<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 20, 1997
REGISTRATION NO. 333-13181
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
OMNIQUIP INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3531 43-1721419
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
369 WEST WESTERN AVENUE
PORT WASHINGTON, WISCONSIN 53074
(414) 284-5571
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------------
P. ENOCH STIFF
PRESIDENT AND CHIEF EXECUTIVE OFFICER
OMNIQUIP INTERNATIONAL, INC.
369 WEST WESTERN AVENUE
PORT WASHINGTON, WISCONSIN 53074
(414) 284-5571
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
MATTHEW G. MALONEY, ESQ. JOHN J. SABL, ESQ.
Dickstein Shapiro Morin & Oshinsky LLP Sidley & Austin
2101 L Street, N.W. One First National Plaza
Washington, D.C. 20037 Chicago, Illinois 60603
(202) 785-9700 (312) 853-7000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
NUMBER OF SHARES MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE(3)
<S> <C> <C> <C> <C>
Common Stock, $.01 par value..................... 9,200,000 $16.00 $147,200,000 $44,607
</TABLE>
(1) Includes 1,200,000 Shares subject to the Underwriters' over-allotment
option.
(2) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457(c).
(3) $34,849 previously paid on or about October 1, 1996.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
THIS REGISTRATION STATEMENT CONTAINS TWO FORMS OF PROSPECTUS: ONE TO BE USED
IN CONNECTION WITH A UNITED STATES OFFERING (THE "U.S. PROSPECTUS") AND ONE TO
BE USED IN CONNECTION WITH A CONCURRENT INTERNATIONAL OFFERING (THE
"INTERNATIONAL PROSPECTUS"). THE U.S. PROSPECTUS AND THE INTERNATIONAL
PROSPECTUS ARE IDENTICAL EXCEPT THAT THEY CONTAIN DIFFERENT FRONT COVER PAGES.
THE FORM OF U.S. PROSPECTUS IS INCLUDED HEREIN AND THE FRONT COVER PAGE OF THE
INTERNATIONAL PROSPECTUS WHICH IS LABELLED "ALTERNATE PAGE FOR INTERNATIONAL
PROSPECTUS" FOLLOWS THE FRONT COVER PAGE FOR THE U.S. PROSPECTUS.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS (SUBJECT TO COMPLETION)
ISSUED FEBRUARY 20, 1997
8,000,000 SHARES
[LOGO]
COMMON STOCK
-----------------
OF THE 8,000,000 SHARES OF COMMON STOCK BEING OFFERED, 3,000,000 SHARES ARE
BEING OFFERED BY THE COMPANY AND 5,000,000 SHARES
ARE BEING OFFERED BY THE SELLING STOCKHOLDERS. THE COMPANY WILL NOT
RECEIVE ANY OF THE PROCEEDS FROM THE SALE OF SHARES BY THE SELLING
STOCKHOLDERS. SEE "PRINCIPAL AND SELLING STOCKHOLDERS." OF THE
8,000,000 SHARES OF COMMON STOCK BEING OFFERED, 6,400,000 SHARES
ARE BEING OFFERED INITIALLY IN THE UNITED STATES AND CANADA BY
THE U.S. UNDERWRITERS AND 1,600,000 SHARES ARE BEING OFFERED
INITIALLY OUTSIDE OF THE UNITED STATES AND CANADA BY THE
INTERNATIONAL UNDERWRITERS. SEE "UNDERWRITERS." PRIOR TO
THIS OFFERING, THERE HAS BEEN NO PUBLIC MARKET FOR THE
COMMON STOCK OF THE COMPANY. IT IS CURRENTLY
ANTICIPATED THAT THE INITIAL PUBLIC OFFERING
PRICE PER SHARE WILL BE BETWEEN $14 AND $16.
SEE "UNDERWRITERS" FOR A DISCUSSION OF
FACTORS CONSIDERED IN DETERMINING THE
INITIAL PUBLIC OFFERING PRICE.
------------------------
THE COMMON STOCK HAS BEEN APPROVED FOR QUOTATION ON THE NASDAQ NATIONAL MARKET
UNDER THE SYMBOL "OMQP."
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------
PRICE $ A SHARE
-------------------
<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY (2) STOCKHOLDERS (3)
--------------------- --------------------- --------------------- ------------------------
<S> <C> <C> <C> <C>
PER SHARE............ $ $ $ $
TOTAL (3)............ $ $ $ $
</TABLE>
- ---------
(1) THE COMPANY AND THE SELLING STOCKHOLDERS HAVE AGREED TO INDEMNIFY THE
UNDERWRITERS AGAINST CERTAIN LIABILITIES, INCLUDING LIABILITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.
(2) BEFORE DEDUCTING EXPENSES PAYABLE BY THE COMPANY ESTIMATED AT $1,750,000.
(3) THE SELLING STOCKHOLDERS HAVE GRANTED TO THE U.S. UNDERWRITERS AN OPTION,
EXERCISABLE FOR 30 DAYS FROM THE DATE HEREOF, TO PURCHASE AN AGGREGATE OF
1,200,000 ADDITIONAL SHARES OF COMMON STOCK AT THE PRICE TO PUBLIC LESS
UNDERWRITING DISCOUNTS AND COMMISSIONS FOR THE PURPOSE OF COVERING
OVER-ALLOTMENTS, IF ANY. IF THE U.S. UNDERWRITERS EXERCISE SUCH OPTION IN
FULL, THE TOTAL PRICE TO PUBLIC, UNDERWRITING DISCOUNTS AND COMMISSIONS,
PROCEEDS TO COMPANY AND PROCEEDS TO SELLING STOCKHOLDERS WILL BE $ ,
$ , $ AND $ , RESPECTIVELY. SEE "UNDERWRITERS."
------------------------
THE SHARES ARE OFFERED, SUBJECT TO PRIOR SALE, WHEN, AS AND IF ACCEPTED BY
THE UNDERWRITERS NAMED HEREIN AND SUBJECT TO APPROVAL OF CERTAIN LEGAL MATTERS
BY SIDLEY & AUSTIN, COUNSEL FOR THE UNDERWRITERS. IT IS EXPECTED THAT DELIVERY
OF THE SHARES WILL BE MADE ON OR ABOUT MARCH , 1997 AT THE OFFICES OF MORGAN
STANLEY & CO. INCORPORATED, NEW YORK, N.Y., AGAINST PAYMENT THEREFOR IN
IMMEDIATELY AVAILABLE FUNDS.
-------------------
MORGAN STANLEY & CO.
INCORPORATED
CREDIT SUISSE FIRST BOSTON
SCHRODER WERTHEIM & CO.
ROBERT W. BAIRD & CO. INCORPORATED
, 1997
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY
NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
PROSPECTUS (SUBJECT TO COMPLETION)
ISSUED FEBRUARY 20, 1997
8,000,000 SHARES
[LOGO]
COMMON STOCK
-----------------
OF THE 8,000,000 SHARES OF COMMON STOCK BEING OFFERED, 3,000,000 SHARES ARE
BEING OFFERED BY THE COMPANY AND 5,000,000 SHARES ARE BEING OFFERED BY THE
SELLING STOCKHOLDERS. THE COMPANY WILL NOT RECEIVE ANY OF THE PROCEEDS
FROM THE SALE OF SHARES BY THE SELLING STOCKHOLDERS. SEE "PRINCIPAL AND
SELLING STOCKHOLDERS." OF THE 8,000,000 SHARES OF COMMON STOCK BEING
OFFERED, 1,600,000 SHARES ARE BEING OFFERED INITIALLY OUTSIDE OF THE
UNITED STATES AND CANADA BY THE INTERNATIONAL UNDERWRITERS AND
6,400,000 SHARES ARE BEING OFFERED INITIALLY IN THE UNITED
STATES AND CANADA BY THE U.S. UNDERWRITERS. SEE
"UNDERWRITERS." PRIOR TO THIS OFFERING, THERE HAS BEEN NO
PUBLIC MARKET FOR THE COMMON STOCK OF THE COMPANY. IT IS
CURRENTLY ANTICIPATED THAT THE INITIAL PUBLIC OFFERING
PRICE PER SHARE WILL BE BETWEEN $14 AND $16. SEE
"UNDERWRITERS" FOR A DISCUSSION OF THE FACTORS
CONSIDERED IN DETERMINING THE
INITIAL PUBLIC OFFERING PRICE.
------------------------
THE COMMON STOCK HAS BEEN APPROVED FOR QUOTATION ON THE NASDAQ NATIONAL MARKET
UNDER THE SYMBOL "OMQP."
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
-------------------
PRICE $ A SHARE
-------------------
<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDERS (3)
--------------------- --------------------- --------------------- ------------------------
<S> <C> <C> <C> <C>
PER SHARE............ $ $ $ $
TOTAL(3)............. $ $ $ $
</TABLE>
- ---------
(1) THE COMPANY AND THE SELLING STOCKHOLDERS HAVE AGREED TO INDEMNIFY THE
UNDERWRITERS AGAINST CERTAIN LIABILITIES, INCLUDING LIABILITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.
(2) BEFORE DEDUCTING EXPENSES PAYABLE BY THE COMPANY ESTIMATED AT $1,750,000.
<PAGE>
(3) THE SELLING STOCKHOLDERS HAVE GRANTED TO THE U.S. UNDERWRITERS AN OPTION,
EXERCISABLE FOR 30 DAYS FROM THE DATE HEREOF TO PURCHASE AN AGGREGATE OF
1,200,000 ADDITIONAL SHARES OF COMMON STOCK AT THE PRICE TO PUBLIC LESS
UNDERWRITING DISCOUNTS AND COMMISSIONS FOR THE PURPOSE OF COVERING
OVER-ALLOTMENTS, IF ANY. IF THE U.S. UNDERWRITERS EXERCISE SUCH OPTION IN
FULL, THE TOTAL PRICE TO PUBLIC, UNDERWRITING DISCOUNTS AND COMMISSIONS,
PROCEEDS TO COMPANY AND PROCEEDS TO SELLING STOCKHOLDERS WILL BE $ ,
$ , $ AND $ , RESPECTIVELY. SEE "UNDERWRITERS."
------------------------
THE SHARES ARE OFFERED, SUBJECT TO PRIOR SALE, WHEN, AS AND IF ACCEPTED BY
THE UNDERWRITERS NAMED HEREIN AND SUBJECT TO APPROVAL OF CERTAIN LEGAL MATTERS
BY SIDLEY & AUSTIN, COUNSEL FOR THE UNDERWRITERS. IT IS EXPECTED THAT DELIVERY
OF THE SHARES WILL BE MADE ON OR ABOUT MARCH , 1997 AT THE OFFICES OF MORGAN
STANLEY & CO. INCORPORATED, NEW YORK, N.Y., AGAINST PAYMENT THEREFOR IN
IMMEDIATELY AVAILABLE FUNDS.
-------------------
MORGAN STANLEY & CO.
INTERNATIONAL
CREDIT SUISSE FIRST BOSTON
SCHRODERS
ROBERT W. BAIRD & CO. INCORPORATED
, 1997
<PAGE>
[INSIDE FRONT COVER OF PROSPECTUS]
Photo: LULL brand telescopic material handler placing a load in front of the
machine.
Photo: SKY TRAK brand telescopic material handler using a truss boom in a crane
application.
Photo: SKY TRAK brand telescopic material handler with auger attachment on
uneven terrain.
Photo: LULL brand telescopic material handler with a fork attachment placing a
load on the roof of a building.
<PAGE>
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------
UNTIL , 1997 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
------------------------
For investors outside of the United States: No action has been or will be
taken in any jurisdiction by the Company or any Underwriter that would permit a
public offering of the Common Stock or possession or distribution of this
Prospectus in any jurisdiction where action for that purpose is required, other
than in the United States. Persons into whose possession this Prospectus comes
are required by the Company and the Underwriters to inform themselves about and
to observe any restrictions as to the offering of the Common Stock and the
distribution of this Prospectus.
------------------------
In this Prospectus references to "dollar" and "$" are to United States
dollars, and the term "United States" or "U.S." means the United States of
America, its states, its territories, its possessions and all areas subject to
its jurisdiction.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 6
Use of Proceeds................................ 11
Dividend Policy................................ 11
Capitalization................................. 12
Dilution....................................... 13
Selected Consolidated Financial Data........... 14
Management's Discussion and Analysis of Results
of Operations and Financial Condition........ 16
Pro Forma Financial Information................ 25
Management's Discussion and Analysis of Pro
Forma Results of Operations and Financial
Condition.................................... 28
<CAPTION>
PAGE
-----
<S> <C>
Business....................................... 34
Management..................................... 45
Principal and Selling Stockholders............. 51
Certain Transactions........................... 52
Description of Capital Stock................... 56
Shares Eligible for Future Sale................ 58
Certain U.S. Federal Tax Considerations for
Non-U.S. Holders of Common Stock............. 60
Underwriters................................... 63
Legal Matters.................................. 66
Experts........................................ 66
Additional Information......................... 67
Index to Financial Statements.................. F-1
</TABLE>
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DURING THIS OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING IN
THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE COMMON STOCK PURSUANT TO EXEMPTIONS FROM RULES 10b-6,
10b-7 AND 10b-8 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY INFORMATION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO, AND SHOULD BE READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND
FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED ELSEWHERE IN THIS
PROSPECTUS. THE COMPANY OWNS THE TRADEMARKS SKY TRAK-REGISTERED TRADEMARK-, SCAT
TRAK-REGISTERED TRADEMARK-, TRAK INTERNATIONAL-REGISTERED TRADEMARK-,
LULL-REGISTERED TRADEMARK-, DYNA LUGGER-REGISTERED TRADEMARK- AND MILLENNIA-TM-.
OTHER TRADEMARKS APPEARING IN THIS PROSPECTUS ARE THE PROPERTY OF THEIR
RESPECTIVE HOLDERS. UNLESS OTHERWISE INDICATED, OR UNLESS THE CONTEXT OTHERWISE
REQUIRES, THE "COMPANY" OR "OMNIQUIP" AS USED IN THIS PROSPECTUS REFERS TO
OMNIQUIP INTERNATIONAL, INC., ITS PREDECESSORS AND SUBSIDIARIES, "INVESTMENTS
L.P." REFERS TO HARBOUR GROUP INVESTMENTS III, L.P., AND "UNIQUIP L.P." REFERS
TO UNIQUIP-HGI ASSOCIATES, L.P. UNLESS OTHERWISE INDICATED, ALL INFORMATION IN
THIS PROSPECTUS ASSUMES THAT THE UNDERWRITERS' OVER-ALLOTMENT OPTION IS NOT
EXERCISED.
THE COMPANY
The Company is the largest North American manufacturer of telescopic
material handlers, and also manufactures a line of skid steer loaders, as well
as a limited range of other material handling equipment. Omniquip's highly
versatile products are used in a wide variety of applications by commercial and
residential building contractors, as well as other construction, military,
industrial, municipal and agricultural end-users. The Company's telescopic
material handlers are marketed under the well recognized and highly regarded SKY
TRAK and LULL brand names. Based upon industry reports, the Company believes
that its North American market share of 1996 shipments of telescopic material
handlers was approximately 40%.
Telescopic material handlers are especially useful in rough terrain
environments and congested job sites, where their maneuverability and ability to
raise, extend and lower payloads provide significant advantages over more
traditional material handling equipment, such as cranes, straight-mast forklifts
and elevators. The Company's telescopic material handlers have a maximum lift
capacity of 5,000 pounds to 10,000 pounds and can position payloads from 28 feet
to 54 feet above the ground or 15 feet to 39 feet in front of the machine's
chassis. The versatility of these units allows users to lower overall costs by
substituting a single telescopic material handler for one or more other types of
material handling equipment, as well as for certain labor intensive material
handling tasks. The Company believes it manufactures the broadest product line
of telescopic material handlers in North America. Shipments of commercial
telescopic material handlers marketed under the SKY TRAK and LULL brand names
increased from approximately 950 units in calendar 1990 to approximately 2,900
units in 1996. In addition, Omniquip has been the principal supplier since 1988
of telescopic material handlers to the U.S. military, having delivered over
2,800 such units for use in loading and unloading containers and palletized
loads for ships, aircraft and trucks as well as for munitions handling and
reloading multiple rocket launchers. In 1995, the Company was awarded a contract
to supply the Army and related agencies with a new generation of telescopic
material handlers to support the logistics requirements of the Rapid Deployment
Forces. The Army has estimated that its requirements under the contract could
range up to a maximum of 1,200 vehicles, or a maximum contract value of $120
million. Shipments under the contract are expected to begin in fiscal year 1997.
The Company believes that this contract will enhance its ability to pursue sales
to other branches of the United States armed forces and foreign military
agencies. See "Risk Factors--ATLAS Contract."
The Company has experienced significant growth in sales of its skid steer
loaders, principally marketed under the SCAT TRAK brand name, with shipments of
approximately 120 units in calendar 1990, increasing to shipments of
approximately 1,250 units in 1996. Skid steer loaders are compact and versatile
machines used to dig, lift and handle bulk materials such as dirt, construction
materials, waste, farm produce and snow. The compact size, maneuverability and
ease of transport make skid steer loaders well-suited for a wide variety of
applications. The Company's skid steer loaders can lift and position maximum
payloads of 1,300 pounds to 1,750 pounds to a maximum lift height of 112 inches
to 121 inches.
3
<PAGE>
The Company competes principally in selected segments of the material
handling and construction equipment markets which utilize engines of less than
130 horsepower. The Company believes that these segments have typically
experienced a higher level of growth in recent years than general construction
equipment markets. North American shipments of construction and allied equipment
grew from $30.8 billion in 1990 to $38.9 billion in 1995, representing a nominal
compound annual growth rate of 4.8%. According to industry estimates, shipments
of telescopic material handlers in North America grew from approximately 2,400
units in 1990 to approximately 7,100 units in 1996, representing a real compound
annual growth rate of 19.8%, and sales of skid steer loaders in North America
grew from approximately 27,000 units in 1990 to approximately 44,700 units in
1996, representing a real compound annual growth rate of 8.8%. The Company
believes higher growth rates for telescopic material handlers and skid steer
loaders are attributable to a number of factors, including the following: high
product versatility, increased productivity provided by these products,
significant growth in demand for equipment rentals, and growth in demand for
these products for non-construction applications.
The Company's strategy is to grow within segments of the material handling
and construction equipment markets which typically are not dominated by
full-line construction equipment manufacturers, which are growing faster than
the construction industry generally, and which typically utilize local
independent dealers for distribution rather than regional distributorships
primarily dedicated to products made by a single manufacturer. The Company
intends to achieve its business strategy by providing superior products,
pursuing a multiple brand distribution strategy, acquiring complementary
businesses, achieving cost savings from the integration of acquired operations,
and leveraging its position as a leading North American manufacturer to expand
its penetration of global markets.
The Company was formed in 1995 by Investments L.P. in connection with the
acquisition of TRAK International, Inc. ("TRAK"), a manufacturer of telescopic
material handlers and skid steer loaders. TRAK was the first company to
introduce the arc boom forklift, the precursor to the telescopic material
handler, in 1956. In August 1996, the Company acquired the business and
substantially all of the assets of Lull Industries, Inc. ("Lull"), a
manufacturer of telescopic material handlers, with a small product line of skid
steer loaders, articulated forklifts and tenders, masonry tenders and motorized
wheelbarrows. Lull's business was founded in 1956.
The Company's principal executive offices are located at 369 West Western
Avenue, Port Washington, Wisconsin 53074, and its telephone number is (414)
284-5571.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered............ 8,000,000 shares
3,000,000 shares by the Company
5,000,000 shares by the Selling Stockholders
U.S. offering................. 6,400,000 shares
International offering........ 1,600,000 shares
Common Stock to be outstanding
after the Offering............ 14,250,000 shares
Use of proceeds................. To repay certain indebtedness. See "Use of Proceeds."
Nasdaq Symbol................... OMQP
Dividend Policy................. The Company expects to pay a quarterly cash dividend of
$0.01 per share. See "Dividend Policy."
</TABLE>
4
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The following summary historical consolidated and unaudited pro forma
consolidated financial data were derived from the historical consolidated
financial statements of the Company or TRAK, as the predecessor to the Company,
and the pro forma financial information of the Company, included elsewhere
herein. The information contained in this table should be read in conjunction
with "Capitalization," "Selected Consolidated Financial Data," "Management's
Discussion and Analysis of Results of Operations and Financial Condition," "Pro
Forma Financial Information," "Management's Discussion and Analysis of Pro Forma
Results of Operations and Financial Condition," and the financial statements
included elsewhere herein.
<TABLE>
<CAPTION>
PREDECESSOR(1) COMPANY
------------------------------- -------------------------------------------------------------------
FISCAL YEARS OCT. 1, AUG. 17, FISCAL THREE MONTHS
ENDED 1994 1995 YEAR ENDED
SEPT. 30, THROUGH THROUGH ENDED DEC. 31,
---------------- AUG. 16, SEPT. 30, SEPT. 30, ------------------
1993 1994 1995 1995 1996(2) 1995 1996(2)
------- ------- ------------- -------------- ---------- ------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............. $50,068 $60,973 $75,401 $12,723 $124,861 $ 23,487 $ 59,166
Cost of sales......... 39,183 47,208 57,707 9,787 92,688 17,330 43,887
------- ------- ------------- ------- ---------- ------------- -------------
Gross profit.......... 10,885 13,765 17,694 2,936 32,173 6,157 15,279
Selling, general and
administrative
expenses............ 8,290 9,502 10,903 1,670 16,311 3,609 5,755
Boom warranty
charge.............. -- -- -- -- -- -- --
------- ------- ------------- ------- ---------- ------------- -------------
Operating income...... 2,595 4,263 6,791 1,266 15,862 2,548 9,524
Interest expense...... 1,140 1,363 1,379 353 3,434 666 2,183
Other finance
charges............. 570 699 1,121 269 2,012 529 589
------- ------- ------------- ------- ---------- ------------- -------------
Income before income
taxes............... 885 2,201 4,291 644 10,416 1,353 6,752
Provision for income
taxes............... 368 876 1,762 262 4,060 548 2,774
------- ------- ------------- ------- ---------- ------------- -------------
Income before
extraordinary item
and change in
accounting
principles.......... 517 1,325 2,529 382 6,356 805 3,978
Cumulative effect of
change in accounting
principles.......... 199(5) -- (241)(6) -- -- -- --
Extraordinary loss.... -- -- -- -- (314)(7) -- --
------- ------- ------------- ------- ---------- ------------- -------------
Net income............ $ 716 $ 1,325 $ 2,288 $ 382 $ 6,042 $ 805 $ 3,978
------- ------- ------------- ------- ---------- ------------- -------------
------- ------- ------------- ------- ---------- ------------- -------------
Earnings per share(8):
Income before
extraordinary
item.............. $ .03 $ .56 $ .07 $ .35
Net income.......... $ .03 $ .53 $ .07 $ .35
<CAPTION>
PRO FORMA(3)
---------------------------------
FISCAL YEAR THREE MONTHS
ENDED ENDED
SEPT. 30, DEC. 31,
1996 1996
------------- -------------
<S> <C> <C> <C>
STATEMENT OF OPERATION
Net sales............. $207,239 $ 59,166
Cost of sales......... 158,567 43,887
------------- -------------
Gross profit.......... 48,672 15,279
Selling, general and
administrative
expenses............ 24,573 5,918
Boom warranty
charge.............. 2,881(4) --
------------- -------------
Operating income...... 21,218 9,361
Interest expense...... 5,478 1,009
Other finance
charges............. 1,332 589
------------- -------------
Income before income
taxes............... 14,408 7,763
Provision for income
taxes............... 5,642 3,178
------------- -------------
Income before
extraordinary item
and change in
accounting
principles.......... 8,766 4,585
Cumulative effect of
change in accounting
principles.......... --
Extraordinary loss.... --
------------- -------------
Net income............ $ 8,766 $ 4,585
------------- -------------
------------- -------------
Earnings per share(8):
Income before
extraordinary
item.............. $ .62 $ .32
Net income.......... $ .62 $ .32
</TABLE>
<TABLE>
<CAPTION>
COMPANY
------------------------------
DECEMBER 31, 1996
------------------------------
AS
ACTUAL ADJUSTED(9)
-------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............... $ 15,362 $ 16,152
Total assets.................. 139,020 139,020
Short-term debt............... 4,500 4,500
Long-term debt................ 82,100 43,165
Stockholders' equity.......... 16,403 56,128
</TABLE>
- ----------------------------------
(1) The Company was organized in August 1995 for the purpose of acquiring TRAK,
the predecessor company.
(2) Amounts for fiscal year ended September 30, 1996 and for the quarter ended
December 31, 1996 reflect the acquisition of Lull on August 15, 1996.
(3) Amounts give effect to the pro forma transactions described under "Pro Forma
Financial Information," including the notes thereto.
(4) In the quarter ended December 31, 1995, Lull determined that a specific
warranty obligation had been incurred on certain boom units manufactured and
recorded a pre-tax charge to operations of $2,881.
(5) In October 1992, TRAK adopted Statement of Financial Accounting Standards,
No. 109, "Accounting for Income Taxes" (SFAS 109). The cumulative effect of
adopting SFAS 109 was to record a net tax benefit of $199.
(6) In October 1994, TRAK adopted Statement of Financial Accounting Standards,
No. 106, "Employer's Accounting for Postretirement Benefits Other Than
Pensions" (SFAS 106). The cumulative effect of adopting SFAS 106 was to
record a charge of $241, net of income tax benefits.
(7) In August 1996, the Company incurred an extraordinary loss of $314, net of
income tax benefits of $200, related to the write-off of deferred finance
charges in connection with the refinancing of debt.
(8) Given the historical organization and capital structure of TRAK, as
predecessor to the Company, earnings per share information is not considered
meaningful for the predecessor. Historical reported earnings per share of
the Company are based on 11,250,000 shares of Common Stock outstanding. Pro
forma earnings per share are based on 14,250,000 shares of Common Stock
outstanding after giving effect to the Offering.
(9) Amounts give effect to the issuance and sale of Common Stock in the Offering
and the application of the net proceeds therefrom to the repayment of
indebtedness.
5
<PAGE>
RISK FACTORS
PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY SHOULD CAREFULLY
CONSIDER THE FOLLOWING FACTORS, AS WELL AS THE OTHER INFORMATION CONTAINED IN
THIS PROSPECTUS.
ABSENCE OF CONSOLIDATED OPERATING HISTORY; RECENT ACQUISITION
The Company was formed in August 1995 in connection with the acquisition of
TRAK. Subsequently, the Company acquired the business and substantially all of
the assets of Lull in August 1996. There can be no assurance that the Company
will be successful in integrating the operations of Lull, that such integration
will not divert management resources or cause temporary disruptions in the
management of the business or that the Company will realize the contemplated
manufacturing, purchasing and other efficiencies from such integration. In
addition, there can be no assurance that the Company will not experience
unanticipated liabilities or other problems arising subsequent to the completion
of this acquisition, or that this acquisition and any subsequent integration
will not otherwise have an adverse effect on the Company. See "Business."
CYCLICALITY
The markets for the Company's products have historically been cyclical.
Because the Company's products are used primarily in the construction industry,
its sales, and therefore its results of operations, are significantly dependent
upon the general state of the economy, regional economic conditions, interest
rates and other factors affecting residential and commercial building
activities. During periods of expansion in construction activity, the Company
generally has benefited from increased demand for construction equipment.
Conversely, during recessionary times, the Company has been adversely affected
by declines in demand for such products, due not only to decreased sales but
also to increased losses under the Company's various guarantees pursuant to
dealer floor-plan and rental fleet financing arrangements. In addition, sales to
the equipment rental industry may be more cyclical than sales of construction
equipment generally. While the Company believes that increased sales of its
products to military, agricultural and industrial end-users may mitigate to some
extent the effects of cyclicality in the construction industry, there can be no
assurance that growth in the markets for the Company's products will occur or
that such growth will result in increased demand for the Company's products. See
"Management's Discussion and Analysis of Results of Operations and Financial
Condition," "Management's Discussion and Analysis of Pro Forma Results of
Operations and Financial Condition" and "Business."
ATLAS CONTRACT
In 1995, the Company was awarded a four year, fixed-price contract by the
United States Army, United States Army Reserve and National Guard (collectively,
the "Army") for the supply of the Army's requirements for the All-Terrain
Lifter, Army System ("ATLAS"), the next generation of the military version of
the Company's commercial telescopic material handler. The contract covers the
Army's requirements for ATLAS vehicles over the four year period ending May
1999. Such requirements have been estimated by the Army to range up to a maximum
of 1,200 vehicles, or a maximum contract value of $120 million, but such
estimates are not binding and actual purchase orders received from the Army
under the contract may be significantly less than the maximum estimated amounts.
The Army has the contract option to purchase up to an additional 300 units above
the 1,200 unit maximum. The Company has completed testing five prototype
vehicles and has received from the Army initial orders for 224 vehicles, none of
which can be shipped until the Army satisfactorily completes further testing of
a random sample of units. There can be no assurance that the Army will be
satisfied with either the prototypes or initial units manufactured, that
modifications required, if any, as a result of Army testing will not result in a
material increase in the cost to the Company to produce such units, that the
Army will place orders for any specified number of units, that the Army, if it
purchases units under the contract, will purchase additional units after
6
<PAGE>
the expiration of the contract, that the U.S. Congress will appropriate
necessary funds to permit the purchase of desired units or that the Army will
not take other actions, including termination of the contract, which could have
a material adverse effect on the Company. In addition, there can be no assurance
that any sales made by the Company under the contract will be profitable. See
"Business."
ACQUISITION STRATEGY
The Company expects to continue a strategy of identifying and acquiring
companies with complementary products or services which could be expected to
enhance the Company's operations and profitability. There can be no assurance
that the Company will continue to identify suitable new acquisition candidates,
obtain financing necessary to complete such acquisitions or acquire businesses
on satisfactory terms or that any business acquired by the Company will be
integrated successfully into the Company's operations or prove to be profitable.
The Company could incur substantial indebtedness in connection with its
acquisition strategy.
PRODUCT RECALL
From time to time, the Company discovers defects in product design for
existing products which require it to take steps to correct or retrofit, at the
Company's expense, previously sold products. Currently, the Company is in the
process of correcting a defect in its LULL brand of telescopic material
handlers. In 1995, prior to the acquisition by the Company, Lull established
reserves of approximately $2.9 million for the cost of retrofitting such
telescopic material handlers. As of December 31, 1996, such reserve was
approximately $0.9 million. The Company also has a reserve of approximately $0.9
million as of December 31, 1996 relating to corrective warranty work being
undertaken with respect to two models of skid steer loaders. There can be no
assurance, however, that the ultimate cost of correcting these defects will not
exceed the amount of the previously-established reserves, that the defects will
not adversely affect the Company's reputation or result in a decline in sales of
the Company's products or that action required to be taken to correct these
defects will not result in additional temporary disruptions in the Company's
business. See "Management's Discussion and Analysis of Pro Forma Results of
Operations and Financial Condition--Seasonality and Pro Forma Quarterly Results"
and "Business--Product Liability and Product Recall."
DEALER FINANCE ARRANGEMENTS
The Company assists its dealers in floor plan and rental fleet financing
arrangements. In connection therewith, the Company has undertaken certain
guarantee and repurchase obligations, generally subject to certain limitations.
Although the Company has not incurred any material losses pursuant to these
arrangements in recent years, there can be no assurance that the Company will
not incur such losses in the future. See "Management's Discussion and Analysis
of Results of Operations and Financial Condition-- Capital Resources and
Liquidity" and "Business--Marketing and Distribution--Financing."
DEPENDENCE ON CERTAIN SUPPLIERS
Certain of the components included in the Company's products are obtained
from a single supplier or a limited number of suppliers. Disruption or
termination of supplier relationships could have an adverse effect on the
Company's operations. The Company believes that alternative sources could be
obtained, if necessary, but the inability to obtain sufficient quantities of the
components or the need to develop alternative sources, if and as required in the
future, could result in delays or reductions in product shipments, or higher
purchasing costs, which in turn could have an adverse effect on the Company's
results of operations and customer relationships. See "Business--Manufacturing
and Raw Materials."
7
<PAGE>
PRODUCT LIABILITY
From time to time, the Company is the subject of product liability claims
relative to the Company's products, which, if successful, could have a material
adverse impact on the Company. Although the Company maintains liability
insurance coverage that it believes to be adequate, there can be no assurance
that the Company will be able to maintain such coverage or obtain alternate
coverage in the future at a reasonable cost, or that such coverage will be
sufficient to satisfy future claims, if any. See "Business-- Product Liability
and Product Recall."
TECHNOLOGICAL CHANGE
Certain of the Company's products are subject to changing technology which
could place the Company at a competitive disadvantage relative to alternative
products introduced by competitors. There can be no assurance that the Company
will be able to achieve the technological advances or introduce new products
that may be necessary to remain competitive.
COMPETITION
The markets for the Company's products are highly competitive and relatively
fragmented, with a large number of competitors. Many of the Company's
competitors are larger than the Company and have greater financial, marketing
and technical resources. In addition, the Company may encounter competition from
new market entrants. There can be no assurance that competitors will not take
actions, including developing new products, which could adversely affect the
Company's sales and operating results.
DEPENDENCE ON KEY PERSONNEL
The success of the Company's business is dependent upon the management and
leadership skills of P. Enoch Stiff, the Company's President and Chief Executive
Officer, and other members of the Company's senior management team. The Company
does not have employment agreements with, or "key man" life insurance on, Mr.
Stiff and other key executive officers. The loss of the services of Mr. Stiff or
other senior executives could have a material adverse effect on the Company's
business and results of operations. In addition, the future success of the
Company will depend, among other factors, on the Company's ability to continue
to attract and retain qualified personnel. See "Management."
DEPENDENCE ON PRINCIPAL FACILITIES
The Company's operations are conducted principally at two facilities.
Although the Company has not experienced any material disruption of operations
at its key facilities, in the event that operations at any of such facilities
were disrupted as a result of equipment failures, natural disasters, work
stoppages or other reasons, the Company's business and results of operations
could be adversely affected. The Company maintains property damage insurance
which it believes to be adequate to provide for reconstruction of its facilities
and equipment, as well as business interruption insurance to mitigate losses
resulting from any production shutdown caused by an insured loss. However, no
assurance can be given that such insurance will be adequate to cover losses that
may occur.
ENVIRONMENTAL MATTERS
The Company is subject to various federal, state and local environmental
laws and regulations which require compliance with increasingly stringent and
costly requirements. Pursuant to these laws and regulations, the Company may
also be required from time to time to remediate environmental contamination
associated with releases of hazardous substances. Although the costs of
compliance with these requirements have not been material to date, there can be
no assurance that the costs of future compliance will not be material. In
addition, although the Company ordinarily conducts "Phase I" environmental
testing in connection with acquisitions of acquired businesses and additional
testing if
8
<PAGE>
deemed appropriate under the circumstances in order to minimize the risks of
encountering material environmental problems resulting from such acquisitions,
there can be no assurance that the Company will not discover material
unanticipated environmental problems requiring significant expenditures for
corrective action or remediation following the completion of an acquisition. See
"Business-- Environmental and Safety Regulations."
CONTROL BY PRINCIPAL STOCKHOLDERS
Following the completion of the Offering, Uniquip L.P. and Investments L.P.
will own an aggregate 37.5% (or 29.1% if the Underwriters exercise in full the
over-allotment option granted by the Selling Stockholders) of the outstanding
Common Stock. Uniquip L.P. and Investments L.P. are under the common control of
Sam Fox. As a result of their stock ownership, Uniquip L.P. and Investments
L.P., as a practical matter, are likely to be able to elect all the directors of
the Company and to control the Company's affairs. Affiliates of Uniquip L.P. and
Investments L.P. provide certain services to the Company which may give rise to
potential conflicts of interest. See "Principal and Selling Stockholders" and
"Certain Transactions."
SHARES ELIGIBLE FOR FUTURE SALE
Immediately upon consummation of the Offering, the Company will have
outstanding 14,250,000 shares of Common Stock, 8,000,000 (9,200,000 if the
Underwriters exercise in full their over-allotment option) of which will have
been sold in the Offering and will be freely transferable without restriction or
further registration under the Securities Act of 1933, as amended (the
"Securities Act"), except for any of those shares of Common Stock owned at any
time by an "affiliate" of the Company within the meaning of Rule 144 under the
Securities Act, which sales will be subject to the volume limitations and
certain other restrictions set forth in Rule 144. Commencing in August 1997,
approximately 5,687,500 shares of Common Stock held by the Company's existing
stockholders will become eligible for sale in the public market subject to
volume and other restrictions pursuant to Rule 144. An additional 562,500 shares
of Common Stock will become eligible for sale in the public market pursuant to
Rule 144 commencing in September 1997. Uniquip L.P. and Investments L.P., as
well as certain of their transferees, will have certain rights to demand
registration of Common Stock owned by them and will have the right, subject to
certain restrictions and limitations, to participate in future registered sales
of Common Stock by the Company. The sale of any substantial number of shares of
Common Stock following the Offering could have a material adverse impact on the
market price of the Common Stock. See "Certain Transactions-- Agreements with
Existing Stockholders" and "Shares Eligible for Future Sale."
DILUTION
Purchasers of the Common Stock offered hereby will suffer an immediate and
substantial dilution of the net tangible book value per share of the Common
Stock from the initial public offering price. See "Dilution."
DETERMINATION OF OFFERING PRICE AND ABSENCE OF PUBLIC MARKET
Prior to the Offering, there has been no public market for the Company's
Common Stock. Consequently, the initial public offering price will be determined
by negotiation between the Company and the representatives of the Underwriters
based upon factors described under the caption "Underwriters." Recently the
stock market has experienced and is likely to experience in the future
significant price and volume fluctuations which could adversely affect the
market price of the Common Stock without regard to the operating performance of
the Company. In addition, the Company believes that factors such as quarterly
fluctuations in the financial results of the Company or its competitors and
general conditions in the industry, the overall economy and the financial
markets could cause the price of the Common Stock to
9
<PAGE>
fluctuate substantially. There can be no assurance that an active trading market
in the Company's Common Stock will develop subsequent to the Offering or, if
developed, that it will be sustained.
ANTI-TAKEOVER PROVISIONS
Certain provisions in the Company's Restated Certificate of Incorporation
and By-Laws could have the effect of making more difficult or discouraging an
acquisition of the Company deemed undesirable by its Board of Directors. These
include: (i) a classified Board of Directors, (ii) the existence of authorized
but unissued Common Stock and (iii) the existence of authorized but unissued
preferred stock, which could be issued by the Company's Board of Directors
without stockholder approval, containing such terms as the Board of Directors
may approve. In addition, certain provisions of Delaware law applicable to the
Company, including Section 203 of the Delaware General Corporation Law, could
have the effect of delaying, deferring or preventing a change of control of the
Company.
FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements concerning the
Company's operations, economic performance and financial condition, including in
particular, the integration of acquisitions into the Company's existing
operations. 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 those identified under "Risk Factors" and elsewhere
in this Prospectus.
10
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by the Company from its sale of shares of
Common Stock in the Offering (after deduction of estimated underwriting
discounts and commissions and expenses payable by the Company in connection with
the Offering) are estimated to be approximately $40.3 million and are expected
to be used to repay a portion of the Company's outstanding indebtedness. This
indebtedness, including accrued interest, was incurred to finance the
acquisitions of TRAK and Lull. The indebtedness to be repaid includes: (i)
approximately $17.9 million in original principal amount of term and revolving
loans payable to senior bank lenders which bear interest at floating rates that,
as of December 31, 1996, equaled a weighted average effective rate of
approximately 8.6% per annum, and have a final maturity date of August 16, 2003;
(ii) $2.0 million in principal amount of junior subordinated notes payable to
Investments L.P., and $14.0 million in principal amount of junior subordinated
notes payable to a commercial bank lender and guaranteed by Investments L.P.,
all of which bear interest at a rate of 15.0% per annum payable at maturity on
February 28, 2004; and (iii) $5.0 million in principal amount of subordinated
notes payable to an institutional lender which bear interest at a rate of 15.0%
per annum payable quarterly and have a maturity date of February 28, 2004. The
Company will incur a prepayment fee estimated to equal approximately $0.6
million, net of taxes, upon the repayment of its subordinated notes to an
institutional investor. Additionally, the Company will pay approximately $0.8
million in accrued interest on the $14.0 million junior subordinated note
payable.
The Company will not receive any of the proceeds from the sale of shares of
Common Stock by the Selling Stockholders.
DIVIDEND POLICY
The terms of the Company's existing credit facilities prohibit the payment
of dividends. After the Offering, the Company anticipates substantially all
indebtedness outstanding under the credit facilities will be repaid. See "Use of
Proceeds." In anticipation of, and conditioned upon, the Offering, the Company
expects to obtain waivers of the terms or otherwise renegotiate the terms of its
revolving credit facility to permit the payment of dividends, including the
initial quarterly dividend described below. Subject to the revised terms of the
revolving credit facility and approval by its Board of Directors, the Company
intends to commence paying dividends after the Offering. It is expected that an
initial quarterly dividend of $0.01 per share will be paid. All dividend
payments are subject to the terms of the Company's credit facilities and to the
Company's earnings, financial condition and capital requirements at the time of
declaration and will be paid only if, as and to the extent declared by the
Company's Board of Directors.
11
<PAGE>
CAPITALIZATION
The following table sets forth the short-term debt and capitalization of the
Company at December 31, 1996, as adjusted to reflect the issuance and sale of
3,000,000 shares of Common Stock by the Company in the Offering (after deduction
of the estimated underwriting discounts and commissions and expenses of the
Offering) and the application of the net proceeds therefrom to the repayment of
indebtedness. See "Use of Proceeds" and "Selected Consolidated Financial Data."
<TABLE>
<CAPTION>
DECEMBER 31, 1996
----------------------
ACTUAL AS ADJUSTED
--------- -----------
<S> <C> <C>
(IN THOUSANDS, EXCEPT
SHARE DATA)
Short-term debt:
Term loans........................................................................... $ 4,500 $ 4,500
--------- -----------
Total short-term debt............................................................ $ 4,500 $ 4,500
--------- -----------
--------- -----------
Long-term debt (net of current portion):
Term loans........................................................................... $ 55,500 $ 43,165
Revolving credit facility............................................................ 5,600 --
Other subordinated notes payable..................................................... 19,000 --
Subordinated notes payable to Investments L.P........................................ 2,000 --
--------- -----------
Total long-term debt............................................................. 82,100 43,165
--------- -----------
Stockholders' equity:
Preferred stock, $.01 par value; authorized: 1,500,000 shares; issued and
outstanding: none.................................................................. -- --
Common stock, $.01 par value; authorized: 100,000,000 shares; issued and outstanding:
11,250,000 shares (14,250,000 as adjusted)......................................... 113 143
Additional paid-in capital........................................................... 6,240 46,535
Stockholder notes receivable......................................................... (352) (352)
Retained earnings.................................................................... 10,402 9,802(1)
--------- -----------
Total stockholders' equity....................................................... 16,403 56,128
--------- -----------
Total capitalization........................................................... $ 98,503 $ 99,293
--------- -----------
--------- -----------
</TABLE>
- ------------------------
(1) Reduction in retained earnings represents effect of an extraordinary charge
to income for the prepayment penalty incurred in connection with the
repayment of debt, net of related tax benefits, of $600.
12
<PAGE>
DILUTION
Per share amounts set forth below are calculated on the basis of 11,250,000
shares of Common Stock outstanding as of December 31, 1996. The net tangible
book deficit of the Company at December 31, 1996 was ($50.6 million), or ($4.50)
per share. Without taking into account any changes in net tangible book value
after December 31, 1996, other than to give effect to (i) the sale of 3,000,000
shares of Common Stock to be sold by the Company in the Offering at an assumed
public offering price of $15.00 per share (reduced for estimated underwriting
discounts and commissions and expenses of the Offering to be paid by the
Company) and (ii) the application of the net proceeds therefrom, the net
tangible book deficit of the Company as of December 31, 1996 would have been
$(10.9) million, or $(0.76) per share. This represents an immediate increase in
net tangible book value of $3.74 per share to the existing stockholders and an
immediate dilution in net tangible book value to investors in the Offering of
$15.76 per share. The following table illustrates the per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............ $ 15.00
Net tangible book deficit per share before the
Offering(1)............................................ ($ 4.50)
Increase in net tangible book value per share
attributable to price paid by investors in the
Offering............................................... 3.74
---------
Net tangible book deficit per share after the Offering..... (0.76)
Dilution in net tangible book value per share to investors
in the Offering(2)....................................... $ 15.76
---------
---------
</TABLE>
- ------------------------
(1) Net tangible book value (deficit) per share is determined by dividing the
net tangible book value (deficit) of the Company by the number of
outstanding shares of Common Stock. Net tangible book value (deficit) is
calculated as total assets, less goodwill, patents, trademarks and other
intangibles (net of amortization) and total liabilities.
(2) Dilution is determined by subtracting net tangible book value (deficit) per
share after giving effect to the Offering from the initial public offering
price paid by investors in the Offering.
The following table summarizes as of December 31, 1996 (based on the
assumptions set forth above regarding the Offering), the number of shares of
Common Stock purchased from the Company, the total consideration paid to the
Company (equal, in the case of the existing stockholders, to the original
consideration for the shares of Common Stock held by them plus additional
contributions made by them in respect of the Common Stock), and the average
price per share paid by the existing stockholders and by the investors
purchasing shares of Common Stock in the Offering (based on an assumed initial
public offering price of $15.00 per share). See "Principal and Selling
Stockholders" and "Certain Transactions -- Related Party Transactions."
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------------- -------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------------ ----------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1)........................... 11,250,000 78.9% $ 6,353,000 12.4% $ 0.56
New investors...................................... 3,000,000 21.1 45,000,000 87.6 15.00
------------ ----- ------------- -----
Total........................................ 14,250,000 100.0% $ 51,353,000 100.0% $ 3.60
------------ ----- ------------- ----- -----
------------ ----- ------------- ----- -----
</TABLE>
- ------------------------
(1) After the sale of 5,000,000 shares by the Selling Stockholders in the
Offering, shares held by existing stockholders will decrease to 6,250,000,
or approximately 43.9% of the total number of shares of Common Stock to be
outstanding after the Offering. Further, the Selling Stockholders have
granted to the Underwriters an option to purchase up to 1,200,000 shares to
cover over-allotments, if any. If such option is exercised in full, such
sales by the Selling Stockholders will decrease the number of shares held by
existing stockholders to 5,050,000, or approximately 35.4% of the total
number of shares of Common Stock to be outstanding after the Offering. See
"Principal and Selling Stockholders."
13
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below for the fiscal year
ended September 30, 1994, the period October 1, 1994 through August 16, 1995,
the period August 17, 1995 through September 30, 1995 and the fiscal year ended
September 30, 1996 are derived from the consolidated financial statements of the
Company or TRAK, as the predecessor to the Company, included herein which have
been audited by Price Waterhouse LLP, independent accountants. The data for the
fiscal years ended September 30, 1992 and 1993 are derived from the audited
financial statements of TRAK which are not included herein. The consolidated
financial data for the three months ended December 31, 1995 and 1996,
respectively, have been derived from the unaudited consolidated financial
statements of the Company, which, in the opinion of the Company's management,
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of financial position and results of
operations. The operating results of the Company for the three months ended
December 31, 1996 are not necessarily indicative of the operating results that
may be expected for the full year. The data set forth below should be read in
conjunction with the reports of the independent accountants, the Consolidated
Financial Statements and related Notes to the Consolidated Financial Statements
of the Company and TRAK, and "Management's Discussion and Analysis of Results of
Operations and Financial Condition," all included elsewhere herein.
<TABLE>
<CAPTION>
PREDECESSOR(1) COMPANY
---------------------------------------- ------------------------------------------
FISCAL
YEAR THREE MONTHS
FISCAL YEARS ENDED ENDED ENDED
SEPT. 30, OCT. 1, 1994 AUG. 17, 1995 SEPT. DEC. 31,
------------------------- THROUGH THROUGH 30, ----------------
1992 1993 1994 AUG. 16, 1995 SEPT. 30, 1995 1996(2) 1995 1996(2)
------- ------- ------- ------------- -------------- ------- ------- -------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................... $66,575 $50,068 $60,973 $75,401 $12,723 $124,861 $23,487 $59,166
Cost of sales........................... 54,150 39,183 47,208 57,707 9,787 92,688 17,330 43,887
------- ------- ------- ------------- ------- ------- ------- -------
Gross profit............................ 12,425 10,885 13,765 17,694 2,936 32,173 6,157 15,279
Selling, general and administrative
expenses.............................. 8,819 8,290 9,502 10,903 1,670 16,311 3,609 5,755
------- ------- ------- ------------- ------- ------- ------- -------
Operating income........................ 3,606 2,595 4,263 6,791 1,266 15,862 2,548 9,524
Interest expense........................ 1,368 1,140 1,363 1,379 353 3,434 666 2,183
Other finance charges................... 972 570 699 1,121 269 2,012 529 589
------- ------- ------- ------------- ------- ------- ------- -------
Income before income taxes.............. 1,266 885 2,201 4,291 644 10,416 1,353 6,752
Provision for income taxes.............. 633 368 876 1,762 262 4,060 548 2,774
------- ------- ------- ------------- ------- ------- ------- -------
Income before extraordinary credit and
change in accounting principles....... 633 517 1,325 2,529 382 6,356 805 3,978
Extraordinary item, net(3).............. 573 -- -- -- -- (314 ) -- --
Cumulative effect of change in
accounting principles................. -- 199(4) -- (241)(5) -- -- -- --
------- ------- ------- ------------- ------- ------- ------- -------
Net income.............................. $ 1,206 $ 716 $ 1,325 $ 2,288 $ 382 $6,042 $ 805 $3,978
------- ------- ------- ------------- ------- ------- ------- -------
------- ------- ------- ------------- ------- ------- ------- -------
Earnings per share:(6)(7)
Income before extraordinary item...... $ .03 $.56 $ .07 $ .35
Extraordinary item.................... -- (.03 ) -- --
------- ------- ------- -------
Net income............................ $ .03 $.53 $ .07 $ .35
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
- ------------------------------
(FOOTNOTES ON FOLLOWING PAGE)
14
<PAGE>
<TABLE>
<CAPTION>
PREDECESSOR
-------------------------
SEPT. 30,
-------------------------
1992 1993 1994(8)
------- ------- -------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
BALANCE SHEET DATA:
Working capital (deficit)......................... $ 484 $ 1,111 $ 260
Total assets...................................... 22,852 24,706 28,651
Short-term debt................................... 5,125 8,608 9,436
Long-term debt.................................... 4,644 4,721 2,966
Mandatorily redeemable preferred stock............ 3,000 3,000 3,262
Stockholders' equity (deficit).................... 564 1,019 1,783
<CAPTION>
COMPANY
-------------------------------
SEPT. 30, DEC. 31,
-------------------- --------
1995(8) 1996(2) 1996
--------- -------- --------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)......................... $10,699 $13,393 $ 15,362
Total assets...................................... 48,332 139,580 139,020
Short-term debt................................... 540 3,875 4,500
Long-term debt.................................... 23,781 84,566 82,100
Mandatorily redeemable preferred stock............ -- -- --
Stockholders' equity (deficit).................... 6,383 12,425 16,403
</TABLE>
- ---------------------
(1) The Company was organized in August 1995 for the purpose of acquiring TRAK,
the predecessor company.
(2) Amounts as of and for fiscal year ended September 30, 1996 and for the
quarter ended December 31, 1996 reflect the acquisition of Lull on August
15, 1996.
(3) Amount in 1992 reflects benefits relating to net operating loss
carryforwards utilized for financial reporting purposes. Amount in 1996
reflects the write-off of deferred finance charges, net of $200 of income
tax benefits, in connection with the refinancing of debt.
(4) In October 1992, TRAK adopted Statement of Financial Accounting Standards,
No. 109, "Accounting for Income Taxes" (SFAS 109). The cumulative effect of
adopting SFAS 109 was to record a net tax benefit of $199.
(5) In October 1994, TRAK adopted Statement of Financial Accounting Standards,
No. 106, "Employer's Accounting for Postretirement Benefits Other Than
Pensions" (SFAS 106). The cumulative effect of adopting SFAS 106 was to
record a charge of $241, net of income tax benefits.
(6) Earnings per share is based on weighted-average shares outstanding of
11,250,000.
(7) Given the historical organization and capital structure of TRAK, as
predecessor to the Company, earnings per share information is not considered
meaningful for the predecessor.
(8) The changes in the balances as of September 30, 1995 versus September 30,
1994 primarily reflect the acquisition of TRAK by the Company on August 16,
1995 and the related financing thereof.
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
OVERVIEW
The Company was formed for the purpose of acquiring TRAK in August 1995.
Subsequent thereto, the Company completed the acquisition of the business of
Lull in August 1996. Set forth below is certain information with respect to the
TRAK and Lull acquisitions:
<TABLE>
<CAPTION>
DATE OF
ACQUISITION ACQUISITION BUSINESS YEAR FOUNDED
- --------------------------------------- ----------------- --------------------------------------- ---------------
<S> <C> <C> <C>
TRAK................................... August 1995 Manufacturer of telescopic material 1954
handlers and skid steer loaders
Lull................................... August 1996 Manufacturer of telescopic material 1956
handlers
</TABLE>
The Company is accounting for each of these acquisitions under the purchase
method of accounting, with the purchase price allocated to the estimated fair
market value of the assets acquired and the liabilities assumed. The excess of
the purchase price over the estimated fair value of the net assets acquired has
been allocated to goodwill, resulting in approximately $65.3 million of goodwill
at December 31, 1996. The amortization of such goodwill over 40 years will
result in an annual noncash charge to future operations of approximately $1.6
million. The basis of presentation relating to the following discussion of the
statements of operations of the Company and of TRAK ("Predecessor") does not
reflect such increased amortization expense, as the full-year effect of the
acquisition of TRAK and the acquisition of Lull are not reflected therein. See
"Management's Discussion and Analysis of Pro Forma Results of Operations and
Financial Condition" for further discussion.
