FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1997
Commission File Number: 0-21461
OMNIQUIP INTERNATIONAL, INC.
- - - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 43-1721419
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
222 East Main Street, Port Washington, Wisconsin 53074
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(Address of principal executive offices)
(Zip Code)
(414) 268-8965
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(registrant's telephone number, including area code)
369 West Western Avenue, Port Washington, Wisconsin 53074
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(Former name, former address and
former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---
The number of shares of Common Stock, $0.01 par value, of the registrant
outstanding as
of August 11, 1997 was 14,250,000.
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OMNIQUIP INTERNATIONAL, INC.
Index
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Page
Number
Part I Financial Information
Item 1. Financial Statements (Unaudited, except as noted)
Consolidated Balance Sheet at June 30, 1997
and September 30, 1996 (Audited) 3
Consolidated Statement of Income for the
three and nine months ended June 30, 1997
and June 30, 1996 4
Consolidated Statement of Changes in
Stockholders' Equity for the nine months
ended June 30, 1997 5
Consolidated Statement of Cash Flows for the
nine months ended June 30, 1997 and
June 30, 1996 6
Notes to Consolidated Financial Statements 7 - 10
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 11 - 15
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K 16
Signatures
Page 2
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OMNIQUIP INTERNATIONAL, INC.
Item 1. Financial Statements
Consolidated Balance Sheet
(Dollars in Thousands Except Per Share Data)
<TABLE>
June 30, 1997 September 30, 1996
Assets (Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $367 $53
Accounts receivable, net 26,361 21,678
Inventories 29,083 27,540
Prepaid expenses and other current assets 6,111 5,534
------------------- -------------------
Total current assets 61,922 54,805
Property, plant and equipment, net 16,530 16,490
Goodwill, net 65,276 65,571
Other assets, net 1,628 2,714
------------------- -------------------
$145,356 $139,580
=================== ===================
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $6,975 $3,875
Accounts payable 23,117 20,895
Accrued liabilities 16,011 16,642
------------------- -------------------
Total current 46,103 41,412
liabilities
Long-term debt 33,500 84,566
Other noncurrent liabilities, net 422 422
Deferred income taxes 756 755
Commitments and contingencies (Note 11)
Stockholders' equity:
Preferred stock, $.01 par value, 1,500,000 shares
authorized; no shares issued and outstanding
Common stock, $.01 par value, 100,000,000 shares
authorized; 14,250,000 and 11,250,000 shares
issued and outstanding at June 30, 1997 and
September 30, 1996, respectively 143 113
Additional paid-in capital 43,724 6,240
Notes receivable from stockholders (352) (352)
Retained earnings 21,060 6,424
------------------- -------------------
Total stockholders' equity 64,575 12,425
------------------- -------------------
$145,356 $139,580
=================== ===================
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
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OMNIQUIP INTERNATIONAL, INC.
Item 1. Financial Statements
Consolidated Statement of Income
(Unaudited)
(Amounts in Thousands Except Per Share Data)
<TABLE>
Three months ended June 30, Nine months ended June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $74,708 $30,449 $197,326 $81,515
Cost of sales 54,295 22,606 144,527 60,281
----------------------------------- ----------------------------------
Gross profit 20,413 7,843 52,799 21,234
Selling, general and administrative expenses 7,675 4,083 20,149 11,414
----------------------------------- ----------------------------------
Operating profit 12,738 3,760 32,650 9,820
Other expenses:
Interest on indebtedness 1,085 630 5,267 1,947
Other finance charges 598 476 1,599 1,479
Other, net (45) 107 (131) 123
----------------------------------- ----------------------------------
1,638 1,213 6,735 3,549
----------------------------------- ----------------------------------
Income before income taxes and
extraordinary item 11,100 2,547 25,915 6,271
Provision for income taxes 4,457 1,068 10,497 2,477
----------------------------------- ----------------------------------
Income before extraordinary item 6,643 1,479 15,418 3,794
Extraordinary item--loss on repayment of
long-term debt, net of income tax benefit
of $521 0 0 (782) 0
----------------------------------- ----------------------------------
Net income $6,643 $1,479 $14,636 $3,794
=================================== ==================================
Earnings per share:
Income before extraordinary item $0.46 $0.13 $1.24 $0.34
Extraordinary item (0.06)
----------------------------------- ----------------------------------
Net income $0.46 $0.13 $1.18 $0.34
=================================== ==================================
Weighted average shares 14,335 11,250 12,400 11,250
=================================== ==================================
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
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OMNIQUIP INTERNATIONAL, INC.
