)(5) 153
Common stock issuable (6)............. 2,881 -- 1,500 (6) 4,381
Additional paid-in capital............ 159,394 -- 9,705 (5) 169,099
Retained earnings..................... 9,465 22,875 (22,875)(5) 9,465
-------- ------- -------- ---------
Total stockholders' equity................ 171,889 22,887 (11,678) 183,098
-------- ------- -------- ---------
$462,577 $50,748 $ 89,203 $ 602,528
======== ======= ======== =========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Balance Sheet
6
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 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 Center Acquisition. Purchase accounting values have been assigned to
the Center Acquisition on a preliminary basis and are subject to adjustment
when the final information as to the fair values of the net assets acquired
is available.
(2) Represents the estimated fair market value of goodwill represented by the
excess purchase price over the estimated fair market value of the net
assets acquired in the Center Acquisition.
(3) Represents assets not acquired in the Center Acquisition.
(4) Represents borrowings under the Company's Revolver to fund the Center
Acquisition.
(5) Represents the elimination of the equity accounts of Center and the effects
of the issuance of 417,771 shares of the Company's Common Stock for the
Center Acquisition.
(6) The Common Stock issuable represents the 64,544 shares of the Company's
Common Stock for the Center Acquisition which will be issued over seven
years (subject to earlier issuance within three years if certain
performance objectives are achieved).
7