The Company operates in a single industry segment. The Company's principal
products consist of material handling and construction equipment utilizing
engines of less than 130 horsepower. In addition to specific factors affecting
the Company's results of operations as discussed below, certain factors
typically recur from period to period. For example, cost of sales is driven to a
large extent by the cost of purchased components and raw materials, which
typically comprise 80% of the total cost of sales. Other factors affecting cost
of sales are production volume and the resultant leveraging of fixed overhead,
as well as productivity of the labor force. In addition, selling, general and
administrative ("SG&A") expenses include costs related to developing, marketing
and selling the Company's products, as well as infrastructure costs for
management and systems. While certain SG&A costs vary with the level of net
sales, many are relatively fixed over fairly wide ranges of unit volume. It is
the Company's strategy to invest in infrastructure costs, in many cases in
advance of increased sales.
The Company sells its products to independent equipment dealers for sale and
rental and to national rental centers for rental. The Company offers its
independent equipment dealers conventional floor-plan and rental fleet financing
to assist in the purchase of its products. Under such financing arrangements,
dealers borrow money from independent lenders on a secured basis for up to five
years. The Company assists with such financing by providing the independent
lenders additional guarantees or other financial support with respect to the
obligations of its dealers. In conjunction with these floor-plan arrangements,
the Company also provides certain financing benefits to its dealers to support
both retail and rental purchases. Such costs are accounted for as other finance
charges and approximated $0.5 million for the Company for the three months ended
December 31, 1996, $2.0 million for the Company for the fiscal year ended
September 30, 1996 and $1.6 million for the Company and its Predecessor on a
combined basis for the twelve months ended September 30, 1995. See "--Capital
Resources and Liquidity."
16
<PAGE>
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 or its
Predecessor's statement of operations:
<TABLE>
<CAPTION>
COMPANY
-------------------------------------
PREDECESSOR THREE
--------------------------------------- MONTHS
PERIOD FROM PERIOD FROM ENDED
FISCAL YEAR FISCAL YEAR 10/1/94 8/17/95 FISCAL YEAR DEC. 31,
ENDED ENDED THROUGH THROUGH ENDED ---------
9/30/93 9/30/94 8/16/95 9/30/95 9/30/96 1995
----------- ----------- ------------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net sales................................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales............................. 78.3 77.4 76.5 76.9 74.2 73.8
----- ----- ----- ----- ----- ---------
Gross profit.............................. 21.7 22.6 23.5 23.1 25.8 26.2
Selling, general and administrative
expenses................................. 16.6 15.6 14.5 13.1 13.1 15.4
----- ----- ----- ----- ----- ---------
Operating income.......................... 5.1 7.0 9.0 10.0 12.7 10.8
Interest expense.......................... 2.3 2.3 1.8 2.8 2.8 2.8
Other finance charges..................... 1.1 1.1 1.5 2.1 1.6 2.2
----- ----- ----- ----- ----- ---------
Income before income taxes................ 1.7 3.6 5.7 5.1 8.3 5.8
Provision for income taxes................ 0.7 1.4 2.3 2.1 3.3 2.3
----- ----- ----- ----- ----- ---------
Income from continuing operations......... 1.0% 2.2% 3.4% 3.0% 5.0% 3.5%
----- ----- ----- ----- ----- ---------
----- ----- ----- ----- ----- ---------
<CAPTION>
1996
---------
<S> <C>
Net sales................................. 100.0%
Cost of sales............................. 74.2
---------
Gross profit.............................. 25.8
Selling, general and administrative
expenses................................. 9.7
---------
Operating income.......................... 16.1
Interest expense.......................... 3.7
Other finance charges..................... 1.0
---------
Income before income taxes................ 11.4
Provision for income taxes................ 4.7
---------
Income from continuing operations......... 6.7%
---------
---------
</TABLE>
THREE MONTHS ENDED DECEMBER 31, 1996 (NEW BASIS) COMPARED TO THREE MONTHS
ENDED DECEMBER 31, 1995 (NEW BASIS)
Net sales for the three months ended December 31, 1996 were $59.2 million,
an increase of $35.7 million over net sales of $23.5 million for the three
months ended December 31, 1995. Sales of telescopic material handlers for the
three months ended December 31, 1996 were $49.5 million, an increase of $32.0
million over the 1995 period. Sales of skid steer loaders for the three months
ended December 31, 1996 were $4.0 million, an increase of $0.8 million or 24.4%
over the 1995 period. Sales of parts and attachments for the three months ended
December 31, 1996 were $5.6 million, an increase of $2.9 million over the 1995
period. Of the $32.0 million increase in telescopic material handlers, $25.5
million was due to the acquisition of Lull and the remaining $6.5 million
reflected continued strong demand for telescopic material handlers. The increase
in sales of skid steer loaders reflected an increase in unit sales, a shift in
product mix toward larger size units and price increases. Of the $2.9 million
increase in parts and attachments, $2.0 million resulted from the acquisition of
Lull and the remaining $0.9 million primarily reflected increased demand for
parts resulting from the increased population of the Company's units operating
in the field.
Gross profit for the three months ended December 31, 1996 was $15.3 million,
an increase of $9.1 million over gross profit of $6.2 million for the three
months ended December 31, 1995. The increase in gross profit primarily reflected
the increase in net sales discussed above. The gross margin decreased to 25.8%
for the three months ended December 31, 1996 from 26.2% for the three months
ended December 31, 1995. The decline in gross margin is due to the acquisition
of Lull, whose gross margin has historically been lower than that of TRAK.
SG&A expenses for the three months ended December 31, 1996 were $5.8
million, an increase from $3.6 million for the three months ended December 31,
1995. Of the $2.1 million increase, $2.0 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 9.7% for the three months ended December
31, 1996 from 15.4% for the three months ended December 31, 1995. This decrease
in the SG&A percentage reflected the
17
<PAGE>
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 December 31, 1996 was $9.5
million, an increase of $7.0 million over operating income of $2.5 million for
the three months ended December 31, 1995. Operating margins increased to 16.1%
for the three months ended December 31, 1996 from 10.8% for the 1995 period. The
improvements in operating income and operating margins reflected the factors
described above.
Interest expense for the three months ended December 31, 1996 was $2.2
million, an increase of $1.5 million, or 227.8%, over interest expense of $0.7
million for the three months ended December 31, 1995. Interest expense as a
percentage of sales increased to 3.7% for the three months ended December 31,
1996 from 2.8% for the three months ended December 31, 1995. The increase in
interest expense primarily reflected the effects of debt incurred to finance the
August 1996 acquisition of Lull.
Other finance charges, which are primarily comprised of dealer-related
finance charges, for the three months ended December 31, 1996 were $0.6 million,
relatively unchanged from the three months ended December 31, 1995. Other
finance charges as a percentage of sales decreased from 2.2% to 1.0%. The
reduction in other finance charges as a percentage of sales primarily reflected
the fact that Lull has not historically incurred such charges and a slowdown in
the rate of growth of the Company's dealer financing portfolio.
Provision for income taxes for the three months ended December 31, 1996 was
$2.8 million compared to $0.5 million for the three months ended December 31,
1995. The increase primarily reflected the increase in income before provision
for income taxes of $5.4 million between these periods. The Company's effective
tax rate was 41.0% for the three months ended December 31, 1996 and 40.5% for
the three months ended December 31, 1995.
Net income for the three months ended December 31, 1996 was $4.0 million, an
increase of $3.2 million, or 394.2%, over net income of $0.8 million for the
three months ended December 31, 1995 as a result of the factors noted above.
FISCAL YEAR ENDED SEPTEMBER 30, 1996 (NEW BASIS) COMPARED TO PERIOD FROM OCTOBER
1, 1994 THROUGH AUGUST 16, 1995 (PREDECESSOR BASIS)
Net sales for the fiscal year ended September 30, 1996 were $124.9 million,
an increase of $49.5 million, or 65.6%, over net sales of $75.4 million for the
ten and one-half month period from October 1, 1994 through August 16, 1995
("Stub Period 1995"). Sales of telescopic material handlers for the fiscal year
ended September 30, 1996 were $94.1 million, an increase of $42.2 million, or
81.4%, over Stub Period 1995. Sales of skid steer loaders for the fiscal year
ended September 30, 1996 were $18.0 million, an increase of $3.0 million, or
19.9%, over Stub Period 1995. Sales of parts and attachments for the fiscal year
ended September 30, 1996 were $12.8 million, an increase of $4.2 million, or
49.7%, over Stub Period 1995. The improvement in sales of telescopic material
handlers reflected continued strong market demand for such products and the
effects of the August 15, 1996 acquisition of Lull, which resulted in $12.7
million of incremental sales in the fiscal year ended September 30, 1996. Of the
81.4% increase in net sales of telescopic material handlers, 67.6 percentage
points were attributable to an increase in the number of units sold, including
the incremental effects of Lull, and the remainder was primarily attributable to
a shift in the TRAK product mix towards larger size units and price increases.
The Company believes the increased demand for telescopic material handlers is
attributable to the expansion of rental fleets, the substitution of telescopic
material handlers for other construction and material handling equipment and
relatively strong conditions in the construction equipment industry. The
increase in sales of skid steer loaders reflects an increase in unit sales, a
shift in product mix towards larger size units and a price increase effective in
early 1996. Skid steer loader sales for the fiscal year ended September 30, 1996
were adversely affected by a
18
<PAGE>
temporary reduction in the rate of production and shipments during early
calendar 1996 while the Company incorporated corrective product modifications
and upgrades to its skid steer product line. Skid steer loader sales for fiscal
1997 are likely to be adversely affected by reduced sales in Europe as a result
of the termination of the Company's European distribution arrangement following
the acquisition of the Company's European distributor by another manufacturer of
skid steer loaders. For the fiscal year ended September 30, 1996, sales through
such European distributor accounted for less than 2% of the Company's pro forma
consolidated net sales. See "Business--Marketing and Distribution." Parts sales
continued to increase in support of the increased population of the Company's
units operating in the field, and sales of attachments increased primarily as a
result of new equipment sales.
Gross profit for the fiscal year ended September 30, 1996 was $32.2 million,
an increase of $14.5 million, or 81.8%, over gross profit of $17.7 million for
Stub Period 1995. The increase in gross profit primarily reflected the increase
in net sales discussed above. The gross margin increased to 25.8% for the fiscal
year ended September 30, 1996 from 23.5% for Stub Period 1995. The increase in
gross margin reflects the favorable change in product mix toward higher-margin
telescopic material handlers, improved production efficiencies (in part due to
expanded use of robotics and a new paint system), as well as economies
associated with higher production volumes. Also contributing to the gross margin
improvement were purchasing programs that achieved price reductions for certain
components and materials.
SG&A expenses for the fiscal year ended September 30, 1996 were $16.3
million, an increase of $5.4 million, or 49.6%, over SG&A expenses of $10.9
million for Stub Period 1995. The increase in SG&A expenses for the fiscal year
ended September 30, 1996 reflected expenses associated with higher net sales in
1996, the incremental effect of SG&A expenses incurred by Lull subsequent to its
August 15, 1996 acquisition by the Company, approximately $0.7 million in
management fees paid to an affiliate of the Company's majority stockholder,
increased product development expenditures primarily related to telescopic
material handlers, systems consulting fees and amortization of goodwill in 1996
as a result of the application of purchase accounting beginning in August 1995
in connection with the acquisition of TRAK and in August 1996 in connection with
the acquisition of Lull. SG&A expenses as a percentage of net sales decreased to
13.1% for the fiscal year ended September 30, 1996 from 14.5% for Stub Period
1995. The decrease in the SG&A percentage continued to reflect the relatively
fixed nature of certain SG&A expenses as well as the Company's efforts to
control general and administrative costs.
Operating income for the fiscal year ended September 30, 1996 was $15.9
million, an increase of $9.1 million, or 133.6%, over operating income of $6.8
million for Stub Period 1995. Operating margins increased to 12.7% for the
fiscal year ended September 30, 1996 from 9.0% for Stub Period 1995. The
improvements in operating income and margins reflected the factors described
above.
Interest expense for the fiscal year ended September 30, 1996 was $3.4
million, an increase of $2.0 million, or 149.0%, over interest expense of $1.4
million for Stub Period 1995. Interest expense as a percentage of net sales
increased to 2.8% for the fiscal year ended September 30, 1996 from 1.8% for
Stub Period 1995. The increase in interest expense primarily reflected the
effects of debt incurred to finance the August 1995 acquisition of TRAK and the
August 1996 acquisition of Lull, and higher weighted-average interest rates in
1996.
Other finance charges, which are primarily comprised of dealer-related
finance charges, for the fiscal year ended September 30, 1996 were $2.0 million,
an increase of $0.9 million, or 79.5%, over other finance charges of $1.1
million for Stub Period 1995. Other finance charges as a percentage of net sales
increased to 1.6% from 1.5%. The increase in other finance charges primarily
resulted from the greater utilization of the floor plan financing program due to
the increases in net sales as well as greater usage by dealers.
Provision for income taxes for the fiscal year ended September 30, 1996 was
$4.1 million compared to $1.8 million for Stub Period 1995. The increase
primarily reflected the increase in income before provision for income taxes of
$6.1 million between these periods. The Company's effective tax rate was 39.0%
for the fiscal year ended September 30, 1996 and 41.1% for Stub Period 1995.
19
<PAGE>
Income from continuing operations for the fiscal year ended September 30,
1996 was $6.4 million, an increase of $3.9 million, or 151.3% over income from
continuing operations of $2.5 million for Stub Period 1995 as a result of the
factors described above.
In August 1996, in connection with the refinancing of debt, the Company
incurred an extraordinary charge of $0.3 million, net of $0.2 million of income
tax benefits, related to the write-off of deferred financing charges.
In October 1994, the Predecessor adopted SFAS 106, the cumulative effect of
which on net income was a charge of $0.4 million, less applicable income tax
benefits of $0.2 million.
PERIOD FROM AUGUST 17, 1995 THROUGH SEPTEMBER 30, 1995 (NEW BASIS)
Due to the relatively brief period involved, comprehensive comparative data
has not been presented or discussed below with respect to the period from August
17, 1995 through September 30, 1995 (the period from the date of acquisition of
TRAK and the application of purchase accounting through the date of the
Company's fiscal year end). However, see "Management's Discussion and Analysis
of Pro Forma Results of Operations and Financial Condition" for a discussion of
pro forma comparative data including this period.
Net sales for the period from August 17, 1995 through September 30, 1995
(the "September 1995 Stub Period") were $12.7 million. Gross margin of 23.1% was
relatively consistent with gross margin for the period from October 1, 1994
through August 16, 1995. SG&A expenses as a percentage of net sales decreased to
13.1% as the Company continued to realize the benefits of its efforts to monitor
and control general and administrative costs. Other finance charges as a
percentage of net sales were 2.1%, reflecting the growth in the Company's
business and the dealer-related finance charges incurred by the Company. The
Company's effective tax rate for the September 1995 Stub Period was 40.7%.
PERIOD OCTOBER 1, 1994 THROUGH AUGUST 16, 1995 COMPARED TO FISCAL YEAR ENDED
SEPTEMBER 30, 1994
(PREDECESSOR BASIS)
Net sales for Stub Period 1995 were $75.4 million, an increase of $14.4
million, or 23.7%, over net sales of $61.0 million for the full fiscal year
ended September 30, 1994, primarily as a result of increased unit sales. Demand
for both telescopic material handlers and skid steer loaders was strong
throughout Stub Period 1995. Sales of telescopic material handlers in Stub
Period 1995 were $51.9 million, an increase of $6.6 million, or 14.5%, over the
fiscal year ended September 30, 1994 due primarily to continued strong market
conditions. Sales of skid steer loaders in Stub Period 1995 were $15.0 million,
an increase of $4.3 million, or 40.2%, over the fiscal year ended September 30,
1994 reflecting primarily the continued expansion of the distributor base. Sales
of parts and attachments in Stub Period 1995 were $8.5 million, an increase of
$3.6 million, or 71.4%, over the fiscal year ended September 30, 1994.
Attachments sales increased primarily due to the introduction of new attachment
products for telescopic material handlers and skid steer loaders and due to the
strong growth in sales of skid steer loaders which typically have higher
associated sales of attachments. Parts sales increased due to the increased
population of the Company's units operating in the field.
Gross profit for Stub Period 1995 was $17.7 million, an increase of $3.9
million, or 28.5%, over gross profit of $13.8 million for the fiscal year ended
September 30, 1994. This increase primarily reflected the increases in net sales
described above. The gross margin increased to 23.5% in Stub Period 1995 from
22.6% in the fiscal year ended September 30, 1994, primarily reflecting
manufacturing efficiencies and productivity gains as well as the continuing
increases in sales volume.
SG&A expenses for Stub Period 1995 were $10.9 million, an increase of $1.4
million, or 14.7%, over SG&A expenses of $9.5 million for the fiscal year ended
September 30, 1994. This increase primarily reflected expenses associated with
increased sales as well as costs associated with upgrading information
20
<PAGE>
systems. SG&A expenses as a percentage of net sales decreased to 14.5% in Stub
Period 1995 from 15.6% in the fiscal year ended September 30, 1994. The decrease
in this percentage reflected ongoing efforts to control general and
administrative costs as the business expanded.
Operating income for Stub Period 1995 was $6.8 million, an increase of $2.5
million, or 59.3%, over operating income of $4.3 million for the fiscal year
ended September 30, 1994. Operating margins increased to 9.0% in Stub Period
1995 from 7.0% in the fiscal year ended September 30, 1994. These improvements
reflected the factors described above.
Interest expense for Stub Period 1995 was $1.4 million, unchanged from the
fiscal year ended September 30, 1994. Interest expense as a percentage of net
sales decreased to 1.8% in Stub Period 1995 from 2.3% in the fiscal year ended
September 30, 1994.
Other finance charges, which are primarily comprised of dealer-related
finance charges, for Stub Period 1995 were $1.1 million, an increase of $0.4
million, or 60.4%, over other finance charges of $0.7 million for the fiscal
year ended September 30, 1994. Other finance charges as a percentage of net
sales increased to 1.5% in Stub Period 1995 from 1.1% in the fiscal year ended
September 30, 1994. The increase in other finance charges primarily resulted
from the greater utilization of the floor plan financing program due to the
increases in sales as well as greater usage by dealers.
Provision for income taxes for Stub Period 1995 was $1.8 million, an
increase of $0.9 million, or 101.1%, over $0.9 million in the fiscal year ended
September 30, 1994. The increase in the provision for income taxes primarily
resulted from the increase in income before provision for taxes of $2.1 million
in Stub Period 1995 compared to the fiscal year ended September 30, 1994. The
effective income tax rate for Stub Period 1995 was 41.1% versus 39.8% for the
fiscal year ended September 30, 1994.
Income from continuing operations for Stub Period 1995 was $2.5 million, an
increase of $1.2 million, or 90.9%, over income from continuing operations of
$1.3 million for the fiscal year ended September 30, 1994. Income from
continuing operations as a percentage of net sales increased to 3.4% in Stub
Period 1995 compared to 2.2% in the fiscal year ended September 30, 1994. The
increase in income from continuing operations primarily reflected the factors
discussed above.
In October 1994, the Predecessor adopted SFAS 106, the cumulative effect of
which on net income was a charge of $0.4 million, less applicable income tax
benefits of $0.2 million.
CAPITAL RESOURCES AND LIQUIDITY
Net cash provided by operating activities of the Company was $2.7 million
for the three months ended December 31, 1996. Working capital (all references to
working capital in this section exclude the effects of changes in cash and
current portions of long-term debt) decreased by $2.3 million in that period,
excluding the effects of the Lull acquisition. Capital expenditures and net
repayments of borrowings under the Company's revolving line of credit facility
were $0.4 million and $1.8 million, respectively, for the three months ended
December 31, 1996. Cash and cash equivalents increased to $0.4 million at
December 31, 1996 from $0.1 million at September 30, 1996.
Net cash provided by operating activities of the Company was $3.3 million
for the three months ended December 31, 1995. Working capital increased by $2.1
million in that period. Cash provided by operating activities of the Company for
the three months ended December 31, 1995 was used to finance capital
expenditures of $0.4 million and for repayments of $2.9 million of existing
indebtedness.
Net cash provided by operating activities of the Company was $8.6 million
for the fiscal year ended September 30, 1996. Working capital decreased by $1.4
million in that period, excluding the effects of the Lull acquisition. Cash
provided by operating activities of the Company for the fiscal year ended
September 30, 1996 was used primarily to finance capital expenditures of $1.4
million and for repayments of existing indebtedness.
21
<PAGE>
Net cash provided by operating activities of the Company was $0.3 million
for the September 1995 Stub Period. Working capital increased by $0.2 million in
that period. Cash provided by operating activities of the Company for the
September 1995 Stub Period was used to finance capital expenditures of $0.2
million and for net payments of $0.1 million on existing indebtedness.
Net cash provided by operating activities of the Predecessor was $0.5
million for Stub Period 1995. Working capital increased by $2.4 million in Stub
Period 1995. Capital expenditures and other investments of $3.4 million and
preferred stock dividends of $0.2 million in Stub Period 1995 were primarily
financed with cash flows from operations and $3.1 million of additional
borrowings during that period.
Net cash provided by operating activities of the Predecessor was $3.0
million for the fiscal year ended September 30, 1994. Working capital decreased
by approximately $0.2 million in that period. Cash provided by operating
activities for the fiscal year ended September 30, 1994 was used primarily to
finance capital expenditures and other investments of $1.6 million, repay
existing indebtedness of $0.9 million and pay preferred stock dividends of $0.4
million.
The aggregate purchase price paid by the Company for TRAK in August 1995
totaled $30.4 million, including assumed liabilities of $17.8 million. The
acquisition was financed through a $6.0 million equity contribution by
Investments L.P. and management, a $2.0 million junior subordinated note payable
to Investments L.P., a $5.0 million subordinated note payable to an
institutional lender and $17.4 million under credit agreements with certain
financial institutions. The purchase price will increase, by up to $2.0 million
plus interest, based upon the volume of orders received by the Company under
contracts with the Army. In the fiscal year ended September 30, 1996, $0.4
million of such additional purchase price payable to TRAK's former shareholders
was recorded. All debt outstanding, preferred stock, stock warrants and stock
options of the Predecessor at August 16, 1995 were extinguished in connection
with the merger transaction.
The aggregate purchase price paid by the Company for Lull in August 1996
totaled approximately $69.0 million, plus assumed liabilities of $14.6 million.
The acquisition was financed with additional borrowings under the Company's
amended credit facilities with lending institutions as described below,
including $14.0 million of subordinated debt guaranteed by Investments L.P.
On August 16, 1996, and in conjunction with the acquisition of Lull, the
Company refinanced its then existing credit facilities. The new Loan and
Security Agreement provides for a revolving line of credit facility and two term
loans. The new revolving line of credit facility provides for borrowings of up
to the lesser of $25.0 million or a borrowing base calculated based on a
percentage of eligible receivables and inventories. Borrowings under this line
of credit are due August 16, 2003 and bear interest either at the bank's
corporate base rate plus 1.5% (9.75% at December 31, 1996) or LIBOR plus 2.75%
(8.4% at December 31, 1996). The Company may elect to convert outstanding line
of credit balances between interest types at its discretion. Amounts outstanding
under this new revolving line of credit facility totaled $5.6 million at
December 31, 1996. In addition, the Company had $0.3 million in outstanding
letters of credit under the revolving line of credit facility. At December 31,
1996, the Company had unused borrowing capacity of $18.8 million under this
facility.
Borrowings under the term loan provided by the new Loan and Security
Agreement are due in quarterly installments ranging from $0.5 million to $3.1
million, commencing in October 1996 with a final payment in August 2003. The
term loan bears interest either at the bank's corporate base rate plus 1.75%
(10% at December 31, 1996) or LIBOR plus 3% (8.7% at December 31, 1996). The
Company may elect to convert outstanding term loan balances between interest
types at its discretion.
On August 16, 1996 and in conjunction with the acquisition of Lull, the
Company issued a $14.0 million junior subordinated note payable to a financial
institution with principal and interest, at 15% per annum, due February 28,
2004.
22
<PAGE>
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 $64.2 million at December 31,
1996. Under TRAK's agreements, TRAK either provides a back-up guarantee of a
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 $53.0 million at December 31, 1996.
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 $2.0 million for 1996).
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 December 31, 1996
were approximately $11.2 million. This contingency would be reduced by proceeds
from the sales of the equipment financed.
Included in accrued liabilities at December 31, 1996 is approximately $0.9
million related to a specific warranty obligation which Lull incurred on certain
manfactured boom units. Such warranty obligations are expected to be
substantially completed by September 30, 1997.
The Company's cash flows are adversely impacted in the second quarter of its
fiscal year due to the application of customer rebates earned in the preceding
calendar year. At December 31, 1996, the amount of such accrued customer rebates
to be applied to accounts receivable in the three months ending March 31, 1997
approximated $4.1 million.
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 that it will have sufficient funds available
to meet its currently anticipated operating and capital expenditure requirements
for its existing operations.
See also "Management's Discussion and Analysis of Pro Forma Results of
Operations and Financial Condition."
BACKLOG
The Company's backlog as of December 31, 1996 was $77.0 million, of which
$22.4 million relates to the ATLAS contract. It is expected that substantially
all of the December 31, 1996 backlog will be shipped before December 31, 1997.
EFFECTS OF INFLATION
Inflation has not had a material effect on the Company's business or results
of operations.
NEW ACCOUNTING STANDARDS
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123") which addresses accounting for stock option, purchase
and award plans. SFAS 123 specifies that companies utilize either
23
<PAGE>
the "fair value based method" or the "intrinsic value based method" for valuing
stock options granted. For purposes of valuing any grants for any such plans
adopted in the future, the Company would expect to utilize the "intrinsic value
based method." The Company does not expect that the adoption of SFAS 123 will
have a material effect on the Company's financial position or results of
operations.
24
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following pro forma unaudited consolidated statement of operations of
Omniquip for the year ended September 30, 1996 was prepared to illustrate the
estimated effects of (i) the acquisition of the business of Lull (as described
further below) and the financing thereof and (ii) the Offering contemplated
hereby and the application of the estimated net proceeds to the Company
therefrom to prepay certain outstanding indebtedness (collectively, the "Pro
Forma Transactions"), as if the Pro Forma Transactions had occurred at the
beginning of the year.
On August 15, 1996, the Company completed the acquisition of substantially
all of the assets of Lull in a transaction accounted for under the purchase
method of accounting. The aggregate purchase price approximated $69.0 million,
plus assumed liabilities of approximately $14.6 million, and was financed
primarily with borrowings under the Company's restructured credit agreements
with certain financial institutions, including $14.0 million of subordinated
debt guaranteed by Investments L.P.
The purchase price for Lull was assigned to the assets acquired and
liabilities assumed based on their estimated fair values at the acquisition
date. Based on such allocations, the aggregate purchase price exceeded the
estimated fair value of the net assets acquired (goodwill) by approximately
$55.8 million, which is being amortized over 40 years and will result in an
annual amortization charge of $1.4 million.
The following pro forma unaudited consolidated statement of operations of
Omniquip for the three months ended December 31, 1996 was prepared to illustrate
the estimated effects of the Offering contemplated hereby and the application of
the estimated net proceeds to the Company therefrom to prepay certain
outstanding indebtedness (as if the Offering and related transactions had
occurred at the beginning of the period).
The pro forma unaudited consolidated statements of operations does not
purport to represent (i) the actual results of operations, had the Pro Forma
Transactions occurred on the dates assumed, or (ii) the results of operations to
be expected in the future. They do not reflect any estimate of cost savings or
other efficiencies that may be achieved from the integration of TRAK and Lull.
Management believes that the assumptions used in preparing the pro forma
unaudited consolidated statements of operations provide a reasonable basis for
presenting all of the significant effects of the Pro Forma Transactions, that
the pro forma adjustments give appropriate effect to those assumptions, and that
the pro forma adjustments are properly applied in the pro forma unaudited
consolidated statements of operations.
The pro forma unaudited consolidated statement of operations and
accompanying notes should be read in conjunction with the historical financial
statements of the Company and Lull, including the notes thereto, and the other
financial information pertaining to the Company and Lull, including the
information set forth under "Capitalization," "Selected Consolidated Financial
Data," "Management's Discussion and Analysis of Results of Operations and
Financial Condition," and "Management's Discussion and Analysis of Pro Forma
Results of Operations and Financial Condition," included elsewhere herein.
25
<PAGE>
PRO FORMA INCOME STATEMENT
FISCAL YEAR ENDED SEPTEMBER 30, 1996
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
OMNIQUIP/
OMNIQUIP LULL(1) LULL PRO FORMA LULL OFFERING PRO FORMA
AS REPORTED AS REPORTED ADJUSTMENTS PRO FORMA ADJUSTMENTS AS ADJUSTED
----------- ----------- -------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net sales.............................. $ 124,861 $ 82,378 $ $ 207,239 $ $ 207,239
Cost of sales.......................... 92,688 65,879 158,567 158,567
----------- ----------- ---------- -----------
Gross profit........................... 32,173 16,499 48,672 48,672
Selling, general and administrative
expenses............................. 16,311 7,547 65(4) 23,923 650(7) 24,573
Boom warranty charge................... 2,881(3) 2,881 2,881
----------- ----------- ------- ---------- ----------- -----------
Operating income....................... 15,862 6,071 (65) 21,868 (650) 21,218
Interest expense....................... 3,434 403 6,511(5) 10,348 (4,870)(7) 5,478
Other finance charges.................. 2,012 (680) 1,332 1,332
----------- ----------- ------- ---------- ----------- -----------
Income before income taxes............. 10,416 6,348 (6,576) 10,188 4,220 14,408
Provision for income taxes............. 4,060 (89)(6) 3,971 1,671(6) 5,642
----------- ----------- ------- ---------- ----------- -----------
Income from continuing operations...... $ 6,356 $ 6,348 $ (6,487) $ 6,217 $ 2,549 $ 8,766
----------- ----------- ------- ---------- ----------- -----------
----------- ----------- ------- ---------- ----------- -----------
Earnings per share from continuing
operations (2)....................... $ .56 $ .55 $ .62
</TABLE>
- ------------------------------
(1) The Lull data is comprised of unaudited financial information for the period
October 1, 1995 through August 15, 1996 (date of acquisition).
(2) Omniquip as reported earnings per share and Omniquip/Lull pro forma earnings
per share are based on weighted-average shares outstanding of 11,250,000.
Pro forma as adjusted earnings per share is based on weighted-average shares
outstanding of 14,250,000.
(3) In the quarter ended December 31, 1995, Lull determined that a specific
warranty obligation had been incurred on certain boom units manufactured and
recorded a pre-tax charge of $2,881.
(4) Operating expenses for the fiscal year ended September 30, 1996 have been
adjusted for the following:
<TABLE>
<S> <C>
Amortization of goodwill (over a 40-year period)........................... $ 1,221
Elimination of non-recurring stock compensation expense relating to a
discontinued plan of the predecessor..................................... (876)
Elimination of seller transaction costs.................................... (280)
---------
$ 65
---------
---------
</TABLE>
(5) Interest expense for the fiscal year ended September 30, 1996 has been
adjusted for the following:
<TABLE>
<S> <C>
Interest (weighted-average interest rate of 11.2%) on acquisition debt of
$69,000.................................................................. $ 6,779
Additional interest on existing Omniquip debt due to restructured credit
facilities............................................................... 135
Historical interest expense on debt not assumed............................ (403)
---------
$ 6,511
---------
---------
</TABLE>
(6) Amounts reflect the estimated income tax effects of pro forma adjustments
and the effect of reflecting a previously non-taxable Subchapter
S-corporation (Lull) as taxable in the period.
(7) Reductions in interest expense reflect the application of the net proceeds
from the Offering to repay $21,000 of subordinated debt, $5,600 of a
revolving line of credit facility, and $12,335 of term loans.
The increase in selling, general and administrative expenses reflects the
Company's estimate of the additional costs associated with being a public
company. Adjustments do not reflect the effects of the prepayment penalty
incurred related to the debt to be repaid with the net proceeds of the
Offering. Such effects, net of related tax benefits, of approximately $600
will be presented as an extraordinary item in the statement of income in the
period in which the debt repayment occurs.
26
<PAGE>
PRO FORMA INCOME STATEMENT
THREE MONTHS ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
OMNIQUIP OFFERING PRO FORMA
AS REPORTED ADJUSTMENTS AS ADJUSTED
----------- ----------- -----------
<S> <C> <C> <C>
Net sales................................................................ $ 59,166 $ 59,166
Cost of sales............................................................ 43,887 43,887
----------- -----------
Gross profit............................................................. 15,279 15,279
Selling, general and administrative expenses............................. 5,755 $ 163(2) 5,918
----------- ----------- -----------
Operating income......................................................... 9,524 (163) 9,361
Interest expense......................................................... 2,183 (1,174) 1,009
Other finance charges.................................................... 589 589
----------- ----------- -----------
Income before income taxes............................................... 6,752 1,011 7,763
Provision for income taxes............................................... 2,774 404(3) 3,178
----------- ----------- -----------
Income from continuing operations........................................ $ 3,978 $ 607 $ 4,585
----------- ----------- -----------
----------- ----------- -----------
Earnings per share from continuing operations (1)........................ $ 0.35 $ 0.32
</TABLE>
- ------------------------
(1) Omniquip as reported earnings per share is based on weighted-average shares
outstanding of 11,250,000. Pro forma as adjusted earnings per share is based
on weighted-average shares outstanding of 14,250,000.
(2) Reductions in interest expense reflect the application of the net proceeds
from the Offering to repay $21,000 of subordinated debt, $5,600 of a
revolving line of credit facility, and $12,335 of term loans.
The increase in selling, general and administrative expenses reflects the
Company's estimate of the additional costs associated with being a public
company. Adjustments do not reflect the effects of the prepayment penalty
incurred related to the debt to be repaid with the net proceeds of the
Offering. Such effects, net of related tax benefits, of approximately $600
will be presented as an extraordinary item in the statement of income in the
period in which the debt repayment occurs.
(3) Amounts reflect the estimated income tax effects of pro forma adjustments.
27
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF PRO FORMA RESULTS OF OPERATIONS AND FINANCIAL CONDITION
OVERVIEW
As discussed below, the Company was formed for the purpose of acquiring TRAK
in August 1995. Subsequent thereto, the Company completed the acquisition of the
business of Lull in August 1996. Due to the effects of the acquisitions and the
related application of purchase accounting, historical consolidated financial
data of the Company, TRAK, its Predecessor, and Lull for periods through
September 30, 1996 are not comparable. As a result, the following discussion of
pro forma results of operations and financial condition is presented.
On August 16, 1995, the Company completed the acquisition of the issued and
outstanding stock of TRAK in a transaction accounted for under the purchase
method of accounting. The aggregate purchase price approximated $30.4 million,
including assumed liabilities of $17.8 million. The purchase price will be
adjusted, up to a maximum of $2.0 million, together with interest, for orders
received from the Army under contracts for the delivery of telescopic material
handlers for a period of five years from August 17, 1995. In the fiscal year
ended September 30, 1996, approximately $0.4 million of such additional purchase
price payable to TRAK's former shareholders was recorded. The acquisition was
financed through a $6.0 million equity contribution from management and
Investments L.P., a $2.0 million junior subordinated note payable to Investments
L.P., a $5.0 million subordinated note payable to an institutional lender and
approximately $17.4 million under credit agreements with certain financial
institutions.
On August 15, 1996, the Company completed the acquisition of substantially
all of the assets of Lull in a transaction accounted for under the purchase
method of accounting. The aggregate purchase price approximated $69.0 million,
plus assumed liabilities of approximately $14.6 million, and was financed
primarily with borrowings under the Company's restructured credit agreements
with certain financial institutions, including $14.0 million of subordinated
debt guaranteed by Investments L.P.
The purchase prices for TRAK and Lull were assigned to the assets acquired
and liabilities assumed based on their estimated fair values at the respective
acquisition dates. Based on such allocations, the aggregate purchase prices
exceeded the estimated fair value of the net assets acquired (goodwill) by
approximately $65.6 million, which is being amortized over 40 years and will
result in an annual amortization charge of $1.6 million.
The derivation of certain of the pro forma financial information discussed
below is described in the preceding section, "Pro Forma Financial Information."
For purposes of the following discussion, the pro forma unaudited consolidated
statements of operations of Omniquip for the years ended September 30, 1996,
1995 and 1994, respectively, and for the three months ended December 31, 1996
and 1995, respectively, were prepared to illustrate the estimated effects of the
acquisitions of TRAK and Lull as if the acquisitions had occurred at the
beginning of each respective period.
The pro forma unaudited consolidated statement of operations data do not
purport to represent (i) the actual results of operations or financial condition
of the Company had the TRAK and Lull acquisitions occurred on the dates assumed,
or (ii) the results of operations or financial position to be expected in the
future. They do not reflect any estimate of cost savings or other efficiencies
that may be achieved from the integration of TRAK and Lull. The following
discussion of results of operations does not reflect the effects of the Offering
or the application of the net proceeds therefrom.
This section should be read in conjunction with the historical financial
statements of the Company, TRAK and Lull, including the notes thereto, and the
other financial information pertaining to the Company, TRAK and Lull, including
the information set forth under "Capitalization," "Selected Consolidated
Financial Data," "Management's Discussion and Analysis of Results of Operations
and Financial Condition" and "Pro Forma Financial Information," included
elsewhere herein.
28
<PAGE>
PRO FORMA RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain components
of the Company's pro forma income statement, before giving effect to the
Offering and the application of the net proceeds therefrom, and the percentage
of net sales represented by such components:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SEPTEMBER 30, THREE MONTHS ENDED DEC. 31,
---------------------------------------------------------------- -------------------------------
1994 1995 1996 1995 1996
-------------------- -------------------- -------------------- -------------------- ---------
$ % $ % $ % $ % $
--------- --------- --------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales.............. $ 94,512 100.0 $ 154,690 100.0 $ 207,239 100.0 $ 43,968 100.0 $ 59,166
Cost of sales.......... 74,444 78.8 120,532 77.9 158,567 76.5 33,983 77.3 43,887
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Gross profit........... 20,068 21.2 34,158 22.1 48,672 23.5 9,985 22.7 15,279
Selling, general and
administrative
expenses............. 13,766 14.5 19,770 12.7 24,573 11.9 5,986 13.6 5,918
Boom warranty charge... -- -- -- -- 2,881 1.4 2,881 1.4 --
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Operating income....... $ 6,302 6.6 $ 14,388 9.4 $ 21,218 10.2 $ 1,118 7.7 $ 9,361
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<CAPTION>
%
---------
<S> <C>
Net sales.............. 100.0
Cost of sales.......... 74.2
---------
Gross profit........... 25.8
Selling, general and
administrative
expenses............. 10.0
Boom warranty charge... --
---------
Operating income....... 15.8
---------
---------
</TABLE>
The above table presents an abbreviated pro forma income statement of the
Company for the noted periods through the "Operating income" line item. A full
income statement, including the effects of interest expense, other finance
charges and income taxes, has not been presented due to the fact that since both
companies have experienced substantial, rapid growth in recent years,
application of the pro forma effects of the debt financing of the respective
purchase prices paid for TRAK and Lull to the fiscal year ended September 30,
1994 and 1995, respectively, when the companies were substantially smaller,
would result in a disproportionately greater amount of pro forma interest
expense (i.e., if the Company had acquired TRAK and Lull in these prior periods,
the purchase price and related amount of debt financing would presumably have
been substantially lower).
THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED TO PRO FORMA THREE MONTHS ENDED
DECEMBER 31, 1995
Net sales for the three months ended December 31, 1996 were $59.2 million,
an increase of $15.2 million or 34.6% over pro forma net sales of $44.0 million
for the three months ended December 31, 1995. Net sales of telescopic material
handlers for the three months ended December 31, 1996 were $49.5 million, an
increase of $14.1 million or 39.7% over the pro forma three months ended
December 31, 1995. Net sales of skid steer loaders for the three months ended
December 31, 1996 were $4.0 million, an increase of $0.8 million or 24.4% over
the pro forma three months ended December 31, 1995. Net sales of parts and
attachments for the three months ended December 31, 1996 were $5.6 million, an
increase of $0.3 million or 6.4% over the pro forma three months ended December
31, 1995. The improvement in net sales on a pro forma basis of telescopic
material handlers reflected continued strong market growth and, to a lesser
extent, a small increase in market share. Of the 39.7% increase in net sales of
telescopic material handlers on a pro forma basis, 36.0 percentage points were
attributable to an increase in the number of units sold and the remainder was
attributable to a shift in product mix towards larger size units and to price
increases. The Company believes that the strong demand for telescopic material
handlers continues to be driven by expansion of rental fleets, substitution of
telescopic material handlers for other construction equipment and relatively
strong conditions in the construction equipment industry. Of the 24.4% increase
in net sales of skid steer loaders on a pro forma basis, 15.7 percentage points
were attributable to an increase in the number of units sold and the remainder
was due to a shift in product mix towards larger size units and to price
increases.
29
<PAGE>
Gross profit for the three months ended December 31, 1996 was $15.3 million,
an increase of $5.3 million or 53.0% over pro forma gross profit of $10.0
million for the three months ended December 31, 1995. The increase in gross
profit on a pro forma basis reflected the increase in net sales on a pro forma
basis discussed above as well as an increase in gross margin to 25.8% for the
three months ended December 31, 1996 from 22.7% for the pro forma three months
ended December 31, 1995. The increase in gross margin on a pro forma basis was
due to production improvements at all three manufacturing facilities, favorable
product mix as sales of higher margin telescopic material handlers grew more
rapidly than the lower margin skid steer line, and economies associated with
higher production volumes.
SG&A expenses for the three months ended December 31, 1996 of $5.9 million
were down $0.1 million or 1.1% compared to pro forma SG&A expenses for the three
months ended December 31, 1995. As a percentage of net sales, SG&A expenses for
the three months ended December 31, 1996 decreased to 10.0% from 13.6% for the
pro forma three months ended December 31, 1995. The decrease in the SG&A
percentage reflected the relatively fixed nature of certain components of SG&A
expenses as well as the Company's efforts to control expenses.
In the three months ended December 31, 1995, Lull determined that it would
be required to incur costs under specific warranty obligations for certain of
its manufactured boom units. As a result, Lull recorded a nonrecurring charge to
operations of $2.9 million with respect to estimated warranty costs expected to
be incurred for such boom units. At December 31, 1996 the remaining reserve
approximated $0.9 million.
Operating income for the three months ended December 31, 1996 was $9.4
million, an increase of $8.2 million over pro forma operating income for the
three months ended December 31, 1995. Excluding the boom warranty charge
described above, operating income on a pro forma basis increased $5.4 million or
134.1%. Operating margin, excluding boom warranty costs, increased to 15.8% for
the three months ended December 31, 1996 from 9.1% for the pro forma three
months ended December 31, 1995. The improvements in operating income and
operating margin on a pro forma basis reflected the factors described above.
PRO FORMA FISCAL YEAR ENDED SEPTEMBER 30, 1996 COMPARED TO PRO FORMA FISCAL YEAR
ENDED
SEPTEMBER 30, 1995
Pro forma net sales for the fiscal year ended September 30, 1996 were $207.2
million, an increase of $52.5 million, or 34.0%, over pro forma net sales of
$154.7 million for the fiscal year ended September 30, 1995. Pro forma net sales
of telescopic material handlers for the fiscal year ended September 30, 1996
were $170.0 million, an increase of $48.5 million, or 40.0%, over the fiscal
year ended September 30, 1995. Pro forma net sales of skid steer loaders for the
fiscal year ended September 30, 1996 were $18.0 million, an increase of $0.8
million, or 4.7%, over the fiscal year ended September 30, 1995. Pro forma net
sales of parts and attachments for the fiscal year ended September 30, 1996 were
$19.2 million, an increase of $3.2 million, or 19.9%, over the fiscal year ended
September 30, 1995. The improvement in pro forma net sales of telescopic
material handlers reflected continued strong market demand for such products. Of
the 40.0% increase in pro forma net sales of telescopic material handlers, 33.4
percentage points were attributable to an increase in the number of units sold
and the remainder was primarily attributable to a shift in product mix towards
larger size units and to price increases. The Company believes the increased
demand for telescopic material handlers is attributable to the expansion of
rental fleets, the substitution of telescopic material handlers for other
construction equipment and relatively strong conditions in the construction
equipment industry. The increase in sales of skid steer loaders reflects a shift
in product mix towards larger size units and a price increase effective early in
calendar 1996, which more than offset a 3.4% decline in unit sales. Skid steer
loader sales for the fiscal year ended September 30, 1996 were adversely
impacted by a temporary reduction in the rate of production and shipments in
early calendar 1996 to incorporate corrective product modifications and
upgrades. Skid steer loader sales for fiscal 1997 are likely to be adversely
affected by reduced sales in Europe as a result of the termination of the
Company's European
30
<PAGE>
distribution arrangement following the acquisition of the Company's European
distributor by another manufacturer of skid steer loaders. For the fiscal year
ended September 30, 1996, sales through such European distributor accounted for
less than 2% of the Company's pro forma consolidated net sales. See
"Business--Marketing and Distribution." Pro forma net sales of parts continued
to increase in support of the rapidly expanding numbers of units operating in
the field and new products introduced by Lull, and pro forma net sales of
attachments increased primarily as a result of new equipment sales.
Pro forma gross profit for the fiscal year ended September 30, 1996 was
$48.7 million, an increase of $14.5 million, or 42.5%, over pro forma gross
profit of $34.2 million for the fiscal year ended September 30, 1995. The
increase in pro forma gross profit primarily reflected the increase in net sales
discussed above. Pro forma gross margin increased to 23.5% for the fiscal year
ended September 30, 1996, from 22.1% for the fiscal year ended September 30,
1995. The increase in pro forma gross margin reflects the favorable change in
product mix toward higher margin telescopic material handlers, improved
production efficiencies (in part due to expanded use of robotics and a new paint
system at the Port Washington, Wisconsin facility), as well as economies
associated with higher production volumes. Also contributing to the pro forma
gross margin improvement were purchasing programs implemented by Omniquip that
achieved price reductions for certain components and materials.
Pro forma SG&A expenses for the fiscal year ended September 30, 1996 were
$24.6 million, an increase of $4.8 million, or 24.2%, over pro forma SG&A
expenses of $19.8 million for the fiscal year ended September 30, 1995. This
increase primarily resulted from expenses associated with the increase in pro
forma net sales in 1996. Pro forma SG&A expenses as a percentage of pro forma
net sales decreased to 11.9% for the fiscal year ended September 30, 1996 from
12.7% for the fiscal year ended September 30, 1995. The decrease in the pro
forma SG&A percentage continued to reflect the relatively fixed nature of
certain components of SG&A expenses as well as the companies' efforts to control
general and administrative costs.
In the quarter ended December 31, 1995, Lull determined that it would be
required to incur costs under specific warranty obligations for certain of its
manufactured boom units. As a result, Lull recorded a nonrecurring charge to
operations of $2.9 million with respect to estimated warranty costs expected to
be incurred for such boom units. At September 30, 1996, the remaining reserve
approximated $1.6 million.
Pro forma operating income for the fiscal year ended September 30, 1996 was
$21.2 million, an increase of $6.8 million, or 47.4%, over pro forma operating
income of $14.4 million for the fiscal year ended September 30, 1995. Excluding
the boom warranty charge described above, pro forma operating income was $24.1
million, an increase of $9.7 million, or 67.4%, over 1995. Pro forma operating
margins, excluding boom warranty costs, increased to 11.6% for the fiscal year
ended September 30, 1996 from 9.4% for the fiscal year ended September 30, 1995.
The improvements in pro forma operating income and margins reflected the factors
described above.
PRO FORMA FISCAL YEAR ENDED SEPTEMBER 30, 1995 COMPARED TO PRO FORMA FISCAL YEAR
ENDED SEPTEMBER 30, 1994
Pro forma net sales for the fiscal year ended September 30, 1995 were $154.7
million, an increase of $60.2 million, or 63.7%, over pro forma net sales of
$94.5 million for the fiscal year ended September 30, 1994. Pro forma net sales
of telescopic material handlers in the fiscal year ended September 30, 1995 were
$121.5 million, an increase of $46.4 million, or 61.8%, over the fiscal year
ended September 30, 1994. Pro forma net sales of skid steer loaders in the
fiscal year ended September 30, 1995 were $17.2 million, an increase of $6.5
million, or 60.5%, over the prior year. The remaining $7.3 million increase in
pro forma net sales related to parts and attachments, which continue to reflect
the positive effects of a greater number of units operating in the field. The
increase in the pro forma net sales of telescopic material handlers is comprised
almost entirely of an increase in units sold, which reflected increased demand
and the addition of new dealers to the distribution network. Lull resumed
full-time operations effective
31
<PAGE>
January 1, 1994 after purchasing the assets of a predecessor business out of
bankruptcy in November 1993, and after the completion of a plant and equipment
reorganization in November and December 1993. As a result, pro forma net sales
for the fiscal year ended September 30, 1994 included only nine months of Lull
net sales. The increase in pro forma sales of skid steer loaders also reflected
increases in units sold due to increased demand and the continued expansion of
the distributor base.
Pro forma gross profit for the fiscal year ended September 30, 1995 was
$34.2 million, an increase of $14.1 million, or 70.2%, over pro forma gross
profit of $20.1 million for the fiscal year ended September 30, 1994. The
increase in pro forma gross profit primarily reflected the increase in pro forma
net sales discussed above. The pro forma gross margin increased to 22.1% in the
fiscal year ended September 30, 1995 from 21.2% in the fiscal year ended
September 30, 1994, which primarily reflected manufacturing efficiencies and
productivity gains as well as continuing increases in sales volume. Pro forma
gross margins in the fiscal year ended September 30, 1994 were also somewhat
adversely impacted by certain start-up related inefficiencies at Lull as it
resumed full-time operations on January 1, 1994.
Pro forma SG&A expenses for the fiscal year ended September 30, 1995 were
$19.8 million, an increase of $6.0 million, or 43.6%, over pro forma SG&A
expenses of $13.8 million for the fiscal year ended September 30, 1994. The
increase primarily resulted from expenses associated with increases in pro forma
net sales in the fiscal year ended September 30, 1995. Pro forma SG&A expenses
as a percentage of pro forma net sales decreased to 12.7% in the fiscal year
ended September 30, 1995 from 14.5% in the fiscal year ended September 30, 1994.
The decrease in the pro forma SG&A percentage reflected the successful results
of the companies' efforts to control general and administrative costs as the
businesses expanded. The pro forma SG&A percentage for the fiscal year ended
September 30, 1994 was also adversely impacted by certain start-up related
inefficiencies at Lull as it resumed full-time operations on January 1, 1994.
Pro forma operating income for the fiscal year ended September 30, 1995 was
$14.4 million, an increase of $8.1 million, or 128.3%, over pro forma operating
income of $6.3 million for the fiscal year ended September 30, 1994. Pro forma
operating margins increased to 9.4% in the fiscal year ended September 30, 1995
from 6.6% in the fiscal year ended September 30, 1994. The improvements in pro
forma operating income and operating margins reflect the factors described
above.
SEASONALITY AND PRO FORMA QUARTERLY RESULTS
The following table sets forth for the periods indicated the components of
the Company's quarterly pro forma statement of results:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED 9/30/95 FISCAL YEAR ENDED 9/30/96 FISCAL YEAR ENDING 9/30/97
----------------------------------- ----------------------------------- -------------------------------------
GROSS OPERATING GROSS OPERATING GROSS OPERATING
QUARTER NET SALES PROFIT INCOME NET SALES PROFIT INCOME NET SALES PROFIT INCOME
- ------------ --------- ----------- ----------- --------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
First....... $ 30,118 $ 6,150 $ 1,674 $ 43,968 $ 9,985 $ 1,118 $ 59,166 $ 15,279 $ 9,361
Second...... 39,221 8,792 4,103 53,425 12,647 6,618
Third....... 43,142 9,920 4,762 54,377 12,609 6,130
Fourth...... 42,209 9,296 3,849 55,469 13,431 7,352
--------- ----------- ----------- --------- ----------- -----------
$ 154,690 $ 34,158 $ 14,388 $ 207,239 $ 48,672 $ 21,218
--------- ----------- ----------- --------- ----------- -----------
--------- ----------- ----------- --------- ----------- -----------
</TABLE>
The Company's quarterly net sales are affected to some extent by the
seasonality of construction activities in North America, which tend to be
influenced by climate conditions. The second and third fiscal quarters (January
through June) are generally the strongest periods for material handling and
construction equipment sales, while the first and fourth fiscal quarters
typically experience weaker demand for the Company's products. The effects of
this seasonality on the Company's net sales have been mitigated in recent
quarters by the overall growth in sales volume.
32
<PAGE>
Operating income in the first quarter of fiscal 1996 was adversely affected
by a $2.9 million pre-tax charge to operations for the previously noted boom
warranty matter. In addition, net sales of the LULL brand of telescopic material
handlers declined 7.4% from the second quarter to the third quarter of fiscal
1996 primarily as a result of disruptions caused by efforts relating to boom
warranty work. See "Risk Factors--Product Recall" and "Business--Product
Liability and Product Recall."
PRO FORMA CAPITAL RESOURCES AND LIQUIDITY
As described above, the Company, TRAK and Lull have experienced significant
growth in the past few years in both net sales and operating income. On a pro
forma basis, net sales and operating income have increased from $94.5 million
and $6.3 million, respectively, for the fiscal year ended September 30, 1994 to
$207.2 million and $24.1 million (excluding the nonrecurring boom warranty
charge incurred by Lull), respectively, for the fiscal year ended September 30,
1996. This trend has continued in fiscal 1997, as, on a pro forma basis, net
sales and operating income have increased from $44.0 million and $4.0 million
(excluding the nonrecurring boom warranty charge incurred by Lull),
respectively, for the three months ended December 31, 1995 to $59.2 million and
$9.4 million, respectively, for the three months ended December 31, 1996.