Item 1. Financial Statements
Consolidated Statement of Changes in Stockholders' Equity
(Unaudited)
(Dollars in thousands)
<TABLE>
Notes
Additional receivable
Common paid-in from Retained
stock capital stockholders earnings Total
<S> <C> <C> <C> <C> <C>
Balance, September 30, 1996 $113 $6,240 ($352) $6,424 $12,425
Net income 14,636 14,636
Proceeds from initial public offering 30 37,484 37,514
------------ ------------ ---------------- ------------- ------------
Balance, June 30, 1997 $143 $43,724 ($352) $21,060 $64,575
============ ============ ================ ============= ============
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
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OMNIQUIP INTERNATIONAL, INC.
Note 1. Financial Statements
Consolidated Statement of Cash Flows
(Unaudited)
(Dollars in Thousands)
<TABLE>
Nine months ended
June 30,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $14,636 $3,888
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 1,572 785
Amortization 1,533 291
Deferred income tax provision (benefit) -- (656)
Loss on repayment of long-term debt 1,303 --
(Increase) decrease in current assets:
Accounts receivable, net (4,683) 364
Inventories (1,543) (594)
Prepaid expenses and other current assets (619) 193
Increase (decrease) in current liabilities:
Accounts payable 2,222 (832)
Other current liabilities (571) 1,731
Other (23) 114
-------------------------
Net cash provided by operating activities 13,827 5,284
-------------------------
Cash flows from investing activities:
Capital expenditures, net (1,612) (1,069)
Payments to former TRAK shareholders for ATLAS program (838) --
Other 356 (133)
-------------------------
Net cash used in investing activities (2,094) (1,202)
-------------------------
Cash flows from financing activities:
Proceeds from initial public offering 37,557 --
Net payments on revolver (7,441) (3,677)
Payments on long-term debt (40,525) (405)
Debt prepayment fees (1,010) --
-------------------------
Net cash used in financing activities (11,419) (4,082)
-------------------------
Net change in cash 314 0
Cash beginning of period 53 1
-------------------------
Cash at end of period $367 $1
=========================
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
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OMNIQUIP INTERNATIONAL, INC.
Item 1. Financial Statements
Notes to Consolidated Financial Statements
(Dollars in Thousands Except Per Share Data)
(Unaudited)
1. Unaudited consolidated financial statements
The accompanying unaudited consolidated financial statements of Omniquip
International, Inc. (Omniquip or the Company) have been prepared in
accordance with the instructions for Form 10-Q and do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. However, in the opinion of
management, such information includes all adjustments, which consist only
of normal and recurring adjustments, necessary for a fair presentation of
the results of operations for the periods presented. Operating results for
any quarter are not necessarily indicative of the results for any other
quarter or for the full year. These statements should be read in
conjunction with the Company's consolidated financial statements and notes
to the consolidated financial statements included in the Company's
Amendment No. 2 to Form S-1 filed on February 20, 1997 with the Securities
and Exchange Commission.
2. Organization
Omniquip owns 100% of the outstanding common stock of its subsidiaries,
TRAK International, Inc. (TRAK) and Lull International, Inc. (Lull). The
consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All significant intercompany transactions
and balances have been eliminated.
3. Lull acquisition
For further detailed information regarding the August 1996 acquisition of
Lull, see Note 2 to the consolidated financial statements of the Company
included in the Company's Amendment No. 2 to Form S-1 filed on February 20,
1997 with the Securities and Exchange Commission.
The following table sets forth the pro forma information for Omniquip as if
the Lull acquisition had occurred on October 1, 1995. No pro forma
adjustments have been reflected for the effects of the Company's March 1997
initial public offering of common stock and the application of proceeds
therefrom or for the additional costs associated with being a publicly held
company. This information is unaudited and does not purport to represent
actual net sales or net income had the acquisition actually occurred on
October 1, 1995.
Pro forma information (unaudited)
---------------------------------
For the three months For the nine months
ended June 30, 1996 ended June 30, 1996
-------------------- -------------------
Net sales $54,377 $151,770
Net income 1,678 3,385
4. Initial public offering
On March 20, 1997, the Company completed its initial public offering of
common stock, selling 3 million primary and 6.2 million secondary shares
(including the overallotment option) for $14 per share. The proceeds to the
Company and the application of such proceeds are as follows:
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<TABLE>
<S> <C>
Price to public $42,000
Less: underwriting discounts and commissions (2,730)
---------------
Company proceeds $39,270
===============
Payment of subordinated debt as follows:
Note payable to a financial institution $14,000
Note payable to an insurance company 5,000
Note payable to HGI III, L.P. 2,000
Interest 547
Prepayment fees 1,010
---------------
22,557
Payment on Bank Term Debt 15,000
Expenses of offering 1,713
---------------
Total application of Company proceeds $39,270
===============
</TABLE>
In conjunction with the repayment of certain debt, the Company has
recognized a $782 after-tax extraordinary loss resulting from prepayment
fees paid to the insurance company and the financial institution and
write-off of applicable capitalized deferred financing costs.
5. U.S. Government Contract
On February 28, 1997, TRAK received delivery order number 5 on the
Company's ATLAS contract for 157 units. This order resulted in a payment to
the former TRAK shareholders of $838, which is reflected as additional
goodwill related to the TRAK acquisition in the accompanying financial
statements.
6. Inventories
Inventories consist of the following:
<TABLE>
June 30, September 30,
1997 1996
<S> <C> <C>
Raw material and purchased components $18,282 $15,614
Work-in-process 4,776 4,302
Finished goods 4,521 7,094
Unbilled government contract costs 1,504 530
--------------------------------
$29,083 $27,540
================================
</TABLE>
7. Boom warranty program
During 1995, prior to its acquisition by the Company, Lull had determined
that a specific warranty obligation had been incurred on certain
manufactured boom units. At the acquisition date, the estimated cost to
complete the boom warranty program amounted to $2,000. A reserve for this
amount was recorded in purchase accounting by the Company. At June 30,
1997, and September 30, 1996, a corresponding liability of $168 and $1,557,
respectively, is reflected as a component of other current liabilities in
the accompanying balance sheet. This program is expected to be completed in
fiscal 1997, and costs are not expected to exceed the current reserve.
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8. Stock Options
Options granted by the Company to officers and employees under the 1996
Long-Term Incentive Plan, to purchase shares of the Company's stock, are as
follows:
Grant Price Per Shares
Date Share Granted
------------ ------------ -------------
March 20,1997 $14.00 357,750
April 14,1997 12.13 1,000
April 30,1997 13.00 5,000
Options granted by the Company to directors under the Directors
Non-Qualified Stock Option Plan, to purchase shares of the Company's Stock,
are as follows:
Grant Price Per Shares
Date Share Granted
------------ ------------ --------------
March 20,1997 $14.00 45,000
April 10,1997 13.25 40,000
At June 30, 1997, no options were exercisable under either plan.
The exercise prices of the options granted above are equivalent to the
market price of the Company's common stock on the date of grant.
9. Earnings Per Share
The computation of primary earnings per share is based on the weighted
average number of outstanding common shares during the period plus, when
the effect was dilutive, common stock equivalents consisting of certain
shares subject to stock options. The common equivalent shares arising from
the effect of outstanding stock options was computed using the treasury
stock method, if dilutive. As all potentially dilutive securities are
considered common stock equivalents, there was not a difference between
primary and fully diluted earnings per share.