Correspondingly, pro forma operating cash flows have increased throughout the
period, a substantial portion of which were utilized to finance the businesses'
expansion, particularly with respect to increases in inventories and accounts
receivable, and capital expenditures. Capital expenditures were $0.4 million for
the three months ended December 31, 1996. On a pro forma basis, capital
expenditures were $3.4 million, $4.7 million and $4.0 million for the fiscal
years ended September 30, 1996, 1995 and 1994, respectively. Capital
expenditures for the Company or TRAK in these periods have included plant
expansion for skid steer loader manufacturing, computer systems, a new paint
line and welding robotics. Capital expenditures for Lull in these periods have
included expenditures associated with the expansion of assembly capacity and
purchase of related machinery in 1995 and acquisition of Lull's primary
manufacturing facility in St. Paul, Minnesota and related machinery in 1994.
The net proceeds of the Offering are expected to be utilized to repay a
portion of the outstanding debt of the Company. At the time the Company's debt
is repaid, the Company expects to incur a prepayment fee estimated to equal 0.6
million, net of tax benefits.
For additional information regarding capital resources and liquidity, see
"Management's Discussion and Analysis of Results of Operations and Financial
Condition--Capital Resources and Liquidity."
33
<PAGE>
BUSINESS
GENERAL
The Company is the largest North American manufacturer of telescopic
material handlers, and also manufactures a line of skid steer loaders, as well
as a limited range of other material handling equipment. Omniquip's highly
versatile products are used in a wide variety of applications by commercial and
residential building contractors, as well as other construction, military,
industrial, municipal and agricultural end-users. The Company's telescopic
material handlers are marketed under the well recognized and highly regarded SKY
TRAK and LULL brand names. Based upon industry reports, the Company believes
that its North American market share of 1996 shipments of telescopic material
handlers was approximately 40%.
Telescopic material handlers are especially useful in rough terrain
environments and congested job sites, where their maneuverability and ability to
raise, extend and lower payloads provide significant advantages over more
traditional material handling equipment, such as cranes, straight-mast forklifts
and elevators. The Company's telescopic material handlers have a maximum lift
capacity of 5,000 pounds to 10,000 pounds and can position payloads from 28 feet
to 54 feet above the ground or 15 feet to 39 feet in front of the machine's
chassis. The versatility of these units allows users to lower overall costs by
substituting a single telescopic material handler for one or more other types of
material handling equipment, as well as for certain labor intensive material
handling tasks. The Company believes it manufactures the broadest product line
of telescopic material handlers in North America. Shipments of commercial
telescopic material handlers marketed under the SKY TRAK and LULL brand names
increased from approximately 950 units in calendar 1990 to approximately 2,900
units in 1996. In addition, Omniquip has been the principal supplier since 1988
of telescopic material handlers to the U.S. military, having delivered over
2,800 such units for use in loading and unloading containers and palletized
loads for ships, aircraft and trucks as well as for munitions handling and
reloading multiple rocket launchers. In 1995, the Company was awarded a contract
to supply the Army with a new generation of telescopic material handlers to
support the logistics requirements of the Rapid Deployment Forces. The Army has
estimated that its requirements under the contract could range up to a maximum
of 1,200 ATLAS vehicles, or a maximum contract value of $120 million. Shipments
under the contract are expected to begin in fiscal year 1997. The Company
believes that this contract will enhance its ability to pursue sales to other
branches of the United States armed forces and to foreign military agencies. See
"Risk Factors--ATLAS Contract."
The Company has experienced significant growth in sales of skid steer
loaders, principally marketed under the SCAT TRAK brand name, with shipments of
approximately 120 units in calendar 1990, increasing to shipments of
approximately 1,250 units in 1996. Skid steer loaders are compact and versatile
machines used to dig, lift and handle bulk materials such as dirt, construction
materials, waste, farm produce and snow. The compact size, maneuverability and
ease of transport make skid steer loaders well-suited for a wide variety of
applications. The Company's skid steer loaders can lift and position maximum
payloads of 1,300 pounds to 1,750 pounds to a maximum lift height of 112 inches
to 121 inches.
Omniquip sells and distributes its products commercially through
approximately 175 independent equipment dealers and approximately 75 rental
companies, including national rental fleets, located in the United States and
Canada. Internationally, Omniquip markets and distributes its products through a
variety of arrangements with dealers and distributors in 24 countries. To
facilitate the sale of its products, Omniquip offers its independent equipment
dealers floor plan and rental fleet financing assistance in connection with the
purchase of the Company's products. Such assistance consists of limited, back-up
financing guarantees and repurchase agreements which benefit dealers by
providing them the opportunity to obtain attractive financing terms on the
Company's products, which in turn allows dealers to stock more units for sale or
rental.
34
<PAGE>
INDUSTRY OVERVIEW
Omniquip competes principally in selected segments of the material handling
and construction equipment markets which utilize engines of less than 130
horsepower. With limited exceptions, competitors with significant market shares
in these segments typically are not large full-line construction equipment
manufacturers.
North American shipments of construction and allied equipment grew from
$30.8 billion in 1990 to $38.9 billion in 1995, representing a nominal compound
annual growth rate of 4.8%. According to industry estimates, shipments of
telescopic material handlers in North America grew from approximately 2,400
units in 1990 to approximately 7,100 units in 1996, representing a real compound
annual growth rate of 19.8%, and sales of skid steer loaders in North America
grew from approximately 27,000 units in 1990 to approximately 44,700 units in
1996, representing a real compound annual growth rate of 8.8%. The Company
believes higher growth rates for telescopic material handlers and skid steer
loaders are attributable to a number of factors, including the following:
PRODUCT VERSATILITY. Telescopic material handlers are more versatile
than other material handling equipment such as cranes, straight mast
forklifts and elevators. Telescopic material handlers can unload, carry and
place materials up to five stories high in rough terrain work environments,
eliminating the need for multiple pieces of more specialized equipment and
reducing the labor required to handle materials at the work-site. In
addition, using one or more of the approximately 40 Company-approved
attachments, Omniquip's telescopic material handlers can be used in numerous
applications. Attachments include forks and carriages, grapples, buckets,
augers, concrete hoppers and truss booms. The numerous applications provided
by such attachments used in conjunction with the Company's telescopic
material handlers allow customers to decrease aggregate equipment costs and
increase utilization of their material handling equipment. Similarly, the
compact size, maneuverability, user-friendly controls, large number of
available attachments, ease of transport and labor and time saving
capability of skid steer loaders make them useful for a wide variety of
applications. Unlike larger construction equipment, skid steer loaders can
be used at small work-sites and easily transported.
INCREASED PRODUCTIVITY. Telescopic material handlers and skid steer
loaders enable users to increase labor productivity and improve asset
utilization, compared to other methods using alternative equipment or direct
labor. Productivity enhancements include a reduction in the number of
indirect personnel required for material handling support to load, transport
and place building materials and to operate certain other types of
construction equipment. In addition, telescopic material handlers provide
significant support on construction sites for labor-saving advanced material
handling techniques, such as efficient movement of palletized loads and use
of pre-fabricated building components. The versatility and variety of
attachments available for telescopic material handlers results in higher
utilization of the equipment and permits end users to increase inventory
turnover at job sites more rapidly by taking loads directly off delivery
trucks and placing them where they will be used.
GROWTH OF EQUIPMENT RENTALS. The equipment rental industry serves a
wide variety of industrial, manufacturing, construction and governmental
markets. The equipment rental industry, including rental centers, national
rental fleets and independent dealers who offer material handling equipment
for either sale or rental, has grown significantly. A survey conducted for
an industry trade association estimates that construction equipment rental
revenues were approximately $7.5 billion in 1990 and increased to
approximately $12.9 billion in 1993. The author of the survey further
estimates that such revenues increased to $15.0 billion in 1995. Increased
availability of rental construction equipment has substantially broadened
the group of potential end-users for the Company's products. Equipment
rentals provide end-users having limited needs or resources with the ability
to conveniently and economically rent material handling equipment, as well
as necessary attachments. Rental companies
35
<PAGE>
can fulfill significant, but temporary, needs of large end-users,
supplementing capacity during peak activity periods. Additionally, rental
companies can rent a single telescopic material handler or skid steer loader
to small contractors for short-term projects.
GROWTH OF NON-CONSTRUCTION APPLICATIONS. Historically, the primary
market for telescopic material handlers has been the construction market
while the principal markets for skid steer loaders have been the
construction and agricultural markets. In recent years, however,
applications for both product lines have emerged in other markets. For
example, since 1988, telescopic material handlers have been used by the Army
for munitions handling and, more recently, general logistics purposes.
Telescopic material handlers have also experienced increasing acceptance in
the industrial and agricultural markets where they are used, among other
applications, to transport and position bulk materials. The versatility of
skid steer loaders, which has long resulted in a wide variety of specific
applications in the construction and agricultural markets, has increasingly
given rise to a range of applications in the municipal, landscape and
industrial markets. Examples of these applications include transport of
recycling materials, snow removal and lifting and transporting raw materials
and inventory.
BUSINESS STRATEGY
The Company's strategy is to grow primarily within selected segments of the
material handling and construction equipment markets (i) which utilize engines
of less than 130 horsepower, (ii) which are not typically dominated by full-line
construction equipment manufacturers, (iii) which are growing faster than the
construction equipment industry generally, and (iv) which typically utilize
local independent dealers for distribution rather than regional distributorships
primarily dedicated to products made by a single manufacturer.
Key elements of the Company's business strategy include:
- PROVIDING SUPERIOR PRODUCTS. The Company focuses on developing innovative,
high performance products with low life-cycle cost. By introducing unique
product features and enhancements, the Company believes that it increases
demand for the Company's products. Examples include the pioneering
introduction in 1994 of a SKY TRAK model capable of lifting and
positioning materials up to five stories above ground, the proprietary
sliding telescopic booms developed by Lull which permit higher precision,
horizontal maneuvering of materials at various lift heights, and the tilt-
forward cab design of SCAT TRAK skid steer loaders which simplifies
maintenance. In addition, during the first fiscal quarter of 1998, the
Company expects to introduce the first model of a new range of telescopic
material handlers designed to be used for expanded applications in North
America and to be competitive with products currently used in
international markets. These innovations, along with the Company's focus
on product quality and low life-cycle cost, are important to the
acceptance of the Company's products.
- PURSUING A MULTIPLE BRAND DISTRIBUTION STRATEGY. The Company intends to
pursue a multiple brand strategy, maintaining essentially distinct
nationwide distribution channels for its brand name products. This
strategy provides more complete geographic coverage of the market place
and gives the Company the ability to selectively expand the number of
dealers carrying its products. At the same time this strategy affords the
Company the opportunity to realize economies of scale in providing parts
supply, attachments, dealer finance, component purchasing and
manufacturing. Omniquip's multiple brand distribution strategy is designed
to appeal to customers' differing price, performance and support needs.
- ACQUIRING COMPLEMENTARY BUSINESSES. A key component of the Company's
growth strategy is the identification and completion of complementary
acquisitions. The Company's acquisition of Lull in August 1996 reflects
the Company's strategy of acquiring businesses which utilize complementary
distribution channels or which manufacture and market products which
complement the products
36
<PAGE>
currently manufactured and sold by the Company. The Company has identified
numerous potential acquisition candidates in the relatively fragmented
material handling and general construction equipment industry.
- ACHIEVING COST SAVINGS FROM THE INTEGRATION OF ACQUIRED OPERATIONS. The
Company believes that substantial cost savings can result from the
integration of acquired operations. For example, the Company anticipates
that it can increase purchasing efficiencies for components and materials,
eliminate duplicative overhead costs, streamline production processes and
achieve other economies of scale in areas such as parts supply, product
design and development and dealer finance.
- LEVERAGING ITS POSITION AS A LEADING NORTH AMERICAN MANUFACTURER TO EXPAND
ITS PENETRATION OF GLOBAL MARKETS. While the Company is the largest North
American manufacturer of telescopic material handlers, its sales of such
products outside North America are relatively modest. The Company is in
the process of "globalizing" its products to increase their appeal in
international markets. For example, its new MILLENNIA line of telescopic
material handlers, a prototype of which is currently in testing,
incorporates improved tool handling capabilities, noise suppression
systems and ergonomics. In addition, the Company intends to improve its
distribution networks outside North America in order to increase the
availability of its products in selected markets in Europe, Latin America
and the Far East.
PRODUCTS
The Company designs, manufactures and markets telescopic material handlers
as its principal product line, as well as a line of skid steer loaders. In
addition, the Company manufactures and distributes a variety of other material
handling equipment and attachments and offers parts and service with respect to
the products it sells.
PRO FORMA NET SALES BY PRODUCT CATEGORY(1)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR THREE MONTHS
ENDED SEPT. 30, ENDED DEC. 31,
--------------------------------- --------------------
1994 1995 1996 1995 1996
--------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Telescopic material handlers............................ $ 75,072 $ 121,464 $ 170,006 $ 35,461 $ 49,534
Skid steer loaders...................................... 10,699 17,174 17,984 3,220 4,007
Other(2)................................................ 8,741 16,052 19,249 5,287 5,625
--------- ---------- ---------- --------- ---------
Total............................................... $ 94,512 $ 154,690 $ 207,239 $ 43,968 $ 59,166
--------- ---------- ---------- --------- ---------
--------- ---------- ---------- --------- ---------
</TABLE>
- ------------------------
(1) The information in the foregoing table reflects the pro forma net sales by
product category of TRAK and Lull for the applicable periods as if the
acquisitions of these companies had occurred on October 1, 1993. See "Pro
Forma Financial Information."
(2) Includes parts and service and other miscellaneous equipment lines and
attachments.
TELESCOPIC MATERIAL HANDLERS
Telescopic material handlers are rough terrain vehicles used to transport,
lift and position materials between ground locations, between vehicles and to
elevations up to five stories in height. This equipment is typically utilized in
North America by residential and non-residential building contractors to handle
a wide range of building materials and components, including bricks, concrete
blocks, open-wall panels, roof trusses, lumber, drywall sheets, structural steel
and roofing materials. In addition, by using one or more of the approximately 40
Company-approved attachments, the Company's telescopic material handlers can
also be used in nontraditional, specialized applications, such as steel building
construction or pole and post hole drilling. Available attachments include forks
and carriages, grapples, buckets, augers, concrete
37
<PAGE>
hoppers and truss booms. End-users for the Company's telescopic material
handlers currently include the construction, military, agricultural, landscaping
and industrial markets.
The Company currently manufactures 15 models of telescopic material handlers
marketed under the SKY TRAK and LULL brand names. These models have rated load
capacities of 5,000, 6,000, 8,000 and 10,000 pounds and possess the capacity to
place loads 28, 36, 37, 42 and 54 feet above the ground (and up to 62 feet above
the ground with an optional mast extension). Suggested list prices for these
products range from approximately $60,000 to approximately $115,000 per unit.
Four additional product offerings for use in the logging and pipe handling
industries are marketed under the DYNA LUGGER brand name, which have rated load
capacities up to 30,000 pounds and list prices of up to $275,000.
Each of the Company's two brands of telescopic handlers has unique
characteristics, which have contributed to strong competitive positions in the
market. The success of the SKY TRAK brand has been built on a reputation for
strong product performance and design innovation, with emphasis on design
simplicity and serviceability. The LULL brand has a long tradition associated
with its patented transfer carriage technology, which facilitates the precision
placement of palletized loads. LULL brand products enjoy a premium reputation
for their ease of operation, durability, and high resale value. The Company
believes the combination of its well-known SKY TRAK and LULL brand names, its
ability to offer the industry's broadest product line, and its dual-brand
distribution strategy, provide Omniquip with competitive advantages in the
telescopic material handler market.
Since 1988, Omniquip has been the primary supplier of telescopic material
handlers to the U.S. military. Such products are used by the U.S. military for a
variety of logistics requirements, including loading certain types of rocket
launchers, loading and unloading military equipment, and for a variety of other
military materials handling tasks. The U.S. military exclusively used the
Company's telescopic material handlers in Operation Desert Storm. Substantially
all of the Company's sales to the U.S. military were made prior to fiscal 1994
pursuant to previous contracts. In May 1995, the Company was awarded a
fixed-price government contract to serve as sole supplier to the Army of the
ATLAS, the latest generation of the military version of the Company's rough
terrain telescopic material handler. ATLAS is designed as an integral component
of the Army's logistics support strategy for its Rapid Deployment Forces. The
contract provides for the supply of the Army's requirements over a period of
four years. The Army has estimated that its requirements for ATLAS vehicles over
this period could range up to a maximum of 1,200 units, or a maximum contract
value of $120 million, although the Army is not obligated to purchase any
specified number of ATLAS vehicles. The contract also affords the Army an option
to order an additional 300 units above the 1,200 unit maximum. The Company has
completed testing five prototype vehicles and has received from the Army initial
orders for 224 vehicles, none of which can be shipped until the Army
satisfactorily completes further testing of a random sample of units. The
Company believes that the award of the ATLAS contract also will provide
additional opportunities to market the ATLAS product directly and through the
Army to other branches of the United States armed forces and to foreign military
agencies. See "Risk Factors--ATLAS Contract."
SKID STEER LOADERS
Skid steer loaders are compact and versatile material handling machines used
to dig, lift and transport bulk materials such as dirt, construction materials,
waste, farm produce and snow. Unlike tractors, the left and right side wheels on
skid steer loaders turn independently, thus giving rise to their name and unique
steering mechanism, which provides a small turning radius. The versatility of
skid steer loaders is enhanced by the wide range of available attachments which
permit their use in a range of specialized applications. Approximately 50
Company-approved attachments are currently available, including buckets, forks,
hydraulic breakers, augers, trenchers, brooms, backhoes and cold planers. The
Company's skid steer loaders are commonly used by construction, agricultural,
industrial, landscaping and municipal end-users.
38
<PAGE>
The Company currently manufactures a line of five skid steer loaders
marketed under the brand name SCAT TRAK. The SCAT TRAK product line is offered
in various models with rated load capacities ranging from 1,300 pounds to 1,750
pounds. Suggested list prices for these products range from approximately
$18,000 to $26,000 per unit. The Company's production plans include the
introduction of a new line of skid steer loaders with greater rated load
capacities.
The SCAT TRAK models have been designed to offer competitive performance
advantages, such as superior axle torque and breakout force, and on specialized
models, a high flow hydraulic system for powering larger capacity attachments.
In addition, the tilt-forward cab feature provides superior serviceability. The
Company believes that product advantages such as these, as well as a reputation
for continuing innovation, a growing distribution network and attractive
financing programs, have been important factors in the growth of SCAT TRAK
sales.
OTHER
The Company manufactures and markets a limited range of masonry tenders and
buggies and articulated forklifts and loaders, all of which are used primarily
in the masonry industry, and markets a limited line of straight-mast forklifts.
The Company also provides product service support to its distribution networks,
and produces and sells through its distributors a wide range of service parts to
maintain the operational performance of its end products throughout their useful
lives. The sale of service parts provides an important source of revenue and
profitability, as such sales are historically less sensitive to industry cycles
and typically generate higher gross margins than sales of original equipment.
The Company seeks to provide a high level of parts availability and timely
shipments of orders to maintain the production availability of its products on
customer job sites.
MARKETING AND DISTRIBUTION
The Company sells its products to independent equipment dealers for retail
sale and rental and to equipment rental companies, including independent rental
centers and national rental fleets, for rental. The Company intends to pursue a
multiple brand strategy, maintaining distinct nationwide distribution channels
for its principal brand name products. This strategy provides more complete
geographic coverage of the marketplace and greater flexibility in expanding the
Company's dealer network, while affording the Company the opportunity to realize
economies of scale in providing parts supply, service, attachments, dealer
finance, component purchasing and manufacturing. Both SKY TRAK and LULL brand
telescopic material handlers are marketed to a mix of independent retail
dealers, rental centers and national rental fleets, with SKY TRAK more heavily
oriented towards independent retail dealers and LULL more heavily focused on
rental centers and national accounts. The Company's SCAT TRAK brand of skid
steer loaders is sold primarily to regional rental centers and independent
retail dealers.
Traditionally, independent dealers have focused their efforts on resale of
products to end users. In recent years, however, many independent dealers have
built their own rental fleets to augment their sales activities. Rental centers
are equipment rental dealers who focus exclusively on renting units on a daily,
weekly or monthly basis to customers whose needs do not require purchase and
full-time utilization of units, and national rental fleets are large equipment
rental companies which, through company-owned stores or franchises, carry out
rental activities nationwide.
The Company employs a sales force of approximately 25 field sales managers
and representatives. The Company supports the sales, service and rental
activities of its dealers with product advertising, sales literature, product
training and major trade show participation. Omniquip seeks to promote end-user
acceptance and continued satisfactory performance of its products worldwide. The
Company pursues this goal in cooperation with a network of distributors who,
when properly trained and equipped, provide for the maintenance and repair of
all Omniquip products for end-users. The Company promotes a high level of
customer support through programs which closely monitor the performance of its
products with rental
39
<PAGE>
fleets and with end-users. This level of product support is maintained by a
variety of programs and procedures, including: a toll-free technical assistance
program; on-site service representative visits; factory training programs;
organization of product assessment teams facilitated by the service department;
and continuing interaction among distributors, end-users and major vendors for
failure analysis of products both in and out of warranty. Service support is
provided by Omniquip distributors.
International sales represented approximately 5.6%, 5.1% and 4.5% of pro
forma consolidated net sales for the fiscal years ended September 30, 1995 and
1996, and for the three months ended December 31, 1996, respectively. All of the
Company's products are marketed internationally to independent retail dealers,
except that the LULL brand of telescopic material handlers is marketed
internationally primarily through an exclusive distribution agreement with a
single United States exporter. Historically, the SCAT TRAK product line has been
marketed in Europe exclusively through a private-label agreement with a
distributor. The agreement was recently terminated following the acquisition of
such distributor by another manufacturer of skid steer loaders. The Company
anticipates that future sales in Europe are likely to be adversely affected as
the Company has not yet established alternative distribution arrangements for
the SCAT TRAK product line in Europe. For the fiscal year ended September 30,
1996, sales through such distributor accounted for less than 2% of the Company's
pro forma consolidated net sales.
FINANCING
The Company offers its independent dealers conventional floor plan financing
and rental fleet financing to assist in the purchase of its products. Under
these financing arrangements, dealers borrow money from independent lenders on a
secured basis for up to five years. Where dealer financing is provided directly
by independent lenders, the Company assists the financing by providing the
independent lenders either a back-up guarantee of a dealer's credit or an
undertaking to repurchase used equipment at a discounted price to market at
specified times or under specified circumstances.
At December 31, 1996, approximately $64.2 million of Company-assisted floor
plan and rental fleet financing arrangements were outstanding on a consolidated
basis. The Company's actual exposure under these financing arrangements is
significantly less than the nominal amount outstanding. With respect to TRAK's
dealers, who accounted for approximately $53.0 million of the consolidated $64.2
million in dealer financing outstanding at December 31, 1996, substantially all
of the Company's guarantee obligations for each of calendar years 1996 and 1997,
as well as losses incurred in connection with repurchase obligations described
below, are limited to the greater of $1.5 million and 5% of the portfolio
outstanding at the previous calendar year end (approximately $2.0 million for
1996). During calendar year 1995 such guarantee obligations were limited to 25%
of the portfolio outstanding at December 31, 1994. To the extent that
independent lenders providing financing for TRAK's dealers do not have (or do
not exercise) direct recourse against the Company under back-up guarantees, the
Company is committed to perform its repurchase undertaking to re-acquire
equipment sold to a defaulting dealer at a purchase price equal to amounts due
the independent lender. The Company's actual exposure under these repurchase
arrangements is reduced by underlying equipment values as well as careful
portfolio management, by both the Company and its lenders. At the present time,
an active resale market exists for such equipment. With respect to Lull's
dealers, who accounted for approximately $11.2 million of the combined $64.2
million in dealer financing outstanding at December 31, 1996, the Company's
guarantee obligations are limited to circumstances where the independent lender
is unable to enforce its lien against financed equipment (for example, if a
dealer has fraudulently sold the equipment out of trust to a bona fide purchaser
for value) or where a dealer defaults on its final, balloon installment payment
(typically due 48 months from shipment). At December 31, 1996, past due
principal and interest as a percentage of the total portfolio on a pro forma
consolidated basis was less than one tenth of one percent. The Company's worst
loss experience in recent years occurred in 1991 when TRAK sustained expenses of
approximately $1.0 million as a result of its floor
40
<PAGE>
plan financing guarantees. Most of this loss occurred as the result of dealer
fraud, and the Company has taken steps designed to mitigate future losses
through better documentation and collection techniques.
FACILITIES
The Company's headquarters are located in Port Washington, Wisconsin, and
the Company maintains manufacturing facilities in North Dakota and Minnesota.
Set forth below is certain information with respect to the Company's
manufacturing facilities.
<TABLE>
<CAPTION>
SQUARE OWNED/
LOCATION FOOTAGE LEASED ACTIVITIES AND PRODUCTS
- ------------------------------------- ------------- --------- ---------------------------------------------------
<S> <C> <C> <C>
(APPROXIMATE)
Port Washington, Wisconsin........... 150,000 Owned Telescopic material handlers, skid steer loaders,
research and development
St. Paul, Minnesota.................. 100,000 Owned Telescopic material handlers, research and
development
Oakes, North Dakota.................. 30,000 Leased Masonry tenders and buggies, articulated forklifts
and loaders, telescopic material handler component
parts
</TABLE>
The initial term under the lease agreement for the Company's manufacturing
facility in Oakes, North Dakota expires on April 1, 2000 (the "Initial Term").
Upon expiration of the Initial Term, the Company has the option to purchase the
facility or to extend the lease for an additional 30 months (the "Extended
Term"). If the Company chooses to extend the lease term, lease payments during
the Extended Term will be applied to the purchase of the facility. In the event
of the expiration, cancellation or termination of the lease for the Oakes, North
Dakota property, the Company anticipates no significant difficulty in connection
with leasing alternate space at reasonable rates. The Company believes that its
production facilities and planned expansions will be adequate to meet
anticipated manufacturing volumes, including production of ATLAS telescopic
material handlers, during the fiscal year ending September 30, 1997.
MANUFACTURING AND RAW MATERIALS
The Company fabricates, welds, machines and assembles the chassis,
telescopic booms, attachments and many component parts for its telescopic
material handlers and skid steer loaders. During the past three years, the
Company has made significant capital investments in its Port Washington,
Wisconsin facility to implement robotic welding and a five-station wash,
automatic prime and finish coat paint system and to complete a 25,000 sq. ft.
plant addition. In its St. Paul, Minnesota facility, the Company has invested in
machining centers and numerically controlled plasma punching capability. These
investments, along with numerous projects to improve production flow and
material handling, have provided the foundation for continuing productivity
improvements.
In 1995, the Company completed registration under ISO 9001 of its Port
Washington, Wisconsin quality systems, becoming the first telescopic material
handler manufacturer and the second skid steer loader manufacturer in North
America to achieve this recognition. Registration under ISO 9001 represents the
achievement of an internationally recognized standard of quality systems
implementation and is important for competing in markets with ISO requirements,
such as Europe. In addition, the United States Department of Defense has
mandated the use of ISO 9001 for new procurements, including the ATLAS contract.
The Company expects to implement similar quality system standards in the
recently acquired St. Paul, Minnesota and Oakes, North Dakota facilities.
The Company intends to pursue opportunities to reduce costs of purchased
components through consolidation of vendor sources, improvements in
manufacturing methods and integration of operations. The Company also believes
that opportunities exist to achieve manufacturing economies in the production of
telescopic material handlers by combining the production of certain key
components.
41
<PAGE>
The principal raw materials and components used in the manufacturing of the
Company's products are steel, engines, transmissions, axles, hydraulic systems,
wheels and tires and cabs. The Company procures its raw materials and components
from multiple vendors, although in the case of particular models it typically
purchases certain components from a single vendor. Although alternative
suppliers are available for all raw materials and components, the Company could
experience delays in obtaining components meeting the requisite specifications
from alternative suppliers in the event a principal supplier was unable to
supply a particular component. In the case of the ATLAS product supplied to the
Army, the governing contract specifies precisely the source of key component
parts utilized in the manufacture of the ATLAS product. In the event of
unavailability of any of these key components, the Company could be precluded
from completing production of ATLAS products in a timely fashion unless the Army
agreed to substitution of an alternative component. The Company seeks to manage
the risk of unavailability of key components and raw materials by dealing only
with substantial, financially responsible vendors and managing closely its
material requirements as well as its vendor relationships. To date, the Company
has not experienced a material delay in obtaining a satisfactory supply of key
components from vendors.
PRODUCT DEVELOPMENT AND ENGINEERING
The Company maintains an active program of product development and
engineering activities designed to upgrade existing product lines and develop
new products. The Company employs approximately 30 employees with experience in
the design of products. For the fiscal years ended September 30, 1995 and 1996
and for the three months ended December 31, 1996, the Company spent
approximately $1.3 million, $2.5 million, and $0.8 million, respectively, on
product development and engineering activities. Since 1987, the Company has
invested in the computer systems and training of its engineering staff to
support the increasing use of computer-aided design. To decrease product
development time, reduce product development cost, and improve the quality of
its new products, the Company has further invested to implement finite element
analysis capability, three-dimensional solid design, and concurrent engineering.
The Company's product development and engineering efforts during future periods
are expected to emphasize continued product line expansion, design modifications
to expand the worldwide acceptance of its products, and the expanded sourcing of
attachments to improve access to more end-user markets.
WARRANTY AND SERVICE
Omniquip products are warranted for design, workmanship and material
quality. Warranty lengths vary depending on competitive standards within
individual markets. In general, warranties tend to be for one year and cover all
parts and labor for non-maintenance repairs, provided the repair was not
necessitated by operator abuse. Optional extended warranties, for one to two
years beyond the base period, are available for purchase. Warranty work is
performed only by authorized Omniquip distributors. Distributors submit claims
for warranty reimbursement to the Company and are credited for the cost of
repairs so long as the repairs meet Omniquip's prescribed standards. Warranty
expense is accrued at the time of sale based on historical experience.
TRADEMARKS AND PATENTS
The Company owns and maintains U.S. trademark registrations for all of its
principal trademarks. Registrations for these trademarks are owned and
maintained in other countries where a significant volume of its products are
sold and registration is considered necessary to protect the Company's
proprietary rights.
The Company applies for and maintains patents in the United States and
elsewhere where the Company believes such patents are necessary to maintain the
Company's interest in its inventions. Currently, the Company possesses patents
on two-stage and three-stage telescopic booms which expire in 1997 and 2007,
respectively. The Company believes these patents provide it with a competitive
advantage
42
<PAGE>
in selected markets, but does not believe that the expiration of either of these
patents would have a material adverse effect upon its business or ability to
compete.
COMPETITION
The markets for the Company's products are highly competitive. The principal
competitive factors include distribution, price, design features, performance,
product reliability and the availability of financing.
In the market for telescopic material handlers, the Company is the largest
North American manufacturer, with an estimated share of 1995 shipments of
telescopic material handlers of approximately 40%, and its principal competitors
include Gradall Industries, Inc. and JCB International Co., Ltd. Other
competitors in the North American market include Gehl Company, Pettibone
Corporation, Traverse Lift, Ingersoll-Rand Company, Manitou S.A. and Caterpillar
Inc. Competitors in this market outside the United States include JCB
International Co., Ltd., Manitou S.A., Merlo S.p.A., the Matbro division of
Powerscreen International PLC, Sanderson, FDI/Sambron and Caterpillar Inc. The
Company's principal competitors in the global skid steer loader market include
Ingersoll-Rand Company, which is believed by the Company to have a market share
in excess of 40%, Case Corporation and New Holland N.V., a subsidiary of Fiat
S.p.A., all of which the Company believes maintain a larger market share than
the Company.
Many of the Company's competitors are larger than the Company and possess
significantly greater financial, marketing and technical resources. There can be
no assurance that the Company will not experience significant competition in the
future from large global construction equipment manufacturers and other
competitors or that existing competitors will not take actions which could
adversely affect the Company's operating results.
ENVIRONMENTAL AND SAFETY REGULATION
Omniquip is subject to federal, state and local environmental laws and
regulations that impose limitations on the discharge of pollutants into the
environment and establish standards for the treatment, storage and disposal of
toxic and hazardous wastes. The Company is also subject to the federal
Occupational Safety and Health Act and similar state statutes. The Company
believes it is in material compliance with all applicable environmental laws and
regulations. The Company does not expect any material impact on future recurring
operating costs of compliance with currently enacted environmental regulations.
Under federal, state and local laws, including the federal Comprehensive
Environmental Response, Compensation, and Liability Act, a current owner or
operator of real property may be held liable for the costs of cleaning up
certain hazardous materials on the property. Similarly, persons who have
arranged for the disposal of hazardous materials on properties owned by third
parties may be held liable for cleanup costs for such properties. In each case,
liability may be imposed without regard to whether the person knew of or took
reasonable acts to prevent the contamination. Liability under such laws is often
joint and several, that is, any single liable person may be required to bear the
entire costs of the environmental cleanup. That person, however, may usually
seek contribution from other responsible persons, if there are any; and it is
typical for groups of responsible parties to apportion liability among
themselves.
The Company regularly conducts an environmental assessment consistent with
recognized standards of due diligence on properties and businesses which it
acquires. To date, these assessments have not identified contamination in
respect of acquired properties that would be reasonably likely to result in a
material adverse effect on the Company's business, results of operations or
financial condition. As a general rule, the Company intends to use such
assessments as part of the evaluation of proposed acquisitions. However, there
can be no assurance that environmental assessments have identified, or will in
the future identify, all material liabilities relating to the Company's
properties and businesses, that any
43
<PAGE>
indemnification agreements that can be negotiated will cover all potential
liabilities, or that changes in cleanup requirements or subsequent events at the
Company's properties or at off-site locations will not result in significant
costs to the Company.
PRODUCT LIABILITY AND PRODUCT RECALL
Product liability claims are asserted against the Company from time to time
for various injuries alleged to have resulted from defects in the manufacture
and/or design of the Company's products. The Company does not believe that the
resolution of such claims, either individually or in the aggregate, will have a
material adverse effect on the Company's results of operations or financial
condition. Product liability claims are covered by the Company's comprehensive
general liability insurance policies, subject to certain deductible amounts. The
Company has reserves for such deductible amounts, which it believes to be
adequate based on its previous claims experience. However, there can be no
assurance that resolution of product liability claims in the future will not
have a material adverse effect on the Company.
From time to time, the Company discovers defects in product design for
existing products which require it to take steps to correct or retrofit, at the
Company's expense, previously sold products. Currently, the Company is in the
process of correcting a defect in its LULL brand of telescopic material
handlers. In 1995, prior to the acquisition by the Company, Lull established
reserves of approximately $2.9 million for the cost of retrofitting such
telescopic material handlers. As of December 31, 1996, such reserve was
approximately $0.9 million. The Company also has a reserve of approximately $0.9
million as of December 31, 1996 relating to corrective warranty work being
undertaken with respect to two models of skid steer loaders. There can be no
assurance, however, that the ultimate cost of correcting these defects will not
exceed the amount of the previously-established reserve.
EMPLOYEES
At December 31, 1996, the Company employed approximately 700 persons.
Approximately 250 employees at the Company's Port Washington, Wisconsin facility
are covered under a collective bargaining agreement with the International
Association of Machinists and Aerospace Workers, which expires in 1998. This is
the only collective bargaining agreement to which the Company is a party.
Substantially all of the approximately 265 employees at the Company's St. Paul,
Minnesota facility are employed pursuant to a lease arrangement with CBM
Industries, Inc., d/b/a RJ Associates. Under the terms of such agreement, RJ
Associates (which is not an affiliate of the Company) leases employees to the
Company and pays the employees' salaries and benefits. The Company in turn pays
RJ Associates a management fee and reimburses RJ Associates for the employees'
salaries and benefits. The agreement can be terminated by either party upon
short notice. The Company is obligated to hire the leased employees if the
Company terminates the arrangement but continues conducting the operations in
which the employees are engaged. The Company does not anticipate any material
disruption in its business in the event of a termination of this agreement. The
Company has not experienced any work stoppage during the past five years and
considers its relations with employees to be good.
LEGAL PROCEEDINGS
From time to time, the Company is the subject of legal proceedings,
including proceedings other than product liability claims involving employee
matters and similar claims. There are no such claims currently pending which the
Company believes to be material. The Company maintains comprehensive general
liability insurance which it believes to be adequate for the continued operation
of its business.
44
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information about each of the persons
who serve as the Company's directors and executive officers:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
- ------------------------------------------ --- ---------------------------------------------------------------
<S> <C> <C>
P. Enoch Stiff............................ 49 Director, President and Chief Executive Officer
Philip G. Franklin........................ 45 Vice President--Finance and Chief Financial Officer
James H. Hook............................. 52 Vice President--Business Services
Curtis J. Laetz........................... 52 Vice President--Marketing and Development
Donald E. Nickelson....................... 64 Director and Chairman of the Board
Peter S. Finley........................... 41 Director
Jeffrey L. Fox............................ 36 Director
Samuel A. Hamacher........................ 44 Director
Paul W. Jones............................. 48 Director Nominee*
Jerry E. Ritter........................... 62 Director Nominee*
Joseph F. Shaughnessy..................... 60 Director Nominee*
Robert L. Virgil.......................... 62 Director Nominee*
</TABLE>
- ------------------------
* These individuals have consented to become directors of the Company upon
consummation of the Offering.
Mr. Stiff has been the President and Chief Executive Officer of the Company
since September 1996 and the President and Chief Executive Officer of TRAK since
August 1989. He previously served as the Chief Operating Officer of TRAK from
November 1987 to August 1989. Prior to joining TRAK, Mr. Stiff served from 1985
to 1987 as Vice President and General Counsel of Atwood & Morrill Co., Inc. (a
manufacturer of specialty valves for the utility industry) and as a division
counsel with AMCA International (predecessor to United Dominion Industries,
Inc., a diversified manufacturer) from 1983 to 1985.
Mr. Franklin has been the Vice President--Finance and Chief Financial
Officer of the Company since August 1996 and of TRAK since July 1996. Prior to
joining the Company, Mr. Franklin served as Chief Financial Officer for Monarch
Marking Systems, Inc. (a manufacturer of bar code printers) from 1994 to 1996
and as Vice President--Finance for Hill Refrigeration, Inc. (a manufacturer of
refrigerated display cases) from 1990 to 1994. From 1979 to 1990, he served in
various financial and general management positions with FMC Corporation (a
manufacturer of chemicals and machinery).
Mr. Hook has been the Vice President--Business Services of the Company since
September 1996 and of TRAK since July 1996 and previously served as Vice
President--Finance and Chief Financial Officer of TRAK from September 1992 to
July 1996. Mr. Hook previously served as Senior Vice President-- Operations for
Case Credit Corporation from 1988 to 1992 and as Senior Vice President of First
Interstate Bancorp from 1982 to 1988.
Mr. Laetz has been the Vice President--Marketing and Development of the
Company since September 1996 and has held a similar position with TRAK since
1990. Prior to joining TRAK, Mr. Laetz served as Vice President--Corporate
Planning for A.O. Smith Corp. (a manufacturer of automotive frames, water
heaters and electric motors) from 1988 to 1989 and as President of Dynapac Mfg.
Co. (a compaction equipment manufacturer) from 1986 to 1987. He also previously
served as Senior Vice President--Business Development for VME N.V. (a
manufacturer of wheel loaders, off-highway trucks and excavators) from 1985 to
1986.
45
<PAGE>
Mr. Nickelson has been the Vice Chairman of Harbour Group Industries, Inc.
("Harbour Group") in St. Louis, Missouri (an affiliate of Investments L.P.)
since 1991. From 1988 to 1990, he served as President of Paine Webber Group (an
investment banking and brokerage firm). Mr. Nickelson currently serves as a
trustee of Corporate Property Associates 10 and Corporate Property Associates
11, two public real estate investment trusts located in New York, New York, and
Mainstay Mutual Funds, as a director of DT Industries, Inc., Allied Healthcare
Products, Inc., and Sugen Inc. and as a director and Chairman of the Board of
Greenfield Industries, Inc. Mr. Nickelson was elected a director of the Company
in September 1996.
Mr. Finley has been Senior Vice President--Corporate Development of Harbour
Group since 1990. From 1985 to 1990, he served as Vice President of Harbour
Group. In addition, Mr. Finley holds various officer positions with operating
companies owned by affiliates of Harbour Group. Mr. Finley currently serves as a
director of Greenfield Industries, Inc. Mr. Finley was elected a director of the
Company in August 1995.
Mr. Fox has been Group President of Harbour Group, Ltd. (an affiliate of
Harbour Group which provides operations management services to manufacturing
affiliates of Harbour Group), since 1995. Mr. Fox previously served as President
of Engineered Polymers Corporation (a manufacturer of plastic material handling
products) from 1992 to 1995 and as President of Size Control Company (a
manufacturer of precision gauges) from 1989 to 1992, both of which were
affiliates of Harbour Group. Mr. Fox was elected a director of the Company in
September 1996.
Mr. Hamacher has been the Executive Vice President of Harbour Group, in
charge of corporate development since January 1992. From January 1988 to January
1992, he was the Vice President--Finance of Harbour Group Ltd. Mr. Hamacher
currently serves as a director of DT Industries, Inc. and Allied Healthcare
Products, Inc. Mr. Hamacher was elected a director of the Company in August
1995.
Mr. Jones has been the President of Greenfield Industries, Inc. since
November 1989 and its Chief Executive Officer since May 1993. He has served as a
director of Greenfield Industries, Inc. since 1993. From 1988 to 1989, he served
as General Manager--Manufacturing for General Electric Transportation Systems.
Prior to that time, Mr. Jones was the General Manager of General Electric
Drives, Motor and Generator Operations.
Mr. Shaughnessy has been President, Chief Executive Officer and Chairman of
the Board of BSI Constructors Inc., a general contractor and construction
manager, since 1989, a company which he co-founded in 1972 and for which he
served as President from 1974 to 1989. Mr. Shaughnessy is a member of the
advisory board of Boatmen's Bank, Central Region, in St. Louis, Mo.
Mr. Ritter has been a consultant to Anheuser-Busch Companies, Inc. and
Chairman of the Board of Clark Enterprises, Inc., the general partner of the
Kiel Center and the St. Louis Blues Hockey Club, since July 1996. From March
1990 to June 1996, he served as Vice President and Chief Financial and
Administrative Officer for Anheuser-Busch Companies, Inc. Mr. Ritter currently
serves as a director of Boatmen's Bancorp., Earthgrains Co. and Brown Group,
Inc.
Mr. Virgil has been a principal of Edward Jones & Co., a retail investment
firm, since September 1993. He previously served as a professor of accounting at
the John M. Olin School of Business, Washington University, St. Louis, Missouri
from 1964 to September 1993 and was dean of the School of Business from 1978 to
1993 and Executive Vice Chancellor of University Relations from 1992 to 1993. He
is currently a member of the Board of Directors of CPI Corporation and General
American Life Insurance Company.
The Board of Directors is divided into three classes serving staggered terms
as follows: Class I, comprised of three persons and serving for a term expiring
at the 2000 Annual Meeting of Stockholders; Class II, comprised of three persons
and serving for a term expiring at the 1998 Annual Meeting of Stockholders; and
Class III, comprised of three persons and serving for a term expiring at the
1999 Annual
46
<PAGE>
Meeting of Stockholders. Mr. Stiff and Mr. Nickelson have been elected as Class
I directors, Mr. Finley and Mr. Fox have been elected as Class II directors, and
Mr. Hamacher has been elected as a Class III director. Following the expiration
of the initial term, directors will serve for three year terms. The executive
officers serve at the pleasure of the Board of Directors of the Company.
After the Offering, the Company anticipates that it will form and maintain
an Executive Committee, an Audit Committee, a Compensation and Options Committee
and a Nominating Committee.
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued by the
Company for services rendered during the fiscal year ended September 30, 1996 to
the Company's chief executive officer and other executive officers whose total
salary and bonus exceeded $100,000 for the fiscal year ended September 30, 1996
(the "Named Executive Officers"). None of the Company's other executive officers
had total salary and bonus in excess of $100,000 during the fiscal year ended
September 30, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) COMPENSATION(3) COMPENSATION(4)
- ------------------------------------- --------- --------- --------- --------------- -------------
<S> <C> <C> <C> <C> <C>
P. Enoch Stiff
President and Chief Executive
Officer............................ 1996 $ 174,736 $ 106,504 $ 5,361 $ 34,000
Curtis J. Laetz
Vice President--Marketing and
Development........................ 1996 104,606 39,647 4,301 12,688
James H. Hook
Vice President--Business
Services........................... 1996 105,123 39,834 3,130 12,750
</TABLE>
- ------------------------
(1) Includes amounts deferred under the 401(k) feature of the Company's
retirement income savings plan.
(2) Includes amounts deferred under a deferred compensation plan which permitted
the senior management and directors to defer 25% of their annual bonus for a
period of three years. This arrangement was terminated in fiscal 1996.
(3) Reflects amounts contributed by the Company under the Company's retirement
income savings plan.
(4) Reflects amounts accrued under the Company's deferred compensation plan
described in note 2 above.
LONG-TERM INCENTIVE PLAN. In 1996, the Company established the 1996
Long-Term Incentive Plan (the "Long-Term Incentive Plan") pursuant to which
equity incentives covering up to 1,600,000 shares of Common Stock may be awarded
to key officers and employees of the Company. The Long-Term Incentive Plan is
intended to promote the interests of the Company and its stockholders by
attracting and retaining exceptional executive personnel and other key employees
of the Company and its subsidiaries, motivating such employees by means of stock
options and performance-related incentives to achieve long-range performance
goals, and enabling such employees to participate in the long-term growth and
financial success of the Company. The Long-Term Inventive Plan will be
administered by the Board of Directors prior to the Offering and thereafter by a
committee (the "Incentive Plan Committee") of the Board of Directors consisting
solely of two or more directors who are "non-employee directors" as defined in
Rule 16b-3 under the Exchange Act and "outside directors" as defined in Section
162(m) of the Internal Revenue Code of 1986 (the "Code").
47
<PAGE>
The Long-Term Incentive Plan provides for the granting of four types of
awards on a stand alone, combination, or tandem basis, including incentive stock
options, nonqualified stock options, restricted shares and performance stock
awards. The Long-Term Incentive Plan provides for the award of up to a total of
1,600,000 shares of Common Stock, provided that the total number of shares with
respect to which awards are granted in any one year may not exceed 100,000
shares to any individual employee and 400,000 shares in the aggregate, and the
total number of shares with respect to which grants of restricted and
performance stock awards are made in any year shall not exceed 50,000 shares to
any individual employee and 100,000 shares in the aggregate (subject, in each
case, to adjustment in the event of a stock split, stock dividend, combination
or exchange of shares, exchange for other securities, reclassification,
reorganization, redesignation, merger, consolidation, recapitalization, or other
such change). As of the date hereof, approximately 175 employees are expected to
be eligible to participate in the Long-Term Incentive Plan. No payments or
contributions are required to be made by the employees who participate in the
Long-Term Incentive Plan other than the payment of any purchase price upon the
exercise of a stock option.
A stock option award grants the right to buy a specified number of shares of
Common Stock at a fixed exercise price during a specified time, and subject to
such other terms and conditions, all as the Incentive Plan Committee may
determine; provided that the exercise price of any stock option shall not be
less than 100% of the fair market value of the Common Stock on the date of grant
of the award. An incentive stock option award granted pursuant to the Long-Term
Incentive Plan is an award in the form of a stock option which complies with the
requirements of Section 422 of the Code or any successor provision as it may be
amended from time to time. All other stock option awards granted under the
Long-Term Incentive Plan are nonqualified stock options. The exercise price of
all stock option awards under the Long-Term Incentive Plan is payable, at the
Incentive Plan Committee's discretion, in cash, in shares of already owned
Common Stock of the Company, in any combination of cash and shares, or any other
method deemed appropriate by the Incentive Plan Committee. Each option grant may
be exercised in whole, at any time, or in part, from time to time, after the
grant becomes exercisable.
A grant of restricted shares pursuant to the Long-Term Incentive Plan is a
transfer of shares of Common Stock, subject to such restrictions, if any, on
transfer or other incidents of ownership, for such periods of time as the
Incentive Plan Committee may determine. The certificates representing the
restricted shares will be held by the Company as escrow agent until the end of
the applicable period of restriction, during which time the shares may not be
sold, transferred, gifted, bequeathed, pledged, assigned or otherwise alienated
or hypothecated, voluntarily or involuntarily, except as otherwise provided in
the Long-Term Incentive Plan. However, during the period of restriction, the
recipient of restricted shares will be entitled to vote the restricted shares
and to retain cash dividends paid thereon.
A performance stock award is a right granted to an employee to receive
restricted shares that are not issued to the employee until after the
satisfaction of the performance goals during a performance period. A performance
stock award is earned by the employee over a time period determined by the
Incentive Plan Committee on the basis of performance goals established by the
Incentive Plan Committee at the time of grant. Performance goals established by
the Incentive Plan Committee may be based on one or more of the following
criteria: earnings or earnings growth; earnings per share; return on equity,
assets, capital employed or investment; revenues or revenue growth; gross
profit; gross margin; operating profit; operating margin; operating cash flow;
stock price appreciation and total shareholder return. If the performance goals
set by the Incentive Plan Committee are not met, no restricted shares will be
issued pursuant to the performance stock award. To be entitled to receive a
performance stock award, an employee must remain in the employment of the
Company or its subsidiaries through the end of the performance period, but the
Incentive Plan Committee may provide for exceptions to this requirement as it
deems equitable in its sole discretion.
In the event of a change of control of the Company, the following may, in
the sole discretion of the Incentive Plan Committee, occur with respect to the
employee awards outstanding: (i) automatic lapse of all restrictions and
acceleration of any time periods relating to the exercise or vesting of stock
options and
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<PAGE>
restricted shares so that awards may be immediately exercised or vested; and
automatic satisfaction of performance goals on a pro rata basis with respect to
the number of restricted shares issuable pursuant to a performance stock award
so that such pro rata or other portion of such restricted shares may be
immediately vested; (ii) upon exercise of a stock option during the 60-day
period after the date of a change of control, the participant exercising the
stock option may, in lieu of the receipt of Common Stock, elect by written
notice to the Company to receive a cash amount equal to the excess of the
aggregate value of the shares of Common Stock covered by the stock option, over
the aggregate exercise price of the stock option; (iii) following a change of
control, if a participant's employment terminates for any reason other than
retirement or death, any stock options held by the participant may be exercised
until the earlier of three months after the termination of employment or the
expiration date of such stock option; and (iv) all awards become non-cancelable.
Except as otherwise provided in the Long-Term Incentive Plan, the Board may
at any time terminate, and, from time to time, amend or modify the Long-Term
Incentive Plan. Any such action of the Board may be taken without the approval
of the Company's stockholders, but only to the extent that such stockholder
approval is not required by applicable law or regulation. Furthermore, no
amendment, modification, or termination of the Long-Term Incentive Plan shall
adversely affect any awards already granted to a participant without his or her
consent. No amendment or modification of the Long-Term Incentive Plan may change
any performance goal, or increase the benefits payable for the achievement of a
performance goal, once established for a performance stock award.
Pursuant to the Long-Term Incentive Plan, Messrs. Stiff, Franklin, Hook and
Laetz have been granted non-qualified options to purchase 50,000, 40,000, 15,000
and 15,000 shares of Common Stock, respectively, at the initial public offering
price. Options to purchase an aggregate additional 211,500 shares have also been
granted to other officers and key employees at the initial public offering
price. Options granted to employees on the date of the Company's initial public
offering may not be exercised for a period of two years from the date of grant
and thereafter become exercisable on a cumulative basis in 25% increments
beginning on the second anniversary of the date of grant and concluding on the
fifth anniversary of the date of grant.
Except as set forth above, no awards have been granted under the Long-Term
Incentive Plan as of the date of this Prospectus, and no outstanding options are
presently exercisable.
EXECUTIVE STOCK OPTION PLAN. In 1996, the Company adopted the 1996
Executive Stock Option Plan, a description of which is contained in this
Prospectus under the caption "Certain Transactions--Agreements with Existing
Stockholders."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the Offering, the Company has not had a compensation committee and,
since the acquisition of TRAK, executive compensation has been determined by the
entire Board of Directors, which until September 30, 1996 consisted of Samuel A.
Hamacher, James C. Janning and Peter S. Finley. Prior to the acquisition of
TRAK, executive compensation was determined by TRAK's then-constituted Board of
Directors. Prior to the Offering, Messrs. Hamacher, Janning and Finley also
served as Executive Vice President, President and Vice President, respectively,
of the Company. Messrs. Hamacher, Janning and Finley have not been compensated
for their positions as directors or officers. Following the Offering, the
Company anticipates forming a Compensation and Options Committee, which is not
expected to include any executive officers of the Company.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company is entitled to receive
an annual fee of $10,000 and additional fees of $750 for attendance at each
meeting of the full Board of Directors and $500 for
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<PAGE>
attendance at each meeting of a committee of the Board of Directors. Directors
are also entitled to reimbursement for their expenses incurred in attending
meetings.
DIRECTORS STOCK OPTION PLAN. The Company maintains a 1996 Directors
Non-Qualified Stock Option Plan (the "Directors Stock Option Plan") which
provides for the granting of options to the Company's directors who are not
employees of the Company, for up to an aggregate 250,000 shares of Common Stock.