10. New accounting standard
Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earnings
Per Share," issued in February 1997 and effective for the Company in fiscal
1998, requires presentation in the income statement of basic and diluted
earnings per share, calculated as defined by SFAS 128, rather than primary
and fully diluted earnings per share as defined in Accounting Principles
Board Opinion No. 15 (APB 15) "Earnings Per Share." Earnings per share
calculated in accordance with SFAS 128 is not expected to differ materially
from earnings per share as calculated by the Company under APB 15.
11. Commitments and contingencies
The Company is involved in various litigation consisting almost entirely of
product and general liability claims arising in the normal course of
business. The Company maintains insurance policies relative to product and
general liability claims and has provided reserves for the estimated cost
of the self-insured retention; accordingly, these actions, when ultimately
concluded, are not expected to have a material adverse effect on the
financial position or results of operations of the Company.
Page 9
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The Company has financing arrangements with certain third-party financing
institutions to facilitate dealer purchases of equipment under floor plan
and rental fleet arrangements. The aggregate outstanding loan balance on a
consolidated basis under these agreements was $78.0 million at June 30,
1997. Under TRAK's agreements, TRAK either provides a back-up guarantee of
the dealer's credit or an undertaking to repurchase equipment at a
discounted price at specified times or under specified circumstances. The
aggregate outstanding loan balance under the TRAK agreements was $65.5
million at June 30, 1997. TRAK's actual exposure under these financing
arrangements is significantly less than the nominal amount outstanding.
Aggregate losses under substantially all of the Company's guarantee
obligations to third party lenders with respect to its TRAK dealers in each
of calendar years 1996 and 1997 are limited to the greater of $1.5 million
or 5% of the loan balance at the previous calendar year end (approximately
$2.5 million for 1997).
Lull is also a party to a retail finance agreement with a financing
company, which provides Lull distributors with financing for equipment
purchases from Lull. The financing company has also agreed to provide
financing for distributors' purchases of Lull-produced equipment used as
rental inventory by the distributors. Such contracts are arranged on an
installment basis with a balloon payment by the distributor for the
residual balance at the end of the term (typically due 48 months from date
of shipment). In the event the distributor does not elect to pay or
refinance the balloon payment, Lull has agreed to pay the residual amount
if requested by the financing company. A secured interest in the equipment
financed is maintained by the finance company. Aggregate outstanding loan
balances under this agreement as of June 30, 1997 were approximately $12.5
million. This contingency would be reduced by proceeds from the sales of
the equipment financed.
12. Subsequent event
On July 19, 1997, Omniquip signed a definitive agreement for the
acquisition of the Snorkel Division of Figgie International Inc., a
manufacturer of aerial work platforms, for $150 million plus assumption of
certain liabilities. The acquisition, which will be accounted for as a
purchase, will be financed with debt.
Page 10
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Overview
The following discussion summarizes the significant factors affecting the
consolidated operating results and financial condition of Omniquip
International, Inc. (Omniquip or the Company) for the three and nine months
ended June 30, 1997 compared to the three and nine months ended June 30, 1996.
The discussion should be read in conjunction with the consolidated financial
statements, notes to consolidated financial statements and management's
discussion and analysis of results of operations and financial condition in the
Company's Amendment No. 2 to Form S-1 filed with the Securities and Exchange
Commission on February 20, 1997.
Certain statements included herein are forward-looking statements concerning the
Company's operations, economic performance and financial condition. Such
statements are subject to various risks and uncertainties. Actual results could
differ materially from those currently anticipated due to a number of factors,
including cyclical fluctuations in demand, loss of, or reduced orders under, the
Company's contract for the sale of ATLAS vehicles, the inability to make
complementary acquisitions, or to integrate any such acquisitions, and risks
associated with the substantial borrowings that may be necessary to finance
acquisitions.
Results of Operations
The following table sets forth for the periods indicated the percentage of net
sales represented by certain items reflected in the Company's consolidated
statement of income:
<TABLE>
Three months ended June 30, Nine months ended June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 72.7% 74.2% 73.3% 74.0%
-------------- -------------- -------------- ---------------
Gross profit 27.3% 25.8% 26.7% 26.0%
Selling, general and administrative
expenses 10.2% 13.4% 10.2% 14.0%
-------------- -------------- -------------- ---------------
Operating income 17.1% 12.4% 16.5% 12.0%
Interest expense 1.5% 2.1% 2.7% 2.4%
Other finance charges 0.7% 1.9% 0.7% 1.9%
-------------- -------------- -------------- ---------------
Income before income taxes and
extraordinary item 14.9% 8.4% 13.1% 7.7%
Provision for income taxes 6.0% 3.5% 5.3% 3.0%
-------------- -------------- -------------- ---------------
Income before income taxes 8.9% 4.9% 7.8% 4.7%
Extraordinary item 0.0% 0.0% -0.4% 0.0%
-------------- -------------- -------------- ---------------
Net income 8.9% 4.9% 7.4% 4.7%
============== ============== ============== ===============
</TABLE>
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Three Months Ended June 30, 1997 Compared to Three Months Ended June 30, 1996
Net sales for the three months ended June 30, 1997 were $74.7 million, an
increase of $44.3 million over net sales of $30.4 million for the three months
ended June 30, 1996. Sales of telescopic material handlers for the three months
ended June 30, 1997 were $62.5 million, an increase of $41.4 million over the
1996 period. Sales of skid steer loaders for the three months ended June 30,
1997 were $5.4 million, a decrease of $0.8 million, or 12.8%, compared to the
three months ended June 30, 1996. Sales of parts and attachments for the three
months ended June 30, 1997 were $6.7 million, an increase of $3.6 million over
the 1996 period. Of the $41.4 million increase in telescopic material handlers,
$29.9 million was due to the acquisition of Lull International, Inc. (Lull),
which was consummated in August 1996, $2.0 million was due to the start-up of
sales under the U.S. Army ATLAS contract, which had no sales in the 1996 period,
and the remaining $9.5 million reflected continued strong growth in the TRAK
International, Inc. (TRAK) commercial telescopic business. The decline in skid
steer loader sales primarily reflected reduced shipments to Europe due to the
Company's European distributor being acquired by a competitor. Of the $3.6
million increase in parts and attachments, $2.7 million resulted from the
acquisition of Lull and the remaining $0.9 million reflected increased demand
for parts driven by the increased population of TRAK units operating in the
field.
Gross profit for the three months ended June 30, 1997 was $20.4 million, an
increase of $12.6 million over gross profit of $7.8 million for the three months
ended June 30, 1996. The increase in gross profit primarily reflected the
increase in net sales discussed above. The gross margin increased to 27.3% for
the three months ended June 30, 1997 from 25.8% for the three months ended June
30, 1996. The improvement in gross margin was due to improved manufacturing
efficiencies at all three Company plants, price increases that were implemented
in early 1997, economies due to higher volumes and an increased mix of
telescopic material handlers which carry higher margins than other products.
Partially offsetting these improvements was the effect of the acquisition of
Lull, whose gross margin has historically been lower than that of TRAK.
Selling, general and administrative (SG&A) expenses for the three months ended
June 30, 1997 were $7.7 million, an increase of $3.6 million over SG&A expenses
of $4.1 million for the three months ended June 30, 1996. Of the $3.6 million
increase, $2.2 million resulted from the acquisition of Lull, including $0.4
million of goodwill amortization. SG&A expenses as a percentage of net sales
decreased to 10.3% for the three months ended June 30, 1997 from 13.4% for the
three months ended June 30, 1996. This decrease in the SG&A percentage reflected
the effect of the acquisition of Lull, whose SG&A percentage has historically
been lower than that of TRAK, as well as effective control of SG&A expenses and
the relatively fixed nature of certain of these expenses.