The Directors Stock Option Plan by its express terms provides for the grant
of options thereunder to each eligible director serving on the date of the
Company's initial public offering with respect to 10,000 shares of Common Stock,
and an additional option to the Chairman of the Board of Directors (provided he
is an eligible director) with respect to 5,000 shares of Common Stock, in each
case at the initial public offering price. In addition, the Directors Stock
Option Plan provides for the grant of options to each person first becoming an
eligible director subsequent to the date of the Company's initial public
offering with respect to 10,000 shares of Common Stock and the grant of an
additional option to each person first becoming Chairman of the Board subsequent
to such date (provided such person is an eligible director) with respect to
5,000 shares of Common Stock.
Options granted or to be granted under the Directors Stock Option Plan
become exercisable over a five-year period from the date of grant. All options
granted under the Directors Stock Option Plan expire ten years from the date of
grant.
Options granted or to be granted under the Directors Stock Option Plan are
nontransferable, and the exercise price must be equal to the fair market value
of the Common Stock on the date of grant as determined by the Directors Stock
Option Committee. Upon exercise, the exercise price must be paid in full in cash
or such other consideration as the Directors Stock Option Committee may permit.
Pursuant to the Directors Stock Option Plan, Messrs. Nickelson, Fox, Finley
and Hamacher will be granted options to purchase 15,000 shares, 10,000 shares,
10,000 shares and 10,000 shares of Common Stock, respectively, at the initial
public offering price and Messrs. Jones, Virgil, Shaughnessy and Ritter each
will be granted options to purchase 10,000 shares of Common Stock at the fair
market value per share on the date each is elected a director. Except as set
forth above, no options have been granted under the Directors Stock Option Plan,
and no outstanding options are presently exercisable.
INDEMNIFICATION AND LIMITATION OF LIABILITY
The Company's Restated Certificate of Incorporation limits the liability of
directors for monetary damages, and the Company's By-Laws provide for the
indemnification of the Company's directors and officers, to the full extent
permitted by the Delaware General Corporation Law. See "Description of Capital
Stock--Certain Certificate of Incorporation and By-Law Provisions."
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<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth, as of February 15, 1997 and as adjusted to
reflect the Offering, certain information concerning the beneficial ownership of
Common Stock by (a) each stockholder selling in this Offering, Investments L.P.
and Uniquip L.P. (collectively, the "Selling Stockholders"), (b) each
stockholder who is known by the Company to own beneficially in excess of 5% of
the outstanding Common Stock, (c) each director and director nominee of the
Company, (d) each of the Named Executive Officers, and (e) all directors and
executive officers as a group. See "Underwriters." Except as otherwise
indicated, all persons listed below have sole voting and investment power with
respect to their shares of Common Stock. The Common Stock constitutes the only
class of equity securities outstanding. See "Description of Capital Stock."
<TABLE>
<CAPTION>
OWNERSHIP PRIOR TO OWNERSHIP AFTER
THE OFFERING THE OFFERING
------------------------ ------------------------
SHARES OF SHARES OF
COMMON COMMON
NAME OF BENEFICIAL OWNER STOCK PERCENT STOCK PERCENT
- -------------------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investments L.P.(1)............................... 9,225,000 82.0% 4,770,000 33.5%
Uniquip L.P.(2)................................... 1,125,000 10.0 580,000 4.1
P. Enoch Stiff.................................... 562,500 5.0 562,500 3.9
James H. Hook..................................... 84,375 * 84,375 *
Curtis J. Laetz................................... 84,375 * 84,375 *
Donald E. Nickelson(3)............................ -- -- -- --
Peter S. Finley(3)................................ -- -- -- --
Jeffrey L. Fox(3)................................. -- -- -- --
Samuel A. Hamacher(3)............................. -- -- -- --
Paul W. Jones..................................... -- -- -- --
Jerry E. Ritter................................... -- -- -- --
Joseph F. Shaughnessy............................. -- -- -- --
Robert L. Virgil.................................. -- -- -- --
----------- --- ----------- ---
Total............................................. 11,081,250 98.5% 6,081,250 42.7%
----------- --- ----------- ---
----------- --- ----------- ---
All directors and executive officers as a group (8
persons)(4)..................................... 731,250 6.5% 731,250 5.1%
----------- --- ----------- ---
----------- --- ----------- ---
</TABLE>
- ------------------------
* Less than 1.0%.
(1) Assumes no exercise of the over-allotment option. If the over-allotment
option is exercised in full, the total shares of Common Stock to be sold by
Investments L.P. would be 5,524,200 and its ownership after the Offering
would be 3,700,800 shares of Common Stock, or 26.0% of the outstanding
Common Stock. Investments L.P. is a Delaware limited partnership whose
address is 7701 Forsyth Boulevard, St. Louis, Missouri 63105. Its general
partner is Harbour Group III Management Co., L.P., a Delaware limited
partnership whose general partner is HGM III Co., a Delaware corporation
controlled by Sam Fox. Investments L.P. was organized to make subordinated
debt and equity investments in certain operating companies controlled by
Harbour Group Industries, Inc. and its affiliates. Its limited partners
consist mainly of institutional investors.
(2) Assumes no exercise of the over-allotment option. If the over-allotment
option is exercised in full, the total shares of Common Stock to be sold by
Uniquip L.P. would be 675,800 and its ownership after the Offering would be
449,200 shares of Common Stock or 3.2% of the outstanding Common Stock.
Uniquip L.P. is a Delaware limited partnership whose address is 7701 Forsyth
Boulevard, St. Louis, Missouri 63105. Its general partner is Harbour Group
Industries, Inc., a Delaware corporation controlled by Sam Fox.
(3) Excludes shares owned by Uniquip L.P. and Investments L.P. Each of these
individuals is an officer and/or director of affiliates of Uniquip L.P.
and/or Investments L.P. and each such person disclaims beneficial ownership
of shares beneficially owned by Uniquip L.P. and Investments L.P.
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<PAGE>
CERTAIN TRANSACTIONS
RELATED PARTY TRANSACTIONS
On August 16, 1995, Investments L.P., Uniquip L.P. and P. Enoch Stiff
purchased 9,225,000 shares, 1,125,000 shares and 337,500 shares, respectively,
of the Company's Common Stock for approximately $0.56 per share payable
$5,209,411.76 in cash, $600,000 in cash and $35,294.12 by a promissory note and
$190,588.24 in cash, respectively. On September 20, 1995, Mr. Stiff purchased an
additional 225,000 shares of the Company's Common Stock for approximately $0.56
per share payable $200 in cash and $126,859 by a promissory note. On September
20, 1995, James H. Hook, Curtis J. Laetz and two other officers of the Company
each purchased 84,375 shares of the Company's Common Stock for approximately
$0.56 per share payable $75 in cash and $47,572 by a promissory note.
Investments L.P. and Uniquip L.P., the beneficial owners of approximately 37.5%
of the Common Stock outstanding after the Offering, are under the common control
of Sam Fox. See "Principal and Selling Stockholders."
In connection with the acquisitions of TRAK and Lull, the Company incurred
junior subordinated indebtedness evidenced by subordinated notes (the
"Subordinated Notes") in the principal amounts of $2,000,000 and $14,000,000,
respectively. Investments L.P. holds the Subordinated Note in the principal
amount of $2,000,000 and has guaranteed the Company's obligations under the
Subordinated Note in the principal amount of $14,000,000 (the "Second
Subordinated Note"). Further, Investments L.P. has unconditionally agreed with
the existing holder of the Second Subordinated Note to purchase such obligation,
for a purchase price equal to the outstanding principal balance and all accrued
interest, on the earlier to occur of May 14, 1997 or the completion of the
Offering or other distribution of the Company's equity securities. Each of the
Subordinated Notes bears interest at the rate of 15.0% per annum and matures on
February 28, 2004. Each of the Subordinated Notes is payable only at maturity
and is subordinated to all senior debt of the Company and is subject to the
terms and provisions of a Subordinated Note Agreement (the "Subordinated Note
Agreements") between the Company and the holder of the Subordinated Note. The
Subordinated Note Agreements permit the prepayment of all or a portion of the
amounts outstanding thereunder. The Company expects to repay, without penalty or
premium, the entire balance of indebtedness outstanding under the Subordinated
Notes from the net proceeds received by the Company from its sale of shares of
Common Stock in the Offering. See "Use of Proceeds."
The Company engages Harbour Group Ltd. ("HGL") and Harbour Group, affiliates
of Investments L.P. and Uniquip L.P., to provide certain management consulting
services to the Company for which payments totaling $60,000, $668,000 and
$189,000 were made by the Company to HGL for the fiscal years ended September
30, 1995 and 1996 and for the three months ended December 31, 1996,
respectively. In connection with the acquisitions of TRAK and Lull, the Company
paid fees to Harbour Group and affiliates of approximately $674,000 in the
aggregate for investment banking, corporate development and other services. The
Company has entered into an Operations Consulting and Advisory Services
Agreement (the "HGL Services Agreement") with HGL, pursuant to which HGL will
continue to provide management consulting services to the Company for a one year
term from September 30, 1996, which term will automatically renew from year to
year until terminated by the Company or HGL upon 30 days' notice. Under the HGL
Services Agreement, the Company will compensate HGL for management consulting
services at HGL's approximate costs incurred in performing such services. The
Company has also entered into a Corporate Development Consulting and Advisory
Services Agreement (the "HGI Services Agreement") with Harbour Group, an
affiliate of HGL, pursuant to which Harbour Group will continue to provide
corporate development services to the Company for a one year term from September
30, 1996, which term will automatically renew from year to year until terminated
by the Company or Harbour Group upon 30 day's notice. Under the HGI Services
Agreement, the Company will compensate Harbour Group for corporate development
services by paying an annual fee equal to the greater of $100,000 or Harbour
Group's approximate costs incurred in performing such services, plus a
transaction fee equal to an amount which ranges from two and one half percent of
the first $1.0 million of the purchase price to one half of
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<PAGE>
one percent of the portion of the Purchase Price in excess of $4.0 million for
each completed acquisition or disposition by the Company during the term of the
HGI Services Agreement, subject to a minimum fee per transaction of $125,000.
The Company is included in an insurance program maintained by HGL providing
workers compensation and employer's liability, general liability and automobile
liability and physical damage insurance coverage for all companies controlled by
Harbour Group or its affiliates. The insurance program includes a retrospective
rating plan and automatic premium adjustment plan, which provide for
calculations of the premiums for the insurance program based on the application
of rating formulae to actual incurred losses and reserves for future losses
which require adjustment of the premiums retrospectively. The Company has
entered into an Insurance Agreement with HGL pursuant to which it has agreed to
reimburse HGL, and HGL has agreed to reimburse the Company, for their respective
pro rata shares of any retrospective premium adjustment. The terms of the
Insurance Agreement provide that the Company will no longer be eligible for
inclusion in the Harbour Group insurance plan if affiliates of HGL own less than
50% of the outstanding Common Stock. Accordingly, the Company anticipates
entering into alternative insurance arrangements which will be effective
immediately following the Offering.
The Company believes that each of the related party transactions described
herein was on terms no less favorable to the Company than could have been
obtained from unaffiliated third parties.
AGREEMENTS WITH EXISTING STOCKHOLDERS
As described above, Mr. Stiff, on August 16, 1995, acquired 337,500 shares
of Common Stock for $190,588.24 in cash, a price determined by the Board of
Directors of the Company. In connection with the purchase of such shares of
Common Stock, Mr. Stiff entered into an Investment Agreement with Investments
L.P. and the Company (the "Investment Agreement") providing for, among other
things, restrictions on transfer of such shares, registration rights with
respect to such shares, the grant of an option to Investments L.P. to purchase
such shares in certain circumstances, a right of first refusal for Investments
L.P. in the event of certain offers to purchase such shares, "tag-along" and
"drag-along" rights in the event of certain sales of the Common Stock by
Investments L.P., a right to acquire additional securities of the Company in
order for Mr. Stiff to maintain his percentage of equity interest in the Company
under certain circumstances and a right to make additional investments in the
Company in accordance with his pro rata share of the issued Common Stock in
certain circumstances. In connection with the Investment Agreement, Mr. Stiff
entered into a Participation Agreement with Investments L.P., pursuant to which
Mr. Stiff purchased a 3% interest in $2.0 million in principal amount of junior
subordinated notes issued by TRAK and made payable to Investments L.P.
Also as described above, Mr. Stiff, together with Messrs. Hook, Laetz and
two other officers of the Company on September 20, 1995, acquired Common Stock
at prices determined by the Board of Directors of the Company, and the purchase
price therefor was paid partly in cash and partly by delivery of promissory
notes payable to the Company. The payment obligations of the stockholders under
their respective promissory notes are secured by all or some portion of the
purchased shares pursuant to stock pledge agreements entered into by each
stockholder and the Company. Such notes have a ten-year maturity, bear interest
at a fixed rate of interest of 6.56% per annum and are payable interest only
annually, with one principal payment at maturity. In connection with such
promissory notes, the Company agreed to pay annual bonuses to such stockholders
in amounts equal to the annual interest payments on the notes plus all federal
and state income taxes applicable to such payments. In connection with the
purchase of his shares of the Common Stock, each such stockholder entered into
an agreement with the Company (the "Stockholder Agreements") providing for,
among other things, restrictions on transfer of such shares of the Common Stock
owned by such stockholder, registration rights with respect to such shares, the
repurchase of such shares upon termination of the stockholder's employment at a
price based on a predetermined formula, a right of first refusal for the Company
in the event of certain offers to
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<PAGE>
purchase such shares, a right to acquire additional securities of the Company in
order to maintain the stockholder's percentage of equity interest in the Company
in certain circumstances and "tag-along" and "drag-along" rights in the event of
certain sales of the Common Stock by Investments L.P. The Stockholder Agreements
also contain provisions concerning noncompetition and confidentiality applicable
to such stockholders and provisions for payments to such stockholders, under
certain circumstances, following the termination of their employment with the
Company.
The following directors and executive officers have promissory notes in
excess of $60,000 outstanding to the Company:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT INTEREST
STOCKHOLDER POSITION OUTSTANDING RATE DUE DATE
- -------------------------------- -------------------------------- ----------- ----------- ----------------------
<S> <C> <C> <C> <C>
P. Enoch Stiff Director, President and Chief $ 126,859 6.56% September 20, 2005
Executive Officer
</TABLE>
The Company has also adopted the 1996 Executive Stock Option Plan (the "1996
Plan") pursuant to which options will be granted to Mr. Stiff, Mr. Hook and Mr.
Laetz to acquire 225,000, 84,375 and 84,375 shares, respectively, of the
Company's Common Stock, and to the other management stockholders to acquire an
aggregate 168,750 shares of the Company's Common Stock by tendering existing
Common Stock in payment therefor. The exercise price of all options will be the
current market price on the date of exercise and all options may be exercised
only by exchanging shares of previously owned Common Stock. The 1996 Plan was
created solely for the purpose of alleviating certain adverse securities laws
consequences to the plan participants. The grant and exercise of options under
the 1996 Plan will not result in any increase in the beneficial ownership of
Common Stock by the plan participants from the number of shares owned
immediately after the Offering. Under the terms of the 1996 Plan, the options
are exercisable immediately after the Offering and the shares of Common Stock
issued thereunder will become freely transferable, subject to the restrictions
of the Stockholder Agreements, on the last day of the sixth full month following
the Offering, provided a pro rata portion of the indebtedness originally
incurred to purchase the shares surrendered upon exercise of the options is
repaid. In connection with the issuance of options under the 1996 Plan, the
Company has agreed to amend certain of the promissory notes issued in connection
with purchases of Common Stock to permit partial prepayments. The provisions of
the Stockholder Agreements, which are subject to modification or waiver by the
Company, generally permit the sale of 25% of such shares one year after the
Offering, 50% of such shares two years after the Offering, 75% of such shares
three years after the Offering, and all of such shares four years after the
Offering. Such options expire on the tenth anniversary of the Offering.
The Company anticipates filing a registration statement on Form S-8
immediately after the Offering for the purpose of registering the Company's
shares issuable upon exercise of options granted under the 1996 Plan.
REGISTRATION RIGHTS
Pursuant to a registration rights agreement among the Company, Investments
L.P. and Uniquip L.P. (the "Registration Rights Agreement"), Investments L.P.
and Uniquip L.P. and such of their respective permitted transferees as may be
deemed to be affiliates of the Company have rights to demand registration under
the Securities Act of its or their shares of the Company's Common Stock. In
addition, in the event the Company proposes to register any of its securities
under the Securities Act, such persons (or their permitted transferees) will
have rights, subject to certain exceptions and limitations, to have the shares
of the Company's capital stock then owned by them included in such registration
statement. The Company has agreed that, in the event of any registration of
securities owned by such persons (or a permitted transferee) in accordance with
the provisions thereof, it will indemnify such person, and certain related
persons, against liabilities incurred in connection with such registration,
including liabilities arising under
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<PAGE>
the Securities Act. Pursuant thereto, the Company and Investments L.P. have
entered into an Indemnification Agreement providing for indemnification against
certain potential liabilities arising in connection with the Offering, including
liabilities under the Securities Act.
In addition, as described above under "Certain Transactions--Agreements with
Existing Stockholders," other existing stockholders also have registration
rights, subject to certain exceptions and limitations, to have shares of the
Company's capital stock owned by them to be included in registration statements
filed by the Company under the Securities Act.
The registration rights described above are subject to certain limitations
intended to prevent undue interference with the Company's ability to distribute
securities, including the provision that demand registration rights may not be
exercised within 90 days after the effective date of the Company's most recent
registration statement. Such registration rights are also subject to agreements
between the Company, Investments L.P., Uniquip L.P. and certain other persons
providing that no sales of the Company's Common Stock may be made by such
entities or persons for a period of 180 days following the Offering without the
prior written consent of the Underwriters.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Restated Certificate of Incorporation of the Company (the "Certificate")
authorizes 1,500,000 shares of Preferred Stock, $.01 par value, of which no
shares are outstanding and 100,000,000 shares of Common Stock, $.01 par value,
of which 11,250,000 shares are currently outstanding and 2,412,500 shares are
reserved for issuance pursuant to the Company's stock option plans. Following
the Offering, 14,250,000 shares will be outstanding.
COMMON STOCK
Subject to the rights, if any, of holders of Preferred Stock, holders of
Common Stock are entitled to receive dividends out of funds legally available
therefor when, as and if declared by the Board of Directors of the Company and
to receive pro rata the net assets of the Company legally available for
distribution upon liquidation or dissolution.
Holders of Common Stock are entitled to one vote for each share of Common
Stock held on each matter submitted to a vote of stockholders, including the
election of directors. Holders of Common Stock are not entitled to cumulative
voting, which means that the holders of more than 50% of the outstanding Common
Stock can elect all of the directors if they choose to do so. All shares of
outstanding Common Stock of the Company are, and the shares to be issued by the
Company pursuant to this Prospectus will be, fully paid and nonassessable.
Prior to the Offering, there are seven holders of record of the Common
Stock.
PREFERRED STOCK
The Board of Directors of the Company is authorized to fix the number of
shares and determine the designation of any series of the authorized shares of
the Company's Preferred Stock and to determine or alter the rights, preferences,
privileges and restrictions granted to or imposed upon any unissued series of
Preferred Stock. As of the date of this Prospectus, the Company has not issued
any Preferred Stock.
CERTAIN CERTIFICATE OF INCORPORATION AND BY-LAW PROVISIONS
The Certificate provides that the Company's directors are not liable to the
Company or its stockholders for monetary damages for breach of their fiduciary
duties, except under certain circumstances, including breach of the director's
duty of loyalty, acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of law or any transaction from which the
director derived improper personal benefit. The inclusion of this provision in
the Certificate may have the effect of reducing the likelihood of derivative
litigation against directors and may discourage or deter stockholders or
management from bringing a lawsuit against directors for breach of their duty of
care.
The Certificate provides for the Board of Directors to be divided into three
classes of directors serving staggered three-year terms. As a result,
approximately one-third of the Board of Directors will be elected each year.
Classification of the Board of Directors expands the time required to change the
composition of a majority of directors. This provision, in addition to the
existence of authorized but unissued capital stock, may have the effect, either
alone or in combination with each other, of discouraging an acquisition of the
Company even if such an acquisition is desired by certain stockholders of the
Company.
CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK
Upon consummation of the Offering, there will be 85,750,000 shares of Common
Stock and 1,500,000 shares of Preferred Stock available for future issuance
without stockholder approval. These additional shares may be utilized for a
variety of corporate purposes, including future public offerings to raise
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<PAGE>
additional capital or to facilitate corporate acquisitions. The Company does not
currently have any plans to issue additional shares of capital stock, other than
shares of Common Stock which may be issued upon the exercise of options. See
"Management" and "Certain Transactions."
One of the effects of the existence of unissued and unreserved Common Stock
and undesignated Preferred Stock may be to enable the Board of Directors of the
Company to issue shares to persons friendly to current management which could
render more difficult or discourage an attempt to obtain control of the Company
by means of a merger, tender offer, proxy contest or otherwise, and thereby
protect the continuity of the Company's management. The Board of Directors of
the Company can issue Preferred Stock with rights which could adversely affect
the voting power or other rights of holders of Common Stock.
DELAWARE TAKEOVER STATUTE
Section 203 of the Delaware General Corporation Law, as amended ("Section
203") provides that, subject to certain exceptions specified therein, an
"interested stockholder" of a Delaware corporation shall not engage in any
business combination, including mergers or consolidations or acquisitions of
additional shares of the corporation with the corporation for a three-year
period following the date that such stockholder becomes an "interested
stockholder" unless (i) prior to such date, the board of directors of the
corporation approved either the business combination or the transaction which
resulted in the stockholder becoming an "interested stockholder," (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
"interested stockholder," the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced (excluding certain shares), or (iii) on or subsequent to such date,
the business combination is approved by the board of directors of the
corporation and authorized at an annual or special meeting of stockholders by
the affirmative vote of at least 66 2/3% of the outstanding voting stock which
is not owned by the "interested stockholder." Except as otherwise specified in
Section 203, an "interested stockholder" is defined to include (x) any person
that is the owner of 15% or more of the outstanding voting stock of the
corporation, or is an affiliate or associate of the corporation and was the
owner of 15% or more of the outstanding voting stock of the corporation at any
time within three years immediately prior to the relevant date and (y) the
affiliates and associates of any such person.
These provisions could have the effect of delaying, deferring or preventing
a change of control of the Company. The Company's stockholders, by adopting an
amendment to its Certificate or By-laws, may elect not to be governed by Section
203, effective twelve months after adoption. Neither the Certificate nor the
By-laws presently exclude the Company from the restrictions imposed by Section
203.
REGISTRAR AND TRANSFER AGENT
Boatmen's Trust Company is the Registrar and Transfer Agent for the
Company's Common Stock.
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<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Immediately upon consummation of the Offering, the Company will have
outstanding 14,250,000 shares of Common Stock, 8,000,000 of which will have been
sold in the Offering by the Company and the Selling Stockholders and will be
freely transferable without restriction or further registration under the
Securities Act, except for any of those shares of Common Stock owned at any time
by an "affiliate" of the Company within the meaning of Rule 144 under the
Securities Act (which sales will be subject to the volume limitations and
certain other restrictions described below). Of the remaining 6,250,000 shares,
1,200,000 of the shares held by the Selling Stockholders are subject to the
over-allotment option.
The remaining shares which are not sold pursuant to the over-allotment
option are deemed "restricted" securities under Rule 144 in that they were
originally issued and sold by the Company in private transactions in reliance
upon exemptions from the registration requirements of the Securities Act. It is
anticipated that commencing August 16, 1997, all 5,350,000 shares owned by
Investments L.P. and Uniquip L.P. (or 4,150,000 shares of the over-allotment
option is expected in full) will become eligible for sale in the public market
subject to the volume and other restrictions of Rule 144 described below. See
"Certain Transactions--Registration Rights."
Immediately after the Offering, 562,500 shares owned by certain management
stockholders may be exchanged for a like number of shares pursuant to the
Company's 1996 Plan, and if so exchanged may thereafter be sold pursuant to Rule
144, subject to the volume and other restrictions thereof, commencing six months
after the date on which options under the 1996 Plan have been exercised,
provided a pro rata portion of the indebtedness originally incurred to purchase
the shares surrendered upon exercise of options is repaid and subject to the
provisions of the applicable Stockholder Agreements. The provisions of the
Stockholder Agreements, which are subject to modification or waiver by the
Company, generally permit the sale of 25% of such shares one year after the
Offering, 50% of such shares two years after the Offering, 75% of such shares
three years after the Offering, and all of such shares four years after the
Offering. Any such shares not exchanged by the management stockholders pursuant
to the 1996 Plan, will be "restricted" securities within the meaning of Rule 144
and may be resold thereunder, subject to the terms of the applicable Stockholder
Agreement, and subject to the volume and other restrictions of Rule 144,
commencing on the second anniversary of the date on which the indebtedness
incurred to purchase such shares is repaid. An additional 337,500 shares of
Common Stock owned by Mr. Stiff will be "restricted" securities within the
meaning of Rule 144 and may be resold thereunder, subject to the volume and
other restrictions thereof, commencing August 16, 1997. Under the terms of the
Investment Agreement, which is subject to modification or waiver by the Company
and Investments L.P., Mr. Stiff is generally permitted to sell 25% of such
shares six months after the Offering, 50% of such shares one year after the
Offering, 75% of such shares eighteen months after the Offering, and all of such
shares two years after the Offering.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned "restricted" securities
for at least two years is entitled to sell in "brokers" transactions or directly
to market makers, within any three-month period, a number of those shares that
does not exceed the greater of 1% of the shares of the Common Stock then
outstanding or the average weekly trading volume of the Common Stock on any
national securities exchange and/or the over-the-counter market during the four
calendar weeks immediately preceding the filing of the notice required by Rule
144 or, if no such notice is required, during the four calendar weeks preceding
the date of receipt by a broker of the order to execute the transaction or the
date of execution of such transaction directly with a market maker. Sales under
Rule 144 are also subject to other requirements, including the Company's
obligation to file all required periodic reports on a timely basis.
Restricted shares of Common Stock may be sold pursuant to Rule 144 subject
to the limitations described in the preceding paragraph. Restricted shares of
Common Stock held for at least three years and not then held by affiliates of
the Company, or persons who were affiliates at any time within three months
58
<PAGE>
prior thereto, may be sold without regard to the volume limitations or method of
sale restrictions under Rule 144. The foregoing summary of Rule 144 is not
intended to be a complete description thereof.
Following the Offering, each of Investments L.P. and Uniquip L.P. may
distribute all of their shares to their partners. In the event of such a
distribution, commencing August 16, 1997 all such shares will be eligible for
sale by the recipients thereof pursuant to Rule 144, subject to the volume and
other restrictions thereof.
The Company intends to file a registration statement on Form S-8 under the
Securities Act to register all shares of Common Stock issuable under the 1996
Plan. The registration statement is expected to be filed as soon as practicable
after the date of the Offering and is expected to become effective immediately
upon filing. Subject to the terms of the 1996 Plan, the applicable Stockholder
Agreements and Rule 144 volume limitations applicable to affiliates, shares
covered by the registration statement will be eligible for sale in the public
market. See "Certain Transactions--Agreements with Existing Stockholders."
Certain of the Company's existing stockholders and their permitted
transferees also are entitled to demand registration of shares by the Company.
See "Certain Transactions--Registration Rights."
The Company and its existing stockholders have agreed not to offer, sell,
contract to sell or otherwise dispose of shares of common stock for a period of
180 days after the date hereof without the prior written consent of the
representatives of the Underwriters.
Prior to the Offering, there has been no public market for the Common Stock
and no prediction can be made as to the effect, if any, that future sales, or
availability of shares for future sale will have on the market price prevailing
from time to time. Sales of substantial amounts of Common Stock, or the
perception that such sales could occur, could adversely affect prevailing market
prices. The Common Stock has been approved for quotation on the Nasdaq National
Market under the symbol "OMQP."
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<PAGE>
CERTAIN U.S. FEDERAL TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS OF COMMON STOCK
The following is a general discussion of certain United States federal
income and estate tax consequences of the ownership and disposition of Common
Stock applicable to "Non-United States Holders." Subject to the discussion below
under "Estate Tax," a "Non-United States Holder" is any beneficial owner of
Common Stock that, for United States federal income tax purposes is a
non-resident alien individual, a foreign corporation, a foreign partnership or a
foreign estate or trust as such terms are defined in the Internal Revenue Code
of 1986, as amended (the "Code"). This discussion is based on the Code,
existing, proposed and temporary regulations promulgated thereunder, and
administrative and judicial interpretations as of the date hereof, all of which
are subject to change either retroactively or prospectively. This discussion
does not address all aspects of United States federal income and estate taxation
that may be relevant to Non-United States Holders in light of their particular
circumstances and does not address any tax consequences arising under the laws
of any state, local or foreign taxing jurisdiction or the application of a
particular tax treaty. Prospective investors are urged to consult their tax
advisors regarding the United States federal, state and local income and other
tax consequences, and the non-United States tax consequences, of owning and
disposing of Common Stock.
Proposed United States Treasury Regulations were issued on April 15, 1996
(the "Proposed Regulations") which, if adopted, could affect the United States
taxation of dividends on Common Stock paid to a Non-United States Holder. The
Proposed Regulations are generally proposed to be effective with respect to
dividends paid after December 31, 1997, subject to certain transition rules. It
cannot be predicted at this time whether the Proposed Regulations will be
adopted as proposed or what modifications, if any, may be made to them. The
discussion below is not intended to include a complete discussion of the
provisions of the Proposed Regulations, and prospective investors are urged to
consult their tax advisors with respect to the effect the Proposed Regulations
may have if adopted.
DIVIDENDS
Subject to the discussion below, any dividend paid to a Non-United States
Holder generally will be subject to United States withholding tax either at a
rate of 30% of the gross amount of the dividend or such lower rate as may be
specified by an applicable tax treaty. For purposes of determining whether tax
is to be withheld at a 30% rate or at a reduced rate as specified by an
applicable tax treaty, under current United States Treasury Regulations the
Company ordinarily will presume that dividends paid to a holder with an address
in a foreign country are paid to a resident of such country absent knowledge
that such presumption is not warranted. Under such Regulations, dividends paid
to a holder with an address within the United States generally will be presumed
to be paid to a holder who is not a Non-United States Holder and will not be
subject to the 30% withholding tax, unless the Company has actual knowledge that
the holder is a Non-United States Holder.
The Proposed Regulations would provide for certain presumptions (which
differ from those described above) upon which the Company may generally rely to
determine whether, in the absence of certain documentation, a holder should be
treated as a Non-United States Holder for purposes of the 30% withholding tax
described above. The presumptions would not apply for purposes of granting a
reduced rate of withholding under a treaty. Under the Proposed Regulations, to
obtain a reduced rate of withholding under a treaty a Non-United States Holder
would generally be required to provide an Internal Revenue Service Form W-8
certifying such Non-United States Holder's entitlement to benefits under a
treaty. The Proposed Regulations also would provide special rules to determine
whether, for purposes of determining the applicability of a tax treaty and for
purposes of the 30% withholding tax described above, dividends paid to a
Non-United States Holder that is an entity should be treated as paid to the
entity or those holding an interest in that entity.
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<PAGE>
Dividends received by a Non-United States Holder that are effectively
connected with a United States trade or business conducted by such Non-United
States Holder are exempt from withholding tax. However, such effectively
connected dividends are subject to regular United States income tax in the same
manner as if the Non-United States Holder were a United States person for
federal income tax purposes. A Non-United States Holder may claim exemption from
withholding under the effectively connected income exception by filing Internal
Revenue Service Form 4224 (Exemption From Withholding of Tax on Income
Effectively Connected With the Conduct of a Trade or Business in the United
States) each year with the Company or its paying agent prior to the payment of
the dividends for such year. The Proposed Regulations would replace Form 4224
with Form W-8. Effectively connected dividends received by a corporate
Non-United States Holder may be subject to an additional "branch profits tax" at
a rate of 30% (or such lower rate as may be specified by an applicable tax
treaty) of such corporate Non-United States Holder's effectively connected
earnings and profits, subject to certain adjustments.
A Non-United States Holder eligible for a reduced rate of United States
withholding tax pursuant to a tax treaty may obtain a refund of any excess
amounts currently withheld by filing an appropriate claim for refund with the
United States Internal Revenue Service ("IRS").
GAIN ON DISPOSITION OF COMMON STOCK
A Non-United States Holder generally will not be subject to United States
federal income tax with respect to gain realized upon the sale or other
disposition of Common Stock unless (i) such gain is effectively connected with a
United States trade or business of the Non-United States Holder; (ii) the Non-
United States Holder is an individual who holds the Common Stock as a capital
asset, is present in the United States for a period or periods aggregating 183
days or more during the taxable year in which such sale or disposition occurs,
and certain other conditions are met; or (iii) the Company is or has been a
"United States real property holding corporation" for federal income tax
purposes at any time within the shorter of the five-year period preceding such
disposition or such holder's holding period and certain other conditions are
met. The Company has determined that it is not and has never been, and the
Company does not believe that it will become, a "United States real property
holding corporation" for federal income tax purposes. Non-United States Holders
should consult applicable tax treaties, which might result in United States
federal income tax treatment on the sale or other disposition of Common Stock
different than as described above.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Generally, the Company must report to the IRS the amount of dividends paid,
the name and address of the recipient, and the amount, if any, of tax withheld.
A similar report is sent to the holder. Pursuant to tax treaties or other
agreements, the IRS may make its reports available to tax authorities in the
recipient's country of residence.
Unless the Company has actual knowledge that a holder is a Non-United States
Holder, dividends paid to a holder at an address within the United States may be
subject to backup withholding at a rate of 31% if the holder is not an "exempt
recipient" as defined in Treasury Regulations (which includes corporations) and
fails to provide a correct taxpayer identification number and other information
to the Company. Backup withholding will generally not apply to dividends paid to
holders at an address outside the United States (unless the Company has
knowledge that the holder is a United States person).
Proceeds from the disposition of Common Stock by a Non-United States Holder
effected by or through a United States office of a broker will be subject to
information reporting and to backup withholding at a rate of 31% of the gross
proceeds unless such Non-United States Holder certifies under penalties of
perjury as to, among other things, its name, address and status as a Non-United
States Holder or otherwise establishes an exemption. Generally, United States
information reporting and backup withholding will not apply to a payment of
disposition proceeds if the transaction is effected outside the
61
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United States by or through a non-United States office of a broker. However, if
such broker is, for United States federal income tax purposes, a United States
person, a "controlled foreign corporation," or a foreign person which derives
50% or more of its gross income for certain periods from the conduct of a United
States trade or business, information reporting (but not backup withholding)
will apply unless (i) such broker has documentary evidence in its files that the
holder is a Non-United States Holder and certain other conditions are met, or
(ii) the holder otherwise establishes an exemption.
The Proposed Regulations would, if adopted, alter the foregoing rules in
certain respects. Among other things, the Proposed Regulations would provide
certain presumptions and other rules under which Non-United States Holders may
be subject to backup withholding in the absence of required certifications and
would modify the definition of an "exempt recipient" in the case of a
corporation.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If backup withholding results in an overpayment of United States
income taxes, a refund may be obtained, provided the required documents are
filed with the IRS.
ESTATE TAX
An individual Non-United States Holder who is treated as the owner of Common
Stock at the time of such individual's death or has made certain lifetime
transfers of an interest in Common Stock will be required to include the value
of such Common Stock in such individual's gross estate for United States federal
estate tax purposes and may be subject to United States federal estate tax,
unless an applicable tax treaty provides otherwise. For United States federal
estate tax purposes, a "Non-United States Holder" is an individual who is
neither a citizen nor a domiciliary of the United States. Whether an individual
is considered a "domiciliary" of the United States for estate tax purposes is
generally determined on the basis of all of the facts and circumstances.
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<PAGE>
UNDERWRITERS
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date hereof, the U.S. Underwriters named below, for whom
Morgan Stanley & Co. Incorporated, Credit Suisse First Boston Corporation,
Schroder Wertheim & Co. Incorporated and Robert W. Baird & Co. Incorporated are
serving as U.S. Representatives, have severally agreed to purchase, and the
Company has agreed to sell, and the International Underwriters named below, for
whom Morgan Stanley & Co. International Limited, Credit Suisse First Boston
(Europe) Limited, J. Henry Schroder & Co. Limited and Robert W. Baird & Co.
Incorporated are serving as International Representatives (collectively with the
U.S. Representatives, the "Representatives"), have severally agreed to purchase,
and the Company and the Selling Stockholders have severally agreed to sell, the
respective number of shares set forth opposite the names of such Underwriters
below.
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
- -------------------------------------------------------------------------------- ------------
<S> <C>
U.S. Underwriters:
Morgan Stanley & Co. Incorporated...........................................
Credit Suisse First Boston Corporation......................................
Schroder Wertheim & Co. Incorporated........................................
Robert W. Baird & Co. Incorporated..........................................
------------
Subtotal.................................................................. 6,400,000
------------
International Underwriters:
Morgan Stanley & Co. International Limited..................................
Credit Suisse First Boston (Europe) Limited.................................
J. Henry Schroder & Co. Limited.............................................
Robert W. Baird & Co. Incorporated..........................................
------------
Subtotal.................................................................. 1,600,000
------------
Total..................................................................... 8,000,000
------------
------------
</TABLE>
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<PAGE>
The U.S. Underwriters and the International Underwriters are collectively
referred to as the "Underwriters." The Underwriting Agreement provides that the
obligations of the several Underwriters to pay for and accept delivery of the
shares of Common Stock offered hereby are subject to the approval of certain
legal matters by counsel and to certain other conditions, including the
conditions that no stop order suspending the effectiveness of the Registration
Statement is in effect and no proceedings for such purpose are pending before or
threatened by the Securities and Exchange Commission and that there has been no
material adverse change or any development involving a prospective material
adverse change in the business, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole, from that set forth in such
Registration Statement. The Underwriters are obligated to take and pay for all
of the shares of Common Stock offered hereby (other than those covered by the
over-allotment option described below) if any are taken.
Pursuant to the Agreement between U.S. and International Underwriters, each
U.S. Underwriter has represented and agreed that, with certain exceptions: (i)
it is not purchasing any U.S. Shares (as defined below) for the account of
anyone other than a United States or Canadian Person (as defined below) and (ii)
it has not offered or sold, and will not offer or sell, directly or indirectly,
any U.S. Shares or distribute this Prospectus outside the United States or
Canada or to anyone other than a United States or Canadian Person. Pursuant to
the Agreement Between U.S. and International Underwriters, each International
Underwriter has represented and agreed that, with certain exceptions: (i) it is
not purchasing any International Shares (as defined below) for the account of
any United States or Canadian Person and (ii) it has not offered or sold, and
will not offer or sell, directly or indirectly, any International Shares or
distribute this Prospectus within the United States or Canada or to any United
States or Canadian Person. The foregoing limitations do not apply to
stabilization transactions or to certain other transactions specified in the
Agreement Between U.S. and International Underwriters. As used herein, "United
States or Canadian Person" means any national or resident of the United States
or Canada, or any corporation, pension, profit-sharing or other trust or other
entity organized under the laws of the United States or Canada or of any
political subdivision thereof (other than a branch located outside the United
States or Canada of any United States or Canadian Person) and includes any
United States or Canadian branch of a person who is otherwise not a United
States or Canadian Person. All shares of Common Stock to be purchased by the
U.S. Underwriters and the International Underwriters are referred to herein as
the "U.S. Shares" and the "International Shares," respectively.
Pursuant to the Agreement Between U.S. and International Underwriters, sales
may be made between the U.S. Underwriters and International Underwriters of any
number of shares of Common Stock to be purchased pursuant to the Underwriting
Agreement as may be mutually agreed. The per share price and currency settlement
of any shares of Common Stock so sold shall be the price range set forth on the
cover page hereof, in United States dollars, less an amount not greater than the
per share amount of the concession to dealers set forth below.
Pursuant to the Agreement Between U.S. and International Underwriters, each
U.S. Underwriter has represented that it has not offered or sold, and has agreed
not to offer or sell, any shares of Common Stock, directly or indirectly, in
Canada in contravention of the securities laws of Canada or province or
territory thereof and has represented that any offer or sale of Common Stock in
Canada will be made only pursuant to an exemption from the requirement to file a
prospectus in the province or territory of Canada in which such offer is made.
Each U.S. Underwriter has further agreed to send to any dealer who purchases
from it any shares of Common Stock a notice stating in substance, by purchasing
such Common Stock, such dealer represents and agrees that it has not offered or
sold, and will not offer or sell, directly or indirectly, any of such Common
Stock in Canada or to, or for the benefit of, any resident of any province or
territory of Canada in contravention of the securities laws thereof and that any
offer of shares of Common Stock in Canada will be made only pursuant to an
exemption from the requirement to file a prospectus in the province or territory
of Canada in which such offer or sale is made, and that such dealer will deliver
to any other dealer to whom it sells any of such Common Stock a notice to the
foregoing effect.
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<PAGE>
Pursuant to the Agreement Between U.S. and International Underwriters, each
International Underwriter has represented and agreed that: (i) it has not
offered or sold and will not offer or sell any shares of Common Stock to persons
in the United Kingdom except to persons whose ordinary activities involve them
in acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances which
have not resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations 1995
(the "Regulations"); (ii) it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 and the Regulations with respect
to anything done by it in relation to the shares of Common Stock offered hereby
in, from or otherwise involving the United Kingdom; and (iii) it has only issued
or passed on and will only issue or pass on to any person in the United Kingdom
any document received by it in connection with the issue of the shares of Common
Stock if that person is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or is a
person to whom such document may otherwise lawfully be issued or passed on.
Pursuant to the Agreement Between U.S. and International Underwriters, each
International Underwriter has represented and agreed that it has not offered or
sold, and will not offer or sell, directly or indirectly, in Japan or to or for
the account of any resident thereof, any shares of Common Stock acquired in
connection with the Offering, except for offers or sales of Japanese
International Underwriters or dealers and except pursuant to any exemption from
the registration requirements of the Securities and Exchange Law of Japan. Each
International Underwriter has further agreed to send to any dealer who purchases
from it any of such shares of Common Stock a notice stating in substance that
such dealer may not offer or sell any of such shares, directly or indirectly, in
Japan or to or for the account of any resident thereof, except pursuant to any
exemption from the registration requirements of the Securities and Exchange Law
of Japan, and that such dealer will send to any other dealer to whom it sells
any of such shares a notice to the foregoing effect.
The Underwriters propose to offer part of the shares of Common Stock offered
hereby directly to the public at the public offering price set forth on the
cover page hereof and part to certain dealers at a price that represents a
concession not in excess of $ per share under the public offering price.
The Underwriters may allow, and such dealers may re-allow, a concession not in
excess of $ per share to other Underwriters or to certain other dealers.
After the initial offering of the shares of Common Stock, the offering price and
other selling terms may from time to time be varied by the Representatives.
Pursuant to the Underwriting Agreement, the Selling Stockholders have
granted to the U.S. Underwriters an option, exercisable for 30 days from the
date of this Prospectus, to purchase up to an additional 1,200,000 shares of
Common Stock at the public offering price set forth on the cover page hereof,
less underwriting discounts and commissions. The U.S. Underwriters may exercise
such option to purchase solely for the purpose of covering over-allotments, if
any, incurred in the sale of the shares of Common Stock offered hereby. To the
extent such option is exercised, each U.S. Underwriter will become obligated,
subject to certain conditions, to purchase approximately the same percentage of
such additional shares as the number set forth next to such Underwriter's name
in the preceding table bears to the total number of shares of Common Stock
offered hereby to the U.S. Underwriters.
The Representatives have informed the Company that they do not intend sales
to any accounts over which they have discretionary authority to exceed five
percent of the total number of shares of Common Stock offered hereby.
The Company and the Selling Stockholders, on the one hand, and the
Underwriters, on the other hand, have agreed to indemnify each other against
certain liabilities, including liabilities arising under the Securities Act. In
addition, the Company and the Selling Stockholders have agreed to indemnify each
other against certain liabilities, including liabilities arising under the
Securities Act.
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<PAGE>
The Company and all of the current stockholders of the Company have agreed
that they will not, without the prior written consent of Morgan Stanley & Co.
Incorporated, offer, pledge, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Common Stock, for a period of 180 days after
the date of this Prospectus, except under certain circumstances.
At the request of the Company, the Underwriters have reserved up to 400,000
shares of Common Stock offered hereby for sale at the public offering price to
certain directors, officers and employees of the Company, its affiliates, and
certain persons doing business with the Company. The number of shares of Common
Stock available for sale to the general public will be reduced to the extent
such persons purchase such reserved shares. Any reserved shares not so purchased
will be offered by the Underwriters to the general public on the same basis as
the other shares offered hereby. All purchasers of the shares of Common Stock
reserved pursuant to this paragraph who are also directors or senior officers of
the Company will be required to enter into agreements identical to those
described in the immediately preceding paragraph restricting the transferability
of such shares for a period of 180 days after the date of this Prospectus.
Certain of the Underwriters and their affiliates have from time to time
performed, and continue to perform, various investment banking and commercial
banking services for the Company or Harbour Group and their affiliates on a
fee-for-services basis.
PRICING OF THE OFFERING
Prior to the Offering, there has been no public market for the Common Stock.
The initial public offering price was determined by negotiation among the
Company, Investments L.P. and the Representatives. Among the factors considered
in determining the initial public offering price were the earnings and certain
other financial and operating information of the Company in recent periods, the
future prospects of the Company and its industry in general, the general
condition of the securities market at the time of the Offering, and the market
prices of securities and certain financial and operating information of
companies engaged in activities similar to those of the Company.
LEGAL MATTERS
Certain legal matters with respect to the validity of the issuance of the
Common Stock offered hereby have been passed upon for the Company by Dickstein
Shapiro Morin & Oshinsky LLP, Washington, D.C. Dickstein Shapiro Morin &
Oshinsky LLP has in the past represented, and continues to represent, Uniquip
L.P., Investments L.P. and their respective affiliates with respect to various
matters unrelated to the Company as well as in connection with their ownership
of capital stock of the Company. Certain legal matters in connection with the
Offering will be passed upon for the Underwriters by Sidley & Austin, Chicago,
Illinois.
EXPERTS
The consolidated financial statements of the Company as of September 30,
1995 and 1996 and for the periods August 17, 1995 through September 30, 1995 and
for the fiscal year ended September 30, 1996; the financial statements of TRAK,
as predecessor of the Company, as of and for the fiscal year ended September 30,
1994 and for the period October 1, 1994 through August 16, 1995; and the
financial statements of Lull for the year ended December 31, 1994, as of and for
the year ended December 31, 1995 and as of and for the period from January 1,
1996 through August 15, 1996, included in the Prospectus have been so included
in reliance on the reports of Price Waterhouse LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
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ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (the "Registration
Statement," which term shall include all amendments, exhibits and schedules
thereto), pursuant to the Securities Act and the rules and regulations
promulgated thereunder, with respect to the Common Stock offered hereby. The
Prospectus, which constitutes a part of the Registration Statement, does not
contain all the information set forth in the Registration Statement, certain
parts of which are omitted from the Prospectus in accordance with the rules and
regulations of the Commission, and to which reference is hereby made.
After consummation of this Offering, the Company will be subject to the
information and reporting requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and, in accordance therewith, will be required
to file proxy statements, reports and other information with the Commission. The
Registration Statement, as well as any such report, proxy statement and other
information filed by the Company with the Commission, may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the regional offices of the Commission located at 7 World Trade Center, 13th
Floor, New York, New York 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Commission maintains a web site
(http:\\www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.
Statements made in this Prospectus concerning the provisions of any
contract, agreement or other document referred to herein are not necessarily
complete. With respect to each such statement concerning a contract, agreement
or other document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission, reference is made to such exhibit or other filing for
a more complete description of the matter involved, and each such statement is
qualified in its entirety by such reference.
The Company intends to furnish stockholders with annual reports containing
audited consolidated financial information and will furnish unaudited financial
information for the first three quarters of each fiscal year.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
OMNIQUIP INTERNATIONAL, INC.
Report of Independent Accountants....................................................................... F-2
Consolidated Balance Sheet as of September 30, 1995 and 1996 and December 31, 1996 (unaudited).......... F-3
Consolidated Statement of Income for the period from August 17, 1995 (inception) to September 30, 1995, F-4
for the fiscal year ended September 30, 1996 and for the three months ended December 31, 1995 and 1996
(unaudited)...........................................................................................
Consolidated Statement of Changes in Stockholders' Equity for the period from August 17, 1995 F-5
(inception) to September 30, 1995, for the fiscal year ended September 30, 1996 and for the three
months ended December 31, 1996 (unaudited)............................................................
Consolidated Statement of Cash Flows for the period from August 17, 1995 (inception) to September 30, F-6
1995, for the fiscal year ended September 30, 1996 and for the three months ended December 31, 1995
and 1996 (unaudited)..................................................................................
Notes to Consolidated Financial Statements.............................................................. F-7
TRAK INTERNATIONAL, INC.
Report of Independent Accountants....................................................................... F-22
Balance Sheet as of September 30, 1994.................................................................. F-23
Statement of Income for the fiscal year ended September 30, 1994, for the period from October 1, 1994 to F-24
June 30, 1995 (unaudited) and for the period from October 1, 1994 to August 16, 1995..................
Statement of Changes in Stockholders' Equity for the fiscal year ended September 30, 1994 and for the F-25
period from October 1, 1994 to August 16, 1995........................................................
Statement of Cash Flows for the fiscal year ended September 30, 1994, for the period from October 1, F-26
1994 to June 30, 1995 (unaudited) and for the period from October 1, 1994 to August 16, 1995..........
Notes to Financial Statements........................................................................... F-27
LULL INDUSTRIES, INC.
Report of Independent Accountants....................................................................... F-39
Balance Sheet as of December 31, 1995 and August 16, 1996............................................... F-40
Statement of Income for the fiscal years ended December 31, 1995 and 1994, for the six months ended June F-41
30, 1995 (unaudited) and for the period from January 1, 1996 through August 15, 1996..................
Statement of Changes in Stockholders' Equity for the fiscal years ended December 31, 1995 and 1994 and F-42
for the period from January 1, 1996 through August 15, 1996...........................................
Statement of Cash Flows for the fiscal years ended December 31, 1995 and 1994, for the six months ended F-43
June 30, 1995 (unaudited) and for the period from January 1, 1996 through August 15, 1996.............