Operating income for the three months ended June 30, 1997 was $12.7 million, an
increase of $9.0 million over operating income of $3.8 million for the three
months ended June 30, 1996. Operating margin increased to 17.1% for the three
months ended June 30, 1997 from 12.3% for the 1996 period. The improvements in
operating income and operating margin reflected the factors described above.
Interest expense for the three months ended June 30, 1997 was $1.1 million, an
increase of $0.5 million over interest expense of $0.6 million for the three
months ended June 30, 1996. The increase in interest expense was due primarily
to the increased debt incurred to finance the August 1996 acquisition of Lull
partially offset by subsequent reduction of debt with proceeds from the initial
public offering in March 1997.
Other finance charges, which are primarily comprised of dealer-related finance
charges, were $0.6 million for the three months ended June 30, 1997 compared to
$0.5 million for the three months ended June 30, 1996. Other finance charges as
a percentage of net sales decreased from 1.6% to 0.8%. The reduction in finance
charges as a percentage of net sales reflected the fact that Lull has not
historically incurred such charges as well as a reduction in the percentage of
TRAK business being financed in the current quarter.
Provision for income taxes for the three months ended June 30, 1997 was $4.5
million compared to $1.1 million for the three months ended June 30, 1996. The
increase reflected the increase in income before income taxes of $8.6 million.
The Company's effective tax rate was 40.2% for the three months ended June 30,
1997 compared to 41.9% for the three months ended June 30, 1996.
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Net income for the three months ended June 30, 1997 was $6.6 million, an
increase of $5.2 million over net income of $1.5 million for the three months
ended June 30, 1996, as a result of the factors described above.
Earnings per share for the three months ended June 30, 1997 were $0.46, an
increase of $0.33 from earnings per share of $0.13 for the three months ended
June 30, 1996 as a result of the increase in net income described above
partially offset by an increase in the weighted average shares outstanding from
11.3 million to 14.3 million.
Nine Months Ended June 30, 1997 Compared to Nine Months Ended June 30, 1996
Net sales for the nine months ended June 30, 1997 were $197.3 million, an
increase of $115.8 million over net sales of $81.5 million for the nine months
ended June 30, 1996. Sales of telescopic material handlers for the nine months
ended June 30, 1997 were $165.2 million, an increase of $106.0 million over the
1996 period. Sales of skid steer loaders for the nine months ended June 30, 1997
were $13.7 million, unchanged compared to the nine months ended June 30, 1996.
Sales of parts and attachments for the nine months ended June 30, 1997 were
$18.5 million, an increase of $9.8 million over the 1996 period. Of the $106.0
million increase in telescopic material handlers, $80.0 million was due to the
acquisition of Lull, $2.3 million was due to the start-up of sales under the
U.S. Army ATLAS contract, which had $0.7 million of prototype sales in the 1996
period, and the remaining $23.7 million reflected continued strong growth in
TRAK's commercial telescopic business. Flat skid steer loader sales reflected
increased demand in North America and internationally outside of Europe offset
by reduced shipments to Europe due to the Company's European distributor being
acquired by a competitor. Of the $9.8 million increase in parts and attachments,
$7.0 million resulted from the acquisition of Lull and the remaining $2.8
million reflected increased demand for parts driven by the increased population
of TRAK units operating in the field.
Gross profit for the nine months ended June 30, 1997 was $52.8 million, an
increase of $31.6 million over gross profit of $21.2 million for the nine months
ended June 30, 1996. The increase in gross profit primarily reflected the
increase in net sales discussed above. The gross margin increased to 26.8% for
the nine months ended June 30, 1997 from 26.0% for the nine months ended June
30, 1996. The improvement in gross margin was due to improved manufacturing
efficiencies at all three Company plants, price increases that were implemented
in early 1997, economies due to higher volumes and increased mix of telescopic
material handlers which carry higher margins than other products. Partially
offsetting these improvements was the effect of the acquisition of Lull, whose
gross margin has historically been lower than that of TRAK.