Notes to Financial Statements........................................................................... F-44
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholders of
Omniquip International, Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of changes in stockholders' equity and of
cash flows present fairly, in all material respects, the financial position of
Omniquip International, Inc. and its wholly-owned subsidiaries at September 30,
1995 and 1996, and the results of their operations and their cash flows for the
period August 17, 1995 (date of inception) through September 30, 1995 and for
the fiscal year ended September 30, 1996, in conformity with generally accepted
accounting principles. 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 of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Price Waterhouse LLP
St. Louis, Missouri
November 1, 1996, except as to Notes 1 and 17
which are as of February 19, 1997
F-2
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER SEPTEMBER DECEMBER
30, 30, 31,
1995 1996 1996
----------- ----------- -----------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................ $ 1 $ 53 $ 375
Accounts receivable, net............................. 12,842 21,678 19,271
Inventories.......................................... 12,680 27,540 29,140
Prepaid expenses and other current assets............ 2,284 5,534 5,915
----------- ----------- -----------
Total current assets............................. 27,807 54,805 54,701
Property, plant and equipment, net..................... 9,211 16,490 16,387
Goodwill............................................... 9,596 65,571 65,289
Other assets, net...................................... 1,718 2,714 2,643
----------- ----------- -----------
$ 48,332 $ 139,580 $ 139,020
----------- ----------- -----------
----------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt.................... $ 540 $ 3,875 $ 4,500
Accounts payable..................................... 11,105 20,895 15,779
Accrued liabilities.................................. 5,463 16,642 19,060
----------- ----------- -----------
Total current liabilities........................ 17,108 41,412 39,339
----------- ----------- -----------
Long-term debt......................................... 16,781 77,566 75,100
----------- ----------- -----------
Long-term debt-related parties......................... 7,000 7,000 7,000
----------- ----------- -----------
Other noncurrent liabilities, net...................... 617 422 422
----------- ----------- -----------
Deferred income taxes.................................. 443 755 756
----------- ----------- -----------
Commitments and contingencies
(Notes 2, 5, 6, 12 and 14)
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; 11,250,000 shares issued and
outstanding........................................ 113 113 113
Additional paid-in capital........................... 6,240 6,240 6,240
Notes receivable from stockholders................... (352) (352) (352)
Retained earnings.................................... 382 6,424 10,402
----------- ----------- -----------
Total stockholders' equity....................... 6,383 12,425 16,403
----------- ----------- -----------
$ 48,332 $ 139,580 $ 139,020
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-3
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM AUGUST 17, FOR THE FOR THE THREE
1995 (DATE OF FISCAL YEAR MONTHS ENDED
INCEPTION) ENDED DECEMBER 31,
TO SEPTEMBER 30, SEPTEMBER --------------------
1995 30, 1996 1995 1996
------------------- ------------ --------- ---------
(DOLLARS IN THOUSANDS, (UNAUDITED)
<S> <C> <C> <C> <C>
EXCEPT PER SHARE DATA)
Net sales................................ $ 12,723 $ 124,861 $ 23,487 $ 59,166
Cost of sales............................ 9,787 92,688 17,330 43,887
------- ------------ --------- ---------
Gross profit............................. 2,936 32,173 6,157 15,279
Selling, general and administrative
expenses............................... 1,670 16,311 3,609 5,755
------- ------------ --------- ---------
Operating income......................... 1,266 15,862 2,548 9,524
------- ------------ --------- ---------
Other expenses:
Interest on indebtedness............... 226 2,384 403 1,920
Interest on indebtedness--related
parties.............................. 127 1,050 263 263
Other finance charges.................. 240 1,981 526 534
Other, net............................. 29 31 3 55
------- ------------ --------- ---------
622 5,446 1,195 2,772
------- ------------ --------- ---------
Income before income taxes and
extraordinary item..................... 644 10,416 1,353 6,752
Provision for income taxes............... 262 4,060 548 2,774
------- ------------ --------- ---------
Income before extraordinary item......... 382 6,356 805 3,978
Extraordinary item--loss on refinancing
of long-term debt, net of income tax
benefit of $200........................ -- (314) -- --
------- ------------ --------- ---------
Net income............................... $ 382 $ 6,042 $ 805 $ 3,978
------- ------------ --------- ---------
------- ------------ --------- ---------
Earnings per share:
Income before extraordinary item....... $ .03 $ .56 $ .07 $ .35
Extraordinary item..................... (.03)
------- ------------ --------- ---------
Net income............................. $ .03 $ .53 $ .07 $ .35
------- ------------ --------- ---------
------- ------------ --------- ---------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-4
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM AUGUST 17, 1995 (DATE OF INCEPTION) TO SEPTEMBER 30, 1995
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996
AND FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NOTES
ADDITIONAL RECEIVABLE
COMMON PAID-IN FROM RETAINED
STOCK CAPITAL STOCKHOLDERS EARNINGS TOTAL
----------- ----------- ----------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance, August 17, 1995.................... $ 113 $ 6,240 ($ 352) $ -- $ 6,001
Net income.................................. -- -- -- 382 382
----- ----------- ----- --------- ---------
Balance, September 30, 1995................. 113 6,240 (352) 382 6,383
Net income.................................. -- -- -- 6,042 6,042
----- ----------- ----- --------- ---------
Balance, September 30, 1996................. 113 6,240 (352) 6,424 12,425
Net income (unaudited)...................... -- -- -- 3,978 3,978
----- ----------- ----- --------- ---------
Balance, December 31, 1996 (unaudited)...... $ 113 $ 6,240 ($ 352) $ 10,402 $ 16,403
----- ----------- ----- --------- ---------
----- ----------- ----- --------- ---------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-5
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM AUGUST 17, FOR THE THREE MONTHS
1995
(DATE OF INCEPTION) FOR THE FISCAL YEAR ENDED DECEMBER 31,
TO SEPTEMBER 30, ENDED --------------------
1995 SEPTEMBER 30, 1996 1995 1996
------------------- -------------------- --------- ---------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income................................... $ 382 $ 6,042 $ 805 $ 3,978
Adjustments to reconcile net income to net
cash provided by operating activities,
excluding the effect of an acquisition:
Depreciation............................... 80 1,175 240 523
Amortization............................... 45 571 34 496
Deferred income tax provision (benefit).... 42 (712) -- --
Loss on refinancing of long-term debt...... -- 514 -- --
(Increase) decrease in current assets:
Accounts receivable, net................. (1,063) (1,264) 3,014 2,407
Inventories.............................. 949 (3,628) (1,786) (1,600)
Prepaid expenses and other current
assets................................. 90 (39) (152) (381)
Increase (decrease) in current liabilities:
Accounts payable......................... (162) 2,397 1,197 (5,116)
Other current liabilities................ (42) 3,946 (124) 2,418
Other...................................... (16) (433) 64 10
------ -------- --------- ---------
Net cash provided by operating activities...... 305 8,569 3,292 2,735
------ -------- --------- ---------
Cash flows from investing activities:
Acquisition of net assets of Lull Industries,
Inc........................................ -- (69,007) -- --
Capital expenditures, net.................... (188) (1,404) (387) (420)
Payments to former TRAK shareholders for
ATLAS program.............................. -- (446) -- --
Other........................................ -- (133) (35) (152)
------ -------- --------- ---------
Net cash used in investing activities.......... (188) (70,990) (422) (572)
------ -------- --------- ---------
Cash flows from financing activities:
Proceeds from issuance of long-term debt..... -- 74,000 -- --
Net payments on revolver..................... (117) (3,542) (2,735) (1,841)
Payments on long-term debt................... -- (6,500) (135) --
Financing costs incurred..................... -- (1,485) -- --
------ -------- --------- ---------
Net cash (used in) provided by financing
activities................................... (117) 62,473 (2,870) (1,841)
------ -------- --------- ---------
Net change in cash............................. -- 52 -- 322
Cash at beginning of period.................... 1 1 1 53
------ -------- --------- ---------
Cash at end of period.......................... $ 1 $ 53 $ 1 $ 375
------ -------- --------- ---------
------ -------- --------- ---------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest on indebtedness..................... $ 278 $ 2,619
------ --------
------ --------
Income taxes................................. $ -- $ 3,672
------ --------
------ --------
</TABLE>
See accompanying Notes to Consolidated Statements.
F-6
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
1. ORGANIZATION
Omniquip International, Inc. (Omniquip or the Company), a Delaware
corporation, is a 92% owned investee company of Harbour Group Investments III,
L.P. (HGI III, L.P.) and an affiliate. At September 30, 1996, Omniquip owned
100% of the outstanding common stock of its subsidiaries, TRAK International,
Inc. (TRAK) and Lull International, Inc. (Lull), and had no other investments or
operations.
On September 30, 1996, Omniquip's Board of Directors authorized Omniquip to
split its shares of common stock at a rate of 10 to 1, thereby increasing issued
and outstanding shares from 1,000,000 to 10,000,000. On February 19, 1997,
Omniquip's Board of Directors authorized Omniquip to further split its shares at
a rate of 1.125 to 1, thereby increasing issued and outstanding shares from
10,000,000 to 11,250,000. All shares and per share amounts in the accompanying
consolidated financial statements and notes have been adjusted to give
retroactive effect to the stock splits.
2. ACQUISITIONS
On August 16, 1995, Omniquip acquired the issued and outstanding stock of
TRAK. The transaction was accounted for under the purchase method of accounting.
The aggregate merger consideration (purchase price) paid by Omniquip totaled
approximately $30,400, including assumed liabilities of $17,800. The acquisition
was financed through a $6,000 equity contribution by HGI III, L.P., a $2,000
subordinated note payable to HGI III, L.P., a $5,000 senior subordinated note
payable to an insurance company, and approximately $17,400 under credit
agreements with certain financial institutions.
All preacquisition debt outstanding, preferred stock, stock warrants, and
stock options at August 16, 1995 were settled or paid in connection with the
merger transaction.
The purchase price was assigned to the net assets acquired based on their
estimated fair market value at the acquisition date. Based upon the allocation,
the purchase price exceeded the estimated value of net assets acquired by
approximately $9,600. Such excess purchase price (goodwill) is being amortized
over forty years.
The purchase price under the acquisition agreement will be increased, up to
a maximum of $2,000, together with interest, for orders received from the U.S.
Army under contracts for the delivery of rough terrain fork lifts (the ATLAS
Program) for a period of five years from August 17, 1995. Amounts paid to TRAK's
former owners will be reflected as additional goodwill. As of September 30,
1996, 224 ATLAS Program sales orders have been received, in addition to the
original five prototypes, and, accordingly, $446 in additional purchase price
has been reflected in the accompanying financial statements.
F-7
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
2. ACQUISITIONS (CONTINUED)
The purchase price for TRAK was allocated as follows:
<TABLE>
<S> <C>
Accounts receivable, net........................................... $ 11,800
Inventories........................................................ 13,600
Prepaid expenses and other current assets.......................... 2,400
Property, plant and equipment...................................... 9,100
Other assets....................................................... 1,700
Goodwill........................................................... 10,046
Accounts payable................................................... (11,300)
Accrued liabilities................................................ (5,500)
Other liabilities.................................................. (600)
Deferred income taxes.............................................. (400)
---------
$ 30,846
---------
---------
</TABLE>
On August 15, 1996, Omniquip acquired certain net assets and assumed certain
liabilities of Lull Industries, Inc. (Lull) through its subsidiary, Lull Lift.
The transaction was accounted for under the purchase method of accounting.
Results of operations for Lull Lift are included in Omniquip's consolidated
financial statements from the date of acquisition.
The aggregate merger consideration (purchase price) paid by Omniquip totaled
approximately $69,007, plus assumed liabilities of $14,625. The acquisition was
financed with additional borrowings under the Company's amended credit
facilities with lending institutions, including $14,000 of subordinated debt
guaranteed by HGI III, L.P.
The purchase price has been preliminarily assigned to the net assets
acquired based on their estimated fair market value at the acquisition date.
Based upon the allocation, the purchase price exceeded the estimated value of
net assets acquired by approximately $55,841. Such excess purchase price
(goodwill) is being amortized over forty years.
The purchase price for Lull has been preliminarily allocated as follows:
<TABLE>
<S> <C>
Accounts receivable, net................................................. $ 7,572
Inventories.............................................................. 11,232
Prepaid expenses and other current assets................................ 1,937
Property, plant and equipment............................................ 7,050
Goodwill................................................................. 55,841
Accounts payable......................................................... (7,392)
Accrued liabilities...................................................... (7,233)
---------
$ 69,007
---------
---------
</TABLE>
F-8
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
2. ACQUISITIONS (CONTINUED)
The following table sets forth the pro forma information for Omniquip as if
the acquisition of Lull had occurred on October 1, 1995. 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.
<TABLE>
<CAPTION>
PRO FORMA INFORMATION (UNAUDITED)
-----------------------------------------------
<S> <C> <C>
FOR THE FISCAL YEAR
ENDED FOR THE THREE MONTHS
SEPTEMBER 30, 1996 ENDED DECEMBER 31, 1996
---------------------- -----------------------
Net sales.................................... $ 207,239 $ 43,968
Net income (loss)............................ $ 6,217 $ (704)
</TABLE>
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies utilized by Omniquip require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual amounts could differ
from those estimates. The significant accounting policies followed by Omniquip
are described below and are in conformity with generally accepted accounting
principles.
BUSINESS
The Company is principally engaged in the manufacture and sale of rough
terrain telescopic material
handlers and skid steer loaders to commercial customers, national rental fleets
and the U.S. Government.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Omniquip and
its wholly-owned subsidiaries. All significant intercompany transactions and
balances have been eliminated.
U.S. ARMY CONTRACT
The Company was awarded a contract to serve as the sole supplier of ATLAS, a
telescopic material handler, for the U.S. Army and related entities. The Company
expects shipments under the contract to commence in fiscal 1997. As discussed in
Note 2, the purchase price for TRAK will be adjusted for orders received under
the contract for a period of five years from August 17, 1995.
REVENUE RECOGNITION
Revenue is recognized upon shipment to the customer. Costs and related
expenses to manufacture the products are recorded as costs of sales when the
related revenue is recognized.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
highly liquid investments with an original maturity of three months or less to
be cash equivalents. Overdrafts on the Company's disbursement accounts totaling
approximately $1,789 and $2,868 at September 30, 1995 and 1996, respectively,
are included in accounts payable.
F-9
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RELATIONSHIPS WITH SUPPLIERS
The Company purchases several of its key component parts primarily from
specific suppliers. The Company believes that the supply of these components and
the number of alternative suppliers are adequate.
INVENTORIES
Inventories are stated at the lower of cost, determined using the first-in,
first-out (FIFO) method, or market. Obsolete or unsalable inventories are
reflected at their estimated realizable values.
Inventories relating to the U.S. Army contract are stated at actual
production costs, including manufacturing overhead and direct engineering and
tooling costs. The contract costs reimbursed by the U.S. Army are considered
progress payments and have been offset against inventories. Title to all
inventories related to the U.S. Army contract for which progress payments have
been received vests with the U.S. Army. General and administrative expenses
allocated to the U.S. Army contract for the fiscal year ended September 30, 1996
were $109.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment was recorded at estimated fair market value
under the purchase method of accounting as of the acquisition dates for TRAK and
Lull as described in Note 2. Additions to property, plant and equipment
subsequent to the acquisition dates are recorded at cost. Depreciation is
provided using the straight-line method over the estimated useful lives of the
assets which range from three to thirty-nine years.
Expenditures for repairs, maintenance and minor renewals are charged to
income as incurred. Expenditures which improve an asset or extend its estimated
useful life are capitalized. When properties are retired or otherwise disposed
of, the related cost and accumulated depreciation are removed from the accounts
and any gain or loss is included in income.
GOODWILL
Goodwill resulting from the acquisitions described in Note 2 is stated at
cost and is being amortized on a straight-line basis over 40 years. Accumulated
amortization totaled $27 and $442 at September 30, 1995, and 1996, respectively.
The Company assesses the carrying value of goodwill for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be
recoverable based on an analysis of future expected cash flows from the
underlying operations of the Company. Management believes that there has been no
impairment at September 30, 1996.
OTHER NONCURRENT ASSETS
Other noncurrent assets include two 50% equity investments in dealers of the
Company's products. In accordance with Accounting Principles Board Opinion (APB)
No. 18, "The Equity Method of Accounting for Investments in Common Stock," the
carrying amount of the investments is adjusted to recognize the Company's share
of the earnings and losses of the investee. In the determination of the
Company's share of earnings or losses, all significant intercompany profit in
inventory on hand at these unconsolidated
F-10
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
subsidiaries is eliminated. The carrying value of these equity investments
totaled approximately $393 at September 30, 1995, and 1996, respectively. Equity
earnings were immaterial for the period from August 17, 1995 to September 30,
1995 and for the fiscal year ended September 30, 1996, respectively. The Company
is currently finalizing an agreement to sell its investment in one of these
dealers and expects to fully realize the recorded carrying value.
Expenses associated with the issuance of debt instruments are capitalized by
the Company and amortized over the respective terms of the debt instruments. Net
deferred financing costs included in other assets at September 30, 1995 and 1996
were $413 and $1,454, respectively.
RESEARCH AND DEVELOPMENT COSTS
Research and development costs are expensed as incurred and included in
selling, general and administrative expenses in the accompanying consolidated
statement of income. Such costs incurred in the development of new products or
significant improvements to existing products totaled approximately $72 for the
period from August 17, 1995 through September 30, 1995 and $1,572 for the fiscal
year ended September 30, 1996.
WARRANTY COSTS
The Company provides, by a current charge to income, an amount it estimates
will be necessary to cover future warranty obligations for products sold during
the year. The Company also provides for specific warranty obligations as
necessary and appropriate.
INCOME TAXES
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109 (SFAS 109), "Accounting for Income
Taxes," requiring the use of the liability method of accounting for income
taxes. The current or deferred tax consequences of a transaction are measured by
applying the provisions of enacted tax laws to determine the amount of taxes
payable currently or in future years. Deferred income taxes are provided for
temporary differences between the income tax bases of assets and liabilities,
and their carrying amounts for financial reporting purposes.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company records all financial instruments, including cash and cash
equivalents, accounts receivable, accounts payable, other accruals and notes
payable, at cost which approximates fair value.
FISCAL YEAR
Omniquip's fiscal year end is September 30.
EARNINGS PER SHARE INFORMATION
Earnings per share is computed by dividing net income available to
stockholders by the weighted average number of common shares outstanding during
the period. For the periods presented, the weighted average number of shares
outstanding was 11,250,000.
F-11
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
UNAUDITED INFORMATION
The accompanying financial information as of and for the three months ended
December 31, 1995 and 1996, respectively, the quarterly income statement data
(Note 16) and the December 31, 1996 supplemental balance sheet data (Note 15)
are unaudited. However, in the opinion of management, such information has been
prepared on a basis consistent with the audited financial statements and
includes all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the results of operations presented. The
quarterly results are not necessarily indicative of results for any future
period.
4. FINANCING
Long-term debt consists of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1995 1996
------------- -------------
<S> <C> <C>
UNSUBORDINATED DEBT:
REVOLVING LINE OF CREDIT--principal due August 15, 2001; interest due monthly at the
bank's prime rate plus .50%, or LIBOR plus 2.50%, in some cases; secured by
substantially all assets of the Company; repaid in 1996........................... $ 10,821 $ 0
REVOLVING LINE OF CREDIT--principal due August 16, 2003; interest due monthly at
either LIBOR plus 2.75% or the bank's corporate base rate plus 1.5%; secured by
substantially all assets of the Company 7,441
INSTALLMENT NOTES PAYABLE--principal plus interest due in monthly installments at
the bank's prime rate plus .50% or LIBOR plus 2.50%, in some cases; secured by
substantially all assets of the Company; repaid in 1996........................... 6,500
TERM LOAN--principal due in installments commencing October 1, 1996, with the final
payment due August 16, 2003; interest due monthly at either LIBOR plus 3% or the
bank's corporate base rate plus 1.75%; 60,000
SUBORDINATED DEBT:
NOTE PAYABLE TO AN INSURANCE COMPANY--principal due in installments commencing
August 31, 2001, with the final payment due August 31, 2003; interest due at 15%
per annum......................................................................... 5,000 5,000
NOTE PAYABLE TO A FINANCIAL INSTITUTION--principal payment due in a lump sum payment
on February 28, 2004; interest due at 15% per annum............................... 14,000
NOTE PAYABLE TO HGI III, L.P.--principal payment due in a lump sum payment on August
31, 2003; interest due semi-annually at 15% per annum............................. 2,000 2,000
------------- -------------
24,321 88,441
LESS--Current portion of long-term debt............................................. 540 3,875
------------- -------------
$ 23,781 $ 84,566
------------- -------------
------------- -------------
</TABLE>
F-12
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
4. FINANCING (CONTINUED)
On August 16, 1996, and in conjunction with the acquisition of Lull, the
Company refinanced its existing Loan and Security Agreement. Such agreements had
provided a revolving credit facility and two installment notes. The prior
revolving credit facility provided for borrowings of up to the lesser of $20,000
or a borrowing base calculated using a formula set forth in the agreements.
Amounts outstanding under the prior revolving credit facility totaled $10,821 at
September 30, 1995. In addition, the Company had $187 in outstanding letters of
credit under this revolving line of credit facility at September 30, 1995. The
Company also had borrowings under one installment note payable under the Loan
and Security Agreement which was refinanced. There were no borrowings under the
second installment note, which provided for asset acquisitions, prior to
refinancing.
The new Loan and Security Agreement provides for a revolving line of credit
facility and two term loans. The new revolving line of credit facility provides
for borrowings of up to the lesser of $25,000 or a borrowing base calculated
based on percentages of eligible receivables and inventories. Borrowings under
this line of credit are due August 16, 2003 and bear interest either at the
bank's corporate base rate plus 1.5% (9.75% at September 30, 1996) or LIBOR plus
2.75% (8.20% at September 30, 1996). The Company may elect to convert
outstanding line of credit balances between interest types at its discretion.
Amounts outstanding under this new revolving line of credit facility totaled
$7,441 at September 30, 1996. In addition, the Company had $307 in outstanding
letters of credit under this revolving line of credit facility. At September 30,
1996, the Company had unused borrowing capacity of $17,252 under this facility.
Borrowings under the term loan provided by the new Loan and Security
Agreement are due in quarterly installments ranging from $500 to $3,125,
commencing in October 1996 with a final payment in August 2003. The term loan
bears interest either at the bank's corporate base rate plus 1.75% (10% at
September 30, 1996) or LIBOR plus 3% (8.5% at September 30, 1996). The Company
may elect to convert outstanding term loan balances between interest types at
its discretion.
On August 16, 1995, the Company issued a $5,000 senior subordinated note
payable to an insurance company and due August 31, 2003. Principal payments are
due in varying amounts, commencing August 31, 2001. Interest, at a rate of 15%,
is due quarterly.
On August 16, 1996 and in conjunction with the acquisition of Lull, the
Company issued a $14,000 junior subordinated note payable to a financial
institution with principal and interest, at 15% per annum, due February 28,
2004. The note payable is subordinated to both the Loan and Security Agreements
with certain financial institutions and the note payable to an insurance
company.
The Company entered into an agreement in conjunction with the acquisition of
TRAK (see Note 2) for the issuance of a $2,000 note payable to HGI III, L.P. The
HGI III, L.P. note payable is subordinated to the Loan and Security Agreement
with certain financial institutions and the subordinated notes payable described
above.
Interest expense on the above-noted subordinated debt payable to related
parties (the insurance company and HGI III, L.P.) approximated $127 and $1,050
for the periods ended September 30, 1995 and 1996, respectively.
The Company's borrowing agreements contain restrictions and requirements,
including limitations on dividends, lease rentals, capital expenditures and
investments, new indebtedness, achievement of certain
F-13
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
4. FINANCING (CONTINUED)
earnings levels, and maintenance of a minimum tangible net worth and specified
working capital amounts, among others. At September 30, 1996, the Company was in
compliance with such covenants.
The Company has entered into two interest rate swap agreements to reduce the
impact of changes in interest rates on its floating rate debt. At September 30,
1996, the interest rate swap agreements had a total notional principal amount of
$10,000. These agreements fix the Company's interest rate on $4,000 and $6,000
of its unsubordinated debt at 8.71% and 6.00%, respectively. These agreements
mature at October 10, 1998.
Maturities of long-term debt for subsequent fiscal years are as follows:
<TABLE>
<S> <C>
1997............................................................... $ 3,875
1998............................................................... 8,625
1999............................................................... 10,000
2000............................................................... 10,750
2001............................................................... 11,750
Thereafter......................................................... 43,441
---------
$ 88,441
---------
---------
</TABLE>
5. 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 September 30, 1996, a corresponding
liability of $1,557 is reflected as a component of other current liabilities in
the accompanying consolidated balance sheet.
6. LEASE COMMITMENTS
The Company leases certain of its equipment and automobiles under
noncancelable lease agreements. These leases have been accounted for as
operating leases.
Minimum lease payments for subsequent fiscal years under long-term operating
leases in effect at September 30, 1996 are as follows:
<TABLE>
<S> <C>
1997................................................................. $ 440
1998................................................................. 248
1999................................................................. 128
2000................................................................. 14
---------
Total minimum lease payments......................................... $ 830
---------
---------
</TABLE>
Rent expense under all operating leases for the periods ended September 30,
1995 and 1996 was approximately $52 and $513, respectively.
F-14
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
7. INCOME TAXES
The provision for income taxes is summarized as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM AUGUST 17,
1995 (DATE OF FOR THE FISCAL
INCEPTION) YEAR ENDED
TO SEPTEMBER 30, 1995 SEPTEMBER 30, 1996
----------------------- -------------------
<S> <C> <C>
Current:
Federal......................................... $ 184 $ 3,890
State........................................... 36 682
----- ------
Total current............................... 220 4,572
----- ------
Deferred:
Federal......................................... 35 (661)
State........................................... 7 (51)
----- ------
Total deferred.............................. 42 (712)
----- ------
Provision for income taxes........................ $ 262 $ 3,860
----- ------
----- ------
</TABLE>
Deferred taxes are comprised of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1995 1996
------------- -------------
<S> <C> <C>
Deferred tax assets:
Accruals and other reserves................................... $ 1,663 $ 4,376
Inventories................................................... 488 1,078
Other......................................................... 78 70
------------- -------------
Gross deferred tax assets................................. 2,229 5,524
------------- -------------
Deferred tax liabilities:
Property, plant and equipment................................. (805) (890)
Other......................................................... (198) (541)
------------- -------------
Gross deferred tax liabilities............................ (1,003) (1,431)
------------- -------------
Net deferred tax asset.......................................... $ 1,226 $ 4,093
------------- -------------
------------- -------------
Current deferred tax asset...................................... $ 1,669 $ 4,848
Long-term deferred tax liability................................ (443) (755)
------------- -------------
Net deferred tax asset.......................................... $ 1,226 $ 4,093
------------- -------------
------------- -------------
</TABLE>
F-15
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
7. INCOME TAXES (CONTINUED)
The income tax provision differs from the amount of expense determined by
applying the applicable U.S. statutory federal income tax rate to pre-tax
results as a result of the following differences for the periods ended:
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1995 1996
--------------- -------------
<S> <C> <C>
Statutory rate.................................................. $ 219 $ 3,445
Non-temporary differences:
State tax provision, net...................................... 24 169
Other......................................................... 19 246
----- ------
Total provision................................................. $ 262 $ 3,860
----- ------
----- ------
</TABLE>
8. RETIREMENT PLANS AND RELATED MATTERS
The Company offers all full-time non-union employees who have completed six
months of service a retirement savings plan under Section 401(k) of the Internal
Revenue Code. The Company also offers all union employees who have completed 30
days of service a retirement savings plan under Section 401(k) of the Internal
Revenue Code. For the periods ended September 30, 1995 and 1996, Company
contributions totaled $154 and $310, respectively.
The Company offers an incentive program to all salaried employees of its
TRAK subsidiary based upon a formula related to TRAK's operating results and an
incentive program to union employees based upon a formula related to
productivity improvements. Prior to October 1996, certain participants in the
salaried program were allowed to defer a portion of their award. At September
30, 1995 and 1996, the Company had accrued $839 and $1,029, respectively, for
the incentive program, of which $209 was recorded as a long-term deferred
liability in the accompanying balance sheet at September 30, 1995. In October
1996, the Company discontinued the deferral of awards, at which time $274 was
paid to certain salaried employees in full settlement of all deferred amounts.
At September 30, 1996, this balance is included as an other current liability in
the accompanying consolidated balance sheet. For the periods ended September 30,
1995 and 1996, expenses relating to these plans were $67 and $875, respectively.
9. STOCK OPTION PLANS
In September 1996, Omniquip established the 1996 Long-Term Incentive Plan
pursuant to which equity incentives, covering up to 1,600,000 shares, may be
awarded to key officers and employees, and a Directors Non-Qualified Stock
Option Plan which provides for the granting of options to the Omniquip directors
who are not employees, for up to an aggregate 250,000 shares of common stock. No
options under either of these plans have been granted through September 30,
1996.
In September 1996, Omniquip also established the Executive Stock Option Plan
pursuant to which options will be granted to certain executives and other
management stockholders to acquire an aggregate 562,500 shares of Omniquip
common stock. The exercise price of such options will be the current market
price on the date of exercise and all options may be exercised only by
exchanging shares of previously owned common stock. No options under this plan
have been granted through September 30, 1996.
F-16
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
9. STOCK OPTION PLANS (CONTINUED)
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123 "Accounting for Stock-Based
Compensation" (FAS 123) which addresses accounting for stock option, purchase
and award plans. FAS 123 specifies that companies utilize either the "fair value
based method" or the "intrinsic value based method" for valuing stock options
granted. At September 30, 1996, the Company has not granted any options pursuant
to plans established in September 1996. However, for any such options granted in
the future, the Company would expect to utilize the "intrinsic value based
method" for valuing stock options granted.
10. POSTRETIREMENT BENEFITS
The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 106, "Employer's Accounting for Postretirement Benefits Other Than
Pensions" (OPEB or SFAS 106). This standard requires recognition of the cost of
providing postretirement benefits during an employee's period of service.
The Company provides health care and life insurance benefits for certain
employees who retired prior to November 13, 1987 (less than 100 retirees at
September 30, 1996). Management plans to fund the premiums as incurred, net of
reimbursements received by plan participants. At September 30, 1995 and 1996,
respectively, the Company had a $408 and $423 accrued postretirement benefit
obligation, which is included in "other noncurrent liabilities, net" in the
accompanying financial statements. There are no plan assets. For measurement
purposes, a 10.5% and 9.5% annual rate of increase in health care premiums was
assumed for 1995 and 1996, respectively; this rate was assumed to decrease 1%
per year to 5.5% in 2000 and remain at that level thereafter. The weighted
average discount rate used to determine the accumulated postretirement benefit
obligation was 7.5% and 8.0% at September 30, 1995 and 1996, respectively. The
obligation was calculated utilizing the 1983 group annuity mortality tables.
The annual periodic postretirement benefit cost for the plan years beginning
July 1, 1995 and July 1, 1996 approximates $29 and $23, respectively.
11. RELATED PARTIES
Harbour Group, Ltd., an affiliate of HGI III, L.P., charges the Company for
services of Harbour Group personnel engaged in line or staff functions relating
specifically to the operations of the Company; such charges are to be paid by
the Company based on actual, direct costs for such services. Charges of $60 and
$668 were recorded by the Company during the periods ended September 30, 1995
and 1996, respectively.
Omniquip has paid fees totaling $446 and $228, respectively, to affiliates
of HGI III, L.P. in consideration of services provided in identifying,
negotiating and consummating the acquisitions of TRAK and Lull (as described in
Note 2); such amount has been capitalized as acquisition costs and is included
in goodwill.
Certain members of management have purchased shares of Omniquip's stock at
prices determined by the Board of Directors. The purchase price of the shares
has been financed by recourse promissory notes payable to Omniquip with the
shares pledged as security.
The insurance company which holds $5,000 of the Company's senior
subordinated debt is a limited partner of HGI III, L.P.
F-17
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
12. CUSTOMER FINANCING ARRANGEMENTS
TRAK has financing arrangements with certain third-party financing
institutions to facilitate dealer purchases of equipment under a floor plan
arrangement. TRAK is obligated to repurchase the outstanding loan balance of a
dealer in the event of default by the dealer which is not cured by such dealer
within a 90 day period. A security interest in the equipment financed is
maintained by the finance companies. Aggregate outstanding loan balances under
these agreements at September 30, 1995 and September 30, 1996 approximated
$39,466 and $57,033, respectively. Aggregate losses under one of the
arrangements for calendar year 1995 are limited to 25% of the outstanding loan
balance at December 31, 1994. The outstanding loan balance at December 31, 1994
under this arrangement approximated $24,841. Aggregate losses under the same
arrangement for calendar year 1996 are limited to the greater of $1,500 or 5% of
the outstanding loan balance at December 31, 1995. The outstanding loan balance
at December 31, 1995 under this arrangement approximated $40,659.
TRAK maintains a reserve for potential repurchases of loans in default under
the floor plan arrangements described above. This reserve is included in other
current liabilities and totaled approximately $391 and $570 at September 30,
1995 and September 30, 1996, respectively. Historically, losses under the
repurchase provisions of the floor plan arrangements have not been material and
have been within management's expectations. The related provision charged to
operations totaled approximately $31 and $200 for the periods ended September
30, 1995 and 1996, respectively.
In conjunction with these floor plan arrangements, TRAK incurs
dealer-related financing charges at varying rates for a maximum period of six
months. The financing charges incurred by TRAK for the periods ended September
30, 1995 and 1996 for all outstanding customer financing arrangements totaled
$240 and $1,981, respectively.
Lull Lift is also a party to a retail finance agreement with a financing
company, which provides Lull Lift distributors with financing for equipment
purchases from Lull Lift. The financing company has also agreed to provide
financing for distributors' purchases of Lull Lift produced equipment used as
rental inventory by the distributors. Such contracts are arranged on an
instalment 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 Lift 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 September 30, 1996 were approximately $10,887. This contingency would be
reduced by proceeds from the sales of related equipment. Management believes
that any such liability under this arrangement, if incurred, would not have a
material impact on the results of operations or financial condition of the
Company.
F-18
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
13. CONCENTRATIONS OF CREDIT
The Company principally sells its products through a distribution network.
The Company performs ongoing credit evaluations of its distributors. The Company
maintains reserves for potential credit losses and historically such losses have
been within management's expectations. At September 30, 1995 and 1996, the
Company's five largest distributors represented approximately 29% and 10%,
respectively, of trade receivables. In addition, sales to such distributors for
the periods ended September 30, 1995 and 1996 approximated 30% and 21%,
respectively, of the Company's net sales. No individual distributor accounted
for more than 10% of net sales for the periods ended September 30, 1995 and
1996.
14. CONTINGENCIES
The Company is included 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.
F-19
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
15. SUPPLEMENTAL BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1995 1996
------------- ------------- DECEMBER 31,
1996
------------
(UNAUDITED)
<S> <C> <C> <C>
ACCOUNTS RECEIVABLE:
Trade receivables.................................................. $ 12,854 $ 20,631 $ 19,649
Less allowance for doubtful accounts............................... (173) (351) (383)
Other receivables.................................................. 161 1,398 5
------------- ------------- ------------
$ 12,842 $ 21,678 $ 19,271
------------- ------------- ------------
------------- ------------- ------------
INVENTORIES:
Finished goods..................................................... $ 3,844 $ 7,094 $ 7,394
Work in process.................................................... 2,175 4,302 4,494
Raw materials...................................................... 6,661 15,614 15,853
Unbilled government contract costs................................. -- 530 1,399
------------- ------------- ------------
$ 12,680 $ 27,540 $ 29,140
------------- ------------- ------------
------------- ------------- ------------
PREPAID EXPENSES AND OTHER CURRENT ASSETS:
Deferred income taxes.............................................. $ 1,669 $ 4,848 $ 4,848
Other.............................................................. 615 686 1,067
------------- ------------- ------------
$ 2,284 $ 5,534 $ 5,915
------------- ------------- ------------
------------- ------------- ------------
PROPERTY, PLANT AND EQUIPMENT:
Machinery and equipment............................................ $ 4,248 $ 8,707 $ 8,726
Buildings and building improvements................................ 4,133 7,494 7,543
Land and land improvements......................................... 396 840 840
Construction in progress........................................... 513 704 1,056
------------- ------------- ------------
Total property, plant and equipment, at cost....................... 9,290 17,745 18,165
Less: accumulated depreciation..................................... (79) (1,255) (1,778)
------------- ------------- ------------
$ 9,211 $ 16,490 $ 16,387
------------- ------------- ------------
------------- ------------- ------------
ACCRUED LIABILITIES:
Accrued employee compensation and benefits, including taxes........ $ 1,180 $ 2,460 $ 2,628
Accrued customer rebates........................................... -- 2,634 4,191
Accrued boom warranty.............................................. -- 1,557 910
Other accrued warranty............................................. 1,279 2,526 2,560
Accrued incentive compensation..................................... 630 906 171
Product liability reserves......................................... 564 998 1,028
Accrued income taxes............................................... 250 1,312 3,746
Other.............................................................. 1,560 4,249 3,826
------------- ------------- ------------
$ 5,463 $ 16,642 $ 19,060
------------- ------------- ------------
------------- ------------- ------------
</TABLE>
F-20
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
16. QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for the fiscal year ended September 30,
1996 appears below:
<TABLE>
<CAPTION>
GROSS
NET SALES PROFIT NET INCOME
---------- ----------- -----------
<S> <C> <C> <C>
First quarter.............................................................. $ 23,487 $ 6,156 $ 963
Second quarter............................................................. 27,578 7,234 1,352
Third quarter.............................................................. 30,449 7,745 1,573
Fourth quarter............................................................. 43,347 11,038 2,154
---------- ----------- -----------
$ 124,861 $ 32,173 $ 6,042
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
17. SUBSEQUENT EVENT
In February 1997, the Company filed a Registration Statement on Form S-1 for
the purpose of making an initial public offering of previously unissued common
stock and for the sale by certain current shareholders of a portion of existing
outstanding shares of common stock of the Company. The Company will not receive
any proceeds from the sale of the existing outstanding shares. The net proceeds
from the sales of the previously unissued shares are intended to be used to
retire a portion of the outstanding debt of the Company. In conjunction with the
retirement of a portion of the Company's debt, the Company expects to incur
prepayment penalties. The Company estimates that charges of approximately $600,
net of related tax benefits, will be presented as an extraordinary item in the
statement of income in the period in which the debt repayment occurs.
F-21
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholders of Omniquip International, Inc.
In our opinion, the accompanying balance sheet and the related statements of
income, of changes in stockholders' equity and of cash flows present fairly, in
all material respects, the financial position of TRAK International, Inc. at
September 30, 1994 and the results of its operations and its cash flows for the
fiscal year ended September 30, 1994, and for the period October 1, 1994 to
August 16, 1995, in conformity with generally accepted accounting principles.
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 of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
As explained in Note 9, the Company changed its method of accounting for
postretirement benefits other than pensions in the period ended August 16, 1995.
As explained in Note 1, on August 16, 1995, Omniquip International, Inc.
acquired the issued and outstanding common stock of TRAK International, Inc.
Price Waterhouse LLP
St. Louis, Missouri
July 15, 1996
F-22
<PAGE>
TRAK INTERNATIONAL, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30,
1994
-----------------
(DOLLARS IN
THOUSANDS,
EXCEPT PER SHARE
DATA)
<S> <C>
ASSETS
Current assets:
Cash.................................................................... $ 17
Accounts receivable, net................................................ 10,360
Inventories............................................................. 8,704
Prepaid expenses and other current assets............................... 1,343
-------
Total current assets.................................................. 20,424
Property, plant and equipment, net........................................ 6,197
Other assets, net......................................................... 2,030
-------
$ 28,651
-------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt....................................... $ 7,986
Current portion of long-term debt--related parties...................... 1,450
Accounts payable........................................................ 8,109
Accrued liabilities..................................................... 2,619
-------
Total current liabilities............................................. 20,164
Long-term debt............................................................ 1,616
Long-term debt--related parties........................................... 1,350
Retiree healthcare obligation............................................. --
Accrued incentive compensation............................................ 37
Deferred income taxes..................................................... 439
-------
Total liabilities..................................................... 23,606
-------
Commitments and contingencies (Notes 4, 11 and 13)
Class B mandatorily redeemable preferred stock, $1,000 par value, 3,000
shares authorized; 3,000 shares issued and outstanding.................. 3,262
-------
Stockholders' equity:
Class A preferred stock, $500 par value, 2,000 shares authorized; 1,408
shares issued and outstanding......................................... 704
Class C preferred stock, $1,000 par value, 5,000 shares authorized;
1,110 shares issued and outstanding................................... 1,110
Common stock, $1 par value, 20,000 shares authorized; 5,450 shares
issued and outstanding................................................ 6
Additional paid-in capital.............................................. 50
Retained earnings....................................................... 346
Less treasury stock at cost, 1,595 shares............................... (433)
-------
Total stockholders' equity............................................ 1,783
-------
$ 28,651
-------
-------
</TABLE>
See accompanying Notes to Financial Statements.
F-23
<PAGE>
TRAK INTERNATIONAL, INC.
STATEMENT OF INCOME
<TABLE>
<CAPTION>
FOR THE FOR THE
PERIOD FROM PERIOD FROM
FOR THE FISCAL OCTOBER 1, OCTOBER 1,
YEAR ENDED 1994 TO 1994 TO
SEPTEMBER 30, AUGUST 16, JUNE 30,
1994 1995 1995
--------------- ----------- -----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales.............................................. $ 60,973 $ 75,401 $ 64,964
Cost of sales.......................................... 47,208 57,707 49,782
------- ----------- -----------
Gross profit........................................... 13,765 17,694 15,182
Selling, general and administrative expenses........... 9,502 10,903 9,168
------- ----------- -----------
Operating income....................................... 4,263 6,791 6,014
------- ----------- -----------
Other (income) expenses:
Interest on indebtedness............................. 994 1,121 871
Interest on indebtedness-related parties............. 369 258 229
Other finance charges................................ 864 1,320 1,000
Other, net........................................... (165) (199) --
------- ----------- -----------
2,062 2,500 2,100
------- ----------- -----------
Income before provision for income taxes and cumulative
effect of change in accounting principle............. 2,201 4,291 3,914
Provision for income taxes............................. 876 1,762 1,566
------- ----------- -----------
Income before cumulative effect of change in accounting
principle............................................ 1,325 2,529 2,348
Cumulative effect of change in accounting principles,
net of income tax benefit of $167 (Note 9) in 1995... -- (241) (241)
------- ----------- -----------
Net income............................................. $ 1,325 $ 2,288 $ 2,107
------- ----------- -----------
------- ----------- -----------
</TABLE>
See accompanying Notes to Financial Statements
F-24
<PAGE>
TRAK INTERNATIONAL, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR FISCAL YEAR ENDED SEPTEMBER 30, 1994 AND
FOR THE PERIOD FROM OCTOBER 1, 1994 TO AUGUST 16, 1995
<TABLE>
<CAPTION>
(ACCUMULATED
CLASS A CLASS C ADDITIONAL DEFICIT)/
PREFERRED PREFERRED COMMON PAID-IN RETAINED TREASURY
STOCK STOCK STOCK CAPITAL EARNINGS STOCK TOTAL
--------- --------- ------ ---------- ------------ -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Balance, September 30, 1993....................... $704 $1,110 $6 $ 50 $ (470) $(380) $1,020
Nonmonetary exchange for Class A preferred stock
(Note 8)........................................ (50) (50)
Repurchase of Class A preferred stock (Note 8).... (3) (3)
Dividends on Class B and Class C preferred
stock........................................... (247) (247)
Accretion to Class B preferred stock.............. (262) (262)
Net income........................................ -- -- -- -- 1,325 -- 1,325
--------- --------- ------ ---------- ------ -------- ------
Balance, September 30, 1994....................... 704 1,110 6 50 346 (433) 1,783
Dividends on Class B and Class C preferred
stock........................................... (191) (191)
Redemption of convertible notes
(Notes 3 and 8)................................. 1 997 998
Accretion to Class B preferred stock.............. (530) (530)
Net income........................................ -- -- -- -- 2,288 -- 2,288
--------- --------- ------ ---------- ------ -------- ------
Balance, August 16, 1995.......................... $704 $1,110 $7 $1,047 $1,913 $(433) $4,348
--------- --------- ------ ---------- ------ -------- ------
--------- --------- ------ ---------- ------ -------- ------
</TABLE>
See accompanying Notes to Financial Statements.
F-25
<PAGE>
TRAK INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE FOR THE
FOR THE PERIOD FROM PERIOD FROM
FISCAL OCTOBER 1, OCTOBER 1,
YEAR ENDED 1994 TO 1994 TO
SEPTEMBER 30, AUGUST 16, JUNE 30,
1994 1995 1995
------------- ----------- -----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income.................................................... $ 1,325 $ 2,288 $ 2,107
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation................................................ 666 726 621
Amortization................................................ 230 226 194
Deferred income tax provision............................... 139 (835) (887)
Accrued incentive compensation.............................. 37 166
Retiree healthcare obligation............................... 408 408
Other....................................................... (98) 63 (110)
(Increase) decrease in current assets:
Accounts receivable, net.................................. (4,283) (1,419) (4,464)
Inventories............................................... 881 (5,348) (4,025)
Prepaid expenses and other current assets................. (140) (294) (20)
Increase (decrease) in current liabilities:
Accounts payable.......................................... 3,116 3,158 3,879
Accrued liabilities....................................... 615 1,520 2,255
(Increase) decrease in notes receivable..................... 509 (125) --
------ ----------- -----------
Net cash (used in) provided by operating activities............. 2,997 534 (42)
------ ----------- -----------
Cash flows from investing activities:
Capital expenditures, net..................................... (1,400) (3,030) (2,725)
Investment in other assets.................................... (251) (437) (239)
------ ----------- -----------
Net cash used in investing activities........................... (1,651) (3,467) (2,964)
------ ----------- -----------
Cash flows from financing activities:
Net proceeds from revolving line of credit.................... 28 2,819 2,795
Proceeds from issuance of long-term debt...................... 450 3,200 3,200
Payments on long-term debt.................................... (1,405) (2,911) (2,814)
Payment of preferred stock dividends.......................... (415) (191) (191)
------ ----------- -----------
Net cash provided by (used in) financing activities............. (1,342) 2,917 2,990
------ ----------- -----------
Net increase (decrease) in cash................................. 4 (16) (16)
Cash at beginning of period..................................... 13 17 17
------ ----------- -----------
Cash at end of period........................................... $ 17 $ 1 $ 1
------ ----------- -----------
------ ----------- -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest on indebtedness.................................... $ 1,019 $ 1,487
------ -----------
Income taxes................................................ $ 531 $ 2,864
------ -----------
Supplemental schedule of noncash investing and financing
activities:
Redemption of convertible notes (Notes 3 and 8)............... $ -- $ 998
------ -----------
Receipt of Class A preferred stock in exchange for accounts
receivable (Note 8)......................................... $ 53 $ --
------ -----------
</TABLE>
See accompanying Notes to Financial Statements.
F-26
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
1. MERGER
On August 16, 1995, Omniquip International, Inc. (Omniquip), a Delaware
corporation and a 92% owned investee company of Harbour Group Investments III,
L.P. (HGI III L.P.), acquired the issued and outstanding stock of TRAK
International, Inc. (the Company).
The aggregate consideration (purchase price) paid by Omniquip for the
Company totaled approximately $30,400, including assumed liabilities of $17,800.
The acquisition was financed through a $6,000 equity contribution by HGI III
L.P., a $2,000 subordinated note payable to HGI III L.P., a $5,000 senior
subordinated note payable to an insurance company and approximately $17,400
under credit agreements with certain financial institutions. All preacquisition
debt outstanding, preferred stock, stock warrants and stock options of the
Company at August 16, 1995 were settled or paid in connection with the
acquisition. The acquisition agreement also provides for contingent
consideration to be paid to the former common stockholders of the Company by
Omniquip should certain future requirements be met.
The accompanying financial statements of the Company have been prepared on a
preacquisition basis of accounting and do not reflect the effects of the
acquisition by Omniquip or the related financing.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies utilized by the Company require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual amounts could differ
from these estimates. The significant accounting policies followed by the
Company are described below and are in conformity with generally accepted
accounting principles:
BUSINESS
The Company is principally engaged in the manufacture and sale of telescopic
material handlers and skid steer loaders to commercial customers and the U.S.
Army.
REVENUE RECOGNITION
Revenue is recognized upon shipment to the customer. Costs and related
expenses to manufacture the products are recorded as costs of sales when the
related revenue is recognized.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
highly liquid investments with an original maturity of three months or less to
be cash equivalents. Overdrafts on the Company's disbursement accounts totaling
approximately $1,108 at September 30, 1994 are included in accounts payable.
RELATIONSHIP WITH SUPPLIERS
The Company purchases several of its key component parts primarily from
specific suppliers. The Company believes that the supply of these components and
the number of alternative suppliers are adequate.
F-27
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORIES
Inventories are stated at the lower of cost, determined using the first-in,
first-out (FIFO) method, or market. Obsolete or unsalable inventories are
reflected at their estimated realizable values.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recorded at cost and is depreciated using
the straight-line method over the estimated useful lives of the assets which
range from 3 to 29 years.
Expenditures for repairs, maintenance and minor renewals are charged to
income as incurred. Expenditures which improve an asset or extend its estimated
useful life are capitalized. When properties are retired or otherwise disposed
of, the related cost and accumulated depreciation are removed from the accounts
and any gain or loss is included in income.
OTHER NONCURRENT ASSETS
Other noncurrent assets include net notes receivable outstanding due from
related parties of $397 at September 30, 1994. These notes bear interest at
rates ranging from approximately 7.5% to 8.0%.
Other noncurrent assets include two 50% equity investments in dealers of the
Company's products. In accordance with Accounting Principles Board Opinion (APB)
No. 18, "The Equity Method of Accounting for Investments in Common Stock," the
carrying amount of the investments is adjusted to recognize the Company's share
of the earnings or losses of the investee. In the determination of the Company's
share of earnings or losses, all significant intercompany profit in inventory on
hand at these unconsolidated subsidiaries is eliminated. The carrying value of
the equity investments totaled $711 at September 30, 1994. Equity earnings from
these investments totaled $148 and $0 for the periods ended September 30, 1994
and August 16, 1995, respectively. Such equity earnings are presented in other
non-operating income in the accompanying financial statements.
Other noncurrent assets also include intangible assets, primarily consisting
of tradename and drawings, which are stated at cost of $922 at September 30,
1994 and which are being amortized on a straight-line basis over varying lives
from five to twenty-five years.
RESEARCH AND DEVELOPMENT COSTS
Research and development costs are expensed as incurred. Such costs incurred
in the development of new products or significant improvements to existing
products totaled approximately $364 and $416 for the periods ended September 30,
1994 and August 16, 1995, respectively.
WARRANTY COSTS
The Company provides, by a current charge to income, an amount it estimates
will be necessary to cover future warranty obligations for products sold during
the year. The Company also provides for specific warranty obligations as
necessary and appropriate.
F-28
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
Effective October 1, 1992, the Company adopted Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes." The
adoption of SFAS 109 changed the Company's method of accounting for income taxes
from the deferred method (APB No. 11) to an asset and liability approach. The
asset and liability approach requires that deferred income taxes be provided for
temporary differences between the income tax bases of assets and liabilities,
and their carrying amounts for financial reporting purposes.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company records all financial instruments, including cash and cash
equivalents, accounts receivable, accounts payable, other accruals and notes
payable, at cost which approximates fair value.
REPORTING PERIODS
The Company's fiscal year ends on September 30 of each year. Fiscal year
1995 represents the period from October 1, 1994 through August 16, 1995 (the
date immediately preceding the merger described in Note 1).
EARNINGS PER SHARE INFORMATION
Given the historical organization and capital structure of the Company,
earnings per share information is not considered meaningful or relevant and has
not been presented in the accompanying financial statements or the notes
thereto.
UNAUDITED INFORMATION
The accompanying income statement and cash flow data for the period October
1, 1994 to June 30, 1995 and the quarterly income statement data (Note 15) are
unaudited. However, in the opinion of management, such information has been
prepared on a basis consistent with the audited financial statements and
includes all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the results of operations presented. The
quarterly results are not necessarily indicative of results for any future
period.
F-29
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (CONTINUED)
3. FINANCING
Long-term debt consists of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1994
-------------
<S> <C>
UNSUBORDINATED DEBT:
REVOLVING LINE OF CREDIT--demand note, interest due monthly at the bank's prime
rate plus 1.15%- 2.15% based on components of the borrowing base (8.75% to
9.75% per annum at September 30, 1994), secured by certain accounts
receivable and inventories................................................... $ 7,335
INSTALLMENT NOTES PAYABLE--principal in the aggregate of $54, plus interest,
due in monthly installments as defined in the notes; secured by certain
machinery, equipment, and real estate........................................ 2,267
SUBORDINATED DEBT:
CONVERTIBLE NOTE PAYABLE--principal due August 9, 1995; interest due quarterly
at 15% per annum; converted to common stock on August 9, 1995................ 250
CONVERTIBLE NOTE PAYABLE--principal due August 9, 1995; interest due quarterly
at 15% per annum; converted to common stock on August 9, 1995................ 750
NOTE PAYABLE--remainder due in 4 equal annual installments commencing November,
1994, interest due quarterly at 9% per annum................................. 1,200
NOTE PAYABLE--remainder due in 4 equal annual installments commencing June,
1995, due quarterly at 11 3/8% per annum..................................... 600
-------------
12,402
Less--Current portion of long-term debt........................................ 9,436
-------------
$ 2,966
-------------
-------------
</TABLE>
The Company maintained a Loan and Security Agreement with a bank which
provided for a revolving line of credit facility and installment notes. The
revolving line of credit facility provided for borrowings of up to the lesser of
$12,000 or a borrowing base formula defined as, 85% of eligible receivables plus
the lesser of (a) $5,500, or (b) 70% of qualified finished goods inventory plus
50% of qualified raw materials, components and service parts inventory as
defined in the agreement. Borrowings under this line of credit were evidenced by
demand instruments and bore interest at the bank's prime rate plus 1.15% except
for advances based upon amounts due from customers with installment payment or
consignment like terms, which bore interest at the bank's prime rate plus 2.15%
(no such advances were outstanding at September 30, 1994). Amounts outstanding
thereunder totaled $7,335 at September 30, 1994. The Company had $187 in
outstanding letters of credit at September 30, 1994.
Effective April 4, 1995, the Company entered into three amended and restated
installment notes payable in the amounts of $1,400, $1,530, and $270 which
replaced the existing installment notes. With respect to the $1,530 note
described above, $600 of such note will not be funded until certain requirements
have been met related to the Company's expansion at its facility in Port
Washington, Wisconsin. The amended and restated notes bore interest at the
bank's prime rate plus 1.15% and were due in equal
F-30
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (CONTINUED)
3. FINANCING (CONTINUED)
monthly principal payments of $93, $64, and $11, respectively, which commenced
May 1, 1995. Effective July 10, 1995, the Company entered into a fourth
installment note payable in the amount of $574 under the Loan and Security
Agreement. This note also bore interest at the bank's prime rate plus 1.15% and
was due in equal monthly principal payments of $10, which commenced August 1,
1995.
The Company's borrowing agreements contained restrictions and requirements,
including limitations on capital expenditures, new indebtedness, achievement of
certain earning levels, maintenance of working capital amounts, and limitations
on dividend payments, among others.
Under the terms of the convertible notes payable agreements, such debt
effectively was converted to common stock of the Company prior to August 16,
1995. See Note 8 for further discussion. All remaining outstanding debt was
repaid on August 16, 1995 as a part of the acquisition described in Note 1 with
the proceeds of new borrowings.
Maturities of long-term debt for each of the fiscal years subsequent to
September 30, 1994 under terms in existence at September 30, 1994 (as noted
above, all outstanding debt was repaid on August 16, 1995 in connection with the
acquisition described in Note 1).
<TABLE>
<S> <C>
1995............................................................... $ 9,436
1996............................................................... 1,101
1997............................................................... 1,101
1998............................................................... 764
---------
$ 12,402
---------
---------
</TABLE>
4. LEASE COMMITMENTS
The Company leases certain of its equipment and automobiles under
noncancelable lease agreements. These leases have been accounted for as
operating leases.
Minimum lease payments under long-term operating leases in effect at August
16, 1995 are as follows:
<TABLE>
<S> <C>
1996............................................................... $ 298
1997............................................................... 95
1998............................................................... 24
---------
Total minimum lease payments....................................... $ 417
---------
---------
</TABLE>
Rent expense under all operating leases for the periods ended September 30,
1994 and August 16, 1995 was approximately $318 and $301, respectively.