Selling, general and administrative (SG&A) expenses for the nine months ended
June 30, 1997 were $20.1 million, an increase of $8.7 million over SG&A expenses
of $11.4 million for the nine months ended June 30, 1996. Of the $8.7 million
increase, $6.1 million resulted from the acquisition of Lull, including $1.1
million of goodwill amortization. SG&A expenses as a percentage of net sales
decreased to 10.2% for the nine months ended June 30, 1997 from 14.0% for the
nine months ended June 30, 1996. This decrease in the SG&A percentage reflected
the effect of the acquisition of Lull, whose SG&A percentage has historically
been lower than that of TRAK, as well as effective control of SG&A expenses and
the relatively fixed nature of certain of these expenses.
Operating income for the nine months ended June 30, 1997 was $32.7 million, an
increase of $22.8 million over operating income of $9.8 million for the nine
months ended June 30, 1996. Operating margin increased to 16.5% for the nine
months ended June 30, 1997 from 12.0% for the 1996 period. The improvements in
operating income and operating margin reflected the factors described above.
Interest expense for the nine months ended June 30, 1997 was $5.3 million, an
increase of $3.3 million over interest expense of $1.9 million for the nine
months ended June 30, 1996. The increase in interest expense was due primarily
to the increased debt incurred to finance the August 1996 acquisition of Lull
partially offset by subsequent reduction of debt with proceeds from the initial
public offering in March 1997.
Other finance charges, which are primarily comprised of dealer-related finance
charges, were $1.6 million for the nine months ended June 30, 1997 compared to
$1.5 million for the nine months ended June 30, 1996. Other finance charges as a
percentage of net sales decreased from 1.8% to 0.8%. The reduction in finance
charges as a percentage of sales reflected the fact that Lull has not
historically incurred such charges as well as a reduction in the percentage of
TRAK business being financed in the 1997 period.
Page 13
<PAGE>
Provision for income taxes for the nine months ended June 30, 1997 was $10.5
million compared to $2.5 million for the nine months ended June 30, 1996. The
increase reflected the increase in income before income taxes of $19.6 million
and, to a lesser extent, an increase in the effective tax rate between these
periods. The Company's effective tax rate was 40.5% for the nine months ended
June 30, 1997 compared to 39.5% for the nine months ended June 30, 1996.
Income from continuing operations for the nine months ended June 30, 1997 was
$15.4 million, an increase of $11.6 million over income from continuing
operations of $3.8 million for the nine months ended June 30, 1996, as a result
of the factors described above.
In March 1997, in connection with the initial public offering and the
application of the proceeds therefrom to repay indebtedness, the Company
incurred an extraordinary charge of $0.8 million, net of $0.5 million of income
tax benefits, related to prepayment penalties and write-off of deferred
financing charges.
Net income for the nine months ended June 30, 1997 was $14.6 million, an
increase of $10.8 million from net income for the same period in 1996 as a
result of the factors described above.
Earnings per share for the nine months ended June 30, 1997 were $1.18, an
increase of $0.84 from earnings per share of $0.34 for the nine months ended
June 30, 1996 as a result of the increase in net income described above
partially offset by an increase in the weighted average shares outstanding from
11.3 million to 12.4 million.
Capital Resources and Liquidity
Net cash provided by operating activities of the Company was $13.8 million for
the nine months ended June 30, 1997. Working capital (excluding the effects of
changes in cash and current portions of long-term debt) increased by $5.2
million in the period, reflecting increases in accounts receivable and
inventories partially offset by higher accounts payable, all related to
increased sales. Cash provided by operating activities of the Company for the
period was used primarily to finance capital expenditures of $1.6 million, to
make payments to former TRAK shareholders of $0.8 million tied to receipt of
orders under contracts with the U.S. Army and to repay existing indebtedness.
Net cash provided by operating activities of the Company was $5.3 million for
the nine months ended June 30, 1996. Working capital decreased by $0.9 million
in the period, which primarily reflected an increase in other current
liabilities. Cash provided by operating activities of the Company for the period
was used primarily to finance capital expenditures of $1.1 million and to repay
existing indebtedness.