F-31
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (CONTINUED)
5. INCOME TAXES
The provision for income taxes is summarized as follows for the periods
ended:
<TABLE>
<CAPTION>
SEPTEMBER 30, AUGUST 16,
1994 1995
--------------- -----------
<S> <C> <C>
Current tax expense:
Federal.............................................................................. $ 565 $ 2,056
State................................................................................ 172 374
----- -----------
Total current...................................................................... 737 2,430
----- -----------
Deferred tax expense (benefit):
Federal.............................................................................. 111 (703)
State................................................................................ 28 (132)
----- -----------
Total deferred..................................................................... 139 (835)
----- -----------
Provision for income taxes............................................................. $ 876 $ 1,595
----- -----------
----- -----------
</TABLE>
Deferred taxes are comprised of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1994
---------------
<S> <C>
Deferred tax assets:
Accruals and other reserves.................................................. $ 706
Inventories.................................................................. 276
Other........................................................................ 86
-----
Gross deferred tax assets.................................................. 1,068
-----
Deferred tax liabilities:
Property, plant and equipment................................................ 552
Other........................................................................ 78
-----
Gross deferred tax liabilities................................................. 630
-----
Net deferred tax asset......................................................... $ 438
-----
-----
Current deferred tax asset..................................................... $ 877
Long-term deferred tax liability............................................... (439)
-----
Net deferred tax asset......................................................... $ 438
-----
-----
</TABLE>
F-32
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (CONTINUED)
5. INCOME TAXES (CONTINUED)
The income tax provision differs from the amount of expense determined by
applying the applicable U.S. statutory federal income tax rate to pre-tax
results as a result of the following differences for the periods ended:
<TABLE>
<CAPTION>
SEPTEMBER 30, AUGUST 16,
1994 1995
----------------- -------------
<S> <C> <C>
Statutory rate......................................................................... 34.0% 34.0%
Non-temporary differences:
State tax provision, net............................................................. 6.0 3.7
Other................................................................................ (0.2) 3.4
--- ---
Total provision.................................................................... 39.8% 41.1%
--- ---
--- ---
</TABLE>
6. RETIREMENT PLANS
The Company offers all full-time non-union employees who have completed six
months of service a retirement savings plan under Section 401(k) of the Internal
Revenue Code. The Company also offers all union employees who have completed 30
days of service a retirement savings plan under Section 401(k) of the Internal
Revenue Code. On December 13, 1994, the Board of Directors approved a
non-elective Company contribution of 1% of the compensation paid during fiscal
1994 to each active participant (union and non-union) who was employed by the
Company as of August 31, 1994. For the periods ended September 30, 1994 and
August 16, 1995, Company contributions totaled $726 and $822, respectively.
7. CLASS B MANDATORILY REDEEMABLE PREFERRED STOCK
The mandatorily redeemable preferred stock carries a 6% cumulative dividend
rate, payable quarterly based upon the liquidation value of such stock.
Liquidation value is defined as $1,000 per share plus any dividends in arrears.
Under the original terms of the Class B mandatorily redeemable preferred
stock, the Company is required to redeem all Class B preferred shares at October
31, 1995 at a price per share equal to the liquidation value plus twenty percent
of the Company's cumulative net income divided by 3,000. The Company is
accreting these shares to their currently estimated redemption price, using the
effective interest method over the period to the date of redemption. For the
periods ended September 30, 1994 and August 16, 1995, such accretion charged to
retained earnings approximated $262 and $530, respectively. The holder of this
preferred stock is also entitled to convert, at any time, each share into 1.829
shares of common stock. The holder of the Class B preferred stock is entitled to
one vote per common share which would be issuable upon conversion of the
preferred stock. The Company may force conversion at the time of a public
offering by the Company of its common stock. The Class B mandatorily redeemable
preferred stock has priority over Class A preferred stock and common stock upon
liquidation of the Company, to the extent of liquidation value. In addition,
Class B mandatorily redeemable preferred stock has preference over Class C
convertible redeemable preferred stock, up to an amount equal to 63% of the
liquidation value of the outstanding Class B shares.
The Company had reserved 5,487 shares of common stock for issuance upon
conversion. The mandatorily redeemable preferred stock was settled in connection
with the merger described in Note 1.
F-33
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (CONTINUED)
8. SHAREHOLDERS' EQUITY
CLASS A PREFERRED STOCK--The holders of this preferred stock are entitled to
convert, at any time, their shares into shares of common stock on a one-for-one
basis. The Company may force conversion at the time of a public offering by the
Company of its common stock. The Class A preferred stock has priority over
common stock upon liquidation of the Company, to the extent of liquidation
value. Each share of Class A preferred stock is entitled to one vote.
The Company had reserved 1,408 shares of common stock for issuance upon
conversion.
CLASS C CONVERTIBLE PREFERRED STOCK--The convertible preferred stock carries
a 6% cumulative dividend rate, payable quarterly based upon the liquidation
value of the stock. Liquidation value is defined as $1,000 per share plus any
dividends in arrears.
The holders of the Class C preferred stock are entitled to convert at any
time prior to September 15, 1995, each share into 1.11 shares of common stock.
The holder of this Class C preferred stock is entitled to one vote per common
share which would be issuable upon conversion of the preferred stock. On or
after September 15, 1995, the Company has the option to redeem the Class C
preferred shares, in whole or in part, at a price per share equal to the
liquidation value. The Class C convertible preferred stock has priority over
Class A preferred stock and common stock upon liquidation of the Company, to the
extent of liquidation value.
The Company had reserved 1,234 shares of common stock for issuance upon
conversion.
COMMON STOCK--Each share of common stock is entitled to one vote. On August
9, 1995, the Company's convertible notes payable were converted to 1,110 shares
of Common Stock.
ADDITIONAL PAID-IN CAPITAL--On August 9, 1995, the Company's convertible
notes payable were converted, based on the terms of their respective agreements,
at $900 per share into 1,110 shares of common stock and $997 of additional
paid-in capital.
TREASURY STOCK--During the period ended September 30, 1994, the Company
repurchased 5 shares of its Class A preferred stock for cash and took receipt of
100 shares of its Class A preferred stock in exchange for forgiveness of
outstanding past due receivable amounts from a customer.
STOCK WARRANTS--The holders of the convertible subordinated notes
outstanding at September 30, 1994 (see Note 3) also hold warrants to purchase an
aggregate total of 320 shares of the Company's common stock at a price of $940
per share. These warrants are exercisable any time and expire on the earlier of
a) the date no further amounts remain outstanding under the convertible
subordinated notes payable or b) the closing of a registered offering of Company
common stock.
STOCK OPTIONS--Certain of the Company's officers have been granted options
to purchase an aggregate total of 600 shares of the Company's common stock at a
price between $750 and $940 per share as set forth in the respective common
stock option agreements. These options are exercisable immediately and terminate
between 2001 and 2003.
At September 30, 1994, no options were exercised.
All the above described preferred stock, stock warrants and stock options
were settled in connection with the merger described in Note 1.
F-34
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (CONTINUED)
9. POSTRETIREMENT BENEFITS
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 106, "Employer's Accounting for Postretirement Benefits Other Than
Pensions" (OPEB or SFAS 106) at October 1, 1994. This standard requires
recognition of the cost of providing postretirement benefits during an
employee's period of service.
The Company provides health care and life insurance benefits for certain
employees who retired prior to November 13, 1987 (less than 100 retirees at
September 30, 1994). Management plans to fund the premiums as incurred, net of
reimbursements received by plan participants.
In the period ended August 16, 1995, the Company recorded a $408 accrued
postretirement benefit obligation, which represents a change in accounting
principle. There are no plan assets. For measurement purposes, a 10.5% annual
rate of increase in health care premiums was assumed for 1995; this rate was
assumed to decrease 1% per year to 5.5% in 2000 and remain at that level
thereafter. The weighted average discount rate used to determine the accumulated
postretirement benefit obligation was 7.5% at August 16, 1995. The obligation
was calculated utilizing the 1983 group annuity mortality tables for males and
females. The annual periodic postretirement benefit cost for the plan year
beginning July 1, 1995 will approximate $29.
10. RELATED PARTIES
Several of the Company's shareholders are dealers in the Company's
equipment. Sales of equipment to these dealers approximated $13,672 and $17,303
for the periods ended September 30, 1994 and August 16, 1995, respectively. One
of the Company's shareholders supplies inventory to the Company. Purchases of
inventory from this shareholder amounted to $2,479 and $4,166 for the periods
ended September 30, 1994 and August 16, 1995, respectively. Management believes
these transactions to be at arms-length.
The Company had trade receivables from related parties of $2,235 at
September 30, 1994. The Company also had trade payables to related parties of
$294 at September 30, 1994.
The holders of the Company's convertible notes payable described in Note 3
also own the Company's Class B mandatorily redeemable preferred stock and hold
stock warrants. The holders of the Company's other subordinated notes payable
own the Company's Class C preferred stock.
See also discussion of other noncurrent assets in Note 2.
11. CUSTOMER FINANCING ARRANGEMENTS
The Company has financing arrangements with certain third-party financing
institutions to facilitate dealer purchases of equipment under a floor plan
arrangement. The Company is obligated to repurchase the outstanding loan balance
of a dealer in the event of default by the dealer which is not cured by such
dealer within a 90 day period. A security interest in the equipment financed is
maintained by the finance companies. Aggregate outstanding loan balances under
these agreements at September 30, 1994 approximated $22,390. Aggregate losses
under one of the arrangements for calendar year 1995 are limited to 25% of the
outstanding loan balance at December 31, 1994. The outstanding loan balance at
December 31, 1994 under this arrangement approximated $24,841.
F-35
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (CONTINUED)
11. CUSTOMER FINANCING ARRANGEMENTS (CONTINUED)
The Company maintains a reserve for potential repurchases of loans in
default under the floor plan arrangements described above. This reserve is
included in other current liabilities and totaled approximately $47 and $177 at
September 30, 1994 and August 16, 1995, respectively. The related provision
charged to operations totaled approximately $148 and $151 for the periods ended
September 30, 1994 and August 16, 1995, respectively.
In conjunction with these floor plan arrangements the Company incurs
dealer-related finance charges at varying rates up to a maximum of six months.
The finance charges incurred by the Company for the periods ended September 30,
1994 and August 16, 1995 for all outstanding customer financing arrangements
totaled $864 and $1,320, respectively.
12. CONCENTRATIONS OF CREDIT
The Company principally sells its products through a distribution network
and performs ongoing credit evaluations of its dealers and distributors. The
Company maintains reserves for potential credit losses and historically such
losses have been within management's expectations. At September 30, 1994 the
Company's five largest dealers and distributors represented approximately 21% of
trade receivables. In addition, sales to such dealers and distributors for the
periods ended September 30, 1994 and August 16, 1995 approximated 23% and 22%,
respectively, of the Company's net sales.
13. CONTINGENCIES
The Company is included 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.
F-36
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (CONTINUED)
14. SUPPLEMENTAL BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
SEPTEMBER 30, 1994
------------------
<S> <C>
ACCOUNTS RECEIVABLE, NET:
Trade receivables....................................................... $ 10,385
Less allowance for doubtful accounts.................................... (162)
Other receivables....................................................... 137
-------
$ 10,360
-------
-------
INVENTORIES:
Finished goods.......................................................... $ 4,267
Work in process......................................................... 1,751
Raw materials........................................................... 2,686
-------
$ 8,704
-------
-------
PREPAID EXPENSES AND OTHER CURRENT ASSETS:
Deferred income taxes................................................... $ 877
Other................................................................... 466
-------
$ 1,343
-------
-------
PROPERTY, PLANT AND EQUIPMENT, NET:
Machinery and equipment................................................. $ 5,775
Buildings and building improvements..................................... 3,095
Land and land improvements.............................................. 263
Construction in progress................................................ 201
-------
Total property, plant and equipment, at cost............................ 9,334
Less: accumulated depreciation.......................................... (3,137)
-------
$ 6,197
-------
-------
ACCRUED LIABILITIES:
Accrued employee compensation and benefits, including taxes............. $ 880
Accrued warranty........................................................ 638
Accrued compensation.................................................... 389
Product liability reserves.............................................. 264
Other................................................................... 448
-------
$ 2,619
-------
-------
</TABLE>
F-37
<PAGE>
TRAK INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (CONTINUED)
15. QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for fiscal 1994 and 1995 appears below:
<TABLE>
<CAPTION>
NET INCOME (LOSS)
NET SALES GROSS PROFIT
-------------------- -------------------- --------------------
1994 1995(1) 1994 1995(1) 1994 1995(1)
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
First quarter................................ $ 10,210 $ 17,821 $ 1,692 $ 4,223 $ (888) $ 38(2)
Second quarter............................... 15,628 22,914 3,606 5,288 876 867
Third quarter................................ 18,676 24,229 4,599 5,671 758 850
Fourth quarter............................... 16,459 10,437 3,868 2,512 579 533
--------- --------- --------- --------- --------- ---------
$ 60,973 $ 75,401 $ 13,765 $ 17,694 $ 1,325 $ 2,288
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
- ------------------------
(1) Amounts are for the period from October 1, 1994 through August 16, 1995, the
period preceding the acquisition described in Note 1.
(2) In October 1994, TRAK adopted Statement of Financial Accounting Standards
No. 106, "Employer's Accounting for Postretirement Benefits Other Than
Pensions" (SFAS 106). The cumulative effect of adopting SFAS 106 was to
record a charge of $408, less applicable income tax benefits of $167.
F-38
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Omniquip International, Inc.
In our opinion, the accompanying balance sheet and related statements of
income, of changes in stockholders' equity and of cash flows present fairly, in
all material respects, the financial position of Lull Industries, Inc. at
December 31, 1995 and August 15, 1996, and the results of its operations and its
cash flows for the fiscal years ended December 31, 1994 and 1995, and for the
period January 1, 1996 through August 15, 1996, respectively, in conformity with
generally accepted accounting principles. 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 of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As explained in Note 1, effective August 15, 1996, Omniquip International,
Inc. purchased substantially all of the assets and assumed certain liabilities
of Lull Industries, Inc.
Price Waterhouse LLP
St. Louis, Missouri
November 1, 1996
F-39
<PAGE>
LULL INDUSTRIES, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER
31, AUGUST 15,
1995 1996
----------- -----------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
ASSETS
Current assets:
Cash.............................................................. $ 520 $ 3,959
Accounts receivable, net.......................................... 5,106 6,231
Inventories....................................................... 10,422 11,762
Rental equipment, less accumulated depreciation of $52 and $0,
respectively.................................................... 997
Prepaid expenses and other current assets......................... 147 121
----------- -----------
Total current assets.......................................... 17,192 22,073
Property, plant and equipment, net.................................. 6,350 7,051
Other assets, net................................................... 541 514
----------- -----------
$ 24,083 $ 29,638
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt................................. $ 986 $ 79
Current portion of long-term debt-related party................... 500 500
Accounts payable.................................................. 4,255 7,667
Accrued liabilities............................................... 7,107 12,338
----------- -----------
Total current liabilities..................................... 12,848 20,584
Long-term debt...................................................... 898 851
Long-term debt-related parties...................................... 3,000 3,000
----------- -----------
Total liabilities............................................. 16,746 24,435
----------- -----------
Commitments and contingencies (Notes 4 and 9)
Stockholders' equity:
Class A voting common stock; no par value, stated at $100 per share;
authorized 1,000,000 shares; issued 21,400 and 23,150 shares,
respectively........................................................ 2,140 2,315
Class B nonvoting common stock; authorized 1,000,000 shares; no shares
issued..............................................................
Additional paid-in capital............................................ 238 728
Retained earnings..................................................... 5,040 2,398
----------- -----------
7,418 5,441
Less notes receivable from stockholders (Note 5)...................... (81) (238)
----------- -----------
Total stockholders' equity............................................ 7,337 5,203
----------- -----------
$ 24,083 $ 29,638
----------- -----------
----------- -----------
</TABLE>
See accompanying Notes to Financial Statements.
F-40
<PAGE>
LULL INDUSTRIES, INC.
STATEMENT OF INCOME
<TABLE>
<CAPTION>
FOR THE
PERIOD
FOR THE FISCAL YEAR JANUARY 1,
ENDED 1996 FOR THE SIX
DECEMBER 31, THROUGH MONTHS
-------------------- AUGUST 15, ENDED
1994 1995 1996 JUNE 30, 1995
--------- --------- ------------- ---------------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C> <C>
Net sales.................................... $ 45,838 $ 74,747 $ 61,898 $ 35,220
Cost of sales................................ 37,669 59,318 49,212 27,468
--------- --------- ------------- -------
Gross profit................................. 8,169 15,429 12,686 7,752
Selling, general and administrative
expenses................................... 3,565 5,987 4,823 2,593
Boom warranty charge (Note 4)................ 2,881
Stock compensation expense (Note 5).......... 234 504 750 252
--------- --------- ------------- -------
Operating income............................. 4,370 6,057 7,113 4,907
Other (income) expense:
Interest expense, net...................... 169 86 110 36
Interest expense-related parties........... 240 243 176 120
Other, net................................. 510 (424) (256) (48)
--------- --------- ------------- -------
Net income................................... $ 3,451 $ 6,152 $ 7,083 $ 4,799
--------- --------- ------------- -------
--------- --------- ------------- -------
</TABLE>
See accompanying Notes to Financial Statements.
F-41
<PAGE>
LULL INDUSTRIES, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE FISCAL YEARS ENDED DECEMBER 31, 1994 AND
DECEMBER 31, 1995 AND FOR THE PERIOD JANUARY 1, 1996 THROUGH AUGUST 15, 1996
<TABLE>
<CAPTION>
COMMON SHARES
OUTSTANDING RETAINED NOTES
--------------- ADDITIONAL EARNINGS RECEIVABLE
CLASS A CLASS A PAID-IN (ACCUMULATED FROM
VOTING VOTING CAPITAL DEFICIT) SHAREHOLDERS TOTAL
--------------- --------- ----------- ------------- ------------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994............ 20 $ 2,000 $ -- $ (386) $ -- $ 1,614
Net income........................ 3,451 3,451
Distribution to stockholders...... -- -- -- (392) -- (392)
------ --------- ----- ------ ----- ---------
Balance, December 31, 1994.......... 20 2,000 -- 2,673 -- 4,673
Net income........................ 6,152 6,152
Distribution to stockholders...... (3,716) (3,716)
Exercise of employee stock options
(Note 5)........................ 1 140 238
Interest on stockholder notes
receivable...................... (6) (6)
Distributions to stockholders
applied to notes receivable..... -- -- -- (69) 69 --
------ --------- ----- ------ ----- ---------
Balance, December 31, 1995.......... 21 2,140 238 5,040 (81) 7,337
Net income........................ 7,083 7,083
Distribution to stockholders...... (9,697) (9,697)
Exercise of employee stock options
(Note 5)........................ 2 175 490 -- (180) 485
Interest on stockholder notes
receivable...................... (5) (5)
Distributions to stockholders
applied to notes receivable..... (28) 28
------ --------- ----- ------ ----- ---------
Balance, August 15, 1996............ 23 $ 2,315 $ 728 $ 2,398 $ (238) $ 5,203
------ --------- ----- ------ ----- ---------
------ --------- ----- ------ ----- ---------
</TABLE>
See accompanying Notes to Financial Statements.
F-42
<PAGE>
LULL INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS
ENDED FOR THE PERIOD
DECEMBER 31, JANUARY 1, 1996 FOR THE SIX
-------------------- THROUGH MONTHS ENDED
1994 1995 AUGUST 15, 1996 JUNE 30, 1995
--------- --------- ----------------- ---------------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income...................................................... $ 3,451 $ 6,152 $ 7,083 $ 4,799
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization................................. 504 627 493 217
Interest on stockholder notes receivable...................... (6) (5) --
Donations of equipment (Note 10).............................. 432
(Increase) decrease in current assets:
Accounts receivable, net.................................... (590) (2,810) (1,124) (2,313)
Inventories................................................. (1,908) (5,494) (1,340) (2,392)
Prepaid expenses and other current assets................... 63 (33) 26 (111)
Rental equipment............................................ (339) (657) 852 339
Increase (decrease) in current liabilities:
Accounts payable............................................ 2,723 1,106 3,412 1,339
Accrued liabilities......................................... 492 5,388 (83) (67)
--------- --------- ------ ------
Net cash provided by operating activities................. 4,828 4,273 9,314 1,811
--------- --------- ------ ------
Cash flows from investing activities:
Capital expenditures, net....................................... (2,670) (2,191) (1,023) (914)
Purchase of Mahto Industries, Inc. (Note 11).................... -- (500) -- (500)
--------- --------- ------ ------
Net cash used in investing activities..................... (2,670) (2,691) (1,023) (1,414)
--------- --------- ------ ------
Cash flows from financing activities:
Distributions to stockholders................................... (392) (3,716) (3,897) (2,682)
Net proceeds (payments) on debt under
revolving credit facility..................................... (2,905) (100) -- 2,500
Proceeds from long-term debt.................................... 1,994 250
Principal payments on long-term debt............................ (110) (955) (103)
Borrowings from stockholders.................................... 1,000
Principal payments on stockholder notes payable................. (500) -- -- --
--------- --------- ------ ------
Net cash used in financing activities..................... (2,797) (1,932) (4,852) (35)
--------- --------- ------ ------
Net increase (decrease) in cash........................... (639) (350) 3,439 362
Cash at beginning of period....................................... 1,509 870 520 870
--------- --------- ------ ------
Cash at end of period............................................. $ 870 $ 520 $ 3,959 $ 1,232
--------- --------- ------ ------
--------- --------- ------ ------
</TABLE>
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS
ENDED FOR THE PERIOD
DECEMBER 31, JANUARY 1,
-------------------- 1996 THROUGH
1994 1995 AUGUST 15, 1996
--------- --------- -----------------
(IN THOUSANDS)
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash payments for interest............................... $ 446 $ 370 $ 218
--------- --------- ------
--------- --------- ------
Supplemental schedule of noncash investing and financing
activities:
Stockholder notes receivable issued for stock.......... $ -- $ 144 $ 180
--------- --------- ------
--------- --------- ------
Compensation expense recorded as additional paid-in
capital on stock issuance............................ $ -- $ 234 $ 485
--------- --------- ------
--------- --------- ------
Distributions to stockholders applied to notes
receivable........................................... $ -- $ 69 $ 28
--------- --------- ------
--------- --------- ------
Dividends declared but not paid........................ $ -- $ -- $ 5,800
--------- --------- ------
--------- --------- ------
</TABLE>
See accompanying Notes to Financial Statements.
F-43
<PAGE>
LULL INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
1. ACQUISITION OF THE COMPANY'S ASSETS AND ASSUMPTION OF CERTAIN LIABILITIES
On August 15, 1996, Omniquip International, Inc. (Omniquip) purchased
substantially all of the assets of Lull Industries, Inc. (the Company),
excluding cash, certain accounts receivable and rental equipment, and assumed
certain liabilities of the Company. The purchase price paid to the Company for
the assets totaled approximately $69,000, subject to certain adjustments, and
assumed liabilities totaled approximately $14,600. The acquisition was financed
through additional borrowings. In conjunction with the purchase of substantially
all of the assets and assumption of certain liabilities of the Company by
Omniquip, the Company's board of directors initiated and approved changes to the
Company's stock option plan, declared a special dividend and approved a special
payment related to the negotiation of the asset acquisition. The accompanying
financial statements have been prepared on a preacquisition basis of accounting
and do not reflect the effects of the acquisition of the net assets of the
Company by Omniquip International, Inc. and the related transactions described
in the preceding sentence.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies utilized by the Company require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual amounts could differ
from these estimates. The significant accounting policies followed by the
Company are described below and are in conformity with generally accepted
accounting principles.
BUSINESS
The Company commenced full-time operations effective January 1, 1994 after
purchasing the assets of a predecessor business out of bankruptcy in November
1993, and after the completion of a plant and equipment reorganization in
November and December 1993. As a result thereof, a statement of operations for
the period November 1993 through December 31, 1993 is not presented in the
financial statements. The accumulated deficit at December 31, 1993 of ($386)
reflects the net start-up costs of the Company. The acquisition in November 1993
was accounted for under the purchase method of accounting and the purchase price
of approximately $7,000 was assigned to the net assets acquired based on their
fair market value at the acquisition date.
The Company is principally engaged in the manufacture and sale of rough
terrain telescopic material handlers to customers in the United States with a
primary focus on national rental fleets.
REVENUE RECOGNITION
Revenue is recognized upon shipment to the customer. Costs and related
expenses to manufacture the products are recorded as costs of sales when the
related revenue is recognized.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
highly liquid investments with an original maturity of three months or less to
be cash equivalents. The Company maintains its cash in bank deposit accounts
which may at times exceed federally insured limits. The Company has not
experienced any losses due to exceeding these limits.
F-44
<PAGE>
LULL INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RELATIONSHIPS WITH SUPPLIERS
The Company purchases several of its key component parts primarily from
specific suppliers. The Company believes that the supply of these components and
the number of alternative suppliers are adequate.
INVENTORIES
Inventories are stated at the lower of cost, determined using the first-in,
first-out (FIFO) method, or market. Obsolete, excess or unsaleable inventories
are reflected at their estimated realizable values.
RENTAL EQUIPMENT
Rental equipment consists of machines leased to the Company's largest
customer based on agreements which have expired in 1996. The rental equipment
had been depreciated on a straight-line basis over the estimated life of the
equipment. In 1996, these machines were sold to the customer, with gross profit
of $232 recognized for the excess of the sales price of $1,084 over the carrying
value of the machines.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recorded at cost and is depreciated using
the straight-line method over the estimated useful lives of the assets which
range from five to thirty-nine years.
Expenditures for repairs, maintenance and minor renewals are charged to
income as incurred. Expenditures which improve an asset or extend its estimated
useful life are capitalized. When properties are retired or otherwise disposed
of, the related cost and accumulated depreciation are removed from the accounts
and any gain or loss is included in income.
WARRANTY COSTS
The Company provides, by a current charge to income, an amount it estimates
will be necessary to cover future warranty obligations for products sold during
the year. As further discussed in Note 4, the Company also provides for specific
warranty obligations as necessary and appropriate.
CUSTOMER REBATES
The Company offers its customers the opportunity to earn rebates based upon
volume of sales during the fiscal year. The Company provides, by a current
charge to income, an amount it estimates will ultimately be paid as rebates to
those customers based upon current sales levels and anticipated sales trends.
INCOME TAXES
The Company has elected to be taxed as a subchapter S Corporation under
sections of the federal and state income tax laws which provide that, in lieu of
corporate income taxes, the Company's stockholders include in their individual
income tax returns their pro rata share of the Corporation's taxable income.
Therefore, these statements do not include any provision for corporate income
taxes.
F-45
<PAGE>
LULL INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company records all financial instruments, including cash and cash
equivalents, accounts receivable, accounts payable, other accruals and notes
payable, at cost which approximates fair value.
FISCAL YEAR
The Company's fiscal year end is December 31.
EARNINGS PER SHARE INFORMATION
Given the historical organization and capital structure of the Company,
earnings per share information is not considered meaningful or relevant and has
not been presented in the accompanying financial statements or the notes
thereto.
UNAUDITED INFORMATION
The income statement and cash flow data for the six months ended June 30,
1995 are unaudited. However, in the opinion of management, such information has
been prepared on a basis consistent with the audited financial statements and
includes all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the results of operations presented.
F-46
<PAGE>
LULL INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
3. FINANCING
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, AUGUST 15,
1995 1996
------------- -----------
<S> <C> <C>
Stockholder note payable--principal due November 23, 1998; interest due annually at 8%;
subordinated to bank debt; secured by all assets of the Company...................... $ 3,000 $ 3,000
Stockholder note payable--principal due January 31, 1996 and in arrears; interest due
monthly at the prime rate plus .5% (8.75% at August 15, 1996); secured by land and
buildings............................................................................ 500 500
Term note payable to City of Eagan, MN--principal plus interest at 4% due in monthly
installments of $2,531 with a final payment due in April 2005; secured by certain
equipment and personal guarantees of the Company's stockholders...................... 236 222
Term notes payable to financing company--principal plus interest at 9.5% due in monthly
installments of $87,205, with the final payment made in August 1996; secured by
certain rental equipment............................................................. 915
Mortgage note payable to bank--principal due in monthly installments of $4,167, plus
interest at the prime rate (8.25% at August 15, 1996), through August 1998, with
remaining balance due September 1998; secured by building............................ 733 708
Revolving credit agreement............................................................. -- --
------ -----------
5,384 4,430
Less--current portion of long-term debt................................................ 1,486 579
------ -----------
$ 3,898 $ 3,851
------ -----------
------ -----------
</TABLE>
The Company maintains a revolving credit agreement with a bank. This
agreement provides for borrowings of up to the lesser of $4,000 or a borrowing
base formula determined by eligible receivables and inventories. Borrowings
under this line of credit are due April 30, 1997 and bear interest at the prime
rate (8.25% at August 15, 1996). Borrowings outstanding under the agreement were
$100, $0 and $0 at December 31, 1994 and 1995, and August 15, 1996,
respectively. At August 15, 1996, the Company had unused borrowing capacity of
$4,000 under this facility. Substantially all of the Company's assets are
pledged as security under the credit agreement. In addition, the Company's two
primary stockholders have personally guaranteed any borrowings thereunder up to
$500 in total, and have pledged their shares of the Company's common stock as
collateral. The loan requires maintenance of minimum working capital, net worth,
and other financial ratios and contains other covenants limiting borrowings,
cash dividends or distributions, and equipment purchases. The Company has
obtained a waiver from the bank for any covenant violations.
Interest expense relative to stockholder notes payable approximated $240,
$243 and $176 for the fiscal years ended December 31, 1994 and 1995 and for the
period January 1, 1996 through August 15, 1996, respectively.
F-47
<PAGE>
LULL INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
3. FINANCING (CONTINUED)
Maturities of long-term debt for the period and fiscal years subsequent to
August 15, 1996 are as follows:
<TABLE>
<S> <C>
August 15--December 31, 1996........................................ $ 527
1997................................................................ 72
1998................................................................ 3,661
1999................................................................ 24
2000................................................................ 25
Thereafter.......................................................... 121
---------
$ 4,430
---------
---------
</TABLE>
All of the Company's outstanding debt was repaid in conjunction with the
purchase of the Company's assets by Omniquip, as described in Note 1.
4. BOOM WARRANTY CHARGE
During 1995, the Company determined that a specific warranty obligation had
been incurred on certain manufactured boom units. The Company completed its
initial assessment of the magnitude of the potential warranty claims and
recorded a charge to operations of $2,881 for the fiscal year ended December 31,
1995. This amount represents the Company's estimate of the total costs
associated with this warranty obligation. At December 31, 1995 and August 15,
1996, a corresponding liability of $2,881 and $2,600, respectively, is reflected
as a component of accrued liabilities in the accompanying balance sheet.
5. STOCK COMPENSATION EXPENSE
The Company has a stock option plan for certain key employees whereby the
Company granted options on January 5, 1994 to purchase 9,114 shares of the
Company's Class A common stock at exercise prices ranging from $100 to $110 per
share. Fair value of the common stock was determined by the Board of Directors
to be $100 per share at the grant date. These options are exercisable over five
years from date of grant based upon individual vesting provisions and Company
profitability. Additionally, the options contain a repurchase provision whereby
the Company may buy back the stock at some future date, based on a per share
price equal to 110% of the Company's net book value. During 1995 and 1996,
options to acquire 1,400 and 1,750 common shares, respectively, were exercised
in accordance with the terms of the agreement. Approximately $144 and $180,
respectively, in interest-bearing notes were issued to the employees to finance
the exercise of the stock options, which have carrying values of $81 and $238 at
December 31, 1995 and August 15, 1996, respectively. The options and any related
stock purchases may be canceled if income levels are not achieved over the
five-year period or in the event of termination of employment of the key
employees.
During the fiscal years ended December 31, 1994 and 1995, and in the period
January 1, 1996 through August 15, 1996, stock compensation expense in the
amount of $234, $504 and $750, respectively, has been recorded and charged to
operations in relation to this plan. Such compensation expense was determined
based on the difference between the exercise price at the date of grant and the
formula price to be paid by the Company upon repurchase.
F-48
<PAGE>
LULL INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
6. RETIREMENT PLANS
Effective August 1, 1995, the Company adopted a 401(k) profit sharing plan
which covers substantially all eligible employees who meet certain service and
age requirements. Commencing January 1, 1996, the Company has provided a
matching contribution equal to 100% of each eligible participant's contributions
to the plan at a rate of between 1% and 5% of the employee's salary, depending
on the employee's years of service, as defined. In addition, the Company may
make discretionary contributions to the plan. During the period January 1, 1996
through August 15, 1996, the Company contributed $66 to the plan.
7. CUSTOMER FINANCING ARRANGEMENTS
The Company is a party to a retail finance agreement with a financing
company, which provides the Company's distributors with financing for equipment
purchases from the Company. The financing company has also agreed to provide
financing for distributors' purchases of Company-produced equipment used as
rental inventory by the distributors. Such contracts are arranged on an
instalment 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, the Company 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 December 31, 1995 and August 15, 1996 were approximately $2,600 and $10,887,
respectively. This contingency would be reduced by proceeds from the sales of
related equipment. Management believes that any such liability under this
arrangement, if incurred, would not have a material impact on the results of
operations or financial condition of the Company.
8. CONCENTRATIONS OF CREDIT
Sales are made throughout the United States primarily on credit terms
established on an individual customer basis. The Company performs ongoing credit
evaluations of its customers. The Company maintains reserves for potential
credit losses and historically such losses have been within management's
expectations. Sales to the Company's five largest customers during the fiscal
years ended December 31, 1994 and 1995 and the period January 1, 1996 through
August 15, 1996 were 49%, 48% and 42% of net sales, respectively. Receivables
from these customers approximated 13% and 43% of trade accounts receivable at
December 31, 1995 and August 15, 1996, respectively.
9. CONTINGENCIES
The Company is included 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.
10. DONATIONS OF EQUIPMENT
The Company donated certain equipment with a net book value of $432 to
various nonprofit organizations in 1994. These items were originally acquired by
the Company in 1993 in connection with the acquisition and formation of the
business. This type of donation is not expected to occur in the future and
accordingly, management has classified the associated expense as nonoperating.
F-49
<PAGE>
LULL INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
11. ACQUISITION OF MAHTO INDUSTRIES, INC.
In April 1995, the Company purchased the inventory and production equipment
of Mahto Industries, Inc., a manufacturer of light-duty construction equipment
for $500. The acquisition has been accounted for as a purchase, and results of
operations since the date of acquisition are included in the statement of
income. The fair value of the net assets acquired exceeded the purchase price by
approximately $200, which was applied to reduce the carrying value of the
production equipment. The pro forma impact of this acquisition on the Company's
operating results was immaterial.
12. SUPPLEMENTAL BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
AUGUST
DECEMBER 31, 15,
1995 1996
------------ ---------
<S> <C> <C>
ACCOUNTS RECEIVABLE, NET:
Trade receivables...................................................................... $ 4,906 $ 6,378
Less allowance for doubtful accounts................................................... (100) (149)
Other receivables...................................................................... 300 7
------------ ---------
$ 5,106 $ 6,231
------------ ---------
------------ ---------
INVENTORIES:
Finished goods......................................................................... $ 1,958 $ 6,669
Work in process........................................................................ 743 1,598
Raw materials.......................................................................... 7,721 3,495
------------ ---------
$ 10,422 $ 11,762
------------ ---------
------------ ---------
PROPERTY, PLANT AND EQUIPMENT, NET:
Machinery and equipment................................................................ $ 3,451 $ 4,460
Buildings and building improvements.................................................... 2,785 2,865
Land and land improvements............................................................. 414 414
Furniture and fixtures................................................................. 796 840
------------ ---------
Total property, plant and equipment, at cost........................................... 7,446 8,579
Less: accumulated depreciation......................................................... (1,096) (1,528)
------------ ---------
$ 6,350 $ 7,051
------------ ---------
------------ ---------
ACCRUED LIABILITIES:
Accrued customer rebates............................................................... $ 2,532 $ 2,097
Accrued salaries and employee benefits................................................. 422 580
Accrued stock compensation expense..................................................... 504 769
Dividends declared and payable......................................................... -- 5,800
Accrued boom warranty.................................................................. 2,881 2,000
Other accrued warranty................................................................. 346 537
Other.................................................................................. 422 555
------------ ---------
$ 7,107 $ 12,338
------------ ---------
------------ ---------
</TABLE>
F-50
<PAGE>
[Inside back cover of Prospectus]
Photo: Omniquip's military telescopic material handlers loading onto
military transport aircraft.
Caption: "ATLAS Military Vehicles--Meeting tough demands in difficult
conditions."
Photo: SCAT TRAK brand skid steer loaders with bucket attachment and
trencher attachment.
Caption: "SCAT TRAK Skid Steer Loaders--Providing versatility for a
multitude of tasks."
<PAGE>
[Outside back cover of Prospectus]
[Omniquip Logo]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the Offering (other than the
underwriting discounts and commissions) are set forth in the following table
(all amounts except the SEC registration fee, the NASD filing fee and the NASDAQ
listing fee are estimated):
<TABLE>
<CAPTION>
PAYABLE BY
COMPANY
------------
<S> <C>
Securities and Exchange Commission registration fee............................. $ 44,607
NASD filing fee................................................................. 15,220
Accounting fees and expenses.................................................... 550,000
Legal fees and expenses......................................................... 600,000
Printing........................................................................ 300,000
NASDAQ listing fee.............................................................. 50,000
Miscellaneous................................................................... 190,173
------------
Total....................................................................... $ 1,750,000
------------
------------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware permits
the Company, subject to the standards set forth therein, to indemnify any person
in connection with any action, suit or proceeding brought or threatened by
reason of the fact that such person is or was a director, officer, employee or
agent of the Company or is or was serving as such with respect to another
corporation or entity at the request of the Company. Article VII, Section 8 of
the Company's By-laws provides for full indemnification of its officers,
directors and employees to the extent permitted by Section 145.
Pursuant to the Underwriting Agreement filed hereto as Exhibit No. 1, the
Underwriters will agree to indemnify the Company's officers, directors and
controlling persons against, or contribute to, certain liabilities which might
arise under the Securities Act of 1933, as amended.
The agreement of limited partnership of Investments L.P. provides for the
indemnification by Investments L.P. of the Company (as an affiliate of the
general partner of Investments L.P.) and its directors, officers and employees
against certain liabilities which might arise under the Securities Act of 1933,
as amended.
Pursuant to an Indemnification Agreement between the Company and the Selling
Stockholders filed as an exhibit hereto, the Company will agree to indemnify the
Selling Stockholders against certain liabilities which might arise under the
Securities Act of 1933, as amended.
Directors and officers of the Company will be insured against certain
liabilities, including liabilities arising under the Securities Act of 1993, as
amended.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following securities of the Company were sold by the Company within the
past three years without registration:
On August 16, 1995, Uniquip Corporation sold 820,000 shares of Common Stock
to Harbour Group Investments III, L.P. for $5,209,411.76 payable in cash.
II-1
<PAGE>
On August 16, 1995, Uniquip Corporation sold 100,000 shares of Common Stock
to Uniquip-HGI Associates, L.P. for $635,294.12 payable $600,000 in cash and the
balance by a promissory note.
On August 16, 1995, Uniquip Corporation sold 30,000 shares of Common Stock
to P. Enoch Stiff for $190,588.24 payable in cash.
On September 20, 1995, Uniquip Corporation sold 20,000 shares of Common
Stock to P. Enoch Stiff for $127,059 payable $200 in cash and the balance by a
promissory note.
On September 20, 1995, Uniquip Corporation sold 7,500 shares of Common Stock
to James H. Hook for $47,647 payable $75 in cash and the balance by a promissory
note.
On September 20, 1995, Uniquip Corporation sold 7,500 shares of Common Stock
to Curtis J. Laetz for $47,647 payable $75 in cash and the balance by a
promissory note.
On September 20, 1995, Uniquip Corporation sold 7,500 shares of Common Stock
to Robert D. Melin for $47,647 payable $75 in cash and the balance by a
promissory note.
On September 20, 1995, Uniquip Corporation sold 7,500 shares of Common Stock
to Paul D. Roblee for $47,647 payable $75 in cash and the balance by a
promissory note.
All such transactions were effected in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act of 1933.
On September 30, 1996, Uniquip Corporation changed its name to Omniquip
International, Inc. and effected a 10 for 1 stock split.
On February 19, 1997, Omniquip International, Inc. effected a 1.125 for 1
stock split.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<C> <S>
1 Form of Underwriting Agreement
**3.1 Restated Certificate of Incorporation of the Registrant
**3.2 Amended By-laws of the Registrant
5 Opinion of Dickstein Shapiro Morin & Oshinsky LLP re: legality of Common Stock
being registered
**10.1 Purchase and Stockholder Agreement, dated September 20, 1995, by and between
Uniquip Corporation and P. Enoch Stiff
**10.2 Stock Pledge Agreement, dated September 20, 1995, by and between P. Enoch Stiff and
Uniquip Corporation
**10.3 $126,859 Promissory Note, dated September 20, 1995, by P. Enoch Stiff to Uniquip
Corporation
**10.4 Letter Agreement, dated September 20, 1995, by and between P. Enoch Stiff and
Uniquip Corporation
**10.5 Amendment to Promissory Note and Stock Pledge Agreement, dated September 30, 1996,
by and between Omniquip International, Inc. and P. Enoch Stiff
**10.6 Investment Agreement, dated August 16, 1995, by and between P. Enoch Stiff and
Harbour Group Investments III, L.P.
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
**10.7 Participation Agreement, dated August 16, 1995, by and between P. Enoch Stiff and
Harbour Group Investments III, L.P.
**10.8 Purchase and Stockholder Agreement, dated September 20, 1995, by and between
Uniquip Corporation and James H. Hook
**10.9 Stock Pledge Agreement, dated September 20, 1995, by and between James H. Hook and
Uniquip Corporation
**10.10 $47,572 Promissory Note, dated September 20, 1995, by James H. Hook to Uniquip
Corporation
**10.11 Letter Agreement, dated September 20, 1995, by and between James H. Hook and
Uniquip Corporation
**10.12 Amendment to Promissory Note and Stock Pledge Agreement, dated September 30, 1996,
by and between Omniquip International, Inc. and James H. Hook
**10.13 Purchase and Stockholder Agreement, dated September 20, 1995, by and between
Uniquip Corporation and Curtis J. Laetz
**10.14 Stock Pledge Agreement, dated September 20, 1995, by and between Curtis J. Laetz
and Uniquip Corporation
**10.15 $47,572 Promissory Note, dated September 20, 1995, by Curtis J. Laetz to Uniquip
Corporation
**10.16 Letter Agreement, dated September 20, 1995, by and between Curtis J. Laetz and
Uniquip Corporation
**10.17 Amendment to Promissory Note and Stock Pledge Agreement, dated September 30, 1996,
by and between Omniquip International, Inc. and Curtis J. Laetz
**10.18 Purchase and Stockholder Agreement, dated September 20, 1995, by and between
Uniquip Corporation and Robert D. Melin
**10.19 Stock Pledge Agreement, dated September 20, 1995, by and between Robert D. Melin
and Uniquip Corporation
**10.20 $47,572 Promissory Note, dated September 20, 1995, by Robert D. Melin to Uniquip
Corporation
**10.21 Letter Agreement, dated September 20, 1995, by and between Robert D. Melin and
Uniquip Corporation
**10.22 Amendment to Promissory Note and Stock Pledge Agreement, dated September 30, 1996,
by and between Omniquip International, Inc. and Robert D. Melin
**10.23 Purchase and Stockholder Agreement, dated September 20, 1995, by and between
Uniquip Corporation and Paul D. Roblee
**10.24 Stock Pledge Agreement, dated September 20, 1995, by and between Paul D. Roblee and
Uniquip Corporation
**10.25 $47,572 Promissory Note, dated September 20, 1995, by Paul D. Roblee to Uniquip
Corporation
**10.26 Letter Agreement, dated September 20, 1995, by and between Paul D. Roblee and
Uniquip Corporation
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
**10.27 Amendment to Promissory Note and Stock Pledge Agreement, dated September 30, 1996,
by and between Omniquip International, Inc. and Paul D. Roblee
**10.28 Omniquip International, Inc. 1996 Executive Stock Option Plan
**10.29 Form of Option Agreement pursuant to the Omniquip International, Inc. 1996
Executive Stock Option Plan
**10.30 Omniquip International, Inc. 1996 Long-Term Incentive Plan
10.31 Omniquip International, Inc. 1996 Directors Non-Qualified Stock Option Plan
**10.32 Form of Option Agreement pursuant to the Omniquip International, Inc. 1996
Directors Non-Qualified Stock Option Plan
**10.33 Amended and Restated Subordinated Note Agreement, dated August 16, 1996, by and
between TRAK International, Inc. and Harbour Group Investments III, L.P.
**10.34 Subordinated Note Agreement, dated August 16, 1996, by and between Uniquip
Corporation and The Boatmen's National Bank of St. Louis
**10.35 Loan Agreement, dated August 16, 1996, by and among The Boatmen's National Bank of
St. Louis, as agent, The Boatmen's National Bank of St. Louis and the other lenders
named therein, as lenders, TRAK International, Inc. and Lull Lift Corporation
**10.36 Note Purchase Agreement, dated August 16, 1995, by and between TRAK International,
Inc. and The Minnesota Mutual Life Insurance Company
**10.37 First Amendment to Note Agreements, dated as of July 18, 1996, by and between TRAK
International, Inc. and The Minnesota Mutual Life Insurance Company
**10.38 Second Amendment to Note Agreements, dated August 16, 1996, by and between TRAK
International, Inc. and The Minnesota Mutual Life Insurance Company
**10.39 Insurance Agreement, dated September 27, 1996, by and between Harbour Group Ltd.
and Uniquip Corporation
**10.40 Corporate Development Consulting and Advisory Services Letter Agreement, dated
September 30, 1996, by and between Omniquip International, Inc. and Harbour Group
Industries, Inc.
**10.41 Operations Consulting and Advisory Services Letter Agreement, dated September 30,
1996, by and between Omniquip International, Inc. and Harbour Group Ltd.
10.42 Registration Rights Agreement, dated September 30, 1996, by and among Omniquip
International, Inc., Uniquip-HGI Associates, L.P. and Harbour Group Investments
III, L.P.
**10.43 Stock Option Agreement, dated September 20, 1995, by and between Uniquip
Corporation and Harbour Group Investments III, L.P.
**10.44 Termination of Option Agreement, dated September 30, 1996, by and between Omniquip
International, Inc. and Harbour Group Investments III, L.P.
**10.45 Agreement and Plan of Merger, dated July 19, 1995, by and among TRK Acquisition
Corporation, TRAK International, Inc. and the major stockholders of TRAK
International, Inc. listed therein
**10.46 Indemnification and Escrow Agreement, dated August 16, 1995, by and among TRAK
International, Inc., the stockholders of TRAK International, Inc. listed therein
and The Boatmen's Trust Company, as Escrow Agent
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S>
**10.47 Asset Purchase Agreement, dated August 15, 1996, by and among Lull Lift
Corporation, Lull Industries, Inc. and the stockholders of Lull Industries, Inc.
listed therein
**10.48 Collective Bargaining Agreement, effective from November 1, 1994 to October 31,
1998, by and between TRAK International, Inc. and Local 1430, District No. 10
International Association of Machinists and Aerospace Workers
*10.49P Contract No. DAAE07-95-D-R012 between TRAK International, Inc. and U.S. Army Tank--
Automotive Command
10.50 Floorplan Repurchase Agreement, dated October 2, 1990, by and between TRAK
International, Inc. and Deutsche Financial Services and Addendum to Floorplan
Repurchase Agreement, dated June 14, 1993, by and between TRAK International, Inc.
and Deutsche Financial Services (Deutsche Financial Services as successor to ITT
Commercial Finance Corp. and ITT Commercial Finance, a division of ITT Industries
of Canada Ltd.)
10.51 Letter Agreement, dated August 21, 1996, by and between TRAK International, Inc.
and Deutsche Financial Services
10.52 TRAK International, Inc. Deferred Compensation Arrangement for management
executives and directors
**10.53 Agreement, dated January 19, 1995, between CBM Industries, Inc., d/b/a RJ
Associates and Lull Industries, Inc.
**10.54 Industrial Park Lease, dated April 1, 1995, by and between the City of Oakes and
Lull Industries, Inc.
**10.55 Retail Finance Agreement, effective July 14, 1994, between Lull Industries, Inc.
and Deere Credit, Inc.
10.56 Form of Indemnification Agreement by and among Omniquip International, Inc.,
Harbour Group Investments III, L.P. and Uniquip-HGI Associates, L.P.
21.0 Subsidiaries of the Registrant
23.1 Consents of Price Waterhouse LLP
23.2 Consent of Dickstein Shapiro Morin & Oshinsky LLP (contained in Exhibit 5)
**23.3 Consent to serve as a director of Omniquip International, Inc. of Paul W. Jones
**23.4 Consent to serve as a director of Omniquip International, Inc. of Jerry E. Ritter
**23.5 Consent to serve as a director of Omniquip International, Inc. of Joseph F.
Shaughnessy
**23.6 Consent to serve as a director of Omniquip International, Inc. of Robert L. Virgil
**24.0 Powers of Attorney
27.0 Financial Data Schedule
</TABLE>
- ------------------------
* Filed in paper format pursuant to Rule 202 of Regulation S-T.
** Previously filed.
II-5
<PAGE>
(b) Financial Statement Schedules
Schedule VII-- Omniquip International, Inc. Valuation and Qualifying
Accounts and Reserves for the period August 17, 1995 to
September 30, 1995 and the fiscal year ended September 30,
1996.
-- TRAK International, Inc. Valuation and Qualifying Accounts and
Reserves for the period October 1, 1994 to August 16, 1995 and
the fiscal year ended September 30, 1994.
Other Financial Statement Schedules are either not applicable, or the
information is included elsewhere in the Consolidated Financial Statements.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Port Washington, State of
Wisconsin, on February 21, 1997.
OMNIQUIP INTERNATIONAL, INC.
(Registrant)
By: /s/ PHILIP G. FRANKLIN
-----------------------------------
Philip G. Franklin
VICE PRESIDENT--FINANCE AND
CHIEF FINANCIAL OFFICER
Pursuant to the Securities Act of 1933, this registration statement has been
signed by the following persons in the capacities indicated on February 21,
1997.
<TABLE>
<C> <S>
* President, Chief Executive Officer and
- ------------------------------------------- Director
P. Enoch Stiff (Principal executive officer)
/s/ PHILIP G. FRANKLIN Vice President--Finance and Chief Financial
- ------------------------------------------- Officer (Principal financial and accounting
Philip G. Franklin officer)
* Director and Chairman of the Board
- -------------------------------------------
Donald E. Nickelson
* Director
- -------------------------------------------
Peter S. Finley
* Director
- -------------------------------------------
Jeffrey L. Fox
* Director
- -------------------------------------------
Samuel A. Hamacher
</TABLE>
*By: /s/ PHILIP G. FRANKLIN
-------------------------
Philip G. Franklin
ATTORNEY-IN-FACT
- ------------------------
* Such signature has been affixed pursuant to the following Power of Attorney:
II-7
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each officer or director of Omniquip
International, Inc. (the "Corporation") whose signature appears below
constitutes and appoints P. Enoch Stiff and Philip G. Franklin, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign the Corporation's Registration Statement on Form S-1
relating to the proposed public offering of the Corporation's Common Stock and
to sign any and all amendments (including post-effective amendments and any
registration statement or amendments thereto filed pursuant to Rule 462 as
promulgated under the Securities Act of 1933, as amended) and supplements
thereto, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
II-8
<PAGE>
SCHEDULE VII
OMNIQUIP INTERNATIONAL, INC.
RULE 12-09 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------------------------ ----------- ------------------------ ----------- -----------
ADDITIONS
------------------------
BALANCE AT
BEGINNING CHARGED TO CHARGED BALANCE AT
VALUATION AND OF COSTS AND TO OTHER END OF
RESERVE ACCOUNTS PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ------------------------------------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Accounts receivable reserve............... $ 173 $ 52 $ 145(1) $ 19 $ 351
----------- ----- ----------- ----- -----------
----------- ----- ----------- ----- -----------
Excess and obsolete
inventory reserves...................... $ 1,355 $ -- $ 1,500 $ 373 $ 2,482
----------- ----- ----------- ----- -----------
----------- ----- ----------- ----- -----------
</TABLE>
- ------------------------
(1) Reflects the acquisition of the net assets of Lull Industries, Inc.
S-1
<PAGE>
SCHEDULE VII
OMNIQUIP INTERNATIONAL, INC.
RULE 12-09 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE PERIOD AUGUST 17, 1995 TO SEPTEMBER 30, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------------------------ ----------- ------------------------ ----------- -----------
ADDITIONS
------------------------
BALANCE AT
BEGINNING CHARGED TO CHARGED BALANCE AT
VALUATION AND OF COSTS AND TO OTHER END OF
RESERVE ACCOUNTS PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
------------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Accounts receivable reserve............... $ 173 $ -- $ -- $ -- $ 173
----------- ----- ----- ----- -----------
----------- ----- ----- ----- -----------
Excess and obsolete inventory reserves.... $ 1,218 $ 165 $ -- $ 28 $ 1,355
----------- ----- ----- ----- -----------
----------- ----- ----- ----- -----------
</TABLE>
S-2
<PAGE>
SCHEDULE VII
TRAK INTERNATIONAL, INC.
RULE 12-09 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE PERIOD OCTOBER 1, 1994 TO AUGUST 16, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ---------------------------------------------------- --------------- -------------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
--------------------------
<CAPTION>
BALANCE AT CHARGED TO CHARGED BALANCE AT
VALUATION AND BEGINNING OF COSTS AND TO OTHER END OF
RESERVE ACCOUNTS PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
------------------ --------------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Accounts receivable reserve......................... $ 162 $ 11 $ -- $ -- $ 173
----- ----- --- --- -----
----- ----- --- --- -----
Excess and obsolete inventory reserves.............. $ 559 $ 115 $ -- $ 97 $ 577
----- ----- --- --- -----
----- ----- --- --- -----
</TABLE>
S-3
<PAGE>
SCHEDULE VII
TRAK INTERNATIONAL, INC.
RULE 12-09 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ---------------------------------------------------- --------------- -------------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
--------------------------
<CAPTION>
BALANCE AT CHARGED TO CHARGED BALANCE AT
VALUATION AND BEGINNING OF COSTS AND TO OTHER END OF
RESERVE ACCOUNTS PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
------------------ --------------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Accounts receivable reserve......................... $ 171 $ 35 $ -- $ 44 $ 162
----- ----- --- ----- -----
----- ----- --- ----- -----
Excess and obsolete inventory reserves.............. $ 572 $ 120 $ -- $ 133 $ 559
----- ----- --- ----- -----
----- ----- --- ----- -----
</TABLE>
S-4
<PAGE>
Exhibit A
8,000,000 Shares
OMNIQUIP INTERNATIONAL. INC.
(Common Stock, $.01 par value)
UNDERWRITING AGREEMENT
___________, 1997
<PAGE>
_______, 1997
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
Schroder Wertheim & Co. Incorporated
Robert W. Baird & Co. Incorporated
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Morgan Stanley & Co. International Limited
Credit Suisse First Boston (Europe) Limited
J. Henry Schroder & Co. Limited
Robert W. Baird & Co. Incorporated
c/o Morgan Stanley & Co. International Limited
25 Cabot Square
Canary Wharf
London E14 4QA
England
Dear Sirs and Mesdames:
Omniquip International, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the several Underwriters (as
defined below), and certain stockholders of the Company (the "Selling
Shareholders") named in Schedule I hereto propose to sell to the several
Underwriters, an aggregate of 8,000,000 shares of its Common Stock, par value
$.01 (the "Firm Shares"), of which 3,000,000 shares are to be issued and sold
by the Company and 5,000,000 shares are to be sold by the Selling
Shareholders, each Selling Shareholder selling the amount set forth opposite
such Selling Shareholder's name in Schedule I hereto. As part of the
offering contemplated by this Agreement, Morgan Stanley & Co. Incorporated
("Morgan Stanley") has agreed to reserve out of the Shares set forth opposite
its name on Schedule II to this Agreement, up to _______ shares, for sale to
the Company's employees, officers, and directors (collectively,
"Participants"), as set forth in the Prospectus under the heading
"Underwriters" (the "Directed Share Program"). The Shares to be sold by
Morgan Stanley pursuant to the Directed Share Program (the "Directed Shares")
will be sold by Morgan Stanley pursuant to this Agreement at the public
offering price. Any Directed Shares not orally confirmed for purchase by any
Participants by the end of the first business day after the date on which
this Agreement is executed will be offered to the public by Morgan Stanley as
set forth in the Prospectus.
2
<PAGE>
It is understood that, subject to the conditions hereinafter stated,
6,400,000 Firm Shares (the "U.S. Firm Shares") will be sold to the several
U.S. Underwriters named in Schedule II hereto (the "U.S. Underwriters") in
connection with the offering and sale of such U.S. Firm Shares in the United
States and Canada to United States and Canadian Persons (as such terms are
defined in the Agreement Between U.S. and International Underwriters of even
date herewith), and 1,600,000 Firm Shares (the "International Shares") will
be sold to the several International Underwriters named in Schedule III
hereto (the "International Underwriters") in connection with the offering and
sale of such International Shares outside the United States and Canada to
persons other than United States and Canadian Persons. Morgan Stanley & Co.
Incorporated, Credit Suisse First Boston Corporation, Schroder Wertheim & Co.
Incorporated and Robert W. Baird & Co. Incorporated shall act as
representatives (the "U.S. Representatives") of the several U.S.
Underwriters, and Morgan Stanley & Co. International Limited, Credit Suisse
First Boston (Europe) Limited, J. Henry Schroder & Co. Limited and Robert W.
Baird & Co. Incorporated shall act as representatives (the "International
Representatives") of the several International Underwriters. The U.S.
Underwriters and the International Underwriters are hereinafter collectively
referred to as the Underwriters.
The Selling Shareholders also propose to sell to the several U.S.
Underwriters not more than an additional 1,200,000 shares of the Company's
Common Stock, par value $.01 (the "Additional Shares")(each such Selling
Shareholder selling the amount set forth opposite such Selling Shareholder's
name in Schedule I hereto), if and to the extent that U.S. Representatives,
shall have determined to exercise, on behalf of the U.S. Underwriters, the
right to purchase such shares of common stock granted to the Underwriters in
Section 3 hereof. The Firm Shares and the Additional Shares are hereinafter
collectively referred to as the "Shares." The shares of Common Stock, par
value $.01, of the Company to be outstanding after giving effect to the sales
contemplated hereby are hereinafter referred to as the "Common Stock." The
Company and the Selling Shareholders are hereinafter sometimes collectively
referred to as the "Sellers."
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement, relating to the Shares. The
registration statement contains two prospectuses to be used in connection
with the offering and sale of the Shares: the U.S. prospectus, to be used in
connection with the offering and sale of Shares in the United States and
Canada to United States and Canadian Persons, and the international
prospectus, to be used in connection with the offering and sale of Shares
outside the United States and Canada to persons other than United States and
Canadian Persons. The international prospectus is identical to the U.S.
prospectus except for the outside front cover page. The registration
statement as amended at the time it becomes effective, including the
information (if any) deemed to be part of the registration statement at the
time of effectiveness pursuant to Rule 430A
3
<PAGE>
under the Securities Act of 1933, as amended (the "Securities Act"), is
hereinafter referred to as the "Registration Statement"; the U.S. prospectus
and the international prospectus in the respective forms first used to
confirm sales of Shares are hereinafter collectively referred to as the
"Prospectus." If the Company has filed an abbreviated registration statement
to register additional shares of Common Stock pursuant to Rule 462(b) under
the Securities Act (the "Rule 462 Registration Statement"), then any
reference herein to the term "Registration Statement" shall be deemed to
include such Rule 462 Registration Statement.
1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or, to the Company's
knowledge, threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) the Registration Statement and the Prospectus
comply and, as amended or supplemented, if applicable, will comply in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and (iii) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations
and warranties set forth in this paragraph 1(b) do not apply to statements
or omissions in the Registration Statement or the Prospectus based upon
information relating to any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
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(d) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(e) This Agreement has been duly authorized, executed and delivered
by the Company.
(f) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(g) The shares of Common Stock (including the Shares to be sold by
the Selling Shareholders) outstanding prior to the issuance of the Shares
to be sold by the Company have been duly authorized and are validly issued,
fully paid and non-assessable.
(h) The Shares to be sold by the Company have been duly authorized
and, when issued and delivered in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable, and the
issuance of such Shares will not be subject to any preemptive or similar
rights.
(i) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement will not contravene
any provision of applicable law or the certificate of incorporation or
by-laws of the Company or any agreement or other instrument (after giving
effect to any written waiver of a default or written consent to such
agreement or instrument) binding upon the Company or any of its
subsidiaries that is material to the Company and its subsidiaries, taken as
a whole, or any judgment, order or decree of any governmental body, agency
or court having jurisdiction over the Company or any subsidiary, and no
consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Company
of its obligations under this Agreement, except such as may be required by
the securities or Blue Sky laws of the various states or the securities
laws of non-U.S. jurisdictions in connection with the offer and sale of the
Shares.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition,
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financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries, taken as a whole, from that set forth in the
Prospectus (exclusive of any amendments or supplements thereto subsequent to
the date of this Agreement). Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
(i) the Company and its subsidiaries have not incurred any material
liability or obligation, direct or contingent, nor entered into any material
transaction not in the ordinary course of business; (ii) the Company has not
purchased any of its outstanding capital stock, nor declared, paid or
otherwise made any dividend or distribution of any kind on its capital stock
other than ordinary and customary dividends; and (iii) there has not been
any material change in the capital stock, short-term debt or long-term debt
of the Company and its consolidated subsidiaries, except in each case as
described in or contemplated by the Prospectus.
(k) There are no legal or governmental proceedings pending or, to the
Company's knowledge, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or
any of its subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
(l) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in
all material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.
(m) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds as described in the
Prospectus, will not be an "investment company," as such term is defined in
the Investment Company Act of 1940, as amended.
(n) The Company and its subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety (including
occupational health and safety), the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (collectively,
"Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive
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required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(o) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties) which would, singly or in the aggregate, have a material adverse
effect on the condition, financial or otherwise, or on the earnings,
business, prospects or operations of the Company and its subsidiaries,
taken as a whole.
(p) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Securities Act with respect to any securities of the
Company or to require the Company to include such securities with the
Shares registered pursuant to the Registration Statement.
(q) The Company and its subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the
Company and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or
such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; and any real property and buildings held
under lease by the Company and its subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its subsidiaries, in each
case except as described in or contemplated by the Prospectus.
(r) The Company and its subsidiaries own or possess, or can acquire
on reasonable terms, all material patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names currently
employed by them in connection with the business now operated by them, and
neither the Company nor any of its subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to
any of the foregoing which, singly or
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in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in any material adverse change in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries, taken as a whole.
(s) No material labor dispute with the employees of the Company or
any of its subsidiaries exists, except as described in or contemplated by
the Prospectus, or, to the knowledge of the Company, is imminent; and the
Company is not aware of any existing, threatened or imminent labor
disturbance by the employees of any of its principal suppliers,
manufacturers or contractors that could result in any material adverse
change in the condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries, taken as a
whole.
(t) The Company and each of its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they
are engaged; neither the Company nor any such subsidiary (but with respect
to any period prior to the time such subsidiary become a subsidiary of the
Company, only with respect to periods after January 1, 1992 and then only
to the knowledge of the Company) has been refused any insurance coverage
sought or applied for; and neither the Company nor any such subsidiary has
any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the
Company and its subsidiaries, taken as a whole, except as described in or
contemplated by the Prospectus.
(u) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or
foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such subsidiary has received
any notice of proceedings relating to the revocation or modification of any
such certificate, authorization or permit, except for failures to possess
and proceedings which, singly and in the aggregate, would not have a
material adverse effect on the condition, financial or otherwise, or in the
earnings, business or operations of the Company and its subsidiaries, taken
as a whole.
(v) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation
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of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accounting for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(w) The Company has complied with all provisions of Section 517.075,
Florida Statutes relating to doing business with the Government of Cuba or
with any person or affiliate located in Cuba.
Furthermore, the Company represents and warrants to Morgan Stanley
that (i) the Registration Statement, the Prospectus and any preliminary
prospectus comply, and any further amendments or supplements thereto will
comply, with any applicable laws or regulations of foreign jurisdictions in
which the Prospectus or any preliminary prospectus, as amended or
supplemented, if applicable, are distributed in connection with the Directed
Share Program, and that (ii) no authorization, approval, consent, license,
order, registration or qualification of or with any government, governmental
instrumentality or court, other than such as have been obtained, is necessary
under the securities laws and regulations of foreign jurisdictions in which
the Directed Shares are offered outside the United States.
2. Representations and Warranties of the Selling Shareholders.
Each Selling Shareholder represents and warrants to and agrees with each of
the Underwriters that:
(a) This Agreement has been duly authorized, executed and delivered
by or on behalf of such Selling Shareholder.
(b) The execution and delivery by such Selling Shareholder of, and
the performance by such Selling Shareholder of its obligations under, this
Agreement will not contravene any provision of applicable law, or the
agreement or certificate of limited partnership of such Selling
Shareholder; or any agreement or other instrument binding upon such
Selling Shareholder or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over such Selling Shareholder,
and no consent, approval, authorization or order of, or qualification with,
any governmental body or agency is required for the performance by such
Selling Shareholder of its obligations under this Agreement, except such as
may be required by the securities or Blue Sky laws of the various states or
the securities laws of non-U.S. jurisdictions in connection with the offer
and sale of the Firm Shares.
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<PAGE>
(c) Such Selling Shareholder has, and on the Closing Date and the
Option Closing Date will have, valid title to the Shares to be sold by such
Selling Shareholder and the legal right and power, and all authorization
and approval required by law, to enter into this Agreement and to sell,
transfer and deliver the Shares to be sold by such Selling Shareholder.
(d) The Shares to be sold by such Selling Shareholder pursuant to
this Agreement have been duly authorized and are validly issued, fully paid
and non-assessable.
(e) Delivery of the Shares to be sold by such Selling Shareholder
pursuant to this Agreement will pass title to such Shares free and clear of
any security interests, claims, liens, equities and other encumbrances.
(f) All information furnished by or on behalf of such Selling
Shareholder for use in the Registration Statement and Prospectus is, and on
the Closing Date and on the Option Closing Date will be, true, correct, and
complete, and does not, and on the Closing Date and on the Option Closing
Date will not, contain any untrue statement of a material fact or omit to
state any material fact necessary to make such information not misleading.
3. Agreements to Sell and Purchase. Each Seller, severally and
not jointly, hereby agrees to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees,
severally and not jointly, to purchase from such Seller at U.S. $ a
share (the "Purchase Price") the number of Firm Shares (subject to such
adjustments to eliminate fractional shares as you may determine) that bears
the same proportion to the number of Firm Shares to be sold by such Seller as
the number of Firm Shares set forth in Schedules II and III hereto opposite
the name of such Underwriter bears to the total number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Selling Shareholders
agree to sell to the U.S. Underwriters the Additional Shares, and the
Underwriters shall have a one-time right to purchase, severally and not
jointly, up to 1,200,000 Additional Shares at the Purchase Price. If the
U.S. Representatives, on behalf of the U.S. Underwriters, elect to exercise
such option, the U.S. Representatives, shall so notify the Company in writing
not later than 30 days after the date of this Agreement, which notice shall
specify the number of Additional Shares to be purchased by the U.S.
Underwriters and the date on which such shares are to be purchased. Such
date may be the same as the Closing Date (as defined below) but not earlier
than the Closing Date nor later than ten business days after the date of such
notice. Additional Shares may be purchased as provided in Section 5 hereof
solely for the purpose of covering over allotments made
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in connection with the offering of the Firm Shares. If any Additional Shares
are to be purchased, each U.S. Underwriter agrees, severally and not jointly,
to purchase the number of Additional Shares (subject to such adjustments to
eliminate fractional shares as the U.S. Representatives may determine) that
bears the same proportion to the total number of Additional Shares to be
purchased as the number of Firm Shares set forth in Schedule II hereto
opposite the name of such U.S. Underwriter bears to the total number of U.S.
Firm Shares. The Additional Shares to be purchased by the U.S. Underwriters
and the U.S. Firm Shares are hereinafter collectively referred to as the
"U.S. Shares."
Each Seller hereby agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ending 180 days after the date of the Prospectus, (i)
offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to (A) the Shares to be sold hereunder or
(B) the issuance by the Company of shares of Common Stock upon the exercise
of an option or warrant or the conversion of a security outstanding on the
date hereof of which the Underwriters have been advised in writing. In
addition, the Selling Shareholders agree that, without the prior written
consent of Morgan Stanley & Co. Incorporated on behalf of the Underwriters,
it will not, during the period ending 180 days after the date of the
Prospectus, make any demand for, or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into
or exercisable or exchangeable for Common Stock.
4. Terms of Public Offering. The Sellers are advised by you that
the Underwriters propose to make a public offering of their respective
portions of the Shares as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable. The
Sellers are further advised by you that the Shares are to be offered to the
public initially at U.S. $ a share (the "Public Offering Price")
and to certain dealers selected by you at a price that represents a
concession not in excess of U.S. $ a share under the Public Offering
Price, and that any Underwriter may allow, and such dealers may reallow, a
concession, not in excess of U.S. $ a share, to any Underwriter or to
certain other dealers.
Each U.S. Underwriter hereby makes to and with the Company the
representations and agreements of such U.S. Underwriter contained in the
fifth and sixth paragraphs of Article III of the Agreement Between U.S. and
International
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Underwriters of even date herewith. Each International Underwriter hereby
makes to and with the Company the representations and agreements of such
International Underwriter contained in the seventh, eighth, ninth and tenth
paragraphs of Article III of such Agreement.
5. Payment and Delivery. Payment for the Firm Shares shall be
made to the Company in Federal or other funds immediately available in
Chicago, Illinois, against delivery of the Firm Shares for the respective
accounts of the several Underwriters at the office of Sidley & Austin, One
First National Plaza, Chicago, Illinois 60603 at 9:00 a.m., local time, on
, 1997, or at such other time on the same or such other date, not
later than , 1997, as shall be designated in writing by you. The time
and date of such payment are hereinafter referred to as the "Closing Date."
Payment for any Additional Shares shall be made to the Selling
Shareholders in Federal or other funds immediately available in Chicago,
Illinois against delivery of the Additional Shares for the respective
accounts of the several U.S. Underwriters at the office of Sidley & Austin at
9:00 a.m., local time, on the date specified in the notice described in
Section 3 or on such other date, in any event not later than , 1997,
as shall be designated in writing by the U.S. Representatives, on behalf of
the U.S. Underwriters. The time and date of such payment are hereinafter
referred to as the "Option Closing Date."
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The
certificates evidencing the Firm Shares and Additional Shares shall be
delivered to you on the Closing Date or the Option Closing Date, as the case
may be, for the respective accounts of the several Underwriters, with any
transfer taxes payable in connection with the transfer of the Shares to the
Underwriters duly paid, against payment of the Purchase Price therefor.
6. Conditions to the Underwriters' Obligations. The obligations
of the Sellers to sell the Shares to the Underwriters and the several
obligations of the Underwriters to purchase and pay for the Shares on the
Closing Date are subject to the condition that the Registration Statement
shall have become effective not later than 3:00 p.m. (New York time) on the
date hereof.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
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(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company
and its subsidiaries, taken as a whole, from that set forth in the
Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement) that, in your judgment, is
material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect set forth in clause (a)(i) above and to the
effect that the representations and warranties of the Company contained in
this Agreement are true and correct as of the Closing Date and that the
Company has complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or before
the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an
opinion of Dickstein Shapiro Morin & Oshinsky LLP, outside counsel for the
Company, dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the jurisdiction
of its incorporation, has the corporate power and authority to own its
property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except
to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole;
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(ii) each subsidiary of the Company has been duly incorporated,
is validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
(iii) the authorized capital stock of the Company conforms as
to legal matters to the description thereof contained in the
Prospectus;
(iv) the shares of Common Stock (including the Additional Shares
to be sold by the Selling Shareholders) outstanding prior to the
issuance of the Shares to be sold by the Company have been duly
authorized and are validly issued, fully paid and non-assessable;
(v) the Shares to be sold by the Company have been duly
authorized and, when issued and delivered in accordance with the terms
of this Agreement, will be validly issued, fully paid and
non-assessable, and the issuance of such Shares will not be subject to
any preemptive or similar rights;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the certificate
of incorporation or by-laws of the Company or, to the best of such
counsel's knowledge, any agreement or other instrument binding upon
the Company or any of its subsidiaries that is material to the Company
and its subsidiaries, taken as a whole, or, to the best of such
counsel's knowledge, any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Company or any
subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for
the performance by the Company of its obligations under this
Agreement, except such as may be required by the securities or Blue
Sky laws of the various states or the securities laws of non-U.S.
jurisdictions in connection with the offer and sale of the Shares;
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(viii) the statements (A) in the Prospectus under the captions
"Management," "Security Ownership of Certain Beneficial Owners and
Management," "Certain Transactions," "Description of Capital Stock"
and "Underwriters" (only with respect to this Agreement) and (B) in
the Registration Statement in Items 14 and 15, in each case insofar as
such statements constitute summaries of the legal matters, documents
or proceedings referred to therein, fairly present the information
called for with respect to such legal matters, documents and
proceedings and fairly summarize the matters referred to therein;
(ix) after due inquiry, such counsel does not know of any legal
or governmental proceedings pending or threatened to which the Company
or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is subject that
are required to be described in the Registration Statement or the
Prospectus and are not so described or of any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not described or filed as
required;
(x) the Company is not an "investment company," as such term is
defined in the Investment Company Act of 1940, as amended;
(xi) Nothing has come to such counsel's attention that the
Company or any of its subsidiaries (A) are not in compliance with any
and all applicable Environmental Laws, (B) have not received all
permits, licenses or other approvals required of any of them under
applicable Environmental Laws to conduct their respective businesses
and (C) are not in compliance with all terms and conditions of any
such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or
other approvals or failure to comply with the terms and conditions of
such permits, licenses or approvals would not, singly or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole; and
(xii) such counsel (A) is of the opinion that the
Registration Statement and Prospectus (except for financial statements
and schedules and other financial and statistical data included
therein as to which such counsel need not express any opinion) comply
as to form in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder, (B) has
no reason to believe that (except for financial statements and
schedules and other financial and statistical data as to which such
counsel need not express any belief) the
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Registration Statement and the prospectus included therein at the time
the Registration Statement became effective contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading and (C) has no reason to believe that (except
for financial statements and schedules and other financial and
statistical data as to which such counsel need not express any belief)
the Prospectus contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(d) The Underwriters shall have received on the Closing Date an
opinion of Dickstein Shapiro Morin & Oshinsky LLP, counsel for the Selling
Shareholders, dated the Closing Date, to the effect that:
(i) this Agreement has been duly authorized, executed and
delivered by or on behalf of each Selling Shareholder;
(ii) the execution and delivery by each Selling Shareholder of,
and the performance by each Selling Shareholder of its obligations
under, this Agreement will not contravene any provision of applicable
law, or the certificate or agreement of limited partnership of such
Selling Shareholder, or, to the best of such counsel's knowledge, any
agreement or other instrument binding upon such Selling Shareholder
or, to the best of such counsel's knowledge, any judgment, order or
decree of any governmental body, agency or court having jurisdiction
over such Selling Shareholder, and no consent, approval, authorization
or order of, or qualification with, any governmental body or agency is
required for the performance by such Selling Shareholder of its
obligations under this Agreement, except such as may be required by
the securities or Blue Sky laws of the various states or the
securities laws of non-U.S. jurisdictions in connection with offer and
sale of the Shares;
(iii) each Selling Shareholder has the legal right and power,
and all authorization and approval required by law, to enter into this
Agreement and to sell, transfer and deliver the Shares to be sold by
such Selling Shareholder;
(iv) each Selling Shareholder has record ownership and, to such
counsel's knowledge, beneficial ownership of the Shares to be sold by
it to the Underwriters pursuant to the Underwriting Agreement, and,
assuming that the Underwriters are "bona fide purchasers" (as defined
under Section 8-302 of the New York Uniform Commercial Code), upon
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delivery of the certificates for any Shares to be sold by such Selling
Shareholder against payment therefor on the Option Closing Date the
Underwriters will acquire valid title to such Shares, free and clear
of any security interest or "adverse claims" within the meaning of
section 8-302 of the New York Uniform Commercial Code; and
(v) such counsel (A) is of the opinion that the Registration
Statement and Prospectus (except for financial statements and
schedules and other financial and statistical data included therein as
to which such counsel need not express any opinion) comply as to form
in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder, (B) has no reason
to believe that (except for financial statements and schedules and
other financial and statistical data as to which such counsel need not
express any belief) the Registration Statement and the prospectus
included therein at the time the Registration Statement became
effective contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (C) has no reason to
believe that (except for financial statements and schedules and other
financial and statistical data as to which such counsel need not
express any belief) the Prospectus contains any untrue statement of a
material fact or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(e) The Underwriters shall have received on the Closing Date an
opinion of Sidley & Austin, counsel for the Underwriters, dated the Closing
Date, covering the matters referred to in subparagraphs (v), (vi), (viii)
(but only as to the statements in the Prospectus under "Description of
Capital Stock" and "Underwriters") and (xii) of paragraph (c) above.
With respect to subparagraph (xii) of paragraph (c) and subparagraph
(v) of paragraph (d) above, Dickstein Shapiro Morin & Oshinsky LLP and
Sidley & Austin may state that their opinion and belief are based upon
their participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and review and
discussion of the contents thereof, but are without independent check or
verification, except as specified. With respect to paragraph (d) above,
Dickstein Shapiro Morin & Oshinsky LLP may rely upon, with respect to
factual matters and to the extent such counsel deems appropriate, upon the
representations of the Selling Shareholders contained herein.
17
<PAGE>
The opinions of Dickstein Shapiro Morin & Oshinsky LLP described in
paragraphs (c) and (d) above shall be rendered to the Underwriters at the
request of the Company or the Selling Shareholders, as the case may be, and
shall so state therein.
(f) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the Underwriters,
from Price Waterhouse LLP, independent public accountants, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements
and certain financial information contained in the Registration Statement
and the Prospectus; provided that the letter delivered on the Closing Date
shall use a "cut-off date" not earlier than the date hereof.
(g) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and certain shareholders, officers and
directors of the Company relating to sales and certain other dispositions
of shares of Common Stock or certain other securities, delivered to you on
or before the date hereof, shall be in full force and effect on the Closing
Date.
The several obligations of the U.S. Underwriters to purchase
Additional Shares hereunder are subject to the delivery to the U.S.
Representatives on the Option Closing Date of such documents as you may
reasonably request with respect to the good standing of the Company, the due
authorization and issuance of the Additional Shares and other matters related
to the issuance of the Additional Shares.
7. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with
each Underwriter as follows:
(a) To furnish to you, without charge, five signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to you in New York City, without
charge, prior to 10:00 a.m. local time on the business day next succeeding
the date of this Agreement and during the period mentioned in paragraph (c)
below, as many copies of the Prospectus and any supplements and amendments
thereto or to the Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to
18
<PAGE>
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will furnish
to the Company) to which Shares may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as
so amended or supplemented will not, in the light of the circumstances when
the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(e) To make generally available to the Company's security holders and
to you as soon as practicable an earning statement covering the
twelve-month period ending March 31, 1998, that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(f) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be paid
all expenses incident to the performance of its obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the
Company's counsel and the Company's accountants in connection with the
registration and delivery of the Shares under the Securities Act and all
other fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies
thereof to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and expenses related to the transfer and delivery
of the Shares to the Underwriters, including any transfer or other taxes
payable thereon, (iii) the cost of printing or producing any Blue Sky
memorandum in connection with the offer and sale of the Shares under state
19
<PAGE>
securities laws and all expenses in connection with the qualification of
the Shares for offer and sale under state securities laws as provided in
Section 7(d) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky, (iv) all filing fees and
disbursements of counsel to the Underwriters incurred in connection with
the review and qualification of the offering of the Shares by the National
Association of Securities Dealers, Inc., (v) all fees and expenses in
connection with the preparation and filing of the registration statement on
Form 8-A relating to the Common Stock and all costs and expenses incident
to listing the Shares on the Nasdaq National Market, (vi) the cost of
printing certificates representing the Shares, (vii) the costs and charges
of any transfer agent, registrar or depositary, (viii) the costs and
expenses of the Company relating to investor presentations on any "road
show" undertaken in connection with the marketing of the offering of the
Shares, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and
the cost of any aircraft chartered in connection with the road show, and
(ix) all other costs and expenses incident to the performance of the
obligations of the Company hereunder for which provision is not otherwise
made in this Section. It is understood, however, that except as provided
in this Section, Section 9 entitled "Indemnity and Contribution", and the
last paragraph of Section 11 below, the Underwriters will pay all of their
costs and expenses, including fees and disbursements of their counsel,
stock transfer taxes payable on resale of any of the Shares by them and any
advertising expenses connected with any offers they may make.
(g) In connection with the Directed Share Program, the Company will
ensure that the Directed Shares will be restricted to the extent required
by the National Association of Securities Dealers, Inc. (the "NASD") or
the NASD rules from sale, transfer, assignment, pledge or hypothecation for
a period of three months following the date of the effectiveness of the
Registration Statement. Morgan Stanley will notify the Company as to which
Participants will need to be so restricted. At the request of Morgan
Stanley, the Company will direct the transfer agent to place stop transfer
restrictions upon such securities for such period of time.
(h) To pay all fees and disbursements of counsel incurred by the
Underwriters in connection with the Directed Share Program and stamp
duties, similar taxes or duties or other taxes, if any, incurred by the
Underwriters in connection with the Directed Share Program.
20
<PAGE>
Furthermore, the Company covenants with Morgan Stanley that the
Company will comply with all applicable securities and other applicable
laws, rules and regulations in each foreign jurisdiction in which the
Directed Shares are offered in connection with the Directed Share Program.
8. Expenses of Selling Shareholders. To the extent not paid by
the Company, each Selling Shareholder agrees to pay or cause to be paid (i)
all taxes, if any, on the transfer and sale of the Shares being sold by such
Selling Shareholder and (ii) such Selling Shareholder's pro rata share
(determined by dividing the number of Shares sold by such Selling Shareholder
by the total number of Shares sold by all Sellers) of all costs and expenses
incident to the performance of the obligations of the Selling Shareholders
and the Company under this Agreement, including, but not limited to, all
expenses enumerated in Section 7(f) above and the fees, disbursements and
expenses of counsel for the Selling Shareholders.
9. Indemnity and Contribution. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls
any Underwriter within the meaning of either Section 15 of the Securities
Act or Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein.
(b) The Company agrees to indemnify and hold harmless Morgan Stanley
and each person, if any, who controls Morgan Stanley within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act
("Morgan Stanley Entities"), from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating
any such action or claim) (i) caused by any untrue statement or alleged
untrue statement of a material fact contained in the prospectus wrapper
material prepared by or with the consent of the Company for distribution in
foreign jurisdictions in connection with the Directed Share Program
attached to the Prospectus or any
21
<PAGE>
preliminary prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statement therein, when considered in conjunction with the
Prospectus or any applicable preliminary prospectus, not misleading;
(ii) caused by the failure of any Participant to pay for and accept delivery
of the shares which, immediately following the effectiveness of the
Registration Statement, were subject to a properly confirmed agreement to
purchase; or (iii) related to, arising out of, or in connection with the
Directed Share Program, provided that, the Company shall not be responsible
under this subparagraph (iii) for any losses, claim, damages or liabilities
(or expenses relating thereto) that are finally judicially determined to
have resulted from the bad faith or gross negligence of Morgan Stanley
Entities.
(c) Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act and the Company, its
directors, its officers who sign the Registration Statement and each
person, if any, who controls the Company within the meaning of either such
Section, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, but only with reference to
information relating to such Selling Shareholder furnished in writing by or
on behalf of such Selling Shareholder expressly for use in the Registration
Statement, any preliminary prospectus, the Prospectus or any amendments or
supplements thereto.
(d) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Selling Shareholders, the directors of
the Company, the officers of the Company who sign the Registration
Statement and each person, if any, who controls the Company or any Selling
Shareholder within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act from and against any and all losses,
claims, damages and liabilities (including, without limitation, any legal
or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the
Prospectus (as amended or supplemented if the
22
<PAGE>
Company shall have furnished any amendments or supplements thereto), or
caused by any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, but only with reference to information relating
to such Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use in the Registration Statement,
any preliminary prospectus, the Prospectus or any amendments or
supplements thereto.
(e) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to paragraph (a), (b), (c) or (d) of this Section 9,
such person (the "indemnified party") shall promptly notify the person
against whom such indemnity may be sough (the "indemnifying party") in
writing and the indemnifying party, upon request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of
such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii)
the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is
understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel)
for (i) all Underwriters and all persons, if any, who control any
Underwriter within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act, (ii) the Company, its directors, its
officers who sign the Registration Statement and each person, if any, who
controls the Company within the meaning of either such Section and (iii)
the Selling Shareholders and all persons, if any, who control any Selling
Shareholder within the meaning of either such Section, and that all such
fees and expenses shall be reimbursed as they are incurred. In the case of
any such separate firm for the Underwriters and such control persons of the
Underwriters, such firm shall be designated in writing by Morgan Stanley.
In the case of any such separate firm for the Company, and such directors,
officers and control persons of the Company, such firm shall be designated
in writing by the Company. In the case of any such separate firm for the
Selling Shareholders and such controlling persons of any Selling
Shareholder, such firm shall be designated in writing by the Selling
Shareholders. The indemnifying party shall not be liable for any
23
<PAGE>
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel as contemplated by
the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered into
more than 30 days after receipt by such indemnifying party of the aforesaid
request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such proceeding. Notwithstanding anything contained herein to
the contrary, if indemnity may be sought pursuant to Section 9(b) hereof in
respect of such action or proceeding, then in addition to such separate
firm for the indemnified parties, the indemnifying party shall be liable
for the reasonable fees and expenses of not more than one separate firm (in
addition to any local counsel) for Morgan Stanley for the defense of any
losses, claims, damages and liabilities arising out of the Directed Share
Program, and all persons, if any, who control Morgan Stanley within the
meaning of either Section 15 of the Act or Section 20 of the Exchange Act.
(f) To the extent the indemnification provided for in paragraph (a),
(b), (c) or (d) of this Section 9 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party under such paragraph, in
lieu of indemnifying such indemnified party thereunder, shall contribute to
the amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party or parties on
the other hand from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the
indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as
any other relevant equitable considerations.
24
<PAGE>
The relative benefits received by the Sellers on the one hand and the
Underwriters on the other hand in connection with the offering of the Shares
shall be deemed to be in the same respective proportions as the net proceeds
from the offering of the Shares (before deducting expenses) received by each
Sellers and the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table (and footnotes thereto)
on the cover of the Prospectus, bear to the aggregate Public Offering Price
of the Shares. The relative fault of the Sellers on the one hand and the
Underwriters on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relate to
information supplied by the Sellers or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Underwriters'
respective obligations to contribute pursuant to this Section 9 are several
in proportion to the respective number of Shares they have purchased
hereunder, and not joint.
(g) The Sellers and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (f) of
this Section 9. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 9, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The remedies provided for in this
Section 9 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any indemnified party at law or in
equity.
(h) The indemnity and contribution provisions contained in this
Section 9 and the representations, warranties and other statements of the
Company and the Selling Shareholders contained in this Agreement shall
remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling
25
<PAGE>
any Underwriter, the Selling Shareholders or any person controlling any
Selling Shareholder, or the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Shares.
10. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery
of this Agreement and prior to the Closing Date (i) trading generally shall
have been suspended or materially limited on or by, as the case may be, any
of the New York Stock Exchange, the American Stock Exchange, the National
Association of Securities Dealers, Inc., the Chicago Board of Options
Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade, (ii)
trading of any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or New York State authorities or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or
any calamity or crisis that, in your judgment, is material and adverse and
(b) in the case of any of the events specified in clauses (a)(i) through
(iv), such event, singly or together with any other such event, makes it, in
your judgment, impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
11. Effectiveness; Defaulting Underwriters. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase
Shares that it has or they have agreed to purchase hereunder on such date,
and the aggregate number of Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than
one-tenth of the aggregate number of the Shares to be purchased on such date,
the other Underwriters shall be obligated severally in the proportions that
the number of Firm Shares set forth opposite their respective names in
Schedule II or Schedule III bears to the aggregate number of Firm Shares set
forth opposite the names of all such non-defaulting Underwriters, or in such
other proportions as you may specify, to purchase the Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to
purchase on such date; provided that in no event shall the number of Shares
that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 11 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If,
on the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of
Firm Shares to be purchased, and arrangements satisfactory to you, the
Company and the Selling Shareholders for the purchase of such Firm Shares are
not made within 36 hours after such default, this Agreement shall terminate
without liability on the part of
26
<PAGE>
any non-defaulting Underwriter, the Company or the Selling Shareholders. In
any such case either you or the relevant Sellers shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in
order that the required changes, if any, in the Registration Statement and in
the Prospectus or in any other documents or arrangements may be effected.
If, on the Option Closing Date, any Underwriter or Underwriters shall fail or
refuse to purchase Additional Shares and the aggregate number of Additional
Shares with respect to which such default occurs is more than one-tenth of
the aggregate number of Additional Shares to be purchased, the non-defaulting
Underwriters shall have the option to (i) terminate their obligation
hereunder to purchase Additional Shares or (ii) purchase not less than the
number of Additional Shares that such non-defaulting Underwriters would have
been obligated to purchase in the absence of such default. Any action taken
under this paragraph shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of any Seller to comply
with the terms or to fulfill any of the conditions of this Agreement, or if
for any reason any Seller shall be unable to perform its obligations under
this Agreement, the Sellers will reimburse the Underwriters or such
Underwriters as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the fees and
disbursements of their counsel) reasonably incurred by such Underwriters in
connection with this Agreement or the offering contemplated hereunder.
12. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
13. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
27
<PAGE>
14. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a
part of this Agreement.
Very truly yours,
OMNIQUIP INTERNATIONAL, INC.
By: _________________________
Name:
Title:
HARBOUR GROUP INVESTMENTS III, L.P.
By: Harbour Group III, Management Co., L.P.,
General Partner
By: _________________________
HGM III Co., General Partner
By: _________________________
Name:
Title:
UNIQUIP-HG ASSOCIATES, L.P.
By: _________________________
Name:
Title:
28
<PAGE>
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
Schroder Wertheim & Co. Incorporated
Robert W. Baird & Co. Incorporated
Acting severally on behalf
of themselves and the
several U.S. Underwriters
named herein.
By: Morgan Stanley & Co.
Incorporated
By: _____________________
Name:
Title:
Morgan Stanley & Co. International Limited
Credit Suisse First Boston (Europe) Limited
J. Henry Schroder & Co. Limited
Robert W. Baird Incorporated
Acting severally on behalf
of themselves and the
several International
Underwriters named herein.
By: Morgan Stanley & Co.
International Limited
By: __________________________
Name:
Title:
29
<PAGE>
SCHEDULE I
FIRM SHARES
Harbour Group Investments III, L.P
Uniquip-HG Associates, L.P.
ADDITIONAL SHARES
Harbour Group Investments III, L.P.
Uniquip-HG Associates, L.P.
30
<PAGE>
SCHEDULE II
U.S. Underwriters
-----------------
Number of
Firm Shares
U.S. Underwriter to be Purchased
---------------- ---------------
Morgan Stanley & Co. Incorporated. . . . .
Credit Suisse First Boston Corporation . .
Schroder Wertheim & Co. Incorporated . . .
Robert W. Baird & Co. Incorporated . . . .
[NAMES OF OTHER U.S. UNDERWRITERS]
---------------
Total U.S. Firm Shares....... 6,400,000
---------------
---------------
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<PAGE>
SCHEDULE III
International Underwriters
--------------------------
Number of
Firm Shares
International Underwriter to be Purchased
- ------------------------- ---------------
Morgan Stanley & Co. International
Limited. . . . . . . . . . . . . . . . .
Credit Suisse First Boston (Europe) Limited
J. Henry Schroder & Co. Limited. . . . . .
Robert W. Baird & Co. Incorporated . . . .
[NAMES OF OTHER INTERNATIONAL
UNDERWRITERS]
---------------
Total International Firm Shares....... 1,600,000
---------------
---------------
32
<PAGE>
EXHIBIT A
______________, 1997
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
Schroder Wertheim & Co. Incorporated
Robert W. Baird & Co. Incorporated
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Morgan Stanley & Co. International Limited
Credit Suisse First Boston (Europe) Limited
J. Henry Schroder & Co. Limited
Robert W. Baird & Co. Incorporated
c/o Morgan Stanley & Co. International Limited
25 Cabot Square
Canary Wharf
London E14 4QA
England
Dear Sirs:
The undersigned understands that Morgan Stanley & Co. Incorporated
("Morgan Stanley"), as a Representative of the several U.S. Underwriters, and
Morgan Stanley & Co. International Limited, as a Representative of the
International Underwriters, propose to enter into an Underwriting Agreement
(the "Underwriting Agreement") with Omniquip International, Inc., a Delaware
corporation (the "Company"), providing for the public offering (the "Public
Offering") by the several U.S. Underwriters and International Underwriters,
including Morgan Stanley (collectively, the "Underwriters"), of _____________
shares (the "Shares") of the Common Stock, $.01 par value of the Company (the
"Common Stock").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby
1
<PAGE>
agrees that, without the prior written consent of Morgan Stanley on behalf of
the Underwriters, it will not, during the period commencing on the date
hereof and ending 180 days after the date of the final prospectus relating to
the Public Offering (the "Prospectus"), (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock (provided that such shares or securities are
either now owned by the undersigned or are hereafter acquired prior to or in
connection with the Public Offering), or (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of such shares of Common Stock, whether
any such transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to the sale of any Shares to the
Underwriters pursuant to the Underwriting Agreement. In addition, the
undersigned agrees that, without the prior written consent of Morgan Stanley
on behalf of the Underwrites, it will not, during the period commencing on
the date hereof and ending 180 days after the date of the Prospectus, make
any demand for or exercise any right with respect to, the registration of any
shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock.
Whether or not the Public Offering actually occurs depends on a
number of factors, including market conditions. Any Public Offering will
only be made pursuant to an Underwriting Agreement, the terms of which are
subject to agreement between the Company and the Underwriters.
_________________________
(Name)
_________________________
(Address)
2
<PAGE>
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, NW
Washington, DC 20037-1526
February 20, 1997
Omniquip International, Inc.
369 West Western Avenue
Port Washington, Wisconsin 53074
Re:Omniquip International, Inc. Amendment No. 2 to
Registration Statement on Form S-1 (File No. 333-13181)
Ladies and Gentlemen:
We have acted as counsel to Omniquip International, Inc., a Delaware
corporation (the "Company"), in connection with the Company's Registration
Statement on Form S-1, as amended (the "Registration Statement"), filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
pertaining to the registration of the sale of 9,200,000 shares of the Company's
common stock, $0.01 par value per share (the Common Stock"), in an underwritten
public offering which includes 3,000,000 shares to be sold by the Company (the
"Company Firm Shares"), 5,000,000 shares to be sold by certain Selling
Stockholders named in the Registration Statement (the "Selling Stockholder Firm
Shares") and up to an additional 1,200,000 shares to be sold by the Selling
Stockholders named in the Registration Statement if the U.S. Underwriters
exercise their over-allotment option in full (the "Additional Selling
Stockholder Shares"). As of the date hereof, the Company is authorized to issue
100,000,000 shares of Common Stock, of which 11,250,000 shares are issued and
outstanding and of which 2,412,500 shares are issuable pursuant to the Company's
stock option and employee benefit plans (including 1,600,000 shares issuable
pursuant to the Company's 1996 Long-Term Incentive Plan approved by the Board of
Directors of the Company, subject to stockholder approval). The Company Firm
Shares and the Additional Company Shares are hereinafter referred to as the "New
Shares" and the Selling Stockholder Firm Shares are hereinafter referred to as
the "Outstanding Shares."
We have examined and are familiar with originals or copies, certified or
otherwise identified to our satisfaction, of such documents, corporate records
and other instruments as we have deemed necessary or appropriate for purposes of
this opinion.
On the basis of the foregoing, we are of the opinion that:
(i) the Outstanding Shares have been duly authorized, and are validly
issued, fully paid and non-assessable;
(ii) the Company has taken all necessary corporate action to authorize the
issuance and sale of the New Shares;
(iii) when issued and delivered to and paid for by the Underwriters pursuant
to the Underwriting Agreement, the New Shares will be duly authorized, validly
issued, fully paid and non-assessable.
No opinion is expressed herein as to the laws of any jurisdiction other
than the federal laws of the United States of America and, to the extent
required by the foregoing opinion, the General Corporation Law of the State of
Delaware.
Capitalized terms used in this opinion and not otherwise defined herein
shall have the meanings ascribed to them in the Registration Statement.
The foregoing opinion is delivered to you in connection with the
Registration Statement, and may not be relied upon by any other person or for
any other purpose.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the reference to this firm under the
caption "Legal Matters" in the Prospectus contained in the Registration
Statement.
Very truly yours,
/s/ Dickstein Shapiro Morin & Oshinsky LLP
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
1996 DIRECTORS NON-QUALIFIED STOCK OPTION PLAN
1. Adoption and Purpose of the Plan. Omniquip International, Inc. (the
"Company") hereby adopts the 1996 Directors Non-Qualified Stock Option Plan
(the "Plan") dated September 30, 1996, which provides for the granting of
non-qualified stock options ("Options") to purchase shares of the Company's
Common Stock, $.01 par value per share (the "Common Stock"), to members of
the Board of Directors who are not employees of the Company ("Grantees").
This Plan will give such Grantees added financial incentive to further the
Company's financial well being and increase the Company's value to the
benefit of the Company's shareholders. The Company believes that the Plan
will enable it to be competitive in encouraging directors to remain in its
service and to attract other qualified persons to the Company.
The effective date of the Plan shall be September 30, 1996. Options may
be granted hereunder at any time and from time to time through the date of
termination of the Plan.
2. Plan Administration. The Plan shall be administered and interpreted
by the Board of Directors of the Company (the "Board") or, if determined from
time to time by the Board, any committee of the Board. In addition to grant
or award transactions made pursuant to the formula provisions of Section 4
hereof, grant or award transactions with Grantees, as well as transactions
involving the disposition or settlement of grants or awards previously made,
shall be effective if approved by any of the following: (i) the Board
<PAGE>
of Directors of the Company, either by affirmative vote of a majority of the
Board at a meeting duly held at which a quorum is present or by unanimous
written consent; (ii) a committee of the Board, appointed from time to time
(or any successor committee appointed by the Board), consisting of two or
more "Non-Employee Directors" as defined under Rule 16b-3 of the Securities
Exchange Act of 1934, as amended (the "Act") (the "Committee"); or (iii) the
affirmative votes of the holders of a majority of the Common Stock present or
represented, and entitled to vote at a meeting duly held or by the written
consent of the holders of a majority of the Common Stock entitled to vote;
provided, however, that transactions may be authorized and effected with
Grantees in any other manner approved by the Board of Directors; provided,
that as a condition to any such transaction, the Grantee is required to hold
the Common Stock so acquired for a period of not less then six (6) months
following the date of acquisition of Common Stock from the Company.
The foregoing shall not prohibit service on a committee administering
this Plan solely by reason of the receipt of Options granted pursuant to the
formula provisions of Section 4 hereof, or affect the eligibility of
committee members to receive Options granted pursuant to the formula
provisions of Section 4.
In administering the Plan, the Board or any authorized committee thereof
may adopt rules and regulations as necessary for carrying out the purposes
and intent of the Plan. Any action taken by the Board or a majority of such
committee in the interpretation or administration of the Plan shall, as
between the Company and the Grantees, be final and
2
<PAGE>
conclusive. Members of any such committee may vote without appearing in
person at any meeting of the committee. The Board or such committee may
consult with counsel, who may be counsel to the Company, and shall not incur
any liability for any action taken in good faith in reliance upon the advice
of counsel. Within the limitations of the Plan, the Eligible Directors (as
defined below) to whom Options will be granted, the exercise price and the
number of shares of Common Stock for which Options will be granted from time
to time will be as specified in Section 4 below, except with respect to any
other Options granted hereunder, in which case such matters will be
determined in a manner consistent with the provisions of Section 2 hereof.
3. Participants. Options may be granted to directors of the Company who
are not employees of the Company or any subsidiary of the Company (an
"Eligible Director"). As used herein, the term "subsidiary" means any
present or future corporation which is or would be a "subsidiary corporation"
within the meaning of Section 424 of the Internal Revenue Code of 1986, as
amended (the "Code").
4. Initial Grant of Options.
(a) Each Eligible Director on the date the Company's Registration
Statement on Form S-1 (the "Registration Statement") under the Securities Act
of 1933, as amended (the "33 Act"), with respect to the initial public
offering of the Common Stock becomes effective under the 33 Act (the
"Effective Date") shall be granted an Option with respect to 10,000 shares of
Common Stock, at an exercise price per share equal to the initial
3
<PAGE>
public offering price per share set forth in the Registration Statement at
the time it becomes effective.
(b) Each person first becoming an Eligible Director subsequent to the
Effective Date by reason of his or her election or appointment to the Board
of Directors subsequent to such date shall be granted an Option with respect
to 10,000 shares of Common Stock on the date such person is first elected or
appointed and duly qualified to serve on the Board of Directors (the
"Qualification Date"), at an exercise price per share equal to the fair
market value thereof as determined in accordance with Section 7 hereof.
(c) In the event the Chairman of the Board of Directors on the Effective
Date is an Eligible Director, he or she shall be granted an additional Option
with respect to 5,000 shares of Common Stock, at an exercise price per share
equal to the initial public offering price per share set forth in the
Registration Statement at the time it becomes effective.
(d) Each person first becoming Chairman of the Board of Directors
subsequent to the Effective Date by reason of election or appointment to such
position after such date, provided he or she is an Eligible Director, shall
be granted an Option with respect to 5,000 shares of Common Stock on the date
such person is first elected or appointed Chairman, at an exercise price per
share equal to the fair market value thereof as determined in accordance with
Section 7 hereof.
4
<PAGE>
5. Number of Shares Subject to the Plan. The total number of shares of
Common Stock which may be issued under Options granted pursuant to the Plan
shall not exceed 250,000 shares. Shares of Common Stock issuable upon
exercise of Options granted under the Plan may be either authorized and
unissued shares or previously issued shares reacquired by the Company and
held in treasury. If any Option granted under the Plan is surrendered before
exercise, lapses without exercise, or, for any other reason, ceases to be
exercisable, the shares subject to such Option shall be available for the
grant of Options under the Plan. Subject to the provisions of Section 12
hereof, the Plan shall remain in effect until all shares of Common Stock now
or hereafter subject to the Plan have been purchased pursuant to the exercise
of Options granted under the Plan; provided that the Plan shall terminate on
the (10th) tenth anniversary of the effective date, and no Option may be
granted hereunder after such date.
6. Stock Adjustments. In the event that a dividend shall be declared on
the Common Stock payable in shares of Common Stock, the number of shares of
Common Stock then subject to any outstanding Option under the Plan and the
number of shares of Common Stock reserved for grant of Options pursuant to
this Plan but not yet subject to Option shall be adjusted by adding to each
such share of Common Stock the number of shares of Common Stock which would
be distributable in respect thereof if such shares had been outstanding on
the record date for the issuance of such stock dividend. In the event
5
<PAGE>
that the outstanding shares of Common Stock shall be converted into or
exchanged for a different number of shares or other securities of the Company
or of another corporation, whether through stock split, recapitalization,
split-up, merger, consolidation, reorganization, combination or other
issuance or exchange of shares, then there shall be substituted for each
share of Common Stock subject to any outstanding Option under this Plan and
for each share of Common Stock reserved for the grant of Options pursuant to
the Plan but not yet subject to Option, the number and kind of shares or
other securities which each outstanding share of Common Stock shall have been
so converted into or for which each share shall have been so exchanged. In
the case of any substitution or adjustment as provided in this Section 6, the
Option price of any share subject to an outstanding Option shall be adjusted
so that there will be no change in the aggregate purchase price payable upon
exercise of any such Option.
7. Option Price. The purchase price for shares of Common Stock to be
purchased upon the exercise of Options shall be the fair market value of such
shares at the date on which the Option is granted, which, in the case of the
Options to be granted in accordance with Section 4 (a) and (c) hereof, shall
be the initial public offering price per share set forth in the Registration
Statement at the time it becomes effective and in the case of all other
awards the fair market value on such date. For the purposes of this Section,
the fair market value of a share of Common Stock on any date shall be equal
to the closing sale price of a share of the Common Stock as published by a
national securities exchange on which the shares of the Common Stock are
traded on such date or, if there is no sale of the
6
<PAGE>
Common Stock on such date, the average of the bid and asked prices on such
exchange at the close of trading on such date or, if shares of Common Stock
are not listed on a national securities exchange on such date but are
authorized for quotation in the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") National Market ("NM"), the last
transaction price per share as reported by NASDAQ NM on such date or, if
shares of Common Stock are not authorized for quotation in NASDAQ NM on such
date, the average of the bid and asked prices in the over the counter market
or, if the Common Stock is not listed on a national securities exchange,
quoted in NASDAQ NM or quoted in the over the counter market, the fair market
value of a share of the Common Stock on such date as shall be determined in
good faith by the Board or any authorized committee thereof. For purposes of
the Plan, the determination of the Board or any committee thereof of the fair
market value of a share shall be conclusive. .
8. Exercisability. Except as otherwise set forth in Section 10 hereof,
Options shall become exercisable as follows: a). Of the options granted
pursuant to Section 4(a) and Section 4(b) hereof, options to purchase 5000
shares of Common Stock shall become exercisable on the first anniversary of
the date of grant and options to purchase the remaining 5000 shares of Common
Stock shall become exercisable in equal amounts on the second, third, fourth
and fifth anniversaries of the date of grant. b) Of the options granted
pursuant to Section 4(c) and 4(d) hereof, options to purchase 2500 shares of
Common Stock shall become exercisable on the first anniversary of the date of
grant and options to purchase the remaining 2500 shares of Common Stock shall
become exercisable in equal amounts on the second, third, fourth and fifth
anniversaries of the date of grant.
No Option may be exercised after the expiration of ten (10) years from
the date of grant of such Option. Options which have become exercisable may
be exercised from time to time, in whole or in part, provided that no partial
exercise will be permitted which would result in the issuance of less than
fifty (50) shares of Common Stock. Upon exercise, the purchase price
thereunder shall be payable in full in cash or in kind, or part in cash and
part in kind, by surrender of currently exercisable Options having a value
7
<PAGE>
(determined by subtracting the exercise price from the fair market value of
Common Stock and multiplying such amount by the number of Options
surrendered) on the date of exercise, equal to the portion of the exercise
price so paid. An Option may not be exercised for fractional shares of
Common Stock and any fractional shares resulting from payment in kind shall
be cancelled.
Any issuance of Common Stock pursuant to the exercise of an Option under
the Plan shall not be made until appropriate arrangements satisfactory to the
Board or any committee thereof have been made for the payment of any tax
amounts (federal, state, local or other) that may be required to be withheld
or paid by the Company (or any subsidiary or parent thereof) with respect to
such Grantee. Subject to the requirements of Rule 16b-3 of the Act, the
Board or any committee thereof, in its sole discretion and pursuant to such
procedures as it may specify from time to time, may permit a Grantee to
satisfy such tax withholding obligation, in whole or in part, by (i) electing
to have the Company withhold otherwise deliverable shares of Common Stock
having a fair market value, as defined in Section 7, not exceeding the
minimum amount required to be withheld, or (ii) delivering to the Company
shares of Common Stock then owned by the Grantee.
An Option shall be exercised when written notice of such exercise has
been given to the Company by the Grantee, accompanied by payment of the
purchase price. Until the issuance of the stock certificates evidencing the
shares of Common Stock issuable upon such exercise, no right to vote, receive
dividends or any other rights as a shareholder shall exist with respect to
such shares notwithstanding the prior exercise of the Option. No adjustment
will be made for dividends or other rights for which the record date is prior
to the date the stock certificate is issued except as provided in Section 6.