On March 20, 1997, the Company completed its initial public offering of common
stock, selling 3 million primary and 6.2 million secondary shares (including
shares issued upon exercise of the underwriters' overallotment option) for $14
per share. Proceeds to the Company from the offering of $37.6 million (net of
expenses of the offering of $1.7 million) were used to repay $22.6 million of
subordinated debt (including accrued interest and prepayment fees) and $15.0
million of bank term debt.
The Company has borrowings under a revolving credit facility and two term loans.
The revolving credit facility provides for borrowings of up to the lesser of
$25.0 million or a borrowing base calculated on a percentage of eligible
receivables and inventories. Borrowings under this facility are due August 16,
2003 and bear interest either at the bank's corporate base rate plus 1.0% (9.5%
at June 30, 1997) or LIBOR plus 2.25% (8.0% at June 30, 1997). There were no
amounts outstanding under the revolving credit facility, other than $0.3 million
in outstanding letters of credit, at June 30, 1997. At June 30, 1997, the
Company had unused borrowing capacity of $24.7 million under this facility.
Borrowings under the term loans are due in quarterly installments ranging from
$0.5 million to $3.1 million, which commenced in October 1996 with a final
payment in August 2003. The term loans bear interest either at the bank's
corporate base rate plus 1.25% (9.75% at June 30, 1997) or LIBOR plus 2.5% (8.2%
at June 30, 1997). The Company may elect to convert outstanding term loan
balances between interest types at its discretion.
Page 14
<PAGE>
On July 19, 1997, Omniquip signed a definitive agreement for the acquisition of
the Snorkel Division of Figgie International, Inc., a manufacturer of aerial
work platforms, for $150 million plus assumption of certain liabilities. The
acquisition, which will be accounted for as a purchase, will be financed with
senior bank debt. Omniquip has a commitment from Morgan Stanley Senior Funding,
Inc. to provide up to $225 million in debt facilities subject to negotiation and
execution of a mutually-satisfactory loan agreement. Based on its ability to
generate funds from operations and the availability of funds under its existing
and anticipated facilities with financial institutions, the Company believes it
will have sufficient funds available to meet its currently anticipated operating
and capital expenditure requirements for its existing operations.
Backlog
The Company's backlog as of June 30, 1997 was $95.6 million, of which $35.5
million relates to the ATLAS military contract It is expected that substantially
all of the commercial backlog and approximately two-thirds of the military
backlog will be shipped before June 30, 1998.
Page 15
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
PART II. Other Information
- - - --------------------------------------------------------------------------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None.
Page 16
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
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 thereunto duly authorized.
OMNIQUIP INTERNATIONAL, INC.
Date: August 14, 1997 /s/ Philip G. Franklin
--------------------------------
Philip G. Franklin
Vice President - Finance, Chief Financial
Officer, Treasurer and Secretary
(Principal financial and accounting
officer)
<PAGE>
EXHIBIT INDEX
Page No. in Sequential
Exhibit No. Description Numbering System
----------- ----------- ----------------------
27 Financial Data Schedule
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This document contains summary financial information extracted from the attached
quarterly report on Form 10-Q for the period ended June 30, 1997 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 367
<SECURITIES> 0
<RECEIVABLES> 26,757
<ALLOWANCES> 396
<INVENTORY> 29,083
<CURRENT-ASSETS> 61,922
<PP&E> 19,357
<DEPRECIATION> 2,827
<TOTAL-ASSETS> 145,356
<CURRENT-LIABILITIES> 46,103
<BONDS> 33,500
0
0
<COMMON> 143
<OTHER-SE> 43,372
<TOTAL-LIABILITY-AND-EQUITY> 145,356
<SALES> 74,708
<TOTAL-REVENUES> 74,708
<CGS> 54,295
<TOTAL-COSTS> 61,970
<OTHER-EXPENSES> 553
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,085
<INCOME-PRETAX> 11,100
<INCOME-TAX> 4,457
<INCOME-CONTINUING> 6,643
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,643
<EPS-PRIMARY> 0.46
<EPS-DILUTED> 0.46
</TABLE>