8
<PAGE>
9. Listing and Registration. The Company, in its discretion, may
postpone the issuance and delivery of shares upon any exercise of an Option
until completion of a securities exchange listing or registration or other
qualification of such shares under any state or federal law, rule or
regulation as the Company may consider appropriate. The Company may also
require any person exercising an Option to make such representations and
furnish such information as it may consider appropriate or necessary in
connection with the issuance of the shares of Common Stock subject to such
Option.
10. Form of Options and Conditions of Exercise. Options shall be
evidenced by stock option agreements in such form, not inconsistent with the
provisions of this Plan, as determined by the Board or any authorized
committee thereof. Options will not be assignable or transferable by the
Grantee other than by will or the laws of descent and distribution and shall
be exercisable during the lifetime of the Grantee only by the Grantee.
Grantees may be granted more than one Option under the Plan. The
granting of an Option under the Plan shall not affect any unexercised Option
previously granted to the Grantee under the Plan or any unexercised Option
granted to the Grantee under any other plan.
Except as otherwise set forth herein, no Option shall be exercisable
after resignation or removal from the Board of Directors.
9
<PAGE>
Upon the removal of a Grantee for cause (as determined by a majority of
the Board), all Options then held by such Grantee, whether or not exercisable
on such date, shall be forfeited and automatically expire on the date of
removal.
Upon the voluntary resignation of a Grantee (or the failure of a Grantee
to be re-elected to the Board), all Options held by such Grantee and
exercisable as of the date of resignation shall be exercisable in whole or in
part by such Grantee for a period of thirty (30) days from the date of
resignation (or determination of the election results) but in no event later
than ten (10) years from the date of grant, and all Options held by such
Grantee which are not exercisable on such date of resignation shall be
forfeited and automatically expire on such date. A director on leave of
absence may, for purposes of the Plan, be considered a director of the
Company, provided that notwithstanding such leave of absence, in no event
shall an Option be exercised later than ten (10) years from the date of
grant. Upon the death of any Grantee, all Options exercisable by the Grantee
on the date of death may be exercised in whole or part for a period of one
(1) year from the date of such Grantee's death by the person or persons to
whom his or her rights under the Option shall have passed by will or by the
laws of descent and distribution, but in no event later than ten (10) years
from the date of grant and all Options held by such Grantee which are not
exercisable on the date of death shall be forfeited and automatically expire
on such date.
11. Reservation of Shares. The Company, during the term of the Plan,
will at all times reserve and keep available the number of shares of Common
Stock as shall be
10
<PAGE>
sufficient to satisfy the requirements of the Plan. The inability of the
Company to obtain the necessary approvals from any regulatory body having
jurisdiction or authority deemed necessary by the Company's counsel to the
lawful issuance and sale of any shares of Common Stock under the Plan shall
relieve the Company of any liability in respect of the nonissuance or sale of
such shares as to which such requisite authority shall not have been
obtained.
12. Amendment of the Plan. The Plan may be terminated or amended at any
time by the Board or any committee thereof authorized to administer the Plan.
13. No Right to Continued Service. The Plan shall not be construed as
giving a Grantee any right to continued service as a member of the Board or
to affect or limit in any way the right of the Company and its stockholders
to remove such Grantee.
14.Governing Law. The Plan and any related documents or instruments
shall be governed and construed in accordance with the laws of the State of
Delaware.
11
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
369 West Western Avenue
Port Washington, WI 53074
September 30, 1996
Harbour Group Investments III, L.P.
7701 Forsyth Boulevard
Suite 600
St. Louis, Missouri 63105
Uniquip - HGI Associates, L.P.
7701 Forsyth Boulevard
Suite 600
St. Louis, Missouri 63105
Dear Sirs:
It is contemplated that an initial public offering will be made by the
undersigned, Omniquip International, Inc., a Delaware corporation (the
"Company"), of a certain number of shares of its common stock, par value $.01
per share (the "Common Stock"). In connection therewith, and effective upon the
date the registration statement on Form S-1 filed by the Company with respect to
the shares to be so offered becomes effective (the "Effective Date"), the
Company hereby grants to you certain registration rights with respect to those
shares of Common Stock of the Company that you will hold after the Effective
Date as follows:
1. Registration Request.
(a) Demand Registration. If, after the Effective Date, the Company
receives a written request signed by Harbour Group Investments III, L.P. and/or
Uniquip - HGI Associates, L.P., or any permitted assignee of their rights
hereunder (collectively, the "Related Stockholders") (i) stating that such
Related Stockholder or Stockholders proposes to sell or transfer at least ten
percent (10%) of the aggregate shares of Common Stock owned by the respective
Related Stockholders at the time of such request in an underwritten offering
(the "Registrable Securities"), and (ii) requesting registration of the
Registrable Securities under the Securities Act of 1933, as amended (the
"Securities Act"), the Company shall file, as promptly as practicable (but in no
event later than 120 days after receipt of such notice unless otherwise provided
herein), with the Securities and Exchange Commission (the
<PAGE>
"SEC") a registration statement under the Securities Act, on the appropriate
form, covering the Registrable Securities specified in the written request,
and shall use its best efforts to cause such registration statement to be
declared effective. Notwithstanding the foregoing, the Company shall not be
obligated to effect such registration prior to the expiration of 180 days
following the effective date of the Company's most recent registration
statement.
The Company shall, promptly after becoming obligated to file a registration
statement, give notice to each of the Related Stockholders of the receipt of
such request and provide a reasonable opportunity for all Related Stockholders
to participate in the registration.
Notwithstanding the foregoing, the Related Stockholders may collectively
initiate only two requests pursuant to this Section 1. A request shall be
deemed to have been exercised by the Related Stockholders when the Company has
complied with all of its responsibilities under this Agreement to file the
registration statement covering the Registrable Securities under the Securities
Act and utilized its best efforts to cause such registration statement to be
declared effective. It is not necessary that the registration statement
actually be declared effective or that the sale of the Registrable Securities
occur if such failure or nonoccurrence does not result from the Company's
inability or unwillingness to exercise its responsibilities hereunder.
Notwithstanding the foregoing, any of the Related Stockholders may reinstate a
right to exercise a request hereunder following the exercise of a request and
compliance by the Company with its obligations hereunder where a registration
statement is not declared effective or where the sale of Registrable Securities
is not consummated, upon the reimbursement by the Related Stockholders of all of
the Company's out-of-pocket expenses incurred in connection with performing its
obligations hereunder.
(b) Piggyback Registration. If at any time during the term of this
Agreement the Company proposes to register any of its Common Stock in an
underwritten public offering under the Securities Act (except equity securities
pursuant to a registration statement filed on Forms S-4 or S-8 or such other
form as shall be prescribed under the Securities Act for the same purposes), it
will at each such time give written notice to each Related Stockholder of its
intention to do so and upon the written request of any relayed stockholder given
within 20 days after receipt of such notice, the Company will use its best
efforts to effect the registration of the shares of Common Stock of such Related
Stockholders (the "Piggyback Securities") which it shall have been so requested
to register by including such Piggyback Securities in such registration
statement. In the event that any registration
2
<PAGE>
pursuant to this Section 1(b) shall be, in whole or in part, in connection
with an underwritten offering of securities of the Company, any such
Piggyback Securities are to be included in the underwriting on the same terms
and conditions as the shares of Common Stock, if any, otherwise being sold
through underwriters under such registration statement; provided, however,
that if the managing underwriter determines and advises in writing that the
inclusion in the registration statement of all Piggyback Securities proposed
to be included and any other shares of Common Stock sought to be registered
by any other stockholder of the Company (the "Other Common Stock") would
interfere with the successful marketing of the securities proposed to be
registered by the Company, then the number of Piggyback Securities and Other
Common Stock to be included in the underwriting shall be reduced pro rata
among all holders of Piggyback Securities and Other Common Stock requesting
such registration.
2. Registration Procedures.
(a) If and whenever the Company is required by the provisions of this
Agreement to include in a registration statement any Registrable Securities or
Piggyback Securities under the Securities Act, the Company shall be entitled to
postpone either the filing or the effectiveness of any such registration
statement for a period of 135 days from the receipt of a request for such
registration if a valid corporate purpose exists for withholding the public
release of possibly material information, but, subject to such right, the
Company shall:
(i) use its best efforts to prepare and file with the SEC a
registration statement on the appropriate form (provided that before filing a
registration statement or prospectus or amendments or supplements thereto which
contain any information regarding the Related Stockholders, the Company will
furnish each of the Related Stockholders with copies of all such documents
proposed to be filed) with respect to such Registrable Securities or Piggyback
Securities and use its best efforts to cause such registration statement to
become and remain effective as provided herein;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement and prospectus
effective and current and to comply with the provisions of the Securities Act
with respect to the sale or other
3
<PAGE>
disposition of all Registrable Securities or Piggyback Securities covered by
such registration statement, including such amendments and supplements as may
be necessary to reflect the intended method of disposition by the prospective
seller or sellers of such Registrable Securities or Piggyback Securities
until the Related Stockholder(s) have completed the distribution described in
the registration statement, but for no longer than 90 days;
(iii) furnish to each prospective seller of Registrable
Securities or Piggyback Securities such number of copies of preliminary, final,
amended or supplemental registration statements and prospectuses as such seller
may reasonably request;
(iv) use its best efforts to register or qualify under such
other securities or blue sky or other applicable laws of such jurisdictions
within the United States as each prospective seller shall reasonably request,
and to maintain such registrations and qualifications effective for a period
conterminous with the effectiveness of the registration statement under the
Securities Act, and to do any and all other acts and things which may be
necessary under applicable laws to enable the Related Stockholder(s) to
consummate the disposition in such jurisdictions of such Registrable Securities
or Piggyback Securities, as the case may be; provided, however, that the Company
shall not be obligated to so register or qualify such Registrable Securities or
Piggyback Securities in any jurisdiction in which the Company would be required
to execute a general consent to service of process as a condition thereof and
the Company is not already subject or otherwise required to become subject to
such service of process in such jurisdiction;
(v) notify the Related Stockholder(s), at any time when a
prospectus relating thereto is required to be delivered under the Securities Act
within the period that the Company is required to keep the registration
statement effective, of the happening of any event as a result of which the
prospectus included in any such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the statements
therein not misleading, and prepare a supplement or amendment to such prospectus
so that, as thereafter delivered to the purchasers of such Registrable
Securities or Piggyback Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements therein not misleading; and
(vi) enter into such customary agreements (including an
underwriting agreement in customary form) and take such other actions as the
Related
4
<PAGE>
Stockholder(s) reasonably may request in order to expedite or facilitate the
disposition of such Registrable Securities or Piggyback Securities.
(b) It shall be a condition precedent to the obligations of the
Company to take any actions pursuant to Sections 1 and 2 of this Agreement that
the Related Stockholder shall furnish to the Company such information, consents,
and other documents relating to the Related Stockholder as the Company may
reasonably request and as may be required in connection with the action to be
taken by the Company hereunder.
(c) At the end of the period during which the Company is obligated to
keep any registration statement current and effective, the holders of
Registrable Securities or Piggyback Securities included in the registration
statement shall discontinue sales of such Registrable Securities or Piggyback
Securities pursuant to such registration statement upon receipt of notice from
the Company of its intention to remove from registration the securities covered
by such registration statement which remain unsold, and such holder shall notify
the Company of the number of shares registered which remain unsold immediately
upon receipt of such notice from the Company.
(d) Expenses of registration hereunder shall be paid by the Company
(including without limitation all registration and filing fees, blue sky fees
and expenses, printing expenses, fees and expenses of counsel for the Company
and its independent public accountants) provided that all underwriting discounts
and selling commissions applicable to the sale of Registrable Shares or
Piggyback Securities and all fees and expenses of counsel or other experts
retained by the Related Stockholder(s) and other incidental expenses of the
Related Stockholder(s) in connection with their duties hereunder shall be paid
by the incurring Related Stockholder.
3. Indemnification. In the event any of the Registrable Securities or
Piggyback Securities are included in a registration statement under this
Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Related Stockholder, and any underwriter (as defined in the
Securities Act) for such Related Stockholder, and each person, if any, who
controls such Related Stockholder or such underwriter within the meaning of the
Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), against any losses, claims,
5
<PAGE>
damages or liabilities, joint or several, to which any such person may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or filed with
the SEC pursuant to and in accordance with Rule 424(b) under the Securities
Act, or any amendments or supplements thereto, or arise out of or any based
upon the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein
not misleading; and the Company will reimburse each such Related Stockholder,
such underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, the Company shall not be liable to any Related
Stockholder, underwriter or controlling person in any such case for any such
loss, claim, damage or liability to the extent that it arises out of or is
based upon an untrue statement or alleged untrue statement in or omissions or
alleged omissions from any of such documents, in reliance upon and in
conformity with written information furnished to the Company expressly for
use in connection with such registration by any Related Stockholder,
underwriter or controlling person; and provided further that with respect to
any untrue statement or omission or alleged untrue statement or omission made
in any preliminary prospectus, the indemnity agreement contained in this
subsection (a) shall not inure to the benefit of any Related Stockholder,
underwriter or controlling person from whom the person asserting such losses,
claims, damages or liabilities purchased shares of Common Stock concerned, to
the extent that any such loss, claim, damage or liability of such Related
Stockholder, underwriter or controlling person results from the fact that
there was not sent or given to such person, at or prior to the written
confirmation of the sale of such shares of Common Stock to such person, a
copy of the Prospectus, if required by the Securities Act.
(b) To the extent permitted by law, each Related Stockholder will
indemnify and hold harmless the Company, and any underwriters (as defined in the
Securities Act) for the Company, each of its directors, each of its officers who
have signed such registration statement, each person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act, and each
other Related Stockholder against any losses, claims, damages or liabilities
joint or several to which any such person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue or alleged untrue statement of any material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or filed with the
6
<PAGE>
SEC pursuant to and in accordance with Rule 424(b) under the Securities Act
or any amendments or supplements thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to
be stated therein, or necessary to make the statements therein not
misleading; in each such case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in such registration statement, preliminary prospectus,
final prospectus, or amendments or supplements thereto, in reliance upon and
in conformity with written information furnished by such Related Stockholder
expressly for use in connection with such registration; and each such Related
Stockholder will reimburse any legal or other expenses reasonably incurred by
the Company or any such director, officer, controlling person, underwriter or
other Related Stockholder in connection with investigating or defending any
such loss, claim, damage or liability or action as such expenses are
incurred; provided, however, that with respect to any untrue statement or
omission or alleged untrue statement or omission made in any preliminary
prospectus, the indemnity agreement contained in this subsection (b) shall
not inure to the benefit of the Company, its directors, its officers,
underwriters or control persons or any such Related Stockholder from whom the
person asserting such losses, claims, damages or liabilities purchased the
shares of Common Stock concerned, to the extent that any such loss, claim,
damage or liability of the Company, its directors, its officers, underwriters
or control persons or any such Related Stockholder results from the fact that
there was not sent or given to such person, at or prior to the written
confirmation of the sale of such shares of Common Stock to such person, a
copy of the Prospectus, if required by the Securities Act.
(c) Promptly after receipt by an indemnified party under this
Section 3 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party under this Section 3, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party
pursuant to subsections (a) or (b) of this Section, except to the extent that
it was unaware of such action and has been materially prejudiced by such
failure, or from any liability which it may have to any indemnified party
otherwise than pursuant to subsection (a) or (b) of this Section. In case
any such action is brought against any indemnified party and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein, and, to the extent the indemnifying party
desires, jointly with any other indemnifying party similarly noticed, to
assume the defense thereof with counsel satisfactory to such indemnified
party who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party, and after notice from the
7
<PAGE>
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. In no event
shall the indemnifying party be liable for the reasonable fees and expenses
of more than one counsel (in addition to any local counsel) for all such
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdictions arising out of the same set of
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by
such indemnified party unless such settlement includes an unconditional
release of such indemnified party from all liability on any claims that are
the subject matter of such action.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) and (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsections (a) and (b) above
(i) in such proportion as is appropriate to reflect the relative benefits
received by the indemnifying party on the one hand and the indemnified party on
the other from the offering of the Common Stock or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the indemnifying party on
the one hand and the indemnified party on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities as well as any other relevant equitable considerations. The
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received by
the indemnifying party and the indemnified party. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omissions or
alleged omission to state a material fact relates to information supplied by the
indemnifying party or the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages, or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by
8
<PAGE>
such indemnified party in connection with investigating or defending any
action or claim which is the subject of this Section. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentations.
(e) The obligations of the Company and the Related Stockholders under
this Agreement shall be in addition to any liability which the Company and the
Related Stockholders may otherwise have.
4. Termination of the Company's Obligations. All obligations of the
Company pursuant to this Agreement shall terminate at such time as each Related
Stockholder is able to sell all shares of Common Stock then owned by it without
restriction or limitation.
5. Assignment. This Agreement shall be binding upon you and your
respective successors and permitted assigns. This Agreement may not be assigned
by you without the Company's consent, except that it is contemplated herein and
the Company expressly permits the assignment by a Related Stockholder to any of
the other Related Stockholders or to any partner or shareholder of a Related
Stockholder. In addition, the Company and each of the Related Stockholders
acknowledges and agrees that any of the Related Stockholders may exercise in its
discretion, a request hereunder on behalf of itself and its permitted assigns as
aforesaid, but any such demand shall be included within and counted against the
rights granted to the Related Stockholders under Section 1 hereof.
6. Miscellaneous. The laws of the State of New York shall govern this
Agreement (without giving effect to such jurisdiction's conflict of laws
principles). All notices and other communications hereunder shall be in writing
and shall be deemed duly given when personally delivered against receipt, on the
next business day when sent by Federal Express or similar overnight courier
service, or on the third business day when sent certified mail, postage prepaid,
in any case to the addresses of the parties set forth on the first page hereof
(or such other addresses as to which notice has been given hereunder). This
Agreement contains the entire understanding of the parties hereto with respect
to its subject matter and supersedes all prior agreements and understandings
between the parties with respect to its subject matter. The Agreement may be
amended only by a written instrument duly executed by the parties hereto.
9
<PAGE>
If this correctly sets forth our understanding, please confirm your
agreement by executing each of the enclosed copies of this letter in the space
indicated below and returning one executed copy to the undersigned.
OMNIQUIP INTERNATIONAL, INC.
By: /s/ Philip G. Franklin
________________________________
Name: Philip G. Franklin
Title: Chief Financial Officer
Accepted and agreed to this
30th day of September, 1996
HARBOUR GROUP INVESTMENTS III, L.P.
By: HARBOUR GROUP III MANAGEMENT CO., L.P.
General Partner
By: HGM III CO.
General Partner
By: /s/ Francis M. Loveland
_________________________________
Name: Francis M. Loveland
Title: Vice President
UNIQUIP - HGI ASSOCIATES, L.P.
By: HARBOUR GROUP INDUSTRIES, INC.
General Partner
By: /s/ Francis M. Loveland
____________________________________
Name: Francis M. Loveland
Title: Vice President and Chief
Financial Officer
10
<PAGE>
EX.10.50
FLOORPLAN REPURCHASE AGREEMENT
To: ITT COMMERCIAL FINANCE CORP.
8251 Maryland Avenue
Clayton, Missouri, U.S.A. 63105
and
To: ITT COMMERCIAL FINANCE
a division of ITT Industries of Canada Ltd.
50 Burnhamthorpe Road, Suite 1400
Mississauga, Ontario, Canada L5B 3C2
We, the undersigned, sell various products ("Merchandise") at wholesale
to retail dealers or distributors in the United States of America and Canada
(collectively "Dealer") who may require financial assistance in order to make
such purchases from us. To induce you to finance the acquisition of
Merchandise by any Dealer and in consideration thereof, we agree that:
1. Whenever a Dealer shall request the shipment of Merchandise from
us and shall request the same be financed by you, we may deliver to you an
invoice or invoices describing the Merchandise and by delivery of an invoice
shall evidence and warrant the following:
a. That we transfer to the Dealer all rights, title and
interest in and to the Merchandise so described
contingent upon your approval to finance the transaction.
b. That our title to the Merchandise is free and clear of all
liens and encumbrances when transferred to the Dealer.
c. That the Merchandise is in salable condition, free of any
material defects.
d. That the Merchandise has been the subject of a bona fide
order by the Dealer placed with and accepted by us and that
the Dealer has requested that the transaction be financed
by you.
e. That the Merchandise subject to the transaction has been
shipped to the Dealer not more than ten (10) days prior to
the invoice date.
<PAGE>
In the event of any breach of any of the above-described warranties, we
will immediately: (i) pay to you an amount equal to the total unpaid balance
(being principal, finance charges, and all service, delinquency and penalty
charges) owed to you on each item of such Merchandise as to which we have
breached any of the above-described warranties; and (ii) reimburse you for
all costs and expenses (including, but not limited to, attorney's fees and
legal fees on a solicitor and client basis) incurred by you as a result of
any such breach.
2. You shall only be bound to finance Merchandise which you have
accepted to finance (which acceptances shall be indicated by your issuance of
an approval number or a draft or other instrument to us in payment of the
invoice less the amount of your charges as agreed upon from time to time) and
only if: (i) the Merchandise is delivered to the Dealer within thirty (30)
days following your acceptance; (ii) you have received our invoice for such
Merchandise within ten (10) days from the date of delivery of the Merchandise
to the Dealer; and (iii) you have not revoked your acceptance prior to the
shipment of the Merchandise to the Dealer.
3. Whenever you deem it necessary in your sole discretion to
repossess or if you otherwise come into possession of any Merchandise
financed by you when originally shipped by us to a Dealer, in which you have
a security interest or other lien, we will be required to and will repurchase
each unit of such Merchandise from you upon your repossession or other
acquisition or possession thereof in accordance, and subject to compliance,
with the following terms and conditions:
a. We will repurchase each unit of such Merchandise in
whatever condition, at the point where you repossess it
or where it otherwise comes into your possession. You
agree to give us notice of the time and place to
repurchase such Merchandise.
b. Subject to the provisions of 3(c) hereinbelow, the
repurchase price that we will pay you for each unit of
such Merchandise will be an amount equal to the total
unpaid balance (being principal, finance charges and all
service, penalty and delinquency charges) owed to you on
such unit of Merchandise, and any costs and expenses paid
or incurred by you in connection with the repossession of
such unit of Merchandise including reasonable attorney's
fees and legal fees on a solicitor and client basis
("Repurchase Price"). We will pay you the Repurchase
Price for each unit of such Merchandise immediately upon
the earlier of (i) our disposition of such unit of
Merchandise, or (ii) the ninetieth (90th) day following
the date you repossess or otherwise come into possession of
such unit of Merchandise. We will also pay you interest
on the average daily unpaid Repurchase Price for each unit
of such Merchandise, from the date of your repossession or
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<PAGE>
other acquisition or possession of such unit of Merchandise
until the Repurchase Price is paid in full. Interest will
accrue on the average daily unpaid Repurchase Price on each
unit of such Merchandise at the rate of interest equal to
the rate of interest charged by you to the particular
Dealer under your financing program with such Dealer.
Interest payments will be due and payable on the 10th day
of each month.
c. We may send you a written notice requesting you to obtain
possession, for repurchase by us, of all Merchandise of a
Dealer ("Action Notice") if such Dealer is in default to
you in the payment of any principal or interest payment
according to the terms of your financing agreement with
such Dealer. You shall then be required, within thirty
(30) days following your actual receipt of such Action
Notice ("Action Period") to initiate any action or motion
to obtain possession and the right to dispose of such
Merchandise. If you fail to initiate such action or motion
within the Action Period, the Repurchase Price on each such
unit of Merchandise of such Dealer shall be reduced by
(i) all principal payments that become more than ninety
(90) days past due after the date of your actual receipt of
such Action Notice ("Principal Reduction") and (ii) all
interest, finance charges and all service, penalty and
delinquency charges related to such Principal Reduction.
The Repurchase Price shall not be reduced by any principal
payment, or any finance charges or any service, penalty or
delinquency charges related thereto, that is ninety (90) or
more days past due as of the date of your actual receipt of
such Action Notice regardless of whether or not you
initiate such action or motion within the Action Period.
If you do initiate such action or motion within the Action
Period, we shall pay you one hundred percent (100%) of the
Repurchase Price in accordance with the terms of this
Agreement on each such unit of Merchandise financed by you
when originally shipped by us to Dealer. You agree to
apply payments from a Dealer in accordance with your normal
and customary practices consistently applied.
d. You warrant to us that your security interest or other lien
in each unit of such Merchandise that you repossess or that
otherwise comes into your possession is superior to all
other security interests and liens in such unit of
Merchandise as of the date by which you specify we must
take possession of such unit of Merchandise. We neither
take nor receive any rights, and we promise that there will
be no liens superior to yours, in any unit of such
Merchandise until the Repurchase Price for such unit of
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<PAGE>
Merchandise is paid, as limited, if such limitation is
applicable, by 3(c) hereinabove.
4. Except as limited by 3(c) hereinabove, you may extend the time
of a Dealer in default to fulfill its obligations to you without notice to us
and without altering our obligations hereunder. We waive any rights we may
have to notice of: dishonor, any legal proceeding against a Dealer (except
under 3(c) hereinabove), and we waive any rights we may have to require you
to proceed against a Dealer or to pursue any other remedy in your power. Our
liability to you will not be affected by any change in the terms of any
agreement between you and Dealer, or the release, settlement or compromise of
or with any party liable for the payment or performance thereof other than
Dealer, the nonperfection of any security or lien thereunder, any change in
Dealer's financial condition, or the interruption of business relations
between you and Dealer. We have made an independent investigation of the
financial condition of Dealer and we do not rely on any representations made
by you as to the financial condition of Dealer. We acknowledge that we have
access to current and future Dealer financial information which will enable
us to continuously remain informed of Dealer's financial condition. We may,
however, rely upon written information that you supply to us as to the amount
and length of time that principal or interest payments are past due from a
Dealer to you.
5. Your failure to exercise any rights granted hereunder shall not
operate as a waiver of those rights.
6. This Agreement shall be binding upon and inure to the benefit of
your successors or assigns. You may perform or cause to be performed any or
all of your obligations hereunder by any of your subsidiary and/or affiliated
companies, and our obligations under this Agreement shall inure to the
benefit of any of your subsidiary and/or affiliated companies.
7. Either of us may terminate this Agreement by notice to the other
in writing, the termination to be effective thirty (30) days after receipt of
the notice by the other party, but the termination shall in no manner
terminate our liability with respect to financial transactions entered into
by you with any Dealer prior to the effective date of termination, including,
without limitation, transactions that will not be completed until after the
effective date of termination.
8. THIS AGREEMENT IS SUBMITTED BY US TO YOU (FOR YOUR ACCEPTANCE OR
REJECTION THEREOF) AT ITT COMMERCIAL FINANCE CORP.'S PRINCIPAL PLACE OF
BUSINESS IN THE CITY OF CLAYTON, ST. LOUIS COUNTY, STATE OF MISSOURI, U.S.A.
63105 AND SHALL NOT BE BINDING OR BECOME EFFECTIVE UNLESS AND UNTIL ACCEPTED
BY YOU IN THE MANNER SET FORTH BELOW. IF SO ACCEPTED, THIS AGREEMENT SHALL
BE DEEMED TO HAVE BEEN MADE AT ITT COMMERCIAL FINANCE CORP.'S PRINCIPAL PLACE
OF BUSINESS. THIS AGREEMENT SHALL BE
4
<PAGE>
GOVERNED AND CONTROLLED AS TO INTERPRETATION, ENFORCEMENT, VALIDITY,
CONSTRUCTION, EFFECT AND IN ALL OTHER RESPECTS BY THE LAWS, STATUTES AND
DECISIONS OF THE STATE OF MISSOURI, U.S.A. WE, IN ORDER TO INDUCE YOU TO
ACCEPT THIS AGREEMENT, UNCONDITIONALLY CONSENT TO THE TERMS OF BINDING
ARBITRATION HEREINAFTER SET FORTH. IN THE EVENT THE TERMS OF SUCH BINDING
ARBITRATION ARE INVALID OR UNENFORCEABLE, WE UNCONDITIONALLY CONSENT AND
SUBMIT TO THE JURISDICTION OF THE COURTS OF THE UNITED STATES OF AMERICA
WHEREVER LOCATED, AND AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING DIRECTLY
OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO OR FROM THIS AGREEMENT
MAY BE LITIGATED, AT YOUR SOLE DISCRETION AND ELECTION, IN ANY STATE OR
FEDERAL COURTS HAVING SITUS ANYWHERE WITHIN THE STATE OF MISSOURI, U.S.A. WE
HEREBY FURTHER UNCONDITIONALLY CONSENT AND SUBMIT TO THE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF MISSOURI, U.S.A. WE
HEREBY WAIVE ANY RIGHT WE MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY
LITIGATION BROUGHT AGAINST US BY YOU IN ACCORDANCE WITH THIS PARAGRAPH.
9. BINDING ARBITRATION. All actions, disputes, claims and
controversies heretofore or hereafter arising out of or relating to (a) this
Agreement and/or any amendments and addenda hereto, (b) any subsequent
agreement entered into between the parties hereto, (c) any previous agreement
entered into between the parties hereto and/or (d) any relationship or
business dealings between the parties hereto (collectively the "Disputes"),
shall be subject to and resoled by binding arbitration in accordance with and
pursuant to the Code of Procedure in effect from time to time ("Code") of the
National Arbitration Forum ("NAF"), currently located at 2124 Dupont Avenue
South, Minneapolis, Minnesota 55405. If the code is cancelled and/or the
NAF dissolves or disbands, all arbitrable Disputes under this Agreement shall
be subject to and resolved by binding arbitration in accordance with and
pursuant to the Code and shall be administered by the American Arbitration
Association.
a. The parties to this Agreement agree that the locale and
situs of all arbitration provided for herein shall be in
the Eastern Division of the Federal Judicial District for
the Eastern District of Missouri. When the jurisdictional
requirements of the Federal Arbitration Act, 9 U.S.C.,
Sections 1-14 (1982), ("FAA") are satisfied, the FAA shall,
with respect to all Disputes within the scope of the FAA,
govern the arbitration hereunder and be applied by the
arbitrator(s). The parties recognize and agree that this
Agreement evidences transactions involving commerce among
the several states.
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<PAGE>
b. Nothing in this Agreement shall be construed to prevent
either party's use of any prejudgment or provisional action
or remedy relating to any collateral or security for any
contractual debts now or hereafter owed by either party to
the other under this Agreement, any previous agreement
entered into between the parties, any subsequent agreement
entered into between the parties and/or any renewals,
extensions, changes, amendments, addenda, additions or
modifications thereto. The institution and maintenance of
an action for judicial relief in pursuit of any such
prejudgment or provisional remedies shall not constitute a
waiver of the right of any party, including the plaintiff,
to compel arbitration of any Disputes subject to
arbitration as provided herein. If, however, either party
brings any other action for judicial relief with respect to
any Disputes that the parties have agreed to arbitrate
under the terms and provisions of this Agreement, the party
who brought such action shall be liable for and shall
immediately pay to the other party all of the other party's
costs and expenses (including attorney's fees) incurred by
the other party to stay such action and remove or refer
such Disputes to arbitration. Without limiting the
foregoing, the parties hereto further specifically and
expressly agree that all Disputes arising under common law,
statutory law and in equity shall be subject to binding
arbitration pursuant to the terms stated herein.
c. In any Disputes arbitrated pursuant to the terms of this
Agreement, the arbitrator(s) is(are) specifically empowered
to hear and decide pre-hearing motions to dismiss such
Disputes and for summary judgment on such Disputes. The
parties agree to permit discovery proceedings of the type
provided by the Federal Rules of Civil Procedure both in
advance and during recesses of the arbitration hearings,
but only with respect to any Disputes arbitrated where the
amount in controversy is at least $250,000.00. All
arbitration proceedings conducted hereunder will be
conducted on a confidential basis and all awards granted
thereunder shall be kept confidential. Any award, judgment
or order rendered by the arbitrator(s) pursuant to the
terms of this Agreement may be entered and enforced by
either party in any state or federal court having competent
jurisdiction. Each party agrees to submit to the
jurisdiction of any such court for purposes of enforcement
of any such award, order or judgment. Any award, judgment
or order rendered by the arbitrator(s) pursuant to such
arbitration shall be included in a written decision signed
by the arbitrator(s) joining therein, which will specify
the reasons
6
<PAGE>
upon which the award, judgment or order was based,
including all of the elements involved in the calculation
of any award of damages.
d. All notices you send to us will be sufficiently given when
actually received by us at our address specified below. All
notices we send to you will be sufficiently given if mailed
or delivered to you, and actually received by you, at:
8251 Maryland Avenue, Clayton, Missouri 63105, Attention:
General Counsel, or such other address as you may specify
from time to time. In the event either party brings legal
action to vacate or modify the arbitrator's(s') award and
such party does not prevail, such party will pay all costs
and expenses, including attorney's fees, incurred by the
other party in defending such action. Such costs and
expenses shall also be assessed against the petitioning
party who does not prevail in any subsequent appellate
action. If the arbitration provisions contained in this
Agreement are invalid or their application is invalid or
unenforceable, thereby allowing the parties to resolve
their Disputes outside of arbitration, we hereby agree that
any legal proceeding with respect to any Disputes in which
we or you or any of your affiliates, or our successors or
assigns are parties, will be tried in a court of competent
jurisdiction by a judge without a jury. We hereby waive
any right to a jury trial in any such proceeding.
10. This Agreement will only apply to Merchandise that you agree to
finance for a Dealer after the date hereof. All Merchandise that you agreed
to finance prior to the date hereof, whether or not such financing is
complete as of the date hereof, will be governed by any agreement(s) in
effect between you and us as of the date that you previously agreed to
provide such financing, and we hereby ratify all terms of such prior
agreements with respect to such Merchandise that you agreed to finance prior
to the date hereof.
11. This document contains the full agreement of the parties
concerning the financing by you, and the repurchase by us, of Merchandise,
and can be varied only by a document signed by all parties hereto. However,
we may agree to execute a Guaranty to ITT Commercial Finance Corp. or to
execute a Guarantee to ITT Commercial Finance, a division of ITT Industries
of Canada Ltd. as to transactions with specific Dealers (individually and
collectively "Guaranty"). The terms of that certain letter from Mr. Geoffrey
D. Lyon to Mr. Enoch Stiff dated September 19, 1990 and any such Guaranty
shall not limit or amend, but shall be in addition to and wholly separate
from, this Agreement.
12. Notice of the acceptance of this Agreement is hereby waived.
7
<PAGE>
EACH OF THE UNDERSIGNED HEREBY REQUESTS THAT THIS AGREEMENT BE DRAWN IN
ENGLISH.
CHACUN DES SOUSSIGNES EXIGENT QUE CE DOCUMENT SOIT REDIGE EN ANGLAIS.
Dated: October 2, 1990
ATTEST: TRAK INTERNATIONAL, INC.
/s/ /Illegible Signature/ By: /s/ P. Enoch Stiff
- ----------------------------- ---------------------------
Title: President
By: /s/ Allan J. Jablonsky
---------------------------
Title: Controller
(If a corporation, two authorized
officers must sign).
Business Address:
ACCEPTED: 369 W. Western Avenue
Port Washington, WI 53074
ITT COMMERCIAL FINANCE CORP.
By:
--------------------------
Title:
-----------------------
ITT COMMERCIAL FINANCE
a division of ITT Industries of Canada Ltd.
By:
--------------------------
Title:
-----------------------
8
<PAGE>
ADDENDUM TO FLOORPLAN REPURCHASE AGREEMENT
This Addendum is made to that certain Floorplan Repurchase Agreement
entered into by and between TRAK INTERNATIONAL, INC. ("TRAK") and ITT
Commercial Finance Corp. and ITT Commercial Finance, a division of ITT
Industries of Canada Ltd. ("ITT") on October 2, 1990 ("Agreement").
FOR VALUE RECEIVED, TRAK and ITT agree that the following paragraph is
incorporated into the Agreement as if originally set forth therein:
"Notwithstanding anything to the contrary in Section 3(d), in addition to
all our other obligations set forth in this Agreement, if, after
reasonable efforts, you are unable for any reason to obtain a
subordination of a prior filing creditor's interest in a Dealer's
Merchandise financed by you when originally shipped by TRAK to a Dealer,
or any proceeds thereof, we will be liable for and indemnify you for
One Hundred percent (100%) of any Loss you suffer as a result of your
inability to obtain such subordination (including, without limitation,
any Loss resulting from your inability to exercise your perfected
Purchase Money Security Interest ("PMSI") in Merchandise or your
inability to obtain any proceeds of, or chattel paper or general
intangibles arising from, any PMSI Merchandise); provided, however,
that this indemnification shall be of no force or effect as to any Loss
you suffer regarding Merchandise or any proceeds thereof, of any Dealer
against whom you have not obtained, as to Dealers located in the United
States, a first perfected PMSI in accordance with Section 9-312 of the
Uniform Commercial Code as enacted in the applicable jurisdiction
("UCC"), timely filed UCC continuation statements and sent
re-notification letters to maintain such priority and, as to Canadian
Dealers, complied with comparable Canadian legislation as enacted in the
applicable province regarding perfection of PMSI's. The amount of any
Loss and the decision as to when a Loss has occurred will be in your sole
discretion, provided you use your standard procedure for the
determination of a Loss. The term "Loss" as used in this paragraph will
mean: the principal balance and any finance charges due and owing to you
by the Dealer for Merchandise financed by you when originally shipped by
us to a Dealer, and all costs and expenses (including, without
limitation, reasonable attorneys' fees) incurred by you in attempting to
collect such Loss from the Dealer. We will immediately pay you the
amount owed under the terms of this paragraph on receipt of notice from
you that you have incurred a Loss with respect to any Dealer."
<PAGE>
The above provision is in addition to and separate from, and in no way
a limitation on or amendment to, any other provision of the Agreement.
All other terms as they appear in the Agreement are ratified and shall
remain unchanged and in full force and effect.
IN WITNESS WHEREOF, TRAK and ITT have executed this Addendum to
Floorplan Repurchase Agreement by their duly authorized representatives all
as of the 14th day of June, 1993.
TRAK INTERNATIONAL, INC. ITT COMMERCIAL FINANCE CORP.
By: /s/ James H. Hook By: /s/ /Illegible Signature/
------------------------- ---------------------------
Title: VP[cad 228]Finance & CFO Title: RVP
ITT COMMERCIAL FINANCE,
a division of ITT Industries of Canada Ltd.
By: /s/ /Illegible Signature/
------------------------------
Title: RVP
2
<PAGE>
EX. 10.51
Deutsche Financial Services
A Deutsche Bank Company
August 21, 1996
Mr. Enoch Stiff
President & CEO
TRAK International
369 W. Western Avenue
Port Washington, WI 53074
Dear Enoch:
Please accept this letter as confirmation that TRAK's recourse liability for
calendar year 1996 is capped at 5% of the total TRAK dealer outstandings as
of 12/31/95, or $1,500,000.00, whichever is greatest. We will continue to
assign recourse on a dealer by dealer basis depending on the strength of each
individual dealer, but the combined recourse liability in any one calendar
year for TRAK would be limited to the described cap. This recourse limitation
will not however, in any way, limit any of TRAK's obligations or liabilities
for the repurchase of TRAK merchandise from DFS.
Our records indicate the TRAK dealer receivable outstandings on 12/31/95 were
$40,658,940.00. Therefore, TRAK's total combined recourse liability for
calendar 1996 is capped at $2,032,947.00. The caps for 1997 and subsequent
years will be based on the outstanding receivable level at December 31 of the
previous year.
If you have any questions or if I can be of any other assistance, please do
not hesitate to contact me.
Sincerely,
/s/ Robert S. Hawkins
Robert S. Hawkins
Regional Vice President
cc: Tom Meredith
Rick Verweyst
Acknowledge and agreed to this 27th day of August, 1996.
TRAK International
By: /s/ Enoch Stiff
- ---------------------------
Title: President & CEO
<PAGE>
EX 10.52
LONG TERM INCENTIVE PLAN
EXAMPLE:
- -------
1. Joe Smith is a V.P. whose estimated salary on 8/31/93 will be $88,000. His
maximum Group B annual incentive for the FYE 8/31/93, payable during the
following December is $35,200 (40%).
2. As a participant in the long term plan, Joe defers 25% of the annual
incentive he is paid in December (a maximum of $8,800). Assume that Joe gets
less than the maximum annual award, say $30,000, and he therefore puts
$7,500 (25%) into the long term plan.
3. Joe's deferred bonus of $7,500 will earn interest at a to be determined rate
for a period of three years, from the initial date of the annual award,
December 1993.
4. If the interest rate is set at 10% compounded monthly, Joe would get a cash
payment of $10,111.36 paid to him in December 1996.
5. In addition to the deferred bonus plus interest Joe will be eligible to
receive an additional sum of money if the eps growth factor for the fiscal
years ending 8/31/93, 8/31/94, 8/31/95 and 8/31/96 is positive.
6. In this example, if the eps growth factor for the sample period is 18%, Joe
would receive an additional 18% of the maximum bonus he would have received
for the FYE 8/31/93 ($35,200).
7. Joe's payment under the long term bonus plan would then total $10,111.36
plus $6,336 for a total of $16,447.36.
8. Joe gets $16,447.36 only if he continues in the employ of TRAK through the
fourth year. If he voluntarily resigns or is terminated for cause, he gets
the deferred bonus principal only ($6,336). If he retires or is terminated
for reasons other than cause, he will receive the principal plus earnings
up to his termination date.
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
Common Stock
($0.01 Par Value Per Share)
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT made this ___ day of March, 1997, by and
among Omniquip International, Inc., a Delaware corporation (the "Company"),
and Harbour Group Investments III, L.P., a Delaware limited partnership, and
Uniquip-HGI Associates, L.P., a Delaware limited partnership (collectively,
the "Selling Stockholders").
WHEREAS, the Company has filed with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Act of 1933, as
amended (the "Act"), a Registration Statement (as finally declared effective,
the "Registration Statement") on Form S-1 (File No. 333-13181) pursuant to
which the Company and the Selling Stockholders propose to sell to the public
an aggregate of 8,000,000 shares of the Company's Common Stock through
several underwriters led by Morgan Stanley & Co. Incorporated, CS First
Boston Corporation, Schroder Wertheim & Co. Incorporated and Robert W. Baird
& Co. Incorporated and certain of their respective affiliates (collectively
the "Underwriters"), in connection with an offering pursuant to an
underwriting agreement (the "Underwriting Agreement") to be entered into by
the Company, the Selling Stockholders and the Underwriters. In addition, the
Selling Stockholders propose to grant the Underwriters an option to purchase
up to an additional 1,200,000 shares of the Company's Common Stock solely to
cover over-allotments.
<PAGE>
WHEREAS, the Underwriting Agreement contains certain provisions with
respect to the obligations and liabilities between the Company and the
Selling Stockholders on the one hand and the Underwriters on the other.
WHEREAS, the Underwriters require the Selling Stockholders to agree to
indemnify the Company and the Underwriters for certain liabilities.
WHEREAS, that certain Letter Agreement dated September 30, 1996 (the
"Registration Rights Agreement") between the Company and the Selling
Stockholders requires the Company and the Selling Stockholders to indemnify
each other for certain liabilities.
WHEREAS, the Company and the Selling Stockholders desire to set forth the
obligations and liabilities between and among each other arising out of their
respective obligations and liabilities under the Underwriting Agreement and
the Registration Rights Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. The Company agrees to indemnify and hold harmless the Selling
Stockholders and each person, if any, who controls each Selling Stockholder
within the meaning of the Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), against any losses, claims, damages or
liabilities, joint or several, to which any such person may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the forms of prospectus first filed
with the Commission pursuant to
2
<PAGE>
and in accordance with Rule 424(b) under the Act or (if no such filing is
required) the prospectus contained in the Registration Statement, or any
amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make
the statements therein not misleading; and the Company will reimburse each
Selling Stockholder and each such controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses
are incurred; provided, however, that the Company shall not be liable in any
such case to the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue statement in or
omission or alleged omission from any of such documents in reliance upon and
in conformity with written information furnished to the Company by any
Selling Stockholder or any controlling person thereof specifically for use
therein; and provided further that with respect to any untrue statement or
omission or alleged untrue statement or omission made in any preliminary
prospectus, the indemnity agreement contained in this Section 1 shall not
inure to the benefit of any entity or firm or any controlling person thereof
from whom the person asserting such losses, claims, damages or liabilities
purchased the shares of Common Stock concerned, to the extent that any such
loss, claim, damage or liability of such entity, firm or controlling person
results from the fact that there was not sent or given to such person, at or
prior to the written confirmation of the sale of such shares of Common Stock
to such person, a copy of the Prospectus, if required by the Act.
2. Each Selling Stockholder agrees, severally and not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the Registration Statement and each person, if any,
who controls the Company within the meaning of the Act or the Exchange Act
against any losses, claims, damages or liabilities,
3
<PAGE>
joint or several, to which any such person may become subject, under the Act
or otherwise insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue or
alleged untrue statement of any material fact contained in the Registration
Statement, the forms of prospectus first filed with the Commission pursuant
to and in accordance with Rule 424(b) under the Act or (if no such filing is
required) the prospectus contained in the Registration Statement, or any
amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make
the statements therein not misleading; in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Selling Stockholder
specifically for use therein; and the Selling Stockholder will reimburse any
legal and other expenses reasonably incurred by the Company, any such
director, officer or controlling person thereof in connection with
investigating or defending any such loss, claim, damage or liability or
action as such expenses are incurred; provided, however, that with respect to
any untrue statement or omission or alleged untrue statement or omission made
in any preliminary prospectus, the indemnity agreement contained in this
Section 2 shall not inure to the benefit of any entity or firm or any
controlling person thereof from whom the person asserting such losses,
claims, damages or liabilities purchased the shares of Common Stock
concerned, to the extent that any such loss, claim, damage or liability of
such entity, firm or controlling person results from the fact that there was
not sent or given to such person, at or prior to the written confirmation of
the sale of such shares of Common Stock to such person, a copy of the
Prospectus, if required by the Act.
3. Promptly after receipt by an indemnified party under this Agreement
of notice of the commencement of any action, such indemnified party will, if
a claim in respect
4
<PAGE>
thereof is to be made against any indemnifying party under this Agreement,
notify the indemnifying party of the commencement thereof; but the omission
so to notify the indemnifying party will not relieve it from liability which
it may have to any indemnified party pursuant to Sections 1 or 2 of this
Agreement, except to the extent that it was unaware of such action and has
been materially prejudiced by such failure, or from any liability which it
may have to any indemnified party otherwise than pursuant to Sections 1 and 2
of this Agreement. In case any such action is brought against any
indemnified party and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein, and,
to the extent the indemnifying party desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with
the consent of the indemnified party, be counsel to the indemnifying party),
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with
the defense thereof other than reasonable costs of investigation. In no
event shall the indemnifying party be liable for the fees and expenses of
more than one counsel (in addition to any local counsel) for all such
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same set of
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by
such indemnified party unless such settlement includes an unconditional
release of such indemnified party from all liability on any claims that are
the subject matter of such action.
5
<PAGE>
4. If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under Sections 1 or 2
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages
or liabilities referred to in Section 1 or 2 above (i) in such proportion as
is appropriate to reflect the relative benefits received by the indemnifying
party on the one hand and the indemnified party on the other from the
offering of the Common Stock or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the indemnifying party on the one
hand and the indemnified party on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities as
well as any other relevant equitable considerations. The relative benefits
received by the indemnifying party on the one hand and the indemnified party
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the
indemnifying party and the indemnified party. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omissions or alleged omission to state a material fact relates to
information supplied by the indemnifying party or the indemnified party and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The
amount paid by any party as a result of the losses, claims, damages, or
liabilities referred to in the first sentence of this Section shall be deemed
to include any legal or other expenses reasonably incurred by such party in
connection with investigating or defending any action or claim which is the
subject of this Section. No person guilty of fraudulent misrepresentation
(within the meaning of
6
<PAGE>
Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
5. The obligations of the Company and the Selling Stockholders under
this Agreement shall be in addition to any liability which the Company and
the Selling Stockholders may otherwise have.
6. It is agreed that any controversy arising out of the operation of the
interim reimbursement arrangements set forth herein, including the amounts
of any requested reimbursement payments and the method of determining such
amounts, shall be settled by arbitration conducted under the provisions of
the Constitution and Rules of the Board of Governors of the New York Stock
Exchange, Inc. or pursuant to the Code of Arbitration Procedure of the NASD
or, if any such arbitration procedure is unavailable, pursuant to the rules
of the American Arbitration Association. Any such arbitration must be
commenced by service of a written demand for arbitration or written notice of
intention to arbitrate, therein electing the arbitration tribunal. In the
event the party demanding arbitration does not make such designation of an
arbitration tribunal in such demand or notice, then the party responding to
said demand or notice is authorized to do so. Such an arbitration would be
limited to the operation of the interim reimbursement provisions contained in
Section 3 hereof and would not resolve the ultimate propriety or
enforceability of the obligation to reimburse expenses which is created by
the provisions of such Section 3 hereof.
7. In the event the Company and the Selling Stockholders shall be liable
to reimburse the Underwriters for out-of-pocket expenses incurred by the
Underwriters as a consequence of the refusal, failure or inability by the
Company or any Selling Stockholder to perform any undertaking or obligation
required to be performed by the Underwriting Agreement, the Company and each
of the Selling Stockholders agree that the person who
7
<PAGE>
fails to perform its respective obligations shall be liable to the party who
has not defaulted in its obligations under the Underwriting Agreement for all
amounts required to be paid by the Company and the Selling Stockholders
pursuant to the Underwriting Agreement.
8. Any notice, claim or demand hereunder shall be made in writing and
shall be sufficient if given as provided in the Underwriting Agreement.
9. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators,
successors and assigns.
10. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York, without regard to such jurisdiction's
conflicts of laws principles.
11. This Agreement may be executed by one or more parties hereto in any
number of counterparts, each of which shall be deemed to be an original, but
all of which shall be deemed to be one and the same instrument.
12. Except as otherwise specifically defined herein, all capitalized terms
used in this Agreement shall have the meanings assigned such terms in the
Underwriting Agreement.
8
<PAGE>
IN WITNESS WHEREOF, the parties below have caused the foregoing to be
executed on their behalf this ___ day of March, 1997.
OMNIQUIP INTERNATIONAL, INC.
By: ________________________________
Name:
Title:
HARBOUR GROUP INVESTMENTS III, L.P.
By: HARBOUR GROUP III MANAGEMENT
CO., L.P., General Partner
By: HGM III CO., General Partner
By:_____________________________
Name:
Title:
UNIQUIP-HGI ASSOCIATES, L.P.
By: HARBOUR GROUP INDUSTRIES, INC.
General Partner
By:_____________________________
Name:
Title:
9
<PAGE>
EXHIBIT 21.0
SUBSIDIARIES OF THE REGISTRANT
Subsidiary Jurisdiction of Incorporation
- ---------- -----------------------------
TRAK International, Inc. Delaware
Lull International, Inc. Delaware
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated November 1, 1996,
except as to Notes 1 and 17 which are as of February 19, 1997, relating to
the financial statements of Omniquip International, Inc., which appears in
such Prospectus. We also consent to the application of such report to the
Financial Statement Schedules for the period August 17, 1995 to September 30,
1995 and for the fiscal year ended September 30, 1996 listed under Item 16(b)
of this Registration Statement when such schedules are read in conjunction
with the financial statements referred to in our report. The audits referred
to in such report also included these schedules. We also consent to the
references to us under the headings "Experts" and "Selected Consolidated
Financial Data" in such Prospectus. However, it should be noted that Price
Waterhouse LLP has not prepared or certified such "Selected Consolidated
Financial Data."
PRICE WATERHOUSE LLP
St. Louis, Missouri
February 19, 1997
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated July 15, 1996,
relating to the financial statements of TRAK International, Inc., which
appears in such Prospectus. We also consent to the application of such report
to the Financial Statement Schedules for the period October 1, 1994 to August
16, 1995 and for the fiscal year ended September 30, 1994 listed under Item
16(b) of this Registration Statement when such schedules are read in
conjunction with the financial statements referred to in our report. The
audits referred to in such report also included these schedules. We also
consent to the references to us under the headings "Experts" and "Selected
Consolidated Financial Data" in such Prospectus. However, it should be noted
that Price Waterhouse LLP has not prepared or certified such "Selected
Consolidated Financial Data."
PRICE WATERHOUSE LLP
St. Louis, Missouri
February 19, 1997
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated November 1, 1996,
relating to the financial statements of Lull Industries, Inc., which appears
in such Prospectus. We also consent to the references to us under the
headings "Experts" and "Selected Consolidated Financial Data" in such
Prospectus. However, it should be noted that Price Waterhouse LLP has not
prepared or certified such "Selected Consolidated Financial Data."
PRICE WATERHOUSE LLP
St. Louis, Missouri
February 19, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 375
<SECURITIES> 0
<RECEIVABLES> 19,649
<ALLOWANCES> (383)
<INVENTORY> 29,140
<CURRENT-ASSETS> 54,701
<PP&E> 18,165
<DEPRECIATION> (1,778)
<TOTAL-ASSETS> 139,020
<CURRENT-LIABILITIES> 39,339
<BONDS> 82,100
0
0
<COMMON> 113
<OTHER-SE> 16,290
<TOTAL-LIABILITY-AND-EQUITY> 139,020
<SALES> 59,166
<TOTAL-REVENUES> 59,166
<CGS> 43,887
<TOTAL-COSTS> 49,642
<OTHER-EXPENSES> 589
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,183
<INCOME-PRETAX> 6,752
<INCOME-TAX> 2,774
<INCOME-CONTINUING> 3,978
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,978
<EPS-PRIMARY> .35
<EPS-DILUTED> .35
</TABLE>
